8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
July 31, 2009

Quiksilver, Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation) 001-14229
(Commission File Number) 33-0199426
(IRS Employer Identification Number)

15202 Graham Street, Huntington Beach, CA
(Address of principal executive offices) 92649
(Zip Code)

Registrant’s telephone number, including area code:
(714) 889-2200

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-3.1

EX-10.1

EX-10.2

EX-10.3

EX-10.4

EX-10.5

EX-10.6

Item 1.01 Entry Into a Material Definitive Agreement

U.S. and European Term Facilities

     On July 31, 2009, Quiksilver, Inc., a Delaware corporation (“Quiksilver, Inc.” and, together with its subsidiaries, the “Company”), and its subsidiary Quiksilver Americas, Inc. (“Quiksilver Americas”), as borrower, entered into a Credit Agreement with Rhône Group L.L.C. (“Rhône Group LLC”), as administrative agent, and Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P., the lenders party thereto (the “Lenders”), providing for a senior secured term loan facility to Quiksilver Americas in an aggregate principal amount of $125 million (the “U.S. Term Facility”). Also, on July 31, 2009, Quiksilver, Inc. and its subsidiary Mountain & Wave S.A.R.L. (“Quiksilver Europe”), as borrower, entered into a Credit Agreement with Rhône Group LLC, as administrative agent, and the Lenders, providing for a senior secured term loan facility to Quiksilver Europe in an aggregate principal amount of €20 million (the “European Term Facility”). Each of these term loan facilities (the “Term Facilities”) matures on July 30, 2014, is subject to no interim amortization, bears interest at 15% per annum, payable quarterly, and is fully funded. Any amounts subsequently repaid will not be available to be re-borrowed. Quiksilver Americas has the option of paying up to 6.0% per annum of the interest in respect of the U.S. Term Facility quarterly in kind so long as no default exists under the U.S. Term Facility, with the remaining portion payable in cash. Quiksilver Europe has the option of paying up to 100% of the interest in respect of the European Term Facility quarterly in kind so long as no default exists under the European Term Facility. Both Term Facilities are guaranteed by Quiksilver, Inc. and most of the U.S. subsidiaries of Quiksilver, Inc., and the European Term Facility is also guaranteed by Quiksilver Deluxe SARL, a Luxemburg company, and certain other foreign subsidiaries of Quiksilver, Inc. The Term Facilities are secured primarily by a first or second-priority security interest in substantially all property related to the Company’s Americas business.

     Quiksilver Americas has the right to prepay the U.S. Term Facility in full or in part at any time without penalty, provided that if the U.S. Dollar depreciates against the Euro, any voluntary prepayment in the first three years entitles the Lenders to an additional amount to compensate for such depreciation, subject to a cap. Quiksilver Americas is required to make mandatory prepayments of the U.S. Term Facility without penalty (i) in full, upon a change in control, (ii) with net cash proceeds from certain asset sales outside the ordinary course of business, subject to prepayments under the Revolving Facility (described below), and (iii) upon the occurrence of any other event that results in a mandatory prepayment pursuant to the Revolving Facility, subject to prepayments under the Revolving Facility. Quiksilver Europe has the right to prepay the European Term Facility in full or in part at any time without penalty. Mandatory prepayment of the European Term Facility without penalty is required (i) in full, upon a change in control and (ii) with net cash proceeds of certain asset sales by certain European subsidiaries.

     Upon closing of the Term Facilities, Rhône Group LLC received an upfront fee of 3% of the aggregate principal amount of the Term Facilities and, upon final payment of the U.S. Term Facility, will receive an additional aggregate payment of up to $1.5 million under certain circumstances.

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     The Term Facilities contain customary default provisions and provide that, upon the occurrence of an event of default relating to the bankruptcy or insolvency of the Company, the unpaid balance of the principal and accrued interest under the Term Facilities and all other obligations of the Company under the loan documents will become immediately due and payable without any action under the Term Facilities. Upon the occurrence of any other event of default (which would include an event of default under the Revolving Facility and other material indebtedness), Rhône Group LLC (at the request of the Lenders) may declare the unpaid balance of the principal and accrued interest under the Term Facilities and all other obligations under the loan documents immediately due and payable without any further action. An event of default under the Term Facilities will occur if the initial funding under the French Credit Facility (as defined below) does not occur by September 29, 2009 or, if certain conditions are met, by October 31, 2009.

     The Term Facilities provide for certain representations and warranties and restrictive covenants usual for facilities and transactions of this type. The Term Facilities require that Quiksilver, Inc. and certain of its subsidiaries achieve specified minimum levels of EBITDA and maintain a specified minimum level of availability under the Revolving Facility. Quiksilver Americas and Quiksilver Europe have agreed to reimburse Rhône Group LLC and the Lenders for their fees and expenses incurred in connection with the Term Facilities and related transactions, subject to certain limitations.

     The U.S. Term Facility is attached as Exhibit 10.1 to this Current Report on Form 8-K. The European Term Facility is attached as Exhibit 10.2 to this Current Report on Form 8-K. The above description of the Term Facilities is not complete and is qualified in its entirety by reference to the exhibits.

Warrant and Registration Rights Agreement

     In consideration of providing the Term Facilities, on July 31, 2009, Quiksilver, Inc. entered into a Warrant and Registration Rights Agreement (the “Warrant Agreement”) with Rhône Capital III L.P. (“Rhône Capital III”) and the Lenders pursuant to which Quiksilver, Inc. issued to the Lenders warrants to purchase shares of common stock of Quiksilver, Inc. (the “Warrants”) exercisable for 25,653,831 shares of common stock. The Warrants were fully earned and vested upon issuance. The exercise price of the Warrants is $1.86 per share and the Warrants are exercisable at any time during their seven-year term by paying the exercise price in cash, pursuant to a “cashless exercise” of the Warrant or by a combination thereof.

     The exercise price and number of common shares issuable upon exercise of the Warrants are subject to customary adjustments for certain events. Quiksilver, Inc. is required to obtain the consent of Rhône Capital III prior to issuing common stock (or securities convertible or exchangeable into common stock) at a price per share less than $1.86. To the extent any adjustment to the Warrants would result in an issuance of common stock in excess of 19.99% of the outstanding shares at the time of the issuance of the Warrants (the “Share Cap”), the holders would instead be issued upon exercise of the Warrants shares of non-voting Series A Preferred Stock of Quiksilver, Inc., with 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 rate of 10% per annum, increasing 2% every two quarters up to 18% per annum. Such preferred shares would be automatically converted to common stock upon receipt of approval of Quiksilver, Inc.’s

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stockholders. The Warrants are not transferable (other than to affiliates of Rhône Capital III) and although the common stock issued upon exercise of the Warrants is fully transferable (except for any securities law restrictions), the holders have agreed not to transfer common stock representing 15% or more of the then outstanding number of shares of common stock to any one person unless approved by the Board of Directors of Quiksilver, Inc.

     Under the Warrant Agreement, the Lenders have customary demand and piggyback registration rights with respect to the Warrants and the underlying shares. Each initial holder of Warrants that continue to hold at least 50% of the Warrants (or the shares underlying the Warrants) initially issued to such holder has additional subscription rights pursuant to the Warrants allowing such initial holder to maintain its proportionate, as-if-converted ownership interest in Quiksilver, Inc., if Quiksilver, Inc. makes a public or private offering of common stock for cash, subject to certain exclusions.

     Pursuant to the terms of the Warrant Agreement, on July 31, 2009, Quiksilver, Inc. increased the number of directors constituting its Board of Directors by two and filled the newly-created directorships with two directors, M. Steven Langman and Andrew Sweet, nominated by Triton Onshore SPV L.P. and Triton Coinvestment SPV L.P., respectively. Triton Coinvestment SPV L.P.’s right to nominate one director continues until the Lenders have sold one-third of the shares of common stock issued upon exercise of the Warrants (or Warrants exercisable for such amount) other than to affiliates of Rhône Capital III, and Triton Onshore SPV L.P.’s right to nominate one director continues until the Lenders have sold two-thirds of the shares of common stock issuable upon exercise of the Warrants (or Warrants exercisable for such amount) other than to affiliates of Rhône Capital III.

     The Warrant Agreement is attached as Exhibit 10.3 to this Current Report on Form 8-K. The above description of the Warrant Agreement is not complete and is qualified in its entirety by reference to the exhibit.

Revolving Credit Facility

     On July 31, 2009, Quiksilver, Inc., as a guarantor, Quiksilver Americas, as lead borrower, and certain other U.S. and Canadian subsidiaries of Quiksilver, Inc., as borrowers, (collectively, the “Borrower”) or guarantors, entered into a Credit Agreement with Bank of America, N.A. (“Bank”), as administrative agent, and other lenders (the “Revolving Facility”).

     Under the Revolving Facility, the amount to be extended to the Borrower is limited to the lesser of (i) $185 million in the case of U.S. borrowers or $15 million in the case of the Canadian borrower (with a Borrower option to expand the aggregate commitments to $250 million on certain conditions) and (ii) a borrowing base calculated based on designated percentages of eligible accounts receivable, eligible inventory and eligible credit card receivables of the Borrower and its Canadian subsidiaries, less customary reserves. The Company cannot permit U.S. availability under the Revolving Facility at any time to be less than or equal to 7.5% of the lesser of total commitments under the Revolving Facility and the total borrowing base. The Revolving Facility includes a $92.5 million sublimit for U.S. letters of credit and a $10 million sublimit for Canadian letters of credit. Outstanding loans generally may be repaid in whole or in part at any time, without penalty, subject to certain customary limitations. The Revolving Facility has a term of three years.

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     In the case of U.S. borrowers, the interest rate on borrowings under the Revolving Facility are determined, at the Borrower’s option, as either: (i) an adjusted London Inter-Bank Offer (“LIBO”) rate plus a spread of 4.0% to 4.5%; or (ii) a Base Rate (as defined below) plus a spread of 3.0% to 3.5%. The Base Rate is the highest of (A) the U.S. prime rate, (B) the federal funds effective rate plus 0.5%, or (C) an adjusted LIBO rate for an interest period of one month plus 1% per annum. In the case of the Canadian borrower, the interest rate on borrowings under the Revolving Facility are determined, at the Canadian borrower’s option, as any of: (i) an adjusted LIBO rate plus a spread of 4.0% to 4.5% (if U.S. Dollar loans); or (ii) a Canadian Base Rate (as defined below) plus a spread of 3.5% to 4.0% (if Canadian Dollar loans); or (iii) a bankers’ acceptance equivalent rate plus a spread of 4.0% to 4.5% (if Canadian Dollar loans). The Canadian Base Rate is the highest of (A) the Canadian prime rate, (B) the Bank of Canada overnight rate plus 0.5%, or (C) a bankers’ acceptance equivalent rate for an interest period of one month plus 1% per annum. The applicable spreads are based upon the average daily excess availability under the Revolving Facility. The applicable rate of interest under the Revolving Facility will increase by 2% during an event of default.

     The Revolving Facility is guaranteed by Quiksilver, Inc. and most of its domestic and Canadian subsidiaries that are not borrowers under the Revolving Facility (other than immaterial subsidiaries) (collectively, the “Guarantors”), except that Canadian subsidiaries of Quiksilver, Inc. do not guarantee the obligations of the U.S. loan parties. The obligations of the Borrower under the Revolving Facility generally are secured by (i) a first priority security interest in the inventory and accounts receivable of the Borrower and the Guarantors, together with all general intangibles (excluding intellectual property rights) and other property related to the inventory and accounts receivable, (ii) a second priority security interest in substantially all other personal property of the Borrower and Guarantors and (iii) a second priority pledge of the shares of each domestic subsidiary of the Borrower and Guarantors, except that the assets of the Canadian subsidiaries of Quiksilver, Inc. do not secure the obligations of the U.S. loan parties.

     The Revolving Facility contains customary default provisions and provides that, upon the occurrence of an event of default relating to the bankruptcy or insolvency of the Borrower or other subsidiaries, the unpaid balance of the principal and accrued interest under the Revolving Facility and all other obligations of the Borrower under the loan documents will become immediately due and payable without any action under the Revolving Facility. Upon the occurrence of any other event of default (which would include a default under the Term Facilities and other material indebtedness), the Bank may, by written notice, declare the unpaid balance of the principal and accrued interest under the Revolving Facility and all other obligations under the loan documents immediately due and payable without any further action.

     The Revolving Facility also includes certain representations and warranties and restrictive covenants usual for facilities and transactions of this type. The Borrower paid customary agency, arrangement and upfront fees in connection with the Revolving Facility.

     The Revolving Facility is attached as Exhibit 10.4 to this Current Report on Form 8-K. The above description of the Revolving Facility is not complete and is qualified in its entirety by reference to the exhibit.

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French Credit Facility

     On July 31, 2009, two French subsidiaries of Quiksilver, Inc., Pilot S.A.S. (“Pilot”) and Na Pali, as borrowers, and Quiksilver, Inc., as guarantor, entered into a €268 million facilities agreement with BNP Paribas, Crédit Lyonnais and Société Générale Corporate & Investment Banking as mandated lead arrangers, BNP Paribas as agent, Société Générale as security agent, Caisse Régionale de Crédit Agricole Mutuel Pyrénées Gascogne as issuing bank, and BNP Paribas, Crédit Lyonnais, Société Générale, Natixis, Caisse Régionale de Crédit Agricole Mutuel Pyrénées-Gascogne, Banque Populaire du Sud Ouest, CIC — Société Bordelaise, and HSBC France as original lenders (the “Original Lenders”), (the “French Credit Facility”). Pursuant to the French Credit Facility, the Original Lenders have agreed to make available to Pilot and Na Pali, subject to certain terms and conditions, (i) a €55 million term loan, for purposes of refinancing Pilot’s existing €55 million Line of Credit (the “French Facility A”), (ii) a €115 million term loan, for purposes of refinancing certain outstanding short and mid-term bank debt owed by Na Pali to the Original Lenders (the “French Facility B”), (iii) a revolving credit facility in a maximum amount of €58 million, for purposes of financing the general corporate and working capital purposes of Na Pali and its subsidiaries (the “French Revolving Facility”), and (iv) a line of up to €40 million to issue letters of credit, also for purposes of financing the general corporate and working capital purposes of Na Pali and its subsidiaries (the “French L/C Facility” and, together with the French Facility A, the French Facility B and the French Revolving Facility, the “French Facilities”).

     The maturity of the French Facilities is July 31, 2013. French Facility A and French Facility B are repayable in semi-annual installments at the end of the first and third quarter of each fiscal year, with €14 million coming due on each of January 31, 2010 and July 31, 2010, €17 million on each of January 31, 2011 and July 31, 2011, and €27 million on each of January 31, 2012, July 31, 2012, January 31, 2013 and July 31, 2013. The amount available under the French Revolving Facility, initially €58 million, will decrease to €55 million for the period between August 1, 2010 and July 31, 2011, and to €50 million after August 1, 2011. Amounts outstanding under Facility A will bear interest at a rate of EURIBOR plus 4.75%. Amounts outstanding under French Facility B and the French Revolving Facility will bear interest at a rate of EURIBOR plus 4.25%.

     The French Facilities are guaranteed by Quiksilver, Inc., and are secured by pledges over certain assets of Quiksilver, Inc.’s subsidiaries in Europe, including the Quiksilver and Roxy trademarks and related logos for European territories, and shares in certain European subsidiaries of Quiksilver, Inc.

     Initial funding under the French Facilities is subject to the satisfaction or waiver, no later than September 29, 2009, of certain conditions precedent, including the entry into security documents, intercreditor agreements and documents relating to the extension of the outstanding €50 million debt owed by an affiliate of Quiksilver, Inc. to Société Générale and due July 2010 (the “SG Loan”), completion of certain restructuring transactions in Europe, and delivery of customary certificates and legal opinions. Initial funding is not contingent upon the absence of any material adverse change prior to funding.

     Société Générale has agreed in principle to extend the maturity of the SG Loan to align it with that of the French Facilities, with amortization commencing in July 2011 as follows: €8.9 million due on July 31, 2011, €6.0 million due on January 31, 2012, €6.6 million due on July 31, 2012, €6.4 million due on January 31, 2013 and €22.1 million due on July 31, 2013. The extended SG Loan will bear interest at the rate of EURIBOR plus 5%, and will be guaranteed by Quiksilver, Inc. and secured by certain of the security interests that will also secure the French Facilities.

     The French Credit Facility contains customary default provisions and provides that, upon the occurrence of an event of default following the initial funding, the agent may, and shall if so

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directed by the majority lenders, cancel the commitments and declare all or part of the utilizations to be due, and declare that cash cover is required in respect of each letter of credit outstanding under the French L/C Facility.

     The French Credit Facility includes certain restrictive covenants and representations and warranties usual for facilities and transactions of this type. Among other restrictions, it limits the ability of the Company’s subsidiaries in Europe to repatriate dividends or royalties to Quiksilver, Inc. until the French Facilities are fully and finally repaid.

     The Borrower paid customary agency, arrangement and upfront fees in connection with the French Credit Facility.

     The French Credit Facility is attached as Exhibit 10.5 to this Current Report on Form 8-K. The above description of the French Credit Facility is not complete and is qualified in its entirety by reference to the exhibit.

Amendment of €55 Million Line of Credit

     On July 31, 2009, Quiksilver, Inc. and Pilot entered into an amendment to Pilot’s €55 million Line of Credit Agreement (the “LC Agreement”) with Société Générale, BNP Paribas and Crédit Lyonnais (collectively, the “Banks”) pursuant to which the Banks extended the LC Agreement from July 31, 2009 to September 29, 2009. The Banks agreed to the extension of the LC Agreement for the sole purpose of enabling the Company and Pilot to refinance the financial indebtedness of Pilot and its subsidiaries by September 29, 2009 pursuant to the terms of the French Credit Facility.

     The amendment of the LC Agreement is attached as Exhibit 10.6 to this Current Report on Form 8-K. The above description of the amendment to the LC Agreement is not complete and is qualified in its entirety by reference to the exhibit.

Item 1.02 Termination of a Material Definitive Agreement

     On July 31, 2009, in connection with entering into the Term Facilities and Revolving Facility discussed in Item 1.01 above, the Company terminated the Credit Agreement, dated as of April 12, 2005, among Quiksilver, Inc., certain of its subsidiaries, JPMorgan Chase Bank, N.A., as administrative agent, and other lenders (the “Terminated Facility”). The Terminated Facility provided for a secured revolving line of credit of up to $250 million (with a Company option to expand the facility to $350 million on certain conditions), but limited to a borrowing base generally equal to the sum of 85% of the eligible accounts receivable plus 75% of the eligible inventory of certain of the Company’s U.S. subsidiaries. The Terminated Facility also included a $100 million sublimit for letters of credit, provided that the amount of standby letters of credit could not exceed $30 million.

     The interest rate on borrowings under the Terminated Facility was determined, at the Company’s option, as either: (i) an adjusted LIBO rate plus a margin of 3.5%; or (ii) a margin of 2.0% plus the higher of (A) the prime rate, (B) the federal funds effective rate plus 0.5% and (C) an adjusted LIBO rate plus 1.0%.

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     The obligations of the Company under the Terminated Facility were generally secured by (i) a security interest in the assets of certain of Quiksilver, Inc.’s and its U.S. subsidiaries’ assets (excluding certain trademarks and other intellectual property rights), and (ii) a pledge of 65% of the capital stock of Quiksilver, Inc.’s first-tier foreign subsidiary, QS Holdings, S.A.R.L.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of Registrant

     The information provided in Item 1.01 of this Current Report is hereby incorporated into this Item 2.03 by reference.

Item 3.02 Unregistered Sales of Equity Securities

     See the discussion of the Warrants issued pursuant to the Warrant Agreement under Item 1.01. The Warrants were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933. There are no underwriters, underwriting discounts or commissions involved in the transaction.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

     On July 31, 2009, the Board of Directors of Quiksilver, Inc. pursuant to the requirements of the Warrant Agreement, appointed the nominees of Triton Onshore SPV L.P. and Triton Coinvestment SPV L.P., M. Steven Langman and Andrew Sweet, to the Board of Directors. Messrs. Langman and Sweet are each members of the board of managers of Rhône Group LLC, and hold equity interests in such entity. In addition, Messrs. Langman and Sweet hold limited partnership interests in various investment vehicles which have provided capital to the Lenders and are members of the board of managers of Rhône Capital L.L.C., which together with its affiliates (including Rhône Capital III), indirectly control such investment vehicles as well as the Lenders. The information provided in Item 1.01 of this Current Report is hereby incorporated into this Item 5.02 by reference.

     For service as a non-employee director during fiscal 2009, each of Mr. Langman and Mr. Sweet will receive an annual cash retainer of $45,000, prorated for the portion of the year in which he serves as a director. Under the Company’s 2000 Stock Incentive Plan, each non-employee director is automatically granted an option to purchase 7,500 shares of common stock and awarded 5,000 shares of restricted stock upon first becoming a member of the board. In addition, on the date of each annual meeting of stockholders, each individual who is to continue to serve as a non-employee board member is automatically granted an option to purchase 7,500 shares of common stock and awarded 5,000 shares of restricted stock, provided such individual has served as a non-employee board member for at least six months. Each option grant has an exercise price per share equal to the fair market value per share of common stock on the grant date and a maximum term of seven years, subject to earlier termination following optionee’s cessation of service on the board. Each option is immediately exercisable and fully-vested for all of the option shares. Each restricted stock award vests in a series of three successive equal annual installments over the period beginning on the date of such award. The Company executes an Indemnity Agreement with each of its directors, the form of which is attached to the Company’s Form 10-K for the fiscal year ended October 31, 2006, as Exhibit 10.8.

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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

     On July 31, 2009, Quiksilver, Inc. filed a Certificate of Designation of the Series A Convertible Preferred Stock (“Certificate of Designation”) with the Delaware Secretary of State. The Certificate of Designation has the affect of amending the Company’s Certificate of Incorporation. The Certificate of Designation provides for the issuance of up to 1,000,000 shares of Series A Convertible Preferred Stock.

     The information provided in Item 1.01 of this Current Report is hereby incorporated into this Item 5.03 by reference.

     A copy of the Certificate of Designation is attached as Exhibit 3.1 to this Current Report on Form 8-K. The above description of the Certificate of Designation is not complete and is qualified in its entirety by reference to the exhibit.

Item 9.01 Financial Statements and Exhibits

     (c) Exhibits

Exhibit No.	Exhibit Title or Description
3.1	Certificate of Designation
10.1	U.S. Term Facility
10.2	European Term Facility
10.3	Warrant and Registration Rights Agreement
10.4	Revolving Facility
10.5	French Credit Facility
10.6	Amendment No. 5 to Line of Credit

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 4, 2009	Quiksilver, Inc. (Registrant)
	By:	/s/ Joseph Scirocco
		Joseph Scirocco
		Chief Financial Officer

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Index to Exhibits

Exhibit No.	Exhibit Title or Description
3.1	Certificate of Designation
10.1	U.S. Term Facility
10.2	European Term Facility
10.3	Warrant and Registration Rights Agreement
10.4	Revolving Facility
10.5	French Credit Facility
10.6	Amendment No. 5 to Line of Credit

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EX-3.1

Exhibit 3.1

CERTIFICATE OF DESIGNATION
OF THE
SERIES A CONVERTIBLE PREFERRED STOCK
(Par Value $0.01 Per Share)

OF

QUIKSILVER, INC.

Pursuant to Section 151 of the
General Corporation Law of the State of Delaware

          The undersigned duly authorized officer of Quiksilver, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Company”), in accordance with the provisions of Section 103 thereof, and pursuant to Section 151 thereof, DOES HEREBY CERTIFY:

          That the Certificate of Incorporation of the Company, as amended and restated (the “Certificate of Incorporation”) provides that the Company is authorized to issue 5,000,000 shares of Preferred Stock, par value $0.01 per share, issuable in series by the Board of Directors of the Company (the “Board”); and

          That pursuant to the authority conferred upon the Board by the Certificate of Incorporation of the Company, the Board on July 29, 2009 adopted the following resolution creating a series of 1,000,000 shares of Preferred Stock designated as set forth below;

          RESOLVED, that pursuant to the authority expressly granted to and vested in the Board by provisions of the Certificate of Incorporation and the General Corporation Law of the State of Delaware, the issuance of a series of Preferred Stock, which shall consist of 1,000,000 shares of the 5,000,000 shares of Preferred Stock which the Company now has authority to issue, be, and the same hereby is, authorized, and this committee of the Board hereby fixes the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series (in addition to the powers, designations, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation which may be applicable to the Preferred Stock) authorized by this resolution as follows:

          1. Designation and Rank.

          (a) The designation of such series of Preferred Stock authorized by this resolution shall be Series A Convertible Preferred Stock (the “Series A

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Preferred Stock”). The maximum number of shares of Series A Preferred Stock shall be 1,000,000. Shares of the Series A Preferred Stock shall have a liquidation preference equal to the sum of (i) $0.01 per share, plus (ii) the Common Stock Equivalent Liquidation Value, as defined in Section 1(b) below. The Series A Preferred Stock shall rank prior to the Company’s Common Stock and to all other classes and series of equity securities of the Company now or hereafter authorized, issued or outstanding (the Common Stock and such other classes and series of equity securities collectively referred to herein as the “Junior Stock”) as to dividend rights and rights upon liquidation, winding up or dissolution of the Company. The Series A Preferred Stock shall be junior to all outstanding debt of the Company. The Series A Preferred Stock shall be subject to creation of Junior Stock to the extent not expressly prohibited by the Company’s Certificate of Incorporation.

          (b) For purposes of this Certificate of Designation, “Common Stock Equivalent Liquidation Value” means an amount equal to (i) the number of shares of Common Stock into which each share of Series A Preferred Stock could then be converted had the stockholders of the Company approved such conversion, multiplied by (ii) the amount that each share of Common Stock would receive in a liquidation (assuming, for purposes of this calculation, that the Series A Preferred Stock had been fully converted into shares of Common Stock immediately prior to such liquidation).

          2. Cumulative Dividends; Priority.

          (a) Payment of Dividends. From and after the date on which a share of Series A Preferred Stock is first issued, the holders shall be entitled to receive, when, as, and if declared by the Board, out of funds legally available therefor, cumulative cash dividends in the amount determined as set forth in Section 2(b). Each declared dividend shall be payable to holders of record as they appear on the stock books of the Company at the close of business on such record dates, not more than 60 calendar days preceding the payment dates therefor, as are determined by the Board or a duly authorized committee thereof (each of such dates, a “Record Date”). Dividends shall be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year (each, a “Dividend Payment Date”) or, if any such day is not a day other than a Saturday, Sunday or any other day on which banks in New York City, New York are generally required or authorized by law to be closed (a “Business Day”), the next Business Day. Dividends payable pursuant to this Section 2, if, when, and as declared by the Board, will be, of each outstanding share of Series A Preferred Stock, payable at the Dividend Rate (as defined in Section 2(b)) in effect for such Dividend Period (as defined below). Each period from and excluding a Dividend Payment Date but including the following Dividend Payment Date is herein referred to as a “Dividend Period.” Dividends pursuant to this Section 2(a) shall be paid in cash.

2

          (b) Dividend Rate. From the date of issuance of the first share of Series A Preferred Stock that is issued (or from the end of the prior Dividend Period) and until the occurrence of the Conversion Date, dividends on all shares of Series A Preferred Stock that are issued from time to time will be paid on each Dividend Payment Date in a per share amount calculated as the applicable Dividend Rate (as defined herein) in effect with respect to such Dividend Period multiplied by an amount equal to the product of (i) the average of the daily volume-weighted average prices of the Common Stock during each trading day in such Dividend Period on the principal stock exchange on which the Common Stock then trades and (ii) the number of shares of Common Stock into which each share of Series A Preferred Stock could then be converted had the stockholders of the Company approved such conversion. The Dividend Rate shall be 10% for the first two Dividend Periods following the date of issuance of the first share of Series A Preferred Stock that is issued and increase by 2% after each two subsequent Dividend Periods, but shall not exceed a rate of 18%.

          (c) Special Dividends. In addition to dividends payable pursuant to Section 2(a), each share of Series A Preferred Stock shall be paid, as and when paid in respect of the Common Stock, dividends and distributions paid in respect of the Common Stock in shares of Junior Stock. Each share of Series A Preferred Stock shall be paid any dividend or distribution payable pursuant to this Section 2(c) in an amount equal to (i) the amount of such dividend or distribution payable in respect of one share of Common Stock multiplied by (ii) the number of shares of Common Stock into which each share of Series A Preferred Stock could then be converted had the stockholders of the Company approved such conversion.

          (d) Priority as to Dividends; No Repurchases. No dividends shall be declared or paid or set apart for payment on Preferred Stock of any series ranking, as to dividends, on a parity with or junior to the Series A Preferred Stock for any period unless full dividends for the immediately preceding Dividend Period on the Series A Preferred Stock (including any accumulation in respect of unpaid dividends from prior Dividend Periods) have been or contemporaneously are declared and paid (or declared and a sum sufficient for the payment thereof set apart for such payment). When dividends are not paid in full (or declared and a sum sufficient for such full payment is not so set apart) upon the Series A Preferred Stock and there are issued and outstanding shares of Preferred Stock ranking on a parity as to dividends with the Series A Preferred Stock with the same Dividend Payment Date, then all dividends upon shares of Series A Preferred Stock and such other Preferred Stock ranking on a parity as to dividends shall be declared pro rata, so that the respective amounts of dividends shall bear the same ratio to each other as full quarterly dividends per share payable on the shares of Series A Preferred Stock pursuant to Section 2(b) above and all such other Preferred Stock ranking on a parity as to dividends otherwise payable on such Dividend Payment Date bear to each other.

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          Unless full dividends on the Series A Preferred Stock have been declared and paid or set apart for payment for the immediately preceding Dividend Period (including any accumulation in respect of unpaid dividends for prior Dividend Periods): (i) no cash dividend or other distribution shall be declared or paid or set aside for payment on the Junior Stock other than a dividend or distribution solely in shares of Junior Stock, provided that such dividend or distribution is also being paid in respect of the Series A Preferred Stock in accordance with Section 2(c)) and (ii) the Company may not, directly or indirectly, repurchase, redeem or otherwise acquire any shares of any class or series of stock ranking on a parity with the shares of the Series A Preferred Stock in rights and preferences (or any moneys paid to or made available for a sinking fund for the redemption of any shares of any such stock) otherwise than pursuant to a pro rata offer to purchase or a concurrent redemption of all, or a pro rata portion, of the outstanding shares of Series A Preferred Stock and shares of any class or series of stock ranking on a parity with the shares of the Series A Preferred Stock in rights and preferences (except by conversion into or exchange for Junior Stock).

          The Company shall not permit any subsidiary of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company if, under the preceding paragraph, the Company would be prohibited from purchasing or otherwise acquiring such shares at such time and in such manner.

          (e) At any time at which any shares of Series A Preferred Stock are outstanding, the Company may not, directly or indirectly, repurchase, redeem or otherwise acquire any shares of its Junior Stock (or cause any moneys to be paid to or made available for a sinking fund for the redemption of any shares except by conversion into or exchange for Junior Stock).

     3. Redemption and Repurchase. The shares of the Series A Preferred Stock shall not be redeemable.

     4. Voting and Consent Rights.

          (a) General Voting Rights. Except as from time to time required by applicable law, the Series A Preferred Stock shall have no voting rights.

          (b) Consent Rights on Extraordinary Matters. So long as any shares of the Series A Preferred Stock shall be outstanding and unless the consent or approval of a greater number of shares shall then be required by law, without first obtaining the consent of the holders of at least two-thirds of the number of shares of the Series A Preferred Stock at the time outstanding, the Company shall not either directly or indirectly or through merger or consolidation with any other company, (i) authorize, create or issue, or increase the authorized or issued amount, of any class or series of stock ranking senior to or pari passu with the shares of the Series A Preferred Stock in rights and preferences or (ii) approve

4

any amendment to (or otherwise alter or repeal) its Certificate of Incorporation (or this resolution) which would materially and adversely change the specific terms of the Series A Preferred Stock.

          An amendment which increases the number of authorized shares of any class or series of Preferred Stock or authorizes the creation or issuance of other classes or series of Preferred Stock, in each case ranking junior to the Series A Preferred Stock with respect to the payment of dividends and distribution of assets upon liquidation, dissolution or winding up, or substitutes the surviving entity in a merger or consolidation, reorganization or other business combination for the Company, shall not be considered to be such an adverse change.

     5. Reorganization Events

          (a) In the event of: (i) any consolidation or merger of the Company with or into another person, in each case pursuant to which the Common Stock will be converted into cash, securities or other property of the Company or another person; (ii) any sale, transfer, lease or conveyance to another person of all or substantially all of the property and assets of the Company, in each case pursuant to which the Common Stock will be converted into cash, securities or other property of the Company or another person; (iii) any reclassification of the Common Stock into securities including securities other than the Common Stock; or (iv) any statutory exchange of the outstanding shares of Common Stock for securities of another person (other than in connection with a merger or acquisition) (any such event specified in this Section 5(a), a “Reorganization Event” ), each share of Series A Preferred Stock outstanding immediately prior to such Reorganization Event shall remain outstanding but shall become convertible into the kind of securities, cash and other property receivable in such Reorganization Event by the holder (excluding the counterparty to the Reorganization Event or an affiliate of such counterparty) of that number of shares of Common Stock into which the share of Series A Preferred Stock would then be convertible (such securities, cash and other property, the “Exchange Property”).

          (b) In the event that holders of the shares of Common Stock have the opportunity to elect the form of consideration to be received in such transaction, the consideration that the holders are entitled to receive shall be deemed to be the types and amounts of consideration received by the majority of the holders (excluding the counterparty to the Reorganization Event or an affiliate of such counterparty) of the shares of Common Stock that affirmatively make an election.

          (c) The Company (or any successor) shall, within 10 days of the occurrence of any Reorganization Event, provide written notice to the holders of such occurrence of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property. Failure to deliver such notice shall not affect the operation of this Section 5.

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          (d) Notwithstanding anything to the contrary in this Section 5 or otherwise in this Certificate of Designation, the Company shall not enter into any agreement for a transaction constituting a Fundamental Change (as defined herein) unless such agreement entitles holders to receive, on an as-if converted basis, the securities, cash and other property receivable in such transaction by a holder of shares of Common Stock that was not the counterparty to such transaction or an affiliate of such other party. “Fundamental Change” means the occurrence, prior to the Conversion Date (as defined in Section 6(a)), of the consummation of any consolidation or merger of the Company or similar transaction or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company to any person, in each case pursuant to which the Common Stock will be converted into cash, securities or other property, other than pursuant to a transaction in which the persons that “beneficially owned” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, voting shares of the Company immediately prior to such transaction beneficially own, directly or indirectly, voting shares representing a majority of the continuing or surviving person immediately after the transaction.

     6. Conversion.

          (a) Mandatory Conversion. Effective as of the close of business on the Conversion Date with respect to any share of Series A Preferred Stock, such share of Series A Preferred Stock shall automatically convert into 25.653831 shares of Common Stock (the “Conversion Amount”), subject to adjustment from time to time as set forth in Section 6(c). The “Conversion Date” means, with respect to the shares of Series A Preferred Stock, the fifth business day following the date on which the Company has received all stockholder approvals necessary to approve the conversion of all of the outstanding Series A Preferred Stock into Common Stock for purposes of Section 312.03(c) of the New York Stock Exchange Listed Company Manual.

          (b) Conversion Procedures. Upon occurrence of the Conversion Date, the Company shall provide notice of such conversion to all holders. In addition to any information required by applicable law or regulation, such notice shall state, as appropriate: (i) the Conversion Date, (ii) the number of shares of Common Stock to be issued upon conversion of each share of Series A Preferred Stock held of record by each holder, and (iii) the place or places where certificates for shares of Series A Preferred Stock held of record by each holder are to be surrendered for issuance of certificates representing shares of Common Stock. On the Conversion Date, certificates representing shares of Common Stock shall be issued and delivered to each holder or such holder’s designee upon presentation and surrender of the certificate evidencing the Series A Preferred Stock to the Company. The Company shall pay any and all transfer and similar taxes.

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          (c) Adjustments upon Certain Transactions. If the Company subdivides its outstanding Common Stock or combines its outstanding Common Stock into a smaller number of shares, then the Conversion Amount shall be adjusted as if such subdivision or combination applied to the shares represented by the Conversion Amount.

     7. Liquidation Rights; Priority.

          (a) In the event of any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Company, the holders shall be entitled to receive, out of the assets of the Company, whether such assets are capital or surplus and whether or not any dividends as such are declared (i) $0.01 per share, (ii) the Common Stock Equivalent Liquidation Value as defined in Section 1(b), and (iii) an amount equal to all accrued and unpaid dividend for prior Dividend Periods, and no more, before any distribution shall be made to the holders of the Common Stock or any other class of stock or series thereof ranking junior to the Series A Preferred Stock with respect to the distribution of assets. After payment of the full amount of the liquidation preference, the holders shall not be entitled to any further participation.

          (b) Neither the merger nor consolidation of the Company into or with any other company, nor the merger or consolidation of any other company into or with the Company, nor a sale, transfer or lease of all or any part of the assets of the Company, shall be deemed to be a liquidation, dissolution or winding up of the Company within the meaning of this Section 7.

          (c) Written notice of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, stating a payment date and the place where the distributable amounts shall be payable, shall be given by mail, postage prepaid, no less than 30 days prior to the payment date stated therein, to the holders at their respective addresses as the same shall appear on the books of the Company.

          (d) If the amounts available for distribution with respect to the Series A Preferred Stock and all other outstanding stock of the Company ranking on a parity with the Series A Preferred Stock upon liquidation are not sufficient to satisfy the full liquidation rights of all the outstanding Series A Preferred Stock and stock ranking on a parity therewith, then the holders of each series of such stock will share ratably in any such distribution of assets in proportion to the full respective preferential amount (which in the case of Preferred Stock may include accumulated dividends) to which they are entitled.

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          IN WITNESS WHEREOF, Quiksilver, Inc. has caused this Certificate to be signed by Robert B. McKnight, Jr., its Chief Executive Officer and President, this 31st day of July, 2009.

QUIKSILVER, INC.
By:	/s/ Robert B. McKnight, Jr.
	Robert B. McKnight, Jr.
	Chief Executive Officer and President

8

EX-10.1

Exhibit 10.1

CREDIT AGREEMENT

Dated as of July 31, 2009

among

QUIKSILVER AMERICAS, INC.,
as Borrower

QUIKSILVER, INC.,
as a Guarantor

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

and

The Lenders Party Hereto

RHÔNE GROUP L.L.C.,
as Sole Lead Arranger and Sole Bookrunner

TABLE OF CONTENTS

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

i

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

ii

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

iii

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

iv

SCHEDULES
1.01 2.01	Subsidiary Guarantors Commitments and Applicable Percentages
4.01(a)(ix)	Closing Date Security Documents
4.01(a)(x)	Other Closing Date Loan Documents
5.01	Loan Parties’ Organizational Information
5.05	Material Liabilities or Obligations
5.22	Capitalization
6.16	PostClosing Matters
7.01	Existing Liens
7.02	Existing Investments
7.03(a)	Existing Indebtedness
7.03(l)	Existing Indebtedness of Quiksilver Japan K.K.
7.10	Contractual Obligations
10.02	Administrative Agent’s Office; Certain Addresses for Notices
10.15	Issue Prices

EXHIBITS
A	Form of Loan Notice
B	Form of Note
C	Form of Compliance Certificate
D	Form of Assignment and Assumption
E	Form of Facility Guaranty
F	Form of Security Agreement
G	Form of Intellectual Property Security Agreement
H	Form of Pledge Agreement
I	Copyright Security Agreement
J	Patent Security Agreement
K	Trademark Security Agreement

v

CREDIT AGREEMENT

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

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

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

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

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

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

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

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

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

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

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

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

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

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

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

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

          “Agreement” means this Credit Agreement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          “Change of Control” means:

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

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

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

          “Closing Date” means July 31, 2009.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          “Emerald Coast” means Emerald Coast SAS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          (f) all Attributable Indebtedness of such Person;

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

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

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

          “Indemnified Taxes” means Taxes other than Excluded Taxes.

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

          “Information” has the meaning specified in Section 10.07.

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

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

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

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

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

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

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

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

          “IRS” means the United States Internal Revenue Service.

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

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

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

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

          “Loan” has the meaning specified in Section 2.01.

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

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

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

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

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

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

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

          “Maturity Date” means July 30, 2014.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

16

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

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

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

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

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

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

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

          “PBGC” means the Pension Benefit Guaranty Corporation.

          “PCAOB” means the Public Company Accounting Oversight Board.

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

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

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

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

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

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

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

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

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

          “Permitted Disposition” means any of the following:

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

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

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

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

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

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

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

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

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

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

          (k) [reserved]

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

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

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

          “Permitted Encumbrances” means any of the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          “Permitted Indebtedness” means any of the following:

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

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          (b) the Obligations;

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

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

          “Permitted Investments” means any of the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          (n) Guarantees constituting Permitted Indebtedness;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          1.03 Accounting Terms.

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

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

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

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

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

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

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

ARTICLE II

THE COMMITMENTS AND LOANS

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

          2.02 Borrowing of Loans.

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

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

          2.03 [Reserved].

          2.04 [Reserved].

          2.05 Prepayments.

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

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

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

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

          2.06 [Reserved].

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

          2.08 Interest.

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

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

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

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

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

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

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

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

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

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

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

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

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

          2.12 Payments Generally; Administrative Agent’s Clawback.

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

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

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

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

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

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

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

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

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

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

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

          3.01 Taxes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          3.02 [Reserved].

          3.03 [Reserved].

          3.04 Increased Costs.

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

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

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

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

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

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

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

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

          3.05 [Reserved].

          3.06 Mitigation Obligations; Replacement of Lenders.

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

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

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

ARTICLE IV

CONDITIONS PRECEDENT TO LOANS

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

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

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

               (i) executed counterparts of this Agreement;

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

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

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

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

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

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

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

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

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

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

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

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

               (b) [reserved]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE V

REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

          5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

          5.05 Financial Statements; No Material Adverse Effect.

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

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

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

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

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

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

          5.06 [Reserved].

          5.07 [Reserved].

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

          5.09 [Reserved].

          5.10 [Reserved].

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

          5.12 ERISA Compliance.

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

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

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

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

          5.13 [Reserved].

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

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

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

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

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

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

          5.19 Security Documents.

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

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

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

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

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

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

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

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

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

ARTICLE VI

AFFIRMATIVE COVENANTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

               (a) of the occurrence of any Default;

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

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

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

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

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

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

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

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

          6.07 Maintenance of Insurance.

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

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

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

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

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

          6.10 Inspection Rights.

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

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

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

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

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

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

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

          6.15 Further Assurances.

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

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

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

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

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

ARTICLE VII

NEGATIVE COVENANTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          7.14 Financial Covenants.

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

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

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

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

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

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ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE IX

ADMINISTRATIVE AGENT AND LENDERS

          9.01 Appointment and Authority.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          9.15 Defaulting Lender

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

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

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

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

ARTICLE X

MISCELLANEOUS

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

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

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

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

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

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

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

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

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

          10.02 Notices; Effectiveness; Electronic Communications.

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

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

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

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

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

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

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

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

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

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

          10.04 Expenses; Indemnity; Damage Waiver.

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

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

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

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

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

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

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

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

          10.06 Successors and Assigns.

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

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

                    (i) Minimum Amounts.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          10.08 [Reserved].

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          10.16 Governing Law; Jurisdiction; Etc.

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

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

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

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

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

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

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

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

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

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

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

86

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

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

          10.22 Press Releases.

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

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

          10.23 [Reserved].

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

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

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

87

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

88

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

QUIKSILVER AMERICAS, INC., as the Borrower
By:
	Name:
	Title:
QUIKSILVER, INC., as a Guarantor
By:
	Name:
	Title:

S-1

RHÔNE GROUP L.L.C., as Administrative Agent
By:
	Name:
	Title:

S-2

ROMOLO HOLDINGS C.V., as Lender
By:
Name:
Title:
TRITON SPV L.P., as Lender
By:	Triton GP SPV LLC, as General Partner
By:
Name:
Title:
TRITON ONSHORE SPV L.P., as Lender
By:	Triton GP SPV LLC, as General Partner
By:
Name:
Title:
TRITON OFFSHORE SPV L.P., as Lender
By:	Triton GP SPV LLC, as General Partner
By:
Name:
Title:
TRITON COINVESTMENT SPV L.P., as Lender
By:	Triton GP SPV LLC
By:
Name:
Title:

S-3

EX-10.2

Exhibit 10.2

CREDIT AGREEMENT

Dated as of July 31, 2009

among

MOUNTAIN & WAVE S.À R.L.,
as Borrower

QUIKSILVER, INC.,
as a Guarantor

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

and

The Lenders Party Hereto

RHÔNE GROUP L.L.C.,
as Sole Lead Arranger and Sole Bookrunner

TABLE OF CONTENTS

Section		Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
1.01	Defined Terms		1
1.02	Other Interpretive Provisions		34
1.03	Accounting Terms		34
1.04	Rounding		35
1.05	Times of Day		35
1.06	Currency Equivalents Generally		35
1.07	Certifications		35
ARTICLE II THE COMMITMENTS AND LOANS
2.01	Loans		36
2.02	Borrowing of Loans		36
2.03	[Reserved]		36
2.04	[Reserved]		36
2.05	Prepayments		36
2.06	[Reserved]		37
2.07	Repayment of Loans		37
2.08	Interest.		37
2.09	Closing Fee		38
2.10	Computation of Interest and Fees		38
2.11	Evidence of Debt		38
2.12	Payments Generally; Administrative Agent’s Clawback		39
2.13	Sharing of Payments by Lenders		40
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY
3.01	Taxes		40
3.02	[Reserved]		43
3.03	[Reserved]		43
3.04	Increased Costs		43
3.05	[Reserved]		44
3.06	Mitigation Obligations; Replacement of Lenders		44
3.07	Survival		45

i

Section		Page
ARTICLE IV CONDITIONS PRECEDENT TO LOANS
4.01	Conditions of Loans		45
ARTICLE V REPRESENTATIONS AND WARRANTIES
5.01	Existence, Qualification and Power		49
5.02	Authorization; No Contravention		50
5.03	Governmental Authorization; Other Consents		50
5.04	Binding Effect		50
5.05	Financial Statements; No Material Adverse Effect		50
5.06	[Reserved]		51
5.07	[Reserved]		51
5.08	Ownership of Property; Liens		51
5.09	[Reserved]		51
5.10	[Reserved]		52
5.11	Taxes		52
5.12	ERISA Compliance		52
5.13	[Reserved]		52
5.14	Disclosure		52
5.15	Compliance with Laws		53
5.16	Compliance with Sarbanes-Oxley Act		53
5.17	Intellectual Property		53
5.18	Labor Matters		53
5.19	Security Documents		54
5.20	Environmental Matters		54
5.21	Absence of Insolvency Proceedings		55
5.22	Capitalization		55
5.23	No Amendment to Services Fee Agreement		55
5.24	Compliance with Money Laundering Laws		55
5.25	No Default		55
ARTICLE VI AFFIRMATIVE COVENANTS
6.01	Financial Statements		55
6.02	Certificates; Other Information		57
6.03	Notices		58
6.04	Payment of Obligations		58
6.05	Preservation of Existence, Etc		58
6.06	Maintenance of Properties		59
6.07	Maintenance of Insurance		59
6.08	Compliance with Laws		59
6.09	Books and Records; Accountants		59
6.10	Inspection Rights		59
6.11	Use of Proceeds		60

ii

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

iii

Section		Page
9.14	Relation among Lenders		75
9.15	Defaulting Lender		75
9.16	Actions in Concert		75
ARTICLE X MISCELLANEOUS
10.01	Amendments, Etc		75
10.02	Notices; Effectiveness; Electronic Communications		76
10.03	No Waiver; Cumulative Remedies		78
10.04	Expenses; Indemnity; Damage Waiver		78
10.05	Reinstatement; Payments Set Aside		79
10.06	Successors and Assigns		79
10.07	Treatment of Certain Information; Confidentiality		82
10.08	[Reserved]		83
10.09	Interest Rate Limitation		83
10.10	Counterparts; Integration; Effectiveness		83
10.11	Survival		83
10.12	Severability		83
10.13	Replacement of Lenders		84
10.14	Reserved		84
10.15	Issue Price		84
10.16	Governing Law; Jurisdiction; Etc.		85
10.17	Waiver of Jury Trial		86
10.18	No Advisory or Fiduciary Responsibility		86
10.19	USA PATRIOT Act Notice		87
10.20	Foreign Asset Control Regulations		87
10.21	Time of the Essence		87
10.22	Press Releases		87
10.23	[Reserved]		88
10.24	No Strict Construction		88
10.25	Attachments		88
10.26	Conflict of Terms		88
SIGNATURES			S-1

iv

SCHEDULES
1.01(a)	Subsidiary Guarantors
1.01(b)	US Grantors
2.01	Commitments and Applicable Percentages
4.01(a)(ix)	Closing Date Security Documents
4.01(a)(x)	Other Closing Date Loan Documents
5.01	Loan Parties’ Organizational Information
5.05	Material Liabilities or Obligations
5.22	Capitalization
6.16	Post-Closing Matters
7.01	Existing Liens
7.02	Existing Investments
7.03(a)	Existing Indebtedness
7.03(l)	Existing Indebtedness of Quiksilver Japan K.K.
7.10	Contractual Obligations
10.02	Administrative Agent’s Office; Certain Addresses for Notices
10.15	Issue Prices

EXHIBITS
A	Form of Loan Notice
B	Form of Note
C	Form of Compliance Certificate
D	Form of Assignment and Assumption
E	Form of Facility Guaranty
F	Form of US Security Agreement
G	Form of Intellectual Property Security Agreement
H	Form of US Intellectual Property Security Agreement
I	Form of Pledge Agreement (US Grantors)
J	Form of Pledge Agreement (54th Street)

v

CREDIT AGREEMENT

          This CREDIT AGREEMENT is entered into as of July 31, 2009, among MOUNTAIN & WAVE S.À R.L., a Luxembourg private limited liability company (the “Borrower”); QUIKSILVER, INC., a Delaware corporation (the “Parent”); each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”); and RHÔNE GROUP L.L.C., as Administrative Agent.

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

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

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

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

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

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

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

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

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

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

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

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

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

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

          “Aggregate Commitments” means the Commitments of all the Lenders. As of the Closing Date, the Aggregate Commitments are €20,000,000.

          “Agreement” means this Credit Agreement.

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

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

Credit Agreement (Euro)

2

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

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

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

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

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

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

Credit Agreement (Euro)

3

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

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

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

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

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

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

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

          “Canadian Pledge Agreement” means the Pledge Agreement, dated as of July 31, 2009 among Quiksilver Deluxe, Quiksilver Canada Corp. and the Administrative Agent.

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

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

          “Change of Control” means:

          (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than Rhône Capital III L.P. and its Affiliates

Credit Agreement (Euro)

4

becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or indirectly, of more than 35% of the Equity Interests of the Parent entitled to vote for members of the board of directors or equivalent governing body of the Parent on a fully-diluted basis; or

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

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

          “Closing Date” means July 31, 2009.

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

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

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

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

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

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

          “Consent” means (a) actual written consent given by a Lender from whom such consent is sought; or (b) the passage of ten (10) Business Days from receipt of written notice to a Lender from the Administrative Agent of a proposed course of action to be followed by the Administrative Agent without such Lender’s giving the Administrative Agent written notice that such Lender objects to such course of action.

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

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

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

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

          “Copyright Security Agreement” means the Copyright Security Agreement dated as of the Closing Date between 54th Street and the Administrative Agent, in a form reasonably satisfactory to the Administrative Agent.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          “Emerald Coast” means Emerald Coast SAS.

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

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

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

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

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

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

          “ERISA Event” means (a) a Reportable Event with respect to a Plan; (b) a withdrawal by a Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan subject to Title IV of

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ERISA or notification that a Multiemployer Plan subject to Title IV of ERISA is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.

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

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

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

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

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

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

          “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such

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next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) quoted for such day on such transactions by three Federal funds brokers of recognized standing selected by the Administrative Agent.

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

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

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

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

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

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

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

          “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

          “Global Consolidated EBITDA” means, at any date of determination, an amount equal to Global Consolidated Net Income of the Parent and its Subsidiaries on a Consolidated basis for the most recently completed Measurement Period, plus (a) without duplication and to the extent deducted in calculating such Global Consolidated Net Income, the sum of: (i) Global Consolidated Interest Charges for such Measurement Period, (ii) the provision for federal, state, local and foreign income Taxes for such Measurement Period, (iii) amounts attributable to depreciation and amortization expense for such Measurement Period, (iv) all non-cash charges, expenses or losses, including any impairment charge or write-off of assets (other than the write-off or write-down of current assets) pursuant to GAAP, (v) any non-cash stock compensation expenses, (vi) costs, fees and expenses in connection with the Loan Documents, the ABL Facility and the US Term Loans and the other transactions occurring on or about the Closing Date, (vii) costs, fees and expenses in connection with any Acquisition or Disposition permitted hereunder and occurring after the Closing Date, (viii) any expenses or charges incurred in connection with any issuance (or proposed issuance) of Indebtedness or Equity Interests or any refinancing transaction (or proposed refinancing transaction) or any amendment or other modification (or proposed amendment or

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modification) of any Indebtedness, and (ix) non-recurring costs, fees and expenses of restructuring advisors, in each case of or by the Parent and its Subsidiaries for such Measurement Period, minus (b) without duplication all cash payments made during such period on account of reserves, restructuring charges and other non-cash charges added to Global Consolidated Net Income pursuant to clause (a)(iv) above in respect of a previous Measurement Period. For the purposes of calculating Global Consolidated EBITDA for any Measurement Period, (i) the Global Consolidated EBITDA of any Person acquired by the Parent or its Subsidiaries during such Measurement Period shall be included on a pro forma basis for such period (assuming the consummation of such Acquisition and the incurrence or assumption of any Indebtedness in connection therewith occurred on the first day of such Measurement Period, but excluding any adjustments giving effect to expected costs savings or synergies), and (ii) the Global Consolidated EBITDA of any Person Disposed of by the Parent or its Subsidiaries during such Measurement Period shall be excluded for such Measurement Period (assuming the consummation of such Disposition and the repayment of any Indebtedness in connection therewith occurred on the first day of such period).

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

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

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

          “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative,

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judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

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

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

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

          “Hazardous Materials” means all radioactive substances or wastes and all hazardous or toxic substances, wastes or pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and any other deleterious substance regulated under any Environmental Law.

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

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

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

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

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

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

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

          (f) all Attributable Indebtedness of such Person;

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

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

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

          “Indemnified Taxes” means Taxes other than Excluded Taxes.

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

          “Information” has the meaning specified in Section 10.07.

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

          “Intellectual Property Security Agreement” means the Euro Intellectual Property Security Agreement dated as of the Closing Date between the Borrower, 54th Street and the Administrative Agent, in substantially the form attached hereto as Exhibit G or otherwise in a form reasonably satisfactory to the Administrative Agent.

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

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

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

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

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

          “IRS” means the United States Internal Revenue Service.

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

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

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

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

          “Loan” has the meaning specified in Section 2.01.

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

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

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

          “Luxembourg Share Pledge Agreements” means (a) the First Ranking Share Pledge Agreement, dated as of the Closing Date, among the Parent, the Administrative Agent and the Borrower, (b) the Second Ranking Share Pledge Agreement, dated as of the Closing Date, among the Parent, the Administrative Agent and the Borrower, (c) the Share Pledge Agreement, dated as of the Closing Date, among 54th Street, the Administrative Agent and Quiksilver Deluxe, and (d) the Share Pledge Agreement, dated as of the Closing Date, among QS Holdings, the Administrative Agent and 54th Street.

          “Luxembourg Security Agreements” means (a) the Receivables Pledge Agreement, dated as of the Closing Date, between 54th Street and the Administrative Agent, (b) the Account Pledge Agreement, dated as of the Closing Date, between 54th Street and the Administrative Agent, and (c) the Account Pledge Agreement, dated as of the Closing Date, between the Borrower and the Administrative Agent.

          “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities, or condition (financial or otherwise) of the Loan Parties taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its

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obligations under the Loan Documents; or (c) a material impairment of the rights and remedies of the Administrative Agent or the Lenders under the Loan Documents.

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

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

          “Maturity Date” means July 30, 2014.

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

          “Measurement Period” means, at any date of determination, the most recently completed four Fiscal Quarters of the Parent for which financial statements are available.

          “Mexico JV Agreement” means the Joint Venture Agreement of QS Mexico Holdings dated September 26, 2006 by and between the US Borrower and PBM International LLC, as amended.

          “Money Laundering Laws” has the meaning specified in Section 5.24.

          “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

          “Multiemployer Plan” means any employee benefit plan of the type described in Section 3(37) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five (5) plan years, has made or been obligated to make contributions.

          “Net Proceeds” means, with respect to any applicable Disposition by any Loan Party, the excess, if any, of (a) the sum of cash and cash equivalents received in connection with such Disposition (including any cash or cash equivalents received by any Loan Party by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (b) the sum of (i) the amount of any Indebtedness that is secured by the applicable asset by a Lien permitted hereunder and that is repaid (or an escrow is established for the future repayment thereof) in connection with such Disposition (other than Indebtedness under the Loan Documents), (ii) the reasonable out-of-pocket fees and expenses incurred by such Loan Party in connection with such transaction (including, without limitation, appraisals, and brokerage, legal, title and recording or transfer tax expenses and commissions) paid by any Loan Party to third parties, (iii) taxes paid or reasonably estimated to be actually payable in connection therewith, (iv) amounts provided as a reserve against any liabilities under

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any indemnification obligations or purchase price adjustment associated with such Disposition (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Proceeds), and (v) any liabilities relating to the property subject to such Disposition that are retained by any Loan Party or any of its Subsidiaries.

          “Non-Consenting Lender” has the meaning specified in Section 10.01.

          “Note” means a promissory note made by the Borrower in favor of a Lender evidencing Loans made by such Lender, substantially in the form of Exhibit B.

          “Obligations” means all advances to, and debts (including principal, interest, fees, costs, and expenses), liabilities, obligations, covenants and indemnities of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest, fees, costs and expenses that accrue after the commencement by or against any Loan Party or any Subsidiary thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

          “OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.

          “OFAC List” means the list of Specially Designated Nationals and Blocked Persons List of OFAC and Annex I to the United States Executive Order 13224 — Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism.

          “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

          “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document, excluding, however, such taxes imposed as a result of an assignment (other than an assignment that occurs as a result of the Borrower’s request pursuant to Section 3.06(b)).

          “Parent” has the meaning specified in the introductory paragraph hereto.

          “Participant” has the meaning specified in Section 10.06(d).

          “Participating Member States” means the member states of the European Communities that adopt or have adopted the Euro as their lawful currency in accordance with the legislation of the European Union relating to European Monetary Union.

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          “Patent” has the meaning specified in the Intellectual Property Security Agreement.

          “Patent Security Agreement” means the Patent Security Agreement dated as of the Closing Date between 54th Street and the Administrative Agent, in a form reasonably satisfactory to the Administrative Agent.

          “Patriot Act” means USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

          “PBGC” means the Pension Benefit Guaranty Corporation.

          “PCAOB” means the Public Company Accounting Oversight Board.

          “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by a Loan Party or any ERISA Affiliate or to which a Loan Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

          “Permitted Acquisition” means an Acquisition by any Loan Party or any Subsidiary thereof in which all of the following conditions are satisfied:

          (a) no Default then exists or would immediately arise from the consummation of such Acquisition;

          (b) such Acquisition shall have been approved by the Board of Directors of the Person (or similar governing body if such Person is not a corporation) which is the subject of such Acquisition and such Person shall not have announced that it will oppose such Acquisition or shall not have commenced any action which alleges that such Acquisition shall violate applicable Law;

          (c) the Borrower shall have furnished the Administrative Agent with at least ten (10) days’ prior written notice of such intended Acquisition;

          (d) any assets acquired shall be utilized in, and if such Acquisition involves a merger, consolidation or stock acquisition, the Person which is the subject of such Acquisition shall be engaged in, a business otherwise permitted to be engaged in by the Borrower under this Agreement;

          (e) the business and assets acquired in such Acquisition shall be free and clear of all Liens (other than Permitted Encumbrances);

          (f) no Indebtedness shall be incurred or assumed by any Loan Party in connection with or as a result of such Acquisition (other than Permitted Indebtedness); and

          (g) at the time of determination with respect to the specified Acquisition, the Borrower shall have certified, and shall have delivered supporting documentation reasonably satisfactory to the Administrative Agent, that Domestic Availability (as defined in the ABL Credit Agreement as in effect on the date hereof) immediately preceding, and on a pro forma basis on the date thereof and a projected basis for the twelve (12) months immediately following,

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such Acquisition was, and is projected to be, equal to or greater than the greater of (i) thirty percent (30%) of the Total Loan Cap (provided that, in the event of a refinancing of the ABL Credit Agreement as in effect on the date hereof or following its maturity, the Borrower and the Administrative Agent shall agree in good faith on a successor availability test which preserves the economic effect of this clause (i)) and (ii) $45,000,000.

          “Permitted Disposition” means any of the following:

          (a) Dispositions of inventory in the ordinary course of business;

          (b) (i) outbound licenses and sublicenses of Intellectual Property entered into or existing as of the date hereof and (ii) outbound licenses and sublicenses of Intellectual Property entered into following the date hereof in the ordinary course of business and on arm’s length terms; provided that, in the case of outbound licenses and sublicenses pursuant to clause (ii), unless the Administrative Agent otherwise consents in writing (such consent not to be unreasonably withheld): (A) no such license or sublicense may be for an initial term of more than five (5) years (not counting renewal terms), (B) each such license or sublicense shall contain customary provisions for the termination of the license or sublicense upon a change of control of the licensee or sublicensee and customary prohibitions against assignment of such license or sublicense by the licensee or sublicensee, and (C) the Loan Parties shall not, during any Fiscal Year, enter into any license or sublicense granting use of trademarks and/or service marks and related logos and/or slogans (a “Post-Closing Mark License”) if such license or sublicense provides for payment of annual license fees with respect to such trademarks and service marks reasonably expected to be paid, in the judgment of the Loan Party party to such license or sublicense (excluding upfront fees), during its first Fiscal Year which, when aggregated with the annual license fees (excluding upfront fees) reasonably expected to be paid, in the judgment of the Loan Party party to such license or sublicense, during the first year of all other Post-Closing Mark Licenses entered into by the Loan Parties during that same Fiscal Year, exceed $3,500,000, after deducting such portion of any license fees (excluding upfront fees) that are payable by a Loan Party, directly or indirectly, to the owners of the licensed marks as relate to such license or sublicense, to the extent that such Post-Closing Mark License is, in whole or in part, a sublicense. Notwithstanding the foregoing: (x) the license fees (including upfront fees) payable under any Post-Closing Mark License which has a non-renewable term of one (1) year or less shall not be included for purposes of the foregoing clause (C), and (y) if, in any Fiscal Year, the Administrative Agent gives its consent to exceed $3,500,000 in annual license fees pursuant to clause (ii), then the licensee fees are deemed to be reset at zero for that Fiscal Year, as of the date such consent was provided;

          (c) licenses for the conduct of licensed departments within Stores in the ordinary course of business;

          (d) Dispositions of equipment and other assets (including abandonment of Intellectual Property) in the ordinary course of business that is substantially worn, damaged, obsolete or, in the reasonable business judgment of a Loan Party, no longer used or necessary in its business;

          (e) Dispositions among the Loan Parties (other than transfer of ownership rights in Intellectual Property) (without regard to clause (b) above in this definition);

          (f) Dispositions of Real Estate (or of any Person or Persons created to hold such Real Estate or the equity interests in such Person or Persons), including sale-leaseback

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transactions involving any such Real Estate pursuant to leases on market terms, as long as (i) such sale is made for fair market value; (ii) at least 75% of the consideration from such Disposition is in the form of cash or cash equivalents; and (iii) an amount equal to the Net Proceeds of such Disposition are applied to the Loans to the extent required by Section 2.05(b);

          (g) Dispositions consisting of the compromise, settlement or collection of accounts receivable in the ordinary course of business, consistent with past practices;

          (h) leases, subleases or space leases (and terminations of any of the foregoing), in each case in the ordinary course of business and which do not materially interfere with the business of the Parent and its Subsidiaries, taken as a whole;

          (i) Dispositions of cash, cash equivalents and Permitted Investments described in clauses (a) through (i) of the definition of “Permitted Investments” contained in this Agreement, in each case on ordinary business terms and, to the extent constituting a Disposition, the making of Permitted Investments;

          (j) any Disposition of Real Estate to a Governmental Authority as a result of the condemnation of such Real Estate as long as an amount equal to the Net Proceeds of such Disposition are applied to the Loans to the extent required by Section 2.05(b);

          (k) [reserved]

          (l) to the extent constituting a Disposition, (i) transactions permitted by Section 7.04, (ii) Restricted Payments permitted by Section 7.06 and (iii) Liens permitted by Section 7.01;

          (m) Dispositions of Investments in joint ventures to the extent required by, or made pursuant to customary buy/sell arrangements between, the joint venture parties set forth in joint venture arrangements and similar binding arrangements as long as an amount equal to the Net Proceeds of such Disposition are applied to the Loans to the extent required by Section 2.05(b); and

          (n) other Dispositions, as long as (i) such Disposition is made for fair market value; (ii) at least 75% of the consideration from such Disposition is in the form of cash or cash equivalents; and (iii) an amount equal to the Net Proceeds of such Disposition are applied to the Loans to the extent required by Section 2.05(b).

          “Permitted Encumbrances” means any of the following:

          (a) Liens imposed by law for Taxes that are not overdue for a period of more than thirty (30) days or are being contested in compliance with Section 6.04;

          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by applicable Law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested in compliance with Section 6.04;

          (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security or similar laws or regulations, other than any Lien imposed by ERISA;

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          (d) deposits to secure or relating to the performance of bids, trade contracts, government contracts and leases (other than Indebtedness), statutory obligations, surety, stay, customs and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

          (e) Liens in respect of judgments that do not constitute an Event of Default hereunder;

          (f) easements, covenants, conditions, restrictions, building code laws, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Parent and its Subsidiaries, taken as a whole, and such other minor title defects or survey matters that are disclosed by current surveys that, in each case, do not materially interfere with the ordinary conduct of business of the Parent and its Subsidiaries, taken as a whole;

          (g) Liens existing on the date hereof and listed on Schedule 7.01 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed other than after-acquired property affixed or incorporated thereto and proceeds or products thereof, (ii) the amount secured or benefited thereby is not increased except to the extent permitted hereunder, and (iii) any renewal or extension of the obligations secured or benefited thereby is permitted hereunder;

          (h) Liens on fixed or capital assets acquired by any Loan Party securing purchase money Indebtedness permitted hereunder of any Loan Party to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, and any Indebtedness permitted hereunder assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness permitted hereunder that do not increase the outstanding principal amount thereof so long as (i) such Liens and the Indebtedness secured thereby are incurred prior to or within one hundred and eighty (180) days after such acquisition (other than refinancing thereof permitted hereunder), (ii) the Indebtedness secured thereby does not exceed the cost of acquisition of such fixed or capital assets and (iii) such Liens shall not extend to any other property or assets of the Loan Parties, replacements thereof and additions and accessions to such property and the proceeds and the products thereof and customary security deposits;

          (i) Liens under the Security Documents for the benefit of the Credit Parties;

          (j) landlords’ and lessors’ Liens in respect of rent not in default for more than thirty (30) days;

          (k) possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Investments owned as of the date hereof and other Permitted Investments, provided that such Liens (i) attach only to such Investments or other Investments held by such broker or dealer and (ii) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition of such Investments and not any obligation in connection with margin financing;

          (l) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar

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rights and remedies as to deposit accounts or securities accounts or other funds maintained with depository institutions or securities intermediaries;

          (m) Liens (if any) arising from precautionary UCC filings regarding “true” operating leases or consignment of goods to a Loan Party;

          (n) voluntary Liens on property in existence at the time such property is acquired pursuant to a Permitted Investment or on such property of a Subsidiary of a Loan Party in existence at the time such Subsidiary is acquired pursuant to a Permitted Investment; provided that such Liens are not incurred in connection with, or in anticipation of, such Permitted Investment and do not attach to any other assets of any Loan Party or any Subsidiary;

          (o) Liens in favor of customs and revenues authorities imposed by applicable Law arising in the ordinary course of business in connection with the importation of goods;

          (p) Liens (i) on cash advances in favor of the seller of any property to be acquired in any Permitted Acquisition or other Permitted Investment to be applied against the purchase price for such Permitted Acquisition or other Permitted Investment, (ii) consisting of an agreement to transfer any property in a Permitted Disposition, in each case, solely to the extent such Acquisition or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien, and (iii) on any cash earnest money deposits made by the Parent or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

          (q) any interest or title of a lessor or sublessor under leases or subleases or secured by a lessor’s or sublessor’s interests under leases entered into by the Parent or any of its Subsidiaries in the ordinary course of business;

          (r) Liens in favor of the licensor or sublicensor in respect of inbound licensing of Intellectual Property in the ordinary course of business;

          (s) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods (including under Article 2 of the UCC) and Liens that are contractual rights of set-off relating to purchase orders and other similar agreements entered into by the Parent or any of its Subsidiaries;

          (t) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto incurred in the ordinary course of business;

          (u) Liens arising out of sale and leaseback transactions permitted hereunder and securing Permitted Indebtedness incurred for the construction or acquisition or improvement of, or to finance or to refinance, any Real Estate owned by any Loan Party (including therein any Permitted Indebtedness incurred in connection with sale-leaseback transactions permitted hereunder);

          (v) Liens securing Indebtedness in respect of (i) the ABL Credit Agreement; provided such Liens (to the extent such Liens encumber Collateral) are subject to the ABL Intercreditor Agreement (or, in the case of any refinancing thereof permitted hereunder, another intercreditor agreement containing terms that are at least as favorable to the Credit Parties as those contained in the ABL Intercreditor Agreement) and the Indebtedness secured by such Liens is permitted to be incurred pursuant to clause (a)(i) of the definition of “Permitted Indebtedness”, and (ii) the US Term Loan Credit Agreement; provided such Liens (to the extent such Liens

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encumber Collateral) are subject to the Term Loan Intercreditor Agreement (or, in the case of any refinancing thereof permitted hereunder, another intercreditor agreement containing terms that are at least as favorable to the Credit Parties as those contained in the Term Loan Intercreditor Agreement);

          (w) leases or subleases granted to others in the ordinary course of business which do not interfere in any material respect with the business of the Parent and its Subsidiaries, taken as a whole;

          (x) Liens on specific items of inventory or other goods and the proceeds thereof securing such Person’s obligations in respect of documentary letters of credit or banker’s acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods (in each case, to the extent such items constitute Permitted Indebtedness);

          (y) outbound licenses of Intellectual Property permitted under clause (b) or (e) of the definition of “Permitted Dispositions”; and

          (z) other Liens securing obligations outstanding in an aggregate principal amount not to exceed $10,000,000.

          “Permitted Indebtedness” means any of the following:

          (a) (i) Indebtedness in respect of the ABL Credit Agreement and any refinancings, refundings, renewals, extensions or replacements thereof; provided that (A) the aggregate principal amount of any Indebtedness in respect of the ABL Credit Agreement or any refinancing, refunding, renewal, extension or replacement thereof shall not exceed $250,000,000 at any time or (B) any Indebtedness in respect of the ABL Credit Agreement or any refinancing, refunding, renewal, extension or replacement thereof shall not have an earlier maturity date than the ABL Facility in effect on the date hereof or a decreased weighted average life than the ABL Facility in effect on the date hereof; (ii) Indebtedness in respect of the US Term Loan Credit Agreement; and (iii) any other Indebtedness listed on Schedule 7.03(a) and, in the case of the foregoing clauses (ii) and (iii), any refinancings, refundings, renewals, extensions or replacements of any such Indebtedness; provided that (x) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal, extension or replacement, and (y) the result of such refinancing, refunding, renewal, extension or replacement shall not be an earlier maturity date or decreased weighted average life of such Indebtedness;

          (b) the Obligations;

          (c) Indebtedness permitted to be incurred pursuant to the Senior Note Indenture (as in effect on the date hereof (and without regard to any waivers or consents that may be obtained thereunder after the date hereof) (for the avoidance of doubt, any Indebtedness, including any Specified Subsidiary Permitted Indebtedness, that reduces the availability of borrowing baskets under the terms of the Senior Note Indenture shall reduce the availability of such baskets for purposes of this clause (c) as well)); and

          (d) other Indebtedness; provided, that, at the time of incurrence of such Indebtedness (i) the Global Leverage Ratio shall not exceed 5.00 to 1.00 and (ii) the Americas Leverage Ratio shall not exceed 5.00 to 1.00, in each case after giving pro forma effect to such incurrence of Indebtedness (and application of proceeds therefrom) as if such Indebtedness had

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been incurred (and such proceeds were applied) on the first day of the relevant Measurement Period.

          “Permitted Investments” means any of the following:

          (a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than one year from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;

          (b) commercial paper issued by any Person organized under the laws of any state of the United States of America and rated, at the time of acquisition thereof, at least “Prime-2” (or the then equivalent grade) by Moody’s or at least “A-2” (or the then equivalent grade) by S&P, in each case with maturities of not more than one year from the date of acquisition thereof;

          (c) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated, at the time of acquisition thereof, as described in clause (b) of this definition and (iii) has combined capital and surplus of at least $500,000,000, in each case with maturities of not more than one year from the date of acquisition thereof;

          (d) fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause (a) above (without regard to the limitation on maturity contained in such clause) and entered into with a financial institution satisfying the criteria described in clause (c) above at the time of acquisition thereof or with any primary dealer and having a market value at the time that such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such counterparty entity with whom such repurchase agreement has been entered into;

          (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States or province or territory of Canada, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s;

          (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (c) of this definition;

          (g) marketable short-term money market and similar securities or funds having, at the time of acquisition thereof, a rating of at least A-2 from S&P (or, if at any time S&P shall not be rating such obligations, an equivalent rating from another nationally recognized rating service);

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          (h) shares of investment companies that are registered under the Investment Company Act of 1940 and invest primarily in one or more of the types of securities described in clauses (a) through (g) above;

          (i) in the case of investments by any Foreign Subsidiary or investments made in a country outside the United States of America, other customarily utilized high-quality investments in the country where such Foreign Subsidiary is located or in which such investment is made;

          (j) Investments existing on the Closing Date and set forth on Schedule 7.02, and any modification, renewal or extension thereof; provided that, the amount of any Investment permitted pursuant to this clause is not increased from the amount of such Investment on the Closing Date except pursuant to the terms of such Investment as of the Closing Date or as otherwise permitted by Section 7.02;

          (k) Investments by any Loan Party in any other Loan Party; provided that, for purposes of this clause (k), with respect to the Parent, the definition of “Acquisition” shall exclude clause (c) thereof;

          (l) so long as at the time of determination with respect to an Investment to be made pursuant to this clause (l) the Borrower shall have certified, and shall have delivered supporting documentation reasonably satisfactory to the Administrative Agent, that Domestic Availability (as defined in the ABL Credit Agreement as in effect on the date hereof) immediately preceding, and on a pro forma basis on the date thereof and a projected basis for the twelve (12) months immediately following, such Investment was, and is projected to be, equal to or greater than the greater of (a) thirty percent (30%) of the Total Loan Cap (provided that, in the event of any refinancing of the ABL Credit Agreement as in effect on the date hereof or following its maturity, the Borrower and the Administrative Agent shall agree in good faith on a successor availability test which preserves the economic effect of this clause (a)) and (b) $45,000,000, Investments (i) to refinance Indebtedness of Quiksilver Japan K.K. outstanding on the date hereof and listed on Schedule 7.03(l), provided that (A) the aggregate amount of such refinancing shall not exceed $20,000,000 and (B) if the aggregate amount of such Investment pursuant to this clause (i) exceeds $5,000,000, substantially simultaneously with and as a condition to the extension of such funds, the shares of Quiksilver Japan K.K. shall be transferred to the Borrower, 54th Street or a Wholly-Owned Subsidiary of 54th Street and Quiksilver Japan K.K. shall enter into a guarantee and pledge over all its assets (subject to customary exceptions) in favor of the Administrative Agent for the benefit of the Lenders; (ii) to provide for the payment of the cash portion of the exercise price payable by QS Holdings (or its successor) upon exercise of its buyout rights pursuant to the Brazil JV Agreement, provided that the aggregate amount of such buyout shall not exceed the cash portion of the Agreed Value for the relevant Tranche (as defined in the Brazil JV Agreement) on the terms in effect as of the date hereof and, substantially simultaneously with and as a condition to the extension of such funds, the shares of Quiksilver Brazil shall, to the extent not already held by the Borrower, 54th Street or a Wholly-Owned Subsidiary of 54th Street, be transferred to the Borrower, 54th Street or a Wholly-Owned Subsidiary of 54th Street and Quiksilver Brazil shall enter into a guarantee and pledge over all its assets (subject to customary exceptions) in favor of the Administrative Agent for the benefit of the Lenders; (iii) to provide for the payment of the cash portion of the exercise price payable by the US Borrower upon exercise of its buyout rights or its put obligations pursuant to the Mexico JV Agreement on the terms in effect as of the date hereof and, substantially simultaneously with and as a condition to the extension of such funds, QS Mexico Holdings shall enter into a guarantee and pledge over all its assets (subject to customary exceptions) in favor of the

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Administrative Agent for the benefit of the Lenders; (iv) by any Loan Party in any Wholly-Owned Subsidiary that is not a Loan Party, excluding Investments made pursuant to clauses (i), (ii), (iii) and (v), provided that all such Investments pursuant to this clause (iv) shall not exceed $10,000,000 in the aggregate at any one time outstanding; and (v) by any Loan Party in any Person, excluding Investments made pursuant to clauses (i), (ii), (iii) and (iv), provided that all such Investments pursuant to this clause (v) shall not exceed $10,000,000 in the aggregate at any one time outstanding;

          (m) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;

          (n) Guarantees constituting Permitted Indebtedness;

          (o) Investments in Swap Contracts not prohibited hereunder; provided that such obligations are (or were) entered into in the ordinary course of business for the purposes of directly mitigating risks associated with fluctuations in interest rates or foreign exchange rates, and not for purposes of speculation or taking a “market view”;

          (p) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

          (q) (i) advances of payroll payments to employees in the ordinary course of business and (ii) other loans and advances to officers, directors and employees of the Loan Parties and Subsidiaries in the ordinary course of business in an aggregate amount not to exceed $5,000,000 at any time outstanding; provided, however, that an individual’s use of a cashless exercise procedure to pay the exercise price and required tax withholding (or either of them) in connection with his exercise of a compensatory option to purchase Equity Interests issued by the Parent shall not give rise to a loan or advance for the purposes of this clause (q) to the extent that all funds representing full payment of such option exercise price and required tax withholding are actually remitted to the Parent before the close of business on either (x) the date of exercise of the stock option or (y) the date of issuance of the Equity Interests pursuant to the option exercise;

          (r) Investments constituting Permitted Acquisitions and earnest money deposits made in connection with any letter of intent or purchase agreement permitted hereunder;

          (s) capital contributions made by any Loan Party to another Loan Party;

          (t) Investments received by any Loan Party from purchasers of any assets pursuant to Permitted Dispositions;

          (u) Investments of any Person existing at the time such Person becomes a Subsidiary of any Loan Party pursuant to a Permitted Acquisition or other Permitted Investment or as a result of a fundamental change transaction in accordance with Section 7.04 so long as such Investments were not made in contemplation of such Person becoming a Subsidiary or of such fundamental change transaction;

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          (v) Guarantees of leases (other than Capital Lease Obligations or Synthetic Lease Obligations) or other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business;

          (w) Investments consisting of Dispositions permitted under Section 7.05; and

          (x) purchases of inventory, supplies and materials and, to the extent a Permitted Disposition under clause (b) or (e) of the definition of “Permitted Disposition”, the licensing or contribution of Intellectual Property pursuant to joint marketing arrangements with other Persons, in each case in the ordinary course of business.

          “Permitted Specified Subsidiary Encumbrances” means any of the following:

          (a) Liens imposed by law for Taxes that are not overdue for a period of more than thirty (30) days or are being contested in compliance with Section 6.04;

          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by applicable Law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested in compliance with Section 6.04;

          (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security or similar laws or regulations, other than any Lien imposed by ERISA;

          (d) deposits to secure or relating to the performance of bids, trade contracts, government contracts and leases (other than Indebtedness), statutory obligations, surety, stay, customs and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

          (e) Liens in respect of judgments that do not constitute an Event of Default hereunder;

          (f) easements, covenants, conditions, restrictions, building code laws, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Specified Subsidiary and its Subsidiaries, taken as a whole, and such other minor title defects or survey matters that are disclosed by current surveys that, in each case, do not materially interfere with the ordinary conduct of business of the Specified Subsidiary and its Subsidiaries, taken as a whole;

          (g) Liens on fixed or capital assets acquired by any Specified Subsidiary securing purchase money Indebtedness permitted hereunder of any Specified Subsidiary to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, so long as (i) such Liens and the Indebtedness secured thereby are incurred prior to or within one hundred and eighty (180) days after such acquisition (other than refinancing thereof permitted hereunder), (ii) the Indebtedness secured thereby does not exceed the cost of acquisition of such fixed or capital assets and (iii) such Liens shall not extend to any other property or assets of the Specified Subsidiary, replacements thereof and additions and

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accessions to such property and the proceeds and the products thereof and customary security deposits;

          (h) landlords’ and lessors’ Liens in respect of rent not in default for more than thirty (30) days;

          (i) possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Investments owned as of the date hereof and other Permitted Investments by a Specified Subsidiary, provided that such Liens (a) attach only to such Investments or other Investments held by such broker or dealer and (b) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition of such Investments and not any obligation in connection with margin financing;

          (j) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar rights and remedies as to deposit accounts or securities accounts or other funds maintained with depository institutions or securities intermediaries;

          (k) Liens (if any) arising from precautionary UCC filings regarding “true” operating leases or consignment of goods to a Specified Subsidiary;

          (l) Liens in favor of customs and revenues authorities imposed by applicable Law arising in the ordinary course of business in connection with the importation of goods;

          (m) any interest or title of a lessor or sublessor under leases or subleases or secured by a lessor’s or sublessor’s interests under leases entered into in the ordinary course of business;

          (n) Liens in favor of the licensor or sublicensor in respect of inbound licensing of Intellectual Property in the ordinary course of business granted by a Specified Subsidiary;

          (o) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale of goods (including under Article 2 of the UCC) and Liens that are contractual rights of set-off relating to purchase orders and other similar agreements entered into by any Specified Subsidiary;

          (p) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto incurred in the ordinary course of business;

          (q) leases or subleases granted to others in the ordinary course of business which do not interfere in any material respect with the business of the Specified Subsidiary and its Subsidiaries, taken as a whole;

          (r) Liens on specific items of inventory or other goods and the proceeds thereof securing such Person’s obligations in respect of documentary letters of credit or banker’s acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods (in each case, to the extent such items constitute Permitted Indebtedness); and

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          (s) outbound licenses of Intellectual Property permitted under clause (b) or (e) of the definition of “Permitted Dispositions”.

          “Permitted Specified Subsidiary Indebtedness” means any of the following:

          (a) Indebtedness in respect of the ABL Credit Agreement and the US Term Loan Credit Agreement and any other Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and, in each case, any refinancings, refundings, renewals or extensions of any of the foregoing Indebtedness; provided that (i) the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a premium or interest paid, and (ii) the result of such extension, renewal or replacement shall not be an earlier maturity date or decreased weighted average life of such Indebtedness;

          (b) Indebtedness of any Specified Subsidiary to any other Specified Subsidiary, other than Indebtedness of Quiksilver Brazil or Quiksilver Industria e Comercio de Artigos Esportivos Ltda. to any other Specified Subsidiary;

          (c) Indebtedness in respect of performance bonds, bid bonds, customs and appeal bonds, surety bonds, performance and completion guarantees and similar obligations, or, to the extent in connection with purchases from suppliers, obligations in respect of letters of credit, bank guarantees or similar instruments related thereto, in each case provided in the ordinary course of business;

          (d) Indebtedness constituting indemnification obligations or obligations in respect of purchase price or other similar adjustments in connection with Permitted Dispositions;

          (e) Guarantees of any Indebtedness described in clause (a) hereof;

          (f) obligations in respect of cash management services, netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements;

          (g) Indebtedness in respect of letters of credit, bank guarantees, bankers’ acceptances, warehouse receipts or similar instruments issued or created in the ordinary course of business in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims; provided that any reimbursement obligations in respect thereof are reimbursed within thirty (30) days following the incurrence thereof;

          (h) (i) purchase money Indebtedness of any Specified Subsidiary organized in Canada or any province thereof to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, in an aggregate principal amount for all such Specified Subsidiaries not to exceed $10,000,000 at any time outstanding; and (ii) purchase money Indebtedness of any Specified Subsidiary (other than any Specified Subsidiary organized in Canada or any province thereof) to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, in an aggregate principal amount for all such Specified Subsidiaries not to exceed $10,000,000 at any time outstanding;

          (i) obligations (contingent or otherwise) of any Specified Subsidiary existing or arising under any Swap Contract, provided that such obligations are (or were) entered

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into by such Specified Subsidiary in the ordinary course of business for the purpose of directly mitigating risks associated with fluctuations in interest rates or foreign exchange rates, and not for purposes of speculation or taking a “market view”; and

          (j) without duplication of any Indebtedness described in clause (a) through (i) above, other Indebtedness in an aggregate principal amount not to exceed $10,000,000 at any time outstanding.

          “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, limited partnership, Governmental Authority or other entity.

          “PIK Amounts” has the meaning specified in Section 2.08(d).

          “PIK Election” has the meaning specified in Section 2.08(d).

          “Plan” means any “employee benefit plan” (as such term is defined in Section 3(3) of ERISA including, for purposes of clarity, a Pension Plan and a Multiemployer Plan) established, maintained or contributed to by a Loan Party or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

          “Pledge Agreements” means, collectively, (a) the Pledge Agreement dated as of the Closing Date between the US Grantors and the Collateral Agent, in substantially the form attached hereto as Exhibit I, (b) the Pledge Agreement dated as of the Closing Date between 54th Street and the Administrative Agent, in substantially the form attached hereto as Exhibit J or otherwise in a form reasonably satisfactory to the Administrative Agent, (c) the Canadian Pledge Agreement and (d) the Luxembourg Share Pledge Agreements.

          “Post-Closing Mark License” has the meaning set forth in clause (b) of the definition of “Permitted Disposition”.

          “QS Holdings” means QS Holdings S.à r.l., a Luxembourg private limited liability company.

          “Quiksilver Deluxe” means Quiksilver Deluxe S.à r.l., a Luxembourg private limited liability company.

          “Real Estate” means all land, together with the buildings, structures, parking areas, and other improvements thereon, now or hereafter owned or leased by any Loan Party or any Subsidiary, including all easements, rights-of-way, and similar rights relating thereto.

          “Register” has the meaning specified in Section 10.06(c).

          “Registered Public Accounting Firm” has the meaning specified by the Securities Laws and shall be independent of the Parent and its Subsidiaries as prescribed by the Securities Laws.

          “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

          “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30-day notice period has been waived.

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          “Required Lenders” means, as of any date of determination, Lenders holding in the aggregate more than 50% of the aggregate outstanding principal amount of all Loans; provided that the portion of the aggregate outstanding principal amount of all Loans held or deemed held by any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

          “Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Loan Party or any of the other individuals designated in writing to the Administrative Agent by an existing Responsible Officer of a Loan Party as an authorized signatory of any certificate or other document to be delivered hereunder. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

          “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest of any Loan Party, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such Equity Interest, or on account of any return of capital to such Loan Party’s stockholders, partners or members (or the equivalent of any thereof).

          “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

          “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended and in effect from time to time.

          “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

          “Securities Laws” means the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB.

          “US Intellectual Property Security Agreement” means the Intellectual Property Security Agreement dated as of the Closing Date among the US Grantors and the Collateral Agent, in substantially the form attached hereto as Exhibit H or otherwise in a form reasonably satisfactory to the Administrative Agent.

          “US Security Agreement” means the Security Agreement dated as of the Closing Date among the US Grantors and the Collateral Agent, in substantially the form attached hereto as Exhibit F or otherwise in a form reasonably satisfactory to the Administrative Agent.

          “Security Documents” means the US Security Agreement, Luxembourg Security Agreements, the Pledge Agreements, the US Intellectual Property Security Agreement, the Intellectual Property Security Agreement, the Copyright Security Agreement, the Patent Security Agreement, the Trademark Security Agreement, the US Copyright Security Agreement, the US Patent Security Agreement, the US Trademark Security Agreement and each other security agreement or other instrument or document executed and delivered by any Loan Party to the Administrative Agent pursuant to this Agreement or any other Loan Document granting a Lien on any asset of any Loan Party to secure any of the Obligations.

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          “Senior Note Indenture” means the Indenture, dated as of July 22, 2005, between the Parent, as issuer, and Wilmington Trust Company, as trustee, in connection with the issuance of the Senior Notes, together with all instruments and other agreements entered into by the Parent or any Subsidiary in connection therewith, and any refinancings, refundings, renewals, extensions or replacements of any of the foregoing; provided that (i) the amount of Indebtedness thereunder is not increased at the time of such refinancing, refunding, renewal, extension or replacement except by an amount equal to a premium or other amount paid, and fees and expenses incurred, in connection with such refinancing, refunding, renewal, extension or replacement, and (ii) the result of such refinancing, refunding, extension, renewal or replacement shall not be an earlier maturity date or decreased weighted average life of such Indebtedness.

          “Senior Notes” means the senior unsecured notes issued by the Parent pursuant to the Senior Note Indenture.

          “Services Fee Agreements” means (a) the DC Shoes, Inc. License and Services Agreement dated as of July 30, 2009 by and between DC Shoes and Emerald Coast, and (b) the DC Shoes, Inc. License and Services Fee Agreement dated as of July 31, 2009, by and between DC Shoes, Inc. and DC Shoes Australia Pty. Ltd.

          “Side Agreement” means the agreement dated as of July 30, 2009 by and among 54th Street, the Administrative Agent, the Euro Term Loan Agent, Quiksilver Canada Corp. and Quiksilver Indústria e Comércio de Artigos Esportivos Ltda.

          “Solvent” and “Solvency” means, with respect to any Person on a particular date, that on such date (a) at fair valuation, all of the properties and assets of such Person are greater than the sum of the debts, including contingent liabilities, of such Person, (b) the present fair saleable value of the properties and assets of such Person is not less than the amount that would be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature, and (d) such Person is not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged. The amount of all guarantees or other contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, can reasonably be expected to become an actual or matured liability.

          “Specified Subsidiary” means each of Quiksilver Canada Corp., QS Retail Canada Corp., Quiksilver Brazil and Quiksilver Industria e Comercio de Artigos Esportivos Ltda.

          “Store” means any retail store (which may include any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party.

          “Subordinated Indebtedness” means Indebtedness which is expressly subordinated in right of payment to the prior payment in full of the Obligations.

          “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the Equity Interests having ordinary voting power for the election of directors or other governing body are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party.

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          “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

          “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).

          “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

          “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

          “Term Loan Intercreditor Agreement” means that certain Collateral Agency Agreement, dated as of the Closing Date, among the Administrative Agent, the US Term Loan Agent and the Collateral Agent.

          “Termination Date” means the earlier to occur of (i) the Maturity Date and (ii) the date on which the maturity of the Obligations is accelerated (or deemed accelerated) in accordance with Article VIII.

          “Total Loan Cap” has the meaning specified in the ABL Credit Agreement as in effect on the date hereof.

          “Trademark” has the meaning specified in the Intellectual Property Security Agreement.

          “Trademark Security Agreement” means the Trademark Security Agreement dated as of the Closing Date between 54th Street and the Administrative Agent, in a form reasonably satisfactory to the Administrative Agent.

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          “Trading with the Enemy Act” has the meaning specified in Section 10.20.

          “UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided, further, that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

          “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

          “United States” and “U.S.” mean the United States of America.

          “US Borrower” means Quiksilver Americas, Inc., a California corporation.

          “US Copyright Security Agreement” means the Copyright Security Agreement dated as of the Closing Date among certain Loan Parties and the Collateral Agent, in a form reasonably satisfactory to the Administrative Agent.

          “US Patent Security Agreement” means the Patent Security Agreement dated as of the Closing Date among certain Loan Parties and the Collateral Agent, in a form reasonably satisfactory to the Administrative Agent.

          “US Trademark Security Agreement” means the Trademark Security Agreement dated as of the Closing Date among certain Loan Parties and the Collateral Agent, in a form reasonably satisfactory to the Administrative Agent.

          “US Grantor” means the Parent and each Domestic Subsidiary listed on Schedule 1.01(b) annexed hereto.

          “US Term Loan Agent” means Rhône Group L.L.C., in its capacity as agent for the lenders under the US Term Loan Credit Agreement, together with any successor agent.

          “US Term Loan Credit Agreement” means that certain Credit Agreement dated as of the Closing Date among the Parent, the US Borrower, the lenders party thereto and the US Term Loan Agent, and any refinancings, refundings, renewals or extensions thereof permitted hereunder.

          “US Term Loans” means the term loans in the original principal amount of $125,000,000 made pursuant to the US Term Loan Credit Agreement, together with all interest paid in kind, if any, that has been added to the principal balance of such loans.

          “Warrant Agreement” means the Warrant and Registration Rights Agreement, dated as of the Closing Date by and among the Parent, Rhône Capital III L.P. and the initial Warrant holders party thereto.

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          “Warrants” means those certain Warrants to purchase shares of common stock or Series A convertible preferred stock of the Parent issued to Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P. on the Closing Date.

          “Wholly Owned Subsidiary” means, with respect to any Person, any corporation, partnership or other entity of which all of the Equity Interests (other than, in the case of a corporation, directors’ qualifying shares) are directly or indirectly owned or controlled by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.

     1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

               (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, amendment and restatements, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

               (b) In the computation of periods of time from a specified date to a later specified date, unless otherwise expressly provided, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

               (c) Article and Section headings used herein and in the other Loan Documents are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement or any other Loan Document.

               (d) Any other undefined term contained in any of the Loan Documents shall, unless the context indicates otherwise, have the meaning provided for such term in the Uniform Commercial Code as in effect in the State of New York to the extent the same are used or defined therein.

          1.03 Accounting Terms.

               (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other

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financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

               (b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

     1.04 Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

     1.05 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

     1.06 Currency Equivalents Generally. Any amount specified in this Agreement (other than in Articles II, IX and X) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Administrative Agent at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars. For purposes of this Section 1.06, the “Spot Rate” for a currency means the rate determined by the Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency. Notwithstanding the foregoing, for purposes of determining compliance with Sections 7.01, 7.02 and 7.03 with respect to any amount of Indebtedness or Investment in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness or Investment is incurred; provided that, for the avoidance of doubt, the foregoing provisions of this Section 1.06 shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness or Investment may be incurred at any time under such Sections.

     1.07 Certifications. All certifications to be made hereunder by an officer or representative of a Loan Party shall be made by such Person in his or her capacity solely as an officer or a representative of such Loan Party, on such Loan Party’s behalf and not in such Person’s individual capacity.

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ARTICLE II

THE COMMITMENTS AND LOANS

          2.01 Loans. Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, a “Loan”) to the Borrower on the Closing Date in an aggregate principal amount equal to such Lender’s Commitment. The aggregate amount of the Loans shall not exceed the Aggregate Commitments.

          2.02 Borrowing of Loans.

               (a) The Borrowing of Loans shall be made upon the Borrower’s irrevocable notice to the Administrative Agent. Such notice must be received by the Administrative Agent not later than 11:00 a.m. one Business Day prior to the requested date of such Borrowing of Loans. The Loan Notice (whether telephonic or written) shall specify (i) the requested date of the Borrowing (which shall be the Closing Date), and (ii) the principal amount of Loans to be borrowed.

               (b) Following receipt of the Loan Notice, the Administrative Agent shall promptly notify each Lender of the contents of such Loan Notice. Each Lender shall make the amount of its Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 9:00 a.m. on the Closing Date. Upon satisfaction of the conditions set forth in Section 4.01, the Administrative Agent shall use reasonable efforts to make all funds so received available to the Borrower in like funds by no later than 9:00 a.m. on the Closing Date in accordance with instructions provided to the Administrative Agent by the Borrower.

          2.03 [Reserved].

          2.04 [Reserved].

          2.05 Prepayments.

               (a) The Borrower may, upon notice to the Administrative Agent, at any time and from time to time voluntarily prepay Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent not later than 11:00 a.m. on the date of prepayment; and (ii) any prepayment of Loans shall be in a principal amount of €250,000 or a whole multiple of €100,000 in excess thereof or, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. The Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein; provided, that a notice of prepayment delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any prepayment of a Loan shall be accompanied by all accrued interest on the amount prepaid. Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages.

               (b) If the aggregate Net Proceeds received by Subsidiaries of 54th Street on account of Dispositions of any property or assets of a Loan Party described in clauses (f), (j), (m) and (n) of the definition of Permitted Disposition exceeds $2,000,000 in any Fiscal Year, then the Borrower shall prepay the Loans in an amount equal to such excess, no later than three (3) Business Days after receipt by

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any Subsidiary of 54th Street of such Net Proceeds, in each case without premium or penalty; provided, however, that such prepayment shall not be required to the extent that such Net Proceeds were received by Quiksilver Canada Corp. or QS Retail Canada Corp. and have been utilized to prepay the loans or cash collateralize other obligations under the Canadian facility under the ABL Credit Agreement. Notwithstanding the foregoing, in the case of a Disposition of the DC Shoes Business, an amount equal to such Net Proceeds received by Subsidiaries of 54th Street may be utilized first, to prepay loans and/or cash collateralize other obligations under the Canadian subfacility under the ABL Credit Agreement, provided such Net Proceeds were received by Quiksilver Canada Corp. or QS Retail Canada Corp.; second, in the event such Disposition of the DC Shoes Business is a voluntary sale, to prepay the loans then outstanding under Facility A (as defined under the French Credit Agreement); third, in the event such Disposition of the DC Shoes Business is a voluntary sale, unless the NP Cash Collateral (as defined under the French Credit Agreement) has been released prior to a Permitted Disposition of the DC Shoes Business, for the purpose of (x) releasing the NP Cash Collateral and substituting the Parent in lieu of Na Pali thereunder or (y) increasing the share capital of Quiksilver Europa SL by way of cash contribution (through a share capital increase of Biarritz Holdings S.à r.l.), releasing the NP Cash Collateral and substituting Quiksilver Europa SL in lieu of Na Pali thereunder; and fourth, to prepay the Loans or the US Term Loans.

               (c) The Borrower shall prepay the Loans in an amount equal to the Net Proceeds received by the Borrower or 54th Street on account of Dispositions of any property any assets of the Borrower or 54th Street described in clauses (f), (j), (m) and (n) of the definition of Permitted Disposition no later than three (3) Business Days after receipt by any Loan Party of such Net Proceeds, in each case without premium or penalty. Notwithstanding the foregoing, in the case of a Disposition of the DC Shoes Business, an amount equal to such Net Proceeds may be utilized first, to prepay loans and/or cash collateralize other obligations under the Canadian subfacility under the ABL Credit Agreement, provided such Net Proceeds were received by Quiksilver Canada Corp. or QS Retail Canada Corp.; second, in the event such Disposition of the DC Shoes Business is a voluntary sale, to prepay the loans then outstanding under Facility A (as defined under the French Credit Agreement); third, in the event such Disposition of the DC Shoes Business is a voluntary sale, unless the NP Cash Collateral (as defined under the French Credit Agreement) has been released prior to a Permitted Disposition of the DC Shoes Business, for the purpose of (x) releasing the NP Cash Collateral and substituting the Parent in lieu of Na Pali thereunder or (y) increasing the share capital of Quiksilver Europa SL by way of cash contribution (through a share capital increase of Biarritz Holdings S.à r.l.), releasing the NP Cash Collateral and substituting Quiksilver Europa SL in lieu of Na Pali thereunder; and fourth, to prepay the Loans or the US Term Loans.

               (d) The Borrower shall prepay the Loans in full, without premium or penalty, upon the occurrence of a Change of Control.

          2.06 [Reserved].

          2.07 Repayment of Loans. The Borrower shall repay to the Administrative Agent, for the account of the Lenders, on the Termination Date the aggregate principal amount of Loans outstanding on such date. Once repaid or prepaid, Loans may not be reborrowed.

          2.08 Interest.

               (a) Subject to the provisions of Section 2.08(b) below, each Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to 15.0%.

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               (b) (i) If any amount payable under this Agreement is not paid when due (after giving effect to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such overdue amount shall thereafter bear interest at a per annum rate equal to the Default Rate to the fullest extent permitted by applicable Laws.

               (ii) If any other Event of Default exists, then the Administrative Agent may, and upon the request of the Required Lenders shall, notify the Borrower that all outstanding Loans shall thereafter bear interest at a per annum rate equal to the Default Rate to the fullest extent permitted by applicable Laws for so long as such Event of Default is continuing.

               (iii) Accrued and unpaid interest on past due amounts (including interest on past due interest to the fullest extent permitted by applicable Laws) shall be due and payable upon demand.

               (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

               (d) With respect to each Interest Payment Date, so long as no Event of Default has occurred and is continuing, the Borrower may elect to (i) pay all interest due on such date in cash, or (ii) pay up to 100% of the interest due on such date by adding such interest to the principal amount of the outstanding Loans and the remaining portion of the interest in cash (such election, a “PIK Election”; and such interest added to the principal amount of the outstanding Loans, the “PIK Amounts”). The Borrower will give notice of the terms of such election to the Administrative Agent at least three (3) Business Days prior to the applicable Interest Payment Date; provided, however, that in the event no such notice is given to the Administrative Agent, so long as no Event of Default has occurred and is continuing, the Borrower shall be deemed to have elected to pay 100% of the interest due on such Interest Payment Date as a PIK Amount.

          2.09 Closing Fee. On the Closing Date, the Borrower shall pay to the Administrative Agent, for its own account, an amount equal to 3.0% of the Aggregate Commitments as of the Closing Date.

          2.10 Computation of Interest and Fees. All computations of interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid.

          2.11 Evidence of Debt. The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by the Administrative Agent in the ordinary course of business. In addition, each Lender may record in such Lender’s internal records, an appropriate notation evidencing the date and amount of each Loan from such Lender, each payment and prepayment of principal of any such Loan, and each payment of interest, fees and other amounts due in connection with the Obligations due to such Lender. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained

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by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Administrative Agent (who shall notify the Borrower), the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto. Any failure to so attach or endorse, or any error in doing so, shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. Upon receipt of an affidavit and indemnity of a Lender as to the loss, theft, destruction or mutilation of such Lender’s Note and upon cancellation of such Note, the Borrower will issue, in lieu thereof, a replacement Note in favor of such Lender, in the same principal amount thereof and otherwise of like tenor (subject to adjustment in the case of any assignments of such Lender’s Commitments), at such Lender’s expense.

          2.12 Payments Generally; Administrative Agent’s Clawback.

               (a) General. All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in Euros and in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest.

               (b) Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the time at which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

               (c) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Loan or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan or to make its payment under Section 10.04(c).

               (d) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

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          2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on principal of or interest on any of the Loans made by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Loans and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably, provided that:

               (a) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

               (b) the provisions of this Section shall not be construed to apply to (x) any payment made by any Loan Party pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant.

               Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

          3.01 Taxes.

               (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if the Borrower shall be required by applicable law to deduct any Indemnified Taxes (including any Other Taxes) from such payments, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.01(a)) the Administrative Agent or Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made (the “Gross-Up Payment”), (ii) the Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Law. Notwithstanding the foregoing, the Borrower shall not be obligated to make any portion of the Gross-Up Payment that is (A) attributable to withholding taxes that could have been avoided by the delivery of the properly completed and executed documentation required by subsection (e) of this Section 3.01, (B) governed by subsection (i) of this Section 3.01 or (C) attributable to the Administrative Agent’s or any such Lender’s or Participant’s own willful misconduct or gross negligence.

               (b) Payment of Other Taxes by the Borrower. Without limiting or duplicating the provisions of subsection (a) above, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Law.

               (c) The Borrower shall indemnify the Administrative Agent or each Lender, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other

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Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) paid by the Administrative Agent or such Lender, as the case may be, on or with respect to any assessment of Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section (other than such penalties or interest arising through the gross negligence or willful misconduct of the Administrative Agent or such Lender). A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Administrative Agent on its own behalf or on behalf of a Lender shall be conclusive absent manifest error.

               (d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment or other reasonable documentation evidencing such payment.

               (e) Status of Lenders. Any non-U.S. Lender or Participant that is entitled to an exemption from, or reduction of, withholding tax under the law of the jurisdiction in which the Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall not be entitled to the Gross-Up Payment unless and until such Lender or Participant delivers to the Borrower (with a copy to the Administrative Agent) (or, in the case of a Participant, to the Lender granting the participation only), such properly completed and executed documentation prescribed by applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender or Participant, if requested by the Borrower or the Administrative Agent (or, in the case of a Participant, the Lender granting the participation), shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent (or, in the case of a Participant, the Lender granting the participation) as will enable the Borrower or the Administrative Agent to determine whether or not such Lender or Participant is subject to backup withholding or information reporting requirements. Furthermore, each Lender or Participant shall provide new forms (or successor forms) upon the expiration or obsolescence of any previously delivered forms and to promptly notify the Administrative Agent (or, in the case of a Participant, the Lender granting the participation) of any change in circumstances which would modify or render invalid any claimed exemption or reduction.

               (f) United States Withholding Taxes. Without limiting the provisions of subsection (e) of this Section 3.01, any Lender or Participant that is entitled to an exemption from, or reduction of, United States withholding tax with respect to any payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall, as applicable, deliver to the Borrower and the Administrative Agent (or, in the case of a Participant, to the Lender granting the participation only) in such number of copies as shall be requested by the recipient on or prior to the date on which such Lender or Participant becomes a Lender or Participant under this Agreement (and from time to time thereafter upon the request of the Borrower or the Administrative Agent or Lender granting the participation), whichever of the following is applicable:

               (i) duly completed copies of IRS Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

               (ii) duly completed copies of IRS Form W-8ECI,

               (iii) duly completed copies of IRS Form W-8IMY (with proper attachments,

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               (iv) in the case of a Lender or Participant that is entitled to claim the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a statement of the Lender or Participant, signed under penalty or perjury, to the effect that such Lender or Participant is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed copies of IRS Form W-8BEN or Form W-8IMY (with proper attachments),

               (v) duly completed copies of IRS Form W-9, or

               (vi) any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower (or Lender granting the participation) to determine the withholding or deduction required to be made.

               (g) Non-United States Withholding Taxes. Without limiting the provisions of subsection (e) of this Section 3.01, any Lender or a Participant that is entitled to claim an exemption from withholding tax in a jurisdiction other than the United States with respect to any payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document agrees with and in favor of the Administrative Agent and the Borrower, to deliver to the Administrative Agent and the Borrower (or, in the case of a Participant, to the Lender granting the participation only) any such form or forms, as may be required under the laws of such jurisdiction as a condition to exemption from, or reduction of, any non-United States withholding or backup withholding tax before receiving the Gross-Up Payment.

               (h) Sale or Transfer. If a Lender or Participant claims exemption from, or reduction of, withholding tax and such Lender, or Participant sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Loan Parties to such Lender or Participant, such Lender or Participant agrees to notify the Administrative Agent (or, in the case of a sale of a participation interest, the Lender granting the participation) of the percentage amount in which it is no longer the beneficial owner of Obligations of Loan Parties to such Lender or Participant. To the extent of such percentage amount, the Administrative Agent will treat such Lender’s or such Participant’s documentation provided pursuant to subsections (e), (f) or (g) of this Section 3.01 as no longer valid. With respect to such percentage amount, such Participant or assignee may provide new documentation, pursuant to subsections (e), (f) or (g) of this Section 3.01, as applicable.

               (i) Indemnification by Lenders/Participants. If the IRS or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Administrative Agent (or, in the case of a Participant, the Lender granting the participation) did not properly withhold tax from amounts paid to or for the account of any Lender or any Participant due to a failure on the part of the Lender or any Participant (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent (or such Participant failed to notify the Lender granting the participation) of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify and hold the Administrative Agent harmless (or, in the case of a Participant, such Participant shall indemnify and hold the Lender granting the participation harmless) for all amounts paid, directly or indirectly, by the Administrative Agent (or, in the case of a Participant, the Lender granting the participation), as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Administrative Agent (or, in the case of a Participant, the Lender granting the

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participation) under this Section 3.01, together with all costs and expenses (including attorneys fees and expenses). The obligation of the Lenders and the Participants under this subsection shall survive the payment of all Obligations and the resignation or replacement of the Administrative Agent.

               (j) Exemption or Reduction of Taxes. If a Lender or Participant is entitled to a reduction with respect to any Indemnified Taxes or Other Taxes, the Administrative Agent or the Borrower (or, in the case of a Participant, the Lender granting the participation) may withhold from any interest payment to such Lender or Participant an amount equivalent to the applicable Indemnified Tax or Other Tax after taking into account such reduction. If the forms or other documentation required by subsection (e), (f), or (g) of this Section 3.01, as applicable, are not delivered to the Administrative Agent or the Borrower (or, in the case of a Participant, the Lender granting the participation) may withhold from any interest payment to such Lender or Participant not providing such forms or other documentation an amount equivalent to the applicable reduction in Indemnified Tax or Other Tax.

               (k) Treatment of Refunds. If the Administrative Agent or any Lender determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 3.01, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 3.01 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses incurred in connection with such refund of the Administrative Agent or such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Administrative Agent or such Lender, agree to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority, other than such penalties, interest, or other charges imposed as a result of the willful misconduct or gross negligence of the Administrative Agent hereunder) to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person. Notwithstanding the foregoing, upon the reasonable request of the Borrower, a Lender or the Administrative Agent as applicable, shall in its sole discretion, exercised in good faith, use reasonable efforts to cooperate with the Borrower with a view to obtaining a refund of any Taxes with respect to which the Borrower has paid any Gross-Up Payment pursuant to this Section 3.01 and which the Borrower, reasonably believes were not correctly or legally asserted by the relevant Governmental Authority.

          3.02 [Reserved].

          3.03 [Reserved].

          3.04 Increased Costs.

               (a) Increased Costs Generally. If any Change in Law shall:

               (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender; or

               (ii) subject any Lender to any tax of any kind whatsoever with respect to this Agreement, or change the basis of taxation of payments to such

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Lender in respect thereof (in each case, except for taxes imposed by way of withholding or deduction, Indemnified Taxes, Other Taxes and amounts relating to the foregoing, which shall be governed solely and exclusively by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender);

and the result of any of the foregoing shall be to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender and delivery of the certificate contemplated by Section 3.04(c), the Borrower will pay to such Lender, within ten (10) days following receipt of such certificate by the Borrower, such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

               (b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital requirements has had, or would have, the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, such Lender, to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time upon delivery of the certificate contemplated by Section 3.04(c), the Borrower will pay to such Lender or such Lender’s holding company, as the case may be, within ten (10) days following receipt of such certificate by the Borrower, such additional amount or amounts as will compensate such Lender or such Lender’s holding company, as the case may be, for any such reduction suffered.

               (c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, and the method for calculating such amount or amounts, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

               (d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section 3.04 for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six (6)-month period referred to above shall be extended to include the period of retroactive effect thereof).

          3.05 [Reserved].

          3.06 Mitigation Obligations; Replacement of Lenders.

               (a) Designation of a Different Lending Office. If any Lender requests compensation under Section 3.04, or the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or Section 3.04, as the case may be, in the future, and (ii) in each case,

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would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender, it being understood that the Borrower shall be given a reasonable opportunity to agree to reimburse such costs, and/or expenses.

               (b) Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrower may replace such Lender in accordance with Section 10.13.

          3.07 Survival. All of the Borrower’s obligations under this Article III shall survive repayment of all other Obligations hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO LOANS

          4.01 Conditions of Loans. The obligation of each Lender to make its Loan hereunder is subject to satisfaction of the following conditions precedent:

               (a) The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies or other electronic image scan transmission (e.g., “pdf” or “tif” via e-mail) (followed promptly by originals) unless otherwise specified, and each properly executed by a Responsible Officer of the signing Loan Party (if applicable):

               (i) executed counterparts of this Agreement;

               (ii) a Note executed by the Borrower in favor of each Lender that has requested a Note at least two (2) Business Days in advance of the Closing Date;

               (iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party evidencing (A) the authority of each Loan Party to enter into this Agreement and the other Loan Documents to which such Loan Party is a party (including approvals by the board of directors or similar governing body of each Loan Party) and (B) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;

               (iv) copies of each Loan Party’s Organization Documents and a certificate of good standing (where applicable, or such other customary functionally equivalent certificates or abstracts, to the extent available in the applicable jurisdiction) of such Loan Party’s jurisdiction of organization;

               (v) a favorable opinion of (A) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, as to customary matters relating to the Loan Documents as the Administrative Agent may reasonably request, (B) AMMC Law, special Luxembourg counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, as to customary matters relating to the Luxembourg Security Agreements and the Luxembourg Share Pledge Agreements as the Administrative Agent may reasonably request, (C) McInnes Cooper LLP, special Canadian counsels to the

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Loan Parties, addressed to the Administrative Agent and each Lender, as to customary matters relating to the Canadian Pledge Agreement as the Administrative Agent may reasonably request, and (D) General Counsel of Quiksilver, Inc., as to (x) the due execution and authorization and enforceability of the Side Agreement and Services Fee Agreement and (y) the absence of a conflict with Material Indebtedness of the Loan Parties other than the Senior Notes Indenture, the ABL Credit Agreement and the Euro Term Loan Credit Agreement;

               (vi) a certificate signed by a Responsible Officer of the Borrower, certifying that, as of the Closing Date after giving effect to the transactions contemplated hereby, the Borrower and its Subsidiaries on a consolidated basis are Solvent;

               (vii) a payoff letter from the agent for the lenders under the Existing Credit Agreement in customary form, evidencing that the Existing Credit Agreement has been, or concurrently with the Closing Date is being, terminated, all obligations thereunder are being paid in full, and all Liens securing obligations under the Existing Credit Agreement have been, or concurrently with the Closing Date are being, released;

               (viii) all Uniform Commercial Code financing statements required by Law to create or perfect the Liens intended to be created under the Loan Documents, in form for filing;

               (ix) the Security Documents set forth on Schedule 4.01(a)(ix) hereto, and certificates (if applicable) evidencing any stock being pledged under the Pledge Agreements on the Closing Date, together with undated stock powers executed in blank (if applicable), each duly executed by the applicable Loan Parties;

               (x) all other Loan Documents set forth on Schedule 4.01(a)(x) hereto, each duly executed by the applicable Loan Parties;

               (xi) certificate of Responsible Officers of the Borrower and the Parent confirming that borrowing, guaranteeing or securing, as appropriate, the Obligations in the manner contemplated by this Agreement and the other Loan Documents executed on the Closing Date does not cause any borrowing, guarantee, security or similar limit binding on any Loan Party to be exceeded;

               (xii) an executed copy of the Services Fee Agreements and the Side Agreement, in each case in form and substance reasonably acceptable to the Administrative Agent;

               (xiii) results of searches or other evidence reasonably satisfactory to the Administrative Agent (in each case dated as of a date reasonably close to the Closing Date) indicating the absence of Liens on the assets of the Loan Parties, except for Permitted Encumbrances and Liens for which termination statements and releases are being tendered concurrently with such extension of credit or other arrangements reasonably satisfactory to the Administrative Agent for the delivery of such termination statements and releases have been made; and

               (xiv) (i) executed copies of all documents necessary to perfect the Administrative Agent’s security interest under the Luxembourg Security Agreements

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and the Luxembourg Share Pledge Agreements, including, where applicable, copies of shareholders’ registers evidencing the inscription of applicable pledges of shares, notice and form of acknowledgements with respect to account pledge agreements and notice and form of acknowledgements of any applicable debtors with respect to receivables pledge agreements; (ii) executed copies of circular resolutions of the boards of managers of the Borrower, QS Holdings and 54th Street; and (iii) executed copies of documents evidencing completion of all of the transactions set forth in Section 4.01(v).

               (b) [reserved]

               (c) The Borrower or any Subsidiary shall have entered into (i) the US Term Loan Agreement and received, or substantially simultaneously with the borrowing under this Agreement shall receive, gross proceeds of the US Term Loans in a minimum amount of $125,000,000, and (ii) the ABL Credit Agreement shall have been executed on terms and conditions substantially the same as those set forth in the term sheet attached to the Commitment Letter, dated as of June 8, 2009 and as amended as of June 24, 2009 (with such changes as the Administrative Agent shall reasonably agree), by and among Bank of America, N.A., Bank of America Securities LLC, General Electric Capital Corporation, GE Capital Markets, Inc., Parent and the Borrower and become effective substantially simultaneously with the borrowing under this Agreement.

               (d) The conditions precedent set forth on Part I of Schedule 2 of the French Credit Agreement shall have been satisfied (or waived by the Agent (as defined in the French Credit Agreement)).

               (e) (i) The Administrative Agent, the US Term Loan Agent, the Collateral Agent and the ABL Agent shall have entered into the ABL Intercreditor Agreement, and (ii) the Administrative Agent, the US Term Loan Agent and the Collateral Agent shall have entered into the Term Loan Intercreditor Agreement, in each case on terms reasonably satisfactory to the Administrative Agent.

               (f) There shall exist no action, suit, investigation, litigation or proceeding pending or, to the knowledge of the Borrower or the Parent, threatened that (i) would reasonably be expected to (A) have a material adverse effect on the business, assets, operations, properties, performance or condition (financial or otherwise) of the Parent and its subsidiaries, taken as a whole, or of the Borrower and its subsidiaries, taken as a whole, (B) adversely affect the ability of the Loan Parties to perform their obligations under the Loan Documents in any material respect, or (C) adversely affect the rights and remedies of the Administrative Agent and the Lenders under the Loan Documents in any material respect; or (ii) purports to adversely affect in any material respect the financing of the Loans or prevent the anticipated use of the proceeds thereof.

               (g) Since January 31, 2009, there shall not have been any event or occurrence that, either individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, assets, operations, properties, performance or condition (financial or otherwise) of the Parent and its Subsidiaries, taken as a whole, or the Borrower and its Subsidiaries, taken as a whole.

               (h) The Administrative Agent shall have received a copy of the final legal and tax structure memorandum from Skadden Arps Slate Meagher & Flom LLP and shall have determined that any material differences between such final legal and tax structure memorandum as compared to the prior version delivered to the Administrative Agent, with respect to settlement of intercompany payables that have an impact on the liquidity of the Loan Parties, are reasonably acceptable to it, and, to the extent

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the memorandum contemplates such settlement prior to the Closing Date, the Parent and its Subsidiaries shall have taken such steps as are reasonably necessary to settle the intercompany payables (other than trade payables incurred in the ordinary course of business) to the extent, in the manner and on the timing set forth in such memorandum (and the Administrative Agent shall have received a certification as to such steps having been taken by a Responsible Officer of the Parent).

               (i) The Parent, pursuant to an agreement reasonably acceptable to the Administrative Agent, shall have assigned to the US Borrower all trademarks, service marks, trade names and logos related to “QUIKSILVER” and “ROXY” (including the applications and registrations with respect thereto and all goodwill connected with the use thereof and symbolized thereby) owned by the Parent in the United States and Mexico.

               (j) The Administrative Agent shall have received copies of all material documents and agreements executed by the Loan Parties pursuant to the Warrant Agreement with respect to the Warrants, each in form and substance reasonably acceptable to the Administrative Agent, and the Parent shall have (x) issued the Warrants to Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P., and (y) reserved authorized and unissued shares of common stock of Parent in an amount sufficient to satisfy the full exercise of the Warrants.

               (k) The board of directors of the Parent shall have granted all necessary approvals under the Parent’s Organization Documents and Delaware General Corporation Law with respect to the acquisition and exercise of the Warrants.

               (l) The number of directors on the Board of Directors of the Parent shall have been increased by two and the newly created directorships shall have been filled by nominees of each of Triton Onshore SPV L.P. and Triton Coinvestment SPV L.P.

               (m) The board of directors of the Parent shall have adopted an equity incentive plan for members of current management and future hires, on terms reasonably acceptable to Administrative Agent.

               (n) All necessary governmental and material third party consents and approvals to the transactions contemplated by this Agreement to occur on the Closing Date shall have been obtained.

               (o) All fees and expenses required to be paid by the Borrower to any of the Administrative Agent or the Arranger on or before the Closing Date shall have been paid in full, and all fees and expenses required to be paid by the Borrower to the Lenders on or before the Closing Date shall have been paid in full.

               (p) The Administrative Agent shall have concluded any legally-required background checks and other investigations to ensure compliance with the Patriot Act and anti-money laundering laws.

               (q) The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document shall be true and correct in all material respects on and as of the Closing Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and the Administrative Agent shall have received a certification thereof by a Responsible Officer of the Borrower.

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               (r) No Default shall exist, or would result from the Loans or from the application of the proceeds thereof, and the Administrative Agent shall have received a certification thereof by a Responsible Officer of the Borrower.

               (s) The Administrative Agent shall have received a Loan Notice in accordance with the requirements hereof.

               (t) Since June 8, 2009, there shall have been no material changes in governmental regulations or policies affecting Parent or its Subsidiaries, the Borrower and its Subsidiaries or the Credit Parties.

               (u) The Parent or its Subsidiaries shall not be a party to any binding agreement to dispose of Collateral (including the DC Shoes Business) outside of the ordinary course of business.

               (v) The Parent shall have, and shall have caused its applicable Subsidiaries to, (i) effectuate the creation of the Borrower and 54th Street, (ii) cause the transfer of Equity Interests in QS Holdings to the Borrower, (iii) cause the transfer of Equity Interests in Quiksilver Deluxe S.à r.l. previously held by QS Holdings to 54th Street, (iv) cause the transfer of Equity Interests previously held by QS Holdings in Quiksilver Brazil to 54th Street and (v) cause QS Holdings to assign to 54th Street all trademarks, service marks, trade names and logos related to “QUIKSILVER” and “ROXY” (including the applications and registrations with respect thereto and all goodwill connected with the use thereof and symbolized thereby) owned by QS Holdings in Antigua, Argentina, Aruba, Bahamas, Barbados, Belize, Bermuda, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Netherlands Antilles, Nicaragua, Panama, Paraguay, Peru, St. Kitts & Nevis, St. Lucia, Suriname, Trinidad, Uruguay, and Venezuela, in each case free and clear of all Liens other than Permitted Encumbrance.

               (w) On or prior to July 31, 2009, each of the lenders under the Pilot Facility Agreement (as defined in the French Credit Agreement) shall have executed an amendment to the Pilot Facility Agreement, in form and substance reasonably satisfactory to the Administrative Agent, extending the maturity of the Pilot Facility Agreement to a date not earlier than September 29, 2009 and including a waiver permitting the pledge by QS Holdings of all of its shares of 54th Street in support of the Obligations.

               (x) On or prior to July 31, 2009, QS Holdings shall have been released from, and Biarritz Holdings S.à r.l shall have assumed, any and all indebtedness owed by QS Holdings to Pilot SAS and Q.S. Finance S.A.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

          To induce the Credit Parties to enter into this Agreement and to make Loans hereunder, each of the Parent and the Borrower represents and warrants to the Administrative Agent and the Lenders that:

          5.01 Existence, Qualification and Power. Each Loan Party (a) is a corporation, limited liability company, private limited liability company, unlimited company, partnership or limited partnership, duly organized or formed, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, permits, authorizations, consents and approvals to (i) own or lease its

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assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, where applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect. The Borrower (x) has its “centre of main interests” (within the meaning of European Council Regulation (EC) No. 1346/2000 of May 29, 2000 on insolvency proceedings (the “EC Insolvency Regulation”)) in Luxembourg and (y) has no “establishment” (as such term is used in the EC Insolvency Regulation) outside the Grand-Duchy of Luxembourg. 54th Street has its “centre of main interests” (within the meaning of the EC Insolvency Regulation) in Luxembourg. Schedule 5.01 annexed hereto sets forth, in each case as of the Closing Date, each Loan Party’s name as it appears in official filings in its jurisdiction of organization, its jurisdiction of organization, organization type, organization number, if any, issued by its state of organization, and its federal employer identification number (if any).

          5.02 Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party has been duly authorized by all necessary corporate or other organizational action, and does not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach, termination, or contravention of, or constitute a default under, or require any payment to be made under or permit any holder thereof to accelerate or require the repurchase of, (i) any Material Indebtedness to which such Person is a party in a manner which would reasonably be expected to result in a Material Adverse Effect or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject in a manner which would reasonably be expected to result in a Material Adverse Effect; (c) result in or require the creation of any Lien upon any asset of any Loan Party (other than Liens under the Security Documents and other Permitted Encumbrances); or (d) violate any Law in a manner which would reasonably be expected to result in a Material Adverse Effect.

          5.03 Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, except for (a) the perfection or maintenance of the Liens created under the Security Documents, (b) such as have been obtained or made and are in full force and effect, and (c) those approvals, consents, exemptions, authorizations or other actions, notices or filings, the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect.

          5.04 Binding Effect. This Agreement has been, and each other Loan Document, when delivered, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

          5.05 Financial Statements; No Material Adverse Effect.

               (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (ii) fairly present in all material respects the financial condition of the Parent and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in

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accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein.

               (b) The unaudited Consolidated balance sheet of the Parent and its Subsidiaries dated April 30, 2009, and the related Consolidated statements of income or operations and cash flows for the Fiscal Quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Parent and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject to the absence of footnotes and to normal year-end audit adjustments.

               (c) Since January 31, 2009, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a material adverse effect on the business, assets, operations, properties, performance or condition (financial or otherwise) of the Parent and its Subsidiaries, taken as a whole, or the Borrower and its Subsidiaries, taken as a whole.

               (d) The Consolidated forecasted balance sheet and statements of income and cash flows of the Parent and its Subsidiaries delivered to the Administrative Agent prior to the Closing Date were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Loan Parties’ reasonable estimate of their future financial performance (it being understood that such forecasted financial information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties, that no assurance is given that any particular forecasts will be realized, that actual results may differ and that such differences may be material).

               (e) Except as disclosed in the notes to the Consolidated financial statements of Parent and Subsidiaries as of, and for the 12 months ended, October 31, 2008 as filed with the SEC, or as disclosed in any filing by Parent with the SEC under the Securities Exchange Act of 1934 since October 31, 2008 or as set forth on Schedule 5.05, and except for liabilities incurred in the ordinary course of business since April 30, 2009, there are no liabilities or obligations with respect to the Parent or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due) which, either individually or in the aggregate, are material to the Parent and its Subsidiaries, taken as a whole, or to the Borrower and its Subsidiaries, taken as a whole.

          5.06 [Reserved].

          5.07 [Reserved].

          5.08 Ownership of Property; Liens. Each of the Loan Parties has good record and marketable title in fee simple to or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or where failure to have such title or other interest would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Loan Parties has good title to, valid leasehold interests in, or valid licenses to use all personal property and assets necessary for or used in the conduct of its business, except where failure to have such title, interest or license would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The property of each Loan Party is subject to no Liens, other than Permitted Encumbrances.

          5.09 [Reserved].

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          5.10 [Reserved].

          5.11 Taxes. Except, in each case, as would not reasonably be expected to result in a Material Adverse Effect, the Loan Parties have filed all Federal, state and other tax returns and reports required to be filed, and have paid all Federal, state and other taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable; provided that no Loan Party need pay any such tax or assessment if such amount is being contested in good faith by appropriate proceedings, for which adequate reserves have been provided in accordance with GAAP.

          5.12 ERISA Compliance.

               (a) Except, in each case, as would not reasonably be expected to result in a Material Adverse Effect: (i) each Plan is in compliance with the applicable provisions of ERISA, the Code and other Federal or state Laws; (ii) each Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge of the Loan Parties, nothing has occurred which would prevent, or cause the loss of, such qualification; (iii) the Loan Parties and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan; (iv) no Lien imposed under the Code or ERISA exists or is likely to arise on account of any Plan; (v) there exists no accumulated funding deficiency with respect to any Plan, whether or not waived, within the meaning of Section 412 of the Code or Section 302 of ERISA; and (vi) no Loan Party has failed to make any contribution or payment to any Plan, or made any amendment to any Plan, which has resulted, or could reasonably be expected to result, in the imposition of a Lien or the posting of a bond or other security under Section 302(f) of ERISA or Section 401(a)(29) of the Code.

               (b) There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or would reasonably be expected to result in a Material Adverse Effect. As of the date hereof, there is no pending or, to the knowledge of the Loan Parties threatened, litigation or governmental investigations or proceedings relating to the Plans, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect

               (c) Except as would not reasonably be expected to result in a Material Adverse Effect: (i) no ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither any Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

          5.13 [Reserved].

          5.14 Disclosure. No (i) financial statement, certificate or other factual written information (excluding projections, forward-looking information and information of a general economic or general industry nature) furnished by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this

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Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished, and taken as a whole) or (ii) filing by the Parent under the Securities Exchange Act of 1934 at any time since January 1, 2006 contains any material misstatement of fact or omits to state any fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time (it being understood that such projected financial information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties, that no assurance is given that any particular projections will be realized, that actual results may differ and that such differences may be material).

          5.15 Compliance with Laws. Each of the Loan Parties is in compliance with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. None of the Loan Parties or, to the knowledge of the Loan Parties, none of any director, officer, agent or employee of the Loan Parties is currently subject to any U.S. sanctions administered by OFAC or appears on the OFAC List.

          5.16 Compliance with Sarbanes-Oxley Act. Each of the Loan Parties is in compliance with the requirements of the Sarbanes-Oxley Act of 2002 (including, without limitation, Section 402 thereof), except in such instances in which (a) such requirement is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

          5.17 Intellectual Property. Except, in each case, as would not reasonably be expected to have a Material Adverse Effect: (a) the Loan Parties own, or possess sufficient rights to use, all of the Intellectual Property that is necessary for or used in the operation of their respective businesses as currently conducted, without, to the knowledge of the Borrower, violation of the rights of any other Person, (b) none of the Intellectual Property owned by a Loan Party is subject to any outstanding order, judgment, award or decree limiting or adversely affecting such Loan Party’s use thereof or rights thereto in connection with its business as currently conducted and, to the knowledge of the Borrower, all of the rights of the Loan Parties in and to such Intellectual Property are valid and enforceable and all such Intellectual Property that is registered or issued is subsisting, and (c) to the knowledge of the Borrower (i) the conduct of such Loan Party’s business does not infringe upon, dilute, misappropriate or otherwise violate any rights held by any other Person, and (ii) no other Person is infringing upon, diluting, misappropriating or otherwise violating any Intellectual Property of the Loan Parties. The Intellectual Property owned by each Loan Party is not subject to any Liens, other than Permitted Encumbrances. No claim, litigation, arbitration, opposition, cancellation or other proceeding against any Loan Party concerning the ownership, validity, registerability, enforceability, infringement, dilution, misappropriation or other violation of the use of or the licensed right to use any Intellectual Property is pending or, to the knowledge of the Borrower, threatened, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

          5.18 Labor Matters. Except, in each case, as would not reasonably be expected to have a Material Adverse Effect: (a) there are no strikes, lockouts, slowdowns or other labor disputes against any Loan Party pending or, to the knowledge of any Loan Party, threatened; and (b) and the Parent’s Subsidiaries have complied with all obligations to consult with their workers’ counsels in connection with the transactions contemplated to occur on or before the Closing Date.

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          5.19 Security Documents.

               (a) The US Security Agreement creates in favor of the Collateral Agent, for the benefit of the Administrative Agent and the other Credit Parties, a valid and enforceable security interest in the Collateral (as defined in the US Security Agreement); the US Intellectual Property Security Agreement creates in favor of the Collateral Agent, for the benefit of the Administrative Agent and the other Credit Parties, a valid and enforceable security interest in the IP Collateral (as defined in the US Intellectual Property Security Agreement); the Intellectual Property Security Agreement creates in favor of the Euro Administrative Agent (as defined in the Intellectual Property Security Agreement), for the benefit of the Euro Credit Parties (as defined in the Intellectual Property Security Agreement), a valid and enforceable security interest in the IP Collateral (as defined in the Intellectual Property Security Agreement); each Luxembourg Share Pledge Agreement creates in favor of the Administrative Agent, for the benefit of the Credit Parties, a valid and enforceable security interest in the Shares (as defined in such Luxembourg Share Pledge Agreement); and the Canadian Pledge Agreement creates in favor of the Administrative Agent, for the benefit of the Credit Parties, a valid and enforceable security interest in the Pledged Collateral (as defined in the Canadian Pledge Agreement), in each case the enforceability of which is subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. The UCC financing statements and other filings delivered by the Loan Parties on the Closing Date are in appropriate form for filing in the applicable offices. Upon such filings and/or the obtaining of “control” (as such term is defined in the UCC) to the extent required by the Loan Documents, the Collateral Agent will have a perfected Lien on, and security interest in, to and under all right, title and interest of the grantors thereunder in all Collateral that may be perfected in the United States, Canada and Luxembourg by filing, recording or registering a financing statement or analogous document (including without limitation the proceeds of such Collateral subject to the limitations relating to such proceeds in the UCC). Such Lien and security interest will be prior to any other Lien on any of the Collateral, except in the case of Permitted Encumbrances.

               (b) Upon entry of each Pledge (as defined in the Luxembourg Share Pledge Agreements) in the register of the shareholders of the applicable pledgor thereunder as set forth in such Luxembourg Share Pledge Agreement, the Administrative Agent will have a perfected pledge of, and security interest in, the Shares (as defined in such Luxembourg Pledge Agreement). Upon sending of a notice of pledge to the Account Bank (as defined in, and in accordance with, the Luxembourg Account Pledge Agreements) and upon receipt of the form of acknowledgement from the Account Bank, the Administrative Agent will have a perfected pledge of, and security interest in, the Pledged Assets (as defined in the Luxembourg Account Pledge Agreements). Upon execution and acknowledgement of the pledge of the Pledged Assets (as defined in, and in accordance with, the Luxembourg Receivables Pledge Agreement), the Administrative Agent will have a perfected pledge of, and security interest in, the Pledged Assets.

               (c) Notwithstanding anything to the contrary herein, the Loan Parties shall have no obligation to perfect Liens in the IP Collateral or any other Intellectual Property in any jurisdiction other than the United States, Canada or Luxembourg.

          5.20 Environmental Matters. Except as would not reasonably be expected to have a Material Adverse Effect, as of the Closing Date: (a) there are no Hazardous Materials or underground storage tanks in, on, or under any property of any Parent or any of its Subsidiaries, except those that are in compliance with all Environmental Laws and with permits issued pursuant thereto; (b) there are no outstanding releases of Hazardous Materials in, on, under or from any property of the Parent or any of its Subsidiaries in violation of applicable Environmental Law; (c) there is no violation of Environmental Laws, or with permits issued pursuant thereto by Parent or any of its Subsidiaries which has not been

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fully resolved; (d) none of the Parent or any of its Subsidiaries has received any written notice that remains outstanding from any Person (including but not limited to a Governmental Authority) alleging liability of the Parent or any of its Subsidiaries under any Environmental Law.

          5.21 Absence of Insolvency Proceedings. As of the Closing Date, neither the Parent nor any of its Subsidiaries has instituted or consented to the institution of any proceeding under any Debtor Relief Law, and no proceeding under any Debtor Relief Law relating to it or to all or any material part of its property has been instituted without its consent.

          5.22 Capitalization. Schedule 5.22 sets forth, as of the Closing Date (after giving effect to the transactions to occur on the Closing Date), (a) the ownership of the Borrower and each Guarantor (other than the Parent), after giving effect to the transactions contemplated hereby, and (b) the number of all (i) authorized shares of common stock of the Parent, (ii) outstanding shares of common stock of the Parent, (iii) authorized and unissued shares of common stock of Parent reserved for issuance and (iv) warrants, rights, options and convertible or exchangeable securities of the Parent outstanding (and the number of shares of common stock of the Parent into which or for which such items are exercisable, convertible or exchangeable).

          5.23 No Amendment to Services Fee Agreements. No provision of either Services Fee Agreement has been amended, modified or waived in a manner materially adverse to the Credit Parties.

          5.24 Compliance with Money Laundering Laws(a) . The operations of the Loan Parties are conducted in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the money laundering statutes of all jurisdictions in which any of them operate, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any Loan Party with respect to the Money Laundering Laws which would be expected to have a Material Adverse Effect is pending or, to the best knowledge of the Loan Parties, threatened.

          5.25 No Default(a) . As of the Closing Date, none of the Parent or any of its Subsidiaries will be in material default under any Indebtedness.

ARTICLE VI

AFFIRMATIVE COVENANTS

          So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied (other than contingent obligations for which a claim has not then been asserted), the Loan Parties shall:

          6.01 Financial Statements. Deliver to the Administrative Agent (for distribution to each Lender):

               (a) within ninety (90) days after the end of each Fiscal Year of the Parent, (i) a Consolidated balance sheet of the Parent and its Subsidiaries as at the end of such Fiscal Year, and the related Consolidated statements of income or operations and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all prepared in accordance with GAAP, such Consolidated statements to be audited and accompanied by a report and opinion of a Registered Public Accounting Firm of nationally recognized standing or otherwise reasonably acceptable

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to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit; and (ii) an Americas Consolidated and consolidating balance sheet of the Parent and the Americas Subsidiaries as at the end of such Fiscal Year, and the related Americas Consolidated and consolidating statements of income or operations of the Parent and the Americas Subsidiaries and Americas Consolidated cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year (to the extent available), such consolidating statements to be certified by a Responsible Officer of the Borrower or the Parent to the effect that such statements are fairly stated in all material respects;

               (b) within forty-five (45) days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Parent, (i) a Consolidated balance sheet of the Parent and its Subsidiaries as at the end of such Fiscal Quarter, and the related Consolidated statements of income or operations and cash flows for such Fiscal Quarter and for the portion of the Parent’s Fiscal Year then ended, setting forth in each case in comparative form the figures for (A) such period set forth in the projections delivered pursuant to Section 6.01(d) hereof (if applicable), (B) the corresponding Fiscal Quarter of the previous Fiscal Year and (C) the corresponding portion of the previous Fiscal Year, such Consolidated statements to be certified by a Responsible Officer of the Parent or the Borrower as fairly presenting the financial condition, results of operations and cash flows of the Parent and its Subsidiaries as of the end of such Fiscal Quarter in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes; and (ii) an Americas Consolidated and consolidating balance sheet of the Parent and the Americas Subsidiaries as at the end of such Fiscal Quarter, and the related Americas Consolidated and consolidating statements of income or operations of the Parent and the Americas Subsidiaries and an Americas Consolidated cash flows for such Fiscal Quarter and for the portion of the Parent’s Fiscal Year then ended, setting forth in each case in comparative form the figures for (A) such period set forth in the projections delivered pursuant to Section 6.01(d) hereof (to the extent available), (B) the corresponding Fiscal Quarter of the previous Fiscal Year (to the extent available) and (C) the corresponding portion of the previous Fiscal Year (to the extent available), such Americas Consolidated statements to be certified by a Responsible Officer of the Borrower or the Parent as fairly presenting in all material respects the financial condition, results of operations and cash flows of the Parent and the Americas Subsidiaries as of the end of such Fiscal Quarter;

               (c) within thirty (30) days after the end of each of the first two Fiscal Months of each Fiscal Quarter of the Parent (commencing with the first such Fiscal Month which occurs after the first full six (6) months following the Closing Date), a financial report for the immediately preceding Fiscal Month in a format reasonably satisfactory to the Administrative Agent;

               (d) as soon as available and in any event no later than fifteen (15) days prior to the end of the Fiscal Year ending on October 31, 2009, and no later than within forty-five (45) days prior to the end of each Fiscal Year thereafter, a copy of the approved annual budget of the Parent and its Subsidiaries for the immediately following Fiscal Year;

               (e) on Friday of any week during which Domestic Availability is less than $30,000,000, a thirteen (13)-week cash flow forecast (it being agreed that for all purposes of this Section 6.01(e), if the Friday on which a report is due is not a Business Day, then such report shall be required to be delivered no later than the immediately succeeding Business Day); and

               (f) (i) copies of any reports and other written information delivered to the administrative agent under the ABL Credit Agreement and any agent under the French Credit Agreement and (ii) upon the request of the Administrative Agent, to the lenders or their respective agents under the credit facilities of certain Subsidiaries of the Parent organized in Japan and Australia.

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          6.02 Certificates; Other Information. Deliver to the Administrative Agent (for distribution to each Lender):

               (a) concurrently with the delivery of the financial statements referred to in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible Officer of the Borrower or the Parent;

               (b) promptly upon receipt, copies of any detailed audit reports or management letters submitted to the board of directors (or the audit committee of the board of directors) of any Loan Party by its Registered Public Accounting Firm in connection with any annual or interim audit of any of them;

               (c) promptly after the same are available, copies of each financial statement or other report which any Loan Party files with the SEC and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto

               (d) within the time periods required by the US Intellectual Property Security Agreement or the Intellectual Property Security Agreement, as applicable, such notifications as are required pursuant to the provisions of the US Intellectual Property Security Agreement or the Intellectual Property Security Agreement, as applicable; and

               (e) promptly, such additional information regarding the financial condition or operations of any Loan Party or any Subsidiary as the Administrative Agent or any Lender (through the Administrative Agent) may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) or (b), or Section 6.02(c) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Parent posts such documents, or provides a link thereto on the Parent’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Parent’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent has access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that the Borrower shall deliver paper copies of such documents to the Administrative Agent or Lender that requests the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender. The Administrative Agent shall have no obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Loan Parties with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.

Each Lender that is Controlled directly or indirectly by an investment fund Controlled by Rhône Capital III L.L.C. that is intended to qualify as a “venture capital operating company” (within the meaning of Labor Reg. § 2510.3-101), and that requires “management rights” (within the meaning of Labor Reg. § 2510.3-101(d)(3)(ii)) in the Borrower or its Subsidiaries to continue its qualification as such a venture capital operating company shall be provided, upon written request from such Lender, with rights in regard to the management of the Borrower or its Subsidiaries to the extent necessary to cause such Lender not to lose its status as such a venture capital operating company by reason of the transactions contemplated by this Agreement. In any event, without limiting the preceding sentence, until the earlier of the Maturity Date and the date the Loans are assigned by such Lender, these rights shall include without limitation, upon written request from such Lender: (i) reasonable advance notice of any significant business matter of the Parent or the Borrower, provided that, such notice obligation shall be deemed satisfied so long as

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any director appointed by such Lender serves on the Parent’s board of directors; provided, further, that, in the event the immediately preceding proviso does not apply, such Lender shall not be entitled to such notice if, based on the advice of the Borrower’s counsel, any such disclosure (x) would violate applicable law or confidentiality obligations with third parties or would jeopardize attorney-client privilege, (y) would require public disclosure of information at a time when such information is not otherwise required to be disclosed or (z) relates to any Investment, merger or Disposition of any significant assets or any other extraordinary transaction, and (ii) upon reasonable advance notice to the Parent and the Borrower and during normal business hours, the reasonable opportunity to consult with and discuss the business and affairs of the Parent and the Borrower with the Parent’s and the Borrower’s officers and senior employees and the reasonable opportunity to make recommendations with respect to the business and affairs of the Parent and the Borrower, recognizing that the ultimate discretion with respect to all such matters shall be retained by the Parent and the Borrower and their respective boards of directors.

          6.03 Notices. Promptly, and in any event within five (5) Business Days after any Responsible Officer of any Loan Party obtains knowledge thereof, notify the Administrative Agent:

               (a) of the occurrence of any Default;

               (b) of any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect;

               (c) of the occurrence of (i) any ERISA Event, (ii) a Pension Plan having any Unfunded Pension Liability, or (iii) the imposition of any withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan;

               (d) of the discharge by any Loan Party of its present Registered Public Accounting Firm or any withdrawal or resignation by such Registered Public Accounting Firm; and

               (e) of any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any interest in a material portion of the Collateral under power of eminent domain or by condemnation or similar proceeding or if any material portion of the Collateral is damaged or destroyed.

Each notice pursuant to clauses (a) through (e) of this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Borrower or the Parent setting forth details of the event or occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto.

          6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable: (a) all Tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, and (b) all lawful claims (including, without limitation, claims of landlords, warehousemen, customs brokers, and carriers) which, if unpaid, would by law become a Lien upon its property, except, in each case, where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, and such Loan Party has set aside on its books adequate reserves with respect thereto in accordance with GAAP, or (ii) the failure to pay or discharge the same would not reasonably be expected to result in a Material Adverse Effect.

          6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business,

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except (i) to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect or (ii) pursuant to a transaction permitted by Section 7.04 or 7.05; (c) preserve, renew, maintain and protect its Intellectual Property in accordance with the requirements of the US Intellectual Property Security Agreement or the Intellectual Property Security Agreement, as applicable; and (d) maintain in all material respects the quality of products and services offered under any material trademark or service mark at a level that is equal to or better than the level of quality associated with such products and services as of the date hereof unless the Loan Party that owns the applicable material trademark or service mark determines in its reasonable business judgment that the standard of quality shall be modified and takes reasonable measures to ensure that all licensed users of such trademarks or service marks employ substantially similar standards of quality.

          6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its tangible properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear and casualty or condemnation events excepted to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; and (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.

          6.07 Maintenance of Insurance.

               (a) Maintain with financially sound and reputable insurance companies (which insurance companies are not Affiliates of the Loan Parties), insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business and operating in the same or similar locations or as is required by applicable Law, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons.

               (b) In each case subject to Section 6.16: (i) fire and extended coverage policies maintained with respect to any Collateral shall name the Administrative Agent as a loss payee; (ii) commercial general liability policies shall be endorsed to name the Administrative Agent as an additional insured. Business interruption policies shall name the Administrative Agent as a loss payee; and (iii) each such policy referred to in this Section 6.07(b) shall also provide that it shall not be canceled, modified or not renewed (A) by reason of nonpayment of premium except upon such insurer endeavoring to provide not less than thirty (30) days’ prior written notice thereof to the Administrative Agent or (B) for any other reason except upon not less than thirty (30) days’ prior written notice thereof by the insurer to the Administrative Agent.

          6.08 Compliance with Laws. Comply with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been set aside and maintained by the Loan Parties in accordance with GAAP; or (b) the failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.

          6.09 Books and Records; Accountants. Maintain proper books of record and account, in which entries that are true and correct in all material respects and in conformity with GAAP consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Loan Parties.

          6.10 Inspection Rights.

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               (a) Permit representatives and independent contractors of the Administrative Agent (acting in consultation with the Administrative Agent) to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and Registered Public Accounting Firm, all at the expense of the Loan Parties and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower.

               (b) Notwithstanding anything to the contrary in this Section 6.10, none of the Parent or any of its Subsidiaries will be required to disclose, permit the inspection, examination or making of extracts, or discussion of, any documents, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information unless and until the Administrative Agent executes an appropriate non-disclosure agreement, (ii) in respect of which disclosure to the Administrative Agent (or any representative) is then prohibited by Law or any agreement binding on the Parent or any of its Subsidiaries or (iii) is subject to attorney-client or similar privilege or constitutes attorney work-product

          6.11 Use of Proceeds. Use the proceeds of the Loans (a) to refinance Indebtedness of the Parent and its Subsidiaries under the Existing Credit Agreement, (b) to finance transaction fees and expenses related hereto, and (c) for other general corporate purposes of the Parent and its Subsidiaries, in each case to the extent not prohibited by the Loan Documents.

          6.12 Additional Loan Parties. Notify the Administrative Agent at the time that any Person becomes a Material Subsidiary of any Loan Party (other than QS Holdings or any of its Subsidiaries), and promptly thereafter (and in any event within thirty (30) days or such longer period as the Administrative Agent may agree): cause any such Person which is (x) a Domestic Subsidiary that is a Wholly Owned Subsidiary and not an Immaterial Subsidiary of the Parent or (y) a Subsidiary that is a Wholly Owned Subsidiary and not an Immaterial Subsidiary of the Borrower to (i) become a Guarantor by executing and delivering to the Administrative Agent a Facility Guaranty (or a counterpart or supplement thereto), and (ii) deliver to the Administrative Agent documents of the types referred to in clauses (iii) and (iv) of Section 4.01(a) and, if reasonably requested by the Administrative Agent, customary opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in the foregoing clause (i)). In no event shall compliance with this Section 6.12 waive or be deemed a waiver or Consent to any transaction giving rise to the need to comply with this Section 6.12 if such transaction was not otherwise permitted by this Agreement.

          6.13 Information Regarding the Collateral. Furnish to the Administrative Agent at least ten (10) days’ (or such shorter period as the Administrative Agent shall agree) prior written notice of any change in: (i) any Loan Party’s legal name; (ii) the location of any Loan Party’s chief executive office or its principal place of business; (iii) any Loan Party’s organizational type or jurisdiction of organization; or (iv) any Loan Party’s Federal Taxpayer Identification Number or organizational identification number assigned to it by its jurisdiction of organization. The Loan Parties agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Collateral Agent to continue following such change, to have a valid, legal and perfected security interest in the Collateral for its own benefit and the benefit of the other Credit Parties (to the extent a security interest in such Collateral can be perfected by the filing of a financing statement under the UCC).

          6.14 Environmental Laws. Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, (a) conduct its operations in compliance with all

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Environmental Laws; (b) obtain and renew all Environmental Permits required for its operations; and (c) implement any and all investigation, remediation, removal and response actions to prevent or remediate the release of any Hazardous Materials on, at, or from any of its Real Estate, except where a requirement of Environmental Law is being contested in good faith and by proper proceedings and adequate reserves have been set aside and are being maintained by the Loan Parties or any of its Subsidiaries with respect to such circumstances in accordance with GAAP.

          6.15 Further Assurances.

               (a) Execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements and other documents), that may be required under any applicable Law, or which the Administrative Agent may reasonably request, to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties and to the extent required by, and subject to the limitations set forth in, the Security Documents and this Agreement.

               (b) If any material personal property assets are acquired by any Loan Party after the Closing Date (other than assets constituting Collateral under the Security Documents that become subject to the Lien of the Security Documents upon acquisition thereof), notify the Administrative Agent thereof (in the case of IP Collateral, within the time frames set forth in Section 6.02(d)), and the Loan Parties will cause such assets to be subjected to a perfected Lien securing the Obligations and will take such actions as shall be necessary or shall be requested by the Administrative Agent to grant and perfect such Liens, in each case to the extent required by, and subject to the limitations set forth in, the Security Documents and this Agreement, all at the expense of the Loan Parties. In no event shall compliance with this Section 6.15(b) waive or be deemed a waiver or Consent to any transaction giving rise to the need to comply with this Section 6.15(b) if such transaction was not otherwise permitted by this Agreement.

               (c) If, after the Closing Date, any Loan Party acquires a fee interest in real property located in the United States with a fair market value of $5.0 million or more (other than to the extent such real property was financed through the incurrence of any Indebtedness permitted by Section 7.03), such Loan Party shall notify the Administrative Agent and, if requested by Required Lenders or Administrative Agent, take such actions and execute such documents as the Administrative Agent shall reasonably require to create a mortgage Lien on such real property.

          6.16 Post-Closing Matters. Take the actions set forth on Schedule 6.16 by the applicable date set forth for each such action thereon.

ARTICLE VII

NEGATIVE COVENANTS

          So long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied (other than contingent obligations for which a claim has not been asserted):

          7.01 Liens. No Loan Party shall create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than, as to all of the above, Permitted Encumbrances. Notwithstanding the foregoing, the Borrower and 54th Street and Subsidiaries of 54th Street shall not be permitted to grant any security interest in their respective shares or

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assets other than (i) pursuant to the Loan Documents, (ii) pursuant to the Loan Documents (as defined in the US Term Loan Credit Agreement), (iii) pursuant to the Loan Documents (as defined in the ABL Credit Agreement) and (iv) in the case of a Specified Subsidiary, Permitted Specified Subsidiary Encumbrances.

          7.02 Investments. No Loan Party shall make any Investments, except Permitted Investments.

          7.03 Indebtedness. No Loan Party shall, nor shall it permit any Subsidiary to, incur any Indebtedness, except Permitted Indebtedness. Notwithstanding the foregoing, other than intercompany transfers among the Subsidiaries of 54th Street and transfers to the Borrower (including intermediate transfers to 54th Street in order to effectuate transfers to the Borrower), the Borrower and 54th Street and Subsidiaries of 54th Street shall not be permitted to incur any Indebtedness other than (i) pursuant to the Loan Documents, (ii) pursuant to the Loan Documents (as defined in the ABL Credit Agreement), and (iii) any Specified Subsidiary may incur Permitted Specified Subsidiary Indebtedness. The accrual of interest and the accretion or amortization of original issue discount on Indebtedness and the payment of interest in the form of additional Indebtedness originally incurred in accordance with this Section 7.03 will not constitute an incurrence of Indebtedness. For purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on (i) for existing Indebtedness, the relevant exchange rate applied for purposes of preparing the most recent balance sheet filed by the Parent with the SEC, and (ii) for the Indebtedness being incurred, the relevant currency exchange rate in effect on the date such Indebtedness is incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased based on the relevant exchange rate applied for purposes of preparing the most recent balance sheet filed by the Parent with the SEC.

          7.04 Fundamental Changes. No Loan Party shall merge, dissolve, liquidate, consolidate with or into another Person, except that:

               (a) (i) any Loan Party (other than the Parent) or any Subsidiary which is a Loan Party may merge or consolidate with or into any other Subsidiary which is a Loan Party, provided that in any merger or consolidation involving the Borrower, the Borrower shall be the continuing or surviving Person, and (ii) any Loan Party may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to another Loan Party other than the Parent;

               (b) any Loan Party may consummate any of following transactions, provided that such transaction is otherwise permitted as a Permitted Investment, Permitted Acquisition or Permitted Disposition: (i) any Subsidiary which is not a Loan Party may merge or consolidate with or into a Loan Party, provided that a Loan Party shall be the continuing or surviving Person and that any Indebtedness incurred as a result of such fundamental change is Permitted Indebtedness, and (ii) so long as no Default exists or would immediately result therefrom, any Loan Party (other than the Borrower) may merge with or into or consolidate with any other Person or permit any other Person to merge with or into or consolidate with it; provided that a Loan Party is the surviving Person; and

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               (c) any Guarantor (other than the Parent) may liquidate or dissolve or change its legal form if the Parent determines in good faith that such action is in the best interests of the Parent and its Subsidiaries and is not materially disadvantageous to the Lenders.

          7.05 Dispositions. No Loan Party shall make any Disposition, except Permitted Dispositions. To the extent any Collateral is Disposed of as permitted by this Section 7.05 to any Person other than any Loan Party, such Collateral shall be sold free and clear of the Liens created by the Loan Documents.

          7.06 Restricted Payments. No Loan Party shall declare or make any Restricted Payment, except:

               (a) any Loan Party may make Restricted Payments to any other Loan Party; provided, however, that any Restricted Payment made by any Loan Party to the Parent shall be conditional upon, and made substantially simultaneously with, (i) a transfer by the Parent to the US Borrower or its Subsidiaries, or (ii) a transfer by the Parent to a Subsidiary that is not a Loan Party in connection with a Permitted Investment, in each case in an amount equal to such Restricted Payment;

               (b) any Loan Party may declare and make dividend payments or other distributions payable solely in its Equity Interests (other than Disqualified Stock not otherwise permitted by Section 7.03);

               (c) to the extent constituting Restricted Payments, the Loan Parties may enter into and consummate transactions permitted by Section 7.02 or 7.04;

               (d) in the case of the Parent, repurchases of Equity Interests in the Parent deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

               (e) the Parent may pay for and otherwise effect the repurchase, retirement or other acquisition or retirement for value of Equity Interests of the Parent by any employee, director or officer of the Parent or any of its Subsidiaries pursuant to any equity plan, stock option plan or any other benefit plan or any agreement with any employee, director or officer of the Parent or any of its Subsidiaries; provided that the aggregate amount of Restricted Payments made pursuant to this clause (e) shall not exceed $5,000,000 in any fiscal year;

               (f) any Loan Party may (i) pay cash in lieu of fractional Equity Interests in connection with any dividend, split or combination thereof or any Permitted Investment and (ii) honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion;

               (g) any Restricted Payments permitted under the Senior Notes Indenture as in effect on the date hereof (and without regard to any waivers or consents that may be obtained thereunder after the date hereof); provided that no such payments made to a Subsidiary or the shareholders thereof that is not an Americas Subsidiary shall exceed $10,000,000 in the aggregate at any one time outstanding when aggregated with any Investments made under clause (l)(v) of the definition of “Permitted Investments”; and

          (h) 54th Street may make Restricted Payments to QS Holdings or any other direct or indirect Subsidiary of the Parent; provided, however, that any such Restricted Payment shall be conditional upon, and made substantially simultaneously with, (i) transfer by QS Holdings or any other

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direct or indirect Subsidiary of the Parent to the Borrower in an amount equal to such Restricted Payment, or (ii) a Permitted Investment in an amount equal to such Restricted Payment.

          7.07 Prepayments of Subordinated Indebtedness. No Loan Party shall voluntarily prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner any Subordinated Indebtedness, or make any payment in violation of any subordination terms of any Subordinated Indebtedness, except refinancings and refundings of such Subordinated Indebtedness to the extent permitted hereunder.

          7.08 Change in Nature of Business. No Loan Party shall engage in any line of business substantially different from the lines of business conducted by such Loan Party on the date hereof or any business reasonably related, ancillary, complementary or incidental thereto.

          7.09 Transactions with Affiliates. No Loan Party shall enter into, renew, extend or be a party to any transaction of any kind with any Affiliate of any Loan Party, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Loan Parties as would be obtainable by the Loan Parties at the time in a comparable arm’s length transaction with a Person other than an Affiliate, provided that the foregoing restriction shall not apply to (a) a transaction between or among the Loan Parties not prohibited hereunder; (b) transactions not otherwise prohibited hereunder between or among the Parent or any Subsidiary or any entity that becomes a Subsidiary as a result of such transaction; (c) Restricted Payments permitted under Section 7.06; (d) the transactions occurring on the Closing Date and the payment of fees and expenses related thereto; (e) the issuance of Equity Interests in the Parent to any officer, director, employee or consultant of the Parent or any of its Subsidiaries; (f) transactions, arrangements, reimbursements and indemnities permitted between or among such parties under this Agreement; (g) the payment of reasonable fees and out-of-pocket costs to directors, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of the Parent or any of its Subsidiaries; (h) any issuances of securities of the Parent (other than Disqualified Stock) or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements, stock options and stock ownership plans (in each case in respect of Equity Interests in the Parent) of the Parent or any of its Subsidiaries; or (i) transactions not otherwise prohibited hereunder between the Parent or any Subsidiary and Rhône Capital III L.P. or any of its Affiliates.

          7.10 Burdensome Agreements. No Loan Party shall enter into or permit to exist any Contractual Obligation (other than (w) the Senior Note Indenture, (x) this Agreement or any other Loan Document, (y) the ABL Credit Agreement or any document relating thereto, or (z) the US Term Loan Credit Agreement or any document relating thereto) that limits the ability (i) of any Loan Party to make Restricted Payments to any Loan Party or (ii) of the Loan Parties to create, incur, assume or suffer to exist Liens on property of such Person in favor of the Administrative Agent under the Loan Documents; provided, however, that none of the foregoing shall prohibit (A) any negative pledge incurred or provided in favor of any holder of Indebtedness described under clauses (h) and (u) of the definition of Permitted Encumbrances permitted hereunder solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; (B) customary anti-assignment provisions in contracts restricting the assignment thereof or in contracts for the Disposition of any assets or any Person, provided that the restrictions in any such contract shall apply only to the assets or Person that is to be Disposed of; (C) customary provisions in leases of real property that prohibit mortgages or pledges of the lessee’s interest under such lease or restricting subletting or assignment of such lease; (D) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures to the extent such joint ventures are not prohibited hereunder; (E) customary restrictions arising under licenses and other contracts entered into in the ordinary course of business to the extent permitted hereunder; (F) customary restrictions under Guarantees of the Parent in connection with the French Credit Agreement; (G)

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Contractual Obligations which (x) exist on the date hereof and (to the extent not otherwise permitted by this Section 7.10) are listed on Schedule 7.10 hereto and (y) to the extent Contractual Obligations permitted by clause (x) are set forth in an agreement evidencing Indebtedness, are set forth in any agreement evidencing any permitted renewal, extension or refinancing of such Indebtedness so long as such renewal, extension or refinancing does not materially expand the scope of such Contractual Obligation in an manner adverse to the Lenders; or (H) Contractual Obligations which are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary, so long as such Contractual Obligations were not entered into in contemplation of such Person becoming a Subsidiary.

          7.11 ERISA. No Loan Party shall, and each Loan Party shall ensure that each ERISA Affiliate shall not (a) terminate any Plan so as to incur any liability to the PBGC, (b) fail to pay to any Plan any material contribution which it is obligated to pay under the terms of such Plan for a period of 30 days, or (c) allow or suffer to exist any ERISA Event to the extent that the occurrence or nonoccurrence of such event or condition is within the control of any Loan Party or ERISA Affiliate and would reasonably be expected to result in a Material Adverse Effect.

          7.12 Amendment of Organization Documents. No Loan Party shall amend, modify or waive any Loan Party’s rights under its Organization Documents (a) in a manner materially adverse to the Credit Parties or (b) in any manner that would cause a Material Adverse Effect.

          7.13 Fiscal Year. No Loan Party shall change the Fiscal Year of any Loan Party without the prior consent of the Administrative Agent, except as required by GAAP.

          7.14 Financial Covenants.

               (a) Minimum Americas Consolidated EBITDA. The Loan Parties shall not permit Americas Consolidated EBITDA for any Measurement Period, calculated as of the last day of any Measurement Period ending on any of the dates specified below, to be less than the correlative amount indicated.

Measurement Period Ending	Americas Consolidated EBITDA
January 31, 2010	$	20,000,000
April 30, 2010	$	20,000,000
July 31, 2010	$	30,000,000
October 31, 2010	$	40,000,000
January 31, 2011	$	45,000,000
April 30, 2011	$	50,000,000
July 31, 2011	$	55,000,000
October 31, 2011	$	65,000,000
January 31, 2012	$	70,000,000
April 30, 2012	$	75,000,000
July 31, 2012	$	80,000,000
October 31, 2012 and the last day of each Fiscal Quarter thereafter	$	85,000,000

               (b) Availability. The Loan Parties shall not permit Domestic Availability at any time to be less than seven and one half percent (7.5%) of the Total Loan Cap.

          7.15 Restrictions on QS Holdings. The Parent shall cause QS Holdings not to (i) issue, create, assume, incur, or otherwise become liable for, or permit to exist, any Indebtedness (other than

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intercompany Indebtedness owed to Quiksilver International Pty. Ltd., the Borrower, 54th Street or one of its Subsidiaries outstanding on the Closing Date), (ii) grant any Liens in respect of the Indebtedness or other obligations of any other Person except pursuant to the Loan Documents and the documentation relating to the French Credit Agreement (including the pledge of Equity Interests in Biarritz Holdings S.à r.l), (iii) enter into any commitment to contribute capital to, or purchase securities from, any other Person, (iv) undertake capital expenditures, (v) to the fullest extent permitted by law, dissolve or liquidate or consolidate or merge with or into any other entity in whole or in part or (vi) engage in any business other than (A) holding the Equity Interests of 54th Street and Biarritz Holdings S.à r.l. and its other Subsidiaries as of the Closing Date and intercompany receivables, (B) entry into, and performance of obligations under, documentation relating to the French Credit Agreement on terms contemplated by the French Credit Agreement as in effect on the date hereof or otherwise no more adverse to the Lenders than such terms as in effect on the date hereof, (C) entry into, and performance of obligations under, the Loan Documents, (D) activities relating to ownership, licensing and sublicensing of Intellectual Property and defense and prosecution thereof, (E) maintenance of its existence, including the ability to incur fees, costs and expenses relating to such maintenance, (F) participating in tax, accounting and other administrative matters as a member of the consolidated group of the Parent and its Subsidiaries, (G) incurring fees, costs and expenses for legal, tax and accounting issues of QS Holdings, (H) the performance of obligations under and compliance with its Organization Documents, or any applicable law, ordinance, regulation, rule, order, judgment, decree or permit, including, without limitation, as a result of or in connection with the activities of the Borrower or its Subsidiaries, (I) activities relating to intercompany Indebtedness outstanding on the Closing Date and (J) incurrence of, and compliance with, tax obligations in connection with any of the foregoing. The Parent shall cause QS Holdings to do all things necessary to observe organizational formalities and preserve its existence.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

          8.01 Events of Default. Any of the following shall constitute an “Event of Default”:

               (a) Non-Payment. The Borrower or any other Loan Party fails to pay when and as required to be paid herein: (i) any amount of principal of any Loan, or (ii) any interest on any Loan, which failure continues for three (3) Business Days, or (iii) any other amount payable hereunder or under any other Loan Document, which failure continues for five (5) Business Days; or

               (b) Specific Covenants. Any Loan Party fails to perform or observe any term, covenant or agreement contained in Article VII; or

               (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after notice thereof by the Administrative Agent to the Borrower; or

               (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document shall be incorrect or misleading in any material respect when made or deemed made; or

               (e) Cross-Default; Cross-Acceleration. (i) Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due, after giving effect to any applicable grace period (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise), in respect of

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any Material Indebtedness; (B) fails to observe or perform any other agreement or condition relating to any such Material Indebtedness (excluding Indebtedness under the French Credit Agreement) or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Material Indebtedness (excluding Indebtedness under the French Credit Agreement) (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, in each case prior to its stated maturity; provided that any such failure is unremedied and is not waived by the holders of such Indebtedness; provided, further, that the foregoing clause (i)(B) shall not apply to (x) secured Indebtedness of a Loan Party or a Subsidiary that becomes due upon the sale or transfer by such Loan Party or Subsidiary of the property or assets securing such Indebtedness, or (y) scheduled payments, defeasances or redemptions of Indebtedness on the dates set forth in the instruments and agreements governing such Indebtedness; or (C) fails to observe or perform any other agreement or condition relating to the French Credit Agreement or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or permit to cause, the lenders thereunder, with the giving of notice if required, to declare the Indebtedness under the French Credit Agreement due and payable prior to its stated maturity; provided that any such failure related to a non-payment agreement or condition is unremedied and not waived by the lenders thereunder for 30 days following the relevant date on which the failure occurred; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Loan Party or such Subsidiary as a result thereof is greater than $15,000,000; provided that such failure is unremedied and is not waived by the applicable counterparty to such Swap Contract; or

               (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries (other than any Immaterial Subsidiary but including any group of two or more Immaterial Subsidiaries that on a combined basis would be, as of the last day of the most recently ended Fiscal Quarter of the Parent for which financial statements are available, a Material Subsidiary) institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is otherwise appointed and the appointment continues undischarged, undismissed or unstayed for sixty (60) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or

               (g) Judgments. There is entered against any Loan Party or any Subsidiary thereof one or more final judgments for the payment of money in an aggregate amount (as to all such final judgments) exceeding $10,000,000 (to the extent (i) not covered by independent third-party insurance or (ii) not paid) and such final judgment is not, within sixty (60) days after the entry thereof, satisfied, vacated, discharged or execution thereof stayed or bonded pending appeal, or such judgment is not satisfied, vacated or discharged prior to the expiration of any such stay; or

               (h) ERISA. (i) One or more ERISA Events occur with respect to a Plan which individually or in the aggregate has resulted or could reasonably be expected to result in liability of

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any Loan Party or ERISA Affiliate in an aggregate amount in excess of $10,000,000 or which would reasonably be expected to result in a Material Adverse Effect, or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $10,000,000 or which would reasonably be expected to result in a Material Adverse Effect; or

               (i) Invalidity of Loan Documents. (i) Any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder (including as a result of a transaction permitted under Section 7.04 or 7.05) or as a result of acts or omissions by the Administrative Agent or any Lender or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party or any Subsidiary contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document or seeks to avoid, limit or otherwise adversely affect any Lien purported to be created under any Security Document; or (ii) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party or any Subsidiary not to be, a valid and perfected Lien on any Collateral (other than an immaterial portion of the Collateral), with the priority required by the applicable Security Document other than pursuant to the terms hereof or thereof (including as a result of a transaction permitted under Section 7.04 or 7.05) except to the extent resulting from the failure of the Administrative Agent or the Collateral Agent to file UCC continuation statements or to maintain “control” (as such term is defined in the UCC), as applicable; or

               (j) Guaranty. The termination or attempted termination by any Loan Party of any Facility Guaranty except as expressly permitted or contemplated hereunder or under any other Loan Document; or

               (k) Subordination. (i) The subordination provisions of the documents evidencing or governing any Subordinated Indebtedness (the “Subordination Provisions”) shall, in whole or in part, terminate, cease to be effective except in accordance with its terms; or (ii) the Borrower or any other Loan Party shall disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Subordination Provisions, (B) that the Subordination Provisions exist for the benefit of the Credit Parties, or (C) that all payments of principal of or premium and interest on the applicable Subordinated Indebtedness, or realized from the liquidation of any property of any Loan Party, shall be subject to any of the Subordination Provisions; or

               (l) Amendment to Services Fee Agreements. Any provision of either Services Fee Agreement is amended, modified or waived in a manner materially adverse to the Credit Parties; or

               (m) Board of Directors. The board of directors of the Parent fails to nominate, or the Parent fails to vote its proxies in favor of, any director proposed by Triton Onshore SPV L.P. or Triton Coinvestment SPV L.P. in accordance with the Warrants; or

               (n) COMI. The “centre of main interests” (within the meaning of the EC Insolvency Regulation) of the Borrower or 54th Street is at any time not in Luxembourg; or

               (o) French Closing. The Closing Date (as defined in the French Credit Agreement) does not occur on or prior to September 29, 2009 as a result of the failure of a condition precedent in the French Credit Agreement; provided that if (i) the Parent has advised the Administrative Agent in writing that it believes in good faith such condition precedent will be satisfied no later than

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October 31, 2009, (ii) the lenders under the French Credit Agreement have entered into a new extension through October 31, 2009 on terms substantially identical to the terms of the extension delivered to the Administrative Agent on or prior to the date hereof in accordance with Section 4.01(w) and (iii) no other material amendments have been made to the French Credit Agreement (other than ones to which the Administrative Agent has consented) and no material amendments to the French Credit Agreement requested by the lenders under the French Credit Agreement are pending (other than ones to which the Administrative Agent has consented) as of September 29, 2009, then no Event of Default shall be deemed to occur under this Section 8.01(o) unless the Closing Date (as defined in the French Credit Agreement) does not occur on or prior to October 31, 2009.

          8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of the Required Lenders, take any or all of the following actions:

               (a) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Loan Parties; and

               (b) whether or not the maturity of the Obligations shall have been accelerated pursuant hereto, proceed to protect, enforce and exercise all rights and remedies of the Credit Parties under this Agreement, any of the other Loan Documents or applicable Law, including, but not limited to, by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement and the other Loan Documents or any instrument pursuant to which the Obligations are evidenced, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Credit Parties;

provided, however, that upon the entry of an order for relief with respect to any Loan Party or any Subsidiary thereof under the Bankruptcy Code of the United States of America, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, in each case without further act of the Administrative Agent or any Lender.

          No remedy herein is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of Law.

          8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

          First, to payment of that portion of the Obligations constituting fees, indemnities, Credit Party Expenses and other amounts (including amounts payable under Article III) payable to the Administrative Agent in its capacity as such;

          Second, to payment of that portion of the Obligations constituting indemnities, Credit Party Expenses, and other amounts (other than principal, interest and fees) payable to the Lenders (including amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;

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          Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans and other Obligations, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;

          Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Fourth held by them;

          Fifth, to payment of all other Obligations, ratably among the Credit Parties in proportion to the respective amounts described in this clause Fifth held by them; and

          Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Loan Parties or as otherwise required by Law.

ARTICLE IX

ADMINISTRATIVE AGENT AND LENDERS

          9.01 Appointment and Authority.

               (a) Each Lender hereby irrevocably designates Rhône Group L.L.C. as Administrative Agent under this Agreement and the other Loan Documents. The general administration of the Loan Documents shall be by the Administrative Agent. The Lenders each hereby (a) irrevocably authorizes the Administrative Agent (i) to enter into the Loan Documents to which it is a party, and (ii) at its discretion, to take or refrain from taking such actions as agent on its behalf and to exercise or refrain from exercising such powers under the Loan Documents as are delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably incidental thereto, and (b) agrees and consents to all of the provisions of the Security Documents. All Collateral shall be held or administered by the Administrative Agent (or its duly-appointed agent) for its own benefit and for the ratable benefit of the other Credit Parties. Any proceeds received by the Administrative Agent from the foreclosure, sale, lease or other disposition of any of the Collateral and any other proceeds received pursuant to the terms of the Security Documents or the other Loan Documents shall be paid over to the Administrative Agent for application as provided in this Agreement and the other Loan Documents. The Administrative Agent shall have no duties or responsibilities except as set forth in this Agreement and the other Loan Documents, nor shall it have any fiduciary relationship with any other Credit Party, and no implied covenants, responsibilities, duties, obligations, or liabilities shall be read into the Loan Documents or otherwise exist against the Administrative Agent.

               (b) The provisions of this Article IX are solely for the benefit of the Administrative Agent and the Lenders, and no Loan Party or any Subsidiary thereof shall have rights as a third party beneficiary of any of such provisions (other than the provisions of Section 9.06).

          9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in their capacity as a Lender as any other Lender and may exercise the same as though they it was not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Loan Parties or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.

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          9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent:

          (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

          (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its respective opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law; and

          (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Loan Parties or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable to any Credit Party for any action taken or not taken by it (i) with the Consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a final and non-appealable judgment of a court of competent jurisdiction.

          The Administrative Agent shall not be deemed to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Loan Parties or a Lender. In the event that the Administrative Agent obtains such actual knowledge or receives such a notice, the Administrative Agent shall give prompt notice thereof to each of the other Lenders. Upon the occurrence of an Event of Default, the Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders. Unless and until the Administrative Agent shall have received such direction, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to any such Default or Event of Default as they shall deem advisable in the best interest of the Credit Parties. In no event shall the Administrative Agent be required to comply with any such directions to the extent that the Administrative Agent believes that its compliance with such directions would be unlawful.

          The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

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          9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including, but not limited to, any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received written notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for any Loan Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

          9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities as the Administrative Agent.

          9.06 Resignation of Administrative Agent. The Administrative Agent may at any time give written notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States and shall, unless an Event of Default has occurred and is continuing at the time of such appointment, be reasonably acceptable to the Borrower (whose consent shall not be unreasonably withheld or delayed). Notwithstanding the foregoing, the Required Lenders shall have the right to appoint a successor who is an Affiliate of Rhône Capital III L.L.C. upon prior written notice to the Borrower but without consultation with the Borrower, and such successor need not be a bank with an office in the United States or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any Collateral held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such Collateral until such time as a successor Administrative Agent is appointed) and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). After the retiring Administrative Agent’s resignation hereunder and under the other Loan

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Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Administrative Agent hereunder.

          9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. The Administrative Agent shall not have any duty or responsibility to provide any Credit Party with any other credit or other information concerning the affairs, financial condition or business of any Loan Party that may come into the possession of the Administrative Agent.

          9.08 No Other Duties, Etc. Notwithstanding anything to the contrary in this Agreement or any of the other Loan Documents, no Person who is or becomes an Arranger shall have any powers, rights, duties, responsibilities or liabilities with respect to this Agreement and the other Loan Documents.

          9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Loan Parties) shall be entitled and empowered, by intervention in such proceeding or otherwise:

               (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the Administrative Agent and the other Credit Parties (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Administrative Agent, such Credit Parties and their respective agents and counsel and all other amounts due the Lenders, the Administrative Agent and such Credit Parties under Section 10.04) allowed in such judicial proceeding; and

               (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 10.04.

          Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization,

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arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

          9.10 Collateral and Guaranty Matters. The Credit Parties irrevocably authorize the Administrative Agent, and Administrative Agent agrees, at its option and in its discretion:

               (a) to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon payment in full of all Obligations (other than contingent indemnification obligations for which no claim has been asserted), (ii) that is Disposed of or to be Disposed of as part of or in connection with any Disposition permitted hereunder or under any other Loan Document, or (iii) if approved, authorized or ratified by the Required Lenders in accordance with Section 10.01;

               (b) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by clause (h) of the definition of Permitted Encumbrances; and

               (c) to release any Guarantor from its obligations under any Facility Guaranty and each other applicable Loan Document if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

Upon request by the Administrative Agent at any time, the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents) will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Facility Guaranty and each other applicable Loan Document pursuant to this Section 9.10. In each case as specified in this Section 9.10, the Administrative Agent will, at the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and Lien granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Facility Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.10.

          9.11 Notice of Transfer. The Administrative Agent may deem and treat a Lender party to this Agreement as the owner of such Lender’s portion of the Loans and Commitments for all purposes, unless and until, and except to the extent, an Assignment and Assumption shall have become effective as set forth in Section 10.06.

          9.12 Agency for Perfection. The Administrative Agent and each Lender hereby appoints the Administrative Agent and each other Lender as agent for the purpose of perfecting Liens for the benefit of the Administrative Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC or any other applicable Law can be perfected only by possession. Should any Lender (other than the Administrative Agent) obtain possession of any such Collateral, such Lender shall notify the Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative Agent’s instructions.

          9.13 Indemnification of Administrative Agent. The Lenders shall indemnify the Administrative Agent (to the extent not reimbursed by the Loan Parties and without limiting the obligations of Loan Parties hereunder), ratably according to their Applicable Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or

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asserted against the Administrative Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by the Administrative Agent in connection therewith; provided, that no Lender shall be liable under this Section 9.13 for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a final and nonappealable judgment of a court of competent jurisdiction.

          9.14 Relation among Lenders. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Administrative Agent) authorized to act for, any other Lender.

          9.15 Defaulting Lender.

               (a) If for any reason any Lender shall fail or refuse to abide by its obligations under this Agreement, and such failure is not cured within two (2) Business Days of receipt from the Administrative Agent of written notice thereof, then, in addition to the rights and remedies that may be available to the other Credit Parties, the Loan Parties or any other party at law or in equity, and not at limitation thereof, such Defaulting Lender’s right to participate in the administration of, or decision-making rights related to, the Obligations, this Agreement or the other Loan Documents shall be suspended during the pendency of such failure or refusal. Such decision-making and participation rights shall be restored only upon the payment by the Defaulting Lender of the expenses or other amounts as to which it is delinquent, together with interest thereon at the rate set forth in Section 2.08(b) hereof from the date when originally due until the date upon which any such amounts are actually paid.

               (b) Each Defaulting Lender shall indemnify the Administrative Agent and each non-Defaulting Lender from and against any and all loss, damage or expenses, including but not limited to reasonable attorneys’ fees and funds advanced by the Administrative Agent or by any non-Defaulting Lender, on account of a Defaulting Lender’s failure to perform its obligations under the Loan Documents.

          9.16 Actions in Concert. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or any other Loan Document (including exercising any rights of setoff) without first obtaining the prior written consent of the Administrative Agent and the Required Lenders, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the other Loan Documents shall be taken in concert and at the direction or with the consent of the Administrative Agent or the Required Lenders.

ARTICLE X

MISCELLANEOUS

          10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no Consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders (or the Administrative Agent, with the Consent of the Required Lenders), and the Borrower or the applicable Loan Party, as the case may be, and each such waiver or Consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

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               (a) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest or fees due to the Lenders (or any of them) hereunder or under any of the other Loan Documents without the written Consent of each Lender entitled to such payment (whose consent shall be sufficient therefor without the consent of the Required Lenders);

               (b) reduce the principal of, or the rate of interest specified herein on, any Loan, without the written Consent of each Lender entitled to such amount (whose consent shall be sufficient therefor without the consent of the Required Lenders); provided, however, that only the Consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest or other amounts at the Default Rate;

               (c) change Section 2.13 or Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written Consent of each Lender;

               (d) change any provision of this Section or reduce the percentage specified in the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written Consent of each Lender;

               (e) except as permitted hereunder or under any other Loan Document (including pursuant to a transaction permitted under Section 7.04 or Section 7.05), release, or limit the liability of, the Borrower without the written Consent of each Lender; or

               (f) except for Permitted Dispositions, release all or substantially all of the Collateral from the Liens of the Security Documents without the written Consent of each Lender;

and, provided further, that no amendment, waiver or Consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or Consent hereunder.

          If any Lender does not Consent (a “Non-Consenting Lender”) to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the Consent of each or each affected Lender and that has been approved by the Required Lenders, the Borrower may replace such Non-Consenting Lender in accordance with Section 10.13; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).

          10.02 Notices; Effectiveness; Electronic Communications.

               (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

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               (i) if to the Loan Parties or the Administrative Agent, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and

               (ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

               (b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it in writing, provided that approval of such procedures may be limited to particular notices or communications.

          Unless the Administrative Agent otherwise prescribes in writing, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

               (c) Change of Address, Etc. Each of the Loan Parties and the Administrative Agent may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Administrative Agent. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower and the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

               (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Loan Parties even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Loan Parties shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or

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on behalf of the Loan Parties. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.

          10.03 No Waiver; Cumulative Remedies. No failure by any Credit Party to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided herein and in the other Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether any Credit Party may have had notice or knowledge of such Default at the time.

          10.04 Expenses; Indemnity; Damage Waiver.

               (a) Costs and Expenses. The Borrower shall pay all Credit Party Expenses.

               (b) Indemnification by the Loan Parties. The Loan Parties shall indemnify the Administrative Agent (and any sub-agent thereof), each other Credit Party, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, causes of action, damages, liabilities, settlement payments, costs and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee, but excluding Taxes, which shall be governed by Section 3.01), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agents thereof) and their Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to any Loan Party or any of its Subsidiaries, (iii) any claims of, or amounts paid by any Credit Party to any Person which has entered into a control agreement with any Credit Party hereunder, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party or any of the Loan Parties’ directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence, willful misconduct or bad faith of such Indemnitee.

               (c) Reimbursement by Lenders. Without limiting their obligations under Section 9.13 hereof, to the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or

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asserted against the Administrative Agent (or any such sub-agent) in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(c).

          (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, the Loan Parties shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

          (e) Payments. All amounts due under this Section shall be payable on demand (accompanied by back-up documentation) therefor.

          (f) Survival. The agreements in this Section shall survive the resignation of the Administrative Agent, the assignment of any Loan by any Lender, the replacement of any Lender and the repayment, satisfaction or discharge of all the other Obligations and the termination of this Agreement.

          10.05 Reinstatement; Payments Set Aside. To the extent that any payment by or on behalf of the Loan Parties is made to any Credit Party, or any Credit Party exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Credit Party in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its Applicable Percentage (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

          10.06 Successors and Assigns.

               (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written Consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of Section 10.06(b), (ii) by way of participation in accordance with the provisions of Section 10.06(d), or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.06(f) (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties

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hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 10.06(d) and, to the extent expressly contemplated hereby, the Related Parties of each of the Credit Parties) any legal or equitable right, remedy or claim under or by reason of this Agreement.

               (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

                    (i) Minimum Amounts.

                         (A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Loans at the time owing to it, or in the case of an assignment to an Eligible Assignee, no minimum amount need be assigned; and

                         (B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $25,000,000 unless each of the Administrative Agent and the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed);

                    (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned;

                    (iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

                         (A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless such assignment is to an Eligible Assignee of the type described in clauses (a) and (b) of the definition thereof; and

                         (B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required unless such assignment is to a Lender or an Affiliate of a Lender.

               (iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption. The assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such

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Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04 and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon request, the Borrower (at their expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.06(d).

               (c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders and Participants and the Commitments of, and principal amounts of and stated interest thereon of the Borrowing owing to, each Lender and Participant pursuant to the terms hereof from time to time (the “Register”). The Borrowing is a registered obligation and the right, title and interest of any Lender, Participant or its assignees in and to such Obligation shall be transferable only upon notation of such transfer in the Register. The entries in the Register shall be conclusive, absent manifest error, and the Loan Parties, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice. This Section 10.06(c) shall be construed so that the Obligations are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any regulations promulgated thereunder (and any other relevant or successor provisions of the Code or such regulations).

               (d) Participations. Any Lender may at any time, without the consent of, or notice to, the Loan Parties or the Administrative Agent, sell participations to any Person (other than a natural person or the Loan Parties or any of the Loan Parties’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Loans); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Loan Parties, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any Participant shall agree in writing to comply with all confidentiality obligations set forth in Section 10.07 as if such Participant was a Lender hereunder.

          Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. Subject to subsection (e) of this Section, the Loan Parties agree that each Participant shall be entitled to the benefits of Sections 3.01 and 3.04 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.06(b); provided that such Participant’s participation is recorded in the Register as set forth in Section 10.06(c) as though it were a Lender.

               (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.04 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant. A Participant shall not be

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entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant complies, for the benefit of the Loan Parties, with Section 3.01(e), (f) or (g), as applicable, as though it were a Lender.

               (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

               (g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

          10.07 Treatment of Certain Information; Confidentiality. Each of the Credit Parties agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, funding sources, attorneys, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to any Credit Party or any of their respective Affiliates on a non-confidential basis from a source other than the Loan Parties (only if such Credit Party has no knowledge that such source itself is not in breach of a confidentiality obligation).

          For purposes of this Section, “Information” means all information received from the Loan Parties or any Subsidiary thereof relating to the Loan Parties or any Subsidiary thereof or their respective businesses, other than any such information that is available to any Credit Party on a non-confidential basis prior to disclosure by the Loan Parties or any Subsidiary thereof (provided that if such information is furnished by a source known to such Credit Party to be subject to a confidentiality obligation, such source, to the knowledge of such Credit Party, is not in violation of such obligation by such disclosure). Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

          Each of the Credit Parties acknowledges that (a) the Information may include material non-public information concerning the Loan Parties or a Subsidiary, as the case may be, (b) it has

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developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.

          10.08 [Reserved].

          10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

          10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous letters of intent, commitment letters, agreements and understandings, oral or written, relating to the subject matter hereof, including any confidentiality agreement. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic image scan transmission (e.g., “pdf” or “tif” via e-mail) shall be as effective as delivery of a manually executed counterpart of this Agreement.

          10.11 Survival. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and the Lenders, regardless of any investigation made by the Administrative Agent or any Lenders or on their behalf and notwithstanding that the Administrative Agent and the Lenders may have had notice or knowledge of any Default at the time of making the Loans, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder (other than contingent indemnity obligations for which claims have not been asserted) shall remain unpaid or unsatisfied. Further, the provisions of Article III, Article IX and Section 10.04 all survive and remain in full force and effect after the termination of this Agreement or any provision hereof and repayment of all of the Obligations (including, without limitation, those arising under Article III, Article IX and Section 10.04) hereunder.

          10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

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          10.13 Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Borrower may, at the Borrower’s sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

               (a) such Lender shall have received payment of an amount equal to the outstanding principal amount of its Loans and accrued interest thereon and all other amounts payable to it hereunder and under the other Loan Documents from the assignee (to the extent of such outstanding principal and accrued interest) or the Borrower (in the case of all other amounts);

               (b) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter; and

               (c) such assignment does not conflict with applicable Laws.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.

          10.14 Reserved

          10.15 Issue Price. The parties hereto acknowledge and agree that, for U.S. federal income tax purposes, (A) the making of (i) the US Term Loans in an aggregate principal amount equal to $125,000,000, and (ii) the Loans in an aggregate principal amount equal to €20,000,000, and the issuance of the Warrants, constitute components of an investment unit (an “Investment Unit”), (B) the net aggregate “issue price” of the Investment Unit shall be the Investment Unit Issue Price, (C) the Investment Unit Issue Price shall be allocated among each such component as follows: (i) to the Warrants, the Warrants Issue Price, (ii) to the US Term Loans, the US Term Loan Issue Price and (iii) to the Loans, the Loan Issue Price, and (D) each of the parties shall treat such components on a basis consistent with the foregoing allocations (unless otherwise required by a final determination by the IRS or a court of competent jurisdiction). Solely for purposes of this Section 10.15, the defined terms set forth immediately below shall have the meanings ascribed to them as follows:

          “Investment Unit Issue Price” shall be the amount identified on Schedule 10.15 as the Investment Unit Issue Price.

          “Loan Issue Price” shall be an amount equal to the product of (x) a percentage amount equal to the dollar-equivalent value of €20,000,000 (such amount to be calculated based on the Euro-to-Dollar foreign exchange rate on the Closing Date) (the “Dollar-Equivalent Amount”) divided by the sum of the Dollar-Equivalent Amount and $125,000,000 and (y) the excess of the Investment Unit Issue Price over the Warrants Issue Price.

          “US Term Loan Issue Price” shall be an amount equal to the product of (x) a percentage amount equal to $125,000,000, divided by the sum of the Dollar-Equivalent Amount

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and $125,000,000 and (y) the excess of the Investment Unit Issue Price over the Warrants Issue Price.

          “Warrants Issue Price” shall be the fair market value of the Warrants determined as of the Closing Date as set forth on Schedule 10.15.

          10.16 Governing Law; Jurisdiction; Etc.

               (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

               (b) SUBMISSION TO JURISDICTION. EACH OF THE BORROWER AND THE PARENT IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE BORROWER AND THE PARENT IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWER AND THE PARENT AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

               (c) WAIVER OF VENUE. EACH OF THE BORROWER AND THE PARENT IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE BORROWER AND THE PARENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

               (d) SERVICE OF PROCESS. EACH OF THE BORROWER AND THE PARENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

               (e) ACTIONS COMMENCED BY LOAN PARTIES. EACH OF THE BORROWER AND THE PARENT AGREES THAT ANY ACTION COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY

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IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AS THE ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

          10.17 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

          10.18 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby, each of the Borrower and the Parent acknowledge and agree that: (i) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Loan Parties, on the one hand, and the Credit Parties, on the other hand, as the case may be, and each of the Loan Parties is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the transaction contemplated hereby and the process leading to such transaction, each Credit Party is and has been acting solely as a principal and except as otherwise expressly agreed, is not acting as an advisor, agent or fiduciary, for the Loan Parties or any of their respective Affiliates, stockholders, creditors or employees or any other Person; (iii) none of the Credit Parties has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Loan Parties with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether any of the Credit Parties has advised or is currently advising any Loan Party or any of its Affiliates on other matters) and none of the Credit Parties has any obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; (iv) the Credit Parties and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their respective Affiliates, and none of the Credit Parties has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Credit Parties have not provided any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and each of the Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. Each of the Borrower and the Parent hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against each of the Credit Parties based upon or relating to any allegation that a Credit Party owes such Loan Party and its affiliates and representatives (and their respective affiliates) any fiduciary duty with respect to any of the transactions contemplated hereby, and agrees, to the fullest extent permitted by law, that no Credit Party, or any of its Affiliates, managed funds or Affiliate-managed funds will have any liability (whether direct or indirect) in respect of any claim for breach of fiduciary duty to any such person or any

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other Person with respect to any of the transactions contemplated hereby, including any stockholders, employees or creditors asserting a claim derivatively, in any such Person’s name or otherwise on its behalf.

          10.19 USA PATRIOT Act Notice. Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act.

          10.20 Foreign Asset Control Regulations. Neither of the advance of the Loans nor the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of the Parent or any of its Subsidiaries (a) is or will become a “blocked person” as described in the Executive Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person” or in any manner violative of any such order.

          10.21 Time of the Essence. Time is of the essence of the Loan Documents.

          10.22 Press Releases.

               (a) Each Credit Party executing this Agreement agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure using the name of any Lender or Administrative Agent or its Affiliates or referring to this Agreement or the other Loan Documents without at least two (2) Business Days’ prior notice to such Lender or Administrative Agent and without the prior written consent of such Lender or Administrative Agent unless (and only to the extent that) such Credit Party or Affiliate is required to do so under applicable Law and then, in any event, such Credit Party or Affiliate will consult with such Lender or Administrative Agent before issuing such press release or other public disclosure.

               (b) Each Credit Party agrees that neither it nor its Affiliates will in the future issue any press releases or other public disclosure using the name of the Parent or its Subsidiaries without at least two (2) Business Days’ prior notice to the Administrative Agent and without the prior written consent of the Administrative Agent unless (and only to the extent that) such Credit Party or Affiliate is required to do so under applicable Law and then, in any event, such Credit Party or Affiliate will consult with the Borrower before issuing such press release or other public disclosure. Subject to the foregoing, each Loan Party consents to the publication by Administrative Agent or any Lender of advertising material relating to the financing transactions contemplated by this Agreement using any Loan Party’s name, product photographs, logo or trademark. The Administrative Agent or such Lender shall provide a draft reasonably in advance of any advertising material to the Borrower for review and comment prior to the publication thereof. Administrative Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

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          10.23 [Reserved].

          10.24 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

          10.25 Attachments. The exhibits and schedules attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein, except that in the event of any conflict between any of the provisions of such exhibits (other than the Intercreditor Agreements) and the provisions of this Agreement, the provisions of this Agreement shall prevail.

          10.26 Conflict of Terms. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement conflicts with any provision in any of the other Loan Documents (other than the Intercreditor Agreements), the provision contained in this Agreement shall govern and control. Unless otherwise defined therein, all capitalized terms contained in any exhibit or schedule attached to this Agreement shall have the meanings assigned to such terms in this Agreement.

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

MOUNTAIN & WAVE S.À R.L., as the Borrower
By:
	Name:
	Title:
QUIKSILVER, INC., as a Guarantor
By:
	Name:
	Title:

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RHÔNE GROUP L.L.C., as Administrative Agent
By:
	Name:
	Title:

Credit Agreement (Euro)

ROMOLO HOLDINGS C.V., as Lender
By:
Name:
Title:
TRITON SPV L.P., as Lender
By:	Triton GP SPV LLC, as General Partner
By:
Name:
Title:
TRITON ONSHORE SPV L.P., as Lender
By:	Triton GP SPV LLC, as General Partner
By:
Name:
Title:
TRITON OFFSHORE SPV L.P., as Lender
By:	Triton GP SPV LLC, as General Partner
By:
Name:
Title:
TRITON COINVESTMENT SPV L.P., as Lender
By:	Triton GP SPV LLC
By:
Name:
Title:

Credit Agreement (Euro)

EX-10.3

Exhibit 10.3

WARRANT AND REGISTRATION RIGHTS AGREEMENT

by and among

QUIKSILVER, INC.,

THE INITIAL WARRANT HOLDERS

and

RHÔNE CAPITAL III L.P.

Dated as of July 31, 2009

TABLE OF CONTENTS

			Page
1.	DEFINITIONS			1
2.	ORIGINAL ISSUE OF WARRANTS			6
	2.1.	Form of Warrant Certificates		6
	2.2.	Execution and Delivery of Warrant Certificates		6
3.	EXERCISE PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS			7
	3.1.	Exercise Price		7
	3.2.	Exercise of Warrants		7
	3.3.	Expiration of Warrants		7
	3.4.	Method of Exercise; Payment of Exercise Price		7
	3.5.	Transferability of the Warrants		8
	3.6.	Compliance with the Securities Act		9
	3.7.	Exercise for Series A Preferred Stock		10
4.	REGISTRATION RIGHTS AND PROCEDURES AND LISTING			10
	4.1.	Demand Registration Rights		10
	4.2.	Piggy-Back Registration Rights		13
	4.3.	Expenses of Registration and Selling		14
	4.4.	Obligations of the Company		14
	4.5.	Suspension of Sales		17
	4.6.	Furnishing Information		17
	4.7.	Indemnification		17
	4.8.	Contribution		19
	4.9.	Representations, Warranties and Indemnities to Survive		19
	4.10.	Lock-Up Agreements		19

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TABLE OF CONTENTS
(continued)

			Page
	4.11.	Rule 144 Reporting		20
5.	ADJUSTMENTS			20
	5.1.	Adjustments for Cash Dividends		20
	5.2.	Adjustments Upon Certain Transactions		20
	5.3.	Dividends and Distributions		21
	5.4.	Issuer Tender Offers		22
	5.5.	Consolidation, Merger or Sale		23
	5.6.	Preemptive Rights		24
	5.7.	Consent Upon Certain Issuances		24
	5.8.	Affiliate Transactions		24
	5.9.	Fractional Shares		24
	5.10.	Notice of Adjustment		24
6.	WARRANT TRANSFER BOOKS			25
7.	WARRANT HOLDERS			25
	7.1.	No Voting Rights		25
	7.2.	Right of Action		26
	7.3.	Agent		26
8.	REPRESENTATIONS AND WARRANTIES			26
	8.1.	Representations and Warranties of the Company		26
	8.2.	Representations and Warranties of the Holders		27
9.	COVENANTS			28
	9.1.	Reservation of Common Stock for Issuance on Exercise of Warrants		28
	9.2.	Notice of Dividends		28
	9.3.	HSR Act Compliance		29

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TABLE OF CONTENTS
(continued)

			Page
	9.4.	Board Representation		29
	9.5.	Stockholder Approval		30
	9.6.	Certain Other Events		30
	9.7.	Transfers		31
10.	MISCELLANEOUS			31
	10.1.	Payment of Taxes		31
	10.2.	Surrender of Certificates		31
	10.3.	Mutilated, Destroyed, Lost and Stolen Warrant Certificates		31
	10.4.	Removal of Legends		32
	10.5.	Notices		32
	10.6.	Applicable Law		33
	10.7.	Persons Benefiting		33
	10.8.	Counterparts		33
	10.9.	Amendments		33
	10.10.	Headings		33
	10.11.	Entire Agreement		33
	10.12.	Limitation of Liability		33

SIGNATURES

EXHIBIT A —	Form of Warrant Certificate and Form of Reverse of Warrant Certificate	A-1
EXHIBIT B —	Form of Reverse of Warrant Certificate	B-1
EXHIBIT C —	Certificate of Designations of the Series A Preferred Stock	C-1
SCHEDULE 8.1 — Capitalization

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WARRANT AND REGISTRATION RIGHTS AGREEMENT

     AGREEMENT dated as of July 31, 2009 (the “Issuance Date”) by and among Quiksilver, Inc., a Delaware corporation (the “Company”), the Initial Warrant Holders (defined below) and Rhône Capital III L.P., a Delaware limited partnership (“Rhône Capital III”).

WITNESSETH:

     WHEREAS, the Company is issuing and delivering warrant certificates (the “Warrant Certificates”) evidencing Warrants to purchase 25,653,831 shares, subject to adjustment, of its Common Stock in connection with (i) the execution and delivery of a senior secured term loan facility agreement dated July 31, 2009 among Quiksilver Americas, Inc., a California corporation, the guarantors named therein including the Company, and Rhône Group LLC, as agent (the “Agent”) for the lenders thereunder (the “Lenders”), pursuant to which the Lenders will make a term loan to Quiksilver Americas, Inc. of $125,000,000 (the “U.S. Term Loan Agreement”), and (ii) the execution and delivery of a senior secured term loan facility agreement dated the date hereof among Mountain & Wave S.à r.l., a newly-formed, direct, wholly-owned subsidiary of the Company (the “European Borrower”), the guarantors named therein including the Company and the Agent on behalf of the Lenders, pursuant to which the Lenders will make a term loan to the European Borrower of €20,000,000 (the “European Term Loan Agreement”);

     WHEREAS, subject to certain adjustments and limitations provided herein, the Warrants are exercisable into Common Stock of the Company; and

     WHEREAS, to the extent of any adjustment that would require the approval of the Company’s stockholders in order to comply with the New York Stock Exchange Listed Company Manual, the Warrants will instead be exercisable for Series A Preferred Stock of the Company, on the terms set forth herein.

     NOW, THEREFORE, in consideration of the foregoing and for the purpose of defining the terms and provisions of the Warrants and the respective rights and obligations thereunder of the Company and the Holders, the Company and the Initial Warrant Holders each hereby agree as follows:

1. DEFINITIONS.

     As used in this Agreement, the following terms shall have the following meanings:

          ABL Facility: the senior, secured asset-based revolving credit facility dated the date hereof with respect to the Company and certain of its domestic subsidiaries.

          Affiliate: with respect to any Person, a Person that directly or indirectly controls, is controlled by or is under direct or indirect common control with such Person. For purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

          Agent: the meaning set forth in the preamble to this Agreement.

          Appointing Funds: Triton Onshore SPV L.P. and Triton Coinvestment SPV L.P.

          Board: the board of directors of the Company.

          Business Day: any day that is not a day on which banking institutions are authorized or required to be closed in the state of New York.

          Cashless Exercise: the meaning set forth in Section 3.4(b).

          Certificate of Incorporation: the Company’s Amended and Restated Certificate of Incorporation, as amended from time to time.

          Common Stock: the common stock, par value $0.01 per share, of the Company.

          Common Stock Equivalent: any warrant, right or option to acquire any shares of Common Stock or any security convertible or exchangeable into shares of Common Stock.

          Company: the meaning set forth in the preamble to this Agreement and its successors and assigns.

          Demand Registration: the meaning set forth in Section 4.1(a).

          DOJ: the meaning set forth in Section 9.3.

          Effective Issuance Price:

          (i) with respect to Common Stock issued for cash, the per share amount of the net cash proceeds received by the Company for such Common Stock;

          (ii) with respect to Common Stock issued for other consideration, the per share amount of the Fair Market Value of the net consideration;

          (iii) with respect to any option, warrant or other right to acquire Common Stock, whether direct or indirect and whether or not conditional or contingent, the sum of the per share amount of (a) the Fair Market Value of the net aggregate consideration, if any, received by the Company for the issuance of such option, warrant or right divided by the number of shares of Common Stock into which such option, warrant or right is exercisable at time of issuance, plus (b) the per share amount of the net exercise price to the extent paid in cash and the per share Fair Market Value of the net exercise price if paid in other consideration; and

          (iv) with respect to securities convertible or exchangeable into Common Stock, the net consideration per security paid for such securities (to the extent paid in cash) or the net Fair Market Value of the consideration per security paid for such securities if the price for such securities is paid in other consideration, as of the date of their issuance divided by the number of shares of Common Stock for which such securities are convertible or exchangeable.

          European Borrower: the meaning set forth in the preamble to this Agreement.

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          European Term Loan Agreement: the meaning set forth in the preamble to this Agreement.

          Excess Shares: the meaning set forth in Section 3.7.

          Excess Tender Amount: the meaning set forth in Section 5.4.

          Exchange Act: the Securities Exchange Act of 1934, as amended.

          Excluded Securities: (i) the Qualifying Employee Stock, (ii) the Underlying Stock, (iii) any shares of Common Stock or Common Stock Equivalents issued for non-cash consideration in connection with any merger, consolidation, acquisition or similar business combination, (iv) any shares of Common Stock issued pursuant to the commitments disclosed on Schedule 8.1 hereto, and (v) any shares of Common Stock or Common Stock Equivalents issued in connection with any joint venture, licensing, development or sponsorship activities in the ordinary course of business.

          ex-date: the meaning set forth in Section 5.3(a).

          Exercise Date: the meaning set forth in Section 3.2.

          Exercise Price: the meaning set forth in Section 3.1.

          Expenses: all expenses incurred by the Company and the Holders in effecting any registration pursuant to this Agreement, including, without limitation, all registration and filing fees, printing expenses, reasonable fees and disbursements of one counsel selected by Rhône Capital III to represent all holders of Registrable Securities included in such registration, blue sky fees and expenses, and expenses of the Company’s independent accountants in connection with any regular or special reviews or audits incident to or required by any such registration, and all discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities.

          Expiration Date: the meaning set forth in Section 3.3.

          Fair Market Value:

          (i) in the case of shares of stock where, at least four months prior to the issuance thereof, other shares of the same class had already been listed on the New York Stock Exchange or the National Association of Securities Dealers Automated Quotations, the average of the daily volume-weighted average prices of such stock for the five consecutive trading days immediately preceding the day as of which Fair Market Value is being determined;

          (ii) in the case of securities not covered by (i) above or other property, the fair market value of such securities or such other property as determined by an Independent Financial Expert, using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming, in the case of securities, such securities are fully distributed and, in the case of securities or other property, such items are

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to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors; and

          (iii) in the case of cash, the amount thereof.

          French Facility: the French term and revolving credit facilities with respect to certain of the Company’s French subsidiaries, including (i) the term loan facility dated the date hereof with respect to Pilot SAS; (ii) the term loan facility dated the date hereof with respect to Na Pali; and (iii) the revolving credit facility dated the date hereof with respect to Na Pali.

          FTC: the meaning set forth in Section 9.3.

          Holders: the Initial Warrant Holders and any assignee or transferee of such Initial Warrant Holders and, unless otherwise provided or indicated herein, the holders of the Registrable Securities.

          HSR Act: the meaning set forth in Section 9.3.

          Independent Financial Expert: a nationally recognized investment banking firm mutually agreed by the Company and Rhône Capital III, which firm does not have a material financial interest or other material economic relationship with either the Company or Rhône Capital III or their respective Affiliates. If the Company and Rhône Capital III are unable to agree on an Independent Financial Expert, each of them shall promptly choose a separate Independent Financial Expert who shall promptly choose a third Independent Financial Expert who shall serve as the Independent Financial Expert hereunder, provided that such third Independent Financial Expert does not have any of the relationships with the Company or Rhône Capital III described in this definition.

          Initial Warrant Holders: each of (i) Romolo Holdings C.V., (ii) Triton SPV L.P., (iii) Triton Onshore SPV L.P., (iv) Triton Offshore SPV L.P. and (v) Triton Coinvestment SPV L.P.

          Issuance Date: the meaning set forth in the preamble to this Agreement.

          Lenders: the meaning set forth in the preamble to this Agreement.

          Maximum Number of Shares: the meaning set forth in Section 4.1(c).

          Person: any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

          Per Warrant Cap: the meaning set forth in Section 3.7.

          Piggyback Registration: the meaning set forth in Section 4.2(a).

          Premium Per Pro Forma Share: the meaning set forth in Section 5.4.

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          Prospectus: the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.

          Qualifying Employee Stock: (i) rights and options issued in the ordinary course of business under employee benefit plans and any Common Stock issued after the date hereof upon exercise of such rights and options, and (ii) restricted stock and restricted stock units issued after the date hereof in the ordinary course of business under employee benefit plans and Common Stock issued after the date hereof in settlement of any such restricted stock units.

          Recapitalization Event: the meaning set forth in Section 5.3(a).

          Register, registered, and registration: shall refer to a registration effected by preparing and (a) filing a Registration Statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such Registration Statement or (b) filing a Prospectus and/or prospectus supplement in respect of an appropriate effective Registration Statement on Form S-3.

          Registrable Securities: Common Stock, Series A Preferred Stock or other securities issuable under the Warrants to the Initial Warrant Holders on the Issuance Date and at any time during the term of this Agreement. Registrable Securities shall continue to be Registrable Securities (whether they continue to be held by the Initial Warrant Holders or they are sold to other Persons) until (i) they are sold pursuant to an effective Registration Statement under the Securities Act, (ii) they may be sold by their holder pursuant to Rule 144 without limitation thereunder on volume or manner of sale, or (iii) they shall have otherwise been transferred and new securities not subject to transfer restrictions under any federal securities laws and not bearing any legend restricting further transfer shall have been delivered by the Company, all applicable holding periods shall have expired, and no other applicable and legally binding restriction on transfer by the Holder thereof shall exist.

          Registration Rights: the rights of Holders set forth in Article 4 to have shares of Registrable Securities registered under the Securities Act for sale under one or more effective Registration Statements.

          Registration Statement: any registration statement filed by the Company under the Securities Act pursuant to the Registration Rights, including the Prospectus, any amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

          Reorganization Event: the meaning set forth in Section 5.5.

          Required Stockholder Approval: any approval by the Company’s stockholders in connection with an adjustment of the Warrants to comply with Section 312.03 of the New York Stock Exchange Listed Company Manual.

          Rhône Capital III: the meaning set forth in the preamble to this Agreement.

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          Rhône Director: the meaning set forth in Section 9.4(a).

          Rule 144, Rule 405 and Rule 415: in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

          sale: the meaning set forth in Section 3.6(a).

          Scheduled Black-Out Period: the period from and including the last day of a fiscal quarter of the Company to and including the Business Day after the day on which the Company publicly releases its earnings for such fiscal quarter.

          SEC: the Securities and Exchange Commission.

          Securities Act: the Securities Act of 1933, as amended.

          Series A Preferred Stock: the meaning set forth in Section 3.7.

          Total Cap: the meaning set forth in Section 3.7.

          Underlying Stock: the shares of Common Stock or Series A Preferred Stock issuable or issued upon the exercise of the Warrants.

          U.S. Term Loan Agreement: the meaning set forth in the preamble to this Agreement.

          Voting Securities: the Common Stock and any other securities of the Company of any kind or class having power generally to vote in the election of directors.

          VWAP: the value weighted average price of a given security for a given trading day, determined by calculating, for each trade on such day, the product of the price per share multiplied by the number of shares for such trade, and by adding all such products and dividing such sum by the total number of shares traded on such day.

          Warrant Certificates: the meaning set forth in the preamble to this Agreement and substantially in the form attached hereto as Exhibit A.

          Warrants: the warrants issued by the Company from time to time pursuant to this Agreement.

2. ORIGINAL ISSUE OF WARRANTS.

     2.1. Form of Warrant Certificates. The Warrant Certificates shall be in registered form only and substantially in the form attached hereto as Exhibit A, shall be dated the date on which signed by the Company and may have such legends and endorsements typed, stamped, printed, lithographed or engraved thereon as provided in Section 3.5 or as may be required to comply with any law or with any rule or regulation pursuant thereto or with any rule or regulation of any securities exchange on which the Warrants may be listed.

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     2.2. Execution and Delivery of Warrant Certificates.

          (a) Simultaneously with the execution of this Agreement, Warrant Certificates evidencing 25,653,831 Warrants entitling the holders thereof to purchase an aggregate of 25,653,831 shares of Common Stock, subject to adjustment and subject to Section 3.7, shall be executed by the Company and delivered to the Initial Warrant Holders.

          (b) From time to time, the Company shall sign and deliver Warrant Certificates in required denominations to Persons entitled thereto in connection with any exchange permitted under this Agreement. The Warrant Certificates shall be executed on behalf of the Company by its President, Chief Financial Officer, Chief Administrative Officer, Secretary or Executive Vice President, either manually or by facsimile signature printed thereon. In case any officer of the Company whose signature shall have been placed upon any of the Warrant Certificates shall cease to be such officer of the Company before issue and delivery thereof, such Warrant Certificates may, nevertheless, be issued and delivered with the same force and effect as though such person had not ceased to be such officer of the Company.

3. EXERCISE PRICE; EXERCISE OF WARRANTS AND EXPIRATION OF WARRANTS.

     3.1. Exercise Price. Each Warrant Certificate shall entitle the Holder thereof, subject to the provisions of this Agreement, to purchase, except as provided in Section 3.4 and Section 3.7 hereof, one share of Common Stock for each Warrant represented thereby, at an exercise price (the “Exercise Price”) of $1.86 per share, subject to all adjustments made on or prior to the date of exercise thereof as herein provided.

     3.2. Exercise of Warrants. The Warrants shall be exercisable in whole or in part from time to time on any Business Day (each, an “Exercise Date”) beginning on the date hereof and ending on the Expiration Date, in the manner provided for herein.

     3.3. Expiration of Warrants. Any unexercised Warrants shall expire and the rights of the Holders of such Warrants to purchase Underlying Stock shall terminate at the close of business on July 31, 2016 (the “Expiration Date”).

     3.4. Method of Exercise; Payment of Exercise Price.

          (a) In order to exercise a Warrant, the Holder thereof must (i) surrender the Warrant Certificate evidencing such Warrant to the Company, with the form on the reverse of or attached to the Warrant Certificate duly executed, and (ii) pay in full the Exercise Price then in effect for the shares of Underlying Stock as to which a Warrant Certificate is submitted for exercise in the manner provided in paragraph (b) of this Section.

          (b) Simultaneously with the exercise of each Warrant, payment in full of the Exercise Price shall be delivered to the Company. Such payment shall be made (at the option of the Holder) (a) in cash, by bank wire transfer in immediately available funds, or by certified or official bank check drawn on a New York City bank, or (b) if at the time of such exercise, the Fair Market Value of the shares of Common Stock exceeds the Exercise Price, by surrendering a number of Warrants (or fractional portions thereof) having a value equal to the Exercise Price (a “Cashless Exercise”), determined as provided in this Section 3.4(b). The value of each Warrant so surrendered in a Cashless Exercise shall be equal to the Fair Market Value, at the time of such

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surrender, of that number of shares of Common Stock into which such Warrant is then exercisable (or would be exercisable if Section 3.7 did not then apply with respect to such exercise), less the Exercise Price.

          (c) If fewer than all the Warrants represented by a Warrant Certificate are surrendered, such Warrant Certificate shall be surrendered and a new Warrant Certificate of the same tenor and for the number of Warrants that were not surrendered shall promptly be executed and delivered to the Person or Persons as may be directed in writing by the Holder and the Company shall register the new Warrant in the name of such Person or Persons.

          (d) Upon surrender of a Warrant Certificate in conformity with the foregoing provisions, the Company shall instruct its transfer agent to transfer to the Holder of such Warrant Certificate appropriate evidence of ownership of any shares of Underlying Stock or other securities or property (including cash) to which the Holder is entitled, registered or otherwise placed in, or payable to the order of, such name or names as may be directed in writing by the Holder, and shall deliver such evidence of ownership and any other securities or property (including cash) to the Person or Persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a share as provided in Section 5.9. Upon payment of the Exercise Price therefor, a Holder shall be deemed to own and have all of the rights associated with any Underlying Stock or other securities or property (including cash) to which it is entitled pursuant to this Agreement upon the surrender of a Warrant Certificate in accordance with this Agreement. If the Holder shall direct that such securities be registered in a name other than that of the Holder, such direction shall be tendered in conjunction with a signature guarantee from an eligible guarantor institution participating in a signature guarantee program approved by the Securities Transfer Association.

     3.5. Transferability of the Warrants. The Warrants may not, whether directly or as a result of the transfer of the equity interests in the Initial Warrant Holders, be transferred to any Person, other than (i) to Affiliates of Rhône Capital III or (ii) with the prior written consent of the Company. Subject to Section 10.4, each certificate representing the Warrants shall bear the following legend:

THESE WARRANTS MAY ONLY BE TRANSFERRED WITH THE PRIOR CONSENT OF QUIKSILVER, INC. THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AND REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 31, 2009 BY AND AMONG QUIKSILVER, INC. (THE “COMPANY”), THE INITIAL WARRANT HOLDERS AND RHÔNE CAPITAL III L.P. A COPY OF SUCH WARRANT

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AND REGISTRATION RIGHTS AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.

     3.6. Compliance with the Securities Act.

          (a) No Registrable Securities may be sold, transferred or otherwise disposed of (any such sale, transfer or other disposition, a “sale”), except in compliance with this Section 3.6.

          (b) A Holder may sell its Registrable Securities to a transferee (subject to Section 9.7) that is an “accredited investor” or a “qualified institutional buyer”, as such terms are defined in Regulation D and Rule 144A under the Securities Act, respectively, provided that each of the following conditions is satisfied:

     (i) with respect to any “accredited investor” that is not an institution, such transferee, as the case may be, provides certification establishing to the reasonable satisfaction of the Company that it is an “accredited investor”;

     (ii) such transferee represents that it is acquiring the Registrable Securities for its own account and that it is not acquiring such Registrable Securities with a view to, or for offer or sale in connection with, any distribution thereof (within the meaning of the Securities Act) that would be in violation of the securities laws of the United States or any applicable state thereof, but subject, nevertheless, to the disposition of its property being at all times within its control; and

     (iii) such Holder or transferee agrees to be bound by the provisions of this Section 3.6 with respect to any sale of the Registrable Securities.

          (c) A Holder may sell its Registrable Securities (subject to Section 9.7) in accordance with Regulation S under the Securities Act.

          (d) A Holder may sell its Registrable Securities (subject to Section 9.7) if:

     (i) such Holder gives written notice to the Company of its intention to effect such sale, which notice shall describe the manner and circumstances of the proposed transaction in reasonable detail;

     (ii) such notice includes a certification by the Holder to the effect that such proposed sale may be effected without registration under the Securities Act or under applicable Blue Sky laws; and

     (iii) such transferee complies with Sections 3.6(b)(ii) and 3.6(b)(iii).

          (e) Except for a sale in accordance with Section 3.6(f) and subject to Section 10.4, all stock certificates issued pursuant to the exercise of the Warrants shall bear the following legend:

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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH SHARES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AND REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 31, 2009 BY AND AMONG QUIKSILVER, INC. (THE “COMPANY”), THE INITIAL WARRANT HOLDERS AND RHÔNE CAPITAL III L.P. A COPY OF SUCH WARRANT AND REGISTRATION RIGHTS AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.

          (f) A Holder may sell its Registrable Securities in a transaction that is registered under the Securities Act.

     3.7. Exercise for Series A Preferred Stock. So long as the Underlying Stock is that of Quiksilver, Inc., Holders may not exercise any Warrants or be entitled to take delivery of any shares of Common Stock issuable with respect to such Warrants to the extent (but only to the extent) that, after such receipt of any shares of Common Stock upon the exercise of such Warrants, Holders would be issued more than 25,653,831 shares of Common Stock in the aggregate (the “Total Cap”), provided that in the event the Company (i) subdivides its outstanding Common Stock or (ii) combines its outstanding Common Stock into a smaller number of shares, the Total Cap shall be adjusted by multiplying (x) the Total Cap immediately prior to such subdivision or combination by (y) a fraction, whose numerator shall be the number of shares that one share of Common Stock immediately prior to such subdivision or combination equals immediately after such subdivision or combination, and whose denominator shall be equal to one. So long as the Underlying Stock is that of Quiksilver, Inc., each Warrant shall never be exercisable for more than a number of shares of Common Stock equal to a fraction, whose numerator shall be the Total Cap and whose denominator shall be 25,653,831 (the “Per Warrant Cap”). In the event that an adjustment pursuant to Article 5 would otherwise cause each Warrant to be exercisable for a number of shares of Common Stock that exceeds the Per Warrant Cap (such excess, the “Excess Shares”), then each Warrant shall instead be exercisable into a number of shares of Common Stock equal to the Per Warrant Cap plus a number of shares of convertible non-voting preferred stock, par value $0.01 per share, of the Company on the terms set forth in Exhibit C (the “Series A Preferred Stock”) that is convertible into the number of Excess Shares.

4. REGISTRATION RIGHTS AND PROCEDURES AND LISTING.

     4.1. Demand Registration Rights.

          (a) Subject to the provisions hereof, Rhône Capital III may, on behalf of any Holder or Holders, at any time from and after the Issuance Date request registration for resale under the Securities Act of all or part of the Registrable Securities (a “Demand Registration”) by

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giving written notice thereof to the Company (which request shall specify the number of shares of Registrable Securities to be offered by each Holder and whether such Registration Statement shall be a “shelf” Registration Statement under Rule 415 promulgated under the Securities Act). Subject to Section 4.1(e) below, upon receipt of such notice, the Company shall use commercially reasonable efforts (i) to file a Registration Statement (which shall be a “shelf” Registration Statement under Rule 415 promulgated under the Securities Act if requested pursuant to Rhône Capital III’s request pursuant to the first sentence of this Section 4.1(a)) registering for resale such number of Registrable Securities as requested to be so registered within 45 days in the case of a registration on Form S-3 (and 60 days in the case of a registration on Form S-1) after Rhône Capital III’s request therefor and (ii) to cause such Registration Statement to be declared effective by the SEC as soon as reasonably practicable thereafter. Notwithstanding the foregoing, the Company shall not be required to effect a registration pursuant to this Section 4.1(a): (i) with respect to securities that are not Registrable Securities; (ii) during any Scheduled Black-Out Period; (iii) if the aggregate offering price of the Registrable Securities to be offered is less than $20,000,000, unless the Registrable Securities to be offered constitute all of the then-outstanding Registrable Securities; or (iv) within 180 days after the effective date of a prior registration in respect of the Company’s Common Stock, including, without limitation, a Demand Registration (or, in the event that Holders were prevented from including any shares of Common Stock requested to be included in a Piggy-Back Registration pursuant to Section 4.2(a) or (b), within 90 days after the effective date of a prior registration in respect of the Company’s Common Stock). If permitted under the Securities Act, such Registration Statement shall be one that is automatically effective upon filing.

          (b) Rhône Capital III shall be entitled to request three Demand Registrations. A Registration Statement shall not count as a permitted Demand Registration unless and until it has become effective and Holders are able to register at least 50% of the Registrable Securities requested by Rhône Capital III to be included in such registration. A Demand Registration shall not count against the number of such registrations set forth in the immediately preceding sentence if, (i) after the applicable Registration Statement has become effective, such Registration Statement or the related offer, sale or distribution of Registrable Securities thereunder becomes the subject of any stop order, injunction or other order or restriction imposed by the SEC or any other governmental agency or court for any reason attributable to the Company and such interference is not thereafter eliminated so as to permit the completion of the contemplated distribution of Registrable Securities or (ii) in the case of an underwritten offering, the conditions specified in the related underwriting agreement, if any, are not satisfied or waived for any reason attributable to the Company or for any reason not attributable to the selling Holder or Holders or Rhône Capital III or its Affiliates, and as a result of any such circumstances described in clause (i) or (ii), less than all of the Registrable Securities covered by the Registration Statement are sold by the selling Holder or Holders pursuant to the Registration Statement.

          (c) The Company may include in a Demand Registration shares of Common Stock for sale for its own account or for the account of other security holders of the Company. If such Demand Registration is in respect of an underwritten offering and the managing underwriters of the requested Demand Registration advise the Company and Rhône Capital III that in their reasonable opinion the number of shares of Common Stock proposed to be included in the Demand Registration exceeds the number of shares of Common Stock that can be sold in

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such underwritten offering without materially delaying or jeopardizing the success of the offering (including the offering price per share) (such maximum number of shares, the “Maximum Number of Shares”), the Company will include in such Demand Registration only such number of shares of Common Stock that in the reasonable opinion of the managing underwriters can be sold without materially delaying or jeopardizing the success of the offering (including the offering price per share), which shares of Common Stock will be so included in the following order of priority: (i) first, the Registrable Securities of Rhône Capital III and all other Holders, pro rata on the basis of the aggregate number of Registrable Securities requested to be included by each such Holder, (ii) second, the shares of Common Stock the Company proposes to sell and (iii) third, any other shares of Common Stock that have been requested to be so included.

          (d) If any of the Registrable Securities covered by a Demand Registration are to be sold in an underwritten offering, the Company and Rhône Capital III shall mutually agree upon selection of the managing underwriter or underwriters. If the Company and Rhône Capital III are unable to agree on the managing underwriter or underwriters within a reasonable amount of time, the Company and Rhône Capital III shall each select a managing underwriter and such underwriters shall serve as joint managing underwriters in respect of such offering.

          (e) Notwithstanding the foregoing, if the Board determines in its good faith judgment that the filing of a Demand Registration (i) would be seriously detrimental to the Company in that such registration would interfere with a material corporate transaction or (ii) would require the disclosure of material non-public information concerning the Company that at the time is not, in the good faith judgment of the Board (excluding the Rhône Directors), in the best interests of the Company to disclose and is not, in the opinion of the Company’s counsel, otherwise required to be disclosed, then the Company shall have the right to defer such filing for the period during which such registration would be seriously detrimental; provided, however, that (x) the Company may not defer such filing for a period of more than 90 days after receipt of any demand by Rhône Capital III, and (y) the Company shall not exercise its right to defer a Demand Registration or offers or sales more than once in any 12-month period. The Company shall give written notice of its determination to Rhône Capital III to defer the filing and of the fact the purpose for such deferral no longer exists, in each case, promptly after the occurrence thereof.

          (f) Notwithstanding the foregoing, if the Board determines in its good faith judgment that continuing offers and sales of Registrable Securities registered under a shelf Demand Registration (i) would be seriously detrimental to the Company in that such offers and sales would interfere with a material corporate transaction or (ii) would require the disclosure of material non-public information concerning the Company that at the time is not, in the good faith judgment of the Board (excluding the Rhône Directors), in the best interests of the Company to disclose and is not, in the opinion of the Company’s counsel, otherwise required to be disclosed, then the Company shall have the right to require the selling Holder or Holders to suspend such offers and sales for the period during which such registration would be seriously detrimental; provided, however, that the total number of days that any such suspension may be in effect in any 180-day period shall not exceed 60 days. The Company shall give written notice of its determination to Rhône Capital III to suspend the offers and sales and of the fact the purpose for such suspension no longer exists, in each case, promptly after the occurrence thereof.

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          (g) Upon the date of effectiveness of any Demand Registration for an underwritten offering and if such offering is priced promptly on or after such date, the Company shall use commercially reasonable efforts to keep the Registration Statement effective until the earlier of (i) two years (in the case of a shelf Demand Registration) or 90 days (in the case of any other Demand Registration) from the effective date of such Registration Statement and (ii) such time as all of the Registrable Securities covered by such Demand Registration have been sold pursuant to such Demand Registration.

     4.2. Piggy-Back Registration Rights.

          (a) If at any time the Company has registered or has determined to register any of its securities for its own account or for the account of other security holders of the Company on any registration form (other than Form S-4 or S-8) which permits the inclusion of the Registrable Securities (a “Piggyback Registration”), the Company will give Rhône Capital III written notice thereof promptly (but in no event less than 15 days prior to the anticipated filing date) and, subject to Section 4.2(c), shall include in such registration all Registrable Securities requested to be included therein pursuant to the written request of Rhône Capital III on behalf of one or more Holders received within 10 days after delivery of the Company’s notice. If a Piggyback Registration is initiated as a primary underwritten offering on behalf of the Company and the managing underwriters advise the Company and Rhône Capital III that in their reasonable opinion the number of shares of Common Stock proposed to be included in such registration exceeds the Maximum Number of Shares, the Company shall include in such registration: (i) first, the number of shares of Common Stock that the Company proposes to sell; and (ii) second, the number of shares of Common Stock requested to be included therein by holders of Common Stock, including Holders in respect of whom Rhône Capital III has provided notice in accordance with this Section 4.2(a), pro rata among all such holders on the basis of the number of Registrable Securities requested to be included therein by all such holders or as such holders and the Company may otherwise agree.

          (b) If a Piggyback Registration is initiated as an underwritten registration on behalf of a holder of shares of Common Stock other than Rhône Capital III, and the managing underwriters advise the Company that in their reasonable opinion the number of shares of Common Stock proposed to be included in such registration exceeds the Maximum Number of Shares, then the Company shall include in such registration: (i) first, the number of shares of Common Stock requested to be included therein by the holder(s) requesting such registration; (ii) second, the number of shares of Common Stock requested to be included therein by other holders of shares of Common Stock including Rhône Capital III (if Rhône Capital III has elected to include Registrable Securities in such Piggyback Registration), pro rata among such holders on the basis of the number of shares of Common Stock requested to be included therein by such holders or as such holders and the Company may otherwise agree; and (iii) third, the number of shares of Common Stock that the Company proposes to sell.

          (c) If any Piggyback Registration is a primary or secondary underwritten offering, the Company shall have the right to select, in its sole discretion, the managing underwriter or underwriters to administer any such offering.

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          (d) The Company shall not grant to any Person the right to request the Company to register any Common Stock in a Piggyback Registration unless such rights are consistent with the provisions of this Section 4.2.

     4.3. Expenses of Registration and Selling. All Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Expenses (including, for the avoidance of doubt, any underwriting discount or commission applicable to the sale by a Holder) incurred in connection with the sale of any securities registered hereunder shall also be borne by the Company.

     4.4. Obligations of the Company. Whenever required to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably practicable, subject to the other provisions of this Article 4:

          (a) Prepare and file with the SEC a Registration Statement with respect to a proposed offering of Registrable Securities and use commercially reasonable efforts to have such Registration Statement declared effective as promptly as practicable.

          (b) Prepare and file with the SEC such amendments and supplements to the applicable Registration Statement and the Prospectus or prospectus supplement used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement.

          (c) Furnish to Rhône Capital III, the selling Holder or Holders and any underwriters such number of copies of the applicable Registration Statement and each such amendment and supplement thereto (including in each case all exhibits) and of a Prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

          (d) Use commercially reasonable efforts to register and qualify the securities covered by such Registration Statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by Rhône Capital III, the selling Holder or Holders or any managing underwriter(s), to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such selling Holder or Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business, to file a general consent to service of process or become subject to taxation in any such states or jurisdictions.

          (e) Notify Rhône Capital III and the selling Holder or Holders at any time when a Prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the applicable Prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein

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or necessary to make the statements therein, in the light of the circumstances under which such statements were made, not misleading.

          (f) Give written notice to Rhône Capital III and the selling Holder or Holders:

     (i) when any Registration Statement filed pursuant to Section 4.1 or 4.2 or any amendment thereto has been filed with the SEC and when such Registration Statement or any post-effective amendment thereto has become effective;

     (ii) of any request by the SEC for amendments or supplements to any Registration Statement or the Prospectus included therein or for additional information;

     (iii) of the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for that purpose;

     (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

     (v) of the happening of any event that requires the Company to make changes in any effective Registration Statement or the Prospectus in order to make the statements therein not misleading (in the case of the Prospectus, in the light of the circumstances under which such statements were made) (which notice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made).

          (g) Use commercially reasonable efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any Registration Statement referred to in Section 4.4(f)(iii) at the earliest practicable time.

          (h) Upon the occurrence of any event contemplated by Section 4.4(f)(v), reasonably promptly prepare a post-effective amendment to such Registration Statement or a supplement to the related Prospectus or file any other required document so that, as thereafter delivered to Rhône Capital III, the selling Holder or Holders and any underwriters, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If the Company notifies Rhône Capital III and the selling Holder or Holders in accordance with Section 4.4(f)(v) to suspend the use of the Prospectus until the requisite changes to the Prospectus have been made, then the selling Holder or Holders and any underwriters shall suspend use of such Prospectus and use commercially reasonable efforts to return to the Company all copies of such Prospectus (at the Company’s expense) other than permanently filed copies then in the possession of Rhône Capital III, the selling Holder or Holders or the underwriter.

          (i) Use commercially reasonable efforts to procure the cooperation of the Company’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with any

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procedures reasonably requested by the selling Holder or Holders or any managing underwriter(s).

          (j) Enter into an underwriting agreement in form, scope and substance as is customarily entered into for similar underwritten offerings of equity securities by similar companies and take all such other actions reasonably requested by Rhône Capital III on behalf of the selling Holder or Holders or by the managing underwriter(s), if any, to expedite or facilitate the underwritten disposition of such Registrable Securities, and in connection therewith as customary for any similar underwritten offering, (i) make such representations and warranties to the selling Holder or Holders and the managing underwriter(s), if any, with respect to the business of the Company and its subsidiaries, and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by the issuer in similar underwritten offerings of equity securities by similar companies, and, if true, confirm the same if and when requested, (ii) use commercially reasonable efforts to furnish underwriters opinions of counsel to the Company, addressed to the managing underwriter(s), if any, covering the matters customarily covered in the opinions requested in similar underwritten offerings of equity securities by similar companies, (iii) use commercially reasonable efforts to obtain “cold comfort” letters from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any business acquired by the Company for which financial statements and financial data are included in the Registration Statement) who have certified the financial statements included in such Registration Statement, addressed to each of the managing underwriter(s), if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with similar underwritten offerings of equity securities by similar companies, (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures customary in similar underwritten offerings of equity securities by similar companies and consistent with the provisions of Section 4.7 hereof, and (v) deliver such documents and certificates as may be reasonably requested by the selling Holder or Holders, their counsel and the managing underwriter(s), if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.

          (k) Make available for inspection by a representative of Rhône Capital III, the selling Holder or Holders of at least 5,000,000 Registrable Securities and the managing underwriter(s), if any, and their respective attorneys or accountants at the offices where normally kept, during reasonable business hours, financial and other records, pertinent corporate documents and properties of the Company, and cause the officers, directors and employees of the Company to supply all information in each case reasonably requested by any such representative, managing underwriter(s), attorney or accountant in connection with such Registration Statement.

          (l) Use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on the national securities exchange or national market interdealer quotation system on which the Common Stock is then listed, and enter into such customary agreements including a supplemental listing application and indemnification agreement in customary form (provided, however, that the applicable listing requirements are satisfied), and to provide a transfer agent and registrar for such Registrable Securities covered by

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such Registration Statement no later than the effective date of such Registration Statement. The Company shall bear the cost of all reasonable expenses associated with any listing. A copy of any opinion of counsel accompanying a listing application by the Company with respect to the Registrable Securities shall be furnished to Rhône Capital III and the selling Holder or Holders.

          (m) Make reasonably available senior executives of the Company to participate in “road show” and other marketing presentations from time to time as reasonably requested by the managing underwriter or underwriters.

     4.5. Suspension of Sales. During any Scheduled Black-Out Period and upon receipt of written notice from the Company that a Registration Statement, Prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that circumstances exist that make inadvisable use of such Registration Statement, Prospectus or prospectus supplement, the selling Holder or Holders shall forthwith discontinue disposition of Registrable Securities until termination of such Scheduled Black-Out Period or until the selling Holder or Holders have received copies of a supplemented or amended Prospectus or prospectus supplement, or until the selling Holder or Holders are advised in writing by the Company that the use of the Prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, the selling Holder or Holders shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in the selling Holder’s or Holders’ possession, of the Prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice. The total number of days that any such suspension may be in effect in any 180-day period shall not exceed 60 days.

     4.6. Furnishing Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 4.4 that the selling Holder or Holders and the underwriters, if any, shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registered offering of their Registrable Securities.

     4.7. Indemnification.

          (a) In connection with each registration pursuant to Article 4, the Company agrees to indemnify and hold harmless each selling Holder, and each Person, if any, who controls any selling Holder within the meaning of Section 15 of the Securities Act as follows:

     (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of an untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of an untrue statement of a material fact included in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and

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     (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company, which shall not be unreasonably withheld;

provided, however, that, with respect to any selling Holder, this indemnity does not apply to any loss, liability, claim, damage or expense to the extent arising out of an untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by such selling Holder expressly for use in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto).

          (b) Each selling Holder agrees severally, and not jointly, to indemnify and hold harmless the Company, its directors, each of its officers who signed a Registration Statement, and the other selling Holders, and each Person, if any, who controls the Company and any other selling Holder within the meaning of Section 15 of the Securities Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4.7(a), as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such selling Holder expressly for use in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto).

          (c) Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve the indemnifying party from any liability it may have under this Agreement, except to the extent that the indemnifying party is prejudiced thereby. If it so elects, after receipt of such notice, an indemnifying party, jointly with any other indemnifying parties receiving such notice, may assume the defense of such action with counsel chosen by it, provided that the indemnified party shall be entitled to participate in (but not control) the defense of such action with counsel chosen by it, the reasonable fees and expenses of which shall be paid by the indemnifying party if there would be a conflict if one counsel were to represent both the indemnified and the indemnifying party, and by the indemnified party in all other circumstances. In no event shall the indemnifying party or parties be liable for a settlement of an action with respect to which they have assumed the defense if such settlement is effected without the written consent of the indemnifying party, or for the reasonable fees and expenses of more than one counsel for (i) the Company, its officers, directors and controlling persons as a group, and (ii) the selling Holders and their controlling persons as a group, in each case, in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances; provided that if, in the reasonable judgment of an indemnified party a conflict of interest may exist between such indemnified party and the Company or any other of such indemnified parties with respect to such claim or any of such indemnified parties, the

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indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels.

     4.8. Contribution.

          (a) If the indemnification provided for in or pursuant to Section 4.7 is due in accordance with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any losses, claims, damages, liabilities or expenses referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which result in such losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations. The relative fault of the indemnifying party on the one hand and of the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, and by such party’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. In no event shall the liability of the selling Holders be greater in amount than the amount for which such indemnifying party would have been obligated to pay by way of indemnification if the indemnification provided for under Section 4.7(a) had been available under the circumstances.

          (b) No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4.8(b), each director of the Company, each officer of the Company who signed a Registration Statement, and each Person, if any, who controls the Company or a selling Holder within the meaning of Section 15 of the Securities Act shall have the same rights to contribution as the Company or such selling Holder, as the case may be.

     4.9. Representations, Warranties and Indemnities to Survive. The indemnity and contribution agreements contained in this Article 4 and the representations and warranties of the Company referred to in Section 4.4(j) shall remain operative and in full force and effect regardless of (i) any termination of any underwriting or agency agreement, (ii) any investigation made by or on behalf of the selling Holders, the Company or any underwriter or agent or controlling Person or (iii) the consummation of the sale or successive resales of the Registered Securities.

     4.10. Lock-Up Agreements.

          (a) The Company agrees that, in connection with an underwritten offering in respect of which Registrable Securities are being sold, if requested by the managing underwriter, it will not, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of any Common Stock or securities convertible into or exchangeable or exercisable for Common Stock (subject to customary exceptions), other than any such sale or distribution of

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Common Stock upon exercise of the Company’s Warrants, in the case of an underwritten offering for a period of 90 days from the effective date of the registration statement pertaining to such Registrable Securities or such shorter period to which the selling Holder or Holders are subject.

          (b) The lock-up agreements set forth in Section 4.10(a) shall be subject to customary exceptions that may be contained in an underwriting agreement.

     4.11. Rule 144 Reporting. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees, so long as it is subject to the periodic reporting requirements of the Exchange Act, to use commercially reasonable efforts to:

          (a) make and keep public information available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of this Agreement;

          (b) file with the SEC, in a timely manner, all reports and other documents required of the Company under the Exchange Act; and

          (c) so long as the Holders own any Registrable Securities, furnish to such Holders forthwith upon request: (i) in the event the Company is no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act and of the Exchange Act; (ii) in the event the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, a copy of the most recent annual or quarterly report of the Company; and (iii) such other reports and documents as the Holders may reasonably request in availing themselves of any rule or regulation of the SEC allowing them to sell any such securities without registration.

5. ADJUSTMENTS.

     5.1. Adjustments for Cash Dividends. In the event that the Company shall pay a cash dividend on Common Stock, the Exercise Price for each Warrant shall be reduced by the cash dividend paid on each share of Common Stock.

     5.2. Adjustments Upon Certain Transactions. The Exercise Price and the number of shares of Common Stock issuable upon exercise of each Warrant shall be adjusted in the event the Company (i) pays a dividend or makes any other distribution with respect to its Common Stock solely in shares of its Common Stock, (ii) subdivides its outstanding Common Stock, or (iii) combines its outstanding Common Stock into a smaller number of shares. In such event, the number of shares of Common Stock issuable upon exercise of each Warrant immediately prior to the record date for such dividend or distribution or the effective date of such subdivision or combination shall be adjusted so that the Holder of each Warrant shall thereafter be entitled to receive the number of shares of Common Stock that such Holder would have owned or have been entitled to receive after the happening of any of the events described above, had such Warrant been exercised immediately prior to the happening of such event or any record date with respect thereto. In addition, upon an adjustment pursuant to this Section 5.2, the Exercise Price

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for each share of Common Stock payable upon exercise of such Warrant shall be adjusted (calculated to the nearest $.0001) so that it shall equal the product of the Exercise Price immediately prior to such adjustment multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock issuable upon the exercise of each Warrant immediately prior to such adjustment, and the denominator of which shall be the number of shares of Common Stock so issuable immediately thereafter. Such adjustment shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. For avoidance of doubt, the adjustment contemplated by this section can be expressed by formula as follows:

Ub = shares underlying each Warrant immediately before the adjustment
Ua = shares underlying each Warrant immediately after the adjustment
Pb = exercise price per share immediately before the adjustment
Pa = exercise price per share immediately after the adjustment
Ob = shares outstanding immediately before the transaction in question
Oa = shares outstanding immediately after the transaction in question
Ua = Ub x Oa / Ob
Pa = Pb x Ob / Oa

5.3. Dividends and Distributions.

          (a) If the Company shall fix a record date for the payment of a dividend or the making of a distribution with respect to the Common Stock (other than one subject to Section 5.1 or Section 5.2), including without limitation in connection with a Recapitalization Event (it being understood that, if there is a distribution in connection with a Recapitalization Event and no record date is set therefor, the effective date of such Recapitalization Event shall be deemed to be the record date fixed by the Company for purposes of this Section 5.3), the Exercise Price immediately after the record date for such dividend or distribution shall be determined by multiplying (x) the Exercise Price in effect on such record date by (y) a fraction, the numerator of which shall be the Fair Market Value per share of Common Stock as of the last trading day before the date (the “ex-date”) on which the Common Stock first trades without the right to receive such dividend or distribution less the Fair Market Value of the items distributed in respect of each share of Common Stock in such dividend or distribution, and the denominator of which shall be the Fair Market Value per share of Common Stock as of the last trading day before the ex-date. As used in this Section 5.3, “Recapitalization Event” means any consolidation, merger or similar extraordinary transaction (other than any consolidation, merger or similar extraordinary transaction of the Company with an unaffiliated third party), or any recapitalization or reclassification of the Common Stock. Upon any adjustment of the Exercise Price pursuant to this Section 5.3, the total number of shares of Common Stock purchasable upon the exercise of each Warrant shall be such number of shares (calculated to the nearest hundredth) purchasable per Warrant immediately prior to such adjustment multiplied by a fraction, the numerator of which shall be the Fair Market Value per share of Common Stock as of the last trading date before the ex-date and the denominator of which shall be the Fair Market Value per share of Common Stock as of the last trading date before the ex-date less the Fair Market Value of the items distributed in respect of each share of Common Stock in such dividend or distribution. For avoidance of doubt, the adjustment contemplated by Section 5.3(a) can be expressed by formula as follows:

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Ub = shares underlying each Warrant immediately before the adjustment
Ua = shares underlying each Warrant immediately after the adjustment
Pb = exercise price per share immediately before the adjustment
Pa = exercise price per share immediately after the adjustment
M = average VWAP of the Common Stock for five trading days before ex-date
D = Fair Market Value of the dividend or distribution made per share of Common Stock
Ua = Ub x M / (M — D)
Pa = Pb x (M — D) / M

          (b) In the case of a Recapitalization Event where outstanding shares of Common Stock are converted either solely or partially into shares of common stock of another company, each Warrant shall become a Warrant to purchase a number of shares of common stock of the other company for an Exercise Price per share calculated by (x) first, applying the rules in Sections 5.1 and 5.2, as applicable, and 5.3(a) to determine an initially adjusted Exercise Price per share and number of shares of Common Stock purchasable upon the exercise of each Warrant, (y) second, multiplying the initially adjusted number of shares by the number of shares of common stock of the other company into which each share of Common Stock of the Company shall be converted in the Recapitalization Event to arrive at the final adjusted number of shares of common stock of the other company purchasable upon exercise of each Warrant and (z) third, dividing the initially adjusted Exercise Price per share of Common Stock by the number of shares of common stock of the other company into which each share of Common Stock of the Company shall be converted in the Recapitalization Event to arrive at the final adjusted Exercise Price per share of common stock of the other company. In any case where this Section 5.3(b) applies, the second sentence of Section 5.5 shall also apply to the Recapitalization Event as though it were a Reorganization Event.

          (c) Notwithstanding anything to the contrary contained herein, in the case of a Recapitalization Event, to the extent that one or more of the adjustments set forth in Section 5.1 or Section 5.2 would be applicable to such Recapitalization Event, the adjustments set forth in Sections 5.1, 5.2 and 5.3(a) shall be applied in the order in which the events described in such Sections occur; provided, however, no adjustment pursuant to Section 5.1, 5.2 or 5.3(a), as applicable, shall be made for an event in connection with such Recapitalization Event for which an adjustment has already been made.

     5.4. Issuer Tender Offers. If a publicly-announced tender offer made by the Company or any of its subsidiaries for all or any portion of the Common Stock shall expire and tendering holders of Common Stock are paid aggregate consideration having a Fair Market Value when paid which exceeds the aggregate Fair Market Value of the Common Stock acquired in such tender offer as of the last trading date before the date on which such tender offer is first publicly announced (such excess, the “Excess Tender Amount”), then the Exercise Price in effect immediately after the tender offer expires shall be determined by multiplying (x) the Exercise Price in effect immediately prior to such adjustment by (y) a fraction, the numerator of which shall be the Fair Market Value per share of the Common Stock as of the last trading day before the date on which such tender offer is first publicly announced less the Premium Per Pro Forma Share, and the denominator of which shall be the Fair Market Value per share of Common Stock as of the last trading day before the date on which such tender offer is first publicly announced. As used herein, “Premium Per Pro Forma Share” means (x) the Excess Tender Amount divided

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by (y) the number of shares of Common Stock outstanding at expiration of the tender offer after giving pro forma effect to the purchase of shares in the tender offer. Upon any adjustment of the Exercise Price pursuant to this Section 5.4, the total number of shares of Common Stock purchasable upon the exercise of each Warrant shall be such number of shares (calculated to the nearest hundredth) purchasable per Warrant immediately prior to such adjustment multiplied by a fraction, the numerator of which shall be the Fair Market Value per share of Common Stock as of the last trading day before the date on which such tender offer is first publicly announced and the denominator of which shall be the Fair Market Value per share of the Common Stock as of the last trading day before the date on which such tender offer is first publicly announced less the Premium Per Pro Forma Share. For avoidance of doubt, the adjustment contemplated by this section can be expressed by formula as follows:

Ub = shares underlying each Warrant before the adjustment
Ua = shares underlying each Warrant after the adjustment
Pb = exercise price per share before the adjustment
Pa = exercise price per share after the adjustment
M = average VWAP of the Common Stock for five trading days before date tender offer is
announced
E = Excess Tender Amount (the aggregate premium paid in the tender offer)
Pr = Premium Per Pro Forma Share
Oa = Shares outstanding after giving effect to tender offer
Pr = E / Oa
Ua = Ub x M / (M — Pr)
Pa = Pb x (M — Pr) / M

     5.5. Consolidation, Merger or Sale. If any consolidation, merger or similar extraordinary transaction of the Company with another Person (other than any subsidiary of the Company), or the sale of all or substantially all of its assets, other than in any such case a Recapitalization Event, shall be effected (a “Reorganization Event”), and in connection with such Reorganization Event, the Common Stock shall be converted into or exchanged for or become the right to receive cash, securities or other property, then, as a condition of such Reorganization Event, lawful and adequate provisions shall be made by the Company whereby the Holder of each Warrant shall thereafter have the right to purchase and receive on exercise of such Warrant, for an aggregate price equal to the aggregate Exercise Price for all of the shares underlying the Warrant as in effect immediately before such transaction (subject to adjustment thereafter as contemplated by the succeeding sentence), the same kind and amount of cash, securities or other property as it would have had the right to receive if it had exercised such Warrant immediately before such transaction and been entitled to participate therein. In the event of any such Reorganization Event, the Company shall make appropriate provision to ensure that applicable provisions of this Agreement (including, without limitation, the provisions of Article 4 and this Article 5) shall thereafter be binding on the other party to such transaction (or the successor in such transaction) and applicable to any securities thereafter deliverable upon the exercise of Warrants. The Company will not effect any such Reorganization Event unless, prior to the consummation thereof, the successor entity (if other than the Company) resulting from such Reorganization Event or the entity purchasing such assets shall assume by written instrument reasonably satisfactory in form and substance to Rhône Capital III, executed and mailed or delivered to each Holder at the last address of such Holder appearing on the books of

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the Company, the obligation to deliver the cash, securities or property deliverable upon exercise of Warrants. The Company shall notify the Holder of each Warrant of any such proposed Reorganization Event reasonably prior to the consummation thereof so as to provide such Holder with a reasonable opportunity prior to such consummation to exercise each Warrant in accordance with the terms and conditions hereof; provided, however, that in the case of a transaction which requires notice to be given to the holders of Common Stock of the Company, the Holder of each Warrant shall be provided the same notice given to the holders of Common Stock of the Company.

     5.6. Preemptive Rights. Upon any issuance for cash of any shares of Common Stock, rights or options to acquire Common Stock or securities convertible or exchangeable into Common Stock for cash (in each case, other than issuances that result in adjustments pursuant to Section 5.2 or Section 5.3), subject to obtaining any required approval of the Company’s stockholders to comply with Section 312.03 of the New York Stock Exchange Listed Company Manual, any Initial Holder who still holds at least 50% of the total Warrants issued to such Initial Holder on the Issuance Date shall have additional subscription rights allowing such Initial Holder to maintain its proportionate, as-if-exercised ownership interest in the Company (which, for this purpose, shall be calculated taking into account any Warrants subsequently transferred to such Initial Holder by another Initial Holder) based on the number of shares of Common Stock outstanding immediately prior to such issuance. For the avoidance of doubt, obtaining such approval shall be a condition for the Company to undertake any issuance subject to this Section 5.6. In the event that any issuance subject to this Section 5.6 involves a public offering, such Initial Holders and the Company shall negotiate in good faith as to the provision of such subscription rights so as not to materially delay or jeopardize the success of such public offering. The foregoing shall not apply to any issuance of Excluded Securities.

     5.7. Consent Upon Certain Issuances. So long as Rhône Capital III or any of its Affiliates own any Warrants, the Company shall not issue shares of Common Stock, Common Stock Equivalents (other than Excluded Securities) or rights or options to acquire Common Stock Equivalents (other than Excluded Securities) at an Effective Issuance Price that is lower than the Exercise Price (in each case, other than issuances that result in adjustments pursuant to Section 5.2 or Section 5.3) then in effect for all Warrants without the prior written consent of Rhône Capital III in its sole discretion.

     5.8. Affiliate Transactions. In the event that the Company shall issue any shares of Common Stock to, or repurchase any shares of Common Stock from, any Affiliate, other than Excluded Securities, such issuance or repurchase shall be on terms no less favorable to the Company than those obtainable by a party who is not an Affiliate.

     5.9. Fractional Shares. No fractional shares shall be issued upon exercise of any Warrant. Instead, the Company shall pay to the Holder, in lieu of issuing any fractional share, a sum in cash equal to such fraction multiplied by the Fair Market Value of a share of Common Stock, as determined by the Company’s Chief Executive Officer, Chief Financial Officer or Board, on the trading immediately prior to the date of exercise.

     5.10. Notice of Adjustment. Whenever the number of shares of Common Stock or other stock or property issuable upon the exercise of each Warrant or the Exercise Price is

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adjusted, as herein provided, the Company shall promptly mail by first-class mail, postage prepaid, to Rhône Capital III and each Holder notice of such adjustment or adjustments setting forth the number of shares of Common Stock or other stock or property issuable upon the exercise of each Warrant and the Exercise Price after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

6. WARRANT TRANSFER BOOKS.

     (a) Subject to Section 3.5:

     (i) The Company shall keep at its principal place of business a register in which the Company shall provide for the registration of Warrant Certificates and of any exchanges of Warrant Certificates as herein provided.

     (ii) At the option of the Holder, Warrant Certificates may be exchanged at such office and upon payment of the charges hereinafter provided. Whenever any Warrant Certificates are so surrendered for exchange, the Company shall execute and deliver the Warrant Certificates that the Holder making the exchange is entitled to receive.

     (iii) All Warrant Certificates issued upon any registration of transfer or exchange of Warrant Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Warrant Certificates surrendered for such registration of transfer or exchange.

     (iv) Every Warrant Certificate surrendered for registration of exchange shall (if so required by the Company) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company, duly executed by the Holder thereof or his attorney duly authorized in writing.

     (v) No service charge shall be made to a Holder for any exchange of Warrant Certificates, and the Company shall pay any taxes or other governmental charge that may be imposed in connection with any registration of exchange of Warrant Certificates.

     (vi) Any Warrant Certificate when duly endorsed in blank shall be deemed negotiable and when a Warrant Certificate shall have been so endorsed, the Holder thereof may be treated by the Company and all other Persons dealing therewith as the absolute owner thereof for any purpose and as the Person entitled to exercise the rights represented thereby.

7. WARRANT HOLDERS.

     7.1. No Voting Rights. Prior to the exercise of the Warrants, no Holder of a Warrant Certificate, as such, shall be entitled to any rights of a stockholder of the Company, including the right to vote or to consent.

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     7.2. Right of Action. All rights of action in respect of this Agreement are vested in the Holders of the Warrants, and any Holder of Warrants, without the consent of the Holder of any other Warrant, may, on such Holder’s own behalf and for such Holder’s own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in respect of, such Holder’s right to exercise or exchange such Holder’s Warrants in the manner provided in this Agreement or any other obligation of the Company under this Agreement.

     7.3. Agent. The Warrant Holders appoint Rhône Capital III as their agent and authorize Rhône Capital III to bind, and take all actions in connection with this Agreement on behalf of, the Warrant Holders, including agreeing to amendments of this Agreement pursuant to Section 10.9 herein. The Company shall be entitled to rely on direction by Rhône Capital III on behalf of any Warrant Holder for all purposes hereunder.

8. REPRESENTATIONS AND WARRANTIES.

     8.1. Representations and Warranties of the Company. The Company hereby represents and warrants that, as of the Closing Date:

          (a) Existence, Power and Ownership. It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

          (b) Authorization. It has the corporate power and authority to enter into this Agreement and to perform its obligations under, and consummate the transactions contemplated by, this Agreement and has by proper action duly authorized the execution and delivery of this Agreement.

          (c) No Conflicts. None of the execution and delivery of this Agreement, the consummation of the transactions contemplated herein or the performance of and compliance with the terms and provisions hereof will: (i) violate or conflict with any provision of its Certificate of Incorporation or by-laws; (ii) violate any law, regulation (including without limitation Regulation G, T, U or X), order, writ, judgment, injunction, decree or permit applicable to it; (iii) violate or materially conflict with any contractual provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, deed of trust, contract or other agreement or instrument to which it is a party or by which it or any of its properties may be bound; or (iv) result in or require the creation of any lien, security interest or other charge or encumbrance (other than those contemplated in or in connection with this Agreement) upon or with respect to its properties.

          (d) Consents. Subject to the requirements of the HSR Act and, in the case of exercise of the Warrants for Series A Preferred Stock, receipt of Required Stockholder Approval, no consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or other Person is required in connection with the execution, delivery or performance of this Agreement or the Warrants.

          (e) Enforceable Obligations. This Agreement has been duly executed and delivered by the Company and assuming due authorization, execution and delivery hereof by the Initial Warrant Holders and Rhône Capital III, constitutes a legal, valid and binding obligation of

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the Company, enforceable in accordance with its terms subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

          (f) Capitalization. As of the date hereof, the Company’s authorized capital stock consists of 185,000,000 shares of Common Stock and as of July 31, 2009, 128,269,163 shares of Common Stock were issued and outstanding. As of the date hereof, 2,885,200 shares of Common Stock are held in treasury and as of July 31, 2009, 15,743,332 shares of Common Stock are reserved for issuance upon exercise of outstanding employee stock options, 1,715,421 shares of Common Stock are reserved for issuance under the Company’s 2000 Stock Incentive Plan, as amended and restated, and 2,000,000 shares of Common Stock are reserved for issuance under the Company’s Employee Stock Purchase Plan, as amended and restated. There are no Voting Securities authorized or outstanding other than the Common Stock. There are no other classes of capital stock of the Company authorized or outstanding. The outstanding shares of Common Stock are duly authorized, validly issued, fully paid and non-assessable. There are no preemptive rights (other than as set forth in Section 5.6 of this Agreement) or, except as set forth on Schedule 8.1, other outstanding rights, options, warrants, conversion rights or agreements or commitments of any character relating to the Company’s authorized and issued, unissued or treasury shares of capital stock, and the Company has not issued any debt securities, other securities, rights or obligations that are currently outstanding and convertible into or exchangeable for, or giving any Person a right to subscribe for or acquire, capital stock of the Company.

          (g) Board Approvals. As of the date hereof, the Board has granted all necessary approvals under the Company’s constituent documentation and Delaware General Corporation Law with respect to the acquisition and exercise of the Warrants by the Initial Holders, including, without limitation, for purposes of Section 203 thereunder.

          (h) No Registration Requirement. None of the Company, its subsidiaries or any of their respective Affiliates has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any “security” (as defined in the Securities Act) that is or would be integrated with the issuance of the Warrants in a manner that would require the registration under the Securities Act of the Warrants or (ii) engaged in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offering of the Warrants or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. No securities of the Company or any of its subsidiaries are of the same class (within the meaning of Rule 144A) as the Warrants and listed on a national securities exchange registered under Section 6 of the Exchange Act, or quoted in a U.S. automated inter-dealer quotation system. Assuming the accuracy of the representations and warranties of the Holders in Section 8.2 hereof, it is not necessary in connection with the offer, sale and delivery of the Warrants to the Initial Holders in the manner contemplated herein to register any of the Warrants under the Securities Act.

     8.2. Representations and Warranties of the Holders. Each Holder, severally and not jointly, hereby represents and warrants that:

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          (a) Investment Intent. Holder acknowledges that neither the issuance or sale of the Warrants, nor the issuance of the shares of Common Stock or Series A Preferred Stock issuable upon the exercise thereof, have been registered under the Securities Act or under any state securities laws. Holder (1) is acquiring the Warrants and the shares of Common Stock or Series A Preferred Stock issuable upon the exercise thereof pursuant to an exemption from registration under the Securities Act solely for investment with no present intention to distribute any of the securities to any person in violation of the Securities Act or any other applicable securities laws, and (2) will not sell or otherwise dispose of any of the Warrants or the shares of Common Stock or Series A Preferred Stock issuable upon the exercise thereof, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws.

          (b) Accredited Investor Status. (1) Holder is an “accredited investor” as such term is defined in Rule 501(a) promulgated under the Securities Act whose knowledge and experience in financial and business matters are such that Holder is capable of evaluating the merits and risks of its investment in the Warrants or the shares of Common Stock or Series A Preferred Stock issuable upon the exercise thereof and (2)(a) Holder’s financial situation is such that Holder can afford to bear the economic risk of holding the Warrants or the shares of Common Stock or Series A Preferred Stock issuable upon the exercise thereof for an indefinite period of time, (b) Holder can afford to suffer complete loss of its investment in the Warrants or the shares of Common Stock or Series A Preferred Stock issuable upon the exercise thereof, (c) the Company has made available to Holder all documents and information that Holder has requested relating to an investment in the Company, and (d) Holder has had adequate opportunity to ask questions of, and receive answers from, the Company as well as the Company’s officers, employees, agents and other representatives concerning the Company’s business, operations, financial condition, assets, liabilities and all other matters relevant to Holder’s investment in the Warrants or the shares of Common Stock or Series A Preferred Stock issuable upon the exercise thereof.

9. COVENANTS.

     9.1. Reservation of Common Stock for Issuance on Exercise of Warrants.

          (a) The Company covenants that it will at all times reserve and keep available, free from preemptive rights and solely for the purpose of issue upon exercise of the Warrants as herein provided, (i) out of its authorized but unissued Common Stock, such number of shares of Common Stock as shall then be issuable upon the exercise of all Warrants issuable hereunder, and (ii) out of its authorized but unissued preferred stock, par value $0.01 per share, such number of shares of Series A Preferred Stock as shall then be issuable upon the exercise of all Warrants issuable hereunder. The Company will not issue Series A Preferred Stock to any Persons other than the Warrant Holders. The Company covenants that all shares of Common Stock and Series A Preferred Stock which shall be issuable shall, upon such issue, be duly and validly issued and fully paid and non-assessable.

     9.2. Notice of Dividends. At any time when the Company declares any dividend on its Common Stock, it shall give notice to the Holders of all the then outstanding Warrants of any such declaration not less than 15 days prior to the related record date for payment of the dividend so declared.

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     9.3. HSR Act Compliance. If Rhône Capital III or any Holder determines that a notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), is required in connection with the exercise of any Warrants by any Holder, the Company shall reasonably cooperate with such Holder by (i) promptly effecting all necessary notifications and other filings under the HSR Act that are required to be made by the Company and (ii) responding as promptly as reasonably practicable to all inquiries or requests received from the United States Federal Trade Commission (the “FTC”), the Department of Justice (“DOJ”) or any other governmental authority in connection with such notifications and other filings. For the avoidance of doubt, nothing in this Section 9.3 shall require that the Company or any of its subsidiaries commit to any divestiture, license, or hold separate or similar arrangement with respect to the business, assets or properties of the Company or any of its subsidiaries. Any such notifications and responses by the Company will be in full compliance with the requirements of the HSR Act. The Company shall, to the extent legally permissible, keep Rhône Capital III and such Holder reasonably apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC, the DOJ or such other governmental authority. The Company and Rhône Capital III shall share equally the filing fees in connection with the above filings, and shall otherwise each bear their respective costs and expenses in connection with the preparation of such filings and responses to inquires or requests.

     9.4. Board Representation.

          (a) On the Issuance Date, the Company shall increase the number of directors on the Board by two and each Appointing Fund shall have the right to designate a director (each, a “Rhône Director”) who shall be appointed to the Board. The initial Rhône Directors shall be M. Steven Langman and Andrew Sweet. Each Appointing Fund shall have the right to delegate its right to appoint a director to an Affiliate of the Appointing Fund.

          (b) Subject to Section 9.4(d) and 9.4(f), in connection with each meeting of stockholders at which directors are to be elected to serve on the Board, the Company shall take all necessary steps to nominate each Rhône Director (or such alternative persons who are proposed by the Appointing Funds and notified to the Company on or prior to any date set forth in the Company’s constituent documents or applicable law for stockholder nominees) and to use its reasonable best efforts to cause the Board to unanimously recommend that the stockholders of the Company vote in favor of recommending each Rhône Director for election to the stockholders. If, for any reason, a candidate designated as a Rhône Director is determined to be unqualified to serve on the Board, the Appointing Fund shall have the right to designate an alternative Rhône Director to be so appointed.

          (c) Each appointed or elected Rhône Director will hold his or her office as a director of the Company for such term as is provided in the Company’s constituent documents or until his or her death, resignation or removal from the Board or until his or her successor has been duly elected and qualified in accordance with the provisions of this Agreement, the Company’s constituent documents and applicable law. If any Rhône Director ceases to serve as

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a director of the Company for any reason during his or her term, the Company will use its reasonable best efforts to cause the Board to fill the vacancy created thereby with a replacement designated by the applicable Appointing Fund.

          (d) The Appointing Funds shall each have the right to designate a Rhône Director pursuant to Sections 9.4(a) and 9.4(b) until such time as the Initial Warrant Holders have sold 33 1/3% of the Underlying Stock issuable in respect of the Warrants on the Issuance Date (or Warrants exercisable for such percentage of Underlying Stock), to any Person or Persons other than Affiliates of Rhône Capital III or other Initial Warrant Holders. Thereafter, Triton Onshore SPV L.P. shall have the right to designate one Rhône Director pursuant to Sections 9.4(a) and 9.4(b) until such time as the Initial Warrant Holders have sold 66 2/3% of the Underlying Stock issuable in respect of the Warrants on the Issuance Date (or Warrants exercisable for such percentage of Underlying Stock), to any Person or Persons other than Affiliates of Rhône Capital III or other Initial Warrant Holders. Thereafter, the right of Triton Onshore SPV L.P. to designate a Rhône Director hereunder shall terminate.

          (e) The Company shall provide the same compensation and rights and benefits of indemnity to the Rhône Directors as are provided to other non-employee directors.

          (f) Nothing in this Section 9.4 shall prevent the Board from acting in accordance with its fiduciary duties or applicable law or from acting in good faith in accordance with its constituent documents, while giving due consideration to the intent of this Agreement. The Board shall have no obligation to appoint or nominate any Rhône Director upon written notice that such appointment or nomination would violate applicable law or result in a breach by the Board of its fiduciary duties to its stockholders; provided, however, that the foregoing shall not affect the right of the Appointing Funds to designate an alternate Rhône Director.

     9.5. Stockholder Approval. The Company shall call a special meeting of stockholders as promptly as practicable in the event that (i) the Company does not have a sufficient number of authorized shares of Common Stock to issue Common Stock upon exercise of all unexercised Warrants and to effect the conversion of any issued Series A Preferred Stock into Common Stock, in which case stockholder approval to amend the Company’s Certificate of Incorporation to increase the number of authorized shares of Common Stock shall be sought, or (ii) any or all of the Warrants are exercised for Series A Preferred Stock, in which case stockholder approval for conversion of the Series A Preferred Stock into Common Stock shall be sought, in each case in accordance with the voting requirements set forth in the Company’s by-laws. In the event of a special meeting called pursuant to clause (i) or (ii), the Company shall use its commercially reasonable efforts to obtain such stockholder approval and the Holders shall vote any Common Stock they then hold in favor of such approval.

     9.6. Certain Other Events. If any event occurs as to which the provisions of Article 5 are not strictly applicable or, if strictly applicable, would not fairly protect the rights of the Holders in accordance with the essential intent and principles of such provisions, then the Board shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith judgment of the disinterested members of the Board, to protect such purchase rights as aforesaid.

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     9.7. Transfers. Subject to compliance with applicable federal or state securities laws, Common Stock issuable upon exercise of the Warrants shall be freely transferable; provided, however, that Holders shall not transfer, individually or acting in concert with other Holders, Common Stock representing 15% or more of the then-outstanding number of shares of Common Stock to any one Person without the prior written approval of the Board. This Section 9.7 shall not apply to transfers of Common Stock made pursuant to a bona fide underwritten public offering or open-market transactions.

10. MISCELLANEOUS.

     10.1. Payment of Taxes. The Company shall pay all transfer, stamp and other similar taxes that may be imposed in respect of the issuance or delivery of the Warrants or in respect of the issuance or delivery by the Company of any securities upon exercise of the Warrants with respect thereto. The Company shall also pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Common Stock or Series A Preferred Stock or payment of cash to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant.

     10.2. Surrender of Certificates. Any Warrant Certificate surrendered for exercise or purchase shall be promptly cancelled by the Company and shall not be reissued by the Company. The Company shall destroy such cancelled Warrant Certificates.

     10.3. Mutilated, Destroyed, Lost and Stolen Warrant Certificates. If (a) any mutilated Warrant Certificate is surrendered to the Company, or (b) the Company receives evidence to its satisfaction of the destruction, loss or theft of any Warrant Certificate, and there is delivered to the Company such appropriate affidavit of loss, applicable processing fee and a corporate bond of indemnity as may be required by the Company to save it harmless, then, in the absence of notice to the Company that such Warrant Certificate has been acquired by a bona fide purchaser, the Company shall execute and deliver, in exchange for any such mutilated Warrant Certificate or in lieu of any such destroyed, lost or stolen Warrant Certificate, a new Warrant Certificate of like tenor and for a like aggregate number of Warrants.

     Upon the issuance of any new Warrant Certificate under this Section 10.3, the Company shall pay any tax or other governmental charge that may be imposed in relation thereto and other expenses in connection therewith.

     Every new Warrant Certificate executed and delivered pursuant to this Section 10.3 in lieu of any destroyed, lost or stolen Warrant Certificate shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Warrant Certificate shall be at any time enforceable by anyone, and shall be entitled to the benefits of this Agreement equally and proportionately with any and all other Warrant Certificates duly executed and delivered hereunder.

     The provisions of this Section 10.3 are exclusive and shall preclude (to the extent lawful) all other rights or remedies with respect to the replacement of mutilated, destroyed, lost or stolen Warrant Certificates.

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     10.4. Removal of Legends. In the event (i) the shares of Underlying Stock are registered under the Securities Act or (ii) the Company is presented with an opinion of counsel reasonably satisfactory to the Company that transfers of shares of Underlying Stock do not require registration under the Securities Act, the Company shall direct its transfer agent, and the transfer agent shall, upon surrender by a Holder of its certificates evidencing such shares of Underlying Stock to the transfer agent, exchange such certificates for certificates without the legends referred to in Section 3.6(e).

     10.5. Notices. Any notice, demand or delivery to the Company or Rhône Capital III authorized by this Agreement shall be sufficiently given or made when mailed if sent by first-class mail, postage prepaid, addressed to the Company or Rhône Capital III, as applicable, as follows:

If to the Company:	Quiksilver, Inc. 15202 Graham St. Huntington Beach, CA 92649 Fax: (734) 477-1370 Attention: General Counsel
	With a copy to:
	Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, CA 90071-3144 Fax: (213) 621-5493 Attention: Brian J. McCarthy and K. Kristine Dunn
If to Rhône Capital III:	Rhône Capital III L.P. 630 Fifth Avenue, 27th Floor New York, NY 10111 Fax: (212) 218-6789 Attention: Baudoin Lorans and M. Allison Steiner
	With a copy to:
	Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004-2498 Fax: (212) 291-9116 Attention: Richard Pollack

or such other address as shall have been furnished to the party giving or making such notice, demand or delivery.

          Any notice required to be given by the Company to the Holders pursuant to this Agreement shall be made by mailing by registered mail, return receipt requested, to the Holders

-32-

at their respective addresses shown on the register of the Company. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given when mailed, whether or not the Holder receives the notice.

     10.6. Applicable Law. This Agreement and each Warrant issued hereunder and all rights arising hereunder shall be governed by the internal laws of the State of New York.

     10.7. Persons Benefiting. This Agreement shall be binding upon and inure to the benefit of the Company and Rhône Capital III, and their successors, assigns, beneficiaries, executors and administrators, and the Holders from time to time of the Warrants. Nothing in this Agreement is intended or shall be construed to confer upon any Person, other than the Company, Rhône Capital III and the Holders, any right, remedy or claim under or by reason of this Agreement or any part hereof.

     10.8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument.

     10.9. Amendments.

          (a) Neither this Agreement nor any provisions hereof shall be waived, modified, changed, discharged or terminated other than in accordance with Section 10.9(b) below.

          (b) With the consent of Rhône Capital III, the Company may from time to time (i) supplement or amend this Agreement to cure any ambiguity, to correct or supplement any provision contained herein which may be defective or inconsistent with any other provisions herein, or to make any other provisions with regard to matters or questions arising hereunder and (ii) modify the Agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or modifying in any manner the rights of the Holders hereunder.

     10.10. Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience and shall not control or affect the meaning or construction of any of the provisions hereof.

     10.11. Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof. In the event of any conflict, discrepancy, or ambiguity between the terms and conditions contained in this Agreement and any schedules or attachments hereto, the terms and conditions contained in this Agreement shall take precedence.

     10.12. Limitation of Liability. No party to this Agreement shall be liable to any other party for any consequential, indirect, special or incidental damages under any provision of this Agreement or for any consequential, indirect, penal, special or incidental damages arising out of any act or failure to act hereunder even if that party has been advised of or has foreseen the possibility of such damages.

-33-

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of the day and year first above written.

QUIKSILVER, INC.
By:	/s/ Charles S. Exon
	Name:	Charles S. Exon
	Title:	Chief Administrative Officer
ROMOLO HOLDINGS C.V.
By:
	Name:
	Title:
TRITON SPV L.P.
By:
	Name:
	Title:
TRITON ONSHORE SPV L.P.
By:
	Name:
	Title:
TRITON OFFSHORE SPV L.P.
By:
	Name:
	Title:
TRITON COINVESTMENT SPV L.P.
By:
	Name:
	Title:

-34-

RHÔNE CAPITAL III L.P.
By:
	Name:
	Title:

-35-

FORM OF FACE OF WARRANT CERTIFICATE

THESE WARRANTS MAY ONLY BE TRANSFERRED WITH THE PRIOR CONSENT OF QUIKSILVER, INC. THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS. SUCH SECURITIES MAY BE OFFERED, SOLD OR TRANSFERRED ONLY IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS AND SUBJECT TO THE PROVISIONS OF THE WARRANT AND REGISTRATION RIGHTS AGREEMENT DATED AS OF JULY 31, 2009 BY AND AMONG QUIKSILVER, INC. (THE “COMPANY”), THE INITIAL WARRANT HOLDERS AND RHÔNE CAPITAL III L.P. A COPY OF SUCH WARRANT AND REGISTRATION RIGHTS AGREEMENT IS AVAILABLE AT THE OFFICES OF THE COMPANY.

WARRANTS TO PURCHASE COMMON STOCK
OF QUIKSILVER, INC.

No.                      Certificate for                      Warrants

     This certifies that [HOLDER], or registered assigns, is the registered holder of the number of Warrants set forth above. Each Warrant entitles the holder thereof (a “Holder”), subject to the provisions contained herein and in the Warrant and Registration Rights Agreement referred to below, to purchase from Quiksilver, Inc., a Delaware corporation (the “Company”), one share of the Company’s common stock, par value $0.0l per share (“Common Stock”), subject to adjustment upon the occurrence of certain events specified herein and in the Warrant and Registration Rights Agreement, at the exercise price (the “Exercise Price”) of $1.86 per share, subject to adjustment upon the occurrence of certain events specified herein and in the Warrant Agreement (as defined below).

     This Warrant Certificate is issued under and in accordance with the Warrant and Registration Rights Agreement, dated as of July 31, 2009 (the “Warrant Agreement”), by and among the Company, the Initial Warrant Holders and Rhône Capital III, and is subject to the terms and provisions contained in the Warrant Agreement, to all of which terms and provisions the Holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is hereby incorporated herein by reference and made a part hereof, including the representations and warranties of the Holder pursuant to Section 8.2 of the Warrant Agreement. Reference is hereby made to the Warrant Agreement for a full statement of the respective rights, limitations of rights, duties, obligations and immunities thereunder of the Company, the Holders of the Warrants and Rhône Capital III. Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Warrant Agreement.

     This Warrant Certificate shall terminate and be void as of the close of business on July 31, 2016 (the “Expiration Date”).

A-1

     As provided in the Warrant Agreement and subject to the terms and conditions therein set forth, the Warrants shall be exercisable from time to time on any Business Day and ending on the Expiration Date.

     The Exercise Price and the number of shares of Common Stock issuable upon the exercise of each Warrant are subject to adjustment as provided in the Warrant Agreement.

     All shares of Common Stock issuable by the Company upon the exercise of the Warrants shall, upon such issue, be duly and validly issued and fully paid and non-assessable.

     Under certain circumstances, as set forth in the Warrant Agreement, the Warrants are exercisable for Series A Preferred Stock of the Company.

     In order to exercise a Warrant, the registered holder hereof must surrender this Warrant Certificate at the principal place of business of the Company, with the Exercise Subscription Form on the reverse hereof duly executed by the Holder hereof, with signature guaranteed as therein specified, together with any required payment in full of the Exercise Price then in effect for the share(s) of Underlying Stock as to which the Warrant(s) represented by this Warrant Certificate is (are) submitted for exercise, all subject to the terms and conditions hereof and of the Warrant Agreement. Any such payment of the Exercise Price shall be by cash, bank wire transfer in immediately available funds, certified or official bank check drawn on a New York City bank payable to the order of the Company or on a cashless basis as described in Section 3.4(b) of the Warrant Agreement.

     The Company shall pay all transfer, stamp and other similar taxes that may be imposed in respect of the issuance or delivery of the Warrants or in respect of the issuance or delivery by the Company of any securities upon exercise of the Warrants. The Company shall also pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Common Stock or other securities underlying the Warrants or payment of cash to any Person other than the Holder of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant.

     No service charge shall be made to a Holder for any registration of exchange of the Warrant Certificates, and the Company shall pay any tax or other governmental charge payable in connection therewith.

     Each taker and holder of this Warrant Certificate by taking or holding the same, consents and agrees that this Warrant Certificate when duly endorsed in blank shall be deemed negotiable and that when this Warrant Certificate shall have been so endorsed, the holder hereof may be treated by the Company and all other Persons dealing with this Warrant Certificate as the absolute owner hereof for any purpose and as the Person entitled to exercise the rights represented hereby.

     This Warrant Certificate and all rights arising hereunder shall be governed by the internal laws of the State of New York.

     This Warrant Certificate and the Warrant Agreement are subject to amendment as provided in the Warrant Agreement.

     Copies of the Warrant Agreement are on file at the principal place of business of the Company and may be obtained by writing to the Company at the following address:

A-2

Quiksilver, Inc.
15202 Graham St.
Huntington Beach, CA 92649
Fax: (734) 477-1370
Attention: General Counsel

Dated: [ • ]

QUIKSILVER, INC.
By:
	Name and Title:
By:
	Name and Title:

A-3

EXHIBIT A

FORM OF REVERSE OF WARRANT CERTIFICATE

EXERCISE SUBSCRIPTION FORM

(To be executed only upon exercise of Warrant)

To: Quiksilver, Inc.

     The undersigned irrevocably exercises                      of the Warrants for the purchase of one share (subject to adjustment in accordance with the Warrant Agreement) of Common Stock, par value $0.01 per share, of Quiksilver, Inc., for each Warrant represented by the Warrant Certificate and herewith makes payment of $                     (such payment being by cash, by bank wire transfer in immediately available funds, or by certified or official bank check drawn on a New York City bank payable to the order of Quiksilver, Inc. or on a cashless basis as described in Section 3.4(b) of the Warrant Agreement), all at the Exercise Price and on the terms and conditions specified in the Warrant Certificate and the Warrant Agreement therein referred to, surrenders this Warrant Certificate and all right, title and interest therein to Quiksilver, Inc. and directs that the shares of Common Stock deliverable upon the exercise of such Warrants be registered in the name and delivered at the address specified below.

Date:                                         

¹

(Signature of Owner)

(Street Address)

(City)                                              (State)     (Zip Code)

Signature Guaranteed by:

¹ The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a financial institution satisfactory to the Company.

A-4

Securities to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

A-5

EXHIBIT B

FORM OF REVERSE OF WARRANT CERTIFICATE

EXERCISE SUBSCRIPTION FORM

(To be executed only upon exercise of Warrant for Series A Preferred Stock in the event of an adjustment requiring the approval of the stockholders of Quiksilver, Inc. in order to comply with Section 312.03 of the New York Stock Exchange Listed Company Manual)

To: Quiksilver, Inc.

     The undersigned irrevocably exercises                      of the Warrants for the purchase of one share of Series A Preferred Stock, par value $0.01 per share, of Quiksilver, Inc., for each Warrant represented by the Warrant Certificate and herewith makes payment of $                     (such payment being by cash, by bank wire transfer in immediately available funds, or by certified or official bank check drawn on a New York City bank payable to the order of Quiksilver, Inc. or on a cashless basis as described in Section 3.4(b) of the Warrant Agreement), all at the Exercise Price and on the terms and conditions specified in the Warrant Certificate and the Warrant Agreement therein referred to, surrenders this Warrant Certificate and all right, title and interest therein to Quiksilver, Inc. and directs that the shares of Series A Preferred Stock deliverable upon the exercise of such Warrants be registered in the name and delivered at the address specified below. Due to an adjustment requiring the approval of the stockholders of Quiksilver, Inc. in order to comply with Section 312.03 of the New York Stock Exchange Listed Company Manual, the undersigned hereby irrevocably elects to receive the Series A Preferred Stock in lieu of Common Stock.

Date:                     

²

(Signature of Owner)

(Street Address)

(City)                                             (State)     (Zip Code)

Signature Guaranteed by:

² The signature must correspond with the name as written upon the face of the within Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and must be guaranteed by a financial institution satisfactory to the Company.

B-1

Funds to be issued to:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

Please insert social security or identifying number:

Name:

Street Address:

City, State and Zip Code:

B-2

EXHIBIT C

CERTIFICATE OF DESIGNATIONS OF THE SERIES A PREFERRED STOCK

EX-10.4

Exhibit 10.4

CREDIT AGREEMENT

Dated as of July 31, 2009

among

QUIKSILVER AMERICAS, INC.
as the Lead Borrower

The Other Borrowers From Time to Time Party Hereto

The Guarantors From Time to Time Party Hereto

BANK OF AMERICA, N.A.
as Administrative Agent, Swing Line Lender
and
L/C Issuer,

BANK OF AMERICA, N.A. (acting through its Canada branch)
as Canadian Agent

BANK OF AMERICA, N.A.
GENERAL ELECTRIC CAPITAL CORPORATION
as Co-Collateral Agents,

and

The Other Lenders Party Hereto

BANK OF AMERICA, N.A.,
as Syndication Agent

BANC OF AMERICA SECURITIES LLC
GE CAPITAL MARKETS, INC.
as Joint Lead Arrangers
and Joint Bookrunners

TABLE OF CONTENTS

Section	Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS		1
1.01 Defined Terms		1
1.02 Other Interpretive Provisions		63
1.03 Accounting Terms; Currency Equivalents		64
1.04 Rounding		64
1.05 Times of Day		64
1.06 Letter of Credit Amounts		64
1.07 Certifications		65
1.08 Currency Equivalents Generally		65
1.09 Québec Matters		65
ARTICLE II THE COMMITMENTS AND CREDIT EXTENSIONS		65
2.01 Committed Loans; Reserves		65
2.02 Committed Borrowings, Conversions and Continuations of Committed Loans		67
2.03 Letters of Credit		70
2.04 Swing Line Loans		75
2.05 Prepayments		82
2.06 Termination or Reduction of Commitments		83
2.07 Repayment of Loans		84
2.08 Interest		84
2.09 Fees		85
2.10 Computation of Interest and Fees		86
2.11 Evidence of Debt		87
2.12 Payments Generally; Administrative Agent’s Clawback		88
2.13 Sharing of Payments by Lenders		89
2.14 Settlement Amongst Lenders		90
2.15 Increase in Commitments		91
2.16 CFC Payments		93
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY; APPOINTMENT OF LEAD BORROWER		93
3.01 Taxes		93
3.02 Illegality		95
3.03 Inability to Determine Rates		95
3.04 Increased Costs; Reserves on LIBO Rate Loans		96
3.05 Compensation for Losses		97
3.06 Mitigation Obligations; Replacement of Lenders		98
3.07 Survival		98
3.08 Designation of Lead Borrower as Borrowers’ Agent		98
ARTICLE IV CONDITIONS PRECEDENT TO CREDIT EXTENSIONS		99
4.01 Conditions of Initial Credit Extension		99
4.02 Conditions to all Credit Extensions		102
ARTICLE V REPRESENTATIONS AND WARRANTIES		103
5.01 Existence, Qualification and Power		103
(i)

Section	Page
5.02 Authorization; No Contravention		103
5.03 Governmental Authorization; Other Consents		104
5.04 Binding Effect		104
5.05 Financial Statements; No Material Adverse Effect		104
5.06 Litigation		105
5.07 No Default		105
5.08 Ownership of Property; Liens		105
5.09 Environmental Compliance		105
5.10 Insurance		106
5.11 Taxes		106
5.12 Plans		106
5.13 Subsidiaries; Equity Interests		107
5.14 Margin Regulations; Investment Company Act		107
5.15 Disclosure		107
5.16 Compliance with Laws		107
5.17 Intellectual Property; Licenses, Etc.		108
5.18 Labor Matters		108
5.19 Security Documents		108
5.20 Solvency		109
5.21 Deposit Accounts; Credit Card Arrangements		109
5.22 Brokers		109
5.23 Customer and Trade Relations		109
5.24 Material Contracts		109
5.25 Casualty		109
ARTICLE VI AFFIRMATIVE COVENANTS		110
6.01 Financial Statements		110
6.02 Certificates; Other Information		111
6.03 Notices		113
6.04 Payment of Obligations		114
6.05 Preservation of Existence, Etc.		114
6.06 Maintenance of Properties		115
6.07 Maintenance of Insurance		115
6.08 Compliance with Laws		116
6.09 Books and Records		116
6.10 Inspection Rights		116
6.11 Use of Proceeds		117
6.12 Additional Loan Parties		117
6.13 Cash Management		118
6.14 Information Regarding the Collateral		120
6.15 Physical Inventories		120
6.16 Environmental Laws		121
6.17 Further Assurances		121
6.18 Intentionally Omitted		122
6.19 Material Contracts		122
6.20 Canadian Pension Benefit Plans		122
ARTICLE VII NEGATIVE COVENANTS		122
7.01 Liens		122
7.02 Investments		123
7.03 Indebtedness		123
(ii)

Section	Page
7.04 Fundamental Changes		123
7.05 Dispositions		124
7.06 Restricted Payments		124
7.07 Prepayments of Indebtedness		124
7.08 Change in Nature of Business		125
7.09 Transactions with Affiliates		125
7.10 Burdensome Agreements		125
7.11 Use of Proceeds		126
7.12 Amendment of Material Documents		126
7.13 Fiscal Year		126
7.14 Deposit Accounts; Credit Card Processors		126
7.15 Financial Covenants		126
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES		126
8.01 Events of Default		126
8.02 Remedies Upon Event of Default		129
8.03 Application of Funds		130
8.04 Waivers By Loan Parties		134
ARTICLE IX AGENTS AND LENDERS		135
9.01 Appointment and Authority		135
9.02 Rights as a Lender		136
9.03 Exculpatory Provisions		136
9.04 Reliance by Agents		137
9.05 Delegation of Duties		137
9.06 Resignation of Agents		137
9.07 Non-Reliance on Agents, Canadian Agent and Other Lenders		139
9.08 No Other Duties, Etc		139
9.09 Administrative Agent May File Proofs of Claim		139
9.10 Collateral and Guaranty Matters		140
9.11 Notice of Transfer		140
9.12 Reports and Financial Statements		140
9.13 Agency for Perfection		141
9.14 Indemnification of Agents and Canadian Agent		142
9.15 Relation among Lenders		142
9.16 Defaulting Lender		142
9.17 Actions In Concert		143
9.18 Collateral Issues		143
ARTICLE X MISCELLANEOUS		143
10.01 Amendments, Etc.		143
10.02 Notices; Effectiveness; Electronic Communications		145
10.03 No Waiver; Cumulative Remedies		147
10.04 Expenses; Indemnity; Damage Waiver		147
10.05 Reinstatement; Payments Set Aside		148
10.06 Successors and Assigns		149
10.07 Treatment of Certain Information; Confidentiality		152
10.08 Right of Setoff		153
10.09 Interest Rate Limitation		153
10.10 Counterparts; Integration; Effectiveness		153
10.11 Survival		154
(iii)

Section	Page
10.12 Severability		154
10.13 Replacement of Lenders		154
10.14 Governing Law; Jurisdiction; Etc.		155
10.15 Waiver of Jury Trial		156
10.16 No Advisory or Fiduciary Responsibility		156
10.17 USA PATRIOT Act Notice; Proceeds of Crime Act		157
10.18 Foreign Asset Control Regulations		157
10.19 Error! Bookmark not defined
10.20 Time of the Essence		157
10.21 Foreign Subsidiaries		157
10.22 Press Releases		157
10.23 Additional Waivers		158
10.24 Judgment Currency		159
10.25 No Strict Construction		160
10.26 Attachments		160
10.27 Conflict of Terms		160
SIGNATURES		S-1
(iv)

SCHEDULES

1.01	Domestic Borrowers
1.02	Guarantors
2.01	Commitments and Applicable Percentages
4.01(x)	Security Documents
4.01(xi)	Other Loan Documents
5.01	Loan Parties’ Organizational Information
5.01	Material Indebtedness
5.08(b)(1)	Owned Real Estate
5.08(b)(2)	Leased Real Estate
5.10	Insurance
0	Subsidiaries, including Immaterial Subsidiaries; Other Equity Investments
5.21(a)	DDAs
5.21(b)	Credit Card Arrangements
5.22	Brokers
5.24	Material Contracts
6.02	Financial and Collateral Reporting
0	Existing Liens
7.02	Existing Investments
0	Existing Indebtedness
10.02	Administrative Agent’s Office; Canadian Agent’s Office; Certain Addresses for Notices

EXHIBITS

	Form of
A-1	Domestic Committed Loan Notice
A-2	Canadian Committed Loan Notice
(v)

	Form of
B-1	Domestic Swing Line Loan Notice
B-2	Canadian Swing Line Loan Notice
C-1	Canadian Note
C-2	Domestic Note
C-3	Canadian Swing Line Note
C-4	Domestic Swing Line Note
D	Compliance Certificate
E-1	Assignment and Assumption (Domestic Lenders)
E-2	Assignment and Assumption (Canadian Lenders)
F-1	Joinder Agreement – Domestic Loan Parties
F-2	Joinder Agreement – Canadian Loan Parties
G	Borrowing Base Certificate
H	Credit Card Processor Notification
I-1	Collateral Access Agreement – Domestic Loan Parties
I-2	Collateral Access Agreement – Canadian Loan Parties
J-1	Customs Broker Agent Agreement (Domestic Loan Parties)
J-2	Customs Broker Agent Agreement (Canadian Loan Parties)
K-1	Domestic Guarantee
K-2	Canadian Guarantee
(vi)

CREDIT AGREEMENT

     This CREDIT AGREEMENT is entered into as of July 31, 2009, among

     QUIKSILVER AMERICAS, INC., a California corporation (the “Lead Borrower”);

     QUIKSILVER CANADA CORP., a Nova Scotia unlimited liability company (the “Canadian Borrower”),

     the Persons named on Schedule 1.01 hereto (collectively, with the Lead Borrower and each other Person that from time to time becomes a “Domestic Borrower” hereunder, the “Domestic Borrowers”);

     QUIKSILVER, INC., a Delaware corporation (the “Parent”);

     the Persons named on Schedule 1.02 hereto (collectively, with each other Person that from time to time becomes a “Guarantor” hereunder, the “Guarantors”);

     each lender from time to time party hereto;

     BANK OF AMERICA, N.A., as Administrative Agent, Syndication Agent, Swing Line Lender and L/C Issuer;

     BANK OF AMERICA, N.A. (acting through its Canada branch), as Canadian Agent, Swing Line Lender and L/C Issuer; and

     BANK OF AMERICA, N.A. and GENERAL ELECTRIC CAPITAL CORPORATION, as Co-Collateral Agents.

     The Borrowers have requested that the Lenders provide certain revolving credit facilities, and the Lenders have indicated their willingness to lend and the L/C Issuer has indicated its willingness to issue Letters of Credit, in each case on the terms and conditions set forth herein.

     In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

     Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

     “Accelerated Borrowing Base Delivery Event” means either (i) the occurrence and continuance of any Event of Default, or (ii) the failure of the Borrowers to maintain Domestic Availability at least equal to the greater of (x) twenty percent (20%) of the Total Loan Cap or (y) $30,000,000. For purposes of this Agreement, the occurrence of an Accelerated Borrowing Base Delivery Event shall be deemed continuing (i) so long as such Event of Default is continuing, and/or (ii) if the Accelerated Borrowing Base Delivery Event arises as a result of the Domestic Borrowers’ failure to maintain Domestic Availability as required in clause (ii) of the immediately preceding sentence, until Domestic Availability has equaled or exceeded the greater of (x) twenty percent (20%) of the Total Loan Cap or (y) $30,000,000, for sixty (60) consecutive calendar days, in which case an Accelerated Borrowing Base Delivery Event shall no longer be deemed to be continuing for purposes of this Agreement.

-1-

     “Acceptable BOL” means with respect to In-Transit Inventory, a tangible, negotiable bill of lading that (i) is issued by a common carrier which is not an Affiliate of the applicable foreign vendor or Borrowing Base Party and which is in actual possession of such In-Transit Inventory or by an Eligible NVOCC; (ii) covers only such In-Transit Inventory; (iii) is issued to the order of a Domestic Borrower or a Canadian Loan Party or, while an Event of Default exists, if so requested by any Agent or, with respect to In-Transit Inventory of a Canadian Loan Party, any Agent, or the Canadian Agent, to the order of the Administrative Agent or the Canadian Agent, as applicable; (iv) is subject to the Administrative Agent’s or the Canadian Agent’s, as applicable, first priority Lien and no other Lien that is not a Permitted Encumbrance; and (v) the Agents and, with respect to In-Transit Inventory of a Canadian Loan Party, the Agents and the Canadian Agent, have not notified the Lead Borrower or the applicable Canadian Loan Party that such bill of lading is not in form and content reasonably acceptable to the Agents and, if applicable, the Canadian Agent.

     “Accommodation Payment” has the meaning provided in Section 10.08(d).

     “Account” means “accounts” as defined in the UCC and in the PPSA, and also means a right to payment of a monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a policy of insurance issued or to be issued, (d) for a secondary obligation incurred or to be incurred, (e) for energy provided or to be provided, (f) for the use or hire of a vessel under a charter or other contract, (g) arising out of the use of a credit or charge card or information contained on or for use with the card, or (h) as winnings in a lottery or other game of chance operated or sponsored by a state, province, territory, governmental unit of a state, province or territory, or person licensed or authorized to operate the game by a state, province, territory or governmental unit of a state, province or territory. The term “Account” includes health-care-insurance receivables.

     “ACH” means automated clearing house transfers.

     “Acquisition” means, with respect to any Person, (a) an Investment in, or a purchase of a Controlling interest in, the Equity Interests of any other Person, (b) a purchase or other acquisition of all or substantially all of the assets or properties of, another Person or of any business unit of another Person, (c) any merger, amalgamation or consolidation of such Person with any other Person or other transaction or series of transactions resulting in the acquisition of all or substantially all of the assets, or a Controlling interest in the Equity Interests, of any Person, or (d) any acquisition of Store locations of any Person (which, for the avoidance of doubt, shall exclude lease improvements and Store build-outs) for which the aggregate consideration payable in connection with such acquisition is $5,000,000 or more in any single transaction or $10,000,000 or more in the aggregate during the Availability Period, in each case in any transaction or group of transactions which are part of a common plan.

     “Additional Commitment Lender” has the meaning provided in Section 2.13(c).

     “Adjusted LIBO Rate” means, with respect to any LIBO Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of one percent (1%)) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate. The Adjusted LIBO Rate will be adjusted automatically as to all LIBO Borrowings then outstanding as of the effective date of any change in the Statutory Reserve Rate.

     “Adjustment Date” means the first day of each Fiscal Quarter; provided that, the first Adjustment Date after the Closing Date shall be January 31, 2010.

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     “Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.

     “Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Administrative Agent may from time to time notify the Lead Borrower and the Lenders.

     “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent.

     “Affiliate” means, with respect to any Person, (i) another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified, (ii) any other Person directly or indirectly holding 10% or more of any class of the Equity Interests of that Person, and (iii) any other Person 10% or more of any class of whose Equity Interests is held directly or indirectly by that Person.

     “Agent Parties” has the meaning specified in Section 10.02(c).

     “Agent(s)” means, individually, the Administrative Agent or any of the Co-Collateral Agents, and collectively means all of them.

     “Aggregate Canadian Commitments” means the Canadian Commitments of all the Canadian Lenders. As of the Closing Date, the Aggregate Canadian Commitments are $15,000,000.

     “Aggregate Domestic Commitments” means the Domestic Commitments of all the Domestic Lenders. As of the Closing Date, the Aggregate Domestic Commitments are $185,000,000.

     “Aggregate Total Commitments” means all Domestic Commitments and all Canadian Commitments. As of the Closing Date, the Aggregate Total Commitments are $200,000,000.

     “Agreement” means this Credit Agreement.

     “Allocable Amount” has the meaning specified in Section 10.08(d).

     “Americas Consolidated” means, when used to modify a financial term, test, statement, or report of the Parent, the application or preparation of such term, test, statement or report (as applicable) based upon the financial condition or operating results of the Parent and the Americas Subsidiaries, calculated or prepared (as the case may be) as if such entities were a consolidated group.

     “Americas Subsidiaries” means, collectively, (a) each direct or indirect Domestic Subsidiary of the Parent, and (b) each Canadian Subsidiary; provided that, in the case of financial statements referred to in Section 4.01(e)(ii), “Americas Subsidiaries” shall also include Quiksilver Industria e Comercio de Artigos Esportivos Ltda., Quiksilver Mexico, S. de R. L. de C.V. and Quiksilver Mexico Service, S. de R. L. de C.V.

     “Applicable Margin” means:

     (a) From and after the Closing Date until the first Adjustment Date, the percentages set forth in Level II of the pricing grid below, unless the Average Daily Domestic Availability requirements for Level II (or lower) have not been satisfied, in which event the Applicable Margin shall be set at Level III. In no event shall the Applicable Margin be set at Level I prior to

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the first Adjustment Date (even if the Average Daily Domestic Availability requirements for Level I have been satisfied); and

     (b) From and after the first Adjustment Date, the Applicable Margin shall be determined from the following pricing grid based upon the Average Daily Domestic Availability for the most recent Fiscal Quarter ended immediately preceding such Adjustment Date; provided however, that notwithstanding anything to the contrary set forth herein, upon the occurrence of an Event of Default, any Agent may, and the Administrative Agent shall at the direction of the Required Lenders, immediately increase the Applicable Margin to the percentage set forth in Level III which shall apply for so long as such Event of Default is continuing (even if the Average Daily Domestic Availability requirements for a different Level have been met and without limiting the right of the Administrative Agent or the Required Lenders to charge interest at the Default Rate as provided in Section 2.08(b)); provided further that, if any Borrowing Base Certificate is at any time restated or otherwise revised (including as a result of an audit) or if the information set forth in any such Borrowing Base Certificate otherwise proves to be false or incorrect such that the Applicable Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under this Agreement shall be immediately and retroactively recalculated at such higher rate for any applicable periods and shall be due and payable (to the extent not already paid) on demand.

	Average Daily Domestic	LIBOR			Domestic Prime			Canadian Prime			BA Rate
Level	Availability	Margin			Rate Margin			Rate Margin			Margin
I	Equal to or greater than 66% of the Total Loan Cap		4.00	%		3.00	%		3.50	%		4.00	%
II	Less than 66%, but equal to or greater than 33%, of the Total Loan Cap		4.25	%		3.25	%		3.75	%		4.25	%
III	Less than 33% of the Total Loan Cap		4.50	%		3.50	%		4.00	%		4.50	%

     “Applicable Percentage” means (a) with respect to any Canadian Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Canadian Commitments represented by the Canadian Commitment of such Canadian Lender at such time and (b) with respect to any Domestic Lender at any time, the percentage (carried out to the ninth decimal place) of the Aggregate Domestic Commitments represented by the Domestic Commitment of such Domestic Lender at such time. As to each Lender, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions has been terminated pursuant to Section 0 or if the Aggregate Total Commitments have expired, then the Applicable Percentage of each Lender shall be determined based on the Applicable Percentage of such Lender most recently in effect, giving effect to any subsequent assignments. The initial Applicable Percentage of each Lender is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable.

     “Applicable Rate” means, at any time of calculation, a per annum rate equal to the Applicable Margin for Loans which are LIBO Rate Loans.

     “Appraisal Percentage” means eighty-five percent (85%).

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     “Appraised Value” means the appraised orderly liquidation value, net of costs and expenses to be incurred in connection with any such liquidation, which value is expressed as a percentage of Cost of the Borrowing Base Parties’ Eligible Inventory as set forth in the Borrowing Base Parties’ inventory stock ledger, which value shall be determined from time to time by the most recent appraisal undertaken by an independent appraiser engaged by any Agent.

     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) a Lender Affiliate of a Lender or (c) an entity or Lender Affiliate of an entity that administers or manages a Lender.

     “Arrangers” means Banc of America Securities LLC and GE Capital Markets, Inc., in their capacities as joint lead arrangers.

     “Assignee Group” means two or more Eligible Assignees that are Lender Affiliates of one another or two or more Approved Funds managed by the same investment advisor.

     “Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.04(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 (Assignment and Assumption (Domestic Lenders)) or Exhibit E-2 (Assignment and Assumption (Canadian Lenders)), as applicable, or any other form approved by the Administrative Agent.

     “Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease Obligation of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation (other than any Capital Lease Obligation), the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease, agreement or instrument were accounted for as a capital lease.

     “Audited Financial Statements” means the audited Consolidated balance sheet of the Parent and its Subsidiaries for the Fiscal Year ended October 31, 2008, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Year of the Parent and its Subsidiaries, including the notes thereto.

     “Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(b)(iii).

     “Availability Condition” means at the time of determination with respect to any specified transaction or payment, Domestic Availability immediately preceding, and on a pro forma basis on the date thereof and a projected basis for the twelve (12) months immediately following, such transaction or payment was, and is projected to be, equal to or greater than the greater of (a) thirty percent (30%) of the Total Loan Cap and (b) $45,000,000.

     “Availability Period” means the period from and including the Closing Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Aggregate Total Commitments pursuant to Section 2.06, and (c) the date of termination of the commitment of each Lender to make Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 0.

     “Availability Reserves” means, without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria, such reserves as any Agent from time to time determines in its Permitted Discretion as reflecting (a) any impediments to (i) the Administrative Agent’s ability to realize upon the Collateral included in the Domestic Borrowing Base or (ii) the Canadian

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Agent’s ability to realize upon the Collateral included in the Canadian Borrowing Base, (b) claims and liabilities that (i) any Agent determines in its Permitted Discretion will need to be satisfied in connection with the realization upon the Collateral included in the Domestic Borrowing Base or (ii) the Canadian Agent determines in its Permitted Discretion will need to be satisfied in connection with the realization upon the Collateral included in the Canadian Borrowing Base, (c) criteria, events, conditions, contingencies or risks which adversely affect any component of the Domestic Borrowing Base or the Canadian Borrowing Base, or the assets, business, financial performance or financial condition of any Borrowing Base Party, or (d) that a Default or an Event of Default then exists. Without limiting the generality of the foregoing, by way of example and not limitation, Availability Reserves may include (but are not limited to), in any Agent’s Permitted Discretion, or with respect to Collateral included in the Canadian Borrowing Base, any Agent’s or the Canadian Agent’s Permitted Discretion, reserves based on: (i) rent; (ii) customs duties, freight charges, taxes, tariffs insurance charges and other charges that may reasonably be expected to come due with respect to any Eligible In-Transit Inventory or any Inventory associated with any Eligible Letter of Credit and other costs associated with Inventory of any Borrowing Base Party which is being imported into the United States or Canada; (iii) outstanding Taxes and other governmental charges due and owing by any Borrowing Base Party but unpaid, including, without limitation, ad valorem, real estate, personal property, sales, goods and services, claims of PBGC and other Governmental Authorities in respect of Plans and other Taxes due and owing by any Borrowing Base Party which may be subject to Liens that have priority over or are pari passu with the Liens of the Administrative Agent or the Canadian Agent in the Collateral; (iv) salaries, wages, vacation pay and benefits due and owing to employees of any Loan Party but unpaid and Canadian Priority Payable Reserves; (v) Customer Credit Liabilities; (v) reserves for reasonably anticipated changes in the Appraised Value of Eligible Inventory between appraisals; (vi) unpaid warehousemen’s or bailee’s charges due and owing by any Borrowing Base Party relating to Inventory of any Borrowing Base Party and other Permitted Encumbrances which may have priority over or are pari passu with the Liens of the Administrative Agent or the Canadian Agent in the Collateral; (vii) amounts due to vendors on account of consigned goods of any Borrowing Base Party; (viii) Cash Management Reserves; (ix) Bank Products Reserves; and (x) Dilution Reserves. Upon the determination by any Co-Collateral Agent in its Permitted Discretion that an Availability Reserve should be established or modified, such Co-Collateral Agent shall notify the Administrative Agent and, if applicable, the Canadian Agent, in writing and the Administrative Agent shall thereupon establish or modify such Availability Reserve, subject to the provisions of Section 0.

     “Average Daily Domestic Availability” means, as of any date of determination, the average daily Domestic Availability for the immediately preceding Fiscal Quarter.

     “BA Equivalent Loan” means any Canadian Loan in CD$ bearing interest at a rate determined by reference to the BA Rate in accordance with the provisions of Article II.

     “BA Equivalent Loan Borrowing” means any Committed Borrowing comprised of BA Equivalent Loans.

     “BA Rate” means, for the Interest Period of each BA Equivalent Loan, the rate of interest per annum equal to the annual rates applicable to CD$ bankers’ acceptances having an identical or comparable term as the proposed BA Equivalent Loan displayed and identified as such on the display referred to as the “CDOR Page” (or any display substituted therefor) of Reuter Monitor Money Rates Service as at approximately 10:00 A.M. (Toronto time) on such day (or, if such day is not a Business Day, as of 10:00 A.M. (Toronto time) on the immediately preceding Business Day), plus five (5) basis points; provided that if such rates do not appear on the CDOR Page at such time on such date, the rate for such date will be the annual discount rate (rounded upward to the nearest whole multiple of 1/100 of 1%) as of 10:00 A.M. on such day at which a Canadian chartered bank listed on Schedule 1 of the Bank Act

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(Canada) as selected by the Canadian Agent is then offering to purchase CD$ bankers’ acceptances accepted by it having such specified term (or a term as closely as possible comparable to such specified term), plus five (5) basis points.

     “Bank of America” means Bank of America, N.A., a national banking association, and its successors.

     “Bank of America-Canada Branch” means Bank of America, N.A. (acting through its Canada branch), a banking corporation carrying on business under the Bank Act (Canada).

     “Bank of Canada Overnight Rate” means, on any date of determination, the rate of interest charged by the Bank of Canada on one-day Canadian dollar loans to financial institutions, for such date.

     “Bank Products” means any services or facilities provided to any Loan Party by the Administrative Agent, the Canadian Agent, any Lender or any of their respective Lender Affiliates, including, without limitation, on account of (a) Swap Contracts, (b) purchase cards, and (c) leasing, but excluding Credit Extensions and Cash Management Services.

     “Bank Product Reserves” means such reserves as the Administrative Agent from time to time determines in its Permitted Discretion as being appropriate to reflect the liabilities and obligations of the Loan Parties with respect to Bank Products then provided or outstanding.

     “BAS” means Banc of America Securities LLC and its successors.

     “Blocked Account” has the meaning provided in Section 6.07(a)(ii).

     “Blocked Account Agreement” means, with respect to a Blocked Account established by a Loan Party, an agreement, in form and substance reasonably satisfactory to the Co-Collateral Agents and (if a party thereto) the Canadian Agent, establishing control (as defined in the UCC or in the PPSA, as applicable) of such Blocked Account by the Administrative Agent (for the benefit of itself and the other Credit Parties) or the Canadian Agent (for the benefit of itself and the other Canadian Credit Parties) and whereby the bank maintaining such account agrees, upon the occurrence and during the continuance of a Cash Dominion Event (and delivery of notice thereof from the Administrative Agent or the Canadian Agent, as applicable, to the Lead Borrower and the Blocked Account Bank party to such agreement), to comply only with the instructions originated by the Administrative Agent or the Canadian Agent, as applicable, without the further consent of any Loan Party.

     “Blocked Account Bank” means Bank of America, N.A., Bank of America-Canada Branch and each other bank with whom deposit accounts are maintained in which any funds of any of the Loan Parties from one or more DDAs are concentrated and with whom a Blocked Account Agreement has been, or is required to be, executed in accordance with the terms hereof.

     “Borrower Materials” has the meaning specified in Section 0.

     “Borrowers” means, collectively, the Domestic Borrowers and the Canadian Borrower.

     “Borrowing” means a Committed Borrowing or a Swing Line Borrowing, as the context may require.

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     “Borrowing Base Certificate” means a certificate substantially in the form of Exhibit G hereto (with such changes therein as may be required by any Agent to reflect the components of and reserves against the Domestic Borrowing Base as provided for hereunder from time to time, and as may be required by the Canadian Agent or any Agent to reflect the components of and reserves against the Canadian Borrowing Base as provided for hereunder from time to time), executed and certified as being accurate and complete in accordance with the terms of the Borrowing Base Certificate, by a Responsible Officer of the Lead Borrower or the Parent (with respect to the Domestic Borrowing Base) and any Canadian Loan Party (with respect to the Canadian Borrowing Base) which shall include appropriate exhibits, schedules, supporting documentation, and additional reports as reasonably requested in advance by any Agent (with respect to the Domestic Borrowing Base) or the Canadian Agent or any Agent (with respect to the Canadian Borrowing Base).

     “Borrowing Base Parties” means, collectively, the Domestic Borrowers and the Canadian Loan Parties, and, in the singular, any one of them.

     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office is located and, if such day relates to any LIBO Rate Loan, means any such day on which dealings in Dollar deposits are conducted by and between banks in the London interbank market; provided that, when used in connection with any Loan to the Canadian Borrower, the term “Business Day” shall also exclude any day on which banks are authorized or required by Law to be closed in Toronto, Ontario, Canada.

     “Canadian Agent” means Bank of America, N.A. (acting through its Canada branch), for its own benefit and the benefit of the other Canadian Credit Parties, or any successor Canadian agent.

     “Canadian Agent’s Office” means the Canadian Agent’s address and, as appropriate, account as set forth on Schedule 10.02, or such other address or account as the Canadian Agent may from time to time notify the Canadian Borrower and the Canadian Lenders.

     “Canadian Availability” means, as of any date of determination thereof, the result, if a positive number, of:

     (a) the Canadian Loan Cap

minus

     (b) the Total Canadian Outstandings on such date.

     In calculating Canadian Availability at any time and for any purpose under this Agreement any amount calculated or referenced in Dollars shall also refer to the Equivalent Amount in CD$.

     “Canadian Borrower” has the meaning specified in the introductory paragraph hereto.

     “Canadian Borrowing” means a Committed Canadian Borrowing or a Swing Line Borrowing made to the Canadian Borrower, as the context may require.

     “Canadian Borrowing Base” means, at any time of calculation, an amount in CD$ (or the Equivalent CD$ Amount, if applicable) equal to:

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     (a) the face amount of Eligible Credit Card Receivables of the Canadian Loan Parties multiplied by the Credit Card Advance Rate;

     plus

     (b) the face amount of Eligible Trade Receivables of the Canadian Loan Parties (net of Receivables Reserves applicable thereto) multiplied by the Receivables Advance Rate;

     plus

     (c) the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan Parties, net of Inventory Reserves applicable thereto, multiplied by the Appraisal Percentage of the Appraised Value of Eligible Inventory (other than Eligible In-Transit Inventory) of the Canadian Loan Parties;

     plus

     (d) the lesser of (i) $2,250,000 and (ii) the sum of (x) the Cost of Eligible In-Transit Inventory of the Canadian Loan Parties, net of Inventory Reserves applicable thereto, multiplied by the Appraisal Percentage of the Appraised Value of Eligible In-Transit Inventory of the Canadian Loan Parties, and (y) with respect to any Eligible Letter of Credit, the Appraisal Percentage of the Appraised Value of the Inventory of the Canadian Loan Parties supported by such Eligible Letter of Credit, multiplied by the Cost of such Inventory of the Canadian Loan Parties when completed, net of applicable Reserves;

     minus

     (e) the then amount of all Availability Reserves applicable to the Canadian Loan Parties. In no event shall the amount of Availability Reserves subtracted in calculating the Canadian Borrowing Base be duplicative of Availability Reserves subtracted in calculating the Domestic Borrowing Base.

     “Canadian Commitment Fee” has the meaning provided in Section 2.08(d)(ii).

     “Canadian Commitments” means, as to each Canadian Lender, its obligation to (a) make Committed Canadian Loans to the Canadian Borrower pursuant to Section 2.01(b), (b) purchase participations in Canadian L/C Obligations, and (c) purchase participations in Swing Line Loans made to the Canadian Borrower, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Canadian Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Canadian Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

     “Canadian Concentration Account” has the meaning provided in Section 6.13(c).

     “Canadian Credit Extensions” mean each of the following: (a) a Canadian Borrowing and (b) a Canadian L/C Credit Extension.

     “Canadian Credit Party” or “Canadian Credit Parties” means (a) individually, (i) each Canadian Lender and its Lender Affiliates, (ii) the Canadian Agent and its Lender Affiliates, (iii) each L/C Issuer of any Canadian Letter of Credit and (iv) the successors and assigns of each of the foregoing, and (b) collectively, all of the foregoing.

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     “Canadian L/C Borrowing” means an extension of credit resulting from a drawing under any Canadian Letter of Credit which has not been reimbursed on or prior to the date required to be reimbursed by the Canadian Borrower pursuant to Section 2.03(c)(i) or refinanced as a Committed Canadian Borrowing.

     “Canadian L/C Credit Extension” means, with respect to any Canadian Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

     “Canadian L/C Obligations” means, as at any date of determination and without duplication, the aggregate Stated Amount of all outstanding Canadian Letters of Credit plus the aggregate of all Unreimbursed Amounts under Canadian Letters of Credit, including all Canadian L/C Borrowings.

     “Canadian Lenders” means the Lenders having Canadian Commitments from time to time or at any time. Any Person may be a Canadian Lender only if it is a financial institution that is listed on Schedule I, II or III of the Bank Act (Canada) or is not a foreign bank for purposes of the Bank Act (Canada), and if such financial institution is not resident in Canada and is not deemed to be resident in Canada for purposes of the Income Tax Act (Canada), then such financial institution deals at arm’s length with each Canadian Loan Party for purposes of the Income Tax Act (Canada).

     “Canadian Letter of Credit” means each Letter of Credit issued hereunder for the account of the Canadian Borrower.

     “Canadian Letter of Credit Sublimit” means an amount equal to $10,000,000. The Canadian Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Canadian Commitments. A permanent reduction of the Aggregate Canadian Commitments shall not require a corresponding pro rata reduction in the Canadian Letter of Credit Sublimit; provided, however, that if the Aggregate Canadian Commitments are reduced to an amount less than the Canadian Letter of Credit Sublimit, then the Canadian Letter of Credit Sublimit shall be reduced to an amount equal to (or, at Canadian Borrower’s option, less than) the Aggregate Canadian Commitments.

     “Canadian Liabilities” means (a) all advances to, and debts (including principal, interest, fees, costs, and expenses), liabilities, obligations, covenants, indemnities, and duties of, any Canadian Loan Party arising under any Loan Document or otherwise with respect to any Canadian Loan or Canadian Letter of Credit (including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral therefor), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest, fees, costs and expenses that accrue after the commencement by or against any Canadian Loan Party or any Lender Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, and (b) any Other Canadian Liabilities.

     “Canadian Loan” means an extension of credit by a Canadian Lender to the Canadian Borrower under Article II in the form of a Committed Loan or a Swing Line Loan.

     “Canadian Loan Cap” means, at any time of determination, the lesser of (a) the Aggregate Canadian Commitments and (b) the Canadian Borrowing Base.

     “Canadian Loan Parties” means, collectively, the Canadian Borrower and each Canadian Subsidiary that is a Guarantor of the Canadian Liabilities. “Canadian Loan Party” means any one of such Persons.

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     “Canadian Note” means a promissory note made by the Canadian Borrower in favor of a Canadian Lender evidencing Canadian Loans made by such Canadian Lender, substantially in the form of Exhibit C-1.

     “Canadian Overadvance” means a Canadian Credit Extension to the extent that, immediately after the making of such Canadian Credit Extension, the aggregate principal balance of all Canadian Credit Extensions then outstanding exceeds the Canadian Loan Cap as then in effect.

     “Canadian Pension Plan” means an employee pension benefit plan or pension plan that is covered by the Laws of any jurisdiction in Canada including the Pension Benefits Act (Ontario) and the Income Tax Act (Canada) or subject to minimum funding standards and that is either (a) maintained or sponsored by any Canadian Loan Party or any Canadian Subsidiary for employees, (b) maintained pursuant to a collective bargaining agreement, or other arrangement under which more than one employer makes contributions and to which any Canadian Loan Party or any Canadian Subsidiary is making or accruing an obligation to make contributions or has within the preceding five years made or accrued such contributions or (c) any other plan with respect to which any Canadian Loan Party has incurred or may incur liability, including contingent liability either to such plan or to any Person, administration or Governmental Authority, including the FSCO. “Canadian Pension Plan” shall not include the group registered retirement savings plan in which the employees of any Canadian Loan Party or any Canadian Subsidiary participate and which is not subject to any pension benefits standards legislation or the registered pension plan provisions of the Income Tax Act (Canada).

     “Canadian Prime Rate” means, for any day, the greater of (i) the rate of interest publicly announced from time to time by the Canadian Agent as its reference rate of interest for loans made in CD$ and designated as its “prime” rate being a rate set by Canadian Agent based upon various factors, including Canadian Agent’s costs and desired return, general economic conditions and other factors and is used as a reference point for pricing some loans, provided that in the event that the Canadian Agent (including any successor or assignor) does not at any time publicly announce a prime rate, such rate shall be the “prime rate” publicly announced by a Schedule 1 chartered bank in Canada selected by the Canadian Agent, (ii) the Bank of Canada overnight rate, which is the rate of interest charged by the Bank of Canada on one-day loans to financial institutions, for such day, plus 0.50%, and (iii) the BA Equivalent Rate for a one month Interest Period as determined on such day, plus 1.0%. Any change in the prime rate announced by the Canadian Agent shall take effect at the opening of business on the day specified in the public announcement of such change. Each interest rate based on the Canadian Prime Rate hereunder, shall be adjusted simultaneously with any change in the Canadian Prime Rate.

     “Canadian Prime Rate Loan” means a Loan that bears interest based on the Canadian Prime Rate.

     “Canadian Priority Payable Reserves” means, without duplication of any other Reserves with respect to the Canadian Loan Parties, such reserves as any Co-Collateral Agent or the Canadian Agent from time to time determines in its Permitted Discretion as being appropriate to reflect any amounts secured by any Liens, choate or inchoate, which rank or are capable of ranking in priority to, or pari passu with the Liens of the Administrative Agent or the Canadian Agent, as applicable, and/or any amounts which may represent costs relating to the enforcement of the Liens of the Administrative Agent or the Canadian Agent, as applicable, on the Collateral including, without limitation, any such amounts due and owing by any Borrowing Base Party and not paid for wages (including any amounts protected by the Wage Earner Protection Program Act (Ontario)), amounts due and owing by any Borrowing Base Party and not paid for vacation pay, amounts due and owing by any Borrowing Base Party and not paid under any legislation relating to workers’ compensation or to employment insurance, all amounts deducted or withheld and not paid and remitted when due under the Income Tax Act (Canada), amounts currently or past due and owing by any Borrowing Base Party and not paid for realty, municipal or similar

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Taxes (to the extent impacting personal or movable property) and all amounts currently or past due and owing by any Borrower and not contributed, remitted or paid to any Plan or under the Canada Pension Plan, the Pension Benefits Act (Ontario) or any similar legislation.

     “Canadian Security Documents” means each General Security Agreement, Deed of Hypothec and each other security agreement or other instrument or document executed and delivered by any Canadian Loan Party to the Canadian Agent pursuant to this Agreement or any other Loan Document granting a Lien on assets of any Canadian Loan Party for the benefit of the Canadian Credit Parties, as security for the Canadian Liabilities.

     “Canadian Subsidiary” means any Subsidiary that is organized under the laws of Canada or any province or territory thereof.

     “Canadian Swing Line Note” means the promissory note of the Canadian Borrower substantially in the form of Exhibit C-3, payable to the order of the applicable Swing Line Lender, evidencing the Swing Line Loans made by the Swing Line Lender to the Canadian Borrower.

     “Canadian Swing Line Sublimit” means an amount equal to the lesser of (a) $1,500,000 and (b) the Aggregate Canadian Commitments. The Canadian Swing Line Sublimit is part of, and not in addition to, the Aggregate Canadian Commitments.

     “Capital Expenditures” means, without duplication and with respect to any Person for any period, all expenditures made (whether made in the form of cash or other property) or costs incurred for the acquisition or improvement of fixed or capital assets of such Person (excluding normal replacements and maintenance which are properly charged to current operations), in each case that are (or should be) capitalized under GAAP, but excluding Capital Lease Obligations incurred by a Person during such period. For purposes of this definition, the purchase price of Equipment that is purchased substantially contemporaneously with the trade-in or sale of similar Equipment or with insurance proceeds therefrom shall be included in Capital Expenditures only to the extent of the gross amount by which such purchase price exceeds the credit granted to such Person for the Equipment being traded in by the seller of such new Equipment, the proceeds of such sale or the amount of the insurance proceeds, as the case may be.

     “Capital Lease Obligations” means, with respect to any Person for any period, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP and the amount of which obligations shall be the capitalized amount thereof determined in accordance with GAAP.

     “Cash Collateral Account” means (i) in the case of the Domestic L/C Obligations, an account established by one or more of the Domestic Loan Parties with the Administrative Agent, for its own benefit and the benefit of the other Domestic Credit Parties, at Bank of America under the sole and exclusive dominion and control of the Administrative Agent (subject to the rights of the US Term Loan Agent, Term Loan Collateral Agent and the Euro Term Loan Agent as described in the Intercreditor Agreement), in the name of the Administrative Agent or as the Administrative Agent shall otherwise direct, in which deposits are required to be made by the Domestic Borrowers in respect of the Domestic L/C Obligations in accordance with Section 2.03(g) or Section ARTICLE VIII(u); and (ii) in the case of the Canadian L/C Obligations, an interest bearing account established by any Canadian Loan Party with the Canadian Agent, for its own benefit and the benefit of the other Canadian Credit Parties, at Bank of America-Canada Branch under the sole and exclusive dominion and control of the Canadian Agent, in the name of the Canadian Agent or as the Canadian Agent shall otherwise direct, in which deposits are

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required to be made by the Canadian Borrower in respect of the Canadian L/C Obligations in accordance with Section 2.03(g) or Section ARTICLE VIII(u).

     “Cash Collateralize” has the meaning specified in Section 2.03(g).

     “Cash Dominion Event” means any of (i) the occurrence and continuance of any Event of Default, (ii) the failure of the Borrowers to maintain Domestic Availability for three (3) consecutive Business Days at least equal to the greater of (x) twenty percent (20%) of the Total Loan Cap or (y) $30,000,000, or (iii) at any time after the Closing Date, the failure to either (a) refinance the Pilot SAS Facility or (b) enter into a binding commitment reasonably satisfactory to the Agents to refinance the Pilot SAS Facility (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 Facility then in effect. For purposes of this Agreement, the occurrence of a Cash Dominion Event shall be deemed continuing (i) so long as such Event of Default is continuing, (ii) if such Cash Dominion Event arises as a result of the Borrowers’ failure to maintain Domestic Availability as required under clause (ii) of the immediately preceding sentence, until Domestic Availability is at least equal to the greater of (x) twenty percent (20%) of the Total Loan Cap or (y) $30,000,000 for sixty (60) consecutive calendar days, and/or (iii) if such Cash Dominion Event has occurred due to events described in clause (iii) of the immediately preceding sentence, until such time as the Pilot SAS Facility has been refinanced, or a satisfactory binding commitment to refinance the Pilot SAS Facility (such refinancing to close by no later than the maturity date thereof then in effect) has been entered into; in which case a Cash Dominion Event shall no longer be deemed to be continuing for purposes of this Agreement; provided that a Cash Dominion Event shall be deemed continuing (even if an Event of Default is no longer continuing and/or Domestic Availability exceeds the required amount for sixty (60) consecutive calendar days and/or the Pilot SAS Facility is refinanced or a binding commitment therefor has been entered into) at all times after a Cash Dominion Event has occurred and been discontinued on three (3) occasions after the Closing Date.

     “Cash Equivalent” means an Investment of any type specified in clauses (a) through (h) in the definition below of the term “Permitted Investment”.

     “Cash Management Reserves ” means such reserves as the Administrative Agent, from time to time, determines in its Permitted Discretion as being appropriate to reflect the reasonably anticipated liabilities of the Loan Parties with respect to Cash Management Services then provided or outstanding.

     “Cash Management Services” means any one or more of the following types or services or facilities provided to any Loan Party by the Administrative Agent or any Lender or any of their respective Lender Affiliates: (a) ACH transactions, (b) cash management services, including, without limitation, controlled disbursement services, treasury, depository, overdraft, and electronic funds transfer services, (c) foreign exchange facilities, (d) credit card processing services, and (e) credit or debit cards.

     “CD$” or “Canadian Dollars” means lawful money of Canada.

     “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.

     “CFC” means (a) a Subsidiary that is a controlled foreign corporation under Section 957 of the Code, or (b) an entity treated as disregarded for United States federal income tax purposes that owns more than 65% of the voting Equity Interests of a Subsidiary described in clause (a) of this definition.

     “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule,

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regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority, requiring compliance by any Credit Party (or any lending office of such Credit Party or by such Credit Party’s holding company, if any).

     “Change of Control” means an event or series of events by which:

     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding (i) any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan and (ii) Rhône Capital L.P. and its Affiliates) becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 35% or more of the Equity Interests of the Parent entitled to vote for members of the board of directors or equivalent governing body of the Parent on a fully-diluted basis (and taking into account all such Equity Interests that such “person” or “group” has the right to acquire pursuant to any option right); or

     (b) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Parent cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

     (c) any “change in control” as defined in any document governing Material Indebtedness of any Loan Party; or

     (d) the Parent fails at any time to own, directly or indirectly, 100% of the Equity Interests of each other Loan Party free and clear of all Liens (other than (i) the Liens in favor of the Administrative Agent or the Canadian Agent under the Security Documents, (ii) Liens securing obligations in respect of the U.S. Term Loan Credit Agreement and loan documents relating thereto, and (iii) Liens securing obligations in respect of the Euro Term Loan Credit Agreement and loan documents relating thereto), except where such failure is as a result of a transaction permitted by the Loan Documents.

     “Closing Date” means July 31, 2009.

     “Co-Collateral Agents” means, collectively, Bank of America and GECC, acting in their capacity as co-collateral agents, each for its own benefit and the benefit of the other Credit Parties, or any successor collateral agent.

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     “Code” means the Internal Revenue Code of 1986, and the regulations promulgated thereunder, as amended and in effect.

     “Collateral” means any and all “Collateral” as defined in any applicable Security Document and all other property of any Loan Party that is or is intended under the terms of the Security Documents to be subject to Liens in favor of the Administrative Agent (for the benefit of itself and the other Credit Parties) or the Canadian Agent (for the benefit of itself and the other Canadian Credit Parties), as applicable.

     “Collateral Access Agreement” means an agreement substantially in the form attached hereto as Exhibit I-1 (Collateral Access Agreement – Domestic Loan Parties) or Exhibit I-2 (Collateral Access Agreement – Canadian Loan Parties) or otherwise reasonably satisfactory in form and substance to the Agents (with respect to any location of the Domestic Loan Parties) or the Canadian Agent or any Agent (with respect to any location of the Canadian Loan Parties), executed by (a) a bailee or other Person in possession of Collateral, or (b) a landlord of Real Estate leased by any Borrowing Base Party, in each case, pursuant to which such landlord, bailee or other Person (i) acknowledges the Lien granted to the Administrative Agent or the Canadian Agent, as applicable, on the Collateral, (ii) releases or subordinates such Person’s Liens in the Collateral held by such Person or located on such Real Estate, (iii) provides the Administrative Agent or the Canadian Agent, as applicable, with access to the Collateral held by such bailee or other Person or located in or on such Real Estate, (iv) as to any landlord (x) provides the Administrative Agent or the Canadian Agent, as applicable, with access to the Collateral located in or on such Real Estate and a reasonable time to sell and dispose of the Collateral from such Real Estate, and (y) agrees to give the Administrative Agent or the Canadian Agent, as applicable, reasonable prior notice before terminating the lease covering such Real Estate and an opportunity to cure any default of the applicable tenant if the Administrative Agent or the Canadian Agent, as applicable, so elects.

     “Collateral Issues” has the meaning given such term in Section 0.

     “Commercial Letter of Credit” means any letter of credit or similar instrument (including, without limitation, bankers’ acceptances) issued for the purpose of providing the primary payment mechanism in connection with the purchase of any materials, goods or services by a Loan Party in the ordinary course of business of such Loan Party.

     “Commitment” means, as to each Lender, its Domestic Commitment and its Canadian Commitment.

     “Commitment Fee Adjustment Date” means the first day of each calendar quarter.

     “Commitment Increase” has the meaning provided in Section 2.13(a).

     “Committed Borrowing” means each Committed Canadian Borrowing and each Committed Domestic Borrowing.

     “Committed Canadian Borrowing” means a borrowing consisting of simultaneous Committed Canadian Loans of the same Type and, in the case of BA Equivalent Loans or LIBO Rate Loans, having the same Interest Period made by each of the Canadian Lenders pursuant to Section 2.01.

     “Committed Canadian Loan” means any loan at any time made by any Canadian Lender pursuant to Section 2.01.

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     “Committed Domestic Borrowing” means a borrowing consisting of simultaneous Committed Domestic Loans of the same Type and, in the case of LIBO Rate Loans, having the same Interest Period made by each of the Domestic Lenders pursuant to Section 2.01.

     “Committed Domestic Loan” means any loan at any time made by any Domestic Lender pursuant to Section 2.01.

     “Committed Loan” means any loan at any time made by any Lender (including, without limitation, any Committed Domestic Loan and any Committed Canadian Loan) pursuant to Section 2.01.

     “Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a conversion of a Committed Loan from one Type to the other, or (c) a continuation of a LIBO Rate Loan or a BA Equivalent Loan, pursuant to Section 2.02(b), which, if in writing, shall be substantially in the form of Exhibit A-1 (Domestic Committed Loan Notice) or Exhibit A-2 (Canadian Committed Loan Notice), as applicable.

     “Compliance Certificate” means a certificate substantially in the form of Exhibit D.

     “Consent” means (a) actual written consent given by a Lender from whom such consent is sought; or (b) the passage of ten (10) Business Days from receipt of written notice to a Lender from the Administrative Agent of a proposed course of action to be followed by the Administrative Agent without such Lender’s giving the Administrative Agent written notice that such Lender objects to such course of action.

     “Consolidated” means, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries.

     “Consolidated EBITDA” means, at any date of determination, an amount equal to Consolidated Net Income of the Parent and the Americas Subsidiaries on an Americas Consolidated basis for the most recently completed Measurement Period, plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges, (ii) the provision for federal, state, local and foreign income Taxes, (iii) depreciation and amortization expense, (iv) other non-recurring expenses reducing such Consolidated Net Income which do not represent a cash item in such period or any future period, (v) costs, fees and expenses in connection with the Loan Documents, the Term Loan Documents and the other transactions occurring on or about the Closing Date, (vi) costs, fees and expenses of business consultants, advisors and other outside professionals incurred prior to July 31, 2009, not to exceed $2,000,000, (vii) impairment charges and asset write-offs pursuant to GAAP and any non-cash stock compensation expenses, and (viii) other non-cash restructuring, severance and integration charges reducing such Consolidated Net Income (provided that if any such non-cash charge represents an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDA to such extent in such future period) (in each case of or by the Parent and the Americas Subsidiaries for such Measurement Period), minus (b) the following to the extent included in calculating such Consolidated Net Income: (i) federal, state, local and foreign income tax credits and (ii) all non-cash items increasing Consolidated Net Income (in each case of or by the Parent and the Americas Subsidiaries for such Measurement Period), all as determined on an Americas Consolidated basis, in accordance with GAAP, as applicable.

     “Consolidated Fixed Charge Coverage Ratio” means, at any date of determination, the ratio of (a) (i) Consolidated EBITDA for the most recently completed Measurement Period minus (ii) Capital

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Expenditures paid in cash during such Measurement Period minus (iii) the aggregate amount of Federal, state, local, provincial, territorial, municipal and foreign income taxes paid in cash during such Measurement Period (net of federal, state, local, provincial, territorial, municipal and foreign income tax refunds received in cash during such Measurement Period) to (b) the sum of (i) Debt Service Charges for such Measurement Period plus (ii) the aggregate amount of all Restricted Payments paid in cash by the Parent during such Measurement Period, in each case, of or by the Parent and the Americas Subsidiaries (other than clause (b)(ii) above), and determined on an Americas Consolidated basis, in accordance with GAAP, as applicable.

     “Consolidated Interest Charges” means, for any Measurement Period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses , in each case to the extent treated as interest in accordance with GAAP, including, without limitation, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing and net costs under Swap Contracts, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense with respect to such period under Capital Lease Obligations that is treated as interest, in accordance with GAAP in each case of or by the Parent and the Americas Subsidiaries for the most recently completed Measurement Period, all as determined on an Americas Consolidated basis.

     “Consolidated Net Income” means, as of any date of determination, the net income of the Parent and the Americas Subsidiaries for the most recently completed Measurement Period, all as determined on an Americas Consolidated basis, in accordance with GAAP, as applicable; provided, however, that there shall be excluded (a) extraordinary gains and extraordinary losses for such Measurement Period, (b) the income (or loss) of such Person during such Measurement Period in which any other Person has a joint interest, except to the extent of the amount of cash dividends or other distributions actually paid in cash to such Person during such period, (c) the income (or loss) of such Person during such Measurement Period and accrued prior to the date it becomes a Subsidiary of a Person or any of such Person’s Subsidiaries or is merged into or consolidated with a Person or any of its Subsidiaries or that Person’s assets are acquired by such Person or any of its Subsidiaries, and (d) the income of any direct or indirect Subsidiary of a Person to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its Organization Documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, except that the Parent’s equity in any net loss of any such Americas Subsidiary for such Measurement Period shall be included in determining Consolidated Net Income.

     “Contractual Obligation” means, as to any Person, any provision of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

     “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

     “Cost” means the lower of cost or market value of Inventory, based upon the Borrowers’ accounting practices, known to the Administrative Agent, which practices are in effect on the Closing Date as such calculated cost is determined from invoices received by the Borrowing Base Parties, the Borrowing Base Parties’ purchase journals or the Borrowing Base Parties’ stock ledger. “Cost” does not include inventory capitalization costs or other non-purchase price charges (such as freight) used in the Borrowing Base Parties’ calculation of cost of goods sold.

     “Covenant Compliance Event” means, as of any date, Domestic Availability at any time is less than the greater of (x) fifteen percent (15%) of the Total Loan Cap or (y) $30,000,000. For purposes

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hereof, the occurrence of a Covenant Compliance Event shall be deemed continuing until Domestic Availability is at least equal to the greater of (x) fifteen percent (15%) of the Total Loan Cap or (y) $30,000,000 for sixty (60) consecutive calendar days, in which case a Covenant Compliance Event shall no longer be deemed to be continuing for purposes of this Agreement.

     “Credit Card Advance Rate” means eighty-five percent (85%).

     “Credit Card Notifications” has the meaning provided in Section 6.07(a)(i).

     “Credit Card Receivables” means each Account, together with all income, payments and proceeds thereof, owed by a major credit or debit card issuer (including, but not limited to, Visa, MasterCard and American Express and such other issuers approved by the Agents (such approval not to be unreasonably withheld)) to a Borrowing Base Party resulting from charges by a customer of a Borrowing Base Party on credit or debit cards issued by such issuer in connection with the sale of goods by a Borrowing Base Party, or services performed by a Borrower, in each case in the ordinary course of its business.

     “Credit Extension” means each of (a) a Canadian Credit Extension and (b) a Domestic Credit Extension.

     “Credit Party” or “Credit Parties” means (a) individually, (i) each Canadian Credit Party, (ii) each Domestic Credit Party, (iii) the Arrangers, (iv) each beneficiary of each indemnification obligation undertaken by any Loan Party under any Loan Document, (v) each Lender Affiliate of any Domestic Lender or Canadian Lender or the Administrative Agent or Canadian Agent providing Cash Management Services or Bank Products to a Loan Party, and (vi) the successors and assigns of each of the foregoing, and (b) collectively, all of the foregoing.

     “Credit Party Expenses” means: (a) all reasonable and documented out-of-pocket expenses incurred by any of the Agents, the Canadian Agent, the Arrangers and their respective Lender Affiliates, in connection with this Agreement and the other Loan Documents, including, without limitation (but in any event subject to the limitations described hereinbelow), (i) the reasonable and documented fees, charges and disbursements of (A) counsel for any of the Agents, the Canadian Agent, and the Arrangers (limited to not more than one primary counsel (except in the case of counsel to GECC’s and GECM’s incurred in connection with the initial closing of the credit facility provided under this Agreement, subject to the limitation described in the proviso below) and necessary local counsel (limited to one local counsel per jurisdiction except in the case of Canadian counsel to GECC incurred in connection with the initial closing of the credit facility provided in this Agreement)), (B) outside consultants for any of the Agents and the Canadian Agent, (C) appraisers, (D) commercial finance examinations, and (E) all such out-of-pocket expenses incurred during any workout or restructuring negotiations in respect of the Obligations, and (ii) all reasonable and documented out-of-pocket expenses incurred in connection with (A) the syndication of the credit facility provided for herein, (B) the preparation, negotiation, administration, management, execution and delivery of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (C) the enforcement or protection of their rights in connection with this Agreement or the other Loan Documents or efforts to preserve, protect, collect, or enforce the Collateral or in connection with any proceeding under any Debtor Relief Laws, or (D) any workout or restructuring negotiations in respect of any Obligations; provided that, notwithstanding anything to the contrary contained herein, the aggregate amount included in the definition of Credit Party Expenses on account of fees, charges and disbursements of counsel to GECC and GECM incurred in connection with the initial closing of the credit facility provided under this Agreement shall be limited to $200,000 inclusive of the fees, charges and disbursements of such Credit Parties’ Canadian counsel; and (b) with respect to the L/C Issuer and its Lender Affiliates, all reasonable and documented out-of-pocket

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expenses incurred in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder; and (c) all reasonable and documented out-of-pocket expenses incurred by the Credit Parties who are not the Agents, the Canadian Agent, the Arrangers, the L/C Issuer or any Lender Affiliate of any of them in connection with the enforcement of the Credit Parties’ rights and remedies under any of the Loan Documents or applicable Law including in the course of any work-out or restructuring of the Loans or other Obligations during the pendency of any Event of Default, provided that such Credit Parties shall be entitled to reimbursement for no more than one counsel representing all such Credit Parties (absent a conflict of interest in which case the Credit Parties may engage and be reimbursed for additional counsel).

     “Customer Credit Liabilities” means, at any time, the aggregate remaining value at such time of (a) outstanding gift certificates and gift cards of the Borrowing Base Parties entitling the holder thereof to use all or a portion of the certificate or gift card to pay all or a portion of the purchase price for any Inventory, and (b) outstanding merchandise credits and customer deposits of the Borrowing Base Parties.

     “Customs Broker Agreement” means an agreement substantially in the form attached hereto as Exhibit J-1 (with respect to any Domestic Borrower), Exhibit J-2 (with respect to any Canadian Loan Party), or otherwise in form and substance reasonably satisfactory to the Agents and (if a party thereto) the Canadian Agent, among a Borrowing Base Party, a customs broker, NVOCC or carrier, and the Administrative Agent or the Canadian Agent, as applicable, in which the customs broker, NVOCC or carrier acknowledges that it has control over and holds the documents evidencing ownership of the subject Inventory or other property for the benefit of the Administrative Agent or the Canadian Agent, as applicable, and agrees, upon notice from the Administrative Agent or the Canadian Agent, as applicable, to hold and dispose of the subject Inventory and other property solely as directed by the Administrative Agent or the Canadian Agent, as applicable.

     “DDA” means any checking, savings or other deposit account maintained by any of the Loan Parties. All funds in each DDA shall be conclusively presumed to be Collateral or the proceeds of Collateral and the Credit Parties shall have no duty to inquire as to the source of the amounts on deposit in any DDA.

     “Debt Service Charges” means, for any Measurement Period, the sum of (a) Consolidated Interest Charges paid in cash or required to be paid in cash for such Measurement Period, plus (b) the principal amount of all scheduled amortization payments made in cash or required to be made in cash by the Parent or the Americas Subsidiaries on account of Indebtedness (excluding the Obligations and any Synthetic Lease Obligations but including, without limitation, any Capital Lease Obligations) during such Measurement Period, in each case determined on an Americas Consolidated basis, in accordance with GAAP, as applicable.

     “Debtor Relief Laws” means each of (i) the Bankruptcy Code of the United States, (ii) the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) and the Winding-up and Restructuring Act (Canada), and (iii) all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States, Canada or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

     “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

     “Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, or Canadian Liabilities, an interest rate equal to (i) the Prime Rate plus (ii) the Applicable Margin, if any,

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applicable to Domestic Prime Rate Loans, plus (iii) two percent (2%) per annum; provided, however, that with respect to a LIBO Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such LIBO Rate Loan plus two percent (2%) per annum; (b) when used with respect to Canadian Liabilities, an interest rate equal to (i) the Canadian Prime Rate plus (ii) the Applicable Margin, if any, applicable to Canadian Prime Rate Loans, plus (iii) two percent (2%) per annum; provided, however, that with respect to a (A) LIBO Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such LIBO Rate Loan plus two percent (2%) per annum, and (B) BA Equivalent Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Margin) otherwise applicable to such BA Equivalent Loan plus two percent (2%) per annum; and (c) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus two percent (2%) per annum.

     “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Committed Loans, participations in L/C Obligations or participations in Swing Line Loans required to be funded by it hereunder within one Business Day of the date required to be funded by it hereunder, (b) has otherwise failed to pay over to the Administrative Agent, the Canadian Agent or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due, unless the subject of a good faith dispute, or (c) has been deemed insolvent by the Administrative Agent in good faith or become the subject of any proceeding under any Debtor Relief Law.

     “Deteriorating Lender” means any Defaulting Lender or any Lender as to which (a) the L/C Issuer or the Swing Line Lender believes in good faith that such Lender has defaulted in fulfilling its obligations under one or more other syndicated credit facilities, or (b) a Person that Controls such Lender has been deemed insolvent by the Administrative Agent in good faith or become the subject of any proceeding under any Debtor Relief Law.

     “Dilution Percent” means, for any period, that percentage reasonably determined by the Agents in their Permitted Discretion (with respect to the Domestic Borrowing Base) or the Canadian Agent and the Agents in their Permitted Discretion (with respect to the Canadian Borrowing Base) by dividing (a) the amount of charge-offs, returns of goods purchased from the Borrowing Base Parties and any other non-cash reductions to trade receivables during such period which had, at the time of sale, resulted in the creation of a trade receivable, by (b) the amount of sales (exclusive of sales and other similar taxes) of the Borrowing Base Parties during such period.

     “Dilution Reserve” means a Reserve in amounts established by any Agent (with respect to the Domestic Borrowing Base) or the Canadian Agent or any Agent (with respect to the Canadian Borrowing Base) from time to time in its Permitted Discretion as being appropriate to reflect that the Dilution Percent is or is reasonably anticipated to be greater than five percent (5%).

     “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any sale and leaseback transaction) (whether in one transaction or in a series of transactions) of any property (including, without limitation, any Equity Interests) by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

     “Disqualified Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable (other than solely for Equity Interests that do not constitute Disqualified Stock), pursuant to a sinking fund obligation or otherwise, or redeemable (other than solely for Equity Interests that do not constitute Disqualified Stock)

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at the option of the holder thereof, in whole or in part, on or prior to the date that is 91 days after the Maturity Date; provided, however, that (i) only the portion of such Equity Interests which so matures or is so mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock and (ii) with respect to any Equity Interests issued to any employee or to any plan for the benefit of employees of the Parent or its Subsidiaries or by any such plan to such employees, such Equity Interest shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Parent or one of its Subsidiaries in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, resignation, death or disability and if any class of Equity Interest of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of an Equity Interest that is not Disqualified Stock, such Equity Interests shall not be deemed to be Disqualified Stock. Notwithstanding the preceding sentence, any Equity Interest that would constitute Disqualified Stock solely because the holders thereof have the right to require a Loan Party to repurchase such Equity Interest upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Agreement will be the maximum amount that the any Loan Party may become obligated to pay upon maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock or portion thereof, plus accrued dividends.

     “Dollars” and “$” mean lawful money of the United States.

     “Domestic Availability” means, as of any date of determination thereof, the result, if a positive number, of:

     (a) the Domestic Loan Cap

Minus

     (b) the Total Domestic Outstandings on such date.

     “Domestic Borrowers” has the meaning specified in the introductory paragraph hereto.

     “Domestic Borrowing” means a Committed Domestic Borrowing or a Swing Line Borrowing made to the Domestic Borrowers, as the context may require.

     “Domestic Borrowing Base” means, at any time of calculation, an amount equal to:

     (a) the face amount of Eligible Credit Card Receivables of the Domestic Borrowers multiplied by the Credit Card Advance Rate;

     plus

     (b) the face amount of Eligible Trade Receivables of the Domestic Borrowers (net of Receivables Reserves applicable thereto) multiplied by the Receivables Advance Rate;

     plus

     (c) the Cost of Eligible Inventory (other than Eligible In-Transit Inventory) of the Domestic Borrowers, net of Inventory Reserves applicable thereto, multiplied by the Appraisal Percentage of the Appraised Value of Eligible Inventory (other than Eligible In-Transit Inventory) of the Domestic Borrowers;

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     plus

     (d) the lesser of (i) $27,750,000 and (ii) the sum of (x) the Cost of Eligible In-Transit Inventory of the Domestic Borrowers, net of Inventory Reserves applicable thereto, multiplied by the Appraisal Percentage of the Appraised Value of Eligible In-Transit Inventory of the Domestic Borrowers, and (y) with respect to any Eligible Letter of Credit, the Appraisal Percentage of the Appraised Value of the Inventory of the Domestic Borrowers supported by such Eligible Letter of Credit, multiplied by the Cost of such Inventory of the Domestic Borrowers when completed, net of applicable Reserves;

     minus

     (e) the then amount of all Availability Reserves applicable to the Domestic Borrowers. In no event shall the amount of Availability Reserves subtracted in calculating the Domestic Borrowing Base be duplicative of Availability Reserves subtracted in calculating the Canadian Borrowing Base.

     “Domestic Commitment Fee” has the meaning provided in Section 2.08(d)(i).

     “Domestic Commitments” means, as to each Domestic Lender, its obligation to (a) make Committed Domestic Loans to the Domestic Borrowers pursuant to Section 2.01, (b) purchase participations in Domestic L/C Obligations, and (c) purchase participations in Swing Line Loans made to the Domestic Borrowers, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Domestic Lender’s name on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Domestic Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement.

     “Domestic Concentration Account” has the meaning provided in Section 6.13(c).

     “Domestic Credit Extensions” mean each of the following: (a) a Domestic Borrowing and (b) a Domestic L/C Credit Extension.

     “Domestic Credit Party” or “Domestic Credit Parties” means (a) individually, (i) each Domestic Lender and its Lender Affiliates, (ii) the Agents and their respective Lender Affiliates, (iii) each L/C Issuer of any Domestic Letter of Credit and (iv) the successors and assigns of each of the foregoing, and (b) collectively, all of the foregoing.

     “Domestic L/C Borrowing” means an extension of credit resulting from a drawing under any Domestic Letter of Credit which has not been reimbursed on or prior to the date required to be reimbursed by the Domestic Borrowers pursuant to Section 2.03(c)(i) or refinanced as a Committed Domestic Borrowing.

     “Domestic L/C Credit Extension” means, with respect to any Domestic Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

     “Domestic L/C Obligations” means, as at any date of determination and without duplication, the aggregate Stated Amount of all outstanding Domestic Letters of Credit plus the aggregate of all Unreimbursed Amounts under Domestic Letters of Credit, including all Domestic L/C Borrowings.

     “Domestic Lenders” means the Lenders having Domestic Commitments from time to time or at any time.

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     “Domestic Letter of Credit” means each Letter of Credit issued hereunder for the account of the Domestic Borrowers.

     “Domestic Letter of Credit Sublimit” means an amount equal to $92,500,000. The Domestic Letter of Credit Sublimit is part of, and not in addition to, the Aggregate Domestic Commitments. A permanent reduction of the Aggregate Domestic Commitments shall not require a corresponding pro rata reduction in the Domestic Letter of Credit Sublimit; provided, however, that if the Aggregate Domestic Commitments are reduced to an amount less than the Domestic Letter of Credit Sublimit, then the Domestic Letter of Credit Sublimit shall be reduced to an amount equal to (or, at Lead Borrower’s option, less than) the Aggregate Domestic Commitments.

     “Domestic Loan” means an extension of credit by a Domestic Lender to the Domestic Borrowers under Article II in the form of a Committed Loan or a Swing Line Loan.

     “Domestic Loan Cap” means, at any time of determination, the lesser of (a) the Aggregate Domestic Commitments or (b) the Domestic Borrowing Base.

     “Domestic Loan Parties” means, collectively, the Parent, the Domestic Borrowers and each Domestic Subsidiary that is a Guarantor of the Obligations. “Domestic Loan Party” means any one of such Persons.

     “Domestic Note” means a promissory note made by the Domestic Borrowers in favor of a Domestic Lender evidencing Domestic Loans made by such Domestic Lender, substantially in the form of Exhibit C-2.

     “Domestic Overadvance” means a Domestic Credit Extension to the extent that, immediately after the making of such Domestic Credit Extension, the aggregate principal balance of all Domestic Credit Extensions then outstanding exceeds the Domestic Loan Cap as then in effect.

     “Domestic Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by a Loan Party or any ERISA Affiliate or to which a Loan Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

     “Domestic Prime Rate Loan” means a Loan that bears interest based on the Prime Rate.

     “Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.

     “Domestic Swing Line Note” means the promissory note of the Domestic Borrowers substantially in the form of Exhibit C-4, payable to the order of the applicable Swing Line Lender, evidencing the Swing Line Loans made by such Swing Line Lender to the Domestic Borrowers.

     “Domestic Swing Line Sublimit” means an amount equal to the lesser of (a) $20,00,000 and (b) the Aggregate Domestic Commitments. The Domestic Swing Line Sublimit is part of, and not in addition to, the Aggregate Domestic Commitments.

     “Eligible Assignee” means (a) a Lender or any of its Lender Affiliates; (b) a bank, insurance company, or company engaged in the business of making commercial loans, which Person, together with

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its Lender Affiliates, has a combined capital and surplus in excess of $250,000,000; (c) an Approved Fund; (d) any Person to whom a Lender assigns its rights and obligations under this Agreement as part of an assignment and transfer of such Lender’s rights in and to a material portion of such Lender’s portfolio of asset based credit facilities, and (e) any other Person (other than a natural person) approved by (i) the Administrative Agent, the L/C Issuer and the Swing Line Lender, and (ii) unless an Event of Default has occurred and is continuing, the Lead Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Parent or any of its Subsidiaries or other Affiliates, or the US Term Loan Agent or the Euro Term Loan Agent, or any of their respective Lender Affiliates or Subsidiaries except in connection with the exercise of the purchase right, as set forth in Section 5.4 of the Intercreditor Agreement.

     “Eligible Credit Card Receivables” means, at the time of any determination thereof, each Credit Card Receivable that satisfies the following criteria at the time of creation and continues to meet the same at the time of such determination: such Credit Card Receivable (i) has been earned by performance and represents the bona fide amounts due to a Borrowing Base Party from a credit card payment processor and/or credit card issuer, and in each case originated in the ordinary course of business of such Borrowing Base Party, and (ii) in each case is acceptable to the Agents (with respect to Credit Card Receivables of a Domestic Borrower) or the Canadian Agent and the Agents (with respect to Credit Card Receivables of the Canadian Loan Parties), as applicable, in their Permitted Discretion, and is not ineligible for inclusion in the calculation of the Canadian Borrowing Base or the Domestic Borrowing Base, as applicable, pursuant to any of clauses (a) through (k) below. Without limiting the foregoing, to qualify as an Eligible Credit Card Receivable, an Account shall indicate no Person other than a Borrowing Base Party as payee or remittance party. In determining the amount to be so included, the face amount of an Account shall be reduced by, without duplication of any Reserve or any of clauses (a) through (k) below or otherwise, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrowing Base Party may be obligated to rebate to a customer, a credit card payment processor, or credit card issuer pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by the applicable Borrowing Base Party to reduce the amount of such Credit Card Receivable. Any Credit Card Receivable meeting the foregoing criteria shall be deemed to be an Eligible Credit Card Receivable but only as long as such Credit Card Receivable is not included within any of the following categories, in which case such Credit Card Receivable shall not constitute an Eligible Credit Card Receivable, unless otherwise agreed by the Agents and (if applicable) the Canadian Agent:

     (a) Credit Card Receivables which do not constitute an “Account” (as defined in the UCC or the PPSA, as applicable);

     (b) Credit Card Receivables that have been outstanding for more than five (5) Business Days from the date of sale;

     (c) Credit Card Receivables with respect to which a Borrowing Base Party does not have good and valid title, free and clear of any Lien (other than Liens granted to the Administrative Agent or the Canadian Agent, as applicable, pursuant to the Security Documents and other Permitted Encumbrances not having priority over, or that are pari passu with, the Lien of the Administrative Agent or the Canadian Agent under applicable Law);

     (d) Credit Card Receivables that are not subject to a first priority Lien in favor of the Administrative Agent or the Canadian Agent, as applicable, pursuant to the Security Documents (other than Permitted Encumbrances not having priority over, or that are pari passu with, the Lien of the Administrative Agent or the Canadian Agent under applicable Law) (it being the intent that

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chargebacks in the ordinary course by such processors shall not be deemed violative of this clause);

     (e) Credit Card Receivables which are disputed, are with recourse, or with respect to which a claim, counterclaim, offset or chargeback has been asserted (but only to the extent of such disputed amount, claim, counterclaim, offset or chargeback);

     (f) Credit Card Receivables as to which the processor has the right under certain circumstances to require a Borrowing Base Party to repurchase the Accounts from such credit card processor;

     (g) Credit Card Receivables due from an issuer or payment processor of the applicable credit card which is the subject of any proceeding under any Debtor Relief Law;

     (h) Credit Card Receivables which are not a valid, legally enforceable obligation of the applicable issuer with respect thereto;

     (i) Credit Card Receivables which do not conform in all material respects to all representations, warranties or other provisions in the Loan Documents relating to Credit Card Receivables or which are not payable in Dollars (with respect to Credit Card Receivables of a Domestic Borrower) or in Dollars or CD$ (with respect to Credit Card Receivables of a Canadian Loan Party);

     (j) Credit Card Receivables which are evidenced by chattel paper or an instrument of any kind unless such chattel paper or instrument is in the possession of the Administrative Agent or the Canadian Agent, and to the extent necessary or appropriate, endorsed to the Administrative Agent or the Canadian Agent, as applicable; or

     (k) Credit Card Receivables which any Agent or, if applicable, the Canadian Agent, determines in its Permitted Discretion to be uncertain of collection.

     Subject to Section 0, the Agents shall have the right to establish or modify or eliminate Reserves against Eligible Credit Card Receivables from time to time in their Permitted Discretion.

     “Eligible In-Transit Inventory” means, as of any date of determination thereof, without duplication of other Eligible Inventory, In-Transit Inventory:

     (a) Which satisfies all of the requirements for Eligible Inventory other than the requirement that it be located in the United States (with respect to In-Transit Inventory of a Domestic Borrower) or Canada (with respect to In-Transit Inventory of a Canadian Loan Party);

     (b) Which has been fully paid for by the applicable Borrowing Base Party, or, alternatively, for which the full purchase price thereof is secured by a Commercial Letter of Credit issued under this Agreement;

     (c) For which title to such In-Transit Inventory has passed to such Borrowing Base Party;

     (d) For which the purchase order is in the name of such Borrowing Base Party;

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     (e) Which is scheduled for delivery within thirty (30) days or less from the date of shipment;

     (f) For which an Acceptable BOL has been issued and in each case as to which the Administrative Agent or the Canadian Agent, as applicable, has possession of the Acceptable BOL which evidences ownership of the subject In-Transit Inventory (which possession requirement can be satisfied by the delivery of a Customs Broker Agreement from any third party with possession over such Acceptable BOL);

     (g) Which is in the possession of a common carrier or Eligible NVOCC which issued the Acceptable BOL in respect of such In-Transit Inventory;

     (h) The common carrier (to the extent an NVOCC has not engaged such common carrier), NVOCC and customs broker (as applicable) with respect to such In-Transit Inventory has entered into a Customs Broker Agreement which is then in effect; and

     (i) Which is fully insured by marine cargo and other insurance in accordance with Section 0.

     Subject to Section 0, the Agents shall have the right to establish or modify or eliminate Reserves against Eligible In-Transit Inventory from time to time in their Permitted Discretion.

     “Eligible Inventory” means, as of the date of determination thereof, without duplication, (i) Eligible In-Transit Inventory, and (ii) items of Inventory of a Borrowing Base Party (other than Eligible In-Transit Inventory) that are raw materials or finished goods, merchantable and readily saleable to the public in the ordinary course deemed by the Agents (with respect to Inventory of a Domestic Borrower) or the Canadian Agent and the Agents (with respect to Inventory of a Canadian Loan Party), as applicable, in their Permitted Discretion, to be eligible for inclusion in the calculation of the Canadian Borrowing Base or the Domestic Borrowing Base, as applicable (including blank t-shirts which otherwise satisfy the requirements set forth in this definition), in each case that, except as otherwise agreed by the Agents and, if applicable, the Canadian Agent, complies in all material respects with each of the representations and warranties respecting Inventory made by a Borrowing Base Party in the Loan Documents, and that is not excluded as ineligible by virtue of one or more of the criteria set forth below. Except as otherwise agreed by the Agents and, if applicable, the Canadian Agent, the following items of Inventory shall not be included in Eligible Inventory:

     (a) Inventory that is not solely owned by a Borrowing Base Party or a Borrowing Base Party does not have good and valid title thereto;

     (b) Inventory that is leased by or is on consignment to a Borrowing Base Party or that is consigned by a Borrowing Base Party to a Person which is not a Loan Party;

     (c) Inventory (other than Eligible In Transit Inventory) that (i) is not located in the United States in the case of Inventory of a Domestic Borrower (excluding territories or possessions thereof) or Canada in the case of Inventory of a Canadian Loan Party (excluding territories or possessions thereof), (ii) is in transit, (iii) is located at a location that is not owned or leased by a Borrowing Base Party, except to the extent that a Collateral Access Agreement executed by the Person owning any such location is delivered to the Administrative Agent or the Canadian Agent, as applicable, or (iv) is in the possession of any Person who is a processor;

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     (d) Inventory that is located in a distribution center leased by a Borrowing Base Party unless the applicable lessor has delivered to the Administrative Agent, if requested by any Agent or (if applicable) the Canadian Agent, a Collateral Access Agreement;

     (e) Inventory that is comprised of goods which (i) are damaged, defective, “seconds,” or otherwise unmerchantable, (ii) are to be returned to the vendor, (iii) are obsolete or slow moving, or custom items, work-in-process, raw materials (but excluding blank t-shirts), or that constitute spare parts, display, promotional, marketing, packaging and shipping materials or supplies used or consumed in a Borrowing Base Party’s business, (iv) are seasonal in nature and which have been packed away for sale in a subsequent season, (v) are not in compliance with all standards imposed by any Governmental Authority having regulatory authority over such Inventory, its use or sale, (vi) are bill and hold goods, or (vii) are of a type which is not held for sale by the Borrowing Base Parties in the ordinary course of their business;

     (f) Inventory that is not subject to a perfected first-priority security interest in favor of the Administrative Agent or the Canadian Agent, as applicable, pursuant to the Security Documents (other than Permitted Encumbrances not having priority over, or that are pari passu with, the Lien of the Administrative Agent or the Canadian Agent under applicable Law, or having priority but acceptable to the Co-Collateral Agents and, if applicable, the Canadian Agent in their Permitted Discretion);

     (g) Inventory that consists of samples, labels, bags, and other similar non-merchandise categories;

     (h) Inventory that is not insured in compliance with the provisions of Section 0 hereof;

     (i) Inventory that has been sold but not yet delivered or as to which a Borrowing Base Party has accepted a deposit;

     (j) Inventory that is subject to any licensing, patent, royalty, trademark, trade name or copyright agreement with any third party which any Borrowing Base Party or any of their Subsidiaries has received notice of a dispute in respect of any such agreement or which would require the payment of fees or royalties to or the consent of the licensor under such agreement for any sale or other disposition of such Inventory by the Administrative Agent or the Canadian Agent, unless the Agents and, if applicable, the Canadian Agent, have reviewed the underlying agreements and determined the terms to be acceptable, and subject to the imposition of a Reserve for the payment of any such fees or royalties; or

     (k) Inventory acquired in a Permitted Acquisition or series of related Permitted Acquisitions if the aggregate fair market value of the Inventory of the Borrowing Base Parties acquired in connection with such Permitted Acquisition or series of related Permitted Acquisitions exceeds $5,000,000, unless and until the Co-Collateral Agents, and, if applicable, the Canadian Agent have (i) completed or received an appraisal of such Inventory from appraisers reasonably satisfactory to the Co-Collateral Agents, and, if applicable, the Canadian Agent, and such other due diligence as the Co-Collateral Agents, and, if applicable, the Canadian Agent may reasonably require, all of the results of the foregoing to be reasonably satisfactory to the Co-Collateral Agents, and, if applicable, the Canadian Agent, and (ii) established an Inventory advance rate and Inventory Reserves (if applicable) therefor, and (iii) otherwise agreed that such Inventory shall be deemed Eligible Inventory in their Permitted Discretion.

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     Subject to Section 0, the Agents and, if applicable, the Canadian Agent shall have the right to establish or modify or eliminate Reserves against Eligible Inventory from time to time in their Permitted Discretion.

     “Eligible Letter of Credit” means, as of any date of determination thereof, a Commercial Letter of Credit which supports the full purchase price of Inventory (other than In-Transit Inventory), (a) which Inventory does not constitute Eligible In-Transit Inventory and for which no Acceptable BOL or other documents of title have then been issued; (b) which Commercial Letter of Credit (i) has an expiry within thirty (30) days of the date of determination, and (ii) provides that such Commercial Letter of Credit may be drawn only after the Inventory is completed and after an Acceptable BOL has been issued for such Inventory; and (c) with respect to the Inventory to be purchased with such Commercial Letter of Credit, such Inventory satisfies all of the requirements for Eligible In-Transit Inventory other than the requirement set forth in clause (e) of the definition of the term herein.

     “Eligible NVOCC” means, with respect to any In-Transit Inventory, an NVOCC for such In-Transit Inventory that (i) is not an Affiliate of a Borrowing Base Party or the applicable foreign vendor and is otherwise acceptable to the Agents and, with respect to In-Transit Inventory of a Canadian Loan Party, the Canadian Agent; (ii) is engaged by a Domestic Borrower or a Canadian Loan Party as freight forwarder with respect to such In-Transit Inventory; (iii) has received from the carrier a tangible bill of lading with respect to such In-Transit Inventory that names such NVOCC as consignee; (iv) has issued an Acceptable BOL to the order of a Borrowing Base Party in respect of such In-Transit Inventory; and (v) has entered into a Customs Broker Agreement which is then in effect.

     “Eligible Trade Receivables” means Accounts arising from the sale of a Borrowing Base Party’s Inventory (other than those consisting of Credit Card Receivables) that satisfy the following criteria at the time of creation and continue to meet the same at the time of such determination: such Account (i) has been earned by performance and represents the bona fide amounts due to a Borrowing Base Party from an account debtor, and in each case originated in the ordinary course of business of such Borrowing Base Party, and (ii) in each case is acceptable to the Agents (with respect to Accounts of a Domestic Borrower) or the Canadian Agent and the Agents (with respect to Accounts of a Canadian Loan Party), as applicable, in their Permitted Discretion, and is not ineligible for inclusion in the calculation of the Canadian Borrowing Base or the Domestic Borrowing Base, as applicable, pursuant to any of clauses (a) through (v) below. Without limiting the foregoing, to qualify as an Eligible Trade Receivable, an Account shall indicate no Person other than a Borrowing Base Party as payee or remittance party. In determining the amount to be so included, the face amount of an Account shall be reduced by, without duplication, to the extent not reflected in such face amount, (i) the amount of all accrued and actual discounts, claims, credits or credits pending, promotional program allowances, price adjustments, finance charges or other allowances (including any amount that a Borrowing Base Party may be obligated to rebate to a customer pursuant to the terms of any agreement or understanding (written or oral)) and (ii) the aggregate amount of all cash received in respect of such Account but not yet applied by the applicable Borrowing Base Party to reduce the amount of such Eligible Trade Receivable. Any Account meeting the foregoing criteria shall be deemed to be an Eligible Trade Receivable but only as long as such Account is not included within any of the following categories, in which case such Account shall not constitute an Eligible Trade Receivable, unless otherwise agreed by the Agents and (if applicable) the Canadian Agent:

     (a) Accounts that are not evidenced by an invoice;

     (b) Accounts (i) that have been outstanding for more than ninety (90) days from the original invoice date (or, with respect to Accounts having an aggregate face amount of not more than $5,000,000, one hundred twenty (120) days from the original invoice date) or (ii) that are more than sixty (60) days past the due date;

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     (c) Accounts due from any account debtor if fifty percent (50%) or more of Accounts due from account debtor are ineligible under the provisions of clause (b) above;

     (d) Accounts with respect to which a Borrowing Base Party does not have good and valid title thereto, free and clear of any Lien (other than Liens granted to the Administrative Agent pursuant to the Security Documents and other Permitted Encumbrances not having priority over, or that are pari passu with, the Lien of the Administrative Agent or the Canadian Agent under applicable Law);

     (e) Accounts that are not subject to a first priority security interest in favor of the Administrative Agent or the Canadian Agent, as applicable, pursuant to the Security Documents (other than Permitted Encumbrances not having priority over, or that are pari passu with, the Lien of the Administrative Agent or the Canadian Agent under applicable Law);

     (f) Accounts which are disputed or with respect to which a claim, counterclaim, offset or chargeback has been asserted, but only to the extent of such dispute, counterclaim, offset or chargeback;

     (g) Accounts which arise out of any sale made not in the ordinary course of business, made on a basis other than upon credit terms usual to the business of a Borrowing Base Party;

     (h) Accounts which are owed by any account debtor whose principal place of business is not within the United States (with respect to Inventory of a Domestic Borrower) or Canada (with respect to Inventory of a Canadian Loan Party);

     (i) Accounts which are owed by any Affiliate or any employee of a Loan Party;

     (j) Accounts for which all consents, approvals or authorizations of, or registrations or declarations with any Governmental Authority required to be obtained, effected or given in connection with the performance of such Account by the account debtor or in connection with the enforcement of such Account by the Agents have not been duly obtained, effected or given and are not in full force and effect;

     (k) Accounts due from an account debtor which is the subject of any bankruptcy or insolvency proceeding, has had a trustee or receiver appointed for all or a substantial part of its property, has made an assignment for the benefit of creditors or has suspended its business;

     (l) Accounts due from (i) the federal government of the United States of America unless such Accounts have been assigned by the applicable Borrowing Base Party to the Administrative Agent in accordance with the Federal Assignment of Claims Act of 1940 or (ii) the federal government of Canada or a political subdivision thereof, or any province or territory, or any municipality or department or agency or instrumentality thereof unless the provisions of the Financial Administration Act (Canada) or any applicable provincial, territorial or municipal law of similar purpose and effect restricting the assignment thereof, as the case may be, have been complied with, or any other Governmental Authority except to the extent reasonably acceptable to the Co-Collateral Agents and, if applicable, the Canadian Agent; and in any event such Accounts described in this subsection shall not exceed $6,000,000 at any time outstanding;

     (m) Accounts (i) owing from any Person that is also a supplier to or creditor of a Loan Party or any of its Subsidiaries unless such Person has waived any right of setoff in a manner reasonably acceptable to the Agents and, if applicable, the Canadian Agent, or (ii)

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representing any manufacturer’s or supplier’s credits, discounts, incentive plans or similar arrangements entitling a Loan Party or any of its Subsidiaries to discounts on future purchase therefrom;

     (n) Accounts arising out of sales on a bill-and-hold, guaranteed sale, sale-or-return, sale on approval or consignment basis or subject to any right of return;

     (o) Accounts arising out of sales to account debtors outside the United States (with respect to Accounts of a Domestic Borrower) or Canada (with respect to Accounts of a Canadian Loan Party), unless such Accounts are fully backed by an irrevocable letter of credit on terms, and issued by a financial institution, reasonably acceptable to the Agents and, if applicable, the Canadian Agent;

     (p) Accounts payable other than in Dollars (with respect to Accounts of a Domestic Borrower) or in Dollars or CD$ (with respect to Accounts of a Canadian Loan Party);

     (q) Accounts evidenced by a judgment, chattel paper, promissory note or other instrument;

     (r) Accounts consisting of amounts due from vendors as rebates or allowances, or as finance or interest charges;

     (s) Accounts which are in excess of the credit limit for such account debtor established by a Borrowing Base Party in the ordinary course of business and consistent with past practices;

     (t) Accounts which include extended payment terms (datings) beyond those generally furnished to other account debtors in the ordinary course of business;

     (u) Accounts due from an account debtor and its Affiliates, where the aggregate amount due on such Accounts to the Borrowing Base Parties at any time exceeds fifteen percent (15%) of the total Eligible Trade Receivables then due to the Borrowing Base Parties, only to the extent of such amount in excess of fifteen percent (15%) of the total Eligible Trade Receivables due to the Borrowing Base Parties; or

     (v) Accounts which any Agent and, if applicable, the Canadian Agent, determines in its Permitted Discretion to be unacceptable for borrowing.

     Subject to Section 0, the Agents and, if applicable, the Canadian Agent, shall have the right to establish or modify or eliminate Reserves against Eligible Trade Receivables from time to time in their Permitted Discretion.

     “Environmental Laws” means any and all federal, state, provincial, territorial, municipal, local, and foreign statutes, laws, regulations, ordinances, final and enforceable rules, judgments, orders, decrees or governmental restrictions governing pollution and the protection of the environment or the release of any materials into the environment, including those governing Hazardous Materials, air emissions and discharges to waste or public systems.

     “Environmental Liability” means any liability, obligation, damage, loss, claim, action, suit, judgment, order, fine, penalty, fee, expense, or cost (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any Borrower, any other Loan Party or any

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of their respective Subsidiaries resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal or presence of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement imposing liability under Environmental Law or for Hazardous Materials.

     “Environmental Permit” means any permit, approval, license or other authorization required under any Environmental Law.

     “Equipment” shall mean “equipment”, as defined in the UCC or in the PPSA, and shall also mean all furniture, store fixtures, motor vehicles, rolling stock, machinery, office equipment, plant equipment, tools, dies, molds, and other goods, property, and assets which are used and/or were purchased for use in the operation or furtherance of a Loan Party’s business, and any and all accessions or additions thereto, and substitutions therefor.

     “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, and all of the warrants or options for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person.

     “Equivalent Amount” means, on any date, the rate at which Canadian Dollars may be exchanged into Dollars, determined by reference to the Bank of Canada noon rate as published on the Reuters Screen BOFC on the immediately preceding Business Day. In the event that such rate does not appear on such Reuters page, “Equivalent Amount” shall mean, on any date, the amount of Dollars into which an amount of Canadian Dollars may be converted or the amount of Canadian Dollars into which an amount of Dollars may be converted, in either case, at, in the case of the Canadian Borrower, the Canadian Agent’s spot buying rate in Toronto as at approximately 12:00 noon (Toronto time) on such date and, in the case of a Domestic Borrower, the Administrative Agent’s spot buying rate in New York as at approximately 12:00 noon (New York City time) on the immediately preceding Business Day.

     “Equivalent CD$ Amount” means, on any day with respect to any amount of Dollars, the amount of Canadian Dollars which would be required to buy such amount of Dollars using the spot rate of the Bank of Canada at approximately 12:00 noon (Toronto time) on the day or, if such day is not a Business Day, on the Business Day immediately preceding such day.

     “ERISA” means the Employee Retirement Income Security Act of 1974.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with a Loan Party within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal by a Loan Party or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under

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Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate.

     “Euro Term Loan Agent” means Rhône Group L.L.C., in its capacity as agent for the lenders under the Euro Term Loan Credit Agreement, together with any successor agent (including pursuant to any Permitted Amendment/Refinancing of the Euro Term Loan Credit Agreement).

     “Euro Term Loan Credit Agreement” means that certain Credit Agreement dated as of the Closing Date among the Parent, Mountain & Wave S.à r.l., the lenders party thereto and the Euro Term Loan Agent (including any Permitted Amendment/Refinancing thereof).

     “Event of Default” has the meaning specified in Section 0.

     “Excluded Taxes” means, with respect to any Agent, the Canadian Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or in which it is otherwise treated as doing business, in the case of any Lender, in which its applicable Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which any Loan Party is located, (c) in the case of a Foreign Lender (other than a Canadian Lender or an assignee pursuant to a request by the Lead Borrower under Section 0) or L/C Issuer, any withholding tax that is imposed on amounts payable to such Foreign Lender or L/C Issuer at the time such Foreign Lender or L/C Issuer becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender’s or L/C Issuer’s failure or inability (other than as a result of a Change in Law after such Foreign Lender or L/C Issuer becomes a party hereto) to comply with Section 3.01(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Loan Parties with respect to such withholding tax pursuant to Section 3.01(a), and (d) in the case of a Canadian Lender (other than an assignee pursuant to a request by the Canadian Borrower under Section 0), any withholding tax that is imposed on amounts payable to such Canadian Lender at the time such Canadian Lender becomes a party to this Agreement (or designates a new Lending Office) or is attributable to such Canadian Lender’s failure or inability (other than as a result of a Change in Law) to comply with Section 3.01(e), except to the extent that such Canadian Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Canadian Borrower with respect to such withholding tax pursuant to Section 3.01(a). For the avoidance of doubt, any Participant that is entitled to the benefits of Section 3.01(a) shall be treated as a Lender for purposes of this defined term.

     “Executive Order” has the meaning set forth in Section 0.

     “Existing Credit Agreement” means that certain Amended and Restated Credit Agreement dated as of June 3, 2005, among, inter alia, the Lead Borrower, the Parent, the several banks and other financial institutions party thereto, Bank of America, N.A., as documentation agent, Union Bank of California, N.A., as syndication agent, and JPMorgan Chase Bank, N.A., as administrative agent, as amended.

     “Existing Increasing Lender” shall have the meaning provided in Section 2.13(c).

     “Facility Guaranty” means (a) a Guarantee of the Obligations made by a Guarantor which is a Domestic Loan Party in favor of the Administrative Agent and the other Credit Parties, in substantially the form attached hereto as Exhibit K-1 or otherwise in form reasonably satisfactory to the Agents, and

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(b) a Guarantee of the Canadian Liabilities made by a Guarantor which is a Canadian Loan Party in favor of the Canadian Agent and the other Canadian Credit Parties, in substantially the form attached hereto as Exhibit K-2 or otherwise in form reasonably satisfactory to the Canadian Agent and the Agents.

     “Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.

     “Fee Letter” means the letter agreement, dated May 21, 2009, among the Lead Borrower, the Parent, the Administrative Agent, Bank of America, GECC and the Arrangers.

     “Fiscal Month” means any fiscal month of any Fiscal Year, which month shall generally end on the last day of each calendar month in accordance with the fiscal accounting calendar of the Loan Parties.

     “Fiscal Quarter” means any fiscal quarter of any Fiscal Year, which quarters shall generally end on the last day of each April, July, October and January of such Fiscal Year in accordance with the fiscal accounting calendar of the Loan Parties.

     “Fiscal Year” means any period of twelve (12) consecutive months ending on October 31^st of any calendar year.

     “Foreign Assets Control Regulations” has the meaning set forth in Section 0.

     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which the Lead Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

     “Foreign Subsidiary” means each Subsidiary other than a Domestic Subsidiary.

     FRB” means the Board of Governors of the Federal Reserve System of the United States.

     “French Credit Agreement” means the Facilities Agreement dated as of July 31, 2009 among, inter alia, Pilot SAS and Na Pali, a Société par Actions Simplifiée, as borrowers, the Parent and Pilot SAS, as original guarantors, and Crédit Lyonnais, BNP Paribas and Société Générale Corporate & Investment Banking, as mandated lead arrangers, and any Permitted Amendment/Refinancing thereof.

     “FSCO” means the Financial Services Commission of Ontario and any Person succeeding to the functions thereof and includes the Superintendent under such statute and any other Governmental Authority empowered or created by the Supplemental Pension Plans Act (Quebec) or the Pension Benefits Act (Ontario) or any Governmental Authority of any other Canadian jurisdiction exercising similar functions in respect of any Canadian Pension Plan of any Canadian Loan Party and any Governmental Authority succeeding to the functions thereof.

     “Fronting Fee” has the meaning specified in Section 2.03(j).

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     “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

     “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied; provided that, with respect to Foreign Subsidiaries of Parent organized under the laws of Canada, or any province or territory thereof, unless GAAP is being applied, “GAAP” shall mean principles which are consistent with those promulgated or adopted by the Canadian Institute of Chartered Accountants and its predecessors (or successors) in effect and applicable to the accounting period in respect of which reference to GAAP is being made.

     “GECC” means General Electric Capital Corporation, a Delaware corporation, and its successors.

     “GECM” means GE Capital Markets, Inc. and its successors.

     “General Security Agreements” means each General Security Agreement dated as of the Closing Date among the respective Canadian Loan Parties and the Canadian Agent for the benefit of the Canadian Credit Parties.

     “Governmental Authority” means the government of the United States, Canada, or any other nation, or any political subdivision thereof, whether state, local, provincial, territorial or municipal and any agency, authority, instrumentality, regulatory body, court, tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

     “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien); provided that the term “Guarantee” shall not include endorsements of checks, drafts and other items for the payment of money for collection or deposit, in either case in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

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     “Guarantor” means (a) with respect to the Obligations (including, without limitation, the Canadian Liabilities), the Parent and each other direct Domestic Subsidiary of any Domestic Loan Party that shall be required to execute and deliver a Facility Guaranty or Facility Guaranty supplement pursuant to Section 6.06(a) and (b) with respect to the Canadian Liabilities, QS Retail Canada Corp., an unlimited company organized under the laws of the Province of Nova Scotia, and each other direct Canadian Subsidiary of any Canadian Loan Party that shall be required to execute and deliver a Facility Guaranty or Facility Guaranty supplement pursuant to Section 6.06(b).

     “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes regulated pursuant to any Environmental Law.

     “Honor Date” has the meaning specified in Section 2.03(c)(i).

     “Immaterial Subsidiary” means each Subsidiary of any Loan Party which has assets with a fair market value of less than $100,000, and no income or operations. Schedule 5.13 specifically identifies those Immaterial Subsidiaries in existence as of the Closing Date.

     “Increase Effective Date” has the meaning provided therefor in Section 2.13(d).

     “Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

     (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

     (b) the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

     (c) net obligations of such Person under any Swap Contract;

     (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business not past due for more than sixty (60) days after the date on which such trade account payables were created);

     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

     (f) all Attributable Indebtedness of such Person;

     (g) all obligations of such Person in respect of Disqualified Stock; and

     (h) all Guarantees of such Person in respect of any of the foregoing.

     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is

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expressly made non-recourse to such Person and except to the extent such Person’s liability for such Indebtedness is otherwise limited under applicable Law or otherwise. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.

     “Indemnified Taxes” means Taxes other than Excluded Taxes.

     “Indemnitee” has the meaning specified in Section 10.03(b).

     “Information” has the meaning specified in Section 0.

     “Intellectual Property” means all: trade secrets, know-how and other proprietary information; trademarks, trademark applications, internet domain names, service marks, trade dress, trade names, designs, logos, slogans, indicia of origin and other source identifiers, and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world; copyrights and copyright applications (including copyrights for computer programs), unpatented inventions (whether or not patentable); patents and patent applications; industrial design applications and registered industrial designs; any Loan Party’s rights in any license agreements related to any of the foregoing and income therefrom; intellectual property rights in books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data and databases; all other intellectual property; and all common law and other rights throughout the world in and to all of the foregoing.

     “Intellectual Property Security Agreement” means the Intellectual Property Security Agreement dated as of the Closing Date among the Domestic Loan Parties and the Administrative Agent.

     “Intercreditor Agreement” means that certain Intercreditor Agreement, dated as of the Closing Date, between the Administrative Agent, the US Term Loan Agent, the Term Loan Collateral Agent and the Euro Term Loan Agent.

     “Interest Payment Date” means, (a) as to any LIBO Rate Loan or BA Equivalent Loan, the last day of each Interest Period applicable to such LIBO Rate Loan or BA Equivalent Loan and the Maturity Date; provided, however, that if any Interest Period for a LIBO Rate Loan or BA Equivalent Loan exceeds three months, the date that falls every three months after the beginning of such Interest Period shall also be an Interest Payment Date; and (b) as to any Prime Rate Loan (including a Swing Line Loan), the last Business Day of each calendar quarter and the Maturity Date.

     “Interest Period” means, as to each LIBO Rate Loan or BA Equivalent Loan, the period commencing on the date such Committed Borrowing is disbursed, converted into or continued as such Type of Committed Borrowing and ending on the date one, two, three or six months thereafter, as selected by the Lead Borrower or the Canadian Borrower, as applicable, in its Committed Loan Notice; provided that:

     (i) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;

     (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period;

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     (iii) no Interest Period shall extend beyond the Maturity Date; and

     (iv) notwithstanding the provisions of clause (iii) no Interest Period shall have a duration of less than one (1) month, and if any Interest Period applicable to a LIBO Borrowing or a BA Equivalent Loan, as applicable, would be for a shorter period, such Interest Period shall not be available hereunder.

For purposes hereof, the date of a Committed Borrowing initially shall be the date on which such Committed Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Committed Borrowing.

     “Internal Control Event” means a material weakness in, or fraud that involves management or other employees who have a significant role in, the Parent’s and/or its Subsidiaries’ internal controls over financial reporting, in each case as described in the Securities Laws.

     “In-Transit Inventory” means Inventory of a Borrowing Base Party that is in the possession of a common carrier and is in transit from a foreign location to either (a) with respect to Inventory of a Domestic Borrower, a location of such Domestic Borrower (or a location designated by such Domestic Borrower) that is in the United States or (b) with respect to Inventory of a Canadian Loan Party, a location of such Canadian Loan Party (or a location designated by such Canadian Loan Party) that is in Canada.

     “Inventory” means all “inventory” as defined in the UCC or the PPSA, as applicable, and shall also include, without limitation, all: (a) goods which (i) are leased by a Person as lessor, (ii) are held by a Person for sale or lease or to be furnished under a contract of service, (iii) are furnished by a Person under a contract of service, or (iv) consist of raw materials, work in process, or materials used or consumed in a business; (b) goods of said description in transit; (c) goods of said description which are returned, repossessed or rejected; and (d) packaging, advertising, and shipping materials related to any of the foregoing.

     “Inventory Reserves” means, without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria, such reserves as may be established from time to time by any Agent and, with respect to the Canadian Borrowing Base, the Canadian Agent and any Agent, as applicable, in its Permitted Discretion with respect to the determination of the saleability, at retail or wholesale, of the Eligible Inventory or which reflect such other factors as affect the market value of the Eligible Inventory. Without limiting the generality of the foregoing, Inventory Reserves may, in the Permitted Discretion of any Agent and, with respect to the Canadian Borrowing Base, the Canadian Agent and any Agent, as applicable, include (but are not limited to) reserves based on:

     (a) obsolescence;

     (b) seasonality;

     (c) Shrink;

     (d) imbalance;

     (e) change in Inventory character;

     (f) change in Inventory composition;

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     (g) change in Inventory mix;

     (h) mark-downs (both permanent and point of sale);

     (i) retail mark-ons and mark-ups inconsistent with prior period practice and performance, industry standards, current business plans or advertising calendar and planned advertising events;

     (j) out-of-date and/or expired Inventory; and

     (k) seller’s reclamation or repossession rights under any Debtor Relief Laws.

     Upon the determination by any Agent or, if applicable, the Canadian Agent, in its Permitted Discretion, that an Inventory Reserve should be established or modified, such Agent or the Canadian Agent, as applicable, shall notify the Administrative Agent and, if applicable, the Canadian Agent, in writing and the Administrative Agent or the Canadian Agent, as applicable, shall thereupon establish or modify such Inventory Reserve, subject to the provisions of Section 0 of this Agreement.

     “Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or Equity Interest in, another Person, or (c) any Acquisition. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

     “IP Collateral” has the meaning assigned to such term in the Intellectual Property Security Agreement.

     “IRS” means the United States Internal Revenue Service.

     “ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

     “Issuer Documents” means, with respect to any Letter of Credit, the Letter Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and any Borrower (or any Subsidiary) or in favor the L/C Issuer and relating to any such Letter of Credit.

     “Joinder Agreement” means an agreement, in the form attached hereto as Exhibit F-1 (Joinder Agreement — Domestic Loan Parties) or Exhibit F-2 (Joinder Agreement - Canadian Loan Parties) (or such other form as is reasonably satisfactory to the Agents) pursuant to which, among other things, a Person becomes a party to, and bound by the terms of, this Agreement and/or the other Loan Documents in the same capacity and to the same extent as either a Borrower or a Guarantor, as applicable.

     “Landlord Lien State” means (a) Pennsylvania, Virginia, Washington and such other state(s) determined by the Agents in their Permitted Discretion in which a landlord’s claim for rent may have priority over the Liens of the Administrative Agent in any of the Eligible Inventory of the Domestic Borrowers, under the Security Documents and (b) Ontario, Nova Scotia, Alberta, Manitoba and British Columbia and such other province(s) determined by the Agents and, if applicable, the Canadian Agent in their Permitted Discretion in which a landlord’s claim for rent may have priority over the Liens of the

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Canadian Agent in any of the Eligible Inventory of the Canadian Loan Parties under the Security Documents.

     “Laws” means each international, foreign, federal, state, provincial, territorial, municipal and local statute, treaty, rule, guideline, regulation, ordinance, code and administrative or judicial precedent or authority, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and each applicable administrative order, directed duty, license, authorization and permit of, and agreement with, any Governmental Authority, in each case whether or not having the force of law.

     “L/C Advance” means, with respect to each Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage.

     “L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on or prior to the date required to be reimbursed by the Borrowers pursuant to Section 2.03(c)(i) or refinanced as a Committed Borrowing.

     “L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.

     “L/C Issuer” means (a) as to Domestic Letters of Credit, (i) Bank of America in its capacity as issuer of Domestic Letters of Credit hereunder, or any successor issuer of Domestic Letters of Credit hereunder (which successor may only be a Domestic Lender selected by the Administrative Agent in its discretion and reasonably acceptable to the Lead Borrower), or (ii) any other Domestic Lender (or its Lender Affiliates) requested by the Lead Borrower and approved by the Administrative Agent in its reasonable discretion; and (b) as to Canadian Letters of Credit, (i) Bank of America-Canada Branch in its capacity as issuer of Canadian Letters of Credit hereunder, or any successor issuer of Canadian Letters of Credit hereunder (which successor may only be a Canadian Lender selected by the Canadian Agent in its discretion and reasonably acceptable to the Canadian Borrower), or (ii) any other Canadian Lender (or its Lender Affiliates) requested by the Canadian Borrower and approved by the Canadian Agent in its reasonable discretion. The L/C Issuer may, in its discretion, arrange for one or more Letters of Credit to be issued by Lender Affiliates of the L/C Issuer, in which case the term “L/C Issuer” shall include any such Lender Affiliate with respect to Letters of Credit issued by such Lender Affiliate.

     “L/C Obligations” means, collectively, the Canadian L/C Obligations and the Domestic L/C Obligations. For purposes of computing the amounts available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 0. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

     “Lead Borrower” has the meaning specified in the introductory paragraph hereto.

     “Lease” means any written agreement pursuant to which a Loan Party is entitled to the use or occupancy of any real property for any period of time.

     “Lender” means each Domestic Lender and each Canadian Lender and, as the context requires, includes the Swing Line Lender.

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     “Lender Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

     “Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Lead Borrower and the Administrative Agent.

     “Letter of Credit” means each Standby Letter of Credit and each Commercial Letter of Credit issued hereunder.

     “Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.

     “Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).

     “Letter of Credit Fee” has the meaning specified in Section 2.03(i).

     “LIBO Borrowing” means a Committed Borrowing comprised of LIBO Rate Loans.

     “LIBO Rate” means, for any Interest Period with respect to a LIBO Rate Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period, provided that there shall be a two percent (2%) floor on the LIBO Rate for LIBO Rate Loans with a one (1) or two (2) month Interest Period, and provided further that LIBO Rate Loans may be requested by the Lead Borrower or the Canadian Borrower at the three (3) month LIBO Rate for one (1) or two (2) month Interest Periods. If such rate is not available at such time for any reason, then the “LIBO Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBO Rate Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

     “LIBO Rate Loan” means a Committed Loan that bears interest at a rate based on the Adjusted LIBO Rate.

     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale, Capital Lease Obligation, Synthetic Lease Obligation, or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing relating to such asset) and, with respect to the Canadian Loan Parties, also includes any deemed trust or prior claim in, on or of such asset and (b) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

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     “Liquidation” means the exercise by the Administrative Agent, the Co-Collateral Agents or the Canadian Agent, as applicable, of those rights and remedies accorded to such Persons under the Loan Documents and applicable Law as a creditor of the Loan Parties with respect to the realization on the Collateral, including (after the occurrence and during the continuation of an Event of Default) the conduct by the Loan Parties acting with the consent of the Agents, of any public, private or “going-out-of-business”, “store closing” or other similar sale or any other disposition of the Collateral for the purpose of liquidating the Collateral as well as the collection or other disposition of any of the Collateral. Derivations of the word “Liquidation” (such as “Liquidate”) are used with like meaning in this Agreement.

     “Loan” means a Domestic Loan and a Canadian Loan.

     “Loan Account” has the meaning assigned to such term in Section 2.10(a).

     “Loan Documents” means this Agreement, each Note, each Issuer Document, the Fee Letter, all Borrowing Base Certificates, the Security Documents, each Facility Guaranty, Post-Closing Letter and any other instrument or agreement now or hereafter executed and delivered by any Loan Party in connection herewith.

     “Loan Parties” means, collectively, the Domestic Loan Parties and the Canadian Loan Parties. “Loan Party” means any one of such Persons.

     “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or condition (financial or otherwise) of the Parent and the Americas Subsidiaries taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material impairment of the rights and remedies of the Administrative Agent, the Canadian Agent or the Lenders under the Loan Documents or a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of the Loan Documents to which it is a party. In determining whether any individual event would result in a Material Adverse Effect for the purposes of determining compliance with any representation, warranty, covenant or event of default under this Agreement, notwithstanding that such event in and of itself does not have such effect, a Material Adverse Effect shall be deemed to have occurred if the cumulative effect of such event and all other then existing events subject to such representation, warranty, covenant or event of default would result in a Material Adverse Effect.

     “Material Contract” means, with respect to any Person, each contract to which such Person is a party, the breach or termination of which would (or would be reasonably likely to) result in a Material Adverse Effect. Without limitation of the foregoing, the US Term Loan Credit Agreement and the Senior Note Indenture (for so long as each such agreement is in effect), shall each be deemed a Material Contract.

     “Material Indebtedness” means Indebtedness (other than the Obligations) of the Loan Parties in an aggregate principal amount exceeding $15,000,000 (including, for purposes of calculating such amount, undrawn committed or available amounts and amounts owing to all creditors under any combined or syndicated credit arrangement). Without limitation of the foregoing, the Indebtedness under the US Term Loan Credit Agreement and the Indebtedness under the Senior Note Indenture (for so long as each such agreement is in effect) shall be deemed Material Indebtedness. For purposes of determining the amount of Material Indebtedness at any time, the amount of the obligations in respect of any Swap Contract at such time shall be calculated at the Swap Termination Value thereof.

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     “Maturity Date” means July 31, 2012.

     “Maximum Rate” has the meaning provided in Section 0.

     “Measurement Period” means, at any date of determination, (x) at any time prior to the end of the first Fiscal Month which occurs after the first full eighteen (18) months following the Closing Date, the most recently completed four Fiscal Quarters of the Parent for which financial statements have been (or were required to be) delivered pursuant to Section 6.01, and (y) at any time thereafter, the twelve (12) Fiscal Months most recently ended for which financial statements are available.

     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

     “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which a Loan Party or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

     “Net Proceeds” means:

     (a) with respect to any Disposition by any Loan Party described in clause (b), (h) or (p) of the definition of “Permitted Disposition”, the excess, if any, of (i) the sum of cash and cash equivalents received by any Loan Party in connection with such transaction (including any cash or cash equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness that is secured by the applicable asset by a Lien permitted hereunder on such asset and that is required to be repaid (or to establish an escrow for the future repayment thereof) in connection with such transaction (other than Indebtedness under the Loan Documents), (B) the reasonable and customary out-of-pocket expenses incurred by such Loan Party in connection with such transaction (including, without limitation, appraisals, and brokerage, legal, title and recording or transfer tax expenses and commissions) paid by any Loan Party to third parties (other than another Loan Party or an Affiliate of any Loan Party), and (C) taxes paid in connection therewith; and

     (b) with respect to the incurrence or issuance of any Indebtedness by any Loan Party, the excess of (i) the sum of the cash and cash equivalents received by any Loan Party in connection with such transaction over (ii) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by such Loan Party in connection therewith to third parties (other than another Loan Party or an Affiliate of any Loan Party).

     “Non-Consenting Lender” has the meaning provided therefor in Section 0.

     “Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).

     “Note” means either a Domestic Note or a Canadian Note, as the context may require.

     “NPL” means the National Priorities List under CERCLA.

     “NVOCC” means with respect to any In-Transit Inventory, a non-vessel operating common carrier engaged as a freight forwarder or otherwise to assist in the importation of In-Transit Inventory.

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     “Obligations” means (a) all advances to, and debts (including principal, interest, fees, costs, and expenses), liabilities, obligations, covenants and indemnities of, any Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit (including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral therefor), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest, fees, costs and expenses that accrue after the commencement by or against any Loan Party or any Subsidiary thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding, and (b) any Other Liabilities. Without limiting the foregoing, for purposes of clarity, whenever used herein the term “Obligations” shall include all Canadian Liabilities.

     “Operating Cash” means, without duplication, (a) cash maintained in the cash registers in the Stores in the normal course of business and consistent with past practices, (b) minimum balances maintained in DDAs consistent with past practices, and (c) minimum balances maintained in Blocked Accounts consistent with past practices, provided that Operating Cash described in the foregoing clauses (b) and (c) shall not exceed $500,000 in the aggregate at any time.

     “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity, (d) with respect to any unlimited liability company, the memorandum of association and articles of association (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); and (e) in each case, all shareholder or other equity holder agreements, voting trusts and similar arrangements to which such Person is a party or which is applicable to its Equity Interests.

     “Other Canadian Liabilities” means any obligation on account of: (a) any Cash Management Services furnished to any of the Canadian Loan Parties or any of their Canadian Subsidiaries and/or (b) any transaction which arises out of any Bank Product entered into with any Canadian Loan Party.

     “Other Domestic Liabilities” means any obligation on account of: (a) any Cash Management Services furnished to any of the Domestic Loan Parties or any of their Domestic Subsidiaries and/or (b) any transaction which arises out of any Bank Product entered into with any Domestic Loan Party.

     “Other Liabilities” means, collectively, all Other Canadian Liabilities and all Other Domestic Liabilities.

     “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

     “Outstanding Amount” means: (i) with respect to Committed Loans and Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Committed Loans and Swing Line Loans, as the case may be, occurring on

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such date; and (ii) with respect to any L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by any Borrower of Unreimbursed Amounts, or the refinancing of such unreimbursed amounts as Committed Borrowings.

     “Overadvance” means either a Canadian Overadvance or a Domestic Overadvance.

     “Parent” has the meaning specified in the introductory paragraph hereto.

     “Participant” has the meaning specified in Section 10.04(d).

     “Patriot Act” means USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).

     “Payment Conditions” means, at the time of determination with respect to any specified transaction or payment, that (a) no Default or Event of Default then exists or would arise as a result of entering into such transaction or the making such payment, and (b) the Availability Condition has been satisfied, and (c) the Consolidated Fixed Charge Coverage Ratio, calculated for the Measurement Period most recently ended for which financial statements have been (or were required to be) delivered pursuant to Section 6.01 is (x) with respect to any Restricted Payment, equal to or greater than 1.25:1.0 and (y) with respect to any Investments or Acquisitions or any voluntary prepayments, repurchases, redemptions or defeasances of Permitted Indebtedness (other than Subordinated Indebtedness), equal to or greater than 1.1:1.0, in each case, immediately preceding, and on a pro forma basis on the date thereof and projected basis for the twelve (12) months (or four (4) Fiscal Quarters) immediately following, such transaction or payment. Prior to undertaking any transaction or payment which is subject to the Payment Conditions, the Lead Borrower shall deliver to the Administrative Agent evidence of satisfaction of the conditions contained in clause (b) in the preceding sentence on a basis (including, without limitation, giving due consideration to results for prior periods) reasonably satisfactory to the Agents.

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “PCAOB” means the Public Company Accounting Oversight Board.

     “Pension Plan” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or maintained by a Loan Party or any ERISA Affiliate or to which a Loan Party or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years.

     “Permitted Acquisition” means an Acquisition by any Loan Party or any Subsidiary thereof in which all of the following conditions are satisfied:

     (a) No Default exists at the time of or immediately after giving effect to the consummation of such Acquisition;

     (b) Such Acquisition shall have been approved by the Board of Directors of the Person (or similar governing body if such Person is not a corporation) which is the subject of such Acquisition and such Person shall not have announced that it will oppose such Acquisition

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or shall not have commenced any action which alleges that such Acquisition shall violate applicable Law;

     (c) In the case of a Permitted Acquisition, or a series of related Permitted Acquisitions, involving consideration in the aggregate in excess of $10,000,000, the Lead Borrower shall have furnished the Administrative Agent with at least thirty (30) days’ (or such shorter period as the Administrative Agent shall agree) prior written notice of such intended Acquisition and shall have furnished the Administrative Agent with a current draft of the documents, instruments and agreements contemplated to be executed in connection with such Acquisition (and final copies thereof as and when executed), a summary of any due diligence undertaken by the Loan Parties in connection with such Acquisition, appropriate financial statements of the Person which is the subject of such Acquisition, pro forma projected financial statements for the twelve (12) month period following such Acquisition after giving effect to such Acquisition (including balance sheets, cash flows and income statements by month for the acquired Person, individually, and on an Americas Consolidated basis), and such other information as the Administrative Agent may reasonably require, all of which shall be reasonably satisfactory to the Administrative Agent in its Permitted Discretion;

     (d) In the case of a Permitted Acquisition, or a series of related Permitted Acquisitions, involving consideration in the aggregate in excess of $10,000,000, either (i) the legal structure of such Acquisition shall be reasonably acceptable to the Administrative Agent in its Permitted Discretion, or (ii) the Loan Parties shall have provided the Administrative Agent with a solvency opinion from an unaffiliated third party valuation firm reasonably satisfactory to the Administrative Agent in its Permitted Discretion;

     (e) After giving effect to such Acquisition, if such Acquisition is an Acquisition of the Equity Interests, a Loan Party shall acquire and own, directly or indirectly, a majority of the Equity Interests in the Person being acquired and shall Control a majority of any voting interests or shall otherwise Control the governance of the Person being acquired;

     (f) Any assets acquired shall be utilized in, and if such Acquisition involves a merger, amalgamation, consolidation or stock acquisition, the Person which is the subject of such Acquisition shall be engaged in, a business otherwise permitted to be engaged in by a Borrowing Base Party under this Agreement;

     (g) Intentionally Omitted;

     (h) The business and assets acquired in such Acquisition shall be free and clear of all Liens (other than Permitted Encumbrances);

     (i) No Indebtedness shall be incurred or assumed by any Loan Party in connection with or as a result of such Acquisition (other than Permitted Indebtedness); and

     (j) The Loan Parties shall have satisfied the Payment Conditions with respect to such Acquisition.

     “Permitted Amendment/Refinancing” means, in respect of any Indebtedness, any amendments, restatements,  refinancings, refundings, renewals, extensions or replacements of such Indebtedness; provided that (i) the principal amount of such Indebtedness is not increased at the time of such amendment, restatement, refinancing, refunding, renewal, extension or replacement except by an amount equal to any premium or other amount paid, interest then due, and fees and expenses incurred, in

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connection with such amendment, restatement, refinancing, refunding, renewal, extension or replacement and by an amount equal to any existing commitments unutilized thereunder, (ii) the result of such amendment, restatement, refinancing, refunding, renewal, extension or replacement shall not be an earlier maturity date or decreased weighted average life of such Indebtedness, and (iii) the terms relating to collateral (if any) and subordination (if any), financial covenants, mandatory prepayments, events of default, and interest, fees and other amounts payable, of any such amended, restated, refinanced, refunded, renewed, extended or replacement Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of the agreements and instruments governing the Indebtedness being so amended, restated, refinanced, refunded, renewed, extended or replaced, provided that (A) the interest rates in effect on the Term Loans may be increased by a spread of no more than four percent (4%) in the aggregate above the rates in effect as of the Closing Date, of which no more than two percent  (2%) shall be cash pay, and the balance shall be capitalized and paid at or after the initial maturity of the Term Loans and (B) the foregoing shall not prevent any payment in the form of equity securities (not constituting Indebtedness) in consideration of any such amendment, restatement, refinancing, refunding, renewal, extension or replacement.

     “Permitted Canadian Overadvance” means a Canadian Overadvance made by the Canadian Agent, in its Permitted Discretion, which:

     (a) is made to maintain, protect or preserve the Collateral of the Canadian Loan Parties and/or the Canadian Credit Parties’ rights under the Loan Documents or which is otherwise for the benefit of the Credit Parties; or

     (b) is made to enhance the likelihood of, or maximize the amount of, repayment of any of the Canadian Liabilities; or

     (c) is made to pay any other amount chargeable to any Canadian Loan Party hereunder or under any other Loan Document; and

     (d) together with all other Permitted Canadian Overadvances then outstanding, shall not (i) exceed at any time the lesser of $1,000,000 or ten percent (10%) of the Canadian Borrowing Base at any time or (ii) unless a Liquidation is occurring, remain outstanding for more than thirty (30) consecutive Business Days, unless in each case, the Required Lenders otherwise agree;

     provided, that the foregoing shall not (i) modify or abrogate any of the provisions of Section 2.03 regarding each Canadian Lender’s obligations with respect to Canadian Letters of Credit, or (ii) result in any claim or liability against the Canadian Agent (regardless of the amount of any Canadian Overadvance) for “inadvertent Canadian Overadvances” (i.e. where a Canadian Overadvance results from changed circumstances beyond the control of the Canadian Agent (such as a reduction in the value of Collateral)), and such “inadvertent Canadian Overadvances” shall not reduce the amount of Permitted Canadian Overadvances allowed hereunder, and provided further, that in no event shall the Canadian Agent make a Canadian Overadvance, if after giving effect thereto, the principal amount of the Canadian Credit Extensions would exceed the Aggregate Canadian Commitments (as in effect prior to any termination of the Canadian Commitments pursuant to Section 2.06 hereof).

     “Permitted Discretion” means a determination made in good faith and in the exercise of commercially reasonable business judgment.

     “Permitted Disposition” means each of the following:

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     (a) Dispositions of Inventory in the ordinary course of business;

     (b) bulk sales or other Dispositions of the Inventory of a Loan Party in connection with Store closings, at arm’s length, provided, that such Store closures and related Inventory Dispositions shall not exceed (i) in any period of twelve (12) consecutive months, thirty-five (35) Stores (net of new Store openings) and (ii) in the aggregate from and after the Closing Date, seventy-five (75) Stores (net of new Store openings), provided that at any time after the Disposition of an aggregate of twenty-five (25) or more Stores, in addition to the number of appraisals that may be conducted in accordance with Section 6.10, upon the request of either Co-Collateral Agent, an additional inventory appraisal may be required to be performed at the expense of the Loan Parties; provided, further that, if reasonably required by either of the Co-Collateral Agents or the Canadian Agent, all sales of Inventory in connection with Store closings shall be in accordance with liquidation agreements and with professional liquidators reasonably acceptable to the Agents; provided, further that an amount equal to the Net Proceeds received in connection therewith is applied to the prepayment of Loans if and to the extent then required in accordance with Section 2.05(f) hereof;

     (c) licenses of Intellectual Property of a Loan Party or any of its Subsidiaries in the ordinary course of business;

     (d) licenses for the conduct of licensed departments within the Loan Parties’ Stores in the ordinary course of business; provided that, if requested by the Agents, the applicable Loan Party shall have used commercially reasonable efforts to cause the Person operating such licensed department to enter into an intercreditor agreement with the Administrative Agent or Canadian Agent, as applicable, on terms and conditions reasonably satisfactory to the Agents;

     (e) Dispositions of Equipment and other assets (including abandonment of or other failures to maintain, preserve, renew, protect or keep in full force and effect Intellectual Property) in the ordinary course of business that is substantially worn, damaged, obsolete or, in the judgment of a Loan Party, no longer useful or necessary in its business or that of any Americas Subsidiary;

     (f) Dispositions among the Loan Parties or by any Subsidiary to a Loan Party;

     (g) Dispositions by any Subsidiary which is not a Loan Party to another Subsidiary that is not a Loan Party;

     (h) Dispositions of Real Estate of any Loan Party or any Americas Subsidiary (or Dispositions of any Person or Persons created to hold such Real Estate or the equity interests in such Person or Persons), including sale-leaseback transactions involving any such Real Estate pursuant to leases on market terms, as long as, (i) such Disposition is made for fair market value, and (ii) an amount equal to the Net Proceeds of such Disposition received by any Loan Party is applied to the prepayment of Loans in the manner required by Section 2.05(f);

     (i) Dispositions consisting of the compromise, settlement or collection of Accounts receivable in the ordinary course of business, consistent with past practices;

     (j) leases, subleases, space leases, licenses or sublicenses of Real Estate (and terminations of any of the foregoing), in each case in the ordinary course of business and which do not materially interfere with the business of the Parent and its Subsidiaries, taken as a whole;

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     (k) Dispositions of cash, cash equivalents and Permitted Investments described in clauses (a) through (h) of the definition of “Permitted Investments” contained in this Agreement, in each case on ordinary business terms and, to the extent constituting a Disposition, the making of Permitted Investments;

     (l) any Disposition of Real Estate to a Governmental Authority as a result of the condemnation of such Real Estate;

     (m) Dispositions of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property that is promptly purchased or (ii) the proceeds of such Disposition are promptly applied to the purchase price of such replacement property (which replacement property is actually promptly purchased);

     (n) to the extent constituting a Disposition, (i) transactions permitted by Sections 0, (ii) Restricted Payments permitted by Section 0 and (iii) Liens permitted by Section 0;

     (o) Dispositions of Investments in joint ventures; and

     (p) other Dispositions for consideration not exceeding $5,000,000 in the aggregate during any consecutive twelve (12) month period so long as no Event of Default has occurred and is continuing or would immediately result therefrom, provided that an amount equal to the Net Proceeds of such Disposition received by any Loan Party is applied to the prepayment of Loans in the manner and to the extent required by Section 2.05(f).

     “Permitted Domestic Overadvance” means a Domestic Overadvance made by the Administrative Agent, in its Permitted Discretion, which:

     (a) is made to maintain, protect or preserve the Collateral and/or the Credit Parties’ rights under the Loan Documents or which is otherwise for the benefit of the Credit Parties; or

     (b) is made to enhance the likelihood of, or to maximize the amount of, repayment of any Obligation; or

     (c) is made to pay any other amount chargeable to any Loan Party hereunder or any other Loan Document; and

     (d) together with all other Permitted Domestic Overadvances then outstanding, shall not (i) exceed at any time the lesser of $10,000,000 or ten percent (10%) of the Domestic Borrowing Base at any time or (ii) unless a Liquidation is occurring, remain outstanding for more than thirty (30) consecutive Business Days, unless in each case, the Required Lenders otherwise agree;

     provided, that the foregoing shall not (i) modify or abrogate any of the provisions of Section 2.03 regarding each Domestic Lender’s obligations with respect to Domestic Letters of Credit, or (ii) result in any claim or liability against the Administrative Agent (regardless of the amount of any Domestic Overadvance) for “inadvertent Domestic Overadvances” (i.e. where a Domestic Overadvance results from changed circumstances beyond the control of the Administrative Agent (such as a reduction in the value of Collateral)), and such “inadvertent Domestic Overadvances” shall not reduce the amount of Permitted Domestic Overadvances allowed hereunder, and provided further, that in no event shall the Administrative Agent make a Domestic Overadvance, if after giving effect thereto, the principal amount

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of the Domestic Credit Extensions would exceed the Aggregate Domestic Commitments (as in effect prior to any termination of the Domestic Commitments pursuant to Section 2.06 hereof).

     “Permitted Encumbrances” means any of the following:

     (a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 0;

     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by applicable Law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or are being contested in compliance with Section 0;

     (c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security or similar laws or regulations, other than any Lien imposed by ERISA or any other applicable Law relating to Plans;

     (d) deposits to secure or relating to the performance of bids, trade contracts, government contracts and leases (other than Indebtedness), statutory obligations, surety, stay, customs and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

     (e) Liens in respect of judgments that do not constitute an Event of Default hereunder;

     (f) easements, covenants, conditions, restrictions, building code laws, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of the Parent and the Americas Subsidiaries, taken as a whole, and such other minor title defects or survey matters that are disclosed by current surveys that, in each case, do not materially interfere with the ordinary conduct of business of the Parent and the Americas Subsidiaries, taken as a whole;

     (g) Liens existing on the date hereof and listed on Schedule 0 and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed other than after-acquired property affixed or incorporated thereto and proceeds or products thereof, (ii) the amount secured or benefited thereby is not increased except to the extent permitted hereunder, and (iii) any renewal or extension of the obligations secured or benefited thereby is permitted hereunder;

     (h) Liens on fixed or capital assets acquired by any Loan Party securing Indebtedness permitted under clause (c) of the definition of Permitted Indebtedness so long as (i) such Liens and the Indebtedness secured thereby are incurred prior to or within one hundred and eighty (180) days after such acquisition (other than refinancing thereof permitted hereunder), (ii) the Indebtedness secured thereby does not exceed the cost of acquisition of such fixed or capital assets and (iii) such Liens shall not extend to any other property or assets of the Loan Parties, replacements thereof and additions and accessions to such property and the proceeds and the products thereof;

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     (i) Liens in favor the Administrative Agent and the Canadian Agent under the Security Documents for their own benefit and the benefit of the other Credit Parties, as applicable;

     (j) landlords’ and lessors’ Liens in respect of rent not in default for more than any applicable grace period, not to exceed thirty (30) days;

     (k) possessory Liens in favor of brokers and dealers arising in connection with the acquisition or disposition of Investments owned as of the date hereof and other Permitted Investments, provided that such Liens (i) attach only to such Investments or other Investments held by such broker or dealer and (ii) secure only obligations incurred in the ordinary course and arising in connection with the acquisition or disposition of such Investments and not any obligation in connection with margin financing;

     (l) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s liens, liens in favor of securities intermediaries, rights of setoff or similar rights and remedies as to deposit accounts or securities accounts or other funds maintained with depository institutions or securities intermediaries;

     (m) Liens (if any) arising from precautionary UCC or PPSA filings regarding “true” operating leases or the consignment of goods to a Loan Party or any Subsidiary;

     (n) voluntary Liens on property (other than property of any Loan Party of the type included in either the Canadian Borrowing Base or the Domestic Borrowing Base) in existence at the time such property is acquired pursuant to a Permitted Investment or on such property of a Subsidiary of a Loan Party in existence at the time such Subsidiary is acquired pursuant to a Permitted Investment; provided that such Liens are not incurred in connection with, or in anticipation of, such Permitted Investment and do not attach to any other assets of any Loan Party or any Subsidiary;

     (o) Liens in favor of customs and revenues authorities imposed by applicable Law arising in the ordinary course of business in connection with the importation of goods and securing obligations (i) that are not overdue by more than thirty (30) days, or (ii)(A) that are being contested in good faith by appropriate proceedings, (B) the applicable Loan Party or Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (C) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation;

     (p) Liens on cash advances or any cash earnest money deposits in favor of the seller of any property to be acquired in any Permitted Acquisition or other Permitted Investment;

     (q) leases or subleases granted to others in the ordinary course of business which do not interfere in any material respect with the business of the Parent and its Subsidiaries, taken as a whole;

     (r) any interest or title of a licensor, sublicensor, lessor or sublessor under licenses, leases, sublicenses, or subleases entered into by the Parent or any of its Subsidiaries in the ordinary course of business provided such interest or title is limited to the property that is the subject of such transaction;

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     (s) Liens in respect of the licensing and sublicensing of Intellectual Property in the ordinary course of business;

     (t) Liens that are contractual rights of set-off relating to purchase orders and other similar agreements entered into by the Parent or any of its Subsidiaries;

     (u) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto incurred in the ordinary course of business;

     (v) Liens arising out of any sale and leaseback transaction permitted hereunder in the real property and related improvements that are the subject of such transaction and securing the related Indebtedness under clause (f) of the definition of “Permitted Indebtedness”;

     (w) Liens securing Indebtedness in respect of the Term Loan Documents (or any Permitted Amendment/Refinancing in respect of any of the foregoing); provided such Liens (to the extent covering Collateral) are subject to the Intercreditor Agreement (or, in the case of any Permitted Amendment/Refinancing thereof, another intercreditor agreement containing terms that are at least as favorable to the Credit Parties as those contained in the Intercreditor Agreement); and

     (x) other Liens securing Indebtedness in an aggregate outstanding principal amount not to exceed $5,000,000.

     “Permitted Indebtedness” means, without duplication, each of the following:

     (a) Indebtedness in respect of the Term Loan Documents and any other Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and any Permitted Amendment/Refinancing of any of the foregoing Indebtedness;

     (b) Indebtedness (i) of any Loan Party to any other Loan Party; (ii) of any Subsidiary that is not a Loan Party to any other Subsidiary that is not a Loan Party; and (iii) of any Americas Subsidiary that is not a Loan Party to any Loan Party in an aggregate principal amount not to exceed $5,000,000 outstanding at any time;

     (c) without duplication of Indebtedness described in clause (f) of this definition, purchase money Indebtedness of any Loan Party to finance the acquisition of any fixed or capital assets, including Capital Lease Obligations and Synthetic Lease Obligations, and any Indebtedness assumed in connection with the acquisition of any such assets or secured by a Lien on any such assets prior to the acquisition thereof, and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or result in an earlier maturity date or decreased weighted average life thereof provided that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate, provided, however, that the aggregate principal amount of Indebtedness permitted by this clause (c) shall not exceed $25,000,000 at any time outstanding; provided further that, if reasonably requested by any Agent (or in the case of any such Indebtedness of a

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Canadian Loan Party, the Canadian Agent), the Loan Parties shall use commercially reasonable efforts to cause the holders of such Indebtedness to enter into a Collateral Access Agreement in favor of the Administrative Agent or the Canadian Agent as applicable;

     (d) obligations (contingent or otherwise) of any Loan Party or any Subsidiary thereof existing or arising under any Swap Contract, provided that such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of mitigating risks associated with fluctuations in interest rates or foreign exchange rates, and not for purposes of speculation or taking a “market view”;

     (e) Indebtedness in respect of performance bonds, bid bonds, customs and appeal bonds, surety bonds, performance and completion guarantees and similar obligations related thereto, in each case provided in the ordinary course of business;

     (f) Indebtedness incurred for the construction or acquisition or improvement of, or to finance or to refinance, any Real Estate owned by any Loan Party (including therein any Indebtedness incurred in connection with sale-leaseback transactions permitted hereunder), provided that, (i) in the case of any sale-leaseback transaction, an amount equal to the Net Proceeds received by any Loan Party in connection with any such Indebtedness is applied to the outstanding Loans in the manner and to the extent required by Section 2.05(f) and (ii) if reasonably requested by the Agents or, if applicable, the Canadian Agent, the Loan Parties shall use commercially reasonable efforts to cause the holders of such Indebtedness to enter into a Collateral Access Agreement in favor of the Administrative Agent or the Canadian Agent, as applicable;

     (g) Indebtedness with respect to the deferred purchase price for any Permitted Acquisition, provided that such Indebtedness does not require the payment in cash of principal (other than in respect of working capital adjustments) prior to the Maturity Date, has a maturity which extends beyond the Maturity Date, and is subordinated to the Obligations on terms reasonably acceptable to the Agents;

     (h) Indebtedness of any Person that becomes a Subsidiary of a Loan Party in a Permitted Acquisition, which Indebtedness is existing at the time such Person becomes a Subsidiary (other than Indebtedness incurred solely in contemplation of such Person’s becoming a Subsidiary of a Loan Party);

     (i) the Obligations;

     (j) Intentionally Omitted;

     (k) Guarantees by the Parent in connection with the French Credit Agreement so long as the aggregate principal amount of the obligations Guaranteed does not exceed €268,000,000 (inclusive of any principal amounts described in subsection (m), of this definition;

     (l) any obligations related to the call and put option arrangements to purchase the preferred shares in Pilot SAS held by Jeannine Boix-Vives, Christine Simon and Sylvie Bernard in connection with the shareholders agreement, dated as of April 12, 2005, among the Parent, Laurent Boix-Vives, Jeannine Boix-Vives, Christine Simon and Sylvie Bernard (it being understood, for the avoidance of doubt, that the amount of such obligations for purposes of this Agreement shall not be increased as a result of any amendment to such shareholders agreement);

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     (m) Guarantees of the Parent in connection with the Pilot SAS Facility so long as the aggregate principal amount of the obligations Guaranteed does not exceed €55,000,000;

     (n) Guarantees of the Parent with respect to the obligations under the Societe Generale Agreement in an aggregate principal amount not to exceed €50,000,000;

     (o) (i) Indebtedness constituting indemnification obligations or obligations in respect of purchase price or other similar adjustments in connection with Permitted Dispositions; and (ii) Indebtedness consisting of obligations of any Loan Party or any Americas Subsidiary under deferred compensation or other similar arrangements incurred by such Person in connection with any Permitted Investment;

     (p) Indebtedness consisting of the financing of insurance premiums incurred in the ordinary course of business of any Loan Party or any Subsidiary;

     (q) Guarantees (i) of any Indebtedness of any Loan Party or any Subsidiary thereof described in clause (a) hereof, (ii) by any Loan Party of any Indebtedness of another Loan Party permitted hereunder, and (iii) by any Loan Party of Indebtedness otherwise permitted hereunder of any Subsidiary that is not a Loan Party to the extent such Guarantees are permitted pursuant to Section 7.02;

     (r) Indebtedness to current or former officers, directors, managers, consultants and employees, their respective estates, spouses or former spouses to finance the purchase or redemption of Equity Interests of the Parent to the extent permitted by Section 7.06;

     (s) Indebtedness consisting of obligations of any Loan Party under deferred compensation or other similar arrangements incurred by such Person in connection with any Investment to the extent permitted under Section 7.02;

     (t) Obligations in respect of Bank Products and Cash Management Services and other Indebtedness in respect of netting services, automatic clearinghouse arrangements, overdraft protections and similar arrangements;

     (u) without duplication of any Indebtedness described in clause (a) through (t) above, other Indebtedness in an aggregate principal amount not to exceed $40,000,000 at any time outstanding; and

     (v) all premiums (if any), interest (including post-petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (a) through (u) above.

     “Permitted Investments” means each of the following:

     (a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or, with respect to the Canadian Loan Parties, Canada (or by any agency or instrumentality of the United States of America or Canada, as applicable) having maturities of not more than one year from the date of acquisition thereof; provided that the full faith and credit of the United States of America or Canada, as applicable, is pledged in support thereof;

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     (b) commercial paper issued by any Person organized under the laws of any state of the United States of America or Canada or any province thereof and rated, at the time of acquisition thereof, at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than one year from the date of acquisition thereof;

     (c) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia (or with respect to the Canadian Loan Parties, Canada or any province thereof) or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated, at the time of acquisition thereof, as described in clause (b) of this definition and (iii) has combined capital and surplus of at least $500,000,000, in each case with maturities of not more than one year from the date of acquisition thereof;

     (d) fully collateralized repurchase agreements with a term of not more than thirty (30) days for securities described in clause (a) above (without regard to the limitation on maturity contained in such clause) and entered into with a financial institution satisfying the criteria described in clause (c) above at the time of acquisition thereof or with any primary dealer and having a market value at the time that such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such counterparty entity with whom such repurchase agreement has been entered into;

     (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States or province or territory of Canada, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s;

     (f) securities with maturities of six months or less from the date of acquisition backed by standby letters of credit issued by any commercial bank satisfying the requirements of clause (c) of this definition;

     (g) marketable short-term money market and similar securities or funds having, at the time of acquisition thereof, a rating of at least A-2 from S&P (or, if at any time S&P shall not be rating such obligations, an equivalent rating from another nationally recognized rating service);

     (h) Investments, classified in accordance with GAAP as current assets of the Loan Parties, in any money market fund, mutual fund, or other shares of investment companies that are registered under the Investment Company Act of 1940, and which invest primarily in one or more of the types of securities described in clauses (a) through (g) above;

     (i) Investments existing on the Closing Date and set forth on Schedule 7.02, and any modification, renewal or extension thereof; provided that the amount of any Investment permitted pursuant to this clause is not increased from the amount of such Investment on the Closing Date except pursuant to the terms of such Investment as of the Closing Date or as otherwise permitted by Section 7.02;

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     (j) Investments (i) by any Loan Party in any other Loan Party, (ii) by any Subsidiary that is not a Loan Party in any other Subsidiary that is not a Loan Party, and (iii) by any Loan Party in any Subsidiary that is not a Loan Party; provided that all such Investments pursuant to this clause (iii) shall not exceed $10,000,000 in the aggregate at any one time outstanding, exclusive of any Investments in any Subsidiary organized under the laws of Japan for purposes of refinancing, or providing a Guarantee by the Parent in respect of, Indebtedness of any such Subsidiary, which shall not exceed $10,000,000 in the aggregate at any one time outstanding;

     (k) (i) Investments by any Loan Party and its Subsidiaries in their respective Subsidiaries outstanding on the date hereof; (ii) additional Investments by any Loan Party and its Subsidiaries in Loan Parties; and (iii) Investments in, or for purposes of funding, Quiksilver Brazil JV and QS Mexico Holdings to the extent required or contemplated by the applicable joint venture agreement; provided that all such Investments made pursuant to this clause (iii) shall not exceed $20,000,000 in the aggregate;

     (l) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;

     (m) Guarantees constituting Permitted Indebtedness;

     (n) Investments in Swap Contracts permitted hereunder;

     (o) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business;

     (p) (i) advances of payroll payments to employees in the ordinary course of business and (ii) other loans and advances to officers, directors and employees of the Loan Parties and Subsidiaries in the ordinary course of business in an amount not to exceed $100,000 to any individual at any time or in an aggregate amount not to exceed $1,000,000 at any time outstanding; provided, however, that an individual’s use of a cashless exercise procedure to pay the exercise price and required tax withholding (or either of them) in connection with such individual’s exercise of a compensatory option to purchase stock issued by the Parent shall not give rise to a loan or advance for the purposes of this clause (ii) to the extent that all funds representing full payment of such option exercise price and required tax withholding are actually remitted to the Parent before the close of business on either (x) the date of exercise of the stock option or (y) the date of issuance of the stock pursuant to the option exercise;

     (q) Investments constituting Permitted Acquisitions and earnest money deposits made in connection with any letter of intent or purchase agreement entered into in connection with any Permitted Acquisition;

     (r) capital contributions made by any Loan Party to another Loan Party;

     (s) Investments of any Person existing at the time such Person becomes a Subsidiary of any Loan Party or consolidates, amalgamates or merges with the Parent or any of its Subsidiaries (including in connection with a Permitted Acquisition) so long as such Investments were not made in contemplation of such Person becoming a Subsidiary or of such consolidation, amalgamation or merger;

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     (t) Guarantees of leases or other obligations of any Loan Party that do not constitute Indebtedness, in each case entered into in the ordinary course of business;

     (u) other Investments in an aggregate amount not the exceed $10,000,000 at any time outstanding; and

     (v) other Investments as long as the Payment Conditions are satisfied at the time of consummation thereof;

provided, however, that notwithstanding the foregoing, (i) except as otherwise provided in any Security Document, no Investment of any Loan Party of a type specified in clauses (a) through (h) above (each, a “Cash Equivalent”) shall constitute a Permitted Investment unless such Investment is pledged to the Administrative Agent or the Canadian Agent, as applicable, as additional collateral for the applicable Obligations pursuant to such security and control agreements as may be reasonably required by any Agent and (ii) no Cash Equivalent of any Loan Party shall constitute a Permitted Investment after the occurrence and during the continuance of a Cash Dominion Event while any Loans are outstanding unless such Cash Equivalent is a temporary Investment pending expiration of an Interest Period for a LIBO Rate Loan or a BA Equivalent Loan and the proceeds of such Cash Equivalent will be applied to the outstanding Loans (if any), in the manner provided in Section 2.05, after the expiration of such Interest Period if a Cash Dominion Event then exists and is continuing.

     “Permitted Overadvance” means either a Permitted Domestic Overadvance or a Permitted Canadian Overadvance.

     “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, limited partnership, Governmental Authority or other entity.

     “Pilot SAS” means Pilot SAS, a société par actions simplifiée and an indirect subsidiary of the Parent.

     “Pilot SAS Facility” means that certain credit agreement dated as of March 14, 2008 among, inter alia, Pilot SAS, Crédit Lyonnais, BNP Paribas and Société Générale SA, as amended.

     “Plan” means (a) in respect of the Domestic Loan Parties any Pension Plan or “employee benefit plan” (as such term is defined in Section 3(3) of ERISA) established by a Loan Party or, with respect to any such plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate, or (b) in respect of the Canadian Loan Parties, any Canadian Pension Plan or other pension benefit or retirement savings plan maintained by any of the Canadian Loan Parties for its employees or its former employees to which any of the Canadian Loan Parties contributes or are required to contribute with respect to which any of the Canadian Loan Parties have incurred or may incur liability, including contingent liability.

     “Platform” has the meaning specified in Section 0.

     “Pledge Agreement” means the Pledge Agreement dated as of the Closing Date among the Domestic Loan Parties party thereto and the Administrative Agent.

     “Post-Closing Letter” means that certain letter dated July 31, 2009 amongst the Administrative Agent and the Loan Parties with respect to certain matters to be finalized and delivered subsequent to the Closing Date.

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     “PPSA” means the Personal Property Security Act (Ontario) (or any successor statute) or similar legislation of any other Canadian jurisdiction, including, without limitation, the Civil Code of Quebec, the laws of which are required by such legislation to be applied in connection with the issue, perfection, enforcement, opposability, validity or effect of security interests or other applicable Liens.

     “Prepayment Event” means:

     (a) any Disposition (including pursuant to a sale and leaseback transaction) of any property or asset of a Loan Party described in clause (b), (h) or (p) of the definition of “Permitted Disposition” generating Net Proceeds in excess of $1,000,000;

     (b) any casualty, expropriation or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of a Loan Party generating Net Proceeds in excess of $1,000,000, unless (i) the proceeds therefrom are required to be paid to the holder of a Lien on such property or asset having priority over the Lien of the Administrative Agent or the Canadian Agent, as applicable, or (ii) except while a Cash Dominion Event exists, the proceeds therefrom are utilized for purposes of replacing or repairing the assets in respect of which such proceeds were received within 180 days of the occurrence of the damage to or loss of the assets being repaired or replaced; or

     (c) the incurrence by a Loan Party of any Indebtedness for borrowed money other than Permitted Indebtedness.

     “Prime Rate” means, for any day, a fluctuating rate per annum equal to the highest of (a) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”, (b) the Federal Funds Rate for such day plus one-half of one percent (0.50%) or (c) the Adjusted LIBO Rate for a one month interest period as determined on such day plus one percent (1.00%). The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

     “Prime Rate Loan” means a Canadian Prime Rate Loan or a Domestic Prime Rate Loan, as the context may require.

     “Public Lender” has the meaning specified in Section 6.02.

     “Real Estate” means all land, together with the buildings, structures, parking areas, and other improvements thereon, now or hereafter owned or leased by any Loan Party or any Subsidiary, including all easements, rights-of-way, and similar rights relating thereto.

     “Receivables Advance Rate” means eighty-five percent (85%).

     “Receivables Reserves” means, without duplication of any other Reserves or items that are otherwise addressed or excluded through eligibility criteria, such Reserves as may be established from time to time by any Agent or, if applicable, the Canadian Agent in its Permitted Discretion with respect to the determination of the collectibility in the ordinary course of Eligible Trade Receivables. Upon the determination by any Agent or the Canadian Agent in its Permitted Discretion that a Receivables Reserve should be established or modified, the Co-Collateral Agent shall notify the Administrative Agent or the Canadian Agent, as applicable, in writing and the Administrative Agent or the Canadian Agent, as

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applicable, shall thereupon establish or modify such Receivables Reserve, in all cases subject to the provisions of Section 0.

     “Register” has the meaning specified in Section 10.04(c).

     “Registered Public Accounting Firm” has the meaning specified by the Securities Laws and shall be independent of the Parent and its Subsidiaries as prescribed by the Securities Laws.

     “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

     “Reports” has the meaning provided in Section 9.04(b).

     “Request for Credit Extension” means (a) with respect to a Committed Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.

     “Required Lenders” means, as of any date of determination, (a) at such time as there are three (3) or fewer Lenders, all such Lenders and (b) at such time as there are more than three (3) Lenders, at least two Lenders holding more than fifty percent (50%) of the Aggregate Total Commitments or, if the commitment of each Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02, at least two Lenders holding in the aggregate more than 50% of the Total Outstandings (with the aggregate amount of each Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for purposes of this definition); provided that the Commitment of, and the portion of the Total Outstandings held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Lenders.

     “Reserves” means all (if any) Inventory Reserves, Availability Reserves and Receivables Reserves.

     “Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer or assistant treasurer of a Loan Party or any of the other individuals designated in writing to the Administrative Agent by an existing Responsible Officer of a Loan Party as an authorized signatory of any certificate or other document to be delivered hereunder. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

     “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of any Loan Party or any of its Americas Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to such Person’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment. Without limiting the foregoing, “Restricted Payments” with respect to any Loan Party or any

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Americas Subsidiary shall also include all payments made by such Person with any proceeds of a dissolution or liquidation of such Loan Party or such Americas Subsidiary.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

     “Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002, as amended and in effect from time to time.

     “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

     “Securities Laws” means, collectively, the Securities Act of 1933, the Securities Exchange Act of 1934, Sarbanes-Oxley, and the applicable accounting and auditing principles, rules, standards and practices promulgated, approved or incorporated by the SEC or the PCAOB; and all applicable securities laws in each province and territory of Canada and the respective regulations, rules regulations, blanket orders and blanket rulings under such laws together with applicable published policy statements and notices of the securities regulator of each such province and territory.

     “Security Agreement” means the Security Agreement dated as of the Closing Date among the Domestic Loan Parties and the Administrative Agent.

     “Security Documents” means the Security Agreement, the Canadian Security Documents, the Pledge Agreement, the Intellectual Property Security Agreement, the Blocked Account Agreements, the Credit Card Notifications, and each other security agreement or other instrument or document executed and delivered by or on behalf of any Loan Party to the Administrative Agent or the Canadian Agent pursuant to this Agreement or any other Loan Document granting a Lien to secure any of the Obligations or the Canadian Liabilities, as applicable.

     “Senior Note Indenture” means the Indenture, dated as of July 22, 2005, between the Parent as issuer and Wilmington Trust Company as trustee in connection with the issuance of the Senior Notes.

     “Senior Notes” means the senior unsecured notes issued by the Parent pursuant to the Senior Note Indenture.

     “Settlement Date” has the meaning provided in Section 2.12(a).

     “Shareholders’ Equity” means, as of any date of determination, consolidated shareholders’ equity of the Parent and its Subsidiaries, or the Parent and its Americas Subsidiaries, as applicable, as of that date determined in accordance with GAAP, as applicable.

     “Shrink” means Inventory of the Borrowing Base Parties which has been lost, misplaced, stolen, or is otherwise unaccounted for.

     “Societe Generale Agreement” means the Subscription Agreement, dated July 11, 2005, with QS Finance Luxembourg SA, as issuer, and Société Générale, as subscriber, relating to Indebtedness in an original aggregate principal amount of €50,000,000, as amended as the date hereof and any Permitted Amendment/Refinancing thereof.

     “Solvent” and “Solvency” means, with respect to any Person on a particular date, that on such date (a) at fair valuation, all of the properties and assets of such Person are greater than the sum of the

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debts, including contingent liabilities, of such Person, (b) the present fair saleable value of the properties and assets of such Person is not less than the amount that would be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its properties and assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature, (e) such Person is not engaged in a business or a transaction, and is not about to engage in a business or transaction, for which such Person’s properties and assets would constitute unreasonably small capital after giving due consideration to the prevailing practices in the industry in which such Person is engaged, and (f) such Person is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code and, in the case of any Canadian Loan Party, is not an “insolvent person” within the meaning of such term in the Bankruptcy and Insolvency Act (Canada), as applicable. The amount of all guarantees or other contingent liabilities at any time shall be computed as the amount that, in light of all the facts and circumstances existing at the time, can reasonably be expected to become an actual or matured liability.

     “Standby Letter of Credit” means any Letter of Credit that is not a Commercial Letter of Credit.

     “Stated Amount” means at any time, the maximum amount for which a Letter of Credit may be honored.

     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the FRB to which the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the FRB). Such reserve percentages shall include those imposed pursuant to such Regulation D. LIBO Rate Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

     “Store” means any retail store (which may include any real property, fixtures, equipment, inventory and other property related thereto) operated, or to be operated, by any Loan Party.

     “Subordinated Indebtedness” means Indebtedness which is expressly subordinated in right of payment to the prior payment in full of the Obligations and which is in form and on terms approved in writing by the Administrative Agent.

     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company, unlimited liability company or other business entity of which a majority of the shares of Equity Interests having ordinary voting power for the election of directors or other governing body are at the time beneficially owned, or the management of which is otherwise Controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of a Loan Party.

     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap

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transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Lender Affiliate of a Lender).

     “Swing Line” means the revolving credit facility made available by the Swing Line Lender pursuant to Section 2.04.

     “Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.

     “Swing Line Lender” means Bank of America, in its capacity as provider of Swing Line Loans to the Domestic Borrowers, and Bank of America-Canada Branch, in its capacity as provider of Swing Line Loans to the Canadian Borrower, or any successor swing line lender hereunder.

     “Swing Line Loan” has the meaning specified in Section 2.04(a), and shall include all such Loans made by the Swing Line Lender to the Domestic Borrowers and the Canadian Borrower.

     “Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b), which, if in writing, shall be substantially in the form of Exhibit B-1 (Domestic Swing Line Loan Notice) or Exhibit B-2 (Canadian Swing Line Loan Notice), as applicable.

     “Swing Line Note” means the Domestic Swing Line Note and the Canadian Swing Line Note, as the context may require.

     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

     “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

     “Term Loan Collateral Agent” means, collectively, (a) Rhône Group L.L.C., in its capacity as sub-agent for the U.S. Term Loan Agent, as collateral agent, together with any successor agent (including pursuant to any Permitted Amendment/Refinancing of the US Term Loan Credit Agreement) and (b)

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Rhône Group L.L.C., in its capacity as sub-agent for the Euro Term Loan Agent, as collateral agent, together with any successor agent (including pursuant to any Permitted Amendment/Refinancing of the Euro Term Loan Credit Agreement).

     “Term Loans” means the term loans in the original principal amount of $125,000,000 made pursuant to the US Term Loan Credit Agreement and €20,000,000 made pursuant to the Euro Term Loan Credit Agreement, in each case together with all interest paid in kind, if any, that has been added to the principal balance of such loans.

     “Term Loan Documents” means any and all documents executed in connection with the US Term Loan Credit Agreement or the Euro Term Loan Credit Agreement.

     “Termination Date” means the earliest to occur of (i) the Maturity Date, (ii) the date on which the maturity of the Obligations is accelerated (or deemed accelerated) and the Commitments are irrevocably terminated (or deemed terminated) in accordance with Article VIII, or (iii) the date of the occurrence of any Event of Default pursuant to Section ARTICLE VIII(f).

     “Total Canadian Outstandings” means, without duplication, the aggregate Outstanding Amount of all Canadian Loans and all Canadian L/C Obligations.

     “Total Domestic Outstandings” means, without duplication, the aggregate Outstanding Amount of all Domestic Loans and all Domestic L/C Obligations.

     “Total Loan Cap” means the aggregate of the Canadian Loan Cap and the Domestic Loan Cap.

     “Total Outstandings” means the aggregate of all Total Canadian Outstandings and all Total Domestic Outstandings.

     “Trading with the Enemy Act” has the meaning set forth in Section 0.

     “Type” means, with respect to a Committed Loan, its character as a Prime Rate Loan, a LIBO Rate Loan or a BA Equivalent Loan.

     “UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of New York and all terms used in this Agreement or any other Loan Document and not otherwise defined herein or therein shall have the respective meanings (if any) given such terms in the UCC; provided that, if a term is defined in Article 9 of the Uniform Commercial Code differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided further that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of a security interest in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

     “UFCA ” has the meaning specified in Section 10.08(d).

     “UFTA” has the meaning specified in Section 10.08(d).

     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets, determined in

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accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

     “United States” and “U.S.” mean the United States of America.

     “Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

     “US Term Loan Agent” means Rhône Group L.L.C., in its capacity as agent for the lenders under the US Term Loan Credit Agreement, together with any successor agent (including pursuant to any Permitted Amendment/Refinancing of the US Term Loan Credit Agreement).

     “US Term Loan Credit Agreement” means that certain Credit Agreement dated as of the Closing Date among the Parent, the Lead Borrower, the lenders party thereto and the US Term Loan Agent (and any Permitted Amendment/Refinancing thereof).

     “Wholly Owned Subsidiary” means, with respect to any Person, any corporation, partnership or other entity of which all of the Equity Interests (other than, in the case of a corporation, directors’ qualifying shares) are directly or indirectly owned or controlled by such Person or one or more Wholly Owned Subsidiaries of such Person or by such Person and one or more Wholly Owned Subsidiaries of such Person.

     Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

     (c) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, amended and restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, amendment and restatements, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

     (d) In the computation of periods of time from a specified date to a later specified date, unless otherwise expressly provided, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

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     (e) Article and Section headings used herein and in the other Loan Documents are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement or any other Loan Document.

     (f) Any other undefined term contained in any of the Loan Documents shall, unless the context indicates otherwise, have the meaning provided for such term in the Uniform Commercial Code as in effect in the State of New York or the PPSA, as the context may require, to the extent the same are used or defined therein.

     (g) Whenever any provision in any Loan Document refers to the knowledge (or an analogous phrase) of any Loan Party, such words are intended to signify that such Loan Party has actual knowledge or awareness of a particular fact or circumstance or that such Loan Party, if it had exercised reasonable diligence, would have known or been aware of such fact or circumstance.

     1.02 Accounting Terms; Currency Equivalents.

     (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

     (b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Lead Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Lead Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Lead Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

     Rounding. Any financial ratios required to be maintained by the Loan Parties pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

     Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

     Letter of Credit Amounts. Unless otherwise specified, all references herein to the amount of a Letter of Credit at any time shall be deemed to be the Stated Amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms of any Issuer Documents related thereto, provides for one or more automatic increases in the Stated Amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum Stated Amount of such Letter of

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Credit after giving effect to all such increases, whether or not such maximum Stated Amount is in effect at such time.

     1.03 Certifications.

     All certifications to be made hereunder by an officer or representative of a Loan Party shall be made by such Person in his or her capacity solely as an officer or a representative of such Loan Party, on such Loan Party’s behalf and not in such Person’s individual capacity.

     Currency Equivalents Generally. Any amount specified in this Agreement (other than in Articles II, IX and X, and except as may be calculated pursuant to the definitions of Equivalent Amount or Equivalent CD$ Amount) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Administrative Agent at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars. For purposes of this Section 1.08, the “Spot Rate” for a currency means the rate determined by the Administrative Agent to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Administrative Agent may obtain such spot rate from another financial institution designated by the Administrative Agent if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency. Notwithstanding the foregoing, for purposes of determining compliance with Sections 0, 0 and 0 with respect to any amount of Indebtedness or Investment in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness or Investment is incurred.

     Québec Matters. For purposes of any assets, liabilities or entities located in the Province of Québec and for all other purposes pursuant to which the interpretation or construction of this Agreement may be subject to the laws of the Province of Québec or a court or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall include “movable property”, (b) “real property” or “real estate” shall include “immovable property”, (c) “tangible property” shall include “corporeal property”, (d) “intangible property” shall include “incorporeal property”, (e) “security interest”, “mortgage” and “security” shall include a “hypothec”, “right of retention”, “prior claim” and a resolutory clause, (f) all references to filing, perfection, priority, remedies, registering or recording under the UCC or a PPSA shall include publication under the Civil Code of Québec, (g) all references to “perfection” of or “perfected” security or security interest shall include a reference to an “opposable” or “set up” hypothec, security or security interest as against third parties, (h) any “right of offset”, “right of setoff” or similar expression shall include a “right of compensation”, (i) “goods” shall include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, (j) an “agent” shall include a “mandatary”, (k) “construction security” shall include “legal hypothecs”, (l) “joint and several” shall include “solidary”, (m) “gross negligence or willful misconduct” shall be deemed to be “intentional or gross fault”, (n) “beneficial ownership” shall include “ownership on behalf of another as mandatary”; (o) “easement” shall include “servitude”, (p) “priority” shall include “prior claim”, (q) “survey” shall include “certificate of location and plan”, (r) “state” shall include “province”, (s) “fee simple title” shall include “absolute ownership”, and (t) “accounts” shall include “claims”.

ARTICLE II
THE COMMITMENTS AND CREDIT EXTENSIONS

     2.01 Committed Loans; Reserves.

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          (a) Subject to the terms and conditions set forth herein, each Domestic Lender severally agrees to make Committed Domestic Loans to the Domestic Borrowers from time to time, on any Business Day during the Availability Period, in an aggregate principal amount not to exceed at any time outstanding the lesser of (x) the amount of the Domestic Commitment of such Domestic Lender, or (y) the Applicable Percentage of the Domestic Borrowing Base for such Domestic Lender; subject in each case to the following limitations:

          (i) after giving effect to any Committed Domestic Borrowing, the Total Domestic Outstandings shall not exceed the Domestic Loan Cap,

          (ii) after giving effect to any Committed Domestic Borrowing, the aggregate Outstanding Amount of the Committed Domestic Loans of any Domestic Lender, plus (without duplication) the Applicable Percentage of the Outstanding Amount of all Domestic L/C Obligations for such Domestic Lender, plus such Domestic Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans made to the Domestic Borrowers shall not exceed the Domestic Commitment of such Domestic Lender, and

          (iii) the Outstanding Amount of all Domestic L/C Obligations shall not at any time exceed the Domestic Letter of Credit Sublimit. Within the limits of the Domestic Commitment for each Domestic Lender, and subject to the other terms and conditions hereof, the Domestic Borrowers may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Committed Domestic Loans may be Domestic Prime Rate Loans or LIBO Rate Loans, as further provided herein.

          (b) Subject to the terms and conditions set forth herein, each Canadian Lender severally agrees to make Committed Canadian Loans to the Canadian Borrower from time to time, on any Business Day during the Availability Period, in an aggregate principal amount not to exceed at any time outstanding the lesser of (x) the amount of the Canadian Commitment of such Canadian Lender, or (y) the Applicable Percentage of the Canadian Borrowing Base for such Canadian Lender; subject in each case to the following limitations:

          (i) after giving effect to any Committed Canadian Borrowing, the Total Canadian Outstandings shall not exceed the Canadian Loan Cap,

          (ii) after giving effect to any Committed Canadian Borrowing, the aggregate Outstanding Amount of the Committed Canadian Loans of any Canadian Lender, plus (without duplication) the Applicable Percentage of the Outstanding Amount of all Canadian L/C Obligations for such Canadian Lender, plus such Canadian Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans made to the Canadian Borrower, shall not exceed the Canadian Commitment of such Canadian Lender, and

          (iii) the Outstanding Amount of all Canadian L/C Obligations shall not at any time exceed the Canadian Letter of Credit Sublimit.

Within the limits of the Canadian Commitment for each Canadian Lender, and subject to the other terms and conditions hereof, the Canadian Borrower may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Committed Canadian Loans may be Canadian Prime Rate Loans, LIBO Rate Loans (if in Dollars) or BA Equivalent Loans, as further provided herein.

          (c) The following are the Inventory Reserves and Availability Reserves as of the Closing Date:

          (i) Shrink (an Inventory Reserve): In the amounts set forth on the Borrowing Base Certificate delivered on the Closing Date;

          (ii) Domestic Rent (an Availability Reserve): An amount equal to two (2) months’ rent for all of the Domestic Borrowers’ leased locations in each Landlord Lien State in the United States, other than leased locations with respect to which the Administrative Agent has received a Collateral Access Agreement (to be deducted from the Domestic Borrowing Base);

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          (iii) Canadian Rent (an Availability Reserve): An amount equal to two (2) months’ rent for all of the Canadian Loan Parties’ leased locations in each Landlord Lien State in Canada, other than leased locations with respect to which the Canadian Agent has received a Collateral Access Agreement (to be deducted from the Canadian Borrowing Base);

          (iv) Customer Deposit Liabilities (an Availability Reserve): An amount equal to one hundred percent (100%) of the customer deposits with the Domestic Borrowers (to be deducted from the Domestic Borrowing Base) and an amount equal to one hundred percent (100%) of the customer deposits with the Canadian Loan Parties (to be deducted from the Canadian Borrowing Base); and

          (v) Gift Certificate and Card Liabilities (an Availability Reserve): An amount equal to fifty percent (50%) of the Customer Credit Liabilities related to gift certificates or gift cards as reflected in the Domestic Borrowers’ books and records (to be deducted from the Domestic Borrowing Base) and an amount equal to fifty percent (50%) of the Customer Credit Liabilities related to gift certificates or gift cards as reflected in the Canadian Loan Parties’ books and records (to be deducted from the Canadian Borrowing Base).

          (vi) Other Reserves: As set forth on the Borrowing Base Certificate delivered on the Closing Date.

          (d) Subject to the provisions of Section 0, any Agent and, if applicable, the Canadian Agent, shall have the right, at any time and from time to time after the Closing Date, in its Permitted Discretion to establish new, or modify or eliminate any existing Reserves.

     2.02 Committed Borrowings, Conversions and Continuations of Committed Loans.

          (a) Committed Domestic Loans shall be either Domestic Prime Rate Loans or LIBO Rate Loans, as the Lead Borrower or the Parent, on behalf of the Domestic Borrowers, may request subject to and in accordance with this Section 2.02. All Swing Line Loans made to the Domestic Borrowers shall be only Domestic Prime Rate Loans. Committed Canadian Loans shall be either Canadian Prime Rate Loans, LIBO Rate Loans (if in Dollars) or BA Equivalent Loans, as the Canadian Borrower or the Parent, on behalf of the Canadian Borrower, may request subject to and in accordance with this Section 2.02. All Swing Line Loans made to the Canadian Borrower shall be only Canadian Prime Rate Loans. Subject to the other provisions of this Section 2.02, Committed Borrowings of more than one Type may be incurred at the same time.

          (b) Each Committed Borrowing, each conversion of a Committed Loan from one Type to the other, and each continuation of LIBO Rate Loans and BA Equivalent Loans shall be made upon the irrevocable notice of the Lead Borrower or the Parent on behalf of the Domestic Borrowers or the Canadian Borrower or the Parent on behalf of the Canadian Borrower, as applicable, to the Administrative Agent or the Canadian Agent, as applicable, which may be given by telephone. Each such notice must be received by the Administrative Agent or the Canadian Agent, as applicable, not later than 11:00 a.m. (i) three Business Days prior to the requested date of any Committed Borrowing of, conversion to or continuation of LIBO Rate Loans or BA Equivalent Loans, or of any conversion of (x) LIBO Rate Loans to Domestic Prime Rate Loans or, (in the case of the Canadian Borrower), to Canadian Prime Rate Loans or (y) BA Equivalent Loans to Canadian Prime Rate Loans, and (ii) one Business Day prior to the requested date of any Committed Borrowing of either Canadian Prime Rate Loans or Domestic Prime Rate Loans. Each telephonic notice by the Lead Borrower, the Parent or the Canadian Borrower pursuant to this Section 2.02(b) must be confirmed promptly by delivery to the Administrative Agent or the Canadian Agent, as applicable, of a written Committed Loan Notice, appropriately completed and signed by a Responsible Officer of the Lead Borrower, the Parent or the Canadian Borrower, as applicable. Each Committed Borrowing of, conversion to or continuation of LIBO Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof. Each Committed Borrowing of, conversion to or continuation of BA Equivalent Loans shall be in a principal amount of CD$500,000 or a whole multiple of CD$100,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c), each Committed Borrowing of or conversion to Canadian Prime

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Rate Loans or Domestic Prime Rate Loans, as applicable, shall be in a principal amount of $500,000 or CD$500,000, as applicable, or a whole multiple of $100,000 or CD$100,000, as applicable, in excess thereof. Each Committed Loan Notice (whether telephonic or written) shall specify (i) whether the request is for a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of LIBO Rate Loans or BA Equivalent Loans, (ii) the requested date of the Committed Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of Committed Loans to be borrowed, converted or continued, (iv) the Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted, and (v) if applicable, the duration of the Interest Period with respect thereto. If the request fails to specify a Type of Committed Loan in a Committed Loan Notice or if the Lead Borrower, the Parent or the Canadian Borrower, as the case may be, fails to give a timely notice of a conversion or continuation of a LIBO Rate Loan or a BA Equivalent Loan, then the applicable Committed Loans shall be made as, or converted to, Domestic Prime Rate Loans or Canadian Prime Rate Loans, as applicable. Any such automatic conversion to Prime Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable LIBO Rate Loans or BA Equivalent Loans. If the Lead Borrower requests a Committed Borrowing of, conversion to, or continuation of LIBO Rate Loans or the Canadian Borrower requests a Committed Borrowing of, conversion to, or continuation of LIBO Rate Loans or BA Equivalent Loans in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. Notwithstanding anything to the contrary herein, a Swing Line Loan may not be converted to a LIBO Rate Loan or a BA Equivalent Loan.

          (c) Following receipt of a Committed Loan Notice, the Administrative Agent or the Canadian Agent, as applicable, shall promptly notify each Lender of the amount of its Applicable Percentage of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Lead Borrower or the Parent, on behalf of the Domestic Borrower or by the Parent on behalf of the Canadian Borrower, the Administrative Agent or the Canadian Agent, as applicable, shall notify each Lender of the details of any automatic conversion to Prime Rate Loans described in Section 2.02(b). In the case of a Committed Domestic Borrowing, each Domestic Lender shall make the amount of its Committed Domestic Loan available to the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in the applicable Committed Loan Notice. In the case of a Committed Canadian Borrowing, each Canadian Lender shall make the amount of its Committed Canadian Loan available to the Canadian Agent in immediately available funds at the Canadian Agent’s Office not later than 1:00 p.m. (Toronto time) on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 0 (and, if such Committed Borrowing is the initial Credit Extension, Section 0), the Administrative Agent or the Canadian Agent, as applicable, shall use reasonable efforts to make all funds so received available to the applicable Borrowers in like funds by no later than 4:00 p.m. (and, if such Borrowing is the initial Credit Extension, 4:00 p.m.) on the day of receipt by the Administrative Agent or the Canadian Agent, as applicable, either by (i) crediting either the account of the Lead Borrower or the Canadian Borrower, as applicable, on the books of Bank of America, with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent (by the Lead Borrower) or the Canadian Agent (by the Canadian Borrower); provided, however, that (A) if, on the date a Committed Loan Notice with respect to a Committed Canadian Borrowing is given by the Parent on behalf of the Canadian Borrower or the Canadian Borrower, as applicable, there are Canadian L/C Borrowings outstanding, then the proceeds of such Committed Canadian Borrowing, first, shall be applied to the payment in full of any such Canadian L/C Borrowings, and second, shall be made available to the Canadian Borrower as provided above; or (B) if, on the date a Committed Loan Notice with respect to a Committed Domestic Borrowing is given by the Lead Borrower or the Parent on behalf of the Domestic Borrowers, there are Domestic L/C Borrowings outstanding, then the proceeds of such Committed Domestic Borrowing, first, shall be applied to the payment in full of any such Domestic L/C Borrowings, and second, shall be made available to the Domestic Borrowers as provided above.

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          (d) In the event that the Domestic Borrowers, after receipt of an invoice therefor, fail to pay any interest, fee, service charge, Credit Party Expenses, or other payment to which any Lender or any Agent is entitled from the Domestic Loan Parties pursuant hereto when due, or at any time after the occurrence and during the continuance of a Cash Dominion Event, or the Administrative Agent’s reasonable determination that an Event of Default is likely to occur, the Administrative Agent, without the request of the Lead Borrower, may advance such interest, fee, service charge, Credit Party Expenses, or other payment to which any Lender or any Agent is entitled from the Domestic Loan Parties pursuant hereto or any other Loan Document and may charge the same to the Loan Account with respect to the Domestic Credit Extensions, notwithstanding that a Domestic Overadvance may result thereby. In the event that the Canadian Borrower, after receipt of an invoice therefor, fail to pay any interest, fee, service charge, Credit Party Expenses, or other payment to which any Lender or any Agent or the Canadian Agent is entitled from the Canadian Loan Parties pursuant hereto when due, or at any time after the occurrence and during the continuance of a Cash Dominion Event, or the Administrative Agent’s reasonable determination that an Event of Default is likely to occur, the Canadian Agent, without the request of the Parent on behalf of the Canadian Borrower or the Canadian Borrower, may advance such interest, fee, service charge, Credit Party Expenses, or other payment to which any Lender, any Agent or the Canadian Agent is entitled from the Canadian Loan Parties pursuant hereto or any other Loan Document and may charge the same to the Loan Account with respect to the Canadian Credit Extensions, as applicable, notwithstanding that a Canadian Overadvance may result thereby. The Administrative Agent shall advise the Lead Borrower of any such advance or charge by the Administrative Agent promptly after the making thereof, and the Canadian Agent shall advise the Canadian Borrower of any such advance or charge by the Canadian Agent promptly after the making thereof. Such action on the part of the Administrative Agent or the Canadian Agent shall not constitute a waiver of the applicable Credit Party’s rights and the applicable Borrowers’ obligations under Section 2.05(c). Any amount which is added to the principal balance of the applicable Loan Account as provided in this Section 2.02(d) shall be deemed to be a Domestic Prime Rate Loan or a Canadian Prime Rate Loan, as applicable.

          (e) Except as otherwise provided herein, a LIBO Rate Loan or a BA Equivalent Loan may be continued or converted only on the last day of an Interest Period for such LIBO Rate Loan or BA Equivalent Loan. During the existence of an Event of Default, no Loans may be requested as, converted to or continued as LIBO Rate Loans or BA Equivalent Loans without the Consent of the Required Lenders.

          (f) The Administrative Agent shall promptly notify the Lead Borrower and the applicable Lenders of the interest rate applicable to any Interest Period for LIBO Rate Loans upon determination of such interest rate. At any time that Domestic Prime Rate Loans are outstanding, the Administrative Agent shall notify the Lead Borrower and the Domestic Lenders of any change in Bank of America’s prime rate used in determining the Prime Rate promptly following the public announcement of such change.

          (g) The Canadian Agent shall promptly notify the Canadian Borrower and the Canadian Lenders of the interest rate applicable to any Interest Period for BA Equivalent Loans upon determination of such interest rate. At any time that Canadian Prime Rate Loans are outstanding, the Canadian Agent shall notify the Canadian Borrower and the Canadian Lenders of any change in Bank of America-Canada Branch’s prime rate used in determining the Canadian Prime Rate promptly following the public announcement of such change.

          (h) After giving effect to all Committed Borrowings, all conversions of Committed Loans from one Type to the other, and all continuations of Committed Loans as the same Type, there shall not be more than ten (10) Interest Periods in effect with respect to Committed Loans.

          (i) The Administrative Agent, the Canadian Agent, the Lenders, the Swing Line Lender and the L/C Issuer shall have no obligation to make any Loan or to provide any Letter of Credit if an Overadvance would result. The Administrative Agent may, in its Permitted Discretion, make Permitted Domestic Overadvances without the consent of the Lenders, the Swing Line Lender and the L/C Issuer and each Domestic Lender shall be bound thereby. The Canadian Agent may, in its Permitted

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Discretion, make Permitted Canadian Overadvances without the consent of the Lenders, the Swing Line Lender and the L/C Issuer and each Canadian Lender shall be bound thereby. Any Permitted Overadvance may constitute a Swing Line Loan. A Permitted Domestic Overadvance is for the account of the Domestic Borrowers and shall constitute a Domestic Prime Rate Loan and an Obligation and shall be repaid by the Domestic Borrowers in accordance with the provisions of Section 2.05(c). A Permitted Canadian Overadvance is for the account of the Canadian Borrower and shall constitute a Canadian Prime Rate Loan and a Canadian Liability and shall be repaid by the Canadian Borrower in accordance with the provisions of Section 2.05(c). The making of any such Permitted Overadvance on any one occasion shall not obligate the Administrative Agent, the Canadian Agent or any Lender to make or permit any Permitted Overadvance on any other occasion or to permit such Permitted Overadvances to remain outstanding. The making by the Administrative Agent or the Canadian Agent, as applicable, of a Permitted Overadvance shall not modify or abrogate any of the provisions of Section 2.03 regarding the Lenders’ obligations to purchase participations with respect to Letters of Credit or of Section 2.04 regarding the Lenders’ obligations to purchase participations with respect to Swing Line Loans. Neither the Administrative Agent nor the Canadian Agent shall have any liability for, and no Loan Party or Credit Party shall have the right to, or shall, bring any claim of any kind whatsoever against the Administrative Agent or the Canadian Agent with respect to “inadvertent Overadvances” (i.e. where an Overadvance results from changed circumstances beyond the control of the Administrative Agent or the Canadian Agent (such as a reduction in the Collateral value)) regardless of the amount of any such Overadvance(s).

     2.03 Letters of Credit.

          (a) The Letter of Credit Commitment.

     Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Closing Date until the Letter of Credit Expiration Date, to issue Letters of Credit for the account of any Borrower (provided that any Canadian Letter of Credit may be for the benefit of any Canadian Loan Party), and to amend or extend Letters of Credit previously issued by it, in accordance with Section 2.03(b) below, and (2) to honor drawings under the Letters of Credit; (B) each Domestic Lender severally agrees to participate in Domestic Letters of Credit and any drawings thereunder; provided that, after giving effect to any L/C Credit Extension with respect to any Domestic Letter of Credit, (x) the Total Domestic Outstandings shall not exceed the Domestic Loan Cap, (y) the aggregate Outstanding Amount of the Committed Domestic Loans of any Domestic Lender, plus (without duplication) such Domestic Lender’s Applicable Percentage of the Outstanding Amount of all Domestic L/C Obligations, plus such Domestic Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans made to the Domestic Borrowers shall not exceed such Domestic Lender’s Domestic Commitment, and (z) the Outstanding Amount of the Domestic L/C Obligations shall not exceed the Domestic Letter of Credit Sublimit; and (C) each Canadian Lender severally agrees to participate in Canadian Letters of Credit and any drawings thereunder; provided that, after giving effect to any Canadian L/C Credit Extension, (x) the Total Canadian Outstandings shall not exceed the Canadian Loan Cap, (y) the aggregate Outstanding Amount of the Committed Canadian Loans of such Canadian Lender, plus (without duplication) such Canadian Lender’s Applicable Percentage of the Outstanding Amount of all Canadian L/C Obligations, plus such Canadian Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans made to the Canadian Borrower shall not exceed such Canadian Lender’s Canadian Commitment, and (z) the Outstanding Amount of the Canadian L/C Obligations shall not exceed the Canadian Letter of Credit Sublimit. Each request by the Lead Borrower or the Canadian Borrower, as applicable, for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Domestic Borrowers or the Canadian Borrower, as applicable, that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, each Borrower’s ability to obtain Letters of Credit shall be fully revolving, and accordingly such Borrower may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been

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drawn upon and reimbursed. Any L/C Issuer (other than Bank of America or any of its Lender Affiliates) shall notify the Administrative Agent or the Canadian Agent, as applicable, in writing on each Business Day of all Letters of Credit issued on the prior Business Day by such L/C Issuer, provided that (i) until the Administrative Agent advises any such L/C Issuer that the provisions of Section 4.02 are not satisfied, or (ii) the aggregate amount of the Letters of Credit issued in any such week exceeds such amount as shall be agreed by the Administrative Agent and the L/C Issuer, such L/C Issuer shall be required to so notify the Administrative Agent in writing only once each week of the Letters of Credit issued by such L/C Issuer during the immediately preceding week as well as the daily amounts outstanding for the prior week, such notice to be furnished on such day of the week as the Administrative Agent and such L/C Issuer may agree.

               (i) The L/C Issuer shall not issue any Letter of Credit, if:

               (A) subject to Section 2.03(b)(iii), the expiry date of such requested Standby Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

               (B) subject to Section 2.03(b)(iii), the expiry date of such requested Commercial Letter of Credit would occur more than 180 days after the date of issuance or last extension, unless the Required Lenders have approved such expiry date; or

               (C) the expiry date of such requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless either such Letter of Credit is Cash Collateralized on or prior to the Letter of Credit Expiration Date or all the Lenders have approved such expiry date.

               (ii) The L/C Issuer shall not issue any Letter of Credit without the prior consent of the Administrative Agent or the Canadian Agent, as applicable, if:

          (A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing such Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the L/C Issuer with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the L/C Issuer in good faith deems material to it;

          (B) the issuance of such Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;

          (C) except as otherwise agreed by the Administrative Agent or the Canadian Agent, as applicable, and the L/C Issuer, such Letter of Credit is in an initial Stated Amount less than $25,000 or CD$25,000, as applicable, in the case of a Commercial Letter of Credit, or $100,000 or CD$100,000, as applicable, in the case of a Standby Letter of Credit;

          (D) such Letter of Credit is to be denominated in a currency other than Dollars or, in the case of any Canadian Letter of Credit, Canadian Dollars; provided that if the L/C Issuer, in its discretion, issues a Letter of Credit denominated in a currency other than Dollars, all reimbursements by the applicable Borrowers of the honoring of any drawing under such Letter of Credit shall be paid in the currency in which such Letter of Credit was denominated;

          (E) such Letter of Credit contains any provisions for automatic reinstatement of the Stated Amount after any drawing thereunder; or

          (F) a default of any Lender’s obligations to fund under Section 2.03(c) exists or any Lender is at such time a Defaulting Lender or Deteriorating Lender hereunder, unless the L/C Issuer has received Cash Collateral or otherwise entered into

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arrangements satisfactory to the L/C Issuer with the applicable Borrowers or such Lender to eliminate the L/C Issuer’s risk with respect to such Lender.

               (iii) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue such Letter of Credit in its amended form under the terms hereof or if the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

               (iv) The L/C Issuer shall act on behalf of the applicable Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent and the Canadian Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the terms “Administrative Agent” and “Canadian Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.

          (b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.

               (i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Lead Borrower or the Parent on behalf of the Domestic Borrowers, or the Canadian Borrower or Parent on behalf of the Canadian Borrower, as applicable, delivered to the L/C Issuer (with a copy to the Administrative Agent and, if applicable, the Canadian Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Lead Borrower or the Parent or the Canadian Borrower, as applicable. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent and, if applicable, the Canadian Agent, not later than 11:00 a.m. at least two (2) Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the L/C Issuer: (A) whether such Letter of Credit is to be a Domestic Letter of Credit or a Canadian Letter of Credit, and the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the identity of the Borrower for the account of which such Letter of Credit is requested to be issued; and (H) such other matters as the L/C Issuer may reasonably require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail reasonably satisfactory to the L/C Issuer: (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, the Lead Borrower or the Canadian Borrower, as applicable, shall furnish to the L/C Issuer and the Administrative Agent and, if applicable, the Canadian Agent, such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer, the Administrative Agent or the Canadian Agent may require.

               (ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent and, if applicable, the Canadian Agent (by telephone or in writing) that the Administrative Agent and, if applicable, the Canadian Agent has received a copy of such Letter of Credit Application from the Lead Borrower or the Canadian Borrower, as applicable, and, if not, the L/C Issuer will provide the Administrative Agent and, if applicable, the Canadian Agent, with a copy thereof. Unless the L/C Issuer has received written notice from any Lender, the Administrative Agent, the Canadian Agent or any Loan Party, at least one (1) Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the

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L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the applicable Borrower or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance or amendment of each Letter of Credit, each Domestic Lender or each Canadian Lender, as applicable, shall be deemed to (without any further action), and hereby irrevocably and unconditionally severally agrees to, purchase from the L/C Issuer, without recourse or warranty, a risk participation in such Letter of Credit in an amount equal to the product of such Lender’s Applicable Percentage times the Stated Amount of such Letter of Credit. Upon any change in the Domestic Commitments or the Canadian Commitments under this Agreement, it is hereby agreed that with respect to all L/C Obligations, there shall be an automatic adjustment to the participations hereby created to reflect the new Applicable Percentages of the assigning and assignee Lenders.

               (iii) If the Lead Borrower on behalf of the Domestic Borrowers, or the Canadian Borrower, as applicable, so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole and absolute discretion, agree to issue a Standby Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Standby Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Standby Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Lead Borrower or the Canadian Borrower, as applicable, shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Standby Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Standby Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clauses (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Lenders have elected not to permit such extension or (2) from the Administrative Agent, the Canadian Agent, any Lender or the Lead Borrower that one or more of the applicable conditions specified in Section 0 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.

               (iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Lead Borrower and the Administrative Agent and, if applicable, the Canadian Agent, a true and complete copy of such Letter of Credit or amendment.

          (c) Drawings and Reimbursements; Funding of Participations.

               (i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Lead Borrower or the Canadian Borrower, as applicable, and the Administrative Agent and, if applicable, the Canadian Agent, thereof; provided, however, that any failure to give or delay in giving such notice shall not relieve the applicable Borrower of its obligation to reimburse the L/C Issuer and the applicable Lenders with respect to any such payment. Not later than 11:00 a.m. on the first (1^st) Business Day after the date of any payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor Date”), the applicable Borrower shall reimburse the L/C Issuer through the Administrative Agent or the Canadian Agent, as applicable, in an aggregate principal amount equal to the amount of such drawing. If such Borrower fails to so reimburse the L/C Issuer by such time, the Administrative Agent or the Canadian Agent, as applicable, shall promptly notify each Domestic Lender or each Canadian Lender, as applicable, of the Honor Date, the amount of the unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such event, the Domestic Borrowers or the Canadian Borrower, as

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applicable, shall be deemed to have requested a Committed Borrowing of Domestic Prime Rate Loans or Canadian Prime Rate Loans, as applicable, to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Prime Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Domestic Commitments or the Aggregate Canadian Commitments, as applicable, and the conditions set forth in Section 0 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer, the Administrative Agent or the Canadian Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

               (ii) Each Lender shall upon any notice delivered pursuant to Section 2.03(c)(i) make funds available to the Administrative Agent or the Canadian Agent, as applicable, for the account of the L/C Issuer at the Administrative Agent’s Office or the Canadian Agent’s Office, as applicable, in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent or the Canadian Agent, as applicable, whereupon, subject to the provisions of Section 2.03(c)(iii), each Lender that so makes funds available shall be deemed to have made a Domestic Prime Rate Loan to the Domestic Borrowers, or a Canadian Prime Rate Loan to the Canadian Borrower, as applicable, in such amount. The Administrative Agent or the Canadian Agent, as applicable, shall remit the funds so received to the L/C Issuer.

               (iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Prime Rate Loans because the conditions set forth in Section 0 cannot be satisfied or for any other reason, the Domestic Borrowers or the Canadian Borrower, as applicable, shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligation under this Section 2.03.

               (iv) Until each applicable Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.

               (v) Each Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, any Borrower or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 0 (other than delivery of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Borrowers to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.

               (vi) If any Lender fails to make available to the Administrative Agent or the Canadian Agent, as applicable, for the account of the L/C Issuer any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), the L/C Issuer shall be entitled to recover from such Lender (acting through the Administrative Agent or the Canadian Agent, as applicable), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the greater of the Federal Funds Rate, with respect to the Administrative Agent or payments due to the Canadian Agent in Dollars, and the

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Bank of Canada Overnight Rate with respect to payments due to the Canadian Agent in Canadian Dollars, and a rate determined by the L/C Issuer in accordance with banking industry rules on interbank compensation plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any Lender (through the Administrative Agent or the Canadian Agent, as applicable) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.

          (d) Repayment of Participations.

               (i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any Lender such Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent or the Canadian Agent, as applicable, receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the applicable Borrowers or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent or the Canadian Agent, as applicable), the Administrative Agent or the Canadian Agent, as applicable, will distribute to such Lender its Applicable Percentage thereof (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s L/C Advance was outstanding) in the same funds as those received by the Administrative Agent or the Canadian Agent, as applicable.

               (ii) If any payment received by the Administrative Agent or the Canadian Agent, as applicable, for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 0 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each Domestic Lender or Canadian Lender, as applicable, shall pay to the Administrative Agent or the Canadian Agent, as applicable, for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent or the Canadian Agent, as applicable, plus interest thereon from the date of such demand to the date such amount is returned by such Lender, at a rate per annum equal to the Federal Funds Rate, with respect to the Administrative Agent or payments due to the Canadian Agent in Dollars, and the Bank of Canada Overnight Rate with respect to payments due to the Canadian Agent in Canadian Dollars, from time to time in effect. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

          (e) Obligations Absolute. The obligation of each Borrower to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:

               (i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;

               (ii) the existence of any claim, counterclaim, setoff, defense or other right that any Borrower or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;

               (iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;

               (iv) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a

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trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;

               (v) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, any Borrower or any of their respective Subsidiaries; or

               (vi) the fact that any Event of Default shall have occurred and be continuing.

     The Lead Borrower or the Canadian Borrower, as applicable, shall promptly examine a copy of each Domestic Letter of Credit or each Canadian Letter of Credit, as applicable, and each amendment thereto that is delivered to such Person and, in the event of any claim of noncompliance with the Lead Borrower’s or the Canadian Borrower’s, as applicable, instructions or other irregularity, the Lead Borrower or the Canadian Borrower, as applicable, will promptly notify the L/C Issuer. The Borrowers shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.

          (f) Role of L/C Issuer. Each Lender and the Borrowers agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, the Canadian Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the Lenders or the Required Lenders, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; (iii) any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit or any error in interpretation of technical terms; or (iv) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrowers hereby assume all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Borrowers’ pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, the Canadian Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (v) of Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Borrowers may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Borrowers, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrowers which the Borrowers prove were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary (or the L/C Issuer may refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit), and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

          (g) Cash Collateral. Upon the written request of the Administrative Agent or the Canadian Agent, as applicable, if, as of the Letter of Credit Expiration Date, any L/C Obligation (other than L/C Borrowings) for any reason remains outstanding, then, the Domestic Borrowers shall, in each case, promptly Cash Collateralize the then Outstanding Amount of all Domestic L/C Obligations (other

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than Domestic L/C Borrowings) and the Canadian Borrower shall, in each case, promptly Cash Collateralize the then Outstanding Amount of all Canadian L/C Obligations (other than Canadian L/C Borrowings). Sections 2.05 and 8.02(c) set forth certain additional requirements to deliver Cash Collateral hereunder. For purposes of this Section 2.03, Section 2.05 and Section 8.02(c), “Cash Collateralize” means to pledge and deposit into the applicable Cash Collateral Account or deliver to the Administrative Agent or the Canadian Agent, as applicable, for the benefit of the L/C Issuer and the Domestic Lenders or the Canadian Lenders, as applicable, as collateral for the Domestic L/C Obligations or the Canadian L/C Obligations, as applicable, cash or deposit account balances in an amount equal to one hundred eight percent (108%) of the Outstanding Amount of all Domestic L/C Obligations (other than Domestic L/C Borrowings) or the Canadian L/C Obligations (other than Canadian L/C Borrowings), as applicable, pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent or the Canadian Agent, as applicable, and the L/C Issuer (which documents are hereby Consented to by the Lenders). Derivatives of such term have corresponding meanings. The Domestic Borrowers hereby grant to the Administrative Agent (for the benefit of itself and the other Credit Parties) a security interest in all such cash, deposit accounts and all balances in the Cash Collateral Account established by the Domestic Loan Parties and all proceeds of the foregoing to secure the Secured Obligations (as defined in the Security Agreement) of the Domestic Loan Parties. The Canadian Loan Parties hereby grant to the Canadian Agent a security interest in all such cash, deposit accounts and all balances in the Cash Collateral Account established by the Canadian Loan Parties and all proceeds of the foregoing to secure the Canadian Liabilities. Cash Collateral shall be maintained in blocked, interest-bearing deposit accounts at Bank of America or Bank of America-Canada Branch, as applicable. If at any time the Administrative Agent reasonably determines that any funds held by it as Cash Collateral are subject to any right or claim of any Person other than the Administrative Agent (for the benefit of itself and the other Domestic Credit Parties) and the US Term Loan Agent (subject to the Intercreditor Agreement) or that the total amount of such funds is less than 108% of the aggregate Outstanding Amount of all Domestic L/C Obligations (other than Domestic L/C Borrowings), the Domestic Borrowers will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (x) such aggregate Outstanding Amount of all Domestic L/C Obligations (other than Domestic L/C Borrowings) over (y) the total amount of funds, if any, then held by the Administrative Agent as Cash Collateral that the Administrative Agent reasonably determines to be free and clear of any such right and claim. If at any time the Canadian Agent reasonably determines that any funds held by it as Cash Collateral are subject to any right or claim of any Person other than the Canadian Agent (for the benefit of itself and the other Canadian Credit Parties) or that the total amount of such funds is less than 108% of the aggregate Outstanding Amount of all Canadian L/C Obligations (other than Canadian L/C Borrowings), the Canadian Borrower will, forthwith upon demand by the Canadian Agent, pay to the Canadian Agent, as additional funds to be deposited as Cash Collateral, an amount equal to the excess of (x) such aggregate Outstanding Amount of all Canadian L/C Obligations (other than Canadian L/C Borrowings) over (y) the total amount of funds, if any, then held by the Canadian Agent as Cash Collateral that the Canadian Agent reasonably determines to be free and clear of any such right and claim. Upon the drawing of any Letter of Credit for which funds are on deposit as Cash Collateral, such funds shall be applied, to the extent permitted under applicable Laws, to reimburse the L/C Issuer and, to the extent not so applied, shall thereafter be applied to satisfy other Obligations in the manner specified in Section 2.05 and Section 8.03.

          (h) Applicability of ISP and UCP. Unless otherwise expressly agreed by the L/C Issuer and the Lead Borrower or the Canadian Borrower, as applicable, when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each Standby Letter of Credit, and (ii) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance shall apply to each Commercial Letter of Credit.

          (i) Letter of Credit Fees. The Domestic Borrowers shall pay to the Administrative Agent for the account of the Domestic Lenders, and the Canadian Borrower shall pay to the Canadian Agent, for the account of the Canadian Lenders, as applicable, each in accordance with its Applicable

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Percentage, a Letter of Credit fee (the “Letter of Credit Fee”) for (i) in the case of the Letter of Credit Fee payable by the Domestic Borrowers, each Domestic Letter of Credit equal to the Applicable Rate multiplied by the daily Stated Amount under each such Domestic Letter of Credit (whether or not such maximum amount is then in effect under such Domestic Letter of Credit) and (ii) in the case of the Letter of Credit Fee payable by the Canadian Borrower, each Canadian Letter of Credit equal to the Applicable Rate multiplied by the daily Stated Amount under each such Canadian Letter of Credit (whether or not such maximum amount is then in effect under such Canadian Letter of Credit). For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of the Letter of Credit shall be determined in accordance with Section 0. Letter of Credit Fees shall be (i) due and payable on the last Business Day of each calendar quarter, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand, and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, while any Event of Default exists, Administrative Agent may, and upon the request of the Required Lenders shall, notify the Lead Borrower that all Letter of Credit Fees shall accrue at the Default Rate and thereafter such Letter of Credit Fees shall accrue at the Default Rate to the fullest extent permitted by applicable Law so long as such Event of Default is continuing.

          (j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Domestic Borrowers and the Canadian Borrower, as applicable, shall pay directly to the L/C Issuer for its own account a fronting fee (the “Fronting Fee”) (i) with respect to each Commercial Letter of Credit, at a rate equal to 0.125% per annum, computed on the amount of such Letter of Credit, and payable on a quarterly basis in arrears, and (ii) with respect to each Standby Letter of Credit, at a rate equal to 0.125% per annum, computed on the daily amount available to be drawn under such Letter of Credit and payable on a quarterly basis in arrears. Such Fronting Fees shall be due and payable on the last Business Day of each calendar quarter, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of the Letter of Credit shall be determined in accordance with Section 0. In addition, the Domestic Borrowers shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to Domestic Letters of Credit as from time to time in effect. In addition, the Canadian Borrower shall pay directly to the L/C Issuer for its own account the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to Canadian Letters of Credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.

          (k) Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

     2.04 Swing Line Loans.

          (a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing Line Lender agrees, in reliance upon the agreements of the other Lenders set forth in this Section 2.04, to from time to time on any Business Day during the Availability Period, make loans (each such loan, a “Swing Line Loan”) (i) to the Domestic Borrowers in an aggregate principal amount not to exceed at any time outstanding the amount of the Domestic Swing Line Sublimit, notwithstanding the fact that the Outstanding Amount of such Swing Line Loans made to the Domestic Borrowers, when aggregated with the Applicable Percentage of the Outstanding Amount of Committed Domestic Loans and Domestic L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Domestic Commitment; provided, however, that after giving effect to any Swing Line Loan made to the Domestic Borrowers, (x) the Total Domestic Outstandings shall not exceed the Domestic Loan Cap, and

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(y) the aggregate Outstanding Amount of the Committed Domestic Loans of any Domestic Lender at such time, plus (without duplication) such Lender’s Applicable Percentage of the Outstanding Amount of all Domestic L/C Obligations at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans made to the Domestic Borrowers at such time shall not exceed such Lender’s Domestic Commitment; and (ii) to the Canadian Borrower in an aggregate principal amount not to exceed at any time outstanding the amount of the Canadian Swing Line Sublimit, notwithstanding the fact that the Outstanding Amount of such Swing Line Loans made to the Canadian Borrower, when aggregated with the Applicable Percentage of the Outstanding Amount of Committed Canadian Loans and Canadian L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s Canadian Commitment; provided, however, that after giving effect to any Swing Line Loan made to the Canadian Borrower, (x) the Total Canadian Outstandings shall not exceed the Canadian Loan Cap, and (y) the aggregate Outstanding Amount of the Committed Canadian Loans of any Canadian Lender at such time, plus (without duplication) such Lender’s Applicable Percentage of the Outstanding Amount of all Canadian L/C Obligations at such time, plus such Lender’s Applicable Percentage of the Outstanding Amount of all Swing Line Loans made to the Canadian Borrower at such time shall not exceed such Lender’s Canadian Commitment. No Borrower shall use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan, and the Swing Line Lender shall not be obligated to make any Swing Line Loan at any time when any Lender is at such time a Defaulting Lender or Deteriorating Lender hereunder, unless the Swing Line Lender has entered into satisfactory arrangements with the applicable Borrower or such Lender to eliminate the Swing Line Lender’s risk with respect to such Lender. Within the foregoing limits, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each Swing Line Loan shall bear interest only at a rate based on the Prime Rate or the Canadian Prime Rate, as applicable. Immediately upon the making of a Swing Line Loan to the Domestic Borrowers, each Domestic Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan made to the Domestic Borrowers. Immediately upon the making of a Swing Line Loan to the Canadian Borrower, each Canadian Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such Lender’s Applicable Percentage times the amount of such Swing Line Loan made to the Canadian Borrower. The Swing Line Lender shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the Swing Line Lender in connection with Swing Line Loans made by it or proposed to be made by it as if the term “Administrative Agent” as used in Article IX included the Swing Line Lender with respect to such acts or omissions, and (B) as additionally provided herein with respect to the Swing Line Lender.

          (b) Swing Line Borrowing Procedures. Each Swing Line Borrowing shall be made upon the irrevocable notice of the Lead Borrower or the Parent on behalf of the Domestic Borrowers or the Parent on behalf of the Canadian Borrower or the Canadian Borrower, as applicable, to the Swing Line Lender and the Administrative Agent or the Canadian Agent, as applicable, which may be given by telephone. Each such notice must be received by the Swing Line Lender and the Administrative Agent or the Canadian Agent, as applicable, not later than 1:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $100,000 or CD$100,000, as applicable, and (ii) the requested borrowing date, which shall be a Business Day. Each such telephonic notice must be confirmed promptly by delivery to the Swing Line Lender and the Administrative Agent or the Canadian Agent, as applicable, of a written Swing Line Loan Notice, appropriately completed and signed by a Responsible Officer of the Lead Borrower, the Parent or the Canadian Borrower, as applicable. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent or the Canadian Agent, as applicable (by telephone or in writing) that the Administrative Agent or the Canadian Agent, as applicable, has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative

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Agent or the Canadian Agent, as applicable (by telephone or in writing) of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent or the Canadian Agent at the request of the Required Lenders prior to 2:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the proviso in clause (i) or clause (ii) to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender may, in its discretion, not later than 3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Domestic Borrowers or the Canadian Borrower, as applicable, at its office by crediting the account of the Lead Borrower or such other account as directed by the Parent or the applicable Borrower, as applicable, on the books of the Swing Line Lender in immediately available funds.

          (c) Refinancing of Swing Line Loans.

               (i) The Swing Line Lender, at any time in its sole and absolute discretion, may request, on behalf of the Domestic Borrowers or the Canadian Borrower, as applicable (which hereby irrevocably authorize the Swing Line Lender to so request on their behalf), that each Domestic Lender or each Canadian Lender, as applicable, make a Prime Rate Loan in an amount equal to such Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding to the Domestic Borrowers or the Canadian Borrower, as applicable; provided that the Swing Line Lender shall settle the Swing Line Loans with the Lenders weekly in accordance with Section 2.12(a). Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Prime Rate Loans, but subject to the unutilized portion of the Aggregate Domestic Commitments or the Aggregate Canadian Commitments, as applicable, and the conditions set forth in Section 0. The Swing Line Lender shall furnish the Lead Borrower or the Canadian Borrower, as applicable, with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent or the Canadian Agent, as applicable. Each Domestic Lender or each Canadian Lender, as applicable, shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent or the Canadian Agent, as applicable, in immediately available funds for the account of the Swing Line Lender at the Administrative Agent’s Office or the Canadian Agent’s Office, as applicable, not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii), each Domestic Lender or each Canadian Lender, as applicable, that so makes funds available shall be deemed to have made a Domestic Prime Rate Loan to the Domestic Borrowers or a Canadian Prime Rate Loan to the Canadian Borrower, as applicable, in such amount. The Administrative Agent or the Canadian Agent, as applicable, shall remit the funds so received to the Swing Line Lender.

               (ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i), the request for Prime Rate Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the applicable Lenders fund its risk participation in the relevant Swing Line Loan and each such Lender’s payment to the Administrative Agent or the Canadian Agent, as applicable, for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.

               (iii) If any Lender fails to make available to the Administrative Agent or the Canadian Agent, as applicable, for the account of the Swing Line Lender any amount required to be paid by such Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover from such Lender (acting through the Administrative Agent or the Canadian Agent, as applicable), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the greater of the Federal

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Funds Rate, with respect to the Administrative Agent or payments due to the Canadian Agent in Dollars, and the Bank of Canada Overnight Rate with respect to payments due to the Canadian Agent in Canadian Dollars, and a rate determined by the Swing Line Lender in accordance with banking industry rules on interbank compensation plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such Lender’s Committed Loan included in the relevant Committed Borrowing or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent or the Canadian Agent, as applicable) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.

               (iv) Each Lender’s obligation to make Committed Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the Swing Line Lender, the Borrowers or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 0. No such funding of risk participations shall relieve or otherwise impair the obligation of any Borrower to repay Swing Line Loans, together with interest as provided herein.

          (d) Repayment of Participations.

               (i) At any time after any Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such Lender its Applicable Percentage of such payment (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s risk participation was funded) in the same funds as those received by the Swing Line Lender.

               (ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan made to a Domestic Borrower is required to be returned by the Swing Line Lender under any of the circumstances described in Section 0 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Domestic Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Federal Funds Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Domestic Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.

               (iii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan made to the Canadian Borrower is required to be returned by the Swing Line Lender under any of the circumstances described in Section 0 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each Canadian Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Canadian Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the Bank of Canada Overnight Rate with respect to payments due to the Canadian Agent in Canadian Dollars and the Federal Funds Rate with respect to payments due to the Canadian Agent in Dollars. The Canadian Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Canadian Lenders under this clause shall survive the payment in full of the Canadian Liabilities and the termination of this Agreement.

          (e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Borrowers for interest on the Swing Line Loans. Until each Lender funds its Prime Rate Loan or risk participation pursuant to this Section 2.04 to refinance such Lender’s Applicable

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Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.

          (f) Payments Directly to Swing Line Lender. The Borrowers shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender at the office specified by the Swing Line Lender in writing to the Lead Borrower.

     2.05 Prepayments.

          (a) The Borrowers may, upon irrevocable notice from the Lead Borrower to the Administrative Agent (with respect to Committed Loans made to Domestic Borrowers) or from the Canadian Borrower to the Canadian Agent (with respect to Committed Loans made to the Canadian Borrower), at any time or from time to time voluntarily prepay Committed Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Administrative Agent or the Canadian Agent, as applicable, not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of LIBO Rate Loans or BA Equivalent Loans and (B) on the date of prepayment of Prime Rate Loans; (ii) any voluntary prepayment of LIBO Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; (iii) any voluntary prepayment of BA Equivalent Loans shall be in a principal amount of CD$500,000 or a whole multiple of CD$100,000 in excess thereof; and (iv) any voluntary prepayment of Prime Rate Loans shall be in a principal amount of $500,000 or CD$500,000, as applicable, or a whole multiple of $100,000 or CD$100,000, as applicable, in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the Type(s) of Loans to be prepaid and, if LIBO Rate Loans or BA Equivalent Loans, the Interest Period(s) of such Loans. The Administrative Agent or the Canadian Agent, as applicable, will promptly notify each Domestic Lender or Canadian Lender, as applicable, of its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Lead Borrower or the Canadian Borrower, the applicable Borrowers shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a LIBO Rate Loan or a BA Equivalent Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 0. Each such prepayment shall be applied to the Committed Loans of the Lenders in accordance with their respective Applicable Percentages.

          (b) The Borrowers may, upon irrevocable notice from the Lead Borrower (with respect to Swing Line Loans made to the Domestic Borrowers) or the Canadian Borrower (with respect to Swing Line Loans made to the Canadian Borrower) to the Swing Line Lender (with a copy to the Administrative Agent or the Canadian Agent, as applicable), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent or the Canadian Agent, as applicable, not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000 or CD$100,000, as applicable, or, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment. If such notice is given, the Domestic Borrowers or the Canadian Borrower, as applicable, shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.

          (c) If for any reason the Total Domestic Outstandings at any time exceed the Domestic Loan Cap as then in effect, the Domestic Borrowers shall immediately prepay Committed Domestic Loans, Swing Line Loans made to the Domestic Borrowers and Domestic L/C Borrowings and/or Cash Collateralize the Domestic L/C Obligations (other than Domestic L/C Borrowings) in an aggregate amount equal to such excess; provided, however, that the Domestic Borrowers shall not be required to Cash Collateralize the Domestic L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the Domestic Loans the Total Domestic Outstandings exceed the lesser of the Aggregate Domestic Commitments or the Domestic Borrowing Base, each as then in effect.

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          (d) If for any reason the Total Canadian Outstandings at any time exceed the Canadian Loan Cap as then in effect, the Canadian Borrower shall immediately prepay Committed Canadian Loans, Swing Line Loans made to the Canadian Borrower and Canadian L/C Borrowings and/or Cash Collateralize the Canadian L/C Obligations (other than Canadian L/C Borrowings) in an aggregate amount equal to such excess; provided, however, that the Canadian Borrower shall not be required to Cash Collateralize the Canadian L/C Obligations pursuant to this Section 2.05(d) unless after the prepayment in full of the Canadian Loans the Total Canadian Outstandings exceed the lesser of the Aggregate Canadian Commitments or the Canadian Borrowing Base, each as then in effect.

          (e) The Borrowers shall prepay the Loans in accordance with the provisions of Section 6.07 hereof.

          (f) The Domestic Borrowers shall prepay the Domestic Loans in an amount equal to the Net Proceeds received by a Domestic Loan Party on account of a Prepayment Event in the event that a Cash Dominion Event then exists. The Canadian Borrower shall prepay the Canadian Loans in an amount equal to the Net Proceeds received by a Canadian Loan Party on account of a Prepayment Event in the event that a Cash Dominion Event then exists. Nothing in this Section 2.05(f) shall be construed to constitute any Agent’s or any Lender’s consent to any Prepayment Event that is not permitted by other provisions of this Agreement or the other Loan Documents.

          (g) Prepayments made pursuant to (i) Section 2.05(c), (ii) to the extent representing funds on deposit in the Domestic Concentration Account, Section 2.05(e) and (iii) to the extent the Net Proceeds received by a Domestic Loan Party from a Prepayment Event relating to a Domestic Loan Party, Section 2.05(f), first, shall be applied ratably to the Domestic L/C Borrowings and the Swing Line Loans made to the Domestic Borrowers, second, shall be applied ratably to the outstanding Committed Domestic Loans, and third, the amount remaining, if any, after the prepayment in full of all Domestic L/C Borrowings, Swing Line Loans made to the Domestic Borrowers and Committed Domestic Loans outstanding at such time may be retained by (or shall be returned to) the Domestic Borrowers for use in a manner not prohibited by this Agreement.

          (h) Prepayments made pursuant to (i) Section 2.05(d), (ii) to the extent representing funds on deposit in the Canadian Concentration Account, Section 2.05(e) and (iii) to the extent the Net Proceeds received a Canadian Loan Party from a Prepayment Event relating to a Canadian Loan Party, Section 2.05(f), first, shall be applied ratably to the Canadian L/C Borrowings and the Swing Line Loans made to the Canadian Borrower, second, shall be applied ratably to the outstanding Committed Canadian Loans, and third the amount remaining, if any, after the prepayment in full of all Canadian L/C Borrowings, Swing Line Loans made to the Canadian Borrower and Committed Canadian Loans outstanding at such time may be retained by (or shall be returned to) the Canadian Borrower for use in a manner not prohibited by this Agreement.

     2.06 Termination or Reduction of Commitments.

          (a) The Domestic Borrowers may, upon irrevocable notice from the Lead Borrower to the Administrative Agent, terminate the Aggregate Domestic Commitments, the Domestic Letter of Credit Sublimit or the Domestic Swing Line Sublimit or from time to time permanently reduce in part the Aggregate Domestic Commitments, the Domestic Letter of Credit Sublimit or the Domestic Swing Line Sublimit; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. three (3) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) the Domestic Borrowers shall not reduce (A) the Aggregate Domestic Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Domestic Outstandings would exceed the Aggregate Domestic Commitments, (B) the Domestic Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of Domestic L/C Obligations (other than Domestic L/C Borrowings) not fully Cash Collateralized hereunder would exceed the Domestic Letter of Credit Sublimit, and (C) the Domestic Swing Line Sublimit if, after giving effect thereto, and to any concurrent

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payments hereunder, the Outstanding Amount of Swing Line Loans made to the Domestic Borrowers hereunder would exceed the Domestic Swing Line Sublimit.

          (b) The Canadian Borrower may, upon irrevocable notice from the Canadian Borrower to the Canadian Agent, terminate the Aggregate Canadian Commitments, the Canadian Letter of Credit Sublimit or the Canadian Swing Line Sublimit or from time to time permanently reduce in part the Aggregate Canadian Commitments, the Canadian Letter of Credit Sublimit or the Canadian Swing Line Sublimit; provided that (i) any such notice shall be received by the Canadian Agent not later than 11:00 a.m. (Toronto time) three (3) Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $2,000,000 or any whole multiple of $1,000,000 in excess thereof and (iii) the Canadian Borrower shall not reduce (A) the Aggregate Canadian Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Canadian Outstandings would exceed the Aggregate Canadian Commitments, (B) the Canadian Letter of Credit Sublimit if, after giving effect thereto, the Outstanding Amount of Canadian L/C Obligations (other than Canadian L/C Borrowings) not fully Cash Collateralized hereunder would exceed the Canadian Letter of Credit Sublimit, and (C) the Canadian Swing Line Sublimit if, after giving effect thereto, and to any concurrent payments hereunder, the Outstanding Amount of Swing Line Loans made to the Canadian Borrower hereunder would exceed the Canadian Swing Line Sublimit.

          (c) If, after giving effect to any reduction of the Aggregate Domestic Commitments, the Domestic Letter of Credit Sublimit or the Domestic Swing Line Sublimit exceeds the amount of the Aggregate Domestic Commitments, such Domestic Letter of Credit Sublimit or Domestic Swing Line Sublimit shall be automatically reduced by the amount of such excess.

          (d) If, after giving effect to any reduction of the Aggregate Canadian Commitments, the Canadian Letter of Credit Sublimit or the Canadian Swing Line Sublimit exceeds the amount of the Aggregate Canadian Commitments, such Canadian Letter of Credit Sublimit or Canadian Swing Line Sublimit shall be automatically reduced by the amount of such excess.

          (e) The Administrative Agent or the Canadian Agent, as applicable, will promptly notify the Domestic Lenders or the Canadian Lenders, as applicable, of any termination or reduction made pursuant to this Section 2.06. Upon any reduction of the Aggregate Domestic Commitments, the Domestic Commitment of each Domestic Lender shall be reduced by such Domestic Lender’s Applicable Percentage of such reduction amount. Upon any reduction of the Aggregate Canadian Commitments, the Canadian Commitment of each Canadian Lender shall be reduced by such Canadian Lender’s Applicable Percentage of such reduction amount. All fees (including, without limitation, Commitment Fees and Letter of Credit Fees) and interest in respect of the Aggregate Total Commitments accrued until the effective date of any termination of the Aggregate Total Commitments shall be paid on the effective date of such termination.

     2.07 Repayment of Loans.

          (a) The Domestic Borrowers shall repay to the Administrative Agent, for the account of the Domestic Lenders, on the Termination Date the aggregate principal amount of Committed Domestic Loans outstanding on such date. To the extent not previously paid, the Domestic Borrowers shall repay the outstanding balance of the Swing Line Loans made to the Domestic Borrowers on the Termination Date.

          (b) The Canadian Borrower shall repay to the Canadian Agent, for the account of the Canadian Lenders, on the Termination Date the aggregate principal amount of Committed Canadian Loans outstanding on such date. To the extent not previously paid, the Canadian Borrower shall repay the outstanding balance of the Swing Line Loans made to the Canadian Borrower on the Termination Date.

     2.08 Interest.

          (a) Subject to the provisions of Section 2.08(b) below, (i) each LIBO Rate Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the LIBO Rate for such Interest Period plus the Applicable Margin; (ii) each BA Equivalent Loan

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shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the BA Rate for such Interest Period plus the Applicable Margin; (iii) each Domestic Prime Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Prime Rate plus the Applicable Margin; (iv) each Canadian Prime Rate Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Canadian Prime Rate plus the Applicable Margin; (v) each Swing Line Loan made to the Domestic Borrowers shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Prime Rate plus the Applicable Margin; and (vi) each Swing Line Loan made to the Canadian Borrower shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Canadian Prime Rate plus the Applicable Margin.

          (b) (i) If any amount payable under any Loan Document is not paid when due (after giving effect to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

               (ii) If any other Event of Default exists, then the Administrative Agent may, and upon the request of the Required Lenders shall, notify the Lead Borrower that all outstanding Obligations shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate and thereafter such Loans and L/C Obligations shall bear interest at the Default Rate to the fullest extent permitted by applicable Laws for so long as such or any other Event of Default is continuing.

               (iii) Accrued and unpaid interest on past due amounts (including interest on past due interest to the fullest extent permitted by applicable Laws) shall be due and payable upon demand.

          (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

     Fees. In addition to certain fees described in subsections (i) and (j) of Section 2.03:

          (d) Commitment Fee.

          (i) The Domestic Borrowers shall pay to the Administrative Agent, for the account of each Domestic Lender in accordance with its Applicable Percentage, a commitment fee (the “Domestic Commitment Fee”) based upon the average daily Total Domestic Outstandings (excluding the principal amount of Swing Line Loans made to the Domestic Borrowers) equal to the percentages set forth in the grid below times the actual daily amount by which the Aggregate Domestic Commitments exceed the sum of (i) the Outstanding Amount of the Domestic Loans and (ii) the Outstanding Amount of the Domestic L/C Obligations.

Average Daily Total Domestic
Outstandings	Domestic Commitment Fee
Less than 33% of Aggregate Domestic Commitments		1.00	%
Greater than or equal to 33% but less than 66% of Aggregate Domestic Commitments		0.75	%
Greater than or equal to 66% of Aggregate Domestic Commitments		0.50	%

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The Domestic Commitment Fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The Domestic Commitment Fee, expressed as a percentage, shall be calculated on the Closing Date and thereafter, the Domestic Commitment Fee shall be calculated on each Commitment Fee Adjustment Date for the most recent calendar quarter immediately preceding such Commitment Fee Adjustment Date.

     (ii) The Canadian Borrower shall pay to the Canadian Agent, for the account of each Canadian Lender in accordance with its Applicable Percentage, a commitment fee (the “Canadian Commitment Fee”) based upon the average daily Total Canadian Outstandings (excluding the principal amount of Swing Line Loans made to the Canadian Borrower) equal to the percentages set forth in the grid below times the actual daily amount by which the Aggregate Canadian Commitments exceed the sum of (i) the Outstanding Amount of the Canadian Loans and (ii) the Outstanding Amount of the Canadian L/C Obligations.

Average Daily Total Canadian
Outstandings	Canadian Commitment Fee
Less than 33% of Aggregate Canadian Commitments		1.00	%
Greater than or equal to 33% but less than 66% of Aggregate Canadian Commitments		0.75	%
Greater than or equal to 66% of Aggregate Canadian Commitments		0.50	%

The Canadian Commitment Fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter, commencing with the first such date to occur after the Closing Date, and on the last day of the Availability Period. The Canadian Commitment Fee, expressed as a percentage, shall be calculated on the Closing Date and thereafter, the Canadian Commitment Fee shall be calculated on each Commitment Fee Adjustment Date for the most recent calendar quarter immediately preceding such Commitment Fee Adjustment Date.

          (e) Other Fees. The Borrowers shall pay to the Agents, the Canadian Agent and the Arrangers for their own respective accounts fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.

     2.09 Computation of Interest and Fees.

          (a) All computations of interest for Prime Rate Loans and BA Equivalent Loans shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.11(a), bear

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interest for one day. Each determination by the Administrative Agent or the Canadian Agent, as applicable, of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

          (b) For the purposes of this Agreement, whenever interest to be paid hereunder is to be calculated on the basis of a year of three hundred and sixty (360) days or any other period of time that is less than a calendar year, the yearly rate of interest which the rate determined pursuant to such calculation is equivalent is the rate so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by either three hundred and sixty (360) or such other period of time, as the case may be.

          (c) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis of a 360-day or any other period of time that is less than a calendar year, the yearly rate of interest to which the rate used in such calculation is equivalent is the rate so used multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by three hundred and sixty (360) or the number of days in such period, as applicable. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.

     2.10 Evidence of Debt.

          (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by the Administrative Agent (with respect to Domestic Credit Extensions) and the Canadian Agent (with respect to Canadian Credit Extensions) (each, the “Loan Account”) in the ordinary course of business. In addition, each Lender may record in such Lender’s internal records, an appropriate notation evidencing the date and amount of each Loan from such Lender, each payment and prepayment of principal of any such Loan, and each payment of interest, fees and other amounts due in connection with the Obligations due to such Lender. The accounts or records maintained by the Administrative Agent, the Canadian Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent or the Canadian Agent, as applicable, in respect of such matters, the accounts and records of the Administrative Agent or the Canadian Agent, as applicable, shall control in the absence of manifest error. Upon the request of any Domestic Lender made through the Administrative Agent (who shall notify the Domestic Borrowers), or any Canadian Lender through the Canadian Agent (who shall notify the Canadian Borrower), the applicable Borrowers shall execute and deliver to such Lender (through the Administrative Agent or the Canadian Agent, as applicable) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto. Any failure to so attach or endorse, or any error in doing so, shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations or the Canadian Liabilities, as applicable. Upon receipt of an affidavit and indemnity of a Lender as to the loss, theft, destruction or mutilation of such Lender’s Note and upon cancellation of such Note, the applicable Borrowers will issue, in lieu thereof, a replacement Note in favor of such Lender, in the same principal amount thereof and otherwise of like tenor (subject to adjustment in the case of any assignments of such Lender’s Commitments).

          (b) In addition to the accounts and records referred to in Section 2.10(a), each Lender and the Administrative Agent or, as applicable, the Canadian Agent, shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent or the Canadian Agent and the accounts

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and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent or the Canadian Agent, as applicable, shall control in the absence of manifest error.

     2.11 Payments Generally; Administrative Agent’s Clawback.

          (a) General. All payments to be made by the Borrowers shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder shall be made, as applicable, to the Administrative Agent, for the account of the respective Domestic Lenders to which such payment is owed, at the Administrative Agent’s Office in Dollars and to the Canadian Agent, for the account of the respective Canadian Lenders to which such payment is owed, at the Canadian Agent’s Office, in each case, in immediately available funds not later than 2:00 p.m. on the date specified herein. The Administrative Agent or the Canadian Agent, as applicable, will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office in accordance with the provisions of Section 2.12. All payments received by the Administrative Agent or the Canadian Agent after 2:00 p.m. shall, at the option of the Administrative Agent or the Canadian Agent, as applicable, be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment (other than with respect to payment of a LIBO Loan or a BA Equivalent Loan) to be made by the Borrowers shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.

          (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent or the Canadian Agent, as applicable, shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of LIBO Rate Loans or BA Equivalent Loans, as applicable (or in the case of any Committed Borrowing of Prime Rate Loans, prior to 1:00 p.m. on the date of such Committed Borrowing) that such Lender will not make available to the Administrative Agent or the Canadian Agent, as applicable, such Lender’s share of such Committed Borrowing, the Administrative Agent or the Canadian Agent, as applicable, may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or in the case of a Committed Borrowing of Prime Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the applicable Borrowers a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to the Administrative Agent or the Canadian Agent, as applicable, then the applicable Lender and the Domestic Borrowers severally agree with respect to Committed Domestic Loans, and the Canadian Borrower severally agrees with respect to Committed Canadian Loans, to pay to the Administrative Agent or the Canadian Agent, as applicable, forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to such Borrowers to but excluding the date of payment to the Administrative Agent or the Canadian Agent, as applicable, at (A) in the case of a payment to be made by a Domestic Lender, the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation plus any administrative processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, (B) in the case of a payment to be made by a Canadian Lender, the greater of the Bank of Canada Overnight Rate with respect to payments due to the Canadian Agent in Canadian Dollars and the Federal Funds Rate with respect to payments due to the Canadian Agent in Dollars, and a rate determined by the Canadian Agent in accordance with banking industry rules on interbank compensation plus any administrative processing or similar fees customarily charged by the Canadian Agent in connection with the foregoing, (C) in the case of a payment to be made by the Domestic Borrowers, the interest rate applicable to Domestic Prime Rate Loans and (D) in the case of a payment to be made by the Canadian Borrower, the interest rate applicable to Canadian Prime Rate Loans. If the applicable Borrowers and such Lender shall pay such interest to the Administrative Agent

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or the Canadian Agent, as applicable, for the same or an overlapping period, the Administrative Agent or the Canadian Agent, as applicable, shall promptly remit to such Borrowers the amount of such interest paid by such Borrowers for such period. If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent or the Canadian Agent, as applicable, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing. Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have against a Lender that shall have failed to make such payment to the Administrative Agent or the Canadian Agent, as applicable.

               (ii) Payments by Borrowers; Presumptions by Administrative Agent and Canadian Agent. Unless the Administrative Agent or the Canadian Agent, as applicable, shall have received notice from the Lead Borrower or the Canadian Borrower, as applicable, prior to the time at which any payment is due to the Administrative Agent or the Canadian Agent, as applicable, for the account of the Lenders or the L/C Issuer hereunder that the Borrowers will not make such payment, the Administrative Agent or the Canadian Agent, as applicable, may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent or the Canadian Agent, as applicable, forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to, as applicable, the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, or the Canadian Agent, the greater of the Bank of Canada Overnight Rate with respect to payments due to the Canadian Agent in Canadian Dollars and the Federal Funds Rate with respect to payments due to the Canadian Agent in Dollars, and a rate determined by the Canadian Agent in accordance with banking rules on interbank compensation.

     A notice of the Administrative Agent or the Canadian Agent, as applicable, to any Lender or the Lead Borrower with respect to any amount owing under this Section 2.11(b) shall be conclusive, absent manifest error.

          (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent or the Canadian Agent, as applicable, funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrowers by the Administrative Agent or the Canadian Agent, as applicable, because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof (subject to the provisions of the last paragraph of Section 0 hereof), the Administrative Agent or the Canadian Agent, as applicable, shall promptly return such funds (in like funds as received from such Lender) to such Lender, without interest.

          (d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.03(c) are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under Section 10.03(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment under Section 10.03(c).

          (e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.

     Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations or in Swing

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Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) if a Domestic Lender, notify the Administrative Agent of such fact, and if a Canadian Lender, notify the Canadian Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations and Swing Line Loans of the other applicable Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably, provided that:

          (f) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

          (g) the provisions of this Section shall not be construed to apply to (x) any payment made by any Loan Party pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than to the Borrowers or any Subsidiary thereof (as to which the provisions of this Section shall apply).

          Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.

     2.12 Settlement Amongst Lenders.

     (a) The amount of each Lender’s Applicable Percentage of outstanding Loans (including outstanding Swing Line Loans) shall be computed weekly (or more frequently in the Administrative Agent’s discretion) and shall be adjusted upward or downward based on all Loans (including Swing Line Loans) and repayments of Loans (including Swing Line Loans) received by the Administrative Agent (with respect to Domestic Loans) or the Canadian Agent (with respect to Canadian Loans) as of 3:00 p.m. on the first Business Day (such date, the “Settlement Date”) following the end of the period specified by the Administrative Agent or the Canadian Agent, as applicable.

     (b) The Administrative Agent shall deliver to each of the Domestic Lenders and the Canadian Agent shall deliver to the Canadian Lenders, promptly after a Settlement Date a summary statement of the amount of outstanding Committed Loans and Swing Line Loans for the period and the amount of repayments received for the period. As reflected on the summary statement, (i) the Administrative Agent or the Canadian Agent, as applicable, shall transfer to each Lender its Applicable Percentage of repayments, and (ii) each Lender shall transfer to the Administrative Agent or the Canadian Agent, as applicable (as provided below) or the Administrative Agent or the Canadian Agent, as applicable, shall transfer to each Lender, such amounts as are necessary to insure that, after giving effect to all such transfers, the amount of Committed Loans made by each Lender shall be equal to such Lender’s Applicable Percentage of all Committed Loans outstanding as of such Settlement Date. If the summary statement requires transfers to be made to the Administrative Agent or the Canadian Agent, as applicable, by the Lenders and is received prior to 1:00 p.m. on a Business Day, such transfers shall be made in immediately available funds no later than 3:00 p.m. that day; and, if received after 1:00 p.m., then no later than 3:00 p.m. on the next Business Day. The obligation of each Lender to transfer such funds is irrevocable, unconditional and without recourse to or warranty by the Administrative Agent or the Canadian Agent, as applicable. If and to the extent any Domestic Lender shall not

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have so made its transfer to the Administrative Agent, such Domestic Lender agrees to pay to the Administrative Agent forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Administrative Agent equal to the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation plus any administrative, processing, or similar fees customarily charged by the Administrative Agent in connection with the foregoing. If and to the extent any Canadian Lender shall not have so made its transfer to the Canadian Agent, such Canadian Lender agrees to pay to the Canadian Agent forthwith on demand such amount, together with interest thereon, for each day from such date until the date such amount is paid to the Canadian Agent equal to the greater of the greater of the Bank of Canada Overnight Rate with respect to payments due to the Canadian Agent in Canadian Dollars and the Federal Funds Rate with respect to payments due to the Canadian Agent in Dollars, and a rate determined by the Canadian Agent in accordance with banking industry rules on interbank compensation plus any administrative processing or similar fees customarily charged by the Canadian Agent in connection with the foregoing.

     2.13 Increase in Commitments.

          (a) Request for Increase. Provided no Default then exists or would arise therefrom, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Lead Borrower may request an increase in the Aggregate Canadian Commitments not exceeding $10,000,000 and/or Aggregate Domestic Commitments by an amount not exceeding $50,000,000; provided that the aggregate total amount of all Commitment Increases shall not exceed $50,000,000 (each such increase, a “Commitment Increase”); provided that (i) any such request for a Commitment Increase shall be in a minimum amount of $25,000,000 (or not less than $10,000,000 in the case of the Canadian Commitments), and (ii) the Lead Borrower may make a maximum of two (2) such requests for a Commitment Increase. At the time of sending such request for a Commitment Increase, the Lead Borrower (in consultation with the Administrative Agent) shall specify the time period within which each applicable Lender is requested to respond (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the Lenders).

          (b) Lender Elections to Increase. Each Lender shall notify the Administrative Agent within such time period whether or not it agrees to increase its applicable Commitment and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested Commitment Increase (each Lender agreeing to increase its Commitment, an “Existing Increasing Lender”). Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment.

          (c) Notification by Administrative Agent; Additional Commitment Lenders. The Administrative Agent shall notify the Lead Borrower and each applicable Lender of the Lenders’ responses to each request made hereunder for a Commitment Increase. To achieve the full amount of a requested Commitment Increase, to the extent that the existing applicable Lenders decline to increase their Commitments, or decline to increase their Commitments to the amount requested by the Lead Borrower, the Administrative Agent, in consultation with the Lead Borrower, will use its reasonable efforts to arrange for other Eligible Assignees to become a Domestic Lender or Canadian Lender, as applicable, hereunder and to issue commitments in an amount equal to the amount of the increase in the Aggregate Total Commitments requested by the Lead Borrower and not accepted by the existing applicable Lenders (and the Lead Borrower may also invite additional Eligible Assignees to become Lenders) (each such Eligible Assignee issuing a commitment and becoming a Lender, an “Additional Commitment Lender”), provided, however, that without the consent of the Administrative Agent, at no time shall the Commitment of any Additional Commitment Lender be less than $10,000,000.

          (d) Effective Date and Allocations. If the Aggregate Domestic Commitments or the Aggregate Canadian Commitments are increased in accordance with this Section 2.13, the Administrative

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Agent, in consultation with the Lead Borrower, shall determine the effective date (the “Increase Effective Date”) and the final allocation of such Commitment Increase. The Administrative Agent shall promptly notify the Lead Borrower and the Lenders of the final allocation of such Commitment Increase and the Increase Effective Date and on the Increase Effective Date (i) the Aggregate Domestic Commitments or Aggregate Canadian Commitments, as applicable, and the Aggregate Total Commitments under, and for all purposes of, this Agreement shall be increased by the aggregate amount of such Commitment Increase, and (ii) Schedule 2.01 shall be deemed modified, without further action, to reflect the revised Commitments and Applicable Percentages of the Lenders.

          (e) Conditions to Effectiveness of Increase. As a condition precedent to such Commitment Increase, (i) the Lead Borrower shall have delivered to the Administrative Agent a certificate of each Loan Party dated as of the Increase Effective Date (in sufficient copies for each Lender) signed by a Responsible Officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such Commitment Increase, and (B) in the case of the Borrowers, certifying that, before and after giving effect to such Commitment Increase, (1) the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects on and as of the Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects as of such earlier date, and except that for purposes of this Section 2.13, the representations and warranties contained in subsections (a), (b) and (f) of Section 5.01 shall be deemed to refer to the most recent statements furnished pursuant to clauses (a), (b) and (c), respectively, of Section 0 (if applicable); (ii) the Borrowers, the Administrative Agent, and any Additional Commitment Lender shall have executed and delivered a joinder to the Loan Documents in such form as the Administrative Agent shall reasonably require; (iii) the applicable Borrowers shall have paid such fees and other compensation to the Existing Increasing Lenders and the Additional Commitment Lenders as the Lead Borrower, the Administrative Agent and such Existing Increasing Lenders and Additional Commitment Lenders shall agree; (iv) the Borrowers shall have paid such arrangement fees to BAS and the Administrative Agent as the Lead Borrower, the Administrative Agent and BAS may agree; (v) if reasonably requested by the Administrative Agent, the Borrowers shall deliver to the Administrative Agent and the Lenders an opinion or opinions, in form and substance reasonably satisfactory to the Administrative Agent, from counsel to the Borrowers and dated the Increase Effective Date; (vi) the Borrowers, the Existing Increasing Lenders and the Additional Commitment Lenders shall have delivered such other instruments, documents and agreements as the Administrative Agent may reasonably have requested; and (vii) no Default exists. The Borrowers shall prepay any Committed Domestic Loans or Committed Canadian Loans, as applicable, outstanding on the Increase Effective Date (and pay any additional amounts required pursuant to Section 0) to the extent necessary to keep the outstanding Committed Domestic Loans or Committed Canadian Loans, as applicable, ratable with any revised Applicable Percentages arising from any nonratable increase in the Commitments under this Section 2.13. Upon each increase in the Commitments pursuant to this Section, (a) each applicable Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each Additional Commitment Lender in respect of such increase, and each such Additional Commitment Lender will automatically and without further act be deemed to have assumed, a portion of such applicable Lender’s participations hereunder in outstanding Domestic Letters of Credit or Canadian Letters of Credit, as applicable, and Swing Line Loans made to the applicable Borrowers such that, after giving effect to each such deemed assignment and assumption of participations, the percentage of the aggregate outstanding (i) participations hereunder in the applicable Letters of Credit and (ii) participations hereunder in Swing Line Loans made to the applicable Borrowers held by each applicable Lender (including each such Additional Commitment Lender) will equal the percentage of the aggregate applicable Commitments of all applicable Lenders represented by the applicable Commitment of such applicable Lender and (b) if, on the date of such increase, there are any Committed Domestic Loans or Committed Canadian Loans, as applicable, outstanding, such Committed Domestic Loans or Committed Canadian Loans, as applicable, shall on or prior to the effectiveness of such Commitment Increase be

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prepaid from the proceeds of additional Committed Domestic Loans or Committed Canadian Loans, as applicable, made hereunder (reflecting such increase in applicable Commitments), which prepayment shall be accompanied by accrued interest on the Committed Domestic Loans or Committed Canadian Loans, as applicable, being prepaid and any costs incurred by any applicable Lender in accordance with Section 0. The Administrative Agent and the Lenders hereby agree that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Agreement shall not apply to the transactions effected pursuant to this Section.

          (f) Conflicting Provisions. This Section 2.13 shall supersede any provisions in Sections 0 or 0 to the contrary.

     CFC Payments. Any references to Borrowers (in the context of payments, proceeds, liabilities or Obligations), Commitments, Collateral, L/C Borrowings or Loans shall mean, in the case of and as applied to the foregoing, with respect to any Obligations of the Domestic Borrowers, only the Domestic Borrowers (or any of its Domestic Subsidiaries and only for their own account), the Collateral that is property of Domestic Borrowers, or L/C Borrowings or Loans constituting Obligations of Domestic Borrowers (or any of its Domestic Subsidiaries), so that collections received from the Canadian Loan Parties and proceeds of the Collateral that is property of the Canadian Loan Parties (or any other Canadian Loan Party) shall be applied solely and exclusively to the payment of the Canadian Liabilities. All provisions contained in any Loan Document or side letter shall be interpreted consistently with this Section 0 to the extent possible, and where such other provisions conflict with the provisions of this Section 0, the provisions this Section 0 shall govern.

ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY;
APPOINTMENT OF LEAD BORROWER

     3.01 Taxes.

          (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of the Loan Parties hereunder or under any other Loan Document shall be made free and clear of and without deduction or withholding for any Indemnified Taxes or Other Taxes, provided that if a Loan Party shall be required by applicable Law to deduct or withhold, or an Agent, the Canadian Agent or a Lender shall be required to remit, any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions, withholdings or remittances (including deductions, withholdings or remittances applicable to additional sums payable under this Section), the applicable Credit Party receives an amount equal to the sum it would have received had no such deductions, withholdings or remittances been made, (ii) the Loan Parties shall make such deductions or withholdings and (iii) the Loan Parties shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable Law.

          (b) Payment of Other Taxes by the Loan Parties. Without limiting or duplicating the provisions of subsection (a) above, the Loan Parties shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Law.

          (c) Indemnification by the Loan Parties. The Domestic Loan Parties shall indemnify each Credit Party, and the Canadian Loan Parties shall indemnify each Canadian Credit Party, within ten (10) days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) paid by such Credit Party, as the case may be, and any penalties, interest and reasonable out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Lead Borrower by a Lender or the L/C Issuer (with a copy to the Administrative Agent or the Canadian Agent, as applicable), or by the Administrative Agent on its own behalf or on behalf of a Domestic Credit Party,

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or by the Canadian Agent on its own behalf or on behalf of a Canadian Credit Party, shall be conclusive absent manifest error.

          (d) Evidence of Payments. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by a Loan Party to a Governmental Authority, the Lead Borrower shall deliver to the Administrative Agent or the Canadian Borrower shall deliver to the Canadian Agent, as applicable, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent or the Canadian Agent, as applicable.

          (e) Status of Lenders. Any Lender or L/C Issuer that is entitled to an exemption from, or reduction of, withholding tax under the law of the jurisdiction in which any Loan Party is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Lead Borrower (with a copy to the Administrative Agent) or the Canadian Borrower (with a copy to the Canadian Agent), as applicable, at the time or times prescribed by applicable Law or reasonably requested by the Lead Borrower, the Administrative Agent, the Canadian Borrower or the Canadian Agent, such properly completed and executed documentation prescribed by applicable Law as will permit such payments to be made without withholding or at a reduced rate of withholding. Such delivery shall be required on the Closing Date (or, in the case of an assignee, on the date of assignment) and on or before the date such documentation expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent documentation so delivered or as may reasonably be requested by the Lead Borrower, the Administrative Agent, the Canadian Borrower or the Canadian Agent. In addition, any Lender, if requested by the Lead Borrower, the Administrative Agent, the Canadian Borrower or the Canadian Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Lead Borrower, the Administrative Agent, the Canadian Borrower or the Canadian Agent, as will enable the Lead Borrower, the Administrative Agent, the Canadian Borrower or the Canadian Agent, to determine whether or not such Lender is subject to backup withholding or information reporting requirements.

     Without limiting the generality of the foregoing, in the event that any Loan Party is resident for tax purposes in the United States, any Lender or L/C Issuer that is entitled to an exemption from or reduction of, withholding tax shall deliver to the Lead Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender or L/C Issuer becomes a Lender or L/C Issuer under this Agreement (and from time to time thereafter upon the request of the Lead Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

          (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States is a party,

          (ii) duly completed copies of Internal Revenue Service Form W-8ECI,

          (iii) in the case of a Lender or L/C Issuer that is entitled to claim the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender or L/C Issuer is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Domestic Borrowers within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” related to the Domestic Borrowers, as described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

          (iv) any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable Law to permit the Lead Borrower to determine the withholding or deduction required to be made.

     (f) Treatment of Certain Refunds. If any Credit Party determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party have paid additional amounts pursuant to this

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Section 3.01, it shall pay to the applicable Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 3.01 with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of the applicable Credit Party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Loan Parties, upon the request of the Administrative Agent or the Canadian Agent, as applicable, such Lender or the L/C Issuer, agree to repay the amount paid over to the Loan Parties (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the applicable Credit Party in the event such Credit Party is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require any Credit Party to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Loan Parties or any other Person.

          (g) Sale or Transfer. If a Lender or Participant claims exemption from, or reduction of, withholding tax and such Lender or Participant sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations of Loan Parties to such Lender or Participant, such Lender or Participant agrees to notify the Administrative Agent (or, in the case of a sale of a participation interest, the Lender granting the participation) of the percentage amount in which it is no longer the beneficial owner of Obligations of Loan Parties to such Lender. To the extent of such percentage amount, the Administrative Agent will treat such Lender’s or such Participant’s documentation provided pursuant to subsections (d) or (e) of this Section 3.01 as no longer valid. With respect to such percentage amount, such Participant or Assignee may provide new documentation, pursuant to subsections (d) or (e) of this Section 3.01, as applicable.

     Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBO Rate Loans or, in the case of Canadian Lenders only, BA Equivalent Loans, as applicable, or to determine or charge interest rates based upon the LIBO Rate or the BA Rate, as applicable, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Lead Borrower through the Administrative Agent, any obligation of such Lender to make or continue LIBO Rate Loans or, in the case of Canadian Lenders only, BA Equivalent Loans, as applicable, or to convert Domestic Prime Rate Loans to LIBO Rate Loans or Canadian Prime Rate Loans to BA Rate Loans, as applicable, shall be suspended until such Lender notifies the Administrative Agent and the Lead Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the applicable Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all LIBO Rate Loans of such Lender to Domestic Prime Rate Loans or Canadian Prime Rate Loans, as applicable, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBO Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBO Rate Loans. Upon any such prepayment or conversion, the applicable Borrowers shall also pay accrued interest on the amount so prepaid or converted.

     Inability to Determine Rates. If the Required Lenders determine that for any reason in connection with any request for a LIBO Rate Loan or a BA Equivalent Loan, or a conversion to or continuation thereof that (a) with respect to LIBO Rate Loans only, Dollar deposits are not being offered to banks in the London interbank market for the applicable amount and Interest Period of such LIBO Rate Loan, (b) with respect to BA Equivalent Loans only, there is no market for Bankers Acceptances, (c) adequate and reasonable means do not exist for determining the LIBO Rate or the BA Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan or BA Equivalent Loan, or (d) the LIBO Rate or the BA Rate for any requested Interest Period with respect to a proposed LIBO Rate Loan or BA Equivalent Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Administrative Agent (if with respect to LIBO Rate Loans made to a Domestic Borrower) will promptly so notify the Lead Borrower and each Domestic Lender or the Canadian Agent (if with respect to LIBO

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Rate Loans or BA Equivalent Loans made to the Canadian Borrower) will promptly so notify the Canadian Borrower and each Canadian Lender. Thereafter, the obligation of the Lenders to make or maintain LIBO Rate Loans or of the Canadian Lenders to make or maintain BA Equivalent Loans, as applicable, shall be suspended until the Administrative Agent or the Canadian Agent, as applicable (but in either case upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Lead Borrower may revoke any pending request for a Committed Borrowing of, conversion to or continuation of LIBO Rate Loans made to a Domestic Borrower or the Canadian Borrower may revoke any pending request for a Committed Borrowing of, conversion to or continuation of LIBO Rate Loans or BA Equivalent Loans, as applicable, made to the Canadian Borrower, as applicable, or, failing that, will be deemed to have converted such request into either a request for a Committed Domestic Borrowing of Domestic Prime Rate Loans in the amount specified therein, or a request for a Committed Canadian Borrowing of Canadian Prime Rate Loans in the amount specified therein, as applicable.

     3.02 Increased Costs; Reserves on LIBO Rate Loans.

          (a) Increased Costs Generally. If any Change in Law shall:

          (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBO Rate) or the L/C Issuer;

          (ii) subject any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any LIBO Rate Loan made by it, or change the basis of taxation of payments to such Lender or the L/C Issuer in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the L/C Issuer); or

          (iii) impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or LIBO Rate Loans or BA Equivalent Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any LIBO Rate Loan or BA Equivalent Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer and delivery of the certificate contemplated by Section 3.04(c), the applicable Borrowers will pay to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.

          (b) Capital Requirements. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital requirements has had, or would have, the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time upon delivery of the certificate contemplated by Section 3.04(c), the applicable Borrowers will pay

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to such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company, as the case may be, for any such reduction suffered.

          (c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Lead Borrower shall be conclusive absent manifest error. The applicable Borrowers shall pay such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

          (d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section 3.02 shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that the applicable Borrower shall not be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section 3.02 for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Lead Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six (6)-month period referred to above shall be extended to include the period of retroactive effect thereof).

          (e) Reserves on LIBO Rate Loans. The applicable Borrowers shall pay to each Lender, as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency funds or deposits (currently known as “Eurocurrency liabilities”), additional interest on the unpaid principal amount of each LIBO Rate Loan equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided that, the Lead Borrower shall have received at least ten (10) days’ prior notice (with a copy to the Administrative Agent) of such additional interest from such Lender. If a Lender fails to give notice ten (10) days prior to the relevant Interest Payment Date, such additional interest shall be due and payable ten (10) days from receipt of such notice.

     Compensation for Losses. Upon demand of any Domestic Lender (with a copy to the Administrative Agent) or any Canadian Lender (with a copy to the Canadian Agent) from time to time, each Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

     (b) any continuation, conversion, payment or prepayment of any LIBO Rate Loan or BA Equivalent Loan made to such Borrower on a day other than the last day of the Interest Period for such LIBO Rate Loan or BA Equivalent Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

     (c) any failure by such Borrower, to the extent it is a Domestic Borrower (for a reason other than the failure of such Domestic Lender to make a Domestic Loan) to prepay, borrow, continue or convert any LIBO Rate Loan on the date or in the amount notified by the Lead Borrower;

     (d) any failure by such Borrower, to the extent it is the Canadian Borrower (for a reason other than the failure of such Canadian Lender to make a Canadian Loan) to prepay, borrow, continue or convert any LIBO Rate Loan or any BA Equivalent Loan made to such Borrower on the date or in the amount notified by the Canadian Borrower;

     (e) any assignment of a LIBO Rate Loan made to such Borrower on a day other than the last day of the Interest Period therefor as a result of a request by the Lead Borrower (if such

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Borrower is a Domestic Borrower) or the Canadian Borrower (if such Borrower is the Canadian Borrower) pursuant to Section 0; or

     (f) any assignment of a BA Equivalent Loan made to such Borrower on a day other than the last day of the Interest Period therefor as a result of a request by the Canadian Borrower pursuant to Section 0;

including any loss of anticipated profits and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan or from fees payable to terminate the deposits from which such funds were obtained. The applicable Borrower shall also pay any customary and reasonable administrative fees charged by such Lender in connection with the foregoing.

     For purposes of calculating amounts payable by a Borrower to the Lenders under this Section 0, each Lender shall be deemed to have funded each LIBO Rate Loan made by it at the LIBO Rate for such Loan by a matching deposit or other borrowing in the London interbank market for a comparable amount and for a comparable period, whether or not such LIBO Rate Loan was in fact so funded. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section and setting forth in reasonable detail the manner in which such amount or amounts was determined shall be delivered to the Lead Borrower.

     3.03 Mitigation Obligations; Replacement of Lenders.

          (a) Designation of a Different Lending Office. If any Lender or L/C Issuer requests compensation under Section 3.02, or the Borrowers are required to pay any additional amount to any Lender or L/C Issuer or any Governmental Authority for the account of any Lender or L/C Issuer pursuant to Section 3.01, or if any Lender or L/C Issuer gives a notice pursuant to Section 0, then such Lender or L/C Issuer shall use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or Section 3.02, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 0, as applicable, and (ii) in each case, would not subject such Lender or L/C Issuer to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or L/C Issuer. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender or L/C Issuer in connection with any such designation or assignment.

          (b) Replacement of Lenders. If any Lender requests compensation under Section 3.02, or if any Loan Party is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, the Borrowers may replace such Lender in accordance with Section 0.

     Survival. All of the obligations of each Loan Party under this Article III shall survive termination of the Aggregate Total Commitments and repayment of all other Obligations hereunder.

     3.04 Designation of Lead Borrower as Borrowers’ Agent.

          (a) Each Domestic Borrower hereby irrevocably designates and appoints each of the Parent and the Lead Borrower as such Domestic Borrower’s agent to obtain Credit Extensions, the proceeds of which shall be available to each Domestic Borrower for such uses as are permitted under this Agreement. As the disclosed principal for its agent, each Domestic Borrower shall be obligated to each Credit Party on account of Credit Extensions so made as if made directly by the applicable Credit Party to such Domestic Borrower, notwithstanding the manner by which such Credit Extensions are recorded on the books and records of the Lead Borrower and of any other Domestic Borrower. In addition, each

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Domestic Loan Party other than the Domestic Borrowers hereby irrevocably designates and appoints each of the Parent and the Lead Borrower as such Loan Party’s agent to represent such Loan Party in all respects under this Agreement and the other Loan Documents.

          (b) The Canadian Borrower hereby irrevocably designates and appoints the Parent as the Canadian Borrower’s agent to obtain Credit Extensions, the proceeds of which shall be available to the Canadian Borrower for such uses as are permitted under this Agreement. In addition, each Canadian Loan Party other than the Canadian Borrower hereby irrevocably designates and appoints each of the Parent and the Canadian Borrower as such Canadian Loan Party’s agent to represent such Loan Party in all respects under this Agreement and the other Loan Documents.

          (c) Each Borrower recognizes that credit available to it hereunder is in excess of and on better terms than it otherwise could obtain on and for its own account and that one of the reasons therefor is its joining in the applicable credit facility contemplated herein with all other Borrowers. Consequently, subject to the terms and conditions of this Agreement, each Borrower hereby assumes, guarantees payment and performance of, and agrees to discharge all Obligations of each of the other Borrowers; provided that, notwithstanding anything herein or in any of the other Loan Documents to the contrary, the Canadian Loan Parties shall be liable only for the Canadian Liabilities.

          (d) The Lead Borrower shall act as a conduit for each Borrower (including itself, as a “Borrower”) on whose behalf the Lead Borrower has requested a Credit Extension. Neither the Administrative Agent nor any other Credit Party shall have any obligation to see to the application of such proceeds therefrom.

ARTICLE IV
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

     Conditions of Initial Credit Extension. The obligation of the L/C Issuer and each Lender to make its initial Credit Extension hereunder is subject to satisfaction of the following conditions precedent:

     (a) The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies or other electronic image scan transmission (e.g., “pdf” or “tif” via e-mail) (followed promptly by originals) unless otherwise specified, and each properly executed by a Responsible Officer of the signing Loan Party (if applicable):

     (i) executed counterparts of this Agreement;

     (ii) a Note executed by each applicable Borrower in favor of each Lender requesting a Note;

     (iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party evidencing (A) the authority of each Loan Party to enter into this Agreement and the other Loan Documents to which such Loan Party is a party and (B) the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;

     (iv) copies of each Loan Party’s certificate or articles of incorporation and bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction) and a certificate of good standing (where applicable, or such other customary functionally equivalent certificates, to the extent available in the applicable jurisdiction) from such Loan Party’s jurisdiction of organization and from each jurisdiction where such Loan Party’s ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to so qualify in such jurisdiction could not reasonably be expected to have a Material Adverse Effect;

     (v) a favorable opinion of (x) Skadden, Arps, Slate, Meagher & Flom LLP, special counsel to the Domestic Loan Parties, addressed to the Administrative Agent and

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each Domestic Lender, as to customary matters concerning the Domestic Loan Parties and the Loan Documents; and (y) Fraser Milner Casgrain LLP and McInnes Cooper LLP, counsels to the Canadian Loan Parties, addressed to the Canadian Agent and each Canadian Lender, as to customary matters concerning the Canadian Loan Parties and the Loan Documents;

     (vi) a certificate signed by a Responsible Officer of the Lead Borrower, satisfactory in form and substance to the Agents, certifying (A) that the conditions specified in Sections ARTICLE IV(o) and (p) have been satisfied, (B) either that (1) no consents, licenses or approvals are required in connection with the execution, delivery and performance by any Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, or (2) that all such consents, licenses and approvals have been obtained and are in full force and effect, (C) that, as of the Closing Date after giving effect to the transactions contemplated hereby, the Loan Parties on a consolidated basis are Solvent, and (D) that this Agreement and all Obligations satisfy the requirements of section 3.3 of the Senior Note Indenture;

     (vii) intentionally omitted;

     (viii) except as set forth in the post-Closing Letter, evidence that all insurance required to be maintained pursuant to the Loan Documents and all endorsements in favor of the Administrative Agent or the Canadian Agent, as applicable, required under the Loan Documents have been obtained and are in effect;

     (ix) a payoff letter from the agent for the lenders under the Existing Credit Agreement reasonably satisfactory in form and substance to the Agents evidencing that the Existing Credit Agreement has been or concurrently with the Closing Date is being terminated, all obligations thereunder are being paid in full (except to the extent expressly set forth therein), and all Liens securing obligations under the Existing Credit Agreement have been, or concurrently with the Closing Date are being, released;

     (x) the Security Documents set forth on Schedule 4.01(a)(x) hereto and copies of certificates evidencing any stock being pledged under the Pledge Agreement on the Closing Date (to the extent required by the Pledge Agreement), together with copies of undated stock powers executed in blank, each duly executed by the applicable Loan Parties (originals of which are being delivered to the US Term Loan Agent subject to the Intercreditor Agreement);

     (xi) all other Loan Documents set forth on Schedule 4.01(a)(xi) hereto, each duly executed by the applicable Loan Parties;

     (xii) the Intercreditor Agreement;

     (xiii) (A) a written report regarding the results of a commercial finance examination of the Loan Parties, which shall be reasonably satisfactory to the Co-Collateral Agents and (B) background checks on the Parent, the Loan Parties and their management reasonably requested by any Agent, in each case with results reasonably satisfactory to the Agents;

     (xiv) results of searches or other evidence reasonably satisfactory to the Co-Collateral Agents (in each case dated as of a date reasonably satisfactory to the Co-Collateral Agents) indicating the absence of Liens on the assets of the Loan Parties, except for Permitted Encumbrances and Liens for which termination statements and releases are being tendered concurrently with the initial extension of credit hereunder or other arrangements reasonably satisfactory to the Co-Collateral Agents for the delivery of such termination statements and releases, satisfactions and discharges have been made; and

     (xv) (A) all UCC financing statements and PPSA financing statements, required by Law or reasonably requested by the Agents or the Canadian Agent, as applicable, to be filed, registered or recorded to create, perfect or protect the Liens

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intended to be created under the Loan Documents, and (B) Credit Card Notifications and Blocked Account Agreements required to be delivered on or prior to the Closing Date pursuant to Section 6.07 hereof.

     (b) After giving effect to (i) the first funding under the Loans (if any) on the Closing Date, (ii) the payment of all fees and other amounts due to the Credit Parties by the Borrowers on the Closing Date as required under the Loan Documents, (iii) all Letters of Credit to be issued on the Closing Date, and (iv) the pay off of obligations under the Existing Credit Agreement on the Closing Date, and with the Loan Parties’ trade payables being paid currently and the Loan Parties’ expenses and liabilities being paid in the ordinary course of business and without acceleration of sales, Domestic Availability shall be not less than $80,000,000 and Canadian Availability shall not be less than $10,000,000.

     (c) The Administrative Agent and the Canadian Agent shall have received a Borrowing Base Certificate dated the Closing Date, relating to the month ended on June 30, 2009, and executed by a Responsible Officer of the Lead Borrower or the Parent.

     (d) The Co-Collateral Agents shall be reasonably satisfied with the results of the inventory appraisal conducted by Great American Group dated April, 2009.

     (e) The Administrative Agent shall have received, (i) and the Agents shall be reasonably satisfied with a Consolidated balance sheet of the Parent and its Subsidiaries as at the Fiscal Quarter ended April 30, 2009, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Quarter and for the portion of the Parent’s Fiscal Year then ended, and (ii) a detailed forecast for the period commencing with the Fiscal Quarter ending July 31, 2009 and ending with the end of the Fiscal Quarter ending October 31, 2010, which shall include an Availability model, Americas Consolidated income statement, balance sheet, and statement of cash flow, by month, each prepared in conformity with GAAP (in the case of clause (i)) and consistent with the Loan Parties’ then current practices.

     (f) The Lead Borrower or any Subsidiary shall have entered into the Term Loan Credit Agreements substantially consistent with the term sheet attached to Rhône Capital III L.P.’s commitment letter dated June 8, 2009 relating thereto or otherwise in form and substance reasonably satisfactory to the Agents and received, or substantially simultaneously with the initial Credit Extension under this Agreement shall receive, gross proceeds of the Term Loans in a minimum amount of $125,000,000.

     (g) The Agents shall have received (i) the Intercreditor Agreement duly executed by all parties thereto and (ii) copies of all material documents and agreements duly executed by all parties thereto with respect to the Term Loans and such agreements described in this clause (ii) shall be substantially consistent with the term sheet dated June 8, 2009 relating thereto or otherwise in form and substance reasonably acceptable to the Agents.

     (h) All necessary consents and approvals to the transactions contemplated hereby shall have been obtained.

     (i) All fees required to be paid by the Borrowers to any of the Agents or the Arrangers on or before the Closing Date shall have been paid in full, and all fees required to be paid by the Borrowers to the Lenders on or before the Closing Date shall have been paid in full.

     (j) The Borrowers shall have paid all reasonable and documented fees, charges and disbursements of counsels to the Agents and Arrangers to the extent payable by the Borrowers

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hereunder and invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements payable by the Borrowers hereunder as shall constitute such counsels’ reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimates shall not thereafter preclude a final settling of accounts between the Borrowers and any Agent or Arranger).

     (k) The Agents shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations including, without limitation, the Patriot Act.

     (l) Since June 8, 2009, no material changes in governmental regulations or policies affecting any Loan Party or any Credit Party shall have occurred prior to the Closing Date.

     (m) intentionally omitted.

     (n) The Closing Date shall have occurred on or before July 31, 2009. The Administrative Agent shall notify the Lead Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding on the Loan Parties.

Without limiting the generality of the provisions of Section 9.02, for purposes of determining compliance with the conditions specified in this Section 0, each Lender (other than an Agent or the Canadian Agent) that has signed this Agreement shall be deemed to have Consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be Consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

     Conditions to all Credit Extensions. The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of a Committed Loan to another Type of Committed Loan, or a continuation of LIBO Rate Loans or BA Equivalent Loans) and of each L/C Issuer to issue each Letter of Credit is subject to the following conditions precedent:

     (o) The representations and warranties of the Borrowers and each other Loan Party contained in Article V or any other Loan Document, shall be true and correct in all material respects (or, in the case of any representation and warranty qualified by materiality, in all respects) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date, and except that for purposes of this Section 0, the representations and warranties contained in subsections (a), (b) and (f) of Section 5.01 shall be deemed to refer to the most recent statements, if any, furnished pursuant to clauses (a), (b) and (d), respectively, of Section 0.

     (p) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.

     (q) The Administrative Agent or the Canadian Agent, if applicable, and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.

Each Request for a Credit Extension (other than a Committed Loan Notice requesting only a conversion of a Committed Loan to another Type of Committed Loan or a continuation of LIBO Rate Loans or BA

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Equivalent Loans) submitted by the Lead Borrower or the Canadian Borrower, as applicable, shall be deemed to be a representation and warranty by the Domestic Borrowers or the Canadian Borrower, as applicable, that the conditions specified in Sections ARTICLE IV(o) and (p) have been satisfied on and as of the date of the applicable Credit Extension. The conditions set forth in this Section 0 are for the sole benefit of the Credit Parties but unless and until the Required Lenders otherwise direct the Administrative Agent and the Canadian Agent (in accordance with the terms of this Agreement) to cease making Committed Loans, the Lenders will fund their Applicable Percentage of all Loans that are requested by the Lead Borrower or the Canadian Borrower, as applicable, of all L/C Advances required to be made hereunder and participate in all Swing Line Loans and Letters of Credit whenever made or issued in accordance with the provisions of this Agreement, and which, notwithstanding the failure of the Loan Parties to comply with the provisions of this Article IV, are agreed to by the Administrative Agent or the Canadian Agent, as applicable; provided that, the making of any such Loans or the issuance of any Letters of Credit in the event the provisions of this Article IV are not complied with shall not be deemed to be a modification or waiver by any Credit Party of the provisions of this Article IV on any future occasion or a waiver of any rights of the Credit Parties as a result of any such failure to comply.

ARTICLE V
REPRESENTATIONS AND WARRANTIES

     To induce the Credit Parties to enter into this Agreement and to make Loans and to issue Letters of Credit hereunder, each Loan Party and each Americas Subsidiary (and, in the case of Section 5.06, 5.09, 5.11 and 5.16, for each Subsidiary of the Parent) represents and warrants to the Administrative Agent, the L/C Issuer and the Lenders that:

     Existence, Qualification and Power. Each Loan Party and each Americas Subsidiary (a) is a corporation, limited liability company, unlimited liability company, partnership or limited partnership, duly organized or formed, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, permits, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, where applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (a) (in the case of any Americas Subsidiary that is not a Loan Party), (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. Schedule 5.01 annexed hereto sets forth, in each case as of the Closing Date, each Loan Party’s name as it appears in official filings in its state or province of incorporation or organization, its state or province of incorporation or organization, organization type, organization number, if any, issued by its state of incorporation or organization (in the case of each Domestic Loan Party), and its federal employer identification number (if any).

     Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is a party, has been duly authorized by all necessary corporate or other organizational action, and does not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach, termination, or contravention of, or constitute a default under, or require any payment to be made under (i) any Material Contract or any Material Indebtedness to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries (other than any Loan Document) or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; (c) result in or require the creation of any Lien upon any asset of any Loan Party (other than Liens in favor of the Administrative Agent or the Canadian Agent, as applicable, under the Security

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Documents and other than in accordance with the Intercreditor Agreement); or (d) violate any applicable Law.

     Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority, and no material approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document to which such Person is a party, except for (a) the perfection or maintenance of the Liens created under the Security Documents or (b) such as have been obtained or made and are in full force and effect.

     Binding Effect. This Agreement has been, and each other Loan Document, when delivered, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of each Loan Party that is party thereto, enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

     5.01 Financial Statements; No Material Adverse Effect.

          (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Parent and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) to the extent required by GAAP show all Material Indebtedness and other liabilities, direct or contingent, of the Parent and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.

          (b) The unaudited Consolidated balance sheet of the Parent and its Subsidiaries dated April 30, 2009, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows for the Fiscal Quarter ended on that date, in each case, (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present in all materials respects the financial condition of the Parent and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments. Schedule 5.01 sets forth all Material Indebtedness of the Loan Parties and their Consolidated Subsidiaries (other than any intercompany Indebtedness) outstanding as of the Closing Date (after giving effect to all the transactions occurring on the Closing Date).

          (c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

          (d) To the knowledge of the Lead Borrower, no Internal Control Event exists or has occurred since the date of the Audited Financial Statements that has resulted in or could reasonably be expected to result in a misstatement in any material respect, in any financial information delivered or to be delivered to the Administrative Agent or the Lenders, of (i) covenant compliance calculations provided hereunder or (ii) the assets, liabilities, financial condition or results of operations of the Parent and the Americas Subsidiaries on an Americas Consolidated basis.

          (e) Intentionally Omitted.

          (f) The Americas Consolidated forecasted balance sheet and statements of income and cash flows of the Parent and Americas Subsidiaries delivered pursuant to Section 0 and (if applicable)

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Section 0 were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Loan Parties’ reasonable estimate of their future financial performance (it being understood that such forecasted financial information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties, that no assurance is given that any particular forecasts will be realized, that actual results may differ and that such differences may be material).

     Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Loan Parties threatened in writing, at law, in equity, in arbitration or before any Governmental Authority, against any Loan Party or any of its Subsidiaries or against any of its properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby to occur on the Closing Date, or (b) either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

     No Default. No Loan Party or any Americas Subsidiary is in default under or with respect to any Material Contract or any Material Indebtedness (exclusive of the Term Loan Documents or the Senior Note Indenture). No Default has occurred and is continuing or would result on the Closing Date from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

     5.02 Ownership of Property; Liens.

          (a) Each of the Loan Parties and each Americas Subsidiary thereof has good record and marketable title in fee simple to or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title or failure to have such title or other interest as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Loan Parties and each Americas Subsidiary has good title to, valid leasehold interests in, or valid licenses or other rights to use all personal property and assets material to the ordinary conduct of its business, except where failure to have such title, interest, license or other right could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          (b) Schedule 5.08(b)(1) sets forth the address (including street address and state, province or territory and postal or zip code) of all Real Estate that is owned by the Loan Parties as of the Closing Date, together with a list of the holders of any mortgage thereon as of the Closing Date. Schedule 5.08(b)(2) sets forth the address (including street address and state or province or territory) of all locations leased by the Loan Parties as of the Closing Date.

          (c) The property of each Loan Party and each of the Americas Subsidiaries is subject to no Liens, other than Permitted Encumbrances.

     5.03 Environmental Compliance.

          (a) No Loan Party or any Subsidiary (i) is in violation of any Environmental Law or has not obtained or, to its knowledge, has not complied with any Environmental Permit required under any Environmental Law, (ii) is subject to any Environmental Liability that remains outstanding, or (iii) has received written notice of any claim alleging Environmental Liability by any of them, except, in each case, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

          (b) Except, in each case, as would not reasonably be expected to have a Material Adverse Effect: (i) none of the properties currently owned by any Loan Party or any Subsidiary, or to the knowledge of any Loan Party, leased by any Loan Party or any Subsidiary, is listed or, to the knowledge of any Loan Party, proposed for listing on the NPL or any analogous foreign, state, provincial, territorial, municipal or local list; (ii) there are no underground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being treated, stored or disposed of except in compliance with applicable Environmental Laws on any property currently owned by any Loan Party

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or any Subsidiary in violation of applicable Environmental Law and (iii) to the knowledge of the Loan Parties, Hazardous Materials have not been released, discharged or disposed on any property currently owned by any Loan Party or any Subsidiary in violation of applicable Environmental Law.

          (c) Except, in each case, as would not reasonably be expected to have a Material Adverse Effect: (i) no Loan Party or any Subsidiary is undertaking, either individually or together with other “potentially responsible parties” (as that term is defined in CERCLA), any investigation, assessment, or remedial or response action to remove Hazardous Materials at any location, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law.

     Insurance. The properties of the Loan Parties and their Americas Subsidiaries are insured with financially sound and reputable insurance companies which are not Affiliates of the Loan Parties, in such amounts, with such deductibles and covering such risks (including, without limitation, workmen’s compensation, public liability, business interruption and property damage insurance) as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Loan Parties or the applicable Americas Subsidiary operates. Schedule 5.10 sets forth a summary of all insurance maintained by or on behalf of the Loan Parties as of the Closing Date. As of the Closing Date, each insurance policy listed on Schedule 5.10 is in full force and effect and all premiums in respect thereof that are due and payable have been paid.

     Taxes. The Loan Parties and their Subsidiaries have filed all material federal, state, provincial, local and other material tax returns and reports required to be filed, and have paid all material federal, state, provincial, territorial, municipal, local and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings for which adequate reserves have been provided in accordance with GAAP, as to which taxes no Lien has been filed and which contest effectively suspends the collection of the contested obligation and the enforcement of any Lien securing such obligation. There is no proposed tax assessment against any Loan Party or any Subsidiary that would, if made, have a Material Adverse Effect. No Loan Party or any Subsidiary thereof is a party to any tax sharing agreement, other than any tax sharing agreement between or among such Loan Party (or any Subsidiary thereof) and any Affiliate of such Loan Party (or any Subsidiary thereof).

     5.04 Plans.

          (a) Except as would not reasonably be expected to result in a Material Adverse Effect: (i) each Plan in respect of employees of any Domestic Loan Party is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state Laws; (ii) each Plan in respect of employees of any Domestic Loan Party that is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS or an application for such a letter is currently being processed by the IRS with respect thereto and, to the knowledge of the Lead Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification; (iii) the Domestic Loan Parties and each ERISA Affiliate have made all required contributions to each Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan in respect of employees of any Domestic Loan Party; and (iv) no Lien imposed under the Code or ERISA exists or is likely to arise on account of any Plan in respect of employees of any Domestic Loan Party.

          (b) There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan in respect of employees of any Domestic Loan Party that has resulted or could reasonably be expected to result in a Material Adverse Effect.

          (c) Except as would not reasonably be expected to result in a Material Adverse Effect: (i) no ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither any Domestic Loan Party nor any ERISA Affiliate has incurred,

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or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither any Domestic Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v) neither any Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA.

          (d) As of the Closing Date, no Plan in respect of employees of any Canadian Loan Party or any of their Related Parties is a pension plan or subject to any pension benefits legislation. As of the Closing Date, no Canadian Loan Party has any Canadian Pension Plan.

     Subsidiaries; Equity Interests. As of the Closing Date, the Loan Parties have no direct Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, which Schedule sets forth, in each case as of the Closing Date, the legal name, jurisdiction of incorporation or formation and authorized Equity Interests of each such Subsidiary. All of the outstanding Equity Interests owned by a Loan Party in such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens except for Permitted Encumbrances. As of the Closing Date, the Loan Parties have no equity investments in any other corporation or entity other than (i) Investments described in clause (g) and (h) of the definition of “Permitted Investments” and (ii) those specifically disclosed in Part (b) of Schedule 5.13. All of the outstanding Equity Interests in the Loan Parties (other than the Parent) have been validly issued, and are fully paid and non-assessable and, as of the Closing Date, are owned in the amounts specified on Part (c) of Schedule 5.13 free and clear of all Liens except for Permitted Encumbrances.

     5.05 Margin Regulations; Investment Company Act.

          (a) None of the proceeds of the Credit Extensions shall be used directly or indirectly for any purpose that would entail a violation of Regulations T, U, or X issued by the FRB.

          (b) None of the Loan Parties is, or is required to be registered as an “investment company” under the Investment Company Act of 1940.

     Disclosure. No financial statement, certificate or other factual written information (excluding projections, forward-looking information and information of a general economic or general industry nature) furnished by or on behalf of any Loan Party to any Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished, and taken as a whole) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time (it being understood that such projected financial information is subject to significant uncertainties and contingencies, many of which are beyond the control of the Loan Parties, that no assurance is given that any particular projections will be realized, that actual results may differ and that such differences may be material).

     Compliance with Laws. Each of the Loan Parties and each Subsidiary is in compliance in all material respects with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

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     Intellectual Property; Licenses, Etc. Except, in each case, as would not reasonably be expected to have a Material Adverse Effect, the Loan Parties and their Americas Subsidiaries own, or possess the right to use, all of the Intellectual Property that is reasonably necessary for the operation of their respective businesses as currently conducted, without violation of the rights of any other Person. To the knowledge of the Lead Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, by any Loan Party infringes upon any rights held by any other Person, except, in each case, as would not reasonably be expected to have a Material Adverse Effect. No claim or litigation against any Loan Party alleging any such infringement is pending or, to the knowledge of the Lead Borrower, threatened in writing, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

     5.06 Labor Matters.

     There are no strikes, lockouts, slowdowns or other labor disputes against any Loan Party or any Americas Subsidiary thereof pending or, to the knowledge of any Loan Party, threatened that, in any case, could reasonably be expected to have a Material Adverse Effect. The hours worked by, and payments made to employees of, the Loan Parties comply with the Fair Labor Standards Act and any other applicable federal, state, provincial, territorial, municipal, local or foreign Law dealing with such matters except to the extent that any such violation could not reasonably be expected to have a Material Adverse Effect. No Loan Party or any of its Americas Subsidiaries has incurred any liability or obligation under the Worker Adjustment and Retraining Act or similar federal, state, provincial, local or foreign Law dealing with such matters that, in any case, could reasonably be expected to have a Material Adverse Effect. All payments due from any Loan Party and its Americas Subsidiaries, or for which any claim may be made against any Loan Party, on account of wages and employee health and welfare insurance and other benefits, have been paid or properly accrued in accordance with GAAP as a liability on the books of such Loan Party except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect. As of the Closing Date, no Loan Party or any Americas Subsidiary is a party to or bound by any collective bargaining agreement. There are no representation proceedings pending or, to any Loan Party’s knowledge, threatened to be filed with the National Labor Relations Board or other applicable Governmental Authority, and no labor organization or group of employees of any Loan Party or any Subsidiary has made a pending demand for recognition that, in any case, could reasonably be expected to have a Material Adverse Effect. There are no complaints, unfair labor practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or complaints against any Loan Party or any Americas Subsidiary pending or, to the knowledge of any Loan Party, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment of any employee of any Loan Party or any of its Americas Subsidiaries that, in any case, could reasonably be expected to have a Material Adverse Effect. The consummation of the transactions contemplated by the Loan Documents will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Loan Party or any of its Americas Subsidiaries is bound.

     5.07 Security Documents.

     The Security Documents create in favor of the Administrative Agent (for the benefit of itself and the other Credit Parties) or the Canadian Agent (for the benefit of itself and the other Canadian Credit Parties), as applicable, a legal, valid, continuing and enforceable security interest in the Collateral, and the Security Documents constitute, or will upon the filing of financing statements or other requisite registrations and recordations (including, with respect to IP Collateral, the filing and recordation of the Intellectual Property Security Agreement with the United States Patent and Trademark Office, United States Copyright Office, Canadian Intellectual Property Office and any substitute or successor agency) and/or the obtaining of “control”, in each case with respect to the relevant Collateral as required under the

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applicable UCC or similar legislation of any jurisdiction, including, without limitation, the PPSA and the Civil Code of Quebec, the creation of a perfected Lien on, and security interest in, all right, title and interest of the Loan Parties thereunder in such Collateral that may be perfected in the United States or Canada by filing, recording or registering a financing statement or analogous document (and, in the case of IP Collateral and any other Intellectual Property, the filing and recordation of the Intellectual Property Security Agreement with the United States Patent and Trademark Office and the United States Copyright Office or the Canadian Intellectual Property Office) or, to the extent required by the Loan Documents (it being understood that subsequent recordings in the United States Patent and Trademark Office, United States Copyright Office, Canadian Intellectual Property Office or a substitute or successor agency may be necessary to perfect a Lien on Intellectual Property acquired, register or applied for after the date hereof). Notwithstanding anything to the contrary herein, the Loan Parties shall have no obligation to prefect Liens on any IP Collateral or other Intellectual Property in any jurisdiction outside the United States of America or Canada.

     5.08 Solvency.

     After giving effect to the transactions contemplated by this Agreement, and before and after giving effect to each Credit Extension, the Loan Parties, on a consolidated basis, are Solvent. No transfer of property has been or will be made by any Loan Party and no obligation has been or will be incurred by any Loan Party in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay, or defraud either present or future creditors of any Loan Party.

     5.09 Deposit Accounts; Credit Card Arrangements.

          (a) Annexed hereto as Schedule 5.21(a) is a list of all DDAs maintained by the Loan Parties as of the Closing Date, which Schedule includes, with respect to each DDA and in each case as of the Closing Date: (i) the name of the depository; (ii) the account number(s) maintained with such depository; and (iii) the identification of each Blocked Account Bank.

          (b) Annexed hereto as Schedule 5.21(b) is a list of all arrangements as of the Closing Date to which any Loan Party is a party with respect to the processing and/or payment to such Loan Party of the proceeds of any credit card charges and debit card charges for sales made by such Loan Party.

     Brokers. Except as disclosed on Schedule 5.22 no broker or finder brought about the obtaining, making or closing of the Loans or transactions contemplated by the Loan Documents, and no Loan Party or Affiliate thereof has any obligation to any Person in respect of any finder’s or brokerage fees in connection therewith.

     Customer and Trade Relations. There exists no actual or, to the knowledge of any Loan Party, threatened, termination or cancellation of, or any material adverse modification or change in the business relationship of any Loan Party with any supplier material to its operations except to the extent that any of the foregoing could not reasonably be expected to have a Material Adverse Effect.

     Material Contracts. Schedule 5.24 sets forth a list of all Material Contracts to which any Loan Party is a party as of the Closing Date (other than the Loan Documents and the Term Loan Documents). The Loan Parties have delivered true, correct and complete copies of such Material Contracts to the Administrative Agent on or before the date hereof. The Loan Parties are not in breach or in default in any material respect of or under any Material Contract (exclusive of the Term Loan Documents or the Senior Note Indenture) and have not received any notice of the intention of any other party thereto to terminate any Material Contract.

     Casualty. Neither the businesses nor the properties of any Loan Party or any of its Americas Subsidiaries are affected by any fire, explosion, accident, drought, storm, hail, earthquake, embargo, act

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of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

ARTICLE VI
AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied (other than contingent indemnification Obligations for which a claim has not then been asserted), or any Letter of Credit shall remain outstanding, the Loan Parties shall, and shall, (except in the case of the covenants set forth in Sections 0, 0, and 0), cause each Americas Subsidiary and, in the case of the covenants set forth in Sections 6.08 and 6.16, cause each of its Subsidiaries to:

     Financial Statements. Deliver to the Administrative Agent (for distribution to each Lender):

     (a) within ninety (90) days after the end of each Fiscal Year of the Parent, (i) a Consolidated balance sheet of the Parent and its Subsidiaries as at the end of such Fiscal Year, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all prepared in accordance with GAAP, such Consolidated statements to be audited and accompanied by a report and opinion of a Registered Public Accounting Firm of nationally recognized standing or otherwise reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit, and (ii) an Americas Consolidated and consolidating balance sheet of the Parent and the Americas Subsidiaries as at the end of such Fiscal Year, and the related Americas Consolidated and consolidating statements of income or operations of the Parent and the Americas Subsidiaries, and Americas Consolidated cash flows for such Fiscal Year, setting forth in each case (in the case of clause (ii), to the extent practicable) in comparative form the figures for the previous Fiscal Year, such consolidating statements of the Parent and its Americas Subsidiaries to be certified by a Responsible Officer of the Lead Borrower or the Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the Americas Consolidated financial statements of the Parent and its Americas Subsidiaries;

     (b) within forty-five (45) days after the end of each of the first three Fiscal Quarters of each Fiscal Year of the Parent, (i) a Consolidated balance sheet of the Parent and its Subsidiaries as at the end of such Fiscal Quarter, and the related Consolidated statements of income or operations, Shareholders’ Equity and cash flows for such Fiscal Quarter and for the portion of the Parent’s Fiscal Year then ended, and (ii) an Americas Consolidated and consolidating balance sheet of the Parent and the Americas Subsidiaries as at the end of such Fiscal Quarter, and the related Americas Consolidated and consolidating statements of income or operations and Shareholders’ Equity of the Parent and the Americas Subsidiaries and (commencing with the first such Fiscal Quarter which ends after delivery of the first 10-K annual report of the Parent following the Closing Date) an Americas Consolidated cash flows for such Fiscal Quarter and (to the extent practicable) for the portion of the Parent’s Fiscal Year then ended, setting forth in each case (to the extent practicable) in comparative form the figures for (A) such period set forth in the projections delivered pursuant to Section ARTICLE VI(d) hereof, (B) the corresponding Fiscal Quarter of the previous Fiscal Year and (C) the corresponding portion of the previous Fiscal Year, all in reasonable detail, such Americas Consolidated statements to be certified by a Responsible Officer of the Lead Borrower or the Parent as fairly

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presenting in all material respects the financial condition, results of operations, Shareholders’ Equity and cash flows of the Parent and the Americas Subsidiaries as of the end of such Fiscal Quarter in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes and such consolidating statements of the Parent and its Americas Subsidiaries to be certified by a Responsible Officer of the Lead Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the Americas Consolidated financial statements of the Parent and the Americas Subsidiaries;

     (c) within thirty (30) days after the end of each of the Fiscal Months of each Fiscal Year of the Parent (commencing with the first such Fiscal Month which occurs after the first full six (6) months following the Closing Date), an Americas Consolidated and consolidating balance sheet of the Parent and the Americas Subsidiaries as at the end of such Fiscal Month, and the related Americas Consolidated and consolidating statements of income or operations, Shareholders’ Equity and Americas Consolidated cash flows for such Fiscal Month, and (to the extent practicable) for the portion of the Parent’s Fiscal Year then ended, setting forth in each case (to the extent practicable) in comparative form the figures for (A) such period set forth in the projections delivered pursuant to Section ARTICLE VI(d) hereof, (B) the corresponding Fiscal Month of the previous Fiscal Year and (C) the corresponding portion of the previous Fiscal Year, all in reasonable detail and prepared in accordance with GAAP, to the extent applicable, subject to normal year end audit adjustments and in the absence of footnotes, and in any event, in a manner consistent with the Parent’s accounting practices, such Americas Consolidated statements to be certified by a Responsible Officer of the Lead Borrower or the Parent as fairly presenting in all material respects the financial condition, results of operations, Shareholders’ Equity and cash flows of the Parent and the Americas Subsidiaries as of the end of such Fiscal Month and such consolidating statements to be certified by a Responsible Officer of the Lead Borrower or the Parent to the effect that such statements are fairly stated in all material respects when considered in relation to the Americas Consolidated financial statements of the Parent the Americas Subsidiaries; and

     (d) within thirty (30) days after the end of each Fiscal Year of the Parent, forecasts prepared by management of the Parent and Lead Borrower, in form reasonably satisfactory to the Agents, of Americas Consolidated balance sheets, statements of income or operations and cash flows, and Availability projections of the Parent and the Americas Subsidiaries on a monthly basis for the immediately following Fiscal Year (including the Fiscal Year in which the Maturity Date occurs), and promptly after they become available, any significant revisions to such forecast with respect to such Fiscal Year.

     Certificates; Other Information. Deliver to the Administrative Agent (for distribution to each Lender) and, with respect to items (b), (c) and (f) below, the Co-Collateral Agents:

     (e) intentionally omitted;

     (f) concurrently with the delivery of the financial statements referred to in Sections ARTICLE VI(a), (b) and (c), (i) a duly completed Compliance Certificate signed by a Responsible Officer of the Lead Borrower or the Parent (to be furnished even if a Covenant Compliance Event is not then in effect) and (ii) a copy of management’s discussion and analysis with respect to such financial statements. In the event of any change in GAAP used in the preparation of such financial statements, the Lead Borrower or the Parent shall also provide a statement of reconciliation conforming such financial statements to GAAP;

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     (g) until the first month following delivery of the first 10-K annual report of the Parent following the Closing Date, on the fifteenth (15^th) day of each Fiscal Month (or, if such day is not a Business Day, on the next succeeding Business Day), and thereafter, on the tenth (10^th) day of each Fiscal Month (or, if such day is not a Business Day, on the next succeeding Business Day) (or more frequently at the option of the Lead Borrower), a Borrowing Base Certificate showing the Domestic Borrowing Base and the Canadian Borrowing Base, as of the close of business as of the last day of the immediately preceding Fiscal Month; provided that, upon the occurrence and during the continuance of an Accelerated Borrowing Base Delivery Event, such Borrowing Base Certificate (which shall include information relating to the Inventory only to the extent then available) shall be delivered on Wednesday of each week (or, if any Wednesday is not a Business Day, on the next succeeding Business Day), as of the close of business on the immediately preceding Saturday;

     (h) promptly upon receipt, copies of any detailed audit reports, management letters or recommendations submitted to the board of directors (or the audit committee of the board of directors) of any Loan Party by its Registered Public Accounting Firm in connection with the accounts or books of the Loan Parties or any Subsidiary, or any audit of any of them, including, without limitation, specifying any Internal Control Event;

     (i) promptly after the same are available, copies of each annual report, proxy or financial statement or other report which any Loan Party files with the SEC and copies of all annual, regular, periodic and special reports and registration statements which any Loan Party files with the SEC under Sections 13 or 15(d) of the Securities Exchange Act of 1934 or with any national or foreign securities exchange or applicable Governmental Authority, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;

     (j) the financial and collateral reports described on Schedule 6.02 hereto, no later than the times set forth in such Schedule, provided that certain of the reports listed on Schedule 6.02 may not be required if such delivery is not required by all of the Agents, and, if applicable, the Canadian Agent;

     (k) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party pursuant to the terms of the Senior Note Indenture (or any other indenture relating to Material Indebtedness) or the US Term Loan Credit Agreement or the Euro Term Loan Credit Agreement and not otherwise required to be furnished to the Lenders pursuant to Section 0 or any other clause of this Section 0;

     (l) within thirty (30) days after the end of each Fiscal Year of the Loan Parties, a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Loan Party and its Americas Subsidiaries and containing such additional information as the Administrative Agent, Canadian Agent, any Co-Collateral Agent, or any Lender through the Administrative Agent, may reasonably specify;

     (m) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from any Governmental Authority (including, without limitation, the SEC (or comparable agency in any applicable non-U.S. jurisdiction)) concerning any proceeding with, or investigation or possible investigation or other inquiry by such Governmental Authority regarding financial or other operational results of any Loan Party or any Subsidiary thereof or any other matter which could reasonably be expected to have a Material Adverse Effect; and

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     (n) promptly, such additional information regarding the business affairs, financial condition or operations of any Loan Party or any Americas Subsidiary, or compliance with the terms of the Loan Documents, as the Administrative Agent, Canadian Agent, any Co-Collateral Agent, or any Lender (through the Administrative Agent or the Canadian Agent, as applicable) may from time to time reasonably request.

Documents required to be delivered pursuant to Section ARTICLE VI(a) or (b) or Section 6.02(c) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Parent posts such documents, or provides a link thereto on the Parent’s website on the Internet at the website address listed on Schedule 10.02; or (ii) on which such documents are posted on the Parent’s behalf on an Internet or intranet website, if any, to which each Lender and Agent has access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that: the Lead Borrower shall deliver paper copies of such documents to any Agent or Lender that requests the Lead Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by such Agent or such Lender. No Agent shall have any obligation to request the delivery or to maintain copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Loan Parties with any such request for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents

     The Loan Parties hereby acknowledge that (a) the Administrative Agent and/or the Arrangers will make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of the Loan Parties hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive material non-public information with respect to the Loan Parties or their securities) (each, a “Public Lender”). The Loan Parties hereby agree that so long as any Loan Party is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering they will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (w) the Lead Borrower shall use commercially reasonable efforts to provide that such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Loan Parties shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Loan Parties or their securities for purposes of all applicable securities Laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 0); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Investor”; and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Investor.”

     Notices. Promptly, and in any event within five (5) Business Days after any Responsible Officer of any Loan Party obtains knowledge thereof, notify the Administrative Agent (and the Co-Collateral Agents in the case of (h), (i) or (j), below) of:

     (o) the occurrence of any Default or Event of Default;

     (p) any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect;

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     (q) the occurrence of any ERISA Event;

     (r) any material change in accounting policies or financial reporting practices by any Loan Party;

     (s) any change in the Parent’s senior executive officers;

     (t) the discharge by any Loan Party of its present Registered Public Accounting Firm or any withdrawal or resignation by such Registered Public Accounting Firm;

     (u) any collective bargaining agreement to which a Loan Party becomes a party;

     (v) the filing of any Lien for unpaid Taxes against any Loan Party in excess of $500,000;

     (w) any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any interest in a material portion of the Collateral under power of eminent domain or by condemnation or similar proceeding or if any material portion of the Collateral is damaged or destroyed; and

     (x) any failure by any Loan Party to pay rent at (i) five (5%) or more of such Loan Party’s locations, (ii) any location which is a distribution center or warehouse, or (iii) any of such Loan Party’s locations if such failure continues for more than ten (10) days following the day on which such rent first came due and, in any such case, such failure would be reasonably likely to result in a Material Adverse Effect.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of the Lead Borrower or the Parent setting forth details of the occurrence referred to therein and stating what action the Lead Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section ARTICLE VI(o) shall describe with reasonable particularity the provisions of this Agreement and any other Loan Document that have been breached.

     Payment of Obligations. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, (b) all lawful claims (including, without limitation, claims of landlords, warehousemen, customs brokers, and carriers) which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness and the other provisions of Section 7.07, to the extent applicable, except, in each case, where (a) (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) such Loan Party has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (iii) such contest effectively suspends collection of the contested obligation and enforcement of any Lien securing such obligation, and (iv) no Lien has been filed with respect thereto or (b) the failure to pay or discharge the same could not reasonably be expected to result in a Material Adverse Effect. Nothing contained herein shall be deemed to limit the rights of the Agents with respect to establishing or modifying Reserves in manner permitted by this Agreement.

     6.02 Preservation of Existence, Etc.

          (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization or formation except (i) in a transaction

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permitted by Section 0 or 0 or (ii) in the case of any Americas Subsidiary that is not a Loan Party, to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.

          (b) Take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except (i) to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect or (ii) pursuant to a transaction permitted by Section 0 or 0.

          (c) Preserve or renew all of its Intellectual Property, except (i) to the extent such Intellectual Property is no longer used or useful in the conduct of the business of such Loan Party, (ii) pursuant to a transaction permitted by Section 0 or 0 or (iii) to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

     Maintenance of Properties. Maintain, preserve and protect all of its material properties and Equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear and casualty or condemnation events excepted, and make all necessary repairs thereto and renewals and replacements thereof, except in each case where the failure to do so could not reasonably be expected to have a Material Adverse Effect.

     6.03 Maintenance of Insurance.

          (a) Maintain with financially sound and reputable insurance companies reasonably acceptable to the Agents (which insurance companies are not Affiliates of the Loan Parties), insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business and operating in the same or similar locations or as is required by applicable Law, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and as are reasonably acceptable to the Agents.

          (b) In each case except as set forth in the post-Closing Letter: Fire and extended coverage policies maintained with respect to any Collateral shall name the Administrative Agent or the Canadian Agent, as applicable, as a loss payee and shall be endorsed or otherwise amended to include (i) a non-contributing mortgage clause (regarding improvements to real property) and lenders’ loss payable clause (regarding personal property), in form and substance satisfactory to the Agents, which endorsements or amendments shall provide that the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Administrative Agent or the Canadian Agent, as applicable, (ii) a provision to the effect that none of the Loan Parties, Credit Parties or any other Person shall be a co-insurer and (iii) such other provisions as the Agents and the Canadian Agent may reasonably require from time to time to protect the interests of the Credit Parties. Commercial general liability policies shall be endorsed to name the Administrative Agent or the Canadian Agent, as applicable, as an additional insured. Business interruption policies shall name the Administrative Agent or the Canadian Agent, as applicable, as a loss payee and shall be endorsed or amended to include (i) a provision that, from and after the Closing Date, the insurer shall pay all proceeds otherwise payable to the Loan Parties under the policies directly to the Administrative Agent or the Canadian Agent, as applicable (subject to the rights of the US Term Loan Agent, the Euro Term Loan Agent and the Term Loan Collateral Agent and as described in the Intercreditor Agreement), (provided that unless a Cash Dominion Event then exists, the Administrative and/or Canadian Agent shall promptly remit the proceeds to the Lead Borrower or as the Lead Borrower may direct), (ii) a provision to the effect that none of the Loan Parties, the Agents, the Canadian Agent or any other party shall be a co-insurer and (iii) such other provisions as the Agents or, if applicable, the Canadian Agent, may reasonably require from time to time to protect the interests of the Credit Parties. Each such policy referred to in this Section 6.03(b) shall also provide that it shall not be canceled, modified or not renewed (i) by reason of nonpayment of premium except upon not less than thirty (30) days prior written notice thereof by the insurer to the Administrative Agent or the Canadian Agent, as applicable, (giving such Person the right to cure defaults in the payment of premiums) or (ii) for any other reason except upon not less than thirty (30) days prior written notice thereof by the insurer to the Administrative Agent or the Canadian Agent, as applicable. The Lead Borrower shall deliver to the

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Agents, and the Canadian Borrower shall deliver to the Canadian Agent, on or prior to the date of the cancellation or expiration of any such policy of insurance, or modification materially reducing the scope or amount of coverage of such policies of insurance, a copy of any applicable renewal or replacement insurance certificate.

          (c) None of the Credit Parties, or their agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Section 6.03. Each Loan Party shall look solely to its insurance companies or any other parties other than the Credit Parties for the recovery of such loss or damage and such insurance companies shall have no rights of subrogation against any Credit Party or its agents or employees. If, however, the insurance policies do not provide waiver of subrogation rights against such parties, as required above, then the Loan Parties hereby agree, to the extent permitted by law, to waive their right of recovery, if any, against the Credit Parties and their agents and employees. The designation of any form, type or amount of insurance coverage by the any Credit Party under this Section 6.03 shall in no event be deemed a representation, warranty or advice by such Credit Party that such insurance is adequate for the purposes of the business of the Loan Parties or the protection of their properties.

          (d) Maintain for themselves and their Americas Subsidiaries, a Directors and Officers insurance policy, and a “Blanket Crime” policy including employee dishonesty, forgery or alteration, theft, disappearance and destruction, robbery and safe burglary, property, and computer fraud coverage with responsible companies in such amounts as are customarily carried by business entities engaged in similar businesses similarly situated, and will upon request by any Agent, furnish the Administrative Agent certificates evidencing renewal of each such policy.

     Compliance with Laws. Comply, and cause each Subsidiary to comply, with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a)(i) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been set aside and maintained by the Loan Parties in accordance with GAAP; and (ii) such contest effectively suspends enforcement of the contested Laws, or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. Nothing contained herein shall be deemed to limit the rights of the Agents or the Canadian Agent with respect to establishing or modifying Reserves in a manner permitted by this Agreement.

     6.04 Books and Records.

     (i) Maintain proper books of record and account, in which entries full, true and correct in all material respects and in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Loan Parties or such Americas Subsidiary, as the case may be; and (ii) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Loan Parties or such Subsidiary, as the case may be.

     6.05 Inspection Rights.

          (a) Permit representatives and independent contractors of the Co-Collateral Agents (acting in consultation with the Administrative Agent) to visit and inspect any of its properties, to examine its corporate, financial and operating records, and insurance policies, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and (in the presence of a Responsible Officer of the Parent or the Lead Borrower) Registered Public Accounting Firm, all at the expense of the Loan Parties and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Lead Borrower; provided, however, that when an Event of Default exists the Co-Collateral Agents (acting in consultation with the Administrative Agent) (or any of their representatives or independent contractors) may do any of

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the foregoing at the expense of the Loan Parties at any time during normal business hours and without advance notice.

          (b) Upon the request of any Co-Collateral Agent (acting in consultation with the Administrative Agent) after reasonable prior notice, permit such Co-Collateral Agent (acting in consultation with the Administrative Agent) or professionals (including investment bankers, consultants, accountants, lawyers and appraisers) retained by the Administrative Agent to conduct appraisals, commercial finance examinations and other evaluations, including, without limitation, of (i) the Lead Borrower’s practices in the computation of the Domestic Borrowing Base and the Canadian Borrower’s practices in the computation of the Canadian Borrowing Base and (ii) the assets included in the Domestic Borrowing Base and the Canadian Borrowing Base, respectively, and related financial information such as, but not limited to, sales, gross margins, payables, accruals and reserves. Subject to the following sentence, the Loan Parties shall pay the reasonable and documented out-of-pocket fees and expenses of any of the Administrative Agent and the Co-Collateral Agents and such professionals with respect to such evaluations and appraisals. Without limiting the foregoing, the Loan Parties acknowledge that (A) subject to clause (B) below, the Co-Collateral Agents (acting in consultation with the Administrative Agent) shall undertake up to two (2) inventory appraisals and two (2) commercial finance examinations each Fiscal Year for each of the Domestic Borrowers and the Canadian Loan Parties at the Loan Parties’ expense, and (B) if the Domestic Borrowers fail to maintain Domestic Availability, for three (3) consecutive Business Days, at least equal to the greater of (x) thirty percent (30%) of the Total Loan Cap and (y) $45,000,000, the Co-Collateral Agents (acting in consultation with the Administrative Agent) shall undertake up to three (3) inventory appraisals and three (3) commercial finance examinations each Fiscal Year for each of the Borrowing Base Parties at the Loan Parties’ expense. Notwithstanding the foregoing, any Co-Collateral Agent (acting in consultation with the Administrative Agent) may cause additional appraisals and commercial finance examinations to be undertaken (i) as it in its Permitted Discretion deems necessary or appropriate, at its own expense or, (ii) if required by applicable Law or if a Default shall have occurred and be continuing, at the expense of the Loan Parties. In all events, any professional engaged to perform any evaluations, appraisals, commercial finance examinations or other services pursuant to this clause (b) shall be retained by the Administrative Agent and no other Person.

          (c) Notwithstanding anything to the contrary in this Section 6.05, none of the Parent or any of its Subsidiaries will be required to disclose, permit the inspection, examination or making of extracts, or discussion of, any documents, information or other matter that (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Agents, the Canadian Agent, any Lender (or any of their representatives) is then prohibited by Law or any agreement binding on the Parent or any of its Subsidiaries or (iii) is subject to attorney-client or similar privilege or constitutes attorney work-product.

     Use of Proceeds. Use the proceeds of the Credit Extensions only (a) to refinance Indebtedness of the Parent and its Subsidiaries under the Existing Credit Agreement, (b) to finance transaction fees and expenses related hereto, (c) to finance the acquisition of working capital assets of the Loan Parties, including the purchase of Inventory and Equipment, in each case, in the ordinary course of business, (d) to finance Capital Expenditures of the Loan Parties, and (e) for other general corporate purposes of the Loan Parties, in each case to the extent not prohibited under applicable Law and the Loan Documents.

     6.06 Additional Loan Parties.

          (a) Notify the Administrative Agent promptly after any Person becomes a Domestic Subsidiary that is a Wholly Owned Subsidiary of any Domestic Loan Party (other than any Immaterial Subsidiary), and promptly thereafter (and in any event within thirty (30) days or such longer period as the Agents may agree), (a) cause any such Domestic Subsidiary that is a Wholly Owned Subsidiary (other than any Immaterial Subsidiary) to (i) become a Domestic Borrower or Guarantor by executing and delivering to the Administrative Agent a Joinder Agreement, and, in the case of a Guarantor, a Facility Guaranty (or a counterpart or supplement thereto), (ii) grant a Lien to the Administrative Agent on such

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Person’s assets to the extent required by the Security Documents, and (iii) deliver to the Administrative Agent documents of the types referred to in clauses (iii), (iv), (xiv) and (xv) of Section ARTICLE IV(a) and, if requested by the Administrative Agent, customary opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a)), and (b) if any Equity Interests or Indebtedness of such Person are owned by any Domestic Loan Party, such Domestic Loan Party shall pledge such Equity Interests and promissory notes evidencing such Indebtedness (if any) (except that, if such Subsidiary is a CFC, the Equity Interests of such Subsidiary will not be required to be pledged), in the manner and format required by the Pledge Agreement; provided that, no Equity Interests of any Foreign Subsidiary which is not a Canadian Loan Party shall be required to be pledged.

          (b) Notify the Canadian Agent promptly after any Person becomes a Canadian Subsidiary that is a Wholly Owned Subsidiary of any Canadian Loan Party (other than any Immaterial Subsidiary), and promptly thereafter (and in any event within thirty (30) days or such longer period as the Canadian Agent may agree), (a) cause any such Canadian Subsidiary that is a Wholly Owned Subsidiary (other than any Immaterial Subsidiary) to (i) become a Guarantor of the Canadian Liabilities by executing and delivering to the Canadian Agent a Joinder Agreement and a Facility Guaranty (or a counterpart or supplement thereto), (ii) grant a Lien to the Canadian Agent on such Person’s assets to secure the Canadian Liabilities by executing and delivering to the Canadian Agent Canadian Security Documents, to the extent required by the Security Documents, and (iii) deliver to the Canadian Agent documents of the types referred to in clauses (iii) and (iv) of Section ARTICLE IV(a) and, if requested by the Canadian Agent, customary opinions of counsel to such Person (which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (a)), and (b) if any Equity Interests or Indebtedness of such Person are owned by any Canadian Loan Party, such Canadian Loan Party shall pledge such Equity Interests and promissory notes evidencing such Indebtedness (if any) (except that, if such Subsidiary is a CFC, the Equity Interests of such Subsidiary will not be required to be pledged), in the manner and format required by the Pledge Agreement; provided that, no Equity Interests of any Foreign Subsidiary which is not a Canadian Loan Party, and no Equity Interests of any unlimited company incorporated or amalgamated and existing under the laws of the Province of Nova Scotia, shall be required to be pledged.

          (c) In no event shall compliance with this Section 6.06 waive or be deemed a waiver or Consent to any transaction giving rise to the need to comply with this Section 6.06 if such transaction was not otherwise expressly permitted by this Agreement or constitute or be deemed to constitute, with respect to any Subsidiary, an approval of such Person as a Borrowing Base Party or permit the inclusion of any acquired assets in the computation of the Domestic Borrowing Base or the Canadian Borrowing Base, as applicable.

     6.07 Cash Management.

          (a) On or prior to the Closing Date or such later dates specified in the Post-Closing Letter:

          (i) deliver to the Administrative Agent (with respect to the Domestic Loan Parties) and the Canadian Agent (with respect to the Canadian Loan Parties) copies of notifications (each, a “Credit Card Notification”) substantially in the form attached hereto as Exhibit H which have been executed on behalf of such Loan Party and delivered to such Loan Party’s credit card clearinghouses and processors listed on Schedule 5.21(b); and

          (ii) enter into a Blocked Account Agreement with each Blocked Account Bank maintained by the Loan Parties as of the Closing Date with respect to each DDA specified by the Agents (other than payroll and other specific DDAs as may be acceptable to the Agents) established or maintained by any Loan Party as of the Closing Date with such Blocked Account Bank (collectively, the “Blocked Accounts”).

          (b) Subject to the terms of the Post-Closing Letter, the Loan Parties shall ACH or wire transfer no less frequently than once each Business Day (and whether or not there are then any

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outstanding Obligations) to a Blocked Account all amounts on deposit in each such DDA (net of such minimum balance consistent with past practices, but not to exceed $200,000 in the aggregate for all DDAs in any event) and all payments received by any Loan Party from credit card processors.

     (c) After the occurrence and during the continuance of a Cash Dominion Event (and delivery of notice thereof from the Administrative Agent or the Canadian Agent, as applicable, to the Lead Borrower and the applicable Blocked Account Bank), the Loan Parties and each Blocked Account Bank shall ACH or wire transfer no less frequently than once each Business Day (and whether or not there are then any outstanding Obligations) to the concentration account maintained by the Administrative Agent at Bank of America (the “Domestic Concentration Account”) (in the case of any Domestic Loan Party) or maintained by the Canadian Agent at Bank of America-Canada Branch (the “Canadian Concentration Account”) (in the case of any Canadian Loan Party) all cash receipts and collections by the Loan Parties (other than Operating Cash, and Cash Equivalents being held in accordance with the terms of the proviso at the end of the definition of “Permitted Investments”), including, without limitation, the following:

          (i) all available cash receipts of the Loan Parties from the sale of Inventory and other assets (other than Operating Cash);

          (ii) all proceeds of collections of Accounts of the Loan Parties;

          (iii) all other cash payments received by a Loan Party from any Person or from any source or on account of any sale or other transaction or event, including, without limitation, all Net Proceeds from any Prepayment Event;

          (iv) the then cash balance of each DDA (net of any minimum balance, not to exceed $200,000 in the aggregate) for all DDAs combined;

          (v) the then entire ledger balance of each Blocked Account (net of any minimum balance, not to exceed $200,000 in the aggregate) for all Blocked Accounts combined; and

          (vi) the cash proceeds of all credit card charges received by any Loan Party.

          (d) The Domestic Concentration Account shall at all times be under the sole dominion and control of the Administrative Agent, and the Canadian Concentration Account shall at all times be under the sole dominion and control of the Canadian Agent. The Loan Parties hereby acknowledge and agree that (i) the Loan Parties have no right of withdrawal from the Domestic Concentration Account or the Canadian Concentration Account, (ii) the funds on deposit in each Domestic Concentration Account shall at all times be collateral security for the Secured Obligations (as defined in the Security Agreement), (iii) the funds on deposit in each Canadian Concentration Account shall at all times be collateral security for all of the Canadian Liabilities and (iv) the funds on deposit in the Domestic Concentration Account and the Canadian Concentration Account shall be applied as provided in Section 2.05 of this Agreement. In the event that, notwithstanding the provisions of this Section 6.07, any Domestic Loan Party or Canadian Loan Party receives or otherwise has dominion and control of any such proceeds or collections (other than Operating Cash, and Cash Equivalents being held in accordance with the terms of the proviso at the end of the definition of “Permitted Investments”) while a Cash Dominion Event Exists, such proceeds and collections shall be held in trust by such Domestic Loan Party for the Administrative Agent and by such Canadian Loan Party for the Canadian Agent, shall not be commingled with any of such Loan Party’s other funds or deposited in any account of such Loan Party and shall, not later than the Business Day after receipt thereof, be deposited into the Domestic Concentration Account or the Canadian Concentration Account, as applicable, or dealt with in such other fashion as such Loan Party may be instructed by the Administrative Agent or the Canadian Agent, as applicable.

          (e) Upon the request of the Administrative Agent, the Domestic Loan Parties shall cause bank statements and/or other reports to be delivered to the Administrative Agent not less often than monthly, accurately setting forth all amounts deposited in each Blocked Account to ensure the proper transfer of funds as set forth above. Upon the request of the Canadian Agent, the Canadian Loan Parties shall cause bank statements and/or other reports to be delivered to the Administrative Agent not less often

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than monthly, accurately setting forth all amounts deposited in each Blocked Account to ensure the proper transfer of funds as set forth above. So long as no Cash Dominion Event has occurred and is continuing, the Loan Parties may direct, and shall have sole control over, the manner of disposition of funds in the Blocked Accounts. Any amounts held or received in the Domestic Concentration Account at any time when no Cash Dominion Event exists or while no Loans are outstanding (except as provided in Section 8.02) shall be promptly remitted to an account of the Lead Borrower, or as the Lead Borrower may otherwise direct. Any amounts held or received in the Canadian Concentration Account at any time when no Cash Dominion Event exists or while no Loans are outstanding (except as provided in Section 8.02) shall be promptly remitted to an account of the Canadian Borrower or as the Canadian Borrower may otherwise direct.

          (f) The Loan Parties shall not permit cash in an aggregate amount in excess of 10% of the aggregate of the Domestic Borrowing Base and the Canadian Borrowing Base, each 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 Loan Parties, and (ii) to the extent necessary for the Loan Parties 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 the deposit accounts or Cash Equivalents of the Loan Parties; provided, however, that the Loan Parties’ obligations under this Section 6.13(f) shall be suspended if and for so long as there are no Loans outstanding.

     6.08 Information Regarding the Collateral.

     Furnish to the Administrative Agent at least fifteen (15) days’ (or such shorter period as the Administrative Agent shall agree) prior written notice of any change in: (i) any Loan Party’s legal name; (ii) the location of any Loan Party’s chief executive office or its principal place of business; (iii) any Loan Party’s organizational type or jurisdiction of incorporation or formation; or (iv) any Loan Party’s Federal Taxpayer Identification Number or organizational identification number assigned to it by its jurisdiction of organization. The Loan Parties agree not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC, PPSA or otherwise that are required in order for the Administrative Agent or the Canadian Agent, as applicable, to continue, following such change, to have a valid, legal and perfected security interest in the Collateral for its own benefit and the benefit of the other applicable Credit Parties (to the extent a security interest in such Collateral can be perfected by the filing of a financing statement under the UCC or a filing under the PPSA).

     6.09 Physical Inventories.

          (a) Cause (i) not less than two (2) physical inventories of raw materials to be undertaken, at the expense of the Loan Parties, in each twelve (12) month period, conducted by a Loan Party or such other inventory takers as are reasonably satisfactory to the Co-Collateral Agents and following such methodology as is consistent with the methodology used in the immediately preceding inventory or as otherwise may be reasonably satisfactory to the Co-Collateral Agents and (ii) daily cycle counts of finished goods located at distribution centers, in each case consistent with past practices; provided, however, until such time as the Canadian Borrower transitions to periodic cycle counts with respect to its Inventory, (x) any physical inventory undertaken by the Canadian Borrower shall only include finished goods and (y) the Canadian Borrower shall not be required to comply with clause (ii) above. In the event that at any time Domestic Availability is less than twenty-five percent (25%) of the Total Loan Cap, any Agent may require that in addition to the two (2) physical inventories of raw materials, an additional physical inventory of all inventory be undertaken, at the expense of the Loan Parties, in the manner described above, during such twelve (12) month period. The Co-Collateral Agents, at the expense of the Loan Parties, may participate in and/or observe each scheduled physical count of Inventory which is undertaken on behalf of any Loan Party. The Lead Borrower (with respect to the

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inventory of the Domestic Loan Parties) and the Canadian Borrower (with respect to the inventory of the Canadian Loan Parties), within twenty (20) days following the completion of such physical inventory, shall provide the Administrative Agent or the Canadian Agent, as applicable, with a reconciliation of the results of such physical inventory (as well as of any other physical inventory) and shall post such results to the Loan Parties’ stock ledgers and general ledgers, as applicable. At the request of the Administrative Agent, the Lead Borrower shall, within thirty (30) days after such request, provide the Administrative Agent a summary of the average daily cycle count for the most recently ended Fiscal Quarter.

          (b) Any Agent (after consultation with the Administrative Agent), in its discretion, if any Default or Event of Default exists, may cause additional inventories to be taken as such Agent determines (each, at the expense of the Loan Parties).

     6.10 Environmental Laws.

          (a) Conduct, and cause each Subsidiary to conduct, its operations in compliance with all Environmental Laws, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect; (b) obtain and renew, and cause each Subsidiary to obtain and renew, all Environmental Permits required for its operations, except where the failure to do so would not reasonably be expected to have a Material Adverse Effect; and (c) implement, and cause each Subsidiary to implement, any and all investigation, remediation, removal and response actions that are required under applicable Environmental Laws to prevent the release of any Hazardous Materials on, at, or from any of its Real Estate; provided, however, that neither a Loan Party nor any of its Subsidiaries shall be required to undertake any such investigation, cleanup, removal, remedial or other action to the extent that (i) its obligation to do so is being contested in good faith and by proper proceedings and adequate reserves have been set aside and are being maintained by the Loan Parties with respect to such circumstances in accordance with GAAP or (ii) failure to undertake any investigation, clean up, removal, remedial or other action would not reasonably be expected to have a Material Adverse Effect. Nothing contained herein shall be deemed to limit the rights of the Agents or the Canadian Agent with respect to establishing or modifying Reserves in a manner permitted by this Agreement.

     6.11 Further Assurances.

          (a) Execute any and all further documents, financing statements, filings, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, amendments to financing statements or other documents under the UCC, the PPSA or any other similar legislation), that may be required under any applicable Law, or which any Agent or the Canadian Agent may reasonably request, to grant, preserve, protect or perfect the Liens created or intended to be created by the Security Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties and to the extent required by, and subject to the limitations set forth in, the Security Documents and this Agreement.

          (b) If any material personal property assets are acquired by any Loan Party after the Closing Date (other than assets constituting Collateral under the Security Documents that become subject to the Lien of the Security Documents upon acquisition thereof), notify the Agents thereof (in the case of Intellectual Property, solely with respect to Intellectual Property which is the subject of a registration or application with the PTO, Copyright Office or CIPO and within the time frames set forth in Schedule 6.02), and the Loan Parties will cause such assets to be subjected to a perfected Lien securing the Secured Obligations (as defined in the Security Agreement) of the Domestic Loan Parties (in the case of a Domestic Loan Party) or the Canadian Liabilities (in the case of a Canadian Loan Party), as applicable, and will take such actions as shall be necessary or shall be requested by any Agent or the Canadian Agent, as applicable, to grant and perfect such Liens, in each case to the extent required by, and subject to the limitations set forth in, the Security Documents and this Agreement, including actions described in paragraph (a) of this Section 6.11, all at the expense of the Loan Parties. In no event shall compliance with this Section 6.11(b) waive or be deemed a waiver or Consent to any transaction giving rise to the need to comply with this Section 6.11(b) if such transaction was not otherwise expressly permitted by this

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Agreement or constitute or be deemed to constitute Consent to the inclusion of any acquired assets in the computation of the Borrowing Base.

          (c) If, after the Closing Date, any Loan Party acquires a fee interest in real property located in the United States with a fair market value of $5.0 million or more (other than to the extent such real property was financed through the incurrence of any Indebtedness permitted by Section 7.03), such Loan Party shall notify the Administrative Agent and, if requested by any Agent, take such actions and execute such documents as any Agent shall reasonably require to create a mortgage Lien on such real property.

     6.12 Intentionally Omitted

     Material Contracts. In each case, exclusive of the Term Loan Documents or the Senior Note Indenture or any other Material Contract relating to Material Indebtedness, perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect (other than expirations pursuant to the terms thereof), and enforce each such Material Contract in accordance with its terms.

     6.13 Canadian Pension Benefit Plans.

     Each Canadian Loan Party shall cause each of its Canadian Pension Plans to be duly qualified and administered in all respects in compliance with, as applicable, the Supplemental Pension Plans Act (Quebec) and the Pension Benefits Act (Ontario) and all other applicable laws (including regulations, orders and directives), and the terms of the Canadian Pension Plans and any agreements relating thereto. Each Canadian Loan Party shall ensure:

     (a) it has no unfunded, solvency, or deficiency on windup liability and no accumulated funding deficiency (whether or not waived), or any amount of unfunded benefit liabilities in respect of any Canadian Pension Plan, including any Canadian Pension Plan to be established and administered by it or them;

     (b) all amounts required to be paid by it or them are paid when due;

     (c) no liability upon it or them or Lien on any of its or their asset property arises or exists in respect of any Canadian Pension Plan;

     (d) it makes all required contributions to any Canadian Pension Plan when due; and

     (e) it does not engage in a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Canadian Pension Plan that could reasonably be expected to result in liability.

ARTICLE VII
NEGATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied (other than contingent indemnification Obligations for which a claim has not then been asserted), or any Letter of Credit shall remain outstanding, no Loan Party shall, nor shall it permit any Americas Subsidiary to, directly or indirectly:

     Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or sign or file under the UCC, the PPSA or any similar Law or statute of any jurisdiction a financing statement or similar document that names any Loan

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Party or any Americas Subsidiary as debtor; or sign or authorize any security agreement authorizing any Person thereunder to file such financing statement or similar document other than, as to all of the above, Permitted Encumbrances.

     Investments. Make any Investments, except Permitted Investments.

     Indebtedness. Create, incur, assume, guarantee, suffer to exist or otherwise become or remain liable with respect to, any Indebtedness, except Permitted Indebtedness. The accrual of interest and the accretion or amortization of original issue discount on Indebtedness and the payment of interest in the form of additional Indebtedness originally incurred in accordance with this Section 0 will not constitute an incurrence of Indebtedness. In the event that any item of Indebtedness meets more than one of the categories set forth in the definition of “Permitted Indebtedness”, the Lead Borrower may classify such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one or more of such clauses, at its election. For purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, the Dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term debt, or first committed, in the case of revolving credit debt; provided that if such Indebtedness is incurred to extend, replace, refund, refinance, renew or defease other Indebtedness denominated in a foreign currency, and such extension, replacement, refunding, refinancing, renewal or defeasance would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such extension, replacement, refunding, refinancing, renewal or defeasance, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being extended, replaced, refunded, refinanced, renewed or defeased.

     Fundamental Changes. Merge, amalgamate, dissolve, liquidate, consolidate with or into another Person, except that, so long as no Default or Event of Default shall have occurred and be continuing prior to, or immediately after giving effect to, any action described below or would result therefrom:

     (a) any Subsidiary which is not a Loan Party may merge, amalgamate or consolidate with or into (i) a Loan Party, provided that a Loan Party shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries which are not Loan Parties, provided that when any Americas Subsidiary that is a Wholly-Owned Subsidiary is merging or amalgamating with another Subsidiary, a Wholly-Owned Subsidiary shall be the continuing or surviving Person;

     (b) any Loan Party or any Subsidiary which is a Loan Party may merge, amalgamate, or consolidate with or into any other Subsidiary which is a Loan Party, provided that in any merger, amalgamation or consolidation involving a Borrowing Base Party, a Borrowing Base Party shall be the continuing or surviving Person;

     (c) in connection with a Permitted Investment, any Loan Party or any Americas Subsidiary may merge, amalgamate with or into or consolidate with any other Person or permit any other Person to merge with or into or consolidate with it; provided that in any merger, amalgamation or consolidation involving a Loan Party, a Loan Party is the surviving Person;

     (d) (i) any Loan Party or any Americas Subsidiary may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to another Loan Party; and (ii) any Subsidiary which is not a Loan Party may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to another Subsidiary which is not a Loan Party; and

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     (e) any Guarantor or any Subsidiary which is not a Loan Party may liquidate or dissolve or change its legal form if the Parent determines in good faith that such action is in the best interests of the Parent and its Subsidiaries and is not materially disadvantageous to the Lenders.

     Dispositions. Make any Disposition, except Permitted Dispositions. To the extent any Collateral is Disposed of as permitted by this Section 0 to any Person other than any Loan Party, such Collateral shall be sold free and clear of the Liens created by the Loan Documents.

     Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, except:

     (f) each Loan Party and each Americas Subsidiary may make Restricted Payments to any Loan Party;

     (g) the Loan Parties and each Americas Subsidiary may declare and make dividend payments or other distributions payable solely in Equity Interests (other than Disqualified Stock not otherwise permitted by Section 0);

     (h) each Americas Subsidiary that is not a Loan Party may make Restricted Payments to any other Americas Subsidiary that is not a Loan Party;

     (i) the Parent may pay for and otherwise effect the repurchase, retirement or other acquisition or retirement for value of Equity Interests of the Parent by any employee, director or officer of the Parent or any of its Subsidiaries pursuant to any equity plan, stock option plan or any other benefit plan or any agreement with any employee, director or officer of the Parent or any of its Subsidiaries; provided that the aggregate amount of Restricted Payments made pursuant to this clause (d) shall not exceed $1,000,000 in any calendar year;

     (j) any Loan Party and each Americas Subsidiary may (i) pay cash in lieu of fractional Equity Interests in connection with any dividend, split or combination thereof or any Permitted Investment and (ii) honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion;

     (k) any Canadian Subsidiary may make Restricted Payments to any direct or indirect Subsidiary of the Parent so long as an amount equal to such Restricted Payments made by such Canadian Subsidiary is transferred to a Domestic Loan Party substantially concurrently with such Restricted Payment; and

     (l) if the Payment Conditions are satisfied, the Loan Parties and each Americas Subsidiary may make Restricted Payments in addition to those set forth in clauses (a) through (f) above.

     Prepayments of Indebtedness. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner any Permitted Indebtedness (other than the Obligations or Indebtedness between Loan Parties), or make any payment in violation of any subordination terms of any Subordinated Indebtedness, except (a) as long as no Event of Default then exists or would arise therefrom, regularly scheduled or mandatory repayments, repurchases, redemptions, defeasances or other satisfaction of Permitted Indebtedness (other than Subordinated Indebtedness), (b) as long as no Event of Default has occurred and is continuing, voluntary prepayments, redemptions, repurchases, defeasances or other satisfaction of Permitted Indebtedness (but excluding any payment in violation of the subordination terms

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of any Subordinated Indebtedness) (i) in an amount less than $6,000,000 in the aggregate during the Availability Period as long as the Availability Condition is satisfied, or (ii) constituting intercompany Indebtedness owing by a Loan Party to any Subsidiary that is not a Loan Party so long as an amount equal to such amount prepaid, redeemed, purchased or otherwise satisfied is transferred to a Loan Party substantially concurrently with such prepayment, redemption, purchase or other satisfaction, (c) as long as no Event of Default then exists, repayments and prepayments of Subordinated Indebtedness in accordance with the subordination terms thereof, (d) voluntary prepayments, repurchases, redemptions, defeasances or other satisfaction of Permitted Indebtedness (but excluding on account of any Subordinated Indebtedness) as long as the Payment Conditions are satisfied, and (e) any Permitted Amendment/Refinancings of such Indebtedness.

     7.02 Change in Nature of Business

     Engage in any line of business substantially different from the lines of business conducted by such Loan Parties and their Subsidiaries on the date hereof or any business substantially related or incidental thereto.

     Transactions with Affiliates. Enter into, renew, extend or be a party to any transaction of any kind with any Affiliate of any Loan Party, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Loan Parties or such Americas Subsidiary as would be obtainable by the Loan Parties or such Americas Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate, provided that the foregoing restriction shall not apply to (a) a transaction between or among the Loan Parties not prohibited hereunder; (b) transactions not otherwise prohibited hereunder between or among the Parent or any Subsidiary or any entity that becomes a Subsidiary as a result of such transaction; (c) equity issuances, repurchases, retirements or other acquisitions or retirements of Equity Interests by the Parent permitted under Section 0; (d) the transactions occurring on the Closing Date and the payment of fees and expenses related thereto; (e) the issuance of Equity Interests to any officer, director, employee or consultant of the Parent or any of its Subsidiaries; (f) transactions, arrangements, reimbursements and indemnities permitted between or among such parties under this Agreement; (g) the payment of reasonable fees and out-of-pocket costs to directors, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of the Parent or any of its Subsidiaries; (h) any issuances of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements, stock options and stock ownership plans of the Parent or any of its Subsidiaries; (i) any transfers by or among any Affiliates to pay tax liabilities, or (j) transactions pursuant to and in connection with the Term Loan Documents (including the issuance of warrants in connection therewith and any Permitted Amendment/Refinancing thereof).

     Burdensome Agreements. Enter into or permit to exist any Contractual Obligation (other than (x) this Agreement or any other Loan Document or (y) the Term Loan Credit Agreements or any document relating thereto or (z) the Senior Note Indenture or any Permitted Amendment/Refinancing of any of the foregoing) that limits the ability (i) any Americas Subsidiary that is not a Loan Party to make Restricted Payments to any Loan Party or (ii) of the Loan Parties to create, incur, assume or suffer to exist Liens on property of such Person in favor of the Administrative Agent or the Canadian Agent, as applicable, under the Loan Documents; provided, however, that none of the foregoing shall prohibit (A) any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under clauses (c) or (f) of the definition of Permitted Indebtedness solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; (B) customary anti-assignment provisions in contracts restricting the assignment thereof or in contracts for the Disposition of any assets or any Person, provided that the restrictions in any such contract shall apply only to the assets or Person that is to be Disposed of; (C) provisions in leases of real property that prohibit mortgages or pledges of the lessee’s

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interest under such lease or restricting subletting or assignment of such lease; (D) customary provisions in joint venture agreements and other similar agreements applicable to joint ventures to the extent such joint ventures are not prohibited hereunder; (E) customary restrictions arising under licenses and other contracts entered into in the ordinary course of business; (F) Contractual Obligations which (x) exist on the date hereof and (to the extent not otherwise permitted by this Section 0) are listed on Schedule 0 hereto and (y) to the extent Contractual Obligations permitted by clause (x) are set forth in an agreement evidencing Indebtedness, are set forth in any agreement evidencing any permitted renewal, extension or refinancing of such Indebtedness so long as such renewal, extension or refinancing does not expand the scope of such Contractual Obligation; or (G) Contractual Obligations which are binding on a Subsidiary at the time such Subsidiary first becomes a Subsidiary, so long as such Contractual Obligations were not entered into in contemplation of such Person becoming a Subsidiary.

     Use of Proceeds. Use the proceeds of any Credit Extension in a manner inconsistent with Section 6.11 or in any manner which violates Regulations T, U or X of the FRB.

     7.03 Amendment of Material Documents.

     Amend, modify or waive any of a Loan Party’s rights under (a) its Organization Documents in a manner materially adverse to the Credit Parties, or (b) any Material Contract (other than any Loan Document) or Material Indebtedness (other than on account of any refinancing or Permitted Amendment/Refinancing otherwise permitted hereunder), in each case to the extent that such amendment, modification or waiver would be reasonably likely to have a Material Adverse Effect.

     7.04 Fiscal Year.

     Change the Fiscal Year of any Loan Party without the prior consent of the Administrative Agent, except as required by GAAP.

     7.05 Deposit Accounts; Credit Card Processors.

     In the case of any Loan Party, open new Blocked Accounts or engage any new credit card processors unless the Loan Parties shall have delivered to the Administrative Agent appropriate Blocked Account Agreements or Credit Card Notifications, as applicable, consistent with the provisions of Section 6.07 or otherwise reasonably satisfactory to the Agents and, if applicable, the Canadian Agent.

     7.06 Financial Covenants.

          (a) Consolidated Fixed Charge Coverage Ratio. During the continuance of a Covenant Compliance Event, permit the Consolidated Fixed Charge Coverage Ratio, calculated as of the last day of each Measurement Period during such continuation, to be less than 1.1:1.0.

          (b) Availability. Permit Domestic Availability at any time to be less than or equal to seven and one half percent (7.5%) of the Total Loan Cap.

ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES

     Events of Default. Any of the following shall constitute an Event of Default:

     (a) Non-Payment. Any Borrower or any other Loan Party fails to pay when and as required to be paid herein, (i) any amount of principal of any Loan or any L/C Obligation, or

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deposit any funds as Cash Collateral in respect of L/C Obligations, or (ii) any interest on any Loan or on any L/C Obligation, or any fee due hereunder, which failure continues for two (2) Business Days, or (iii) any other amount payable hereunder or under any other Loan Document which failure continues for two (2) Business Days; or

     (b) Specific Covenants. Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 0, 6.02 (exclusive of Section 6.02(f)), 0, 6.02, 6.03, 6.05, 0, 6.06, 6.07, 6.08 or Article VII; or any Loan Party fails to deliver any one or more of the financial and collateral reports described on Schedule 6.02 hereto, no later than the times set forth in such Schedule, and such failure continues for three (3) Business Days after notice thereof by the Administrative Agent to the Lead Borrower, or

     (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days after notice thereof by the Administrative Agent to the Lead Borrower; or

     (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of any Borrower or any other Loan Party herein or in any other Loan Document, shall be incorrect or misleading in any material respect (or in the case of any representation or warranty qualified by materiality, in any respect) when made or deemed made; or

     (e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due, after giving effect to any applicable grace period (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Material Indebtedness, or (B) fails to observe or perform any other agreement or condition relating to any such Material Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Material Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, in each case, prior to its stated maturity; provided that any such failure is unremedied and is not waived by the holders of such Indebtedness; provided further that this clause (i)(B) shall not apply to (x) secured Indebtedness of a Loan Party or a Subsidiary that becomes due upon the sale or transfer by such Loan Party or Subsidiary of the property or assets securing such Indebtedness; or (y) scheduled payments, defeasances or redemptions of Indebtedness on the dates set forth in the instruments and agreements governing such Indebtedness; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by the Loan Party or such Subsidiary as a result thereof is greater than $15,000,000; provided that such failure is unremedied and is not waived by the applicable counterparty to such Swap Contract; or

     (f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries institutes or consents to the institution of any proceeding or makes any filing under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, interim receiver, trustee, monitor, custodian, conservator, liquidator, rehabilitator

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or similar officer for it or for all or any material part of its property; or a proceeding shall be commenced or a petition filed, without the application or consent of such Person, seeking or requesting the appointment of any receiver, interim receiver, trustee, monitor, custodian, conservator, liquidator, rehabilitator or similar officer and such receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed and the appointment continues undischarged, undismissed or unstayed for 45 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 45 calendar days, or an order for relief is entered in any such proceeding; or

     (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due in the ordinary course of business, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty (30) days after its issuance or levy; or

     (h) Judgments. There is entered against any Loan Party or any Subsidiary thereof (i) one or more final judgments for the payment of money in an aggregate amount (as to all such final judgments) exceeding $5,000,000 (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case such judgment is not, within 30 days after the entry thereof, satisfied, vacated, discharged or execution thereof stayed or bonded pending appeal, or such final judgment is not satisfied, vacated or discharged prior to the expiration of any such stay; or

     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $2,000,000 or which could reasonably be expected to result in a Material Adverse Effect, or (ii) a Loan Party or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $2,000,000 or which could reasonably be expected to result in a Material Adverse Effect; or

     (j) Canadian Pension Plan. Any event or condition shall occur or exist with respect to a Canadian Pension Plan that could reasonably be expected to subject any Canadian Loan Party to any tax, penalty or other liabilities under the Supplemental Pension Plans Act (Quebec) and the Pension Benefits Act (Ontario) or any other applicable Laws, or if a Canadian Loan Party is in default with respect to required payments to a Canadian Pension Plan or any Lien arises (save for contribution amounts not yet due) in connection with any Canadian Pension Plan, and which could reasonably be expected to result in a Material Adverse Effect.

     (k) Invalidity of Loan Documents. (i) Any provision of any material Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or

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obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document or seeks to avoid, limit or otherwise adversely affect any Lien purported to be created under any Security Document; or (ii) any Lien purported to be created under any Security Document shall cease to be, or shall be asserted by any Loan Party or any Subsidiary not to be, a valid and (to the extent required by the Security Documents and this Agreement) perfected Lien on any Collateral (other than an immaterial portion of the Collateral), with the priority required by the applicable Security Document; or

     (l) Change of Control. There occurs any Change of Control; or

     (m) Cessation of Business. Except as otherwise expressly permitted hereunder, any Loan Party shall take any action to suspend the operation of the business of the Loan Parties, taken as a whole, in the ordinary course or liquidate all or a material portion of the assets of the Loan Parties, taken as a whole;

     (n) Loss of Collateral. There occurs any uninsured loss to any material portion of the Collateral; or

     (o) Intentionally Omitted.

     (p) Indictment. The indictment against any Loan Party or any Subsidiary thereof, under any federal, state, provincial, territorial, municipal, foreign or other criminal statute, rule, regulation, order, or other requirement having the force of law for a felony and such indictment remains unquashed or undismissed for a period of ninety (90) days or more, unless the Administrative Agent, in its reasonable discretion, determines that the indictment is not material; or

     (q) Guaranty. The termination, revocation or attempted termination or revocation by any Loan Party of any Facility Guaranty except as expressly permitted hereunder or under any other Loan Document; or

     (r) Subordination. (i) The subordination provisions of the documents evidencing or governing any Subordinated Indebtedness (the “Subordination Provisions”) shall, in whole or in part, terminate, cease to be effective or cease to be legally valid, binding and enforceable against any holder of the applicable Subordinated Indebtedness; or (ii) any Borrower or any other Loan Party shall, directly or indirectly, disavow or contest in any manner (A) the effectiveness, validity or enforceability of any of the Subordination Provisions, (B) that the Subordination Provisions exist for the benefit of the Credit Parties, or (C) that all payments of principal of or premium and interest on the applicable Subordinated Indebtedness, or realized from the liquidation of any property of any Loan Party, shall be subject to any of the Subordination Provisions.

     Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent and, if applicable, the Canadian Agent may, or, at the request of the Required Lenders shall, take any or all of the following actions:

     (s) declare the Commitments of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such Commitments and obligation shall be terminated;

     (t) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan

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Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Loan Parties;

     (u) require that the Domestic Borrowers Cash Collateralize the Domestic L/C Obligations (other than L/C Borrowings), and require that the Canadian Loan Parties Cash Collateralize the Canadian L/C Obligations (other than L/C Borrowings); and

     (v) whether or not the maturity of the Obligations shall have been accelerated pursuant hereto, proceed to protect, enforce and exercise all rights and remedies of the Credit Parties under this Agreement, any of the other Loan Documents or applicable Law, including, but not limited to, by suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement and the other Loan Documents or any instrument pursuant to which the Obligations are evidenced, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Credit Parties;

provided, however, that upon the entry of an order for relief with respect to any Loan Party or any Subsidiary thereof under any Debtor Relief Law, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Loan Parties to Cash Collateralize the L/C Obligations (other than L/C Borrowings) as aforesaid shall automatically become effective, in each case without further act of the Agents, the Canadian Agent, the L/C Issuer, or any Lender.

     No remedy herein is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or any other provision of Law.

     8.02 Application of Funds.

          (a) After the exercise of remedies provided for in Section 0 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 0), any amounts received from any Domestic Loan Party, from the liquidation of any Collateral of any Domestic Loan Party, or on account of the Obligations (excluding the Canadian Liabilities), shall be applied by the Administrative Agent against the Obligations in the following order:

     First, to payment of that portion of the Obligations (excluding the Other Liabilities and the Canadian Liabilities) constituting fees, indemnities, Credit Party Expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and the Co-Collateral Agents and amounts payable under Article III) payable to the Administrative Agent and the Co-Collateral Agents, each in its capacity as such;

     Second, to payment of that portion of the Obligations (excluding the Other Liabilities) constituting indemnities, Credit Party Expenses, and other amounts (other than principal, interest and fees) payable to the Domestic Lenders and the L/C Issuer (on account of Domestic Letters of Credit) (including fees, charges and disbursements of counsel to the respective Domestic Lenders and the L/C Issuer (on account of Domestic Letters of Credit) and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;

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     Third, to the extent not previously reimbursed by the Domestic Lenders, to payment to the Domestic Lenders of that portion of the Obligations constituting principal and accrued and unpaid interest on any Permitted Domestic Overadvances, ratably among the Domestic Lenders in proportion to the amounts described in this clause Third payable to them;

     Fourth, to the extent that Swing Line Loans made to the Domestic Borrowers have not been refinanced by a Committed Domestic Loan, payment to the Swing Line Lender of that portion of the Obligations constituting accrued and unpaid interest on the Swing Line Loans made to the Domestic Borrowers;

     Fifth, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Domestic Loans, Domestic L/C Borrowings and other Obligations (other than the Canadian Liabilities), and fees (including Letter of Credit Fees, other than any fees due on account of any Canadian Letter of Credit), ratably among the Domestic Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Fifth payable to them;

     Sixth, to the extent that Swing Line Loans made to the Domestic Borrowers have not been refinanced by a Committed Domestic Loan, to payment to the Swing Line Lender of that portion of the Obligations constituting unpaid principal of the Swing Line Loans made to the Domestic Borrowers;

     Seventh, to payment of that portion of the Obligations constituting unpaid principal of the Domestic Loans and Domestic L/C Borrowings, ratably among the Domestic Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Seventh held by them;

     Eighth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of Domestic L/C Obligations comprised of the aggregate undrawn amount of Domestic Letters of Credit;

     Ninth, subject to Section 8.02(c), to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders as cash collateral to payment of that portion of the Canadian Liabilities (excluding the Other Canadian Liabilities) constituting fees, indemnities, Credit Party Expenses and other amounts (including fees, charges and disbursements of counsel to the Canadian Agent and amounts payable under Article III) payable to the Canadian Agent, in its capacity as such;

     Tenth, subject to Section 8.02(c), to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders and the L/C Issuer as cash collateral to payment of that portion of the Canadian Liabilities (excluding the Other Canadian Liabilities) constituting indemnities, Credit Party Expenses, and other amounts (other than principal, interest and fees) payable to the Canadian Lenders and the L/C Issuer (on account of Canadian Letters of Credit) (including fees, charges and disbursements of counsel to the respective Domestic Lenders and the L/C Issuer (on account of Canadian Letters of Credit) and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Tenth payable to them;

     Eleventh, to the extent not previously reimbursed by the Canadian Lenders and subject to Section 8.02(c), to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders as cash collateral to payment to the Canadian Lenders of that portion of the Canadian Liabilities constituting principal and accrued and unpaid interest on any Permitted

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Canadian Overadvances, ratably among the Canadian Lenders in proportion to the amounts described in this clause Eleventh payable to them;

     Twelfth, to the extent that Swing Line Loans made to the Canadian Borrower have not been refinanced by a Committed Canadian Loan and subject to Section 8.02(c), to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders and the Swing Line Lender as cash collateral to payment to the Swing Line Lender of that portion of the Canadian Liabilities constituting accrued and unpaid interest on the Swing Line Loans made to the Canadian Borrower;

     Thirteenth, subject to Section 8.02(c), to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders and the L/C Issuer as cash collateral to payment of that portion of the Canadian Liabilities constituting accrued and unpaid interest on the Canadian Loans, Canadian L/C Borrowings and other Canadian Liabilities, and fees (including Letter of Credit Fees not paid pursuant to clause Fifth above), ratably among the Canadian Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Thirteenth payable to them;

     Fourteenth, to the extent that Swing Line Loans made to the Canadian Borrower have not been refinanced by a Committed Canadian Loan and subject to Section 8.02(c), to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders and the Swing Line Lender as cash collateral to payment to the Swing Line Lender of that portion of the Canadian Liabilities constituting unpaid principal of the Swing Line Loans made to the Canadian Borrower;

     Fifteenth, subject to Section 8.02(c), to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders and the L/C Issuer as cash collateral to payment of that portion of the Canadian Liabilities constituting unpaid principal of the Canadian Loans and Canadian L/C Borrowings, ratably among the Canadian Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Fifteenth held by them;

     Sixteenth, subject to Section 8.02(c), to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders and the L/C Issuer, to Cash Collateralize that portion of Canadian L/C Obligations comprised of the aggregate undrawn amount of Canadian Letters of Credit;

     Seventeenth, to payment of all other Obligations (including without limitation the cash collateralization of unliquidated indemnification obligations for which a claim has been made as provided in Section 10.03, but excluding any Other Domestic Liabilities and Other Canadian Liabilities), ratably among the Credit Parties in proportion to the respective amounts described in this clause Seventeenth held by them;

     Eighteenth, to payment of that portion of the Obligations arising from Cash Management Services to the extent secured under the Security Documents, ratably among the Credit Parties in proportion to the respective amounts described in this clause Eighteenth held by them;

     Nineteenth, to payment of all other Obligations arising from Bank Products to the extent secured under the Security Documents, ratably among the Credit Parties in proportion to the respective amounts described in this clause Nineteenth held by them; and

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     Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Domestic Loan Parties or as otherwise required by Law.

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Domestic Letters of Credit pursuant to clause Eighth above shall be applied to satisfy drawings under such Domestic Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Domestic Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

          (b) After the exercise of remedies provided for in Section 0 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 0), any amounts received from any Canadian Loan Party, from the liquidation of any Collateral of any Canadian Loan Party, or on account of the Canadian Liabilities, shall be applied by the Canadian Agent against the Canadian Liabilities in the following order:

     First, to payment of that portion of the Canadian Liabilities (excluding the Other Canadian Liabilities) constituting fees, indemnities, Credit Party Expenses and other amounts (including fees, charges and disbursements of counsel to the Canadian Agent and amounts payable under Article III) payable to the Canadian Agent, in its capacity as such;

     Second, to payment of that portion of the Canadian Liabilities (excluding the Other Canadian Liabilities) constituting indemnities, Credit Party Expenses, and other amounts (other than principal, interest and fees) payable to the Canadian Lenders and the L/C Issuer (on account of Canadian Letters of Credit) (including fees, charges and disbursements of counsel to the respective Domestic Lenders and the L/C Issuer (on account of Canadian Letters of Credit) and amounts payable under Article III), ratably among them in proportion to the amounts described in this clause Second payable to them;

     Third, to the extent not previously reimbursed by the Canadian Lenders, to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders as cash collateral to payment to the Canadian Lenders of that portion of the Canadian Liabilities constituting principal and accrued and unpaid interest on any Permitted Canadian Overadvances, ratably among the Canadian Lenders in proportion to the amounts described in this clause Third payable to them;

     Fourth, to the extent that Swing Line Loans made to the Canadian Borrower have not been refinanced by a Committed Canadian Loan, to the Canadian Agent to be held by the Canadian Agent, for the ratable benefit of the Canadian Lenders as cash collateral to payment to the Swing Line Lender of that portion of the Canadian Liabilities constituting accrued and unpaid interest on the Swing Line Loans made to the Canadian Borrower;

     Fifth, to payment of that portion of the Canadian Liabilities constituting accrued and unpaid interest on the Canadian Loans, Canadian L/C Borrowings and other Canadian Liabilities, and fees (including Letter of Credit Fees due on account of Canadian Letters of Credit), ratably among the Canadian Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Fifth payable to them;

     Sixth, to the extent that Swing Line Loans made to the Canadian Borrower have not been refinanced by a Committed Canadian Loan, to payment to the Swing Line Lender of that portion of the Canadian Liabilities constituting unpaid principal of the Swing Line Loans made to the Canadian Borrower;

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      Seventh, to payment of that portion of the Canadian Liabilities constituting unpaid principal of the Canadian Loans and Canadian L/C Borrowings, ratably among the Canadian Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Seventh held by them;

     Eighth, to the Canadian Agent for the account of the L/C Issuer, to Cash Collateralize that portion of Canadian L/C Obligations comprised of the aggregate undrawn amount of Canadian Letters of Credit;

     Ninth, to payment of all other Canadian Liabilities (including without limitation the cash collateralization of unliquidated indemnification obligations as provided in Section 10.03, but excluding any Other Canadian Liabilities), ratably among the Credit Parties in proportion to the respective amounts described in this clause Ninth held by them;

     Tenth, to payment of that portion of the Canadian Liabilities arising from Cash Management Services to the extent secured under the Security Documents, ratably among the Credit Parties in proportion to the respective amounts described in this clause Tenth held by them;

     Eleventh, to payment of all other Canadian Liabilities arising from Bank Products to the extent secured under the Security Documents, ratably among the Credit Parties in proportion to the respective amounts described in this clause Eleventh held by them; and

     Last, the balance, if any, after all of the Canadian Liabilities have been indefeasibly paid in full, to the Canadian Loan Parties or as otherwise required by Law.

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate undrawn amount of Canadian Letters of Credit pursuant to clause Eighth above shall be applied to satisfy drawings under such Canadian Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Canadian Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Canadian Liabilities, if any, in the order set forth above.

          (c) Any amounts received by the Canadian Agent pursuant to clauses Ninth through Sixteenth of Section 8.02(a) shall be held as cash collateral for the applicable Canadian Liabilities until the earlier of (i) the substantial Liquidation of the Collateral granted by the Canadian Loan Parties to secure the Canadian Liabilities, or (ii) such date that the Canadian Agent and the Administrative Agent shall otherwise determine.

     Waivers By Loan Parties. Except as otherwise provided for in this Agreement or by applicable Law, each Loan Party waives (a) presentment, demand and protest and notice of presentment, dishonor, notice of intent to accelerate, notice of acceleration, protest, default, nonpayment, maturity, release, compromise, settlement, and hereby ratifies and confirms whatever the Administrative Agent may do in this regard, (b) all rights to notice and a hearing prior to the Administrative Agent’s taking possession or control of, or to the Administrative Agent’s replevy, attachment or levy upon, the Collateral or any bond or security that might be required by any court prior to allowing the Administrative Agent to exercise any of its remedies, and (c) the benefit of all valuation, appraisal, marshaling and exemption Laws.

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ARTICLE IX
AGENTS AND LENDERS

     9.01 Appointment and Authority.

          (a) Each of the Domestic Lenders and the L/C Issuer (with respect to Domestic Letters of Credit) hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article IX are for the benefit of the Agents, the Domestic Lenders and the L/C Issuer, and no Loan Party or any Subsidiary thereof shall have rights as a third party beneficiary of any of such provisions (other than the provisions of Section 9.06).

          (b) Each of the Canadian Lenders and the L/C Issuer (with respect to Canadian Letters of Credit) hereby irrevocably appoints Bank of America-Canada Branch to act on its behalf as the Canadian Agent hereunder and under the other Loan Documents and authorizes the Canadian Agent to take such actions on its behalf and to exercise such powers as are delegated to the Canadian Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article IX are for the benefit of the Canadian Agent, the Canadian Lenders and the L/C Issuer, and no Loan Party or any Subsidiary thereof shall have rights as a third party beneficiary of any of such provisions (other than the provisions of Section 9.06).

          (c) Without limiting the generality of the foregoing Section 9.01(b), for the purposes of creating a solidarité active in accordance with article 1541 of the Civil Code of Québec between each Credit Party that is owed any Canadian Liabilities, taken individually, on the one hand, and the Canadian Agent, on the other hand, each Canadian Loan Party and each such Credit Party acknowledge and agree with the Canadian Agent that such Credit Party and the Canadian Agent are hereby conferred the legal status of solidary creditors of the Canadian Loan Parties in respect of all Canadian Liabilities, present and future, owed by any Canadian Loan Party to each such Credit Party and the Canadian Agent (collectively, for the purposes of this paragraph, the “solidary claim”). Accordingly, but subject (for the avoidance of doubt) to article 1542 of the Civil Code of Québec, the Canadian Loan Parties are irrevocably bound towards the Canadian Agent and each such Credit Party in respect of the entire solidary claim of the Canadian Agent and such Credit Party. As a result of the foregoing, the Canadian Loan Parties confirm and agree that subject to Section 9.01(b), above, the rights of the Canadian Agent and each of the Credit Parties who are owed Canadian Liabilities from time to time a party to this Agreement or any of the other Loan Documents by way of assignment or otherwise are solidary and, as regards the Canadian Liabilities owing from time to time to each such Credit Party, each of the Canadian Agent and such Credit Party is entitled, when permitted pursuant to Section 8.01, to: (i) demand payment of all outstanding amounts from time to time in respect of the Canadian Liabilities; (ii) exact the whole performance of such Canadian Liabilities from the Canadian Loan Parties; (iii) benefit from the Canadian Agent’s Liens in the Collateral in respect of such Canadian Liabilities; (iv) give a full acquittance of such Canadian Liabilities (each Credit Party that is owed Canadian Liabilities hereby agreeing to be bound by any such acquittance); and (v) exercise all rights and recourses under the Loan Documents with respect to those Canadian Liabilities. The Canadian Liabilities of the Canadian Loan Parties will be secured by the Canadian Agent’s Liens in the Collateral and the Canadian Agent and the Credit Parties who are owed Canadian Liabilities will have a solidary interest therein.

          (d) Each of the Lenders (in its capacities as a Lender), the Swing Line Lender and the L/C Issuer hereby irrevocably appoints Bank of America as Administrative Agent and authorizes the Administrative Agent to act as the agent of such Lender and the L/C Issuer for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Domestic Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 0 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article X (including Section 10.03(c)), as

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though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents, as if set forth in full herein with respect thereto.

     Rights as a Lender. The Persons serving as the Agents hereunder shall have the same rights and powers in their capacity as a Lender as any other Lender and may exercise the same as though they were not the Administrative Agent, the Canadian Agent or the Co-Collateral Agents and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent, the Canadian Agent or the Co-Collateral Agents hereunder in its individual capacity. Such Person and its Lender Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Loan Parties or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent, the Canadian Agent or the Co-Collateral Agents hereunder and without any duty to account therefor to the Lenders.

     Exculpatory Provisions. The Agents and the Canadian Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Agents and the Canadian Agent:

     (b) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;

     (c) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent, the Canadian Agent or the Co-Collateral Agents, as applicable, is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that no Agent nor the Canadian Agent shall be required to take any action that, in its respective opinion or the opinion of its counsel, may expose such Agent or the Canadian Agent to liability or that is contrary to any Loan Document or applicable Law; and

     (d) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Loan Parties or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent, the Canadian Agent, the Co-Collateral Agents or any of its Lender Affiliates in any capacity.

No Agent nor the Canadian Agent shall be liable to any Credit Party for any action taken or not taken by it (i) with the Consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as such Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 0 and 0) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a final and non-appealable judgment of a court of competent jurisdiction.

     The Agents and the Canadian Agent shall not be deemed to have knowledge of any Default unless and until notice describing such Default is given to such Agent or the Canadian Agent by the Loan Parties, a Lender or the L/C Issuer. In the event that the Agents or the Canadian Agent obtains such actual knowledge or receives such a notice, the Agents or the Canadian Agent, as applicable, shall give prompt notice thereof to each of the other Lenders. Upon the occurrence of an Event of Default, the Agents or the Canadian Agent, as applicable, shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders. Unless and until the Agents or the Canadian Agent, as applicable, shall have received such direction, the Agents and the Canadian Agent, as

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applicable, may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to any such Default or Event of Default as they shall deem advisable in the best interest of the Credit Parties. In no event shall the Agents or the Canadian Agent be required to comply with any such directions to the extent that any Agent or the Canadian Agent believes that its compliance with such directions would be unlawful.

     The Agents and the Canadian Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or the creation, perfection or priority of any Lien purported to be created by the Security Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Agents or the Canadian Agent.

     9.02 Reliance by Agents.

     Each Agent and the Canadian Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including, but not limited to, any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. Each Agent and the Canadian Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent and the Canadian Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent or the Canadian Agent, as applicable, shall have received written notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. Each Agent and the Canadian Agent may consult with legal counsel (who may be counsel for any Loan Party), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

     Delegation of Duties. Each Agent and the Canadian Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by such Agent or the Canadian Agent. Each Agent, the Canadian Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Agents or the Canadian Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as such Agent or the Canadian Agent.

     Resignation of Agents. Any Agent or the Canadian Agent may at any time give written notice of its resignation to the Lenders, the L/C Issuer and the Lead Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Lead Borrower, to appoint a successor, which, in the case of any Agent, shall be a bank with an office in the United States, or a Lender Affiliate of any such bank with an office in the United States and shall, unless an Event of Default has occurred and is continuing at the time of such appointment, be reasonably acceptable to the Lead Borrower (whose consent shall not be unreasonably withheld or delayed), and in the case of the Canadian

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Agent, shall be a financial institution that is listed on Schedule I, II or III of the Bank Act (Canada) or is not a foreign bank for purposes of the Bank Act (Canada), and if such financial institution is not resident in Canada and is not deemed to be resident in Canada for purposes of the Income Tax Act (Canada), then such financial institution deals at arm’s length with each Canadian Loan Party for purposes of the Income Tax Act (Canada) and shall, unless an Event of Default has occurred and is continuing at the time of such appointment, be reasonably acceptable to the Canadian Borrower (whose consent shall not be unreasonably withheld or delayed). If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent or Canadian Agent, as applicable, gives notice of its resignation, then the retiring Agent or Canadian Agent, as applicable, may on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent, Canadian Agent or Co-Collateral Agent, as applicable, meeting the qualifications set forth above; provided that if the Administrative Agent, the Canadian Agent or the Co-Collateral Agent shall notify the Lead Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Agent or Canadian Agent, as applicable, shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any Collateral held by such Person on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring Administrative Agent or Canadian Agent, as applicable, shall continue to hold such collateral security until such time as a successor Administrative Agent or Canadian Agent, as applicable, is appointed) and (2) all payments, communications and determinations provided to be made by, to or through the Administrative Agent or Canadian Agent, as applicable, shall instead be made by or to each Lender and the L/C Issuer directly, until such time as the Required Lenders appoint a successor Administrative Agent or Canadian Agent, as applicable, as provided for above in this Section 0. Upon the acceptance of a successor’s appointment as Administrative Agent, Canadian Agent or Co-Collateral Agent, as applicable, hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent or Canadian Agent, as applicable, and the retiring Agent or Canadian Agent, as applicable, shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section 0). The fees payable by the Borrowers to a successor Administrative Agent or Canadian Agent, as applicable, shall be the same as those payable to its predecessor unless otherwise agreed between the Lead Borrower and such successor. After the retiring Agent’s or Canadian Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 10.03 shall continue in effect for the benefit of such retiring Agent or Canadian Agent, as applicable, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as Administrative Agent, or Canadian Agent, or Co-Collateral Agent hereunder.

     Any resignation by Bank of America as Administrative Agent pursuant to this Section 0 shall also constitute its resignation as L/C Issuer and Swing Line Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line Lender, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.

     Any resignation by Bank of America-Canada Branch as Canadian Agent pursuant to this Section 0 shall also constitute its resignation as L/C Issuer and Swing Line Lender. Upon the acceptance of a successor’s appointment as Canadian Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line Lender, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective

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duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring L/C Issuer to effectively assume the obligations of the retiring L/C Issuer with respect to such Letters of Credit.

     Non-Reliance on Agents, Canadian Agent and Other Lenders. Each Lender and the L/C Issuer acknowledges that it has, independently and without reliance upon the Agents, the Canadian Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the L/C Issuer also acknowledges that it will, independently and without reliance upon the Agents or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. Except as provided in Section 9.04, the Agents and the Canadian Agent shall not have any duty or responsibility to provide any Credit Party with any other credit or other information concerning the affairs, financial condition or business of any Loan Party that may come into the possession of the Agents or the Canadian Agent, as applicable.

     No Other Duties, Etc. Notwithstanding anything to the contrary in this Agreement or any of the other Loan Documents, no Person who is or becomes an Arranger, a Bookrunner or a Syndication Agent shall have any powers, rights, duties, responsibilities or liabilities with respect to this Agreement and the other Loan Documents.

     Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Loan Parties) shall be entitled and empowered, by intervention in such proceeding or otherwise

     (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer, the Administrative Agent and the other Credit Parties (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer, the Administrative Agent, such Credit Parties and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer the Administrative Agent and such Credit Parties under Sections 2.03(i), 2.03(j), 0 and 10.03) allowed in such judicial proceeding; and

     (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, interim receiver, assignee, trustee, monitor, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 0 and 10.03.

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     Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment, compromise or composition or proposal affecting the Obligations or the rights of any Lender or the L/C Issuer or to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer in any such proceeding.

     Collateral and Guaranty Matters. The Credit Parties irrevocably authorize the Agents and the Canadian Agent, at their option and in their discretion,

     (c) to release any Lien on any property granted to or held by the Administrative Agent or the Canadian Agent under any Loan Document (i) upon termination of the Aggregate Total Commitments and payment in full of all Obligations (other than contingent indemnification obligations for which no claim has been asserted) and the expiration or termination of all Letters of Credit, (ii) solely with respect to any Lien on any property of the Canadian Loan Parties, upon termination of the Aggregate Canadian Commitments and payment in full of all Canadian Liabilities (other than contingent indemnification obligations for which no claim has been asserted) and the expiration or termination of all Canadian Letters of Credit, (iii) that is Disposed of or to be Disposed of as part of or in connection with any Disposition permitted hereunder or under any other Loan Document, or (iv) if approved, authorized or ratified in writing by the Required Lenders in accordance with Section 0;

     (d) to subordinate any Lien on any property granted to or held by the Administrative Agent or the Canadian Agent under any Loan Document to the holder of any Lien on such property that is permitted by clause (h) of the definition of Permitted Encumbrances; and

     (e) to release any Guarantor from its obligations under any Facility Guaranty and each other applicable Loan Document if such Person ceases to be a Subsidiary as a result of a transaction permitted hereunder.

Upon request by any Agent or the Canadian Agent at any time, the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents) will confirm in writing such Agent’s or Canadian Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Facility Guaranty and each other applicable Loan Document pursuant to this Section 0. In each case as specified in this Section 0, the Agents or Canadian Agent (as applicable) will, at the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and Lien granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Facility Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 0.

     9.03 Notice of Transfer.

     The Agents and the Canadian Agent may deem and treat a Lender party to this Agreement as the owner of such Lender’s portion of the Loans and Commitments for all purposes, unless and until, and except to the extent, an Assignment and Assumption shall have become effective as set forth in Section 10.04.

     9.04 Reports and Financial Statements.

     By signing this Agreement, each Lender:

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     (a) agrees to furnish the Administrative Agent or the Canadian Agent, as applicable, after the occurrence and during the continuance of a Cash Dominion Event (and thereafter at such frequency as the Administrative Agent or the Canadian Agent may reasonably request) with a summary of all Other Domestic Liabilities or Other Canadian Liabilities due or to become due to such Lender. In connection with any distributions to be made hereunder, the Administrative Agent and the Canadian Agent shall be entitled to assume that no amounts are due to any Lender on account of Other Liabilities unless the Administrative Agent or the Canadian Agent, as applicable, has received written notice thereof from such Lender;

     (b) is deemed to have requested that the Administrative Agent or the Canadian Agent, as applicable, furnish such Lender, promptly after they become available, copies of all financial statements, notices or other written communications required to be delivered by any Loan Party hereunder and all commercial finance examinations and appraisals of the Collateral received by the Agents or the Canadian Agent (collectively, the “Reports”) and the Administrative Agent and the Canadian Agent each hereby agrees to honor each such request;

     (c) expressly agrees and acknowledges that neither the Administrative Agent nor the Canadian Agent makes any representation or warranty as to the accuracy of the Reports, and shall not be liable for any information contained in any Report;

     (d) expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the Agents, the Canadian Agent or any other party performing any audit or examination will inspect only specific information regarding the Loan Parties and will rely significantly upon the Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel;

     (e) agrees to keep all Reports confidential in accordance with the provisions of Section 0 hereof; and

     (f) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Agents, the Canadian Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any Credit Extensions that the indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a Loan or Loans; and (ii) to pay and protect, and indemnify, defend, and hold the Agents, the Canadian Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including attorney costs) incurred by the Agents, the Canadian Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

     9.05 Agency for Perfection.

     Each Agent and Lender hereby appoints each other Agent and Lender as agent for the purpose of perfecting Liens for the benefit of the Agents, the Canadian Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC, the PPSA or any other applicable Law of the United States or Canada can be perfected only by possession. Should any Lender (other than the Agents and the Canadian Agent) obtain possession of any such Collateral, such Lender shall notify the Agents and the Canadian Agent, as applicable, thereof, and, promptly upon the Administrative Agent’s or the Canadian Agent’s request therefor, shall deliver such Collateral to the Administrative Agent or the Canadian Agent, as

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applicable, or otherwise deal with such Collateral in accordance with the Administrative Agent’s or the Canadian Agent’s instructions.

     Indemnification of Agents and Canadian Agent. The Lenders shall indemnify the Agents and the Canadian Agent (to the extent not reimbursed by the Loan Parties and without limiting the obligations of Loan Parties hereunder), ratably according to their Applicable Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against any Agent or the Canadian Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by any Agent or the Canadian Agent in connection therewith; provided, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s or the Canadian Agent’s gross negligence or willful misconduct as determined by a final and nonappealable judgment of a court of competent jurisdiction.

     Relation among Lenders. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Agents and the Canadian Agent) authorized to act for, any other Lender.

     9.06 Defaulting Lender.

          (a) If for any reason any Lender shall fail or refuse to abide by its obligations under this Agreement, including without limitation its obligation to make available to Administrative Agent or the Canadian Agent, as applicable, its Applicable Percentage of any Loans, expenses or setoff or purchase its Applicable Percentage of a participation interest in the Swing Line Loans or L/C Borrowings and such failure is not cured within one (1) Business Day of receipt from the Administrative Agent of written notice thereof, then, in addition to the rights and remedies that may be available to the other Credit Parties, the Loan Parties or any other party at law or in equity, and not at limitation thereof, (i) such Defaulting Lender’s right to participate in the administration of, or decision-making rights related to, the Obligations, this Agreement or the other Loan Documents shall be suspended during the pendency of such failure or refusal, and (ii) a Defaulting Lender shall be deemed to have assigned any and all payments due to it from the Loan Parties, whether on account of outstanding Loans, interest, fees or otherwise, to the remaining non-Defaulting Lenders for application to, and reduction of, their proportionate shares of all outstanding Obligations until, as a result of application of such assigned payments the Lenders’ respective Applicable Percentages of all outstanding Obligations shall have returned to those in effect immediately prior to such delinquency and without giving effect to the nonpayment causing such delinquency, and (iii) at the option of the Administrative Agent, any amount payable to such Defaulting Lender hereunder (whether on account of principal, interest, fees or otherwise) shall, in lieu of being distributed to such Defaulting Lender, be retained by the Administrative Agent as cash collateral for future funding obligations of the Defaulting Lender in respect of any Loan or existing or future participating interest in any Swing Line Loan or Letter of Credit. The Defaulting Lender’s decision-making and participation rights and rights to payments as set forth in clauses (i) and (ii) hereinabove shall be restored only upon the payment by the Defaulting Lender of its Applicable Percentage of any Obligations, any participation obligation, or expenses as to which it is delinquent, together with interest thereon at the rate set forth in Section 2.08(b) hereof from the date when originally due until the date upon which any such amounts are actually paid.

          (b) The non-Defaulting Lenders shall also have the right, but not the obligation, in their respective, sole and absolute discretion, to cause the termination and assignment, without any further action by the Defaulting Lender for no cash consideration (pro rata, based on the respective Domestic Commitments of those Domestic Lenders electing to exercise such right, and the respective Canadian Commitments of those Canadian Lenders electing to exercise such right), of the Defaulting Lender’s

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Domestic Commitment or Canadian Commitment, as applicable, to fund future Loans. Upon any such purchase of the Applicable Percentage of any Defaulting Lender, the Defaulting Lender’s share in future Credit Extensions and its rights under the Loan Documents with respect thereto shall terminate on the date of purchase, and the Defaulting Lender shall promptly execute all documents reasonably requested to surrender and transfer such interest, including, if so requested, an Assignment and Assumption.

          (c) Each Defaulting Lender shall indemnify the Administrative Agent or the Canadian Agent, as applicable, and each non-Defaulting Lender from and against any and all loss, damage or expenses, including but not limited to reasonable attorneys’ fees and funds advanced by the Administrative Agent or the Canadian Agent, as applicable, or by any non-Defaulting Lender, on account of a Defaulting Lender’s failure to timely fund its Applicable Percentage of a Loan or to otherwise perform its obligations under the Loan Documents.

     Actions In Concert. Anything in this Agreement to the contrary notwithstanding, each Lender hereby agrees with each other Lender that no Lender shall take any action to protect or enforce its rights arising out of this Agreement or any other Loan Document (including exercising any rights of setoff) without first obtaining the prior written consent of the Agents and the Required Lenders, it being the intent of Lenders that any such action to protect or enforce rights under this Agreement and the other Loan Documents shall be taken in concert and at the direction or with the consent of the Agents or the Required Lenders.

     Collateral Issues. Notwithstanding any other provisions of this Agreement or any of the other Loan Documents to the contrary, each Co-Collateral Agent shall have rights at least as expansive as the rights afforded to the Administrative Agent or the Canadian Agent relating to (i) (x) the definitions herein of the terms “Domestic Availability” and “Canadian Availability” and any component definition of either of the foregoing, and (y) the definitions herein of the terms “Domestic Borrowing Base” and “Canadian 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 Canadian Agent in regards to the Collateral (collectively, the “Collateral Issues”), and any provision in this Agreement or any other Loan Document relating to a Collateral Issue which would otherwise only need the consent of or to be satisfactory or acceptable to the Administrative Agent or the Canadian Agent shall be deemed to require the consent of or be satisfactory or acceptable (as the case may be) to the Co-Collateral Agents. In addition, in the event that all of the Agents and, as applicable, the Canadian Agent, cannot agree on issues relating to the Domestic Borrowing Base, the Canadian Borrowing Base, Domestic Availability, Canadian Availability, Domestic Borrowing Base eligibility standards, Canadian Borrowing Base eligibility standards, Reserves, advance rates, borrowing base reporting, appraisals or examinations or any other action or determination relating to a Collateral Issue, the determination shall be made by the Agent and, if applicable, the Canadian Agent, either asserting the more conservative credit judgment (that is, that would result in the least amount of credit being available to the Borrowers hereunder) or declining to permit the requested action.

ARTICLE X
MISCELLANEOUS

     Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no Consent to any departure by any Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders (or the Administrative Agent, with the Consent of the Required Lenders), and the Lead Borrower or the applicable Loan Party, as the case may be, and each such waiver or Consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:

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     (a) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 0) without the written Consent of such Lender;

     (b) postpone any date fixed by this Agreement or any other Loan Document for any payment or mandatory prepayment of principal, interest or fees due to the applicable Lenders (or any of them) hereunder without the written Consent of each Lender entitled to such payment;

     (c) reduce the principal of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or any fees payable hereunder, without the written Consent of each Lender entitled to such amount; provided, however, that only the Consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrowers to pay interest or Letter of Credit Fees at the Default Rate;

     (d) change Section 0 or Section 8.02 in a manner that would alter the pro rata sharing of payments required thereby without the written Consent of each Lender;

     (e) change any provision of this Section or change the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, without the written Consent of each Lender;

     (f) except as expressly permitted hereunder or under any other Loan Document, release, or limit the liability of, any Loan Party without the written Consent of each Lender;

     (g) except for Permitted Dispositions, release all or substantially all of the Collateral from the Liens of the Security Documents without the written Consent of each Lender;

     (h) except as provided in Section 2.13, increase the Aggregate Domestic Commitments or the Aggregate Canadian Commitments without the written Consent of each Lender;

     (i) change the definition of the term “Domestic Borrowing Base”, “Canadian Borrowing Base” or any component definition of either term, if as a result thereof the amount of credit available to the Borrowers hereunder would be increased without the written Consent of each Lender, provided that, subject to Section 0 hereof, the foregoing shall not limit the discretion of any Agent to change, establish or eliminate any Reserves with respect to the Domestic Borrowing Base, or of any Agent or the Canadian Agent to change, establish or eliminate any Reserves with respect to the Canadian Borrowing Base even if such change or elimination results in an increase in the amount of credit available to the Borrowers hereunder;

     (j) modify the definition of “Permitted Domestic Overadvance” or the definition of “Permitted Canadian Overadvance” so as to increase the amount thereof or, except as provided in such definitions, the time period for a Permitted Domestic Overadvance or a Permitted Canadian Overadvance without the written Consent of each Lender; and

     (k) except as expressly permitted herein or in any other Loan Document, subordinate any of the Obligations hereunder or the Liens granted hereunder or under the other Loan Documents, to any other Indebtedness or Lien, as the case may be without the written Consent of each Lender;

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and, provided further, that (i) no amendment, waiver or Consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or Consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or Consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (iv) no amendment, waiver or Consent shall, unless in writing and signed by the Canadian Agent in addition to the Lenders required above, affect the rights or duties of the Canadian Agent under this Agreement or any other Loan Document; (v) no amendment, waiver or Consent shall, unless in writing and signed by the Co-Collateral Agents in addition to the Lenders required above, affect the rights or duties of any Co-Collateral Agent under this Agreement or any other Loan Document; and (vi) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or Consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Lender.

     If any Lender does not Consent (a “Non-Consenting Lender”) to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the Consent of each or each affected Lender and that has been approved by the Required Lenders, the Lead Borrower may replace such Non-Consenting Lender in accordance with Section 0; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Lead Borrower to be made pursuant to this paragraph).

     10.02 Notices; Effectiveness; Electronic Communications.

          (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

     (i) if to the Loan Parties, the Agents, the Canadian Agent, the L/C Issuer or the Swing Line Lender, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and

     (ii) if to any other Lender, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire.

     Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).

          (b) Electronic Communications. Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent or the Canadian Agent, as applicable, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic

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communication. The Administrative Agent or the Lead Borrower or the Canadian Agent and the Canadian Borrower may, in their discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.

     Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

          (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Agents, the Canadian Agent or any of their Related Parties (collectively, the “Agent Parties”) have any liability to any Loan Party, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Loan Parties’ or the Agent Parties’ transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to any Loan Party, any Lender, the L/C Issuer or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages).

          (d) Change of Address, Etc. Each of the Loan Parties, the Agents, the Canadian Agent, the L/C Issuer and the Swing Line Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Lead Borrower, the Agents, the Canadian Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender.

          (e) Reliance by Agents, L/C Issuer and Lenders. The Agents, the Canadian Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic Committed Loan Notices and Swing Line Loan Notices) purportedly given by or on behalf of the Loan Parties even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Loan Parties shall indemnify the Agents, the Canadian Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Loan Parties. All telephonic notices to and other telephonic communications with

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the Agents and the Canadian Agent, may be recorded by the Agents or the Canadian Agent, and each of the parties hereto hereby consents to such recording.

     No Waiver; Cumulative Remedies. No failure by any Credit Party to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided herein and in the other Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Credit Party may have had notice or knowledge of such Default at the time.

     10.03 Expenses; Indemnity; Damage Waiver.

          (a) Costs and Expenses. The Borrowers shall pay all Credit Party Expenses (provided that the Canadian Borrower shall be obligated to pay only those Credit Party Expenses which constitute Credit Party Expenses incurred by the Canadian Agent or the Canadian Lenders in connection with the Canadian Loans and Canadian Letters of Credit).

          (b) Indemnification by the Loan Parties. The Loan Parties shall indemnify the Agents and the Canadian Agent (and any of their sub-agents), each other Credit Party, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, causes of action, damages, liabilities, settlement payments, costs and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee, but excluding Taxes which shall be governed by Section 3.01), incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Agents and the Canadian Agent (and any of their sub-agents) and their Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by any Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to any Loan Party or any of its Subsidiaries, (iv) any claims of, or amounts paid by any Credit Party to, a Blocked Account Bank or other Person which has entered into a control agreement with any Credit Party hereunder, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party or any of the Loan Parties’ directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by a Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if such Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction; provided that with respect to the Canadian Loan Parties, “Indemnitees” shall only refer to the Canadian Credit Parties and each Related Party of the Canadian Credit Parties.

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          (c) Reimbursement by Lenders. Without limiting their obligations under Section 0 hereof, to the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it, each Lender severally agrees to pay to the Agents and the Canadian Agent (and any of their sub-agents), the L/C Issuer or such Related Party, as the case may be, such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Agents and the Canadian Agent (and any of their sub-agents) or the L/C Issuer in its capacity as such, or against any Related Party of any of the foregoing acting for the Agents and the Canadian Agent (and any of their sub-agents) or L/C Issuer in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.11(d).

          (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, the Loan Parties shall not assert, and hereby waive, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

          (e) Payments. All amounts due under this Section shall be payable on demand therefor.

          (f) Survival. The agreements in this Section shall survive the resignation of any Agent, the Canadian Agent and the L/C Issuer, the assignment of any Commitment or Loan by any Lender, the replacement of any Lender, the termination of the Aggregate Total Commitments and the repayment, satisfaction or discharge of all the other Obligations and the termination of this Agreement.

     Reinstatement; Payments Set Aside. This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Loan Party for liquidation or reorganization or otherwise under any Debtor Relief Law, should any Loan Party become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver, interim receiver, trustee, monitor, custodian, conservator, liquidator, rehabilitator or similar officer be appointed for all or any significant part of any Loan Party’s assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference”, “fraudulent conveyance”, or otherwise, all as though such payment or performance had not been made. To the extent that any payment by or on behalf of the Loan Parties is made to any Credit Party, or any Credit Party exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Credit Party in its discretion) to be repaid to a receiver, interim receiver, trustee, monitor, custodian, conservator, liquidator, rehabilitator or similar officer, or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, (b) each Domestic Lender and the L/C Issuer (with respect to Domestic Letters of Credit) severally agrees to pay to the Agents upon demand its Applicable Percentage (without duplication) of any amount so recovered from or repaid by the Agents, plus interest thereon from the date of such demand to the date such payment is

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made at a rate per annum equal to the Federal Funds Rate from time to time in effect, and (c) each Canadian Lender and the L/C Issuer (with respect to Canadian Letters of Credit) severally agrees to pay to the Canadian Agent upon demand its Applicable Percentage (without duplication) of any amount so recovered from or repaid by the Canadian Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Canadian Prime Rate from to time in effect. The obligations of the Lenders and the L/C Issuer under clause (b) and clause (c) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.

     10.04 Successors and Assigns.

          (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written Consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of Section 10.04(b), (ii) by way of participation in accordance with the provisions of subsection Section 10.04(d), or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.04(f) (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Credit Parties) any legal or equitable right, remedy or claim under or by reason of this Agreement.

          (b) Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment(s) and the Loans (including for purposes of this Section 10.04(b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that any such assignment shall be subject to the following conditions:

     (i) Minimum Amounts

          (A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender or a Lender Affiliate of a Lender or an Approved Fund with respect to a Lender, no minimum amount need be assigned; and

          (B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $10,000,000 unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Lead Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met;

     (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans;

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     (iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:

          (A) the consent of the Lead Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, a Lender Affiliate of a Lender or an Approved Fund; and

          (B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for assignments in respect of any Commitment if such assignment is to a Person that is not a Lender, a Lender Affiliate of such Lender or an Approved Fund with respect to such Lender; and

          (C) the consent of the L/C Issuer (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding) if such assignment is to a Person that is not a Lender, a Lender Affiliate of such Lender or an Approved Fund with respect to such Lender; and

          (D) the consent of the Swing Line Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the assignment of any Commitment if such assignment is to a Person that is not a Lender, a Lender Affiliate of such Lender or an Approved Fund with respect to such Lender provided that the provisions of this clause (iii) shall not apply to any assignment to Rhône Capital L.P. or its Affiliates pursuant to the purchase right in Section 5.4 of the Intercreditor Agreement. The parties agree that Rhône Capital L.P. (“Rhône”) is a vested third party beneficiary of this Section 10.06 solely to the extent of its purchase right in the Intercreditor Agreement, and the parties agree that this Section 10.06 shall not be amended in a manner that would prohibit such purchase right without the prior written consent of Rhône.

     (iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500, provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

     (v) Restrictions on Canadian Lenders. No Person may be a Canadian Lender unless it (or any of its Lender Affiliates) also has a Domestic Commitment in an amount at least equal to its Canadian Commitment, unless consented to by the Administrative Agent.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.02, 0, and 10.03 with respect to facts and circumstances occurring prior to the effective date of such assignment. Upon request, the applicable Borrowers (at their expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 10.04(d).

          (c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Loan Parties, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders,

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and the Commitments of, and principal amounts of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and the Loan Parties, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Lead Borrower, the Canadian Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice. This Section 10.06(c) shall be construed so that the Obligations are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any regulations promulgated thereunder (and any other relevant or successor provisions of the Code or such regulations).

          (d) Participations. Any Lender may at any time, without the consent of, or notice to, the Loan Parties or the Administrative Agent, sell participations to any Person (other than a natural person or the Loan Parties or any of the Loan Parties’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Domestic Commitment, Canadian Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Loan Parties, the Agents, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any Participant shall agree in writing to comply with all confidentiality obligations set forth in Section 0 as if such Participant was a Lender hereunder.

     Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 0 that affects such Participant. Subject to subsection (e) of this Section, the Loan Parties agree that each Participant shall be entitled to the benefits of Sections 3.01, 3.02 and 0 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.04(b), provided that such Participant’s participation is recorded in the Register as set forth in Section 10.06(c) as though it were a Lender. To the extent permitted by Law, each Participant also shall be entitled to the benefits of Section 0 as though it were a Lender, provided such Participant agrees to be subject to Section 0 as though it were a Lender and such Participant’s participation is recorded in the Register as set forth in Section 10.06(c) as though it were a Lender..

          (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.01 or 3.02 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant. A Participant shall not be entitled to the benefits of Section 3.01 unless the Lead Borrower is notified of the participation sold to such Participant and such Participant complies, for the benefit of the Loan Parties, with Section 3.01(e), as though it were a Lender.

          (f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

          (g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based

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recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

          (h) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Commitment and Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the Lead Borrower and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Lead Borrower, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Lead Borrower shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Lead Borrower to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit issued by Bank of America or its Lender Affiliates outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Prime Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Prime Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America or Bank of America, N.A. (acting through its Canada branch), as applicable, to effectively assume the obligations of Bank of America or Bank of America, N.A. (acting through its Canada branch), as applicable, with respect to such Letters of Credit.

     Treatment of Certain Information; Confidentiality. Each of the Credit Parties agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Lender Affiliates and to its and its Lender Affiliates’ respective partners, directors, officers, employees, agents, funding sources, attorneys, advisors and representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Loan Party and its obligations, (g) with the consent of the Lead Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to any Credit Party or any of their respective Lender Affiliates on a non-confidential basis from a source other than the Loan Parties (only if such Credit Party has no knowledge that such source itself is not in breach of a confidentiality obligation).

     For purposes of this Section, “Information” means all information received from the Loan Parties or any Subsidiary thereof relating to the Loan Parties or any Subsidiary thereof or their respective businesses, other than any such information that is available to any Credit Party on a non-confidential

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basis prior to disclosure by the Loan Parties or any Subsidiary thereof (provided that if such information is furnished by a source known to such Credit Party to be subject to a confidentiality obligation, such source, to the knowledge of such Credit Party, is not in violation of such obligation by such disclosure). Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

     Each of the Credit Parties acknowledges that (a) the Information may include material non-public information concerning the Loan Parties or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including Federal and state securities Laws.

     Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Lender Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent or the Required Lenders, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Lender Affiliate to or for the credit or the account of the Borrowers or any other Loan Party against any and all of the Obligations existing under this Agreement or any other Loan Document then due and owing to such Lender or the L/C Issuer, regardless of the adequacy of the Collateral, and irrespective of whether or not such Lender or the L/C Issuer shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrowers or such Loan Party are owed to a branch or office of such Lender or the L/C Issuer different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender, the L/C Issuer and their respective Lender Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Lender Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Lead Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application. Notwithstanding the foregoing, any amounts of the Canadian Loan Parties so offset shall be applied solely to the Canadian Liabilities.

     Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent, the Canadian Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the applicable Borrowers. In determining whether the interest contracted for, charged, or received by the Administrative Agent, the Canadian Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

     Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous letters of intent, commitment letters, agreements and understandings, oral

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or written, relating to the subject matter hereof; provided that the Fee Letter shall survive the execution and delivery of this Agreement and shall continue to be a binding obligation of each of the parties thereto. Except as provided in Section 0, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic image scan transmission (e.g., “pdf” or “tif” via e-mail) shall be as effective as delivery of a manually executed counterpart of this Agreement.

     Survival. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Credit Parties, regardless of any investigation made by any Credit Party or on their behalf and notwithstanding that any Credit Party may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder (other than contingent indemnity obligations for which claims have not been asserted) shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. Further, the provisions of Article III, Article IX and Section 10.04 all survive and remain in full force and effect after the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof and repayment of all of the Obligations (including, without limitation, those arising under Article III, Article IX and Section 10.04) hereunder. In connection with the termination of this Agreement and the release and termination of the security interests in the Collateral, the Agents or the Canadian Agent may require such indemnities and collateral security as they shall reasonably deem necessary or appropriate to protect the Credit Parties against (x) loss on account of credits previously applied to the Obligations that may subsequently be reversed or revoked, and (y) any obligations that may thereafter arise with respect to the Other Liabilities.

     Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     Replacement of Lenders. If any Lender requests compensation under Section 3.02, or if any Lender delivers a notice described in Section 3.02, the Loan Parties are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Lead Borrower may, at the Borrowers’ (in the case of the Canadian Borrower, only in respect of any Canadian Lender) sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.04), all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:

     (b) the applicable Borrowers shall have paid to the Administrative Agent the assignment fee specified in Section (b);

     (c) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees in respect thereof

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and all other amounts payable to it hereunder and under the other Loan Documents in respect thereof (including any amounts under Section 0) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

     (d) in the case of any such assignment resulting from a claim for compensation under Section 3.02 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter; and

     (e) such assignment does not conflict with applicable Laws.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

     10.05 Governing Law; Jurisdiction; Etc.

          (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          (b) SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE LOAN PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE LOAN PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT ANY CREDIT PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

          (c) WAIVER OF VENUE. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE LOAN PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

          (d) SERVICE OF PROCESS. EACH LOAN PARTY IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

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          (e) ACTIONS COMMENCED BY LOAN PARTIES. EACH LOAN PARTY AGREES THAT ANY ACTION COMMENCED BY ANY LOAN PARTY ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT SOLELY IN A COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR ANY FEDERAL COURT SITTING THEREIN AS THE ADMINISTRATIVE AGENT MAY ELECT IN ITS SOLE DISCRETION AND CONSENTS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS WITH RESPECT TO ANY SUCH ACTION.

     Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby, the Loan Parties each acknowledge and agree that: (i) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial transaction between the Loan Parties, on the one hand, and the Credit Parties, on the other hand, and each of the Loan Parties is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, each Credit Party is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Loan Parties or any of their respective Affiliates, stockholders, creditors or employees or any other Person; (iii) none of the Credit Parties has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Loan Parties with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Loan Document (irrespective of whether any of the Credit Parties has advised or is currently advising any Loan Party or any of its Affiliates on other matters) and none of the Credit Parties has any obligation to any Loan Party or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; (iv) the Credit Parties and their respective Lender Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Loan Parties and their respective Lender Affiliates, and none of the Credit Parties has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Credit Parties have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Loan Document) and each of the Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. Each of the Loan Parties hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against each of the Credit Parties with respect to any breach or alleged breach of agency or fiduciary duty.

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     USA PATRIOT Act Notice; Proceeds of Crime Act . Each Lender that is subject to the Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act and all applicable “know your customer” rules, regulations and procedures applicable to such Lender in Canada), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act. Each Loan Party is in compliance, in all material respects, with the Patriot Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “Proceeds of Crime Act”). No part of the proceeds of the Loans will be used by the Loan Parties, directly or indirectly, for any purpose which would contravene or breach the Proceeds of Crime Act or for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

     Foreign Asset Control Regulations. Neither of the advance of the Loans, the issuance of the Letters of Credit, nor the use of the proceeds of any thereof will violate the Trading With the Enemy Act (50 U.S.C. § 1 et seq., as amended) (the “Trading With the Enemy Act”) or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) (the “Foreign Assets Control Regulations”) or any enabling legislation or executive order relating thereto (which for the avoidance of doubt shall include, but shall not be limited to (a) Executive Order 13224 of September 21, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Executive Order”) and (b) the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56)). Furthermore, none of the Loan Parties or their Affiliates (a) is or will become a “blocked person” as described in the Executive Order, the Trading With the Enemy Act or the Foreign Assets Control Regulations or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such “blocked person” or in any manner violative of any such order.

     Time of the Essence. Time is of the essence of the Loan Documents.

     10.06 Foreign Subsidiaries.

     Notwithstanding any provision of any Loan Document to the contrary, (including any provision that would otherwise apply notwithstanding other provisions or that is the beneficiary of other overriding language), (i) no more than 65% of the total combined voting power of all classes of stock entitled to vote in or of any CFC shall be pledged or similarly hypothecated to guarantee or support any Obligation of the Domestic Borrowers, (ii) no CFC shall guarantee or support any Obligation of the Domestic Borrowers and (iii) no security or similar interest shall be granted in the assets of any CFC, which security or similar interest guarantees or supports any Obligation of the Domestic Borrowers. The parties agree that any pledge, guaranty or similar interest made or granted in contravention of this Section 10.21 shall be void ab initio. For purposes of this Section 10.21, a CFC shall include a Subsidiary substantially all of the assets of which consist of Equity Interests in one or more CFCs.

     10.07 Press Releases.

          (a) Each Credit Party executing this Agreement agrees that neither it nor its Lender Affiliates will in the future issue any press releases or other public disclosure using the name of any Lender or Agent or the Canadian Agent or such Person’s Lender Affiliates or referring to this Agreement or the other Loan Documents without at least two (2) Business Days’ prior notice to such Lender or Agent

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or Canadian Agent and without the prior written consent of such Lender or Agent or Canadian Agent unless (and only to the extent that) such Credit Party or Lender Affiliate is required to do so under applicable Law and then, in any event, such Credit Party or Lender Affiliate will consult with such Lender or Agent or Canadian Agent before issuing such press release or other public disclosure.

          (b) Each Credit Party agrees that neither it nor its Lender Affiliates will in the future issue any press releases or other public disclosure using the name of the Parent or its Subsidiaries without at least two (2) Business Days’ prior notice to the Administrative Agent and without the prior written consent of the Administrative Agent unless (and only to the extent that) such Credit Party or Lender Affiliate is required to do so under applicable Law and then, in any event, such Credit Party or Lender Affiliate will consult with the Lead Borrower before issuing such press release or other public disclosure. Subject to the foregoing, each Loan Party consents to the publication by Administrative Agent or any Lender of advertising material relating to the financing transactions contemplated by this Agreement using any Loan Party’s name, product photographs, logo or trademark. Administrative Agent or such Lender shall provide a draft reasonably in advance of any advertising material to the Lead Borrower for review and comment prior to the publication thereof and reasonably cooperate with Lead Borrower in connection with any modifications requested by Lead Borrower. Administrative Agent reserves the right to provide to industry trade organizations information necessary and customary for inclusion in league table measurements.

     10.08 Additional Waivers.

          (a) Except as provided herein or in any other Loan Document or pursuant to any amendment or waiver executed pursuant to Section 10.01, the Obligations (including, for avoidance of doubt, the Canadian Liabilities) are the joint and several obligation of each Loan Party; provided that the Canadian Borrower and the other Canadian Loan Parties shall be liable only for the Canadian Liabilities. To the fullest extent permitted by applicable Law, the obligations of each Loan Party shall not be affected by (i) the failure of any Credit Party to assert any claim or demand or to enforce or exercise any right or remedy against any other Loan Party under the provisions of this Agreement, any other Loan Document or otherwise, (ii) any release of any other Loan Party from any of the terms or provisions of, this Agreement or any other Loan Document, or (iii) the failure to perfect any security interest in, or the release of, any of the Collateral or other security held by or on behalf of the Administrative Agent, the Canadian Agent, the Co-Collateral Agents or any other Credit Party.

          (b) Except as provided herein or in any other Loan Document or pursuant to any amendment or waiver executed pursuant to Section 10.01, the Obligations of each Loan Party shall not be subject to any reduction, limitation, impairment or termination for any reason (other than the indefeasible payment in full in cash of the Obligations after the termination of the Commitments), including any claim of waiver, release, surrender, alteration or compromise of any of the Obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Obligations or otherwise. Without limiting the generality of the foregoing, the Obligations of each Loan Party shall not be discharged or impaired or otherwise affected by the failure of any Agent or any other Credit Party to assert any claim or demand or to enforce any remedy under this Agreement, any other Loan Document or any other agreement, by any waiver or modification of any provision of any thereof, any default, failure or delay, willful or otherwise, in the performance of any of the Obligations, or by any other act or omission that may or might in any manner or to any extent vary the risk of any Loan Party or that would otherwise operate as a discharge of any Loan Party as a matter of law or equity (other than the indefeasible payment in full in cash of all of the Obligations after the termination of the Commitments).

          (c) To the fullest extent permitted by applicable Law, each Loan Party waives any defense based on or arising out of any defense of any other Loan Party or the unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of any other Loan Party, other than the indefeasible payment in full in cash of all the Obligations and the termination of the Commitments. The Administrative Agent, the Canadian Agent and the other Credit

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Parties may, at their election, foreclose on any security held by one or more of them by one or more judicial or non-judicial sales, accept an assignment of any such security in lieu of foreclosure, compromise or adjust any part of the Obligations, make any other accommodation with any other Loan Party, or exercise any other right or remedy available to them against any other Loan Party, without affecting or impairing in any way the liability of any Loan Party hereunder except to the extent that all the Obligations have been indefeasibly paid in full in cash and the Commitments have been terminated. Each Loan Party waives any defense arising out of any such election even though such election operates, pursuant to applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of such Loan Party against any other Loan Party, as the case may be, or any security.

          (d) Each Domestic Borrower is obligated to repay the Obligations as joint and several obligors under this Agreement. Upon payment by any Loan Party of any Obligations, all rights of such Loan Party against any other Loan Party arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full in cash of all the Obligations and the termination of the Commitments. Any indebtedness of any Loan Party now or hereafter held by any other Loan Party is hereby subordinated in right of payment to the prior indefeasible payment in full of the Obligations but may be paid in the ordinary course of business. If any amount shall erroneously be paid to any Loan Party on account of (i) such subrogation, contribution, reimbursement, indemnity or similar right or (ii) any such indebtedness of any Loan Party, such amount shall be held in trust for the benefit of the Credit Parties and shall forthwith be paid to the Administrative Agent or the Canadian Agent, as applicable, to be credited against the payment of the applicable Obligations, whether matured or unmatured, in accordance with the terms of this Agreement and the other Loan Documents. Subject to the foregoing, to the extent that any Domestic Borrower shall, under this Agreement as a joint and several obligor, repay any of the Obligations constituting Loans made to another Borrower hereunder or other Obligations incurred directly and primarily by any other Borrower (an “Accommodation Payment”), then the Domestic Borrower making such Accommodation Payment shall be entitled to contribution and indemnification from, and be reimbursed by, each of the other Domestic Borrowers (or the Canadian Borrower, if applicable) in an amount, (x) for each of such other Domestic Borrower, equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Domestic Borrower’s Allocable Amount and the denominator of which is the sum of the Allocable Amounts of all of the Domestic Borrowers, or (y) for the Canadian Borrower, in an amount equal to such Accommodation Payment. As of any date of determination, the “Allocable Amount” of each Domestic Borrower shall be equal to the maximum amount of liability for Accommodation Payments which could be asserted against such Domestic Borrower hereunder without (a) rendering such Domestic Borrower “insolvent” within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Domestic Borrower with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (c) leaving such Domestic Borrower unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA.

     Without limiting the generality of the foregoing, or of any other waiver or other provision set forth in this Agreement, each Loan Party hereby absolutely, knowingly, unconditionally, and expressly waives any and all claim, defense or benefit arising directly or indirectly under any one or more of Sections 2787 to 2855 inclusive of the California Civil Code or any similar law of California.

          (e) Judgment Currency. If, for the purposes of obtaining judgment in any court in any jurisdiction with respect to this Agreement or any other Loan Document, it becomes necessary to convert into a particular currency (the “Judgment Currency”) any amount due under this Agreement or under any other Loan Document in any currency other than the Judgment Currency (the “Currency Due”), then conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which judgment is given. For this purpose “rate of exchange” means the rate at which the applicable

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Agent or the Canadian Agent, as applicable, is able, on the relevant date, to purchase the Currency Due with the Judgment Currency in accordance with its normal practice. In the event that there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given and the date of receipt by such Agent or the Canadian Agent, as applicable, of the amount due such Agent or the applicable Loan Party will, on the date of receipt by such Agent or the Canadian Agent, as applicable, pay such additional amounts, if any, or be entitled to receive reimbursement of such amount, if any, as may be necessary to ensure that the amount received by such Agent or the Canadian Agent, as applicable, on such date, as applicable, is the amount in the Judgment Currency which when converted at the rate of exchange prevailing on the date of receipt by the Canadian Agent, as applicable, is the amount then due under this Agreement or such other Loan Document in the Currency Due. If the amount of the Currency Due which the applicable Agent or the Canadian Agent is so able to purchase is less than the amount of the Currency Due originally due to it, the applicable Loan Party shall indemnify and save the Agents, the Canadian Agent, the L/C Issuer and the Lenders harmless from and against all loss or damage arising as a result of such deficiency. This indemnity shall constitute an obligation separate and independent from the other obligations contained in this Agreement and the other Loan Documents, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Agent or the Canadian Agent, as applicable, from time to time and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum in respect of an amount due under this Agreement or any other Loan Document or under any judgment or order.

     No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

     Attachments. The exhibits and schedules attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for the purposes stated herein, except that in the event of any conflict between any of the provisions of such exhibits (other than the Intercreditor Agreement) and the provisions of this Agreement, the provisions of this Agreement shall prevail.

     Conflict of Terms. Except as otherwise provided in this Agreement or any of the other Loan Documents by specific reference to the applicable provisions of this Agreement, if any provision contained in this Agreement conflicts with any provision in any of the other Loan Documents (other than the Intercreditor Agreement), the provision contained in this Agreement shall govern and control.

[SIGNATURE PAGES FOLLOW]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

QUIKSILVER AMERICAS, INC.,
as the Lead Borrower
 

By:  

Name:  

Title:  

DC SHOES, INC.,
as a Domestic Borrower
 

By:  

Name:  

Title:  

HAWK DESIGNS, INC.,
as a Domestic Borrower
 

By:  

Name:  

Title:  

MERVIN MANUFACTURING, INC.,
as a Domestic Borrower
 

By:  

Name:  

Title:  

QS WHOLESALE, INC.,
as a Domestic Borrower
 

By:  

Name:  

Title:  

-1-

QS RETAIL, INC.,
as a Domestic Borrower
 

By:  

Name:  

Title:  

QUIKSILVER, INC.,
as a Guarantor
 

By:  

Name:  

Title:  

-2-

QUIKSILVER CANADA CORP.,
as the Canadian Borrower
 

By:  

Name:  

Title:  

QS RETAIL CANADA CORP.,
as a Guarantor
 

By:  

Name:  

Title:  

-3-

BANK OF AMERICA, N.A., as Administrative Agent
and as a Co-Collateral Agent
 

By:  

Name:  

Title:  

BANK OF AMERICA, N.A. (acting through its
Canada branch), as Canadian Agent
 

By:  

Name:  

Title:  

-4-

BANK OF AMERICA, N.A., as a Domestic Lender,
L/C Issuer and Swing Line Lender
 

By:  

Name:  

Title:  

BANK OF AMERICA, N.A. (acting through its
Canada branch), as a Canadian Lender, L/C
Issuer and Swing Line Lender
 

By:  

Name:  

Title:  

-5-

GENERAL ELECTRIC CAPITAL
CORPORATION, as Co-Collateral Agent
 

By:  

Name:  

Title:  

GENERAL ELECTRIC CAPITAL
CORPORATION, as a Domestic Lender
 

By:  

Name:  

Title:  

-6-

GENERAL ELECTRIC CAPITAL
CORPORATION, as a Canadian Lender
 

By:  

Name:  

Title:  

-7-

EX-10.5

Exhibit 10.5

€268,000,000

FACILITIES AGREEMENT

dated 31 July 2009

among

PILOT SAS
and
NA PALI
as Borrowers

QUIKSILVER, INC.
and
PILOT SAS
as Original Guarantors

and

BNP PARIBAS
CRÉDIT LYONNAIS
and

SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT BANKING
as Mandated Lead Arrangers

and

BNP PARIBAS
as Agent

SOCIÉTÉ GÉNÉRALE
as Security Agent

and

CAISSE REGIONALE DE CRÉDIT AGRICOLE MUTUEL PYRÉNÉES-
GASCOGNE
as Issuing Bank

WHITE & CASE _LLP
11, boulevard de la Madeleine
75001 Paris

THIS AGREEMENT is dated 31 July 2009 and made between:

(1)	PILOT SAS, a société par actions simplifiée with a share capital of €124,813,632, whose registered office is at 26/28 rue Danielle Casanova, 75002 Paris, registered under the unique identification number 070 501 374 RCS Paris (“Pilot” or the “Company”) as borrower and original guarantor;
(2)	NA PALI, a société par actions simplifiée, with a share capital of €3,444,300, whose registered office is at 162, rue Belharra, 64500 Saint Jean-de-Luz, registered under the unique identification number 331 377 036 RCS Bayonne (“Na Pali”) as borrower;
(3)	QUIKSILVER, INC., a corporation incorporated under the laws of the State of Delaware, United States of America, whose registered office is at 15202 Graham Street, Huntington Beach, California 92649, United States of America (“Quiksilver, Inc.”) as original guarantor;
(4)	BNP PARIBAS, a société anonyme with a share capital of €2,508,353,266, organized and existing under the laws of the French Republic, whose registered office is at 16, boulevard des Italiens, 75009 Paris, registered at the trade registry of Paris under number 662 042 449 RCS Paris, CRÉDIT LYONNAIS, a société anonyme with a share capital of €1,847,857,783, organized and existing under the laws of the French Republic, whose registered office is at 18 rue de la République, 69002 Lyon, with a head office at 19 boulevard des Italiens, 75002 Paris, registered at the trade registry of Lyon under number 954 509 741 RCS Lyon and SOCIÉTÉ GÉNÉRALE CORPORATE & INVESTMENT BANKING, a société anonyme with a share capital of €812,925,836.25, organized and existing under the laws of the French Republic, whose registered office is at 29 boulevard Haussmann, 75009 Paris, registered at the trade registry of Paris under number 552 120 222 RCS Paris, as mandated lead arrangers (together the “Arrangers”);
(5)	THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders) as lenders (the “Original Lenders”);
(6)	BNP PARIBAS, as agent of the other Finance Parties (the “Agent”); and
(7)	CAISSE RéGIONALE DE CRéDIT AGRICOLE MUTUEL PYRéNéES- GASCOGNE, a société anonyme with a share capital of €42,999,250, organized and existing under the laws of the French Republic, whose registered office is at 11 boulevard du President Kennedy, 65000 Tarbes, registered at the trade registry of Tarbes under number 776 983 546 RCS Tarbes, as Issuing Bank.

2

IT IS AGREED as follows:

SECTION 1 — INTERPRETATION

1.	DEFINITIONS AND INTERPRETATION
1.1	Definitions

In this Agreement:

“Acceptable Bank” means:

(a)	a bank or financial institution which has a rating for its long-term unsecured and non credit-enhanced debt obligations of A or higher by Standard & Poor’s Rating Services or Fitch Ratings Ltd or A2 or higher by Moody’s Investor Services Limited or a comparable rating from an internationally recognised credit rating agency; or
(b)	any Finance Party and other bank or financial institution approved by the Agent.

“Acceptable Master Agreement” means the 1992 or the 2002 Multicurrency — Cross Border Master Agreement published by the International Swaps and Derivatives Association, the AFB 1994 Master Agreement entitled “Convention Cadre relative aux Opérations de Marché à Terme”, the FBF 2001 Master Agreement entitled “Convention Cadre FBF relative aux Opérations sur Instruments Financiers à Terme” or any other form agreed by the Agent and the Security Agent.

“Accession Letter” means a document substantially in the form set out in Schedule 6 (Form of Accession Letter).

“Accounting Principles” means (i) with respect to the financial statements of QSH, Biarritz Holdings, Quiksilver Europa and the Credit Obligors (excluding the Pilot Consolidated Financial Statements), generally accepted accounting principles as in effect from time to time in their respective jurisdictions of organization and (ii) US GAAP with respect to the financial statements of Quiksilver, Inc. and the Pilot Consolidated Financial Statements.

“Accounting Reference Date” means 31 October.

“Addendum to the Structure Memorandum” means the addendum to the Structure Memorandum prepared by Skadden, Arps, Slate, Meagher & Flom LLP, addressed to, and/or capable of being relied upon by, the Reliance Parties and referred to in Part II of Schedule 2 (Conditions Precedent).

“Additional Cost Rate” has the meaning given to that term in Schedule 4 (Mandatory Cost Formula).

“Additional Guarantor” means (i) on the Closing Date, QSH (as “caution réelle” only), Biarritz Holdings and Quiksilver Europa and (ii) otherwise, a company which becomes a Guarantor in accordance with Clause 28 (Changes to the Obligors).

“Affiliate” means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.

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“Agent’s Spot Rate of Exchange” means the Agent’s spot rate of exchange for the purchase of the relevant currency with the Base Currency in the Paris foreign exchange market at or about 11:00 a.m. on a particular day.

“Agreed Security Principles” means the principles set out in Schedule 10 (Agreed Security Principles).

“Ancillary Commencement Date” means, in relation to an Ancillary Facility, the date on which that Ancillary Facility is first made available, which date shall be a Business Day within the Availability Period for the Revolving Facility.

“Ancillary Commitment” means, in relation to an Ancillary Lender and an Ancillary Facility, the maximum Base Currency Amount which that Ancillary Lender has agreed (whether or not subject to satisfaction of conditions precedent) to make available from time to time under an Ancillary Facility and which has been authorised as such under Clause 8 (Ancillary Facilities), to the extent that amount is not cancelled or reduced under this Agreement or the Ancillary Documents relating to that Ancillary Facility.

“Ancillary Document” means each document relating to or evidencing the terms of an Ancillary Facility.

“Ancillary Facility” means any ancillary facility made available by an Ancillary Lender in accordance with Clause 8 (Ancillary Facilities).

“Ancillary Lender” means the Lender which manages the cash pooling scheme of the Group pursuant to the Cash Pooling Agreement and makes available an Ancillary Facility in accordance with Clause 8 (Ancillary Facilities).

“Ancillary Outstandings” means, at any time, in relation to an Ancillary Lender and an Ancillary Facility then in force the aggregate of the equivalents (as calculated by that Ancillary Lender) in the Base Currency of the following amounts outstanding under that Ancillary Facility:

(a)	the principal amount under each overdraft facility and on-demand short term loan facility (net of any credit balances on any account of any Borrower of an Ancillary Facility with the Ancillary Lender making available that Ancillary Facility to the extent that the credit balances are freely available to be set off by that Ancillary Lender against liabilities owed to it by that Borrower under that Ancillary Facility);
(b)	the face amount of each guarantee, bond and letter of credit under that Ancillary Facility; and
(c)	the amount fairly representing the aggregate exposure (excluding interest and similar charges) of that Ancillary Lender under each other type of accommodation provided under that Ancillary Facility,

in each case as determined by such Ancillary Lender, acting reasonably in accordance with its normal banking practice and in accordance with the relevant Ancillary Document.

“Annual Pilot Consolidated Financial Statements” has the meaning given to that term in Clause 23 (Information Undertakings).

4

“Approved Jurisdiction” shall mean any member state of the European Union, any of Turkey, China, Vietnam, Indonesia, Malaysia, India, Pakistan, Bangladesh, Thailande, Hong Kong, Taiwan, South Korea, Laos, Macao, Algeria, Morocco, Tunisia, Japan and Egypt or any other country approved by the Issuing Banks.

“Auditors” means Deloitte & Touche LLP and its Affiliates or any other firm approved in advance by the Majority Lenders (such approval not to be unreasonably withheld or delayed).

“Authorisation” means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.

“Availability Period” means:

(a)	in relation to each Term Facility, the period from and including the date of this Agreement to and including 29 September 2009;
(b)	in relation to the Revolving Facility, the period from and including the Closing Date to and including the date falling one month prior to the Termination Date; and
(c)	in relation to the L/C Facility, the period from and including the Closing Date to and including the date falling one month prior to the Termination Date.

“Available Ancillary Commitment” means in relation to an Ancillary Facility, an Ancillary Lender’s Ancillary Commitment less the Ancillary Outstandings in relation to that Ancillary Facility.

“Available Commitment” means, in relation to a Facility, a Lender’s Commitment under that Facility minus:

(a)

the Base Currency Amount of its participation in any outstanding Utilisations under that Facility and, in the case of the Revolving Facility only, the Base Currency Amount of the aggregate of its Ancillary Commitments; and

(b)

in relation to any proposed Utilisation, the Base Currency Amount of its participation in any other Utilisations that are due to be made under that Facility on or before the proposed Utilisation Date and, in the case of the Revolving Facility only, the Base Currency Amount of its Ancillary Commitment in relation to any new Ancillary Facility that is due to be made available on or before the proposed Utilisation Date.

For the purposes of calculating a Lender’s Available Commitment in relation to any proposed Utilisation under the Revolving Facility only, the following amounts shall not be deducted from a Lender’s Commitment under that Facility:

(i)	that Lender’s participation in any Revolving Facility Utilisations that are due to be repaid or prepaid on or before the proposed Utilisation Date; and
(ii)	that Lender’s Ancillary Commitments to the extent that they are due to be reduced or cancelled on or before the proposed Utilisation Date.

For the purposes of calculating a Lender’s Available Commitment in relation to any proposed Utilisation under the L/C Facility only, that Lender’s participation in Letters of Credit that are

5

due to be cancelled on or before the proposed Utilisation Date shall not be deducted from that Lender’s Commitment under that Facility.

“Available Facility” means, in relation to a Facility, the aggregate for the time being of each Lender’s Available Commitment in respect of that Facility.

“Base Currency” means the euro.

“Base Currency Amount” means:

(a)

in relation to a Utilisation, the amount specified in the Utilisation Request delivered by a Borrower for that Utilisation (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent’s Spot Rate of Exchange on the date which is three Business Days before the Utilisation Date or, if later, on the date the Agent receives the Utilisation Request in accordance with the terms of this Agreement) and, in the case of a Letter of Credit, as adjusted under Clause 6.8 (Revaluation of Letters of Credit) at six-monthly intervals; and

(b)

in relation to an Ancillary Commitment, the amount specified as such in the notice delivered to the Agent by the Company pursuant to Clause 8.2 (Availability) (or, if the amount specified is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent’s Spot Rate of Exchange on the date which is three Business Days before the Ancillary Commencement Date for that Ancillary Facility or, if later, the date the Agent receives the notice of the Ancillary Commitment in accordance with the terms of this Agreement),

as adjusted to reflect any repayment, prepayment, consolidation or division of a Utilisation, or (as the case may be) cancellation or reduction of an Ancillary Facility.

“Biarritz Holdings” means Biarritz Holdings S.à r.l., a Luxembourg société à responsabilité limitée, with a share capital of €1,344,530, whose registered office is at 9-11 rue Louvigny, L-1946 Luxembourg, registered with the Luxembourg Registre de Commerce et des Sociétés under number B 147.205.

“Borrowers” means the Company and Na Pali and “Borrower” means any of them.

“Borrowings” has the meaning given to that term in Clause 24.1 (Financial definitions).

“Break Costs” means the amount (if any) by which:

(a) the interest excluding the Margin which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the principal amount or Unpaid Sum received been paid on the last day of that Interest Period;

exceeds:

(b) the amount which that Lender would be able to obtain by placing an amount equal to the principal amount or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.

6

“Budget” means:

(a) in relation to the period beginning on 1 November 2008 and ending on 31 October 2009, the budget delivered by the Company to the Agent pursuant to paragraph 4(f) of Part I of Schedule 2 (Conditions Precedent); and

(b) in relation to any other period, any budget delivered by the Company to the Agent in respect of that period pursuant to Clause 23.5 (Budget).

“Business Day” means a day (other than a Saturday or Sunday) on which banks are open for general business in Paris and:

(a) (in relation to any date for payment or purchase of a currency other than euro) the principal financial centre of the country of that currency; or

(b) (in relation to any date for payment or purchase of euro) any TARGET Day.

“Business Plan” means:

(a) in relation to the period beginning on the date of this Agreement and ending on 31 October 2013, the Initial Business Plan; and

(b) in relation to any other period, any business plan delivered by the Company to the Agent pursuant to Clause 23.4 (Business Plan) in the same format as the one delivered pursuant to the definition of “Initial Business Plan”.

“Capex Basket” has the meaning given to that term in Clause 25.19 (Capital Expenditure).

“Capital Expenditure” has the meaning given to that term in Clause 24.1 (Financial definitions).

“Carried Forward Tax Losses” has the meaning given to that term in Clause 22.32 (Carried Forward Tax Losses).

“Cash” means, at any time, the amount of cash (converted into the Base Currency at the Agent’s Spot Rate of Exchange at the relevant time) in hand or at bank and (in the latter case) credited to an account in the name of a member of the Group with an Acceptable Bank and to which a member of the Group is alone (or together with other members of the Group) beneficially entitled and for so long as:

(a) that cash is repayable on demand;

(b) repayment of that cash is not contingent on the prior discharge of any other indebtedness of any member of the Group or of any other person whatsoever or on the satisfaction of any other condition;

(c) there is no Security over that cash except for Transaction Security or any Permitted Security constituted by a netting or set-off arrangement entered into by members of the Group in the ordinary course of their banking arrangements; and

(d) the cash is freely and immediately available to be applied in repayment or prepayment of the Facilities.

7

“Cash Collateral Agreement” means the cash collateral agreement dated 9 December 2008 entered into between Na Pali and JPMorgan Chase, NA, London Branch and JP Morgan Europe Limited as beneficiaries.

“Cash Equivalent Investments” means at any time the amount (converted into the Base Currency at the Agent’s Spot Rate of Exchange at the relevant time) of:

(a) certificates of deposit maturing within one year after the relevant date of calculation and issued by an Acceptable Bank;

(b) any investment in marketable debt obligations issued or guaranteed by the government of the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within one year after the relevant date of calculation and not convertible or exchangeable to any other security;

(c) commercial paper not convertible or exchangeable to any other security:

(i)	for which a recognised trading market exists;
(ii)	issued by an issuer incorporated in the United States of America, the United Kingdom, any member state of the European Economic Area or any Participating Member State;
(iii)	which matures within one year after the relevant date of calculation; and
(iv)	which has a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited, or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating;

(d) any investment in money market funds which (i) have a credit rating of either A-1 or higher by Standard & Poor’s Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody’s Investor Services Limited, (ii) which invest substantially all their assets in securities of the types described in paragraphs (a) to (d) above and (iii) can be turned into cash on not more than 30 days’ notice; or

(e) any other debt security approved by the Majority Lenders (acting reasonably),

in each case, to which any member of the Group is alone (or together with other members of the Group) beneficially entitled at that time and which is not issued or guaranteed by any member of the Group or subject to any Security (other than Security arising under the Transaction Security Documents).

“Cashflow” has the meaning given to that term in Clause 24.1 (Financial definitions).

“Cash Pooling Agreement” means:

(a) the cash pooling agreement dated 1 May 1997 initially concluded by Na Pali with the following of its then direct and indirect Subsidiaries: Sumbawa Sarl, Gen X

8

	Publishing Limited, Molokai Limited, Emerald Coast Europe SARL, Kauai GmbH and Lanai Limited as well as the adherence forms executed by Cariboo SARL (22 April 1998), Namotu Limited (31 October 2001), SCI Tavarua (31 October 2003), Zebraska SARL and DC Europe SARL (31 October 2004);
(b)	the cash pooling agreement dated 11 July 2000 between Na Pali and its then direct Subsidiary Gotcha Europe SA;
(c)	the cash pooling agreement dated 3 November 2003 initially concluded by Na Pali with the following of its then direct and indirect Subsidiaries: Sumbawa SL, Bakio SL, Kauai GmbH, Makaha GmbH, Pukalani BV, Tuvalu BV, Haapiti SRL and Moorea SRL as well as the adherence forms executed by Kiribati Lda (1 November 2005), Hanalei (23 May 2006), Pilot (1 March 2008), Vanuatu GmbH, Lumahai BVBA, Waimea BVBA and Namotu Ltd (16 October 2007);
(d)	the cash pooling agreement dated 1 October 2006 between Na Pali and Tanna SARL dated 1 October 2006;
(e)	the cash pooling agreement dated 31 October 2006 between Na Pali and Tyax SNC;
(f)	the cash pooling agreement dated 28 May 2007 between Na Pali and Kokolo SAS;
(g)	the cash pooling agreement dated 16 October 2007 between Na Pali and Tuamotu;

and any supplement thereto or replacement thereof

“Change of Control” means

(i)

(x) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than Rhône Capital III L.P. and its Affiliates becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of more than 35% of the equity interests of Quiksilver, Inc. entitled to vote for members of the board of directors or equivalent governing body of Quiksilver, Inc. on a fully-diluted basis (and taking into account all such equity interests that such “person” or “group” has the right to acquire pursuant to any option right); or

(y) during any period of twelve (12) consecutive months, a majority of the members of the board of directors or other equivalent governing body of Quiksilver, Inc. ceases to be composed of individuals (i) who were members of such board or equivalent governing body on the first day of such period, (ii) whose election or nomination to such board or equivalent governing body was approved by individuals referred to in preceding sub-clause (i) constituting at the time of such election or nomination at least a majority of such board or

9

equivalent governing body or (iii) whose election or nomination to such board or other equivalent governing body was approved by individuals referred to in preceding sub-clauses (i) and (ii) constituting at the time of such election or nomination at least a majority of such board or equivalent governing body; or (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

(ii)	Quiksilver, Inc. ceasing to directly or indirectly (x) own 100% of the share capital of QSH (on a fully-diluted basis and/or on a non-diluted basis), or (y) own 100% of the voting rights in QSH (on a fully-diluted basis and/or on a non-diluted basis) or (z) have the right or ability to control the composition of the majority of the board of directors (or equivalent body) of QSH; or
(iii)	QSH ceasing to directly (x) own 100% of the share capital of Biarritz Holdings (on a fully-diluted basis and/or on a non-diluted basis), or (y) own 100% of the voting rights in Biarritz Holdings (on a fully-diluted basis and/or on a non-diluted basis) or (z) have the right or ability to control the composition of the majority of the board of directors (or equivalent body) of Biarritz Holdings; or
(iv)	Biarritz Holdings ceasing to directly (x) own 100% of the share capital of Quiksilver Europa (on a fully-diluted basis and/or on a non-diluted basis), or (y) own 100% of the voting rights in Quiksilver Europa (on a fully-diluted basis and/or on a non-diluted basis) or (z) have the right or ability to control the composition of the majority of the board of directors (or equivalent body) of Quiksilver Europa; or
(v)	Quiksilver Europa ceasing to directly (x) own 100% (less the Rossignol Vendors Restricted Shares until they are acquired by Quiksilver Europa as described in the Structure Memorandum) of the share capital of the Company (on a fully-diluted basis and/or on a non-diluted basis), or (y) own 100% (less the voting rights related to the Rossignol Vendors Restricted Shares until such shares are acquired by Quiksilver Europa as described in the Structure Memorandum) of the voting rights in the Company (on a fully-diluted basis and/or on a non-diluted basis) or (z) have the right or ability to control the composition of the majority of the board of directors (or equivalent body) of the Company; or
(vi)	the Company ceasing to directly (x) own 100% of the share capital of Na Pali (on a non-diluted basis) and/or 100% (less the shares to be issued by Na Pali to repay the NP ORAs in accordance with the NP ORAs Subscription Agreement until the date on which the NP ORAs are acquired by the Company as described in the Structure Memorandum) of the share capital of Na Pali on a fully-diluted basis, or (y) own 100% of the voting rights in Na Pali (on a non-diluted basis) and/or 100% (less the voting rights related to the shares to be issued by Na Pali to repay the NP ORAs in accordance with the NP ORAs Subscription Agreement until the date on which the NP ORAs are

10

acquired by the Company as described in the Structure Memorandum) of the voting rights in Na Pali on a fully-diluted basis or (z) have the right or ability to control the composition of the majority of the board of directors (or equivalent body) of Na Pali.

“Charged Property” means all of the assets of the Obligors which from time to time are, or are expressed to be, the subject of the Transaction Security, but excluding, for the avoidance of doubt, in the case of QSH any assets other than the shares of Biarritz Holdings and certain receivables from time to time held by QSH against Biarritz Holdings and its Subsidiaries.

“Chartreuse et Montblanc” means Chartreuse et Mont-Blanc, a société par actions simplifiée unipersonnelle whose registered office is at 41, avenue George V, 75008 Paris, France, registered under the unique identification number 508 758 745 RCS Paris.

“Closing Date” means the date on which the first Utilisation is made.

“Commitment” means a Facility A Commitment, Facility B Commitment, L/C Facility Commitment or Revolving Facility Commitment.

“Compliance Certificate” means a certificate substantially in the form set out in Schedule 7 (Form of Compliance Certificate) or otherwise in form and substance satisfactory to the Agent (acting reasonably).

“Confidential Information” means all information relating to the Company, any Obligor, the Group, the European Group, the Finance Documents or a Facility in respect of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or a Facility from either:

(a)	any member of the Group, the European Group or any of its advisers, or
(b)	another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or the European Group or any of its advisers,

in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:

(i)	is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of Clause 39 (Confidentiality); or
(ii)	is identified in writing at the time of delivery as non-confidential by any Obligor, any member of the Group or the European Group or any of its advisers; or
(iii)	is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Obligors, the Group or the European Group and which, in either case, as far as that Finance Party is aware, has not

11

been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.

“Confidentiality Undertaking” means either a confidentiality undertaking substantially in the latest recommended LMA form or any other form agreed between the Company and the Agent.

“Credit Obligors” means the Company, Na Pali and the Additional Guarantors.

“DC Shoes Business” means the business of designing, manufacturing, selling, distributing and marketing products bearing “DC”, “DC Shoes” and related trademarks and logos.

“Debt Service Cover Ratio” has the meaning given to that term in Clause 24.1 (Financial definitions).

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief laws of the United States of America or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

“Default” means an Event of Default or any event or circumstance specified in Clause 26 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination in each case under the Finance Documents or any combination of any of the foregoing) be an Event of Default.

“Defaulting Lender” means any Lender:

(a)	which has failed to make its participation in a Loan available or has notified the Agent that it will not make its participation in a Loan available by the Utilisation Date of that Loan in accordance with Clause 5.4 (Lenders’ participation) or has failed to provide cash collateral (or has notified any Issuing Bank that it will not provide cash collateral) in accordance with Clause 7.5 (Cash collateral by Non-Acceptable L/C Lender);
(b)	which has otherwise rescinded Finance Document; or
(c)	with respect to which an Insolvency Event has occurred and is continuing,

unless, in the case of paragraph (a) above:

(i) its failure to pay is caused by:

(A)	administrative or technical error; or
(B)	a Disruption Event; and

	payment is made within 5 Business Days of its due date; or
(ii)	the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.

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“Delegate” means any delegate, agent, attorney or co-trustee appointed by the Security Agent.

“Designated Gross Amount” has the meaning given to that term in Clause 8.2 (Availability).

“Designated Net Amount” has the meaning given to that term in Clause 8.2 (Availability).

“Disruption Event” means either or both of:

(a)	a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facilities (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
(b)	the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:

(i)	from performing its payment obligations under the Finance Documents; or
(ii)	from communicating with other Parties in accordance with the terms of the Finance Documents,

and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

“Dormant Subsidiary” means a member of the Group which does not trade (for itself or as agent for any person) and does not own, legally or beneficially, assets (including, without limitation, indebtedness owed to it) which in aggregate have a value of €250,000 or more or its equivalent in other currencies.

“EBIT” has the meaning given to that term in Clause 24.1 (Financial definitions).

“EBITDA” has the meaning given to that term in Clause 24.1 (Financial definitions).

“Environment” means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:

(a)	air (including, without limitation, air within natural or man-made structures, whether above or below ground);
(b)	water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and
(c)	land (including, without limitation, land under water).

“Environmental Claim” means any claim, proceeding, formal notice or investigation by any person in respect of any Environmental Law.

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“Environmental Law” means any applicable law or regulation which relates to:

(a)	the pollution or protection of the Environment;
(b)	the conditions of the workplace; or
(c)	the generation, handling, storage, use, release or spillage of any substance which, alone or in combination with any other, is capable of causing harm to the Environment, including, without limitation, any waste.

“Environmental Permits” means any permit and other Authorisation and the filing of any notification, report or assessment required under any Environmental Law for the operation of the business of any member of the Group conducted on or from the properties owned or used by any member of the Group.

“Estacade” means Estacade Limited, an English limited company whose registered office is at 5A Fore Street, Topsham, Exeter, Devon, EX3 0HF, England, registered under number 04731282.

“EU Term Loan Credit Agreement” means that certain credit agreement dated as of 31 July 2009 among Mountain and Wave S.à. r.l., Quiksilver, Inc., the lenders party thereto and Rhône Group L.L.C.

“EURIBOR” means, in relation to any Loan in euro:

(A) in respect of any Interest Period (other than Interest Periods of one month):

(a)	the applicable Screen Rate; or
(b)	(if no Screen Rate is available for the Interest Period of that Loan) the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request quoted by the Reference Banks to leading banks in the European interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in euro for a period comparable to the Interest Period of the relevant Loan; and

(B) in respect of any Interest Period of one month, the highest of

(a)	the applicable Screen Rate; and
(b)	the rate determined by the Agent to be the arithmetic mean (after excluding the highest and the lowest quotations as long as all Reference Banks give their quotation to the Agent) of the annual rates (rounded upwards to four decimal places) as supplied to the Agent at its request, quoted by the Reference Banks to leading banks in the Paris interbank market,

as of the Specified Time on the Quotation Day for the offering of deposits in euro for a period of one month.

“European Group” means QSH, Biarritz Holdings and the Subsidiaries of Biarritz Holdings.

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“European Obligors” means QSH, Biarritz Holdings, Quiksilver Europa, the Company and Na Pali.

“Event of Default” means any event or circumstance specified as such in Clause 26 (Events of Default).

“Excess Cashflow” has the meaning given to that term in Clause 24.1 (Financial definitions).

“Existing Letters of Credit” has the meaning given to that term in Clause 7.1 (Existing Letters of Credit).

“Expiry Date” means, for a Letter of Credit, the last day of its Term.

“Extension Request” means a written notice delivered to the Agent in accordance with Clause 6.6 (Extension of a Letter of Credit).

“Facilities” means the Term Facilities, the L/C Facility and the Revolving Facility and “Facility” means any of them as the context may require.

“Facility A” means the term loan facility made available under this Agreement as described in paragraph (a)(i) of Clause 2.1 (The Facilities).

“Facility A Commitment” means:

(a)	in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Facility A Commitment” in Schedule 1 (The Original Lenders) and the amount of any other Facility A Commitment transferred to it under this Agreement; and
(b)	in relation to any other Lender, the amount in the Base Currency of any Facility A Commitment transferred to it under this Agreement,

as it may be cancelled, reduced or transferred by it under this Agreement.

“Facility A Loan” means a loan made or to be made under Facility A or the principal amount outstanding for the time being of that loan.

“Facility A Repayment Date” means each date set out in paragraph (a) of Clause 9.1 (Repayment of Term Loans).

“Facility B” means the term loan facility made available under this Agreement as described in paragraph (a)(ii) of Clause 2.1 (The Facilities).

“Facility B Commitment” means:

(a)	in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Facility B Commitment” in Schedule 1 (The Original Lenders) and the amount of any other Facility B Commitment transferred to it under this Agreement; and
(b)	in relation to any other Lender, the amount in the Base Currency of any Facility B Commitment transferred to it under this Agreement,

15

as it may be cancelled, reduced or transferred by it under this Agreement.

“Facility B Loan” means a loan made or to be made under Facility B or the principal amount outstanding for the time being of that loan.

“Facility B Repayment Date” means each date set out in paragraph (b) of Clause 9.1 (Repayment of Term Loans).

“Facility Office” means:

(a)	in respect of a Lender or an Issuing Bank, the office notified by that Lender or that Issuing Bank to the Agent in writing on or before the date it becomes a Lender or an Issuing Bank (or, following that date, by not less than five Business Days’ written notice) as the office through which it will perform its obligations under this Agreement; or
(b)	in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes.

“Fee Letter” means:

(a)	any letter or letters dated on or about the date of this Agreement between the Arrangers and the Company and/or Na Pali (or the Agent and the Company and/or Na Pali) (or the Security Agent and the Company and/or Na Pali) setting out any of the fees referred to in Clause 16 (Fees); and
(b)	any agreement setting out fees payable to a Finance Party referred to in Clause 16.5 (Fees payable in respect of Letters of Credit) or Clause 16.6 (Interest, commission and fees on Ancillary Facilities) of this Agreement or under any other Finance Document.

“Finance Document” means this Agreement, any Accession Letter, the TEG Letter, any Guarantee, any Ancillary Document, the Hedging Letter, any Compliance Certificate, any Fee Letter, any Hedging Agreement, the Intercreditor Agreements, any Selection Notice, any Transaction Security Document, any Utilisation Request, any L/C Request, each Letter of Credit, the Quiksilver, Inc. Undertaking/Macquarie and any other document designated as a “Finance Document” by the Agent and the Company; provided that where the term “Finance Document” is used in, and construed for the purposes of, this Agreement or the Intercreditor Agreements, a Hedging Agreement shall be a Finance Document only for the purposes of:

(a)	the definition of “Material Adverse Effect”;
(b)	the definition of “Transaction Document”;
(c)	the definition of “Transaction Security Document”;
(d)	paragraph (a)(iv) of Clause 1.2 (Construction); and
(e)	Clause 26 (Events of Default) (other than Clause 26.21 (Acceleration)).

“Finance Lease” means any lease or hire purchase contract which would, in accordance with the Accounting Principles, be treated as a finance or capital lease.

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“Finance Parties” means the Agent, the Arrangers, the Security Agent, the Lenders, the Issuing Banks, each Hedge Counterparty or any Ancillary Lender and “Finance Party” shall mean any of them; provided that, where the term “Finance Party” is used in, and construed for the purposes of, this Agreement or the Intercreditor Agreements, a Hedge Counterparty shall be a Finance Party only for the purposes of:

(a)	the definition of “Secured Parties”;
(b)	paragraph (a)(i) of Clause 1.2 (Construction);
(c)	paragraph (c) of the definition of “Material Adverse Effect”; and
(d)	Clause 30 (Conduct of Business by the Finance Parties).

“Financial Indebtedness” means, without double counting, any indebtedness for or in respect of:

(a)	moneys borrowed and debit balances at banks or other financial institutions;
(b)	any acceptance raised under any acceptance credit or bill discounting facility (or dematerialised equivalent);
(c)	any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d)	the amount of any liability in respect of Finance Leases;
(e)	receivables sold or discounted (other than any receivables to the extent they are sold or discounted on a non-recourse basis) including, for the avoidance of doubt, receivables transferred under the NP Factoring Agreements or under any other factoring program;
(f)	any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the termination or close-out of that Treasury Transaction, that amount) shall be taken into account);
(g)	any counter-indemnity obligation in respect of any guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of (i) an underlying liability of an entity which is not a member of the Group which liability would fall within one of the other paragraphs of this definition or (ii) any liabilities of any member of the Group relating to any post-retirement benefit scheme;
(h)	any amount raised by the issue of redeemable shares which are redeemable (other than at the option of the issuer) before the day after the Termination Date or are otherwise classified as borrowings under the Accounting Principles;
(i)	any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the

17

	agreement is in respect of the supply of assets or services and payment is due more than 180 days after the date of supply;
(j)	any amount raised under any other transaction (including any forward sale or purchase, sale and sale back or sale and leaseback agreement) having the commercial effect of a borrowing or otherwise classified as borrowings under the Accounting Principles; and
(k)	the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs (a) to (j) above,

provided that Financial Indebtedness shall not include the obligation to pay the purchase price for the Rossignol Vendor Restricted Shares pursuant to the Shareholders’ Agreement.

“Financial Semester” means either of the six-month periods of each Financial Year commencing on the first day of the Financial Year and on 1 May.

“Financial Year” means the annual accounting period of the Group ending on 31 October in each year.

“Funds Flow Statement” means a funds flow statement in agreed form.

“Gearing” has the meaning given to that term in Clause 24.1 (Financial definitions).

“GE Factofrance” means GE Factofrance, SNC, a société en nom collectif whose registered office is at Tour Facto, 92988 Paris La Défense Cedex, registered under the unique identification number 063 002 446 RCS Nanterre.

“Group” means, at any time, the Company and each of its Subsidiaries at such time.

“Guarantee” means a guarantee, in form and substance satisfactory to the Lenders and the Company, given by an Original Guarantor or an Additional Guarantor (other than QSH) in respect of the obligations under the Finance Documents (for the Guarantees to be issued by the Guarantors on the Closing Date, as described in Part V of Schedule 2).

“Guarantor” means an Original Guarantor or an Additional Guarantor.

“Hanalei” means Hanalei, a Dutch Naamloze Vennootschap, whose registered office is at Antoon Catriestraat, 39F, 9031 Drongen, The Netherlands, registered under the Register Gent.

“Hedge Counterparty” means each Arranger which is a party to a Hedging Agreement as hedge counterparty and “Hedge Counterparties” means all such Arrangers.

“Hedging Agreement” means any Acceptable Master Agreement and related confirmations and schedules entered into or to be entered into by an Obligor and a Hedge Counterparty for the purpose of hedging interest rate liabilities in relation to the Facilities (other than the L/C Facility) in accordance with the Hedging Letter and Clause 25.31 (Post-closing conditions).

“Hedging Letter” means the letter dated the date of this Agreement from the Arrangers to the Company relating to the Hedging Agreements.

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“Holding Company” means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

“IFRS” means international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements.

“Impaired Agent” means the Agent at any time when:

(a)	it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;
(b)	the Agent otherwise rescinds a Finance Document;
(c)	(if the Agent is also a Lender) it is a Defaulting Lender under paragraph (a) or (b) of the definition of “Defaulting Lender”; or
(d)	an Insolvency Event has occurred and is continuing with respect to the Agent;
	unless, in the case of paragraph (a) above:

(i) its failure to pay is caused by:

(A)	administrative or technical error; or
(B)	a Disruption Event; and

payment is made within 5 Business Days of its due date; or

(ii) the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.

“Infoborne” means Infoborne, a French société à responsabilité limitée whose registered office is at c/o Na Pali, ZI de Jalday, 64500 Saint Jean de Luz, registered under the unique identification number 397 872 805 RCS Bayonne.

“Information Package” means the Reports, the Business Plan and the Budget delivered to the Agent pursuant to Schedule 2 (Conditions Precedent).

“Initial Business Plan” means the business plan delivered by the Company to the Agent pursuant to paragraph 4(e) of Part I of Schedule 2 (Conditions Precedent) containing a consolidated balance sheet, a consolidated profit and loss account and a consolidated cash flow statement for the Company and its Subsidiaries for the five Financial Years ending after the date of this Agreement.

“Insolvency Event” in relation to a Finance Party means that the Finance Party:

(a)	is dissolved (other than pursuant to a consolidation, amalgamation or merger);
(b)	becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due;
(c)	makes a general assignment, arrangement or composition with or for the benefit of its creditors;

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(d)

institutes or has instituted against it, by a regulator, supervisor or any similar official with primary insolvency, rehabilitative or regulatory jurisdiction over it in the jurisdiction of its incorporation or organisation or the jurisdiction of its head or home office, a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation by it or such regulator, supervisor or similar official;

(e)

has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors’ rights, or a petition is presented for its winding-up or liquidation, and, in the case of any such proceeding or petition instituted or presented against it, such proceeding or petition is instituted or presented by a person or entity not described in paragraph (d) above and:

(i)	results in a judgment of insolvency or bankruptcy or the entry of an order for relief or the making of an order for its winding-up or liquidation; or
(ii)	is not dismissed, discharged, stayed or restrained in each case within 30 days of the institution or presentation thereof;

(f)	has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger);
(g)	seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or for all or substantially all its assets;
(h)	has a secured party take possession of all or substantially all its assets or has a distress, execution, attachment, sequestration or other legal process levied, enforced or sued on or against all or substantially all its assets and such secured party maintains possession, or any such process is not dismissed, discharged, stayed or restrained, in each case within 30 days thereafter;
(i)	causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in paragraphs (a) to (h) above; or
(j)	takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts.

“Intellectual Property” means:

(a)	any patents, trade-marks, service marks, designs, business names, copyrights, database rights, design rights, domain names, moral rights, inventions, confidential information, knowhow and other intellectual property rights and interests (which may now or in the future subsist), whether registered or unregistered; and
(b)	the benefit of all applications and rights to use such assets of each member of the Group (which may now or in the future subsist).

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“Intellectual Property Memorandum” means the intellectual property memorandum delivered to the Agent pursuant to paragraph 4 (j) of Part I of Schedule 2 (Conditions Precedent).

“Intercreditor Agreements” means the Security Sharing Agreement and the Subordination Agreement.

“Interest Period” means, in relation to a Loan, each period determined in accordance with Clause 14 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with Clause 13.3 (Default interest).

“Issuance and Reimbursement Agreement” means the issuance and reimbursement agreement dated 14 September 2007 between Na Pali as applicant and JP Morgan Europe Limited as issuing bank.

“Issuing Bank” means (i) with respect to the Existing Letters of Credit, each Lender which has issued an Existing Letter of Credit and (ii) with respect to any other Letter of Credit, Caisse Régionale de Crédit Agricole Mutuel Pyrénées-Gascogne and any other Lender which has notified the Agent that it has agreed in an Accession Letter to the Company’s request to be an Issuing Bank pursuant to the terms of this Agreement (each such Lender shall be referred to, whether acting individually or together, as the “Issuing Bank”) provided that, in respect of a Letter of Credit issued or to be issued pursuant to the terms of this Agreement, the “Issuing Bank” shall be the Issuing Bank which has issued or agreed to issue that Letter of Credit.

“Joint Venture” means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.

“J.P. Morgan Guarantee” means the €35,600,000 bank guarantee issued on 14 September 2007 by J.P. Morgan Europe Limited, London Branch, in favour of the Rossignol Vendors pursuant to the Issuance and Reimbursement Agreement dated 14 September 2007 between Na Pali and J.P. Morgan Europe Limited.

“L/C Facility” means the revolving letter of credit facility made available under this Agreement as described in paragraph (a)(iii) of Clause 2.1 (The Facilities).

“L/C Facility Commitment” means:

(a)	in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “L/C Facility Commitment” in Schedule 1 (The Original Lenders) and the amount of any other L/C Facility Commitment transferred to it under this Agreement; and
(b)	in relation to any other Lender, the amount in the Base Currency of any L/C Facility Commitment transferred to it under this Agreement,

as it may be cancelled, reduced or transferred by it under this Agreement.

“L/C Facility Utilisation” means a Letter of Credit.

“L/C Proportion” means in relation to a Lender in respect of any Letter of Credit, the proportion (expressed as a percentage) borne by that Lender’s Available Commitment to the

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Available Facility in respect of the L/C Facility immediately prior to the issue of that Letter of Credit, adjusted to reflect any assignment or transfer under this Agreement to or by that Lender.

“L/C Request” means either (i) a paperless letter of credit request submitted using a secured banking transaction exchange management software (“progiciel de gestion de portail transactionnel bancaire sécurisé”) or (ii) a written notice substantially in the relevant form set out in Part II of Schedule 3 (Requests).

“Legal Opinion” means any legal opinion delivered to the Agent under Clause 4.1 (Initial conditions precedent) or Clause 28 (Changes to the Obligors).

“Legal Reservations” means any matters which are set out as qualifications or reservations as to matters of law of general application in the Legal Opinions.

“Lender” means:

(a)	any Original Lender; and
(b)	any bank, financial institution, trust, fund or other entity which has become a Party as a Lender in accordance with Clause 27 (Changes to the Lenders),

which in each case has not ceased to be a Lender in accordance with the terms of this Agreement.

“Letter of Credit” means (i) each Existing Letter of Credit and (ii) any letter of credit or other documentary credit issued pursuant to this Agreement by the Issuing Bank at the request of and for the account of Na Pali pursuant to an L/C Request, each such Letter of Credit to be subject to the UCP.

“Leverage Ratio” has the meaning given to that term in Clause 24.1 (Financial definitions).

“Licence Agreements” means the NP Licence Agreements, the Omareef Licence Agreements and the New Pier License Agreements.

“LMA” means the Loan Market Association.

“Loan” means a Term Loan or a Revolving Facility Loan.

“Majority Lenders” means:

(a)

(for the purposes of paragraph (a) of Clause 38.1 (Required consents) in the context of a waiver in relation to a proposed Utilisation of the Revolving Facility (other than a Utilisation on the Closing Date) of the condition in Clause 4.2 (Further conditions precedent)), a Lender or Lenders whose Revolving Facility Commitments aggregate more than 662/3 per cent. of the Total Revolving Facility Commitments;

(b)

(for the purposes of (i) paragraph (a) of Clause 38.1 (Required consents) in the context of a waiver in relation to a proposed Utilisation of the L/C Facility (other than a Utilisation on the Closing Date) of the condition in Clause 4.2 (Further conditions precedent) and (ii) paragraph (x) of Clause 6.3 (Completion of an L/C Request for

22

	Letters of Credit)), a Lender or Lenders whose L/C Facility Commitments aggregate more than 662/3 per cent. of the Total L/C Facility Commitments; and
(c)	(in any other case), a Lender or Lenders whose Commitments aggregate more than 662/3 per cent. of the Total Commitments (or, if the Total Commitments have been reduced to zero, whose participations in the outstanding Utilisations aggregated more than 662/3 per cent. of the Total Commitments immediately prior to that reduction).

“Mandatory Cost” means the percentage rate per annum calculated by the Agent in accordance with Schedule 4 (Mandatory Cost Formula).

“Mandatory Prepayment Account” means an interest-bearing account:

(a)	held by a Borrower with the Agent or Security Agent;
(b)	identified in a letter between the Company and the Agent as a Mandatory Prepayment Account;
(c)	subject to Security in favour of the Security Agent which Security is in form and substance reasonably satisfactory to the Agent and Security Agent and subject to the Agreed Security Principles; and
(d)	from which no withdrawals may be made by any members of the Group except as contemplated by this Agreement,

(as the same may be redesignated, substituted or replaced from time to time).

“Margin” means:

(a)	in relation to the Facility A Loan, 4.75 per cent. per annum;
(b)	in relation to the Facility B Loan, 4.25 per cent. per annum;
(c)	in relation to any Revolving Facility Loan, 4.25 per cent. per annum;
(d)	in relation to any Unpaid Sum in relation to a Facility, the rate per annum specified above for that Facility (or, in the case of the L/C Facility, the rate per annum specified above for the Revolving Facility); and
(e)	in relation to any other Unpaid Sum, the highest rate specified above.

but if:

(x)	no Default has occurred and is continuing; and
(y)	the Leverage Ratio in respect of the most recently completed Relevant Period is within a range set out below,

then, commencing on the date of the delivery of the Pilot Consolidated Financial Statements for the Financial Year ending on 31 October 2009, the Margin for each Loan under Facility A, Facility B and the Revolving Facility will mean the percentage per annum set out below in the column for such Facility opposite that range:

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			Facility B and
			Revolving Facility
	Facility A Margin		Margin
Leverage Ratio	% p.a.		% p.a.
Greater than or equal to 3.00:1.00		4.75		4.25
Less than 3.00:1.00 but greater than or equal to 2.50:1.00		4.50		4.00
Less than 2.50:1.00 but greater than or equal to 2.00:1.00		4.25		3.75
Less than 2.00:1.00 but greater than or equal to 1.50:1.00		4.00		3.50
Less than 1.50:1.00		3.75		3.25

However:

(i)	any increase or decrease in the Margin for a Loan shall take effect on the date (the “reset date”) which is the first day of the next Interest Period for that Loan following receipt by the Agent of the Compliance Certificate for that Relevant Period pursuant to Clause 23.2 (Provision and contents of Compliance Certificate);
(ii)	if, following the receipt by the Agent of the Annual Pilot Consolidated Financial Statements and related Compliance Certificate, such financial statements and Compliance Certificate do not confirm the basis for a Margin reduction or increase effected pursuant to the preceding paragraphs, then paragraphs (b) or (c) of Clause 13.2 (Payment of interest), as the case may be, shall apply;
(iii)	while a Default is continuing, the Margin for each Loan under Facility A, Facility B and the Revolving Facility shall be the highest percentage per annum set out above for a Loan under that Facility; and
(iv)	for the purpose of determining the Margin, Leverage Ratio and Relevant Period shall be determined in accordance with Clause 24.1 (Financial definitions).

“Material Adverse Effect” means in the reasonable opinion of the Majority Lenders a material adverse effect on:

(a)	the business, operations, property, performance, condition (financial or otherwise) or prospects of any European Obligor (other than QSH) or the Group taken as a whole; or
(b)	the ability of an Obligor (other than Quiksilver, Inc. and QSH) to perform its obligations under the Finance Documents; or

24

(c) the validity or enforceability of, or the effectiveness or ranking of any Security granted or purporting to be granted pursuant to any of, the Finance Documents or the rights or remedies of any Finance Party under any of the Finance Documents.

“Material Subsidiary” means, at any time:

(a)	an Obligor (other than a TopCo Obligor); or
(b)	a Subsidiary of the Company which:

(i)	is listed in Schedule 9 (Material Subsidiaries); or
(ii)	has earnings before interest, tax, depreciation and amortisation calculated on the same basis as EBITDA (as defined in Clause 24.1 (Financial definitions)) representing 5% or more of EBITDA (as defined in Clause 24.1 (Financial definitions)) or has gross assets representing 5%, or more of the gross assets of the Group, calculated on a consolidated basis; or
(iii)	(to the extent the aggregate earnings before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA) and the aggregate gross assets of all the entities constituting Material Subsidiaries pursuant to the provisions of paragraphs (a) and (b)(i) and (ii) above does not represent at least 75% of the EBITDA of the Group and at least 75% of the consolidated gross assets of the Group) any Subsidiary or Subsidiaries of the Company from time to time, in order to ensure that the aggregate earnings before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA) and the aggregate gross assets of all the Material Subsidiaries represent at least 75% of the total EBITDA and 75% of the consolidated gross assets of the Group, provided that any such Subsidiary shall constitute a Material Subsidiary by decreasing order of its respective earnings and gross assets;

Compliance with the conditions set out in paragraphs (b) (ii) and (b) (iii) shall be determined by reference to the most recent Compliance Certificate supplied by the Company and/or the latest audited financial statements of that Subsidiary (consolidated in the case of a Subsidiary which itself has Subsidiaries) and the latest Pilot Consolidated Financial Statements. However, if a Subsidiary has been acquired since the date as at which the latest Pilot Consolidated Financial Statements were prepared, the financial statements shall be deemed to be adjusted in order to take into account the acquisition of that Subsidiary (such adjustment being certified by the Group’s Auditors as representing an accurate reflection of the revised EBITDA (as defined in Clause 24.1 (Financial definitions) or gross assets of the Group)).

A report by the Auditors of the Company that a Subsidiary is or is not a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on all Parties.

“Material Trademark” means (i) any of the following marks: QUIKSILVER, MOUNTAIN AND WAVE LOGO, ROXY, or HEART LOGO, with respect to the following jurisdictions: France, Spain, Great Britain, Italy, Germany, Poland, Czech Republic, Belgium, Greece, Switzerland, Russia, Portugal, and South Africa and (ii) any other trademarks listed on the list entitled “Material Trademarks” delivered by the Company to the Agent pursuant to Part I of Schedule 2 (Conditions Precedent) and updated from time to time pursuant to Clause

25

25.24 (Intellectual Property) (but excluding, for the avoidance of doubt, trademarks not owned by Biarritz Holdings and its Subsidiaries).

“Month” means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:

(a)	if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day; and
(b)	if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month.

The above rules will only apply to the last Month of any period. “Monthly” shall be construed accordingly.

“New Pier Licence Agreements” means the licence agreements entered into between QSH (and transferred to Biarritz Holdings as a result of the QSH/Biarritz Holdings Contribution) and New Pier, whereby QSH (and Biarritz Holdings following the QSH/Biarritz Holdings Contribution) has granted to New Pier the right to use the QUIKSILVER, MOUNTAIN AND WAVE LOGO, ROXY, and HEART LOGO trademarks in certain territories as described therein.

“Non-Acceptable L/C Lender” means a Lender under the L/C Facility which:

(a)	is not an Acceptable Bank within the meaning of paragraph (a) of the definition of “Acceptable Bank” (other than a Lender which each Issuing Bank has agreed is acceptable to it notwithstanding that fact); or
(b)	which has failed to provide cash collateral (or has notified the Issuing Bank that it will not provide cash collateral) in accordance with Clause 7.5 (Cash collateral by Non-Acceptable L/C Lender);
(c)	has failed to make (or has notified the Agent that it will not make) a payment to be made by it under Clause 7.4 (Indemnities) or Clause 29.10 (Lenders’ indemnity to the Agent) or any other payment to be made by it under the Finance Documents to or for the account of any other Finance Party in its capacity as Lender by the due date for payment;
(d)	which has otherwise rescinded a Finance Document; or
(e)	with respect to which an Insolvency Event has occurred and is continuing,

unless, in the case of paragraphs (b) and (c) above:

(i)	its failure to pay is caused by:
(A)	administrative or technical error; or
(B)	a Disruption Event; and

payment is made within 5 Business Days of its due date.

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“Note” means the €10,000,000 Subordinated Promissory Note dated 12 November 2008 issued by Chartreuse et Montblanc as debtor in favour of the Company as creditor.

“NP Cash Collateral” means the €35,600,000 cash collateral granted by Na Pali to JP Morgan pursuant to the Cash Collateral Agreement.

“NP Factoring Agreements” means (i) the financing facility contract n°12692 dated 22 August 2008 entered into between Na Pali and GE Factofrance, (ii) the financing facility contract n°15106 dated 22 August 2008 entered into between Emerald Coast S.A.S. and GE Factofrance, (iii) the financing facility contract n°12014 dated 6 November 2008 entered into between Sumbawa SL and GE Factofrance and (iv) the financing facility contract n°12012 and the supplemental deed to the AR Financing Facility Contract n°12012 dated 30 October 2008 entered into between Lanai Limited and GE Factofrance.

“NP Licence Agreements” means the licence agreements entered into between QSH (and transferred to Biarritz Holdings as a result of the QSH/Biarritz Holdings Contribution) and Na Pali, whereby QSH (and Biarritz Holdings following the QSH/Biarritz Holdings Contribution) has granted to Na Pali the right to use the QUIKSILVER, MOUNTAIN AND WAVE LOGO, ROXY, and HEART LOGO trademarks in certain territories as described therein.

“NP ORAs” means the €68,500,000 mandatory convertible bonds (obligations remboursables en actions) issued by Na Pali on 26 April 2002 and initially subscribed by Quiksilver Europa, S.L (formerly designated The Aqua Division Company, S.L.).

“NP ORAs Subscription Agreement” means the mandatory convertible bonds (obligations remboursables en actions) subscription agreement dated 26 April 2002 entered into between Na Pali and Quiksilver Europa, S.L (formerly designated The Aqua Division Company, S.L.) and the amendment n°1 thereto dated 24 April 2009 entered into between Na Pali, the Company and QSH.

“NP Perimeter Indebtedness To Be Refinanced” means the Financial Indebtedness of Na Pali and its Subsidiaries outstanding under bank loans and overdraft facilities and owed to the Lenders as of the date hereof, the amount of which has been certified to the Agent pursuant to Part I of Schedule 2 (Conditions Precedent).

“NP Permanent Advance” means the permanent advances for an aggregate amount of €45,000,000 made available by Na Pali to Quiksilver, Inc. as evidenced by the €15,000,000 promissory note dated 20 August 2005 and the €30,000,000 promissory note dated 20 September 2005 issued by Quiksilver, Inc.

“Obligor” means a Borrower or a Guarantor.

“Obligors’ Agent” means the Company, appointed to act on behalf of each Obligor in relation to the Finance Documents pursuant to Clause 2.3 (Obligors’ Agent).

“Omareef” means Omareef Europe, a French société par actions simplifiée whose registered office is at 1468 route des Lacs, 40150 Soorts-Hossegor, registered under the unique identification number 389 024 621 RCS Dax.

“Omareef Licence Agreements” means the licence agreements entered into between QSH (and transferred to Biarritz Holdings as a result of the QSH/Biarritz Holdings Contribution)

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and Omareef, whereby QSH (and Biarritz Holdings following the QSH/Biarritz Holdings Contribution) has granted to Omareef the right to use the QUIKSILVER, MOUNTAIN AND WAVE LOGO, ROXY, and HEART LOGO trademarks in certain territories as described therein.

“Optional Currency” means a currency (other than the Base Currency) which complies with the conditions set out in Clause 4.3 (Conditions relating to Optional Currencies).

“Original Financial Statements” means:

(a)	in relation to the Company, the Pilot consolidated financial statements for its Financial Year ended 31 October 2008;
(b)	in relation to each Obligor other than QSH, Quiksilver Europa, Biarritz Holdings and the Company, its audited financial statements for its Financial Year ended 31 October 2008;
(c)	in relation to each of QSH and Quiksilver Europa, its unaudited financial statements for its Financial Year ended 31 October 2008;
(d)	in relation to any other Obligor other than Biarritz Holdings, its audited financial statements delivered to the Agent as required by Clause 28 (Changes to the Obligors); and
(e)	in relation to Biarritz Holdings, a balance sheet as of the date of this Agreement.

“Original Guarantors” means Quiksilver, Inc. and the Company and “Original Guarantor” means any of them.

“Original Obligor” means a Borrower or an Original Guarantor.

“Participating Member State” means any member state of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.

“Party” means a party to this Agreement.

“Permitted Acquisition” means:

(i)	an acquisition by a member of the Group of an asset sold, leased, transferred or otherwise disposed of by another member of the Group in circumstances constituting a Permitted Disposal;
(ii)	an acquisition of securities which are Cash Equivalent Investments, such acquisition being made at arm’s length terms and in the ordinary course of business so long as those Cash Equivalent Investments promptly become subject to the Transaction Security (subject to the Agreed Security Principles);
(iii)	the incorporation of a company which on incorporation becomes a member of the Group, but only if:

(A) that company is incorporated in a member state of the European Union

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	with limited liability; and
(B)	if the shares in the company are owned by an Obligor, Security over the shares of that company (in form and substance satisfactory to the Agent (acting reasonably)) is created in favour of the Security Agent (subject to the Agreed Security Principles) within 30 days of the date of its incorporation;

(iv)	an acquisition contemplated by the Structure Memorandum;
(v)	an acquisition of all of the issued share capital of a limited liability company, but only if:

(A)	no Default is continuing on the closing date for the acquisition or would occur as a result of the acquisition;
(B)	the acquired company is incorporated or established, and carries on its principal business in, a member state of the European Union and is engaged in a business substantially the same as that carried on by the Group;
(C)	the consideration (including associated costs and expenses) for the acquisition and any Financial Indebtedness or other assumed actual or contingent liability, in each case which is not discharged at the date of acquisition (when aggregated with the consideration (including associated costs and expenses) for any other Permitted Acquisition consummated in such Financial Year and any Financial Indebtedness or other actual or contingent liability assumed pursuant to a Permitted Acquisition consummated in such Financial Year, in each case which is not discharged at the time of acquisition (the “Total Purchase Price”)) does not exceed in any Financial Year of the Company €4,000,000 (or its equivalent) in the aggregate;
(D)	the acquisition is not funded by a Revolving Facility Utilisation or financed by a L/C Facility Utilisation; and
(E)	the Company has delivered to the Agent not later than 30 Business Days before legally committing to make such acquisition a certificate signed by two legal representatives of the Company to which is attached a copy of the latest audited accounts (or if not available, management accounts) of the target company. Such certificate shall (i) confirm that the target company has positive EBIT for the latest financial year and (ii) include reasonably detailed calculations demonstrating that the Company would have remained in compliance with its obligations under Clause 24.2 (Financial condition) and the Leverage Ratio would be less than 3.0 if the Ratios were recalculated for the Relevant Period ending on the most recent test date consolidating the financial statements of the target company (consolidated if it has Subsidiaries) with the financial statements of the Group for such period on a pro forma basis and as if the consideration for the proposed acquisition had been paid at the start of that relevant

29

period;

(vi)	the acquisition of shares in members of the Group from an employee on the death, retirement or resignation of that employee, but only if the consideration for such acquisition (when aggregated with the consideration for any other acquisition of shares in members of the Group from employees) does not in any Financial Year of the Company exceed €250,000 or its equivalent in the aggregate;
(vii)	the acquisition of the Rossignol Vendor Restricted Shares pursuant to the Shareholders Agreement as described in the Structure Memorandum for a maximum purchase price of €35,600,000, provided that simultaneously with such acquisition the NP Cash Collateral is released in full in favor of (or to the order of) Na Pali and Na Pali has no longer any obligation under the Cash Collateral Agreement;
(viii)	the acquisition of shares representing 49% of the share capital of Hanalei for a maximum purchase price not exceeding €3,000,000 and 49% of Estacade for a maximum purchase price not exceeding €1,000,000; and
(ix)	the acquisition of shares representing 49% of the share capital of Tanna for a maximum purchase price not exceeding €500,000.

“Permitted Disposal” means any sale, lease, licence, transfer or other disposal:

(a)	of trading stock or cash (which is not subject to Transaction Security) made by any member of the Group in the ordinary course of trading of the disposing entity;
(b)	of any asset (which is not subject to Transaction Security) by a member of the Group (the “Disposing Company”) to another member of the Group (the “Acquiring Company”), but if:

(i)	the Disposing Company is an Obligor, the Acquiring Company must also be an Obligor; and
(ii)	the Disposing Company is a Guarantor, the Acquiring Company must be a Guarantor guaranteeing at all times an amount no less than that guaranteed by the Disposing Company;

(c)	of assets (other than shares, businesses and assets which are subject to Transaction Security) in exchange for other assets of a comparable or superior type, value and quality;
(d)	of obsolete or redundant vehicles, plant and equipment for cash;
(e)	of Cash Equivalent Investments for Cash or in exchange for other Cash Equivalent Investments;
(f)	arising as a result of any Permitted Security or in connection with a Permitted Loan;

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(g)	of receivables transferred pursuant to the NP Factoring Agreements (or any other factoring programme entered into in replacement thereof in accordance with this Agreement);
(h)	of receivables and intra-Group loans as described in the Structure Memorandum;
(i)	of the DC Shoes Business;
(j)	of the shares of Infoborne;
(k)	of 51% of the share capital of Tuamotu, Estacade and Tanna;
(l)	of real estate properties located at

(i)	Lieudit “Les Terrasses de l’Océan”, Capbreton Landes, France, namely an apartment with one basement and car park (lot number 115, lot number 188, and lot number 362) purchased according to a contract signed on September 19, 2007 before Maître Jean-Christophe Gaymard, Notaire, residing at 38 Cours Galliéni, Dax, Landes, France;
(ii)	23 and 135 Avenue de Jalday, Saint-Jean-de-Luz, namely an industrial estate of a total surface of 01 ha 40 a 51 ca (lot number 64, lot number 35, lot number 65 and a part of lot number 66 of Zone d’Aménagement Concerté de JALDAY) purchased according to a contract signed on July 23, 2009 before Maître Dominique Larralde, Notaire, residing at 21 Rue Chauvin Dragon, BP 419, Résidence “les Palmiers”, Saint-Jean-de-Luz, Pyrénées Atlantiques, France; and
(iii)	162, 171 and 173 rue des Routiers Saint-Jean-de-Luz, namely an industrial estate with two buildings, of a total surface of 02 ha 52a 75 ca (land register number BX n°11, BX n°12, BX n°13, and BX n°16) purchased according to a contract signed on June 18, 2007 before Maître Dominique Larralde, Notaire, residing at 21 Rue Chauvin Dragon, BP 419, Résidence “les Palmiers”, Saint-Jean-de-Luz, Pyrénées Atlantiques, France; and

(m) of the vessel whose identification number (“Numéro d’Acte de Francisation”) is 22115/0243.

“Permitted Financial Indebtedness” means Financial Indebtedness permitted by Clause 25.20 (Financial Indebtedness).

“Permitted Guarantee” means:

(i)	any guarantee or indemnity issued by a TopCo Obligor in respect of the Financial Indebtedness, liabilities or obligations of a member of the Group;
(ii)	any guarantee or indemnity issued by a member of the Group which is a Credit Obligor in respect of the Financial Indebtedness, liabilities or obligations of another Credit Obligor or any guarantee or indemnity issued by a member of the Group which is not a Credit Obligor in respect of the Financial Indebtedness, liabilities or obligations of another member of the Group;

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(iii)	any guarantee or indemnity issued by a Credit Obligor in respect of the Financial Indebtedness, liabilities or obligations of a member of the Group which is not a Credit Obligor so long as the aggregate amount of Financial Indebtedness under any such loans (when aggregated with the aggregate Financial Indebtedness of the outstanding loans permitted under paragraph (iii) of the definition of “Permitted Loan” below) does not exceed €3,000,000 (or its equivalent) at any time;
(iv)	the guarantees and off-balance sheet liabilities existing on the date of this Agreement and set out in Schedule 13 (Guarantees and Off-Balance Sheet Liabilities) and, in the case of the NP Factoring Agreements, as replaced or renewed pursuant to any Working Capital Financing (not provided by Quiksilver, Inc.) permitted pursuant to paragraph (vi) of Clause 25.20 (Financial Indebtedness);
(v)	any guarantee or indemnity given in favour of any relevant tax or regulatory authority in the ordinary course of business, save where calling on that guarantee or indemnity would have a Material Adverse Effect; and
(vi)	any guarantee or indemnity given in respect of rental payments under leases of real property entered into at arms’ length terms and in the ordinary course of business.

“Permitted Loan” means:

(i)	any loan made by a TopCo Obligor to a member of the Group; provided that, any such loan is subordinated to the Facilities in accordance with the Subordination Agreement;
(ii)	any loan made by a Credit Obligor to another Credit Obligor or by a member of the Group which is not a Credit Obligor to another member of the Group;
(iii)	any loan made by a Credit Obligor to a member of the Group which is not a Credit Obligor so long as the aggregate amount of Financial Indebtedness under any such loans (when aggregated with the aggregate Financial Indebtedness under the guarantees and indemnities permitted under paragraph (iii) of the definition of “Permitted Guarantee” above) does not exceed €3,000,000 (or its equivalent) at any time;
(iv)	any trade credit extended by an Obligor or any member of the Group to its customers on normal commercial terms and in the ordinary course of its trading activities;
(v)	any loan under the Cash Pooling Agreement;
(vi)	the loans and credits existing on the date of this Agreement and set out in Schedule 12 (List of Loans); and
(vii)	the loans detailed in the Structure Memorandum.

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“Permitted Security” means:

(i)	any Security listed in Schedule 11 (List of Securities) on the date hereof except to the extent the principal amount secured by that Security exceeds the amount stated in that schedule and, in the case of the NP Factoring Agreements, as replaced or renewed pursuant to any Working Capital Financing (not provided by Quiksilver, Inc.) permitted pursuant to paragraph (vi) of Clause 25.20 (Financial Indebtedness);
(ii)	any lien arising by operation of law (privilège légal) and in the ordinary course of trading and not as a result of any default or omission by any Obligor or any member of the Group;
(iii)	any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances;
(iv)	any Security or Quasi-Security over or affecting any asset acquired by a member of the Group after the date of this Agreement if:

(A)	the Security or Quasi-Security was not created in contemplation of the acquisition of that asset by a member of the Group;
(B)	the principal amount secured has not been increased in contemplation of, or since the acquisition of that asset by a member of the Group; and
(C)	the Security or Quasi-Security is removed or discharged within 2 months of the date of acquisition of such asset;

(v) any Security or Quasi-Security over or affecting any asset of any company which becomes a member of the Group after the Closing Date, where the Security or Quasi-Security is created prior to the date on which that company becomes a member of the Group if:

(A)	the Security or Quasi-Security was not created in contemplation of the acquisition of that company;
(B)	the principal amount secured has not increased in contemplation of or since the acquisition of that company; and
(C)	the Security or Quasi-Security is removed or discharged within 2 months of that company becoming a member of the Group;

(vi)	any Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a member of the Group in the ordinary course of trading and on the supplier’s standard or usual terms and not arising as a result of any default or omission by any member of the Group;
(vii)	any Security or Quasi-Security arising as a consequence of any finance or capital lease in respect of vehicles, plant, equipment or computers, provided that the aggregate capital value of all of such items so leased does not exceed

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	€500,000 (or its equivalent in other currencies) outstanding for the Group at any time;
(viii)	any Security entered into pursuant to any Finance Document;
(ix)	any transfer of receivables pursuant to the NP Factoring Agreements (or any Working Capital Financing (not provided by Quiksilver, Inc.) permitted pursuant to paragraph (vi) of Clause 25.20 (Financial Indebtedness));
(x)	any transfer of receivables contemplated under the Structure Memorandum; and
(xi)	any Security (including any security deposit given in respect of rental payments under leases of real property entered into at arms’ length terms and in the ordinary course of business) securing indebtedness the outstanding principal amount of which (when aggregated with the outstanding principal amount of any other indebtedness which has the benefit of Security given by any member of the Group other than any permitted under paragraphs (i) to (x) above) does not exceed €5,000,000 (or its equivalent in other currencies) in the aggregate .

“Pilot Consolidated Financial Statements” has the meaning given to that term in Clause 23 (Information Undertakings).

“Pilot Facility Agreement” means the €70,000,000 credit agreement dated 14 June 2008 (as amended on 14 August 2008, 30 October 2008, 9 March 2009, 30 June 2009 and 31 July 2009) entered into among the Company as borrower, Société Générale as lender and facility agent, BNP Paribas as lender and security agent and Crédit Lyonnais as lender.

“Pilot ORAs” means the €208,248,624.48 obligations remboursables en actions issued by the Company on 31 October 2005 and initially subscribed by QSH.

“Pilot Tax Consolidated Group” means the Company and each of its Subsidiaries incorporated in France which is a member of the consolidated tax group of the Company.

“Pre-Closing Permitted Restructuring” means any of the corporate restructuring transactions to be completed prior to the Closing Date as described in the Structure Memorandum (including steps n° 1 through 8 (inclusive) of the Structure Memorandum).

“QSH” means QS Holdings S.à r.l., a Luxembourg société à responsabilité limitée, with a share capital of €8,345,580, whose registered office is at 1 rue des Glacis, L-1628 Luxembourg, registered with the Luxembourg Registre de Commerce et des Sociétés under number B 103.193.

“QS Finance” means QS Finance S.A., a Luxembourg société anonyme, with a share capital of €31,000, whose registered office is at 11, avenue Emile Reuter, L-2420 Luxembourg, registered with the Luxembourg Registre de Commerce et des Sociétés under number B 109.345.

“QSH/Biarritz Holdings Contribution” means the contribution by QSH to Biarritz Holdings of all of the marks held by it which are used by Na Pali and its Subsidiaries (including the Material Trademarks), all of the shares of QS Finance and all of the shares of

34

Quiksilver Europa) and the other assets and liabilities as described in the Structure Memorandum.

“Qualifying Lender” has the meaning given to that term in Clause 17 (Tax Gross Up and Indemnities).

“Quasi-Security” has the meaning given to that term in Clause 25.12 (Negative pledge).

“Quiksilver Americas, Inc.” means Quiksilver Americas, Inc., a corporation incorporated under the laws of the State of California, United States of America, whose registered office is at 15202 Graham Street, Huntington Beach, California 92649, United States of America.

“Quiksilver Europa” means Quiksilver Europa SL, a company organized under the laws of Spain, whose registered office is at C/Serrano 73, Madrid and registered with the Commercial Registry of Madrid (Spain) under Volume 16,781, Page 1 and Sheet number M-286696.

“Quiksilver, Inc. Guarantee/SG Financing” means the guarantee (governed by the laws of the State of New York) to be issued by Quiksilver, Inc. in favour of Société Générale (to be in form and substance satisfactory to Société Générale), whereby Quiksilver, Inc. guarantees the payment of all sums due by QS Finance under the SG Financing Documents.

“Quiksilver, Inc. Undertaking/Macquarie” means the letter of undertaking (governed by the laws of the State of New York) to be executed by Quiksilver, Inc. in favour of the Finance Parties, whereby Quiksilver, Inc. undertakes to provide the Company with an amount of cash funds equal to cash payments required to be made by the Company to the purchasers under the Stock Purchase Agreement.

“Quiksilver, Inc. Undertaking/SG Financing” means the letter of undertaking (governed by the laws of the State of New York) to be executed by Quiksilver, Inc. in favour of Société Générale, as described in the Security Sharing Agreement.

“Quotation Day” means, in relation to any period for which an interest rate is to be determined:

(a)	(if the currency is sterling) the first day of that period;
(b)	(if the currency is euro) two TARGET Days before the first day of that period; or
(c)	(for any other currency) two Business Days before the first day of that period,

unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days).

“Ratios” means the Leverage Ratio, the Debt Service Cover Ratio and the Gearing.

“Reference Banks” means, in relation to EURIBOR the principal Paris offices of BNP Paribas, Crédit Lyonnais, Société Générale and Natixis or such other banks as may be appointed by the Agent in consultation with the Company.

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“Refinancing” means the refinancing of the NP Perimeter Indebtedness To Be Refinanced, the Financial Indebtedness under the Pilot Facility Agreement and all corporate actions taken in relation thereto as described in the Structure Memorandum.

“Related Fund” in relation to a fund (the “first fund”), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser of the first fund.

“Relevant Interbank Market” means in relation to euro, the European interbank market and, in relation to any other currency, the London interbank market.

“Relevant Jurisdiction” means, in relation to an Obligor:

(a)	its jurisdiction of incorporation;
(b)	any jurisdiction where any asset subject to or intended to be subject to the Transaction Security to be created by it is situated;
(c)	any jurisdiction where it conducts its business; and
(d)	the jurisdiction whose laws govern the perfection of any of the Transaction Security Documents entered into by it.

“Relevant Period” means each period of twelve months ending on the last day of the Financial Year and each period of twelve months ending on the last day of each Financial Semester.

“Reliance Parties” means the Agent, the Arrangers, the Security Agent, the Issuing Banks, each Ancillary Lender, each Original Lender and each person which becomes a Lender within six months of the Closing Date.

“Repayment Date” means a Facility A Repayment Date or a Facility B Repayment Date or the last day of an Interest Period for a Revolving Facility Loan.

“Repayment Instalment” means any repayment instalment referred to in paragraphs (a) or (b) of Clause 9.1 (Repayment of Term Loans).

“Repeating Representations” has the meaning given to that term in Clause 22.34 (Times when representations made).

“Reports” means the Intellectual Property Memorandum and the Structure Memorandum.

“Representative” means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.

“Revolving Facility” means the revolving credit facility made available under this Agreement as described in paragraph (a)(iv) of Clause 2.1 (The Facilities).

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“Revolving Facility Commitment” means:

(a)	in relation to an Original Lender, the amount in the Base Currency set opposite its name under the heading “Revolving Facility Commitment” in Schedule 1 (The Original Lenders) and the amount of any other Revolving Facility Commitment transferred to it under this Agreement; and
(b)	in relation to any other Lender, the amount in the Base Currency of any Revolving Facility Commitment transferred to it under this Agreement,

as it may be cancelled, reduced or transferred by it under this Agreement.

“Revolving Facility Loan” means a loan made or to be made under the Revolving Facility or the principal amount outstanding for the time being of that loan.

“Revolving Facility Utilisation” means a Revolving Facility Loan.

“Rhône Financing” means the financing to be made available by Rhône Group L.L.C. in an amount of €20,000,000 pursuant to the EU Term Loan Credit Agreement and in an amount of US$125,000,000 pursuant to the US Term Loan Credit Agreement.

“Rhône Financing Documents” means the EU Term Loan Credit Agreement and the US Term Loan Credit Agreement.

“Rollover Loan” means one or more Revolving Facility Loans:

(a)	made or to be made on the same day that a maturing Revolving Facility Loan is due to be repaid;
(b)	the aggregate amount of which is equal to or less than the amount of the maturing Revolving Facility Loan;
(c)	in the same currency as the maturing Revolving Facility Loan; and
(d)	made or to be made to Na Pali for the purpose of refinancing that maturing Revolving Facility Loan.

“Rossignol Documents” means the Issuance and Reimbursement Agreement, the J.P. Morgan Guarantee, the Cash Collateral Agreement and the Shareholders Agreement.

“Rossignol Liabilities” means the amount due to the Rossignol Vendors by Quiksilver Europa pursuant to the Shareholders Agreement in an amount not to exceed €35,600,000.

“Rossignol Liabilities Royalties” means the royalties which are permitted to be paid to Biarritz Holdings pursuant to the Subordination Agreement in order to satisfy the Rossignol Liabilities.

“Rossignol Sale” means the transactions contemplated in the Stock Purchase Agreement dated as of November 12, 2008 entered into between Quiksilver, Inc., Pilot S.A.S., Meribel S.A.S., Quiksilver Americas, Inc., Chartreuse et Mont Blanc LLC, Chartreuse et Mont Blanc SAS, Chartreuse et Mont Blanc Global Holdings S.C.A., Macquarie Asset Finance Limited and Mavilia SAS.

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“Rossignol Vendors” means Laurent Boix-Vives, Jeanine Boix-Vives, Christine Simon and Sylvie Bernard.

“Rossignol Vendors Restricted Shares” means the 146,619 preferred shares (actions de préférence) of the Company held by the Rossignol Vendors.

“Screen Rate” means, in relation to EURIBOR, the percentage rate per annum determined by the Banking Federation of the European Union for the relevant period, displayed on the appropriate page of the Reuters screen. If the agreed page is replaced or service ceases to be available, the Agent may specify another page or service displaying the appropriate rate after consultation with the Company and the Lenders.

“Secured Parties” means each Finance Party from time to time party to this Agreement and any Delegate and Société Générale in its capacity as creditor of the SG Financing.

“Security” means a mortgage, charge, pledge, lien or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.

“Security Agent” means the security agent to be appointed pursuant to the Security Sharing Agreement and to accede to this Agreement, or any successor thereof in accordance with the Security Sharing Agreement.

“Security Sharing Agreement” means the security sharing agreement to be entered into substantially in form of the draft dated the date of this Agreement on or prior to the Closing Date between, among others, the Obligors, Société Générale, as Security Agent, BNP Paribas, as Agent, the Lenders, the Arrangers, the Ancillary Lenders, the Issuing Bank and Société Générale, as SG Creditor.

“Selection Notice” means a notice substantially in the form set out in Part III of Schedule 3 (Requests) given in accordance with Clause 14 (Interest Periods) in relation to a Term Facility.

“Senior Management” means each and all of Pierre Agnes, as president of Na Pali and Pierre Boccon-Liaudet, as president of Pilot and chief financial officer of Na Pali.

“Senior Notes” means the 6-7/8% senior notes due 2015 issued by Quiksilver, Inc. which are subject to the terms of the US Indenture.

“SG Bonds” means the bonds issued by QS Finance and subscribed by Société Générale for an outstanding amount of €50,000,000.

“SG Financing” means the SG Bonds and the SG Forward Financing.

“SG Financing Documents” means the SG Bonds, the SG Forward Financing Documents and the Quiksilver, Inc. Guarantee/SG Financing.

“SG Forward Financing” has the meaning given to that term in the Security Sharing Agreement.

“SG Forward Financing Documents” means the financing agreement to be entered into (in form and substance satisfactory to Société Générale) pursuant to which the SG Forward Financing shall be made available.

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“Shareholders Agreement” means the Shareholders Agreement dated 12 April 2005 between Quiksilver, Inc. and the Rossignol Vendors in respect of the Company (formerly designated Ski Expansion SCA).

“Specified Time” means a time determined in accordance with Schedule 8 (Timetables).

“Stock Purchase Agreement” means the Stock Purchase Agreement dated 12 November 2008 among, inter alia, Quiksilver, Inc. and Macquarie Assets Finance Limited in respect of, inter alia, the sale of Skis Rossignol SAS.

“Structure Chart” means the group structure chart in the agreed form.

“Structure Memorandum” means the legal and tax structure memorandum dated the date hereof prepared by Skadden, Arps, Slate, Meagher & Flom LLP, addressed to, and/or capable of being relied upon by, the Reliance Parties and referred to in Part I of Schedule 2 (Conditions Precedent) together with the Addendum to the Structure Memorandum when the same is delivered to the Agent pursuant to Part II of Schedule 2 (Conditions Precedent).

“Subordinated Debt” has the meaning given to that term in the Subordination Agreement.

“Subordination Agreement” means the subordination agreement to be entered into substantially in form of the draft dated the date of this Agreement on or prior to the Closing Date between, among others, Quiksilver, Inc. as Parent, QS Finance as SG Financing Debtor, Société Générale, as Security Agent, the Subordinated Creditors and the Intra-Group Debtors (in each case, as defined in the Subordination Agreement).

“Subsidiary” means, in relation to any company, another company which is directly or indirectly controlled by it within the meaning of article L.233-3 of the French Code de commerce. For the avoidance of doubt, such definition shall apply to any company registered in any jurisdiction whatsoever.

“Tanna” means Tanna, a French société à responsabilité limitée whose registered office is at 162 rue Belharra, 64500 Saint Jean de Luz, registered under the unique identification number 492 402 276 RCS Bayonne.

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007.

“TARGET Day” means any day on which TARGET2 is open for the settlement of payments in euro.

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).

“Tax Consolidation Agreement” means the tax consolidation agreement effective as of 1 November 2005 entered into among the Company and certain of its French Subsidiaries.

“TEG Letter” has the meaning given to that term in Clause 13.5 (Effective Global Rate (Taux Effectif Global)).

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“Term” means each period determined under this Agreement for which the Issuing Bank is under a liability under a Letter of Credit.

“Term Facility” means Facility A or Facility B.

“Term Loan” means a Facility A Loan or a Facility B Loan.

“Termination Date” means:

(a)	in relation to Facility A, 31 July 2013;
(b)	in relation to Facility B, 31 July 2013;
(c)	in relation to the L/C Facility, 31 July 2013; and
(d)	in relation to the Revolving Facility, 31 July 2013.

“TopCo Obligors” means Quiksilver, Inc., QSH, Biarritz Holdings and Quiksilver Europa and “TopCo Obligor” means any one of them as the context may require.

“Total Commitments” means the aggregate of the Total Facility A Commitments, the Total Facility B Commitments, the Total L/C Facility Commitments and the Total Revolving Facility Commitments, being €268,000,000 at the date of this Agreement.

“Total Facility A Commitments” means the aggregate of the Facility A Commitments, being €55,000,000 at the date of this Agreement.

“Total Facility B Commitments” means the aggregate of the Facility B Commitments, being €115,000,000 at the date of this Agreement.

“Total L/C Facility Commitments” means the aggregate of the L/C Facility Commitments, being €40,000,000 at the date of this Agreement.

“Total Revolving Facility Commitments” means the aggregate of the Revolving Facility Commitments, being €58,000,000 at the date of this Agreement and as reduced in accordance with the terms of this Agreement thereafter.

“Transaction Documents” means (i) the Finance Documents, (ii) the Note, (iii) all documents evidencing the Na Pali ORAs and the Pilot ORAs, (iv) all documents evidencing all outstanding loans made by Quiksilver, Inc. or any Subsidiary of the latter (other than the European Group) to any member of the European Group (other than QSH), (v) the Tax Consolidation Agreement, (vi) the Quiksilver, Inc Undertaking/Macquarie, (vii) the Quiksilver, Inc Undertaking/SG Financing, (viii) the Quiksilver, Inc. Guarantee/SG Financing, (ix) the SG Financing Documents, (x) the NP Factoring Agreements, (xi) the Stock Purchase Agreement and (xii) the Rossignol Documents.

“Transaction Security” means the Security created or expressed to be created in favour of the Security Agent pursuant to the Transaction Security Documents.

“Transaction Security Documents” means each of the documents listed as being a Transaction Security Document in Part V of Schedule 2 (Conditions Precedent), each of the documents listed as being a Transaction Security Document in Part VI of Schedule 2

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(Conditions Precedent) together with any other document entered into by any Obligor creating or expressed to create any Security over all or any part of its assets in respect of the obligations of any of the Obligors under any of the Finance Documents.

“Transfer Agreement” means an agreement substantially in the form set out in Schedule 5 (Form of Transfer Agreement) or any other form agreed between the Agent and the Company.

“Transfer Date” means, in relation to a transfer, the later of:

(a)	the proposed Transfer Date specified in the relevant Transfer Agreement; and
(b)	the date on which the Agent executes the relevant Transfer Agreement.

“Treasury Transactions” means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.

“Tuamotu” means Tuamotu, a French société à responsabilité limitée whose registered office is at 162, rue Belharra, 64500 Saint Jean de Luz, registered under the unique identification number 497 841 064 RCS Bayonne.

“Tyax” means a société a responsabilite limitée, whose registered office is at 162 rue Belharra, 64500 Saint Jean de Luz, registered under the unique identification number 487 539 173 RCS Bayonne.

“UCP” means Uniform Customs and Practices for Documentary Credits, International Chamber of Commerce Publication No. 600.

“Unpaid Sum” means any sum due and payable but unpaid by an Obligor under the Finance Documents.

“US GAAP” means generally accepted accounting principles as in effect in the United States of America from time to time.

“US Group” means Quiksilver Americas, Inc. and its Subsidiaries.

“US Group Change of Control” means Quiksilver, Inc. ceasing to directly or indirectly (x) own at least 95% of the share capital of Quiksilver Americas, Inc. (on a fully-diluted basis and/or on a non-diluted basis), or (y) own at least 95% of the voting rights in Quiksilver Americas, Inc. (on a fully-diluted basis and/or on a non-diluted basis) or (z) have the right or ability to control the composition of the majority of the board of directors (or equivalent body) of Quiksilver Americas, Inc.

“US Indenture” means the Indenture dated 22 July 2005 entered into among Quiksilver, Inc., the Subsidiary Guarantors and Wilmington Trust Company as Trustee relating to the Senior Notes.

“US Term Loan Credit Agreement” means that certain credit agreement dated as of 31 July 2009 among Quiksilver, Inc., Quiksilver Americas, the lenders party thereto and Rhône Group L.L.C.

“Utilisation” means a Loan or a Letter of Credit.

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“Utilisation Date” means the date on which a Utilisation is made.

“Utilisation Request” means (i) a notice substantially in the relevant form set out in Part I of Schedule 3 (Requests) or (ii) a L/C Request.

“VAT” means value added tax in any jurisdiction and any other tax of a similar nature.

“Working Capital Financing” means (i) any factoring programme replacing all or any portion of the factoring programme under the NP Factoring Agreements, provided that the nature and financial characteristics of such factoring programme are not substantially different from the nature and financial characteristics of the factoring programme under the NP Factoring Agreements and/or (ii) loans made or equity contributed by Quiksilver, Inc. or any of its Subsidiaries (other than Biarritz Holdings and its Subsidiaries) to Na Pali in replacement of all or any portion of the factoring programme under the NP Factoring Agreements which are subordinated pursuant to the Subordination Agreement.

“2005 ABL Agreement” means the amended and restated credit agreement dated 3 June 2005 (as amended) entered into among Quiksilver, Inc., Quiksilver Americas, Inc., Bank of America, N.A., Union Bank of California, N.A., JPMorgan Chase Bank, N.A., JPMorgan Chase Bank, N.A., Toronto Branch, J.P. Morgan Securities Inc. and certain financial institutions as lenders.

“2009 ABL Agreement” means that certain credit agreement dated as of the date hereof among Quiksilver Americas, Inc, the other borrowers party thereto, Quiksilver, Inc., the lenders party thereto, the ABL agent, Bank of America, N.A. and General Electric Capital Corporation, as co-collateral agents, and the other agents party thereto, and any refinancings, refundings, renewals or extensions thereof permitted hereunder.

1.2	Construction
(a)	Unless a contrary indication appears, a reference in this Agreement to:

(i)	the “Agent”, any “Arranger”, any “Finance Party”, any “Hedge Counterparty”, any “Issuing Bank”, any “Lender”, any “Obligor”, any “Party”, any “Secured Party”, the “Security Agent” or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees and, in the case of the Security Agent, any person for the time being appointed as Security Agent or Security Agents in accordance with the Finance Documents;
(ii)	a document in “agreed form” is a document which is previously agreed in writing by or on behalf of the Company and the Agent;
(iii)	“assets” includes present and future properties, revenues and rights of every description;
(iv)	“corporate reconstruction” includes in relation to any company any contribution of part of its business in consideration of shares (apport partiel d’actifs) and any demerger (scission) implemented in accordance with articles L.236-1 to L.236-24 of the French Code de commerce;

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(v)	a “Finance Document” or a “Transaction Document” or any other agreement or instrument is a reference to that Finance Document or Transaction Document or other agreement or instrument as amended, novated, supplemented, extended or restated;
(vi)	“gross negligence” means “faute lourde”;
(vii)	a “guarantee” includes any guarantee, any “cautionnement”, “aval”, any “garantie” and any indemnity or similar assurance against loss which is independent from the debt to which it relates;
(viii)	“indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;
(ix)	“merger” includes any “fusion” implemented in accordance with articles L.236-1 to L.236.24 of the French Code de commerce;
(x)	a Lender’s “participation” in relation to a Letter of Credit, shall be construed as a reference to the relevant amount that is or may be payable by a Lender in relation to that Letter of Credit;
(xi)	a “person” includes any individual, firm, company, corporation, government, state or agency of a state or any grouping (whether or not having separate legal personality);
(xii)	a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organization;
(xiii)	a “security interest” includes any type of security (“sûreté réelle”) and transfer by way of security;
(xiv)	“trustee, fiduciary and fiduciary duty” has in each case the meaning given to such term under any applicable law;
(xv)	“wilful misconduct” means “dol”;
(xvi)	a provision of law is a reference to that provision as amended or re-enacted; and
(xvii)	unless a contrary indication appears, a time of day is a reference to Paris time.

(b)	Section, Clause and Schedule headings are for ease of reference only.
(c)	Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
(d)	A Borrower providing “cash cover” for a Letter of Credit or an Ancillary Facility means a Borrower paying an amount in the currency of the Letter of Credit (or, as the

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case may be, Ancillary Facility) to an interest-bearing account in the name of the Borrower and the following conditions being met:

(i)	the account is with the Security Agent or with the Issuing Bank or Ancillary Lender for which that cash cover is to be provided;
(ii)	subject to paragraph (b) of Clause 7.6 (Cash cover by Borrower) until no amount is or may be outstanding under that Letter of Credit or Ancillary Facility, withdrawals from the account may only be made to pay a Finance Party amounts due and payable to it under this Agreement in respect of that Letter of Credit or Ancillary Facility; and
(iii)	the Borrower has, subject to the Agreed Security Principles, executed a security document over that account, in form and substance reasonably satisfactory to the Security Agent or the Lender or Ancillary Lender with which that account is held, creating a first ranking security interest over that account.

(e)	A Default (other than an Event of Default) is “continuing” if it has not been remedied or waived and an Event of Default is “continuing” if it has not been remedied or waived.
(f)	A Borrower “repaying” or “prepaying” a Letter of Credit or Ancillary Outstandings means:

(i)	that Borrower providing cash cover for that Letter of Credit or in respect of the Ancillary Outstandings;
(ii)	the maximum amount payable under the Letter of Credit or Ancillary Facility being reduced or cancelled in accordance with its terms; or
(iii)	the Issuing Bank or Ancillary Lender being satisfied that it has no further liability under that Letter of Credit or Ancillary Facility,

and the amount by which a Letter of Credit is, or Ancillary Outstandings are, repaid or prepaid under paragraphs (f)(i) and (f)(ii) above is the amount of the relevant cash cover or reduction.

(g)	An amount borrowed includes any amount utilised by way of Letter of Credit or under an Ancillary Facility.
(h)	A Lender funding its participation in a Utilisation includes a Lender participating in a Letter of Credit.
(i)	An outstanding amount of a Letter of Credit at any time is the maximum amount that is or may be payable by the relevant Borrower in respect of that Letter of Credit at that time.
(j)	Without prejudice to the generality of any provision of this Agreement, in this Agreement where it relates to an Obligor organized under the laws of Luxembourg, a reference to:

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(i)	a winding-up, administration or dissolution includes, without limitation, bankruptcy (faillite), insolvency, liquidation, composition with creditors (concordat préventif de faillite), moratorium or reprieve from payment (sursis de paiement), controlled management (gestion contrôlée), fraudulent conveyance (actio pauliana), general settlement with creditors, reorganization or similar laws affecting the rights of creditors generally;
(ii)	a receiver, administrative receiver, administrator, trustee, custodian, sequestrator, conservator or similar officer includes, without limitation, a juge délégué, commissaire, juge-commissaire, mandataire ad hoc, administrateur provisoire, liquidateur or curateur;
(iii)	a lien or security interest includes any hypothèque, nantissement, gage, privilège, sûreté réelle, droit de retention, and any type of security in rem (sûreté réelle) or agreement or arrangement having a similar effect and any transfer of title by way of security;
(iv)	a guarantee includes any cautionnement, aval and any garantie which is independent from the debt to which it relates; and
(v)	a person being unable to pay its debts includes that person being in a state of cessation de paiements,

	in each case, as such terms would be interpreted under the laws of Luxembourg.
(k)	Prior to the Closing Date, each reference in this Agreement (except in the Schedules) to the Subordination Agreement or the Security Sharing Agreement shall be deemed to refer to each such agreement in the draft form dated the date of this Agreement as if it were in effect in such form on and from the date of this Agreement.

SECTION 2 — THE FACILITIES

2.	THE FACILITIES
2.1	The Facilities
(a)	Subject to the terms of this Agreement, the Lenders make available:

(i)	a Base Currency term loan facility in an aggregate amount equal to the Total Facility A Commitments;
(ii)	a Base Currency term loan facility in an aggregate amount equal to the Total Facility B Commitments;
(iii)	a multicurrency revolving letter of credit facility in an aggregate amount the Base Currency Amount of which is equal to the Total L/C Facility Commitments; and
(iv)	a Base Currency revolving credit facility in an aggregate amount equal to the Total Revolving Facility Commitments.

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(b)	The Facility A will be available to the Company and the Facility B, the L/C Facility and the Revolving Facility will be available to Na Pali.
(c)	Subject to the terms of this Agreement and the Ancillary Documents, the Ancillary Lender may make available an Ancillary Facility to Na Pali in place of all or part of its Commitment under the Revolving Facility.
2.2	Finance Parties’ rights and obligations
(a)	The obligations of each Finance Party under the Finance Documents are several (conjointes et non solidaires). Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
(b)	The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor shall be a separate and independent debt.
(c)	A Finance Party may, except as otherwise stated in the Finance Documents, separately enforce its rights under the Finance Documents.
2.3	Obligors’ Agent
(a)	Each Obligor (other than the Company) by its execution of this Agreement or an Accession Letter irrevocably appoints the Company to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:

(i)

the Company on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions (including, in the case of a Borrower, Utilisation Requests), to execute on its behalf any Accession Letter, to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor notwithstanding that they may affect the Obligor (including, without limitation, by increasing the obligations of such Obligor howsoever fundamentally, whether by increasing the liabilities guaranteed by it or otherwise), without further reference to or the consent of that Obligor; and

(ii)

each Finance Party to give any notice, demand or other communication to that Obligor pursuant to the Finance Documents to the Company,

	and in each case the Obligor shall be bound as though the Obligor itself had given the notices and instructions (including, without limitation, any Utilisation Requests) or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
(b)	Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors’ Agent or given to the Obligors’ Agent under any Finance Document on behalf of another Obligor or in connection with any Finance Document (whether or not known

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	to any other Obligor and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if that Obligor had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Obligors’ Agent and any other Obligor, those of the Obligors’ Agent shall prevail.
3.	PURPOSE
3.1	Purpose
(a)	The Company shall apply all amounts borrowed by it under Facility A towards refinancing all of its Financial Indebtedness under the Pilot Facility Agreement as described in the Structure Memorandum and the Funds Flow Statement.
(b)	Na Pali shall apply all amounts borrowed by it under Facility B towards:

(i)	refinancing the NP Perimeter Indebtedness To Be Refinanced; and
(ii)	payment of breakage costs and any other costs related to such refinancing (including hedge close-out costs, if any),

	in each case, as described in the Structure Memorandum and the Funds Flow Statement.
(c)	Na Pali shall apply all amounts borrowed by it under the Revolving Facility, the L/C Facility and any Letter of Credit towards the general corporate and working capital purposes of the Group (including towards the payment of fees, costs and expenses incurred in connection with the implementation of the Facilities but not towards acquisitions of companies, businesses or undertakings or prepayment of any Term Loan). Na Pali shall apply all utilizations of any Ancillary Facility for the purpose of the cash pooling of the Group in accordance with the Cash Pooling Agreement (but not towards acquisitions of companies, businesses or undertakings or prepayment of any Term Loan or towards prepayment of any Revolving Facility Utilisation or any L/C Facility Utilisation).
3.2	Monitoring

No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.

4.	CONDITIONS OF UTILISATION
4.1	Initial conditions precedent

The Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation) in relation to any Utilisation if on or before the Utilisation Date for that Utilisation, (i) in the case of a Utilisation on the Closing Date, the Agent has received all of the documents and other evidence listed in Part I and Part II of Schedule 2 (Conditions Precedent) in form and substance satisfactory to each of the Lenders and (ii) in the case of any other Utilisation, the Agent has received all of the documents and other evidence listed in Part III of Schedule 2 (Conditions Precedent) in form and substance satisfactory to the Agent. The Agent shall notify the Company and the Lenders promptly such satisfaction.

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4.2 Further conditions precedent

Subject to Clause 4.1 (Initial conditions precedent), the Lenders will only be obliged to comply with Clause 5.4 (Lenders’ participation), if on the date of the Utilisation Request and on the proposed Utilisation Date:

(a)	(i) in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan, (ii) in the case of any Utilisation (other than a Rollover Loan or a Utilisation on the Closing Date), no Default is continuing or would result from the proposed Utilisation and (iii) in the case of any Utilisation on the Closing Date, no Default (other than a Default referred to in Clause 26.16 (Material adverse change)) is continuing or would result from the proposed Utilisation; and
(b)	in relation to any Utilisation on the Closing Date, all the representations and warranties in Clause 22 (Representations) (other than representations and warranties set out in paragraphs (d) and (g) of Clause 22.13 (Financial Statements)) or, in relation to any other Utilisation, the Repeating Representations to be made by each Obligor are true and correct in all material respects.
4.3	Conditions relating to Optional Currencies
(a)	A currency will constitute an Optional Currency in relation to an L/C Facility Utilisation if:

(i)	it is readily available in the amount required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that Utilisation; and
(ii)	is US dollars or has been approved by the Agent (acting on the instructions of all the Lenders) on or prior to receipt by the Agent of the relevant Utilisation Request for that Utilisation.

(b) If the Agent has received a written request from the Company for a currency to be approved under paragraph (a)(ii) above, the Agent will confirm to the Company by the Specified Time:

(i)	whether or not the Lenders have granted their approval; and
(ii)	if approval has been granted, the minimum amount for any subsequent Utilisation in that currency.

4.4	Maximum number of Utilisations
(a)	A Borrower (or the Company) may not deliver a Utilisation Request if as a result of the proposed Utilisation:

(i)	2 or more Facility A Loans would be outstanding;
(ii)	2 or more Facility B Loans would be outstanding; or

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(iii) 15 or more Revolving Facility Utilisations would be outstanding, provided that a minimum period of 5 Business Days shall have expired between any two Revolving Facility Utilisations.

(b) A Borrower (or the Company) may not request that a Facility A Loan or a Facility B Loan be divided.

SECTION 3 — UTILISATION

5.	UTILISATION — LOANS
5.1	Delivery of a Utilisation Request

A Borrower (or the Company on its behalf) may utilise a Facility by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.

5.2	Completion of a Utilisation Request for Loans
(a)	Each Utilisation Request for a Loan is irrevocable and will not be regarded as having been duly completed unless:

(i)	it identifies the Facility to be utilised;
(ii)	the proposed Utilisation Date is a Business Day within the Availability Period applicable to that Facility;
(iii)	the currency and amount of the Utilisation comply with Clause 5.3 (Currency and amount); and
(iv)	the proposed Interest Period complies with Clause 14 (Interest Periods).

(b) Multiple Utilisations may be requested in a Utilisation Request where the proposed Utilisation Date is the Closing Date. Only one Utilisation may be requested in each subsequent Utilisation Request.

5.3	Currency and amount
(a)	The currency specified in a Utilisation Request must be:

(i)	in relation to a Term Facility, the Base Currency; and
(ii)	in relation to a Revolving Facility Loan, the Base Currency.

(b) The amount of the proposed Utilisation must be:

(i)	for Facility A an amount not to exceed the Available Facility; or
(ii)	for Facility B an amount not to exceed the Available Facility; or
(iii)	in the case of a Revolving Facility Loan, a minimum of €3,000,000 or, if less, the Available Facility.

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5.4	Lenders’ participation
(a)	If the conditions set out in this Agreement have been met, each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.
(b)	The amount of each Lender’s participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making the Loan.
5.5	Limitations on Utilisations
(a)	The Revolving Facility shall not be utilised unless each Term Facility has been utilised in full.
(b)	A Term Facility may only be utilised on the Closing Date.
(c)	The maximum aggregate amount of the Ancillary Commitments of all the Lenders shall not at any time exceed €3,000,000.
5.6	Cancellation of Commitments
(a)	The Facility A Commitments which, at that time, are unutilized shall be immediately cancelled at the end of the Availability Period for Facility A.
(b)	The Facility B Commitments which, at that time, are unutilized shall be immediately cancelled at the end of the Availability Period for Facility B.
(c)	The Revolving Facility Commitments which, at that time, are unutilized shall be immediately cancelled at the end of the Availability Period for the Revolving Facility.
5.7	Clean down

The Company shall ensure that the aggregate of the Base Currency Amounts of:

(a)	all Revolving Facility Loans; and
(b)	any cash loan element of the Ancillary Outstandings under all the Ancillary Facilities,

(as confirmed in a certificate signed by a legal representative of the Company provided to the Agent within 5 Business Days after the end of each twelve-month period starting from the date of this Agreement (or, in the case of sub-paragraph (iv) below, within 5 Business Days after the relevant 10 successive day period)) shall not exceed for a period of at least 10 successive days (i) 80% of the Total Revolving Facility Commitments in effect during the period commencing on the date of this Agreement and ending on the first anniversary of this Agreement, (ii) 80% of the Total Revolving Facility Commitments in effect during the period commencing on the first day following the first anniversary of this Agreement and ending on the second anniversary of this Agreement, (iii) 50% of the Total Revolving Facility Commitments in effect during the period commencing on the first day following the second anniversary of this Agreement and ending on the third anniversary of this Agreement and (iv) €0 for any twelve-month period commencing on the first day following the third anniversary of this Agreement. Not less than 2 months shall elapse between two such periods.

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6.	UTILISATION — LETTERS OF CREDIT
6.1	The L/C Facility
(a)	The L/C Facility shall only be utilised by way of Letters of Credit.
(b)	The L/C Facility shall not be utilised unless each Term Facility has been utilised in full.
6.2	Delivery of an L/C Request for Letters of Credit

Na Pali (or the Company on its behalf) may request a Letter of Credit to be issued by delivery to the Agent of a duly completed L/C Request not later than the Specified Time.

6.3	Completion of an L/C Request for Letters of Credit
(a)	Each L/C Request for a Letter of Credit is irrevocable and will not be regarded as having been duly completed unless:

(i)	it specifies that it is for a Letter of Credit;
(ii)	it identifies Na Pali as the applicant/account party of the Letter of Credit;
(iii)	it identifies the Issuing Bank which has agreed to issue the Letter of Credit;
(iv)	the proposed Utilisation Date is a Business Day within the Availability Period applicable to the L/C Facility;
(v)	the currency and amount of the Letter of Credit comply with Clause 6.4 (Currency and amount);
(vi)	the form of Letter of Credit in a form agreed by the Issuing Bank and Na Pali is attached and it specifies that it is subject to the UCP;
(vii)	the Expiry Date of the Letter of Credit falls on or before the date which is 30 days prior to the Termination Date in relation to the L/C Facility;
(viii)	the Term of the Letter of Credit is 180 days or less (as may be extended pursuant to Clause 6.6 (Extension of a Letter of Credit));
(ix)	the delivery instructions for the Letter of Credit are specified;
(x)	the entity for the account of which the Letter of Credit is issued is Na Pali, Emerald Coast, Omareef or any other entity approved by the Issuing Bank and the Majority Lenders (it being understood, for the avoidance of doubt, that Na Pali shall remain liable for all sums due in respect of such Letter of Credit); and
(xi)	the identity of the beneficiary of the Letter of Credit (which may not be, for the avoidance of doubt, Quiksilver, Inc. or any of its Subsidiaries) is approved by the relevant Issuing Bank and the country in which the beneficiary is registered is an Approved Jurisdiction.

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(b)	If the details and instructions in the L/C Request are not sufficiently specific, the relevant Issuing Bank shall inform Na Pali within two (2) Business Days following receipt of the L/C Request and the Letter Credit will not be issued unless and until such Issuing Bank is satisfied that it has received the necessary additional details and instructions.
6.4	Currency and amount
(a)	The currency specified in a L/C Request must be the Base Currency or an Optional Currency.
(b)	Subject to paragraph (c) below, the amount of the proposed Letter of Credit must be an amount whose Base Currency Amount is not more than the Available Facility and which is:

(i)	if the currency selected is the Base Currency, a minimum of €150,000 or, if less, the Available Facility; or
(ii)	if the currency selected is U.S. dollars, a minimum of $150,000 or, if less, the Available Facility; or
(iii)	if the currency selected is an Optional Currency other than US dollars, the minimum amount specified by the Agent pursuant to paragraph (b)(ii) of Clause 4.3 (Conditions relating to Optional Currencies) or, if less, the Available Facility.

(c)	The maximum aggregate Base Currency Amount of all Letters of Credit shall not exceed €40,000,000 at any time.
6.5	Issuance of Letters of Credit
(a)	If the conditions set out in this Agreement have been met and (other than with respect to an Existing Letter of Credit) the form of the Letter of Credit has been agreed by the relevant Issuing Bank and the Agent, such Issuing Bank shall issue the Letter of Credit on the Utilisation Date.
(b)	Subject to Clause 4.1 (Initial conditions precedent), the Issuing Bank will only be obliged to comply with paragraph (a) above, if on the date of the L/C Request or Extension Request and on the proposed Utilisation Date:

(i)	in the case of a Letter of Credit to be renewed in accordance with Clause 6.6 (Extension of a Letter of Credit) no Event of Default is continuing or would result from the proposed Utilisation and, in the case of any other Utilisation, no Default is continuing or would result from the proposed Utilisation; and
(ii)	in relation to any Utilisation on the Closing Date, all the representations and warranties in Clause 22 (Representations) or, in relation to any other Utilisation, the Repeating Representations to be made by each Obligor are true and correct in all material respects.

(c) The amount of each Lender’s participation in each Letter of Credit will be equal to the proportion borne by its Available Commitment to the Available Facility (in each case

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	in relation to the L/C Facility) immediately prior to the issuance of the Letter of Credit.
(d)	The Agent shall determine the Base Currency Amount of each Letter of Credit which is to be issued in an Optional Currency and shall notify the Issuing Bank and each Lender of the details of the requested Letter of Credit and its participation (which shall equal its L/C Proportion) in that Letter of Credit by the Specified Time.
6.6	Extension of a Letter of Credit
(a)	Na Pali (or the Company on its behalf) may request that any Letter of Credit (other than an Existing Letter of Credit) issued on behalf of Na Pali be extended by delivery to the Agent of an Extension Request in substantially similar form to a Utilisation Request for a Letter of Credit by the Specified Time.
(b)	The Finance Parties shall treat any Extension Request in the same way as an L/C Request except that the conditions set out in paragraph (a)(vi) of Clause 6.3 (Completion of an L/C Request for Letters of Credit) shall not apply.
(c)	The terms of each extended Letter of Credit shall be the same as those of the relevant Letter of Credit immediately prior to its extension, except that:

(i)	its amount may be less than the amount of the Letter of Credit immediately prior to its extension; and
(ii)	its Term shall end on the proposed Expiry Date specified in the Extension Request.

(d)	If the conditions set out in this Agreement have been met, the relevant Issuing Bank shall amend any Letter of Credit (other than an Existing Letter of Credit) pursuant to an Extension Request.
6.7	Reduction of a Letter of Credit
(a)	If, on the proposed Utilisation Date of a Letter of Credit, any of the Lenders under the L/C Facility is a Non-Acceptable L/C Lender and:

(i)	that Lender has failed to provide cash collateral to the Issuing Bank in accordance with Clause 7.5 (Cash collateral by Non-Acceptable L/C Lender); and
(ii)	either:

(A)	the Issuing Bank has not required Na Pali to provide cash cover pursuant to Clause 7.6 (Cash cover by Borrower); or
(B)	Na Pali has failed to provide cash cover to the Issuing Bank in accordance with Clause 7.6 (Cash cover by Borrower),

the Issuing Bank may reduce the amount of that Letter of Credit by an amount equal to the amount of the participation of that Non-Acceptable L/C Lender in respect of that Letter of Credit and that Non-Acceptable L/C Lender shall be deemed not to have

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any participation (or obligation to indemnify the Issuing Bank) in respect of that Letter of Credit for the purposes of the Finance Documents.

(b)	The Issuing Bank shall notify the Agent of each reduction made pursuant to this Clause 6.7.
(c)	This Clause 6.7 shall not affect the participation of each other Lender in that Letter of Credit.
6.8	Revaluation of Letters of Credit
(a)	If any Letters of Credit are denominated in an Optional Currency, the Agent shall on 31 July and 31 January of each Financial Year falling after the date of the Letter of Credit, recalculate the Base Currency Amount of each Letter of Credit by notionally converting into the Base Currency the outstanding amount of that Letter of Credit on the basis of the Agent’s Spot Rate of Exchange on the date of calculation.
(b)	The Company shall, if requested by the Agent within 3 Business Days of any calculation under paragraph (a) above, ensure that within three Business Days sufficient L/C Facility Utilisations are prepaid to prevent the Base Currency Amount of the L/C Facility Utilisations exceeding the Total L/C Facility Commitments following any adjustment to a Base Currency Amount under paragraph (a) of this Clause 6.8.
6.9	Cancellation of L/C Facility Commitments

The L/C Facility Commitments, which, at that time, are unutilized shall be immediately cancelled at the end of the Availability Period for the L/C Facility.

7.	LETTERS OF CREDIT
7.1	Existing Letters of Credit

Schedule 16 (Existing Letters of Credit) hereto contains on the date hereof a description of certain letters of credit issued (or deemed issued) by the Initial Issuing Bank and which shall be outstanding on the Closing Date (and setting forth, with respect to each such letter of credit, (i) the letter of credit number, (ii) the name(s) of the account party or account parties, (iii) the face amount (including the currency in which such letter of credit is denominated), (iv) the name of the beneficiary and (v) the expiry date). Each such letter of credit, until its expiration and reimbursement in full (to the extent drawn) (an “Existing Letter of Credit”) shall, on the Closing Date and once each Term Facility has been drawn in full, constitute a “Letter of Credit” for all purposes of this Agreement, issued, for purposes of Clause 6.5 (Issuance of Letters of Credit), on the Closing Date. For the avoidance of doubt, no Existing Letter of Credit may be extended.

7.2 Immediately payable

If a Letter of Credit or any amount outstanding under a Letter of Credit is expressed to be immediately payable, Na Pali shall repay or prepay that amount immediately.

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7.3	Claims under a Letter of Credit
(a)	Na Pali irrevocably and unconditionally authorises the Issuing Banks to pay any claim made or purported to be made under a Letter of Credit requested by it (or requested by the Company on its behalf) and which appears on its face to be in order (in this Clause 7, a “claim”).
(b)	Na Pali shall immediately on demand pay to the relevant Issuing Bank an amount equal to the amount of any claim.
(c)	Na Pali acknowledges that each Issuing Bank:

(i)	is not obliged to carry out any investigation or seek any confirmation from any other person before paying a claim; and
(ii)	deals in documents only and will not be concerned with the legality of a claim or any underlying transaction or any available set-off, counterclaim or other defence of any person.

(d) The obligations of Na Pali under this Clause 7 will not be affected by:

(i)	the sufficiency, accuracy or genuineness of any claim or any other document; or
(ii)	any incapacity of, or limitation on the powers of, any person signing a claim or other document.

(e)	Each of the Parties acknowledges and agrees that, notwithstanding anything to the contrary contained herein, the obligations of the Issuing Banks to examine any documents presented in connection with a claim shall be limited to those set forth in the UCP.
7.4	Indemnities
(a)	Na Pali shall immediately on demand indemnify the Issuing Banks against any cost, loss or liability incurred by the Issuing Banks (otherwise than by reason of such Issuing Bank’s gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit requested by (or on behalf of) Na Pali.
(b)	Each Lender shall (according to its L/C Proportion) immediately on demand from the relevant Issuing Bank indemnify such Issuing Bank against any cost, loss or liability incurred by that Issuing Bank (including, without limitation, any losses as a result of the failure of Na Pali to reimburse the Issuing Bank in full for the amount of any claim pursuant to Clause 7.3(b) (Claims under a Letter of Credit)) (otherwise than by reason of the Issuing Bank’s gross negligence or wilful misconduct) in acting as the Issuing Bank under any Letter of Credit (unless the Issuing Bank has been reimbursed by an Obligor pursuant to a Finance Document).
(c)	If any Lender is not permitted (by its constitutional documents or any applicable law) to comply with paragraph (b) above, then that Lender will not be obliged to comply with paragraph (b) and shall instead be deemed to have taken, on the date the Letter of Credit is issued (or if later, on the date the Lender’s participation in the Letter of

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	Credit is transferred or assigned to the Lender in accordance with the terms of this Agreement), an undivided interest and participation in the Letter of Credit in an amount equal to its L/C Proportion of that Letter of Credit. On receipt of demand from the Issuing Bank, that Lender shall pay to the Issuing Bank an amount equal to its L/C Proportion of the amount demanded.
(d)	Na Pali shall immediately on demand reimburse any Lender for any payment it makes to the Issuing Bank under this Clause 7.4 in respect of a Letter of Credit.
(e)	Whenever the Issuing Bank receives a payment of a reimbursement obligation as to which it has received any payments from the Lenders pursuant to clause (c) above, the Issuing Bank shall pay to each such Lender which has paid its L/C Proportion thereof (and which has not been reimbursed directly by Na Pali therefore pursuant to paragraph (d) above) an amount equal to such Lender’s share (based upon the proportionate aggregate amount originally funded by such Lender to the aggregate amount funded by all Lenders) of the principal amount of such reimbursement obligation and interest thereon accruing after the purchase of the respective participations.
(f)	The obligations of each Lender or Na Pali under this Clause are continuing obligations and will extend to the ultimate balance of sums payable by that Lender or Na Pali in respect of any Letter of Credit, regardless of any intermediate payment or discharge in whole or in part.
(g)	The obligations of any Lender or Na Pali under this Clause will not be affected by any act, omission, matter or thing which, but for this Clause, would reduce, release or prejudice any of its obligations under this Clause (without limitation and whether or not known to it or any other person) including:

(i)	any time, waiver or consent granted to, or composition with, any Obligor, any beneficiary under a Letter of Credit or any other person;
(ii)	the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor or any member of the Group;
(iii)	the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor, any beneficiary under a Letter of Credit or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security;
(iv)	any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor, any beneficiary under a Letter of Credit or any other person;
(v)	any amendment (however fundamental) or replacement of a Finance Document, any Letter of Credit or any other document or security;

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(vi)	any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document, any Letter of Credit or any other document or security;
(vii)	any insolvency or similar proceedings;
(viii)	the existence of any claim, setoff, defense, counterclaim or other right which Na Pali or any member of the Group may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any person for whom any such transferee may be acting), the Agent, any Lender (including in its capacity as an Issuing Bank), or any other person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between Na Pali or any member of the Group and the beneficiary named in any such Letter of Credit); or
(ix)	the occurrence of any Default.

7.5	Cash collateral by Non-Acceptable L/C Lender
(a)	If, at any time, a Lender under the L/C Facility is a Non-Acceptable L/C Lender, the Issuing Bank may, by notice to that Lender, request that Lender to pay and that Lender shall pay, on or prior to the date falling 3 Business Days after the request by the Issuing Bank, an amount equal to that Lender’s L/C Proportion of the outstanding amount of a Letter of Credit and in the currency of that Letter of Credit to an interest-bearing account held in the name of that Lender with the Issuing Bank.
(b)	The Non-Acceptable L/C Lender to whom a request has been made in accordance with paragraph (a) above shall enter into a security document or other form of collateral arrangement over the account, in form and substance satisfactory to the Issuing Bank, as collateral for any amounts due and payable under the Finance Documents by that Lender to the Issuing Bank in respect of that Letter of Credit.
(c)	Until the outstandings under that Letter of Credit have been reduced to zero and such Letter of Credit has been cancelled, withdrawals from the account may only be made to pay to the Issuing Bank amounts due and payable to the Issuing Bank by the Non-Acceptable L/C Lender under the Finance Documents in respect of that Letter of Credit.
(d)	Each Lender under the L/C Facility shall notify the Agent and the Company:

(i)	on the date of this Agreement or on any later date on which it becomes such a Lender in accordance with Clause 27 (Changes to the Lenders) whether it is a Non-Acceptable L/C Lender; and
(ii)	as soon as practicable upon becoming aware of the same, that it has become a Non-Acceptable L/C Lender,

and an indication in Schedule 1 (The Original Lenders) or in a Transfer Agreement or to that effect will constitute a notice under paragraph (d)(i) to the Agent and, upon delivery in accordance with Clause 27.6 (Copy of Transfer Agreement to Company), to the Company.

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(e)	Any notice received by the Agent pursuant to paragraph (d) above shall constitute notice to the Issuing Bank of that Lender’s status and the Agent shall, upon receiving each such notice, promptly notify the Issuing Bank of that Lender’s status as specified in that notice.
(f)	If a Lender who has provided cash collateral in accordance with this Clause 7.5:

(i)	ceases to be a Non-Acceptable L/C Lender; and
(ii)	no amount is due and payable by that Lender in respect of a Letter of Credit,

	that Lender may, at any time it is not a Non-Acceptable L/C Lender, by notice to the Issuing Bank request that an amount equal to the amount of the cash provided by it as collateral in respect of that Letter of Credit (together with any accrued interest) standing to the credit of the relevant account held with the Issuing Bank be returned to it and the Issuing Bank shall pay that amount to the Lender within 3 Business Days after the request from the Lender (and shall cooperate with the Lender in order to procure that the relevant security or collateral arrangement is released and discharged).
7.6	Cash cover by Borrower
(a)	If a Lender which is a Non-Acceptable L/C Lender fails to provide cash collateral (or notifies the Issuing Bank that it will not provide cash collateral) in accordance with Clause 7.5 (Cash collateral by Non-Acceptable L/C Lender) and the Issuing Bank notifies the Company (with a copy to the Agent) that it requires Na Pali to provide cash cover to an account with the Issuing Bank in an amount equal to that Lender’s L/C Proportion of the outstanding amount of that Letter of Credit and in the currency of that Letter of Credit then Na Pali shall do so within 5 Business Days after the notice is given.
(b)	Notwithstanding paragraph (d) of Clause 1.2 (Construction), the Issuing Bank may agree to the withdrawal of amounts up to the level of that cash cover from the account if:

(i)	it is satisfied that the relevant Lender is no longer a Non-Acceptable L/C Lender; or
(ii)	the relevant Lender’s obligations in respect of the relevant Letter of Credit are transferred to a New Lender in accordance with the terms of this Agreement.

(c) To the extent that Na Pali has complied with its obligations to provide cash cover in accordance with this Clause 7.6, the relevant Lender’s L/C Proportion in respect of that Letter of Credit will remain (but that Lender’s obligations in relation to that Letter of Credit may be satisfied in accordance with paragraph (d)(ii) of Clause 1.2 (Construction)). However, Na Pali’s obligation to pay any Letter of Credit fee in relation to the relevant Letter of Credit to the Agent (for the account of that Lender) in accordance with paragraph (b) of Clause 16.5 (Fees payable in respect of Letters of Credit) will be reduced proportionately as from the date on which it complies with that obligation to provide cash cover (and for so long as the relevant amount of cash cover continues to stand as collateral).

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(d)	The relevant Issuing Bank shall promptly notify the Agent of the extent to which Na Pali provides cash cover pursuant to this Clause 7.6 and of any change in the amount of cash cover so provided.
7.7	Rights of contribution

No Obligor will be entitled to any right of contribution or indemnity from any Finance Party in respect of any payment it may make under this Clause 7.

8.	ANCILLARY FACILITIES
8.1	Type of Facility

An Ancillary Facility may be made available by way of:

(a)	an overdraft facility;
(b)	a short term loan facility; or
(c)	any other facility or accommodation required in connection with the business of the Group and which is agreed by the Company with an Ancillary Lender.
8.2	Availability
(a)	If the Company and the Lender which manages the cash pooling scheme of the Group pursuant to the Cash Pooling Agreement agree then, except as otherwise provided in this Agreement, such Lender may provide an Ancillary Facility on a bilateral basis in place of that Lender’s unutilised Revolving Facility Commitment (which shall (except for the purposes of determining the Majority Lenders) be reduced by the amount of all or part of the Ancillary Commitment under that Ancillary Facility) up to a maximum amount such that the aggregate of the Ancillary Commitments shall not exceed €3,000,000 at any time.
(b)	No Ancillary Facility shall be made available unless, not later than 2 Business Days prior to the Ancillary Commencement Date for an Ancillary Facility, the Agent has received from the Company:

(i) a notice in writing of the establishment of an Ancillary Facility and specifying:

(A)	the proposed Ancillary Commencement Date and expiry date of the Ancillary Facility;
(B)	the proposed type of Ancillary Facility to be provided;
(C)	the Lender which manages the cash pooling scheme of the Group pursuant to the Cash Pooling Agreement as Ancillary Lender;
(D)	the proposed Ancillary Commitment, the maximum amount of the Ancillary Facility and, if the Ancillary Facility is an overdraft facility comprising more than one account its maximum gross amount (that amount being the “Designated Gross Amount”) and its maximum net amount (that amount being the “Designated Net Amount”); and

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(E) the proposed currency of the Ancillary Facility (if not denominated in the Base Currency); and

(ii) any other information which the Agent may reasonably request in connection with the Ancillary Facility.

	The Agent shall promptly notify the Ancillary Lender and the other Lenders of the establishment of an Ancillary Facility.
	No amendment or waiver of a term of any Ancillary Facility shall require the consent of any Finance Party other than the relevant Ancillary Lender unless such amendment or waiver itself relates to or gives rise to a matter which would require an amendment of or under this Agreement (including, for the avoidance of doubt, under this Clause). In such a case, the provisions of this Agreement with regard to amendments and waivers will apply.
(c)	Subject to compliance with paragraph (b) above:

(i)	the Lender concerned will become an Ancillary Lender; and
(ii)	the Ancillary Facility will be available,

	with effect from the date agreed by the Company and the Ancillary Lender.
8.3	Terms of Ancillary Facilities
(a)	Except as provided below, the terms of any Ancillary Facility will be those agreed by the Ancillary Lender and the Company.
(b)	However, those terms:

(i)	must be based upon normal commercial terms at that time (except as varied by this Agreement);
(ii)	may allow only Na Pali to use the Ancillary Facility;
(iii)	may not allow the Ancillary Outstandings to exceed the Ancillary Commitment, including following a fluctuation in an exchange rate;
(iv)	may not allow the Ancillary Commitment of a Lender to exceed the Available Commitment with respect to the Revolving Facility of that Lender; and
(v)	must require that the Ancillary Commitment is reduced to nil, and that all Ancillary Outstandings are repaid (or cash cover provided in respect of all the Ancillary Outstandings) not later than the Termination Date for the Revolving Facility (or such earlier date as the Revolving Facility Commitment of the relevant Ancillary Lender (or its Affiliate) is reduced to zero).

(c) If there is any inconsistency between any term of an Ancillary Facility and any term of this Agreement, this Agreement shall prevail except for (i) Clause 35.3 (Day count convention) which shall not prevail for the purposes of calculating fees, interest or commission relating to an Ancillary Facility; (ii) an Ancillary Facility comprising

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	more than one account where the terms of the Ancillary Documents shall prevail to the extent required to permit the netting of balances on those accounts; and (iii) where the relevant term of this Agreement would be contrary to, or inconsistent with, the law governing the relevant Ancillary Document, in which case that term of this Agreement shall not prevail.
(d)	Interest, commission and fees on Ancillary Facilities are dealt with in Clause 16.6 (Interest, commission and fees on Ancillary Facilities).
8.4	Repayment of Ancillary Facility
(a)	An Ancillary Facility shall cease to be available on the Termination Date in relation to the Revolving Facility or such earlier date on which its expiry date occurs or on which it is cancelled in accordance with the terms of this Agreement.
(b)	If an Ancillary Facility expires in accordance with its terms the Ancillary Commitment of the Ancillary Lender shall be reduced to zero (and its Revolving Facility Commitment shall be increased accordingly).
(c)	No Ancillary Lender may demand repayment or prepayment of any amounts or demand cash cover for any liabilities made available or incurred by it under its Ancillary Facility (except where the Ancillary Facility is provided on a net limit basis to the extent required to bring any gross outstandings down to the net limit) unless:

(i)	the Total Revolving Facility Commitments have been cancelled in full, or all outstanding Utilisations under the Revolving Facility have become due and payable in accordance with the terms of this Agreement, or the Agent has declared all outstanding Utilisations under the Revolving Facility immediately due and payable, or the expiry date of the Ancillary Facility occurs; or
(ii)	it becomes unlawful in any applicable jurisdiction for the Ancillary Lender to perform any of its obligations as contemplated by this Agreement or to fund, issue or maintain its participation in its Ancillary Facility; or
(iii)	the Ancillary Outstandings (if any) under that Ancillary Facility can be refinanced by a Revolving Facility Utilisation and the Ancillary Lender gives sufficient notice to enable a Revolving Facility Utilisation to be made to refinance those Ancillary Outstandings.

(d) For the purposes of determining whether or not the Ancillary Outstandings under an Ancillary Facility mentioned in paragraph (c)(iii) above can be refinanced by a Utilisation of the Revolving Facility:

(i)

the Revolving Facility Commitment of the Ancillary Lender will be increased by the amount of its Ancillary Commitment; and

(ii)

the Utilisation may (so long as paragraph (c)(i) above does not apply) be made irrespective of whether a Default is outstanding or any other applicable condition precedent is not satisfied (but only to the extent that the proceeds are applied in refinancing those Ancillary Outstandings) and irrespective of whether Clause 4.4 (Maximum number of Utilisations) or paragraph (a)(iii) of Clause 5.2 (Completion of a Utilisation Request for Loans) applies.

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(e) On the making of a Utilisation of the Revolving Facility to refinance Ancillary Outstandings:

(i)

each Lender will participate in that Utilisation in an amount (as determined by the Agent) which will result as nearly as possible in the aggregate amount of its participation in the Revolving Facility Utilisations then outstanding bearing the same proportion to the aggregate amount of the Revolving Facility Utilisations then outstanding as its Revolving Facility Commitment bears to the Total Revolving Facility Commitments; and

(ii)

the relevant Ancillary Facility shall be cancelled.

(f)

In relation to an Ancillary Facility which comprises an overdraft facility where a Designated Net Amount has been established, the Ancillary Lender providing that Ancillary Facility shall only be obliged to take into account for the purposes of calculating compliance with the Designated Net Amount those credit balances which it is permitted to take into account by the then current law and regulations in relation to its reporting of exposures to the European Central Bank or the applicable regulatory authorities as netted for capital adequacy purposes.

8.5

Ancillary Outstandings

Each of Na Pali, the Company and each Ancillary Lender agrees with and for the benefit of each Lender that:

(a)	the Ancillary Outstandings under any Ancillary Facility provided by that Ancillary Lender shall not exceed the Ancillary Commitment applicable to that Ancillary Facility including following any fluctuation in exchange rates and where the Ancillary Facility is an overdraft facility comprising more than one account, Ancillary Outstandings under that Ancillary Facility shall not exceed the Designated Net Amount in respect of that Ancillary Facility; and
(b)	where all or part of the Ancillary Facility is an overdraft facility comprising more than one account, the Ancillary Outstandings (calculated on the basis that the words in brackets in paragraph (a) of the definition of that term were deleted) shall not exceed the Designated Gross Amount applicable to that Ancillary Facility.
8.6	Adjustment for Ancillary Facilities upon acceleration

In this Clause 8.6:

“Revolving Outstandings” means, in relation to a Lender, the aggregate of the equivalent in the Base Currency of (i) its participation in each Revolving Facility Utilisation then outstanding (together with the aggregate amount of all accrued interest, fees and commission owed to it as a Lender under the Revolving Facility), and (ii) if the Lender is also an Ancillary Lender, the Ancillary Outstandings in respect of Ancillary Facilities provided by that Ancillary Lender (together with the aggregate amount of all accrued interest, fees and commission owed to it as an Ancillary Lender in respect of the Ancillary Facility).

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“Total Revolving Outstandings” means the aggregate of all Revolving Outstandings.

(a)	If a notice is served under Clause 26.21 (Acceleration), each Lender and each Ancillary Lender shall promptly adjust by corresponding transfers (to the extent necessary) of their claims in respect of amounts outstanding to them under the Revolving Facility and each Ancillary Facility to ensure that after such transfers the Revolving Outstandings of each Lender bear the same proportion to the Total Revolving Outstandings as such Lender’s Revolving Facility Commitment bears to the Total Revolving Facility Commitments, each as at the date the notice is served under Clause 26.21 (Acceleration).
(b)	If an amount outstanding under an Ancillary Facility is a contingent liability and that contingent liability becomes an actual liability or is reduced to zero after the original adjustment is made under paragraph (a) above, then each Lender and Ancillary Lender will make a further adjustment by corresponding transfers (to the extent necessary) to put themselves in the position they would have been in had the original adjustment been determined by reference to the actual liability or, as the case may be, zero liability and not the contingent liability.
(c)	Prior to the application of the provisions of paragraph (a) of this Clause 8.6, an Ancillary Lender that has provided an overdraft comprising more than one account under an Ancillary Facility shall set-off any liabilities owing to it under such overdraft facility against credit balances on any account comprised in such overdraft facility.
(d)	All calculations to be made pursuant to this Clause 8.6 shall be made by the Agent based upon information provided to it by the Lenders and Ancillary Lenders.
8.7	Information

Na Pali and each Ancillary Lender shall, promptly upon request by the Agent, supply the Agent with any information relating to the operation of an Ancillary Facility (including the Ancillary Outstandings) as the Agent may reasonably request from time to time. Na Pali consents to all such information being released to the Agent and the other Finance Parties.

8.8 Revolving Facility Commitment amounts

Notwithstanding any other term of this Agreement, each Lender shall ensure that at all times its Revolving Facility Commitment is not less than its Ancillary Commitment.

SECTION 4 — REPAYMENT, PREPAYMENT AND CANCELLATION

9.	REPAYMENT
9.1	Repayment of Term Loans
(a)	The Company shall repay the Facility A Loan in instalments by repaying on each Facility A Repayment Date an amount which reduces the Base Currency Amount of the outstanding Facility A Loan by the amount set out opposite that Facility A Repayment Date below:

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Facility A Repayment Date	Repayment Instalment
31 January 2010	€4,529,412
31 July 2010	€4,529,412
31 January 2011	€5,500,000
31 July 2011	€5,500,000
31 January 2012	€8,735,294
31 July 2012	€8,735,294
31 January 2013	€8,735,294
31 July 2013	€8,735,294

(b) Na Pali shall repay the Facility B Loan in instalments by repaying on each Facility B Repayment Date an amount which reduces the Base Currency Amount of the outstanding Facility B Loan by the amount set out opposite that Facility B Repayment Date below:

Facility B Repayment Date	Repayment Instalment
31 January 2010	€9,470,588
31 July 2010	€9,470,588
31 January 2011	€11,500,000
31 July 2011	€11,500,000
31 January 2012	€18,264,706
31 July 2012	€18,264,706
31 January 2013	€18,264,706
31 July 2013	€18,264,706

(c)	The Borrowers may not reborrow any part of a Term Facility which has been repaid.
9.2	Repayment of Revolving Facility Loans

Na Pali shall repay each Revolving Facility Loan on the last day of its Interest Period.

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9.3 Final Repayment

For the avoidance of doubt, all of the outstanding principal of each Loan shall be repaid in full on the Termination Date for such Loan.

For the avoidance of doubt all Letters of Credit shall be repaid in full on the Termination Date for the L/C Facility.

9.4 Mandatory Cancellation of the Revolving Facility

On the first anniversary of the date of this Agreement, the Total Revolving Facility Commitments shall be reduced to €55,000,000 (to the extent not otherwise cancelled or reduced under this Agreement) (such reduction to be applied pro rata to reduce the Revolving Facility Commitment of each Lender).

On the second anniversary of the date of this Agreement, the Total Revolving Facility Commitments shall be reduced to €50,000,000 (to the extent not otherwise cancelled or reduced under this Agreement) (such reduction to be applied pro rata to reduce the Revolving Facility Commitment of each Lender).

10.	ILLEGALITY, VOLUNTARY PREPAYMENT AND CANCELLATION
10.1	Illegality

If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund, issue or maintain its participation in any Utilisation:

(a)	that Lender, shall promptly notify the Agent upon becoming aware of that event;
(b)	upon the Agent notifying the Company, the Commitment of that Lender will be immediately cancelled; and
(c)	each Borrower shall repay that Lender’s participation in the Utilisations made to that Borrower on the last day of the Interest Period for each Utilisation occurring after the Agent has notified the Company or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law).
10.2	Illegality in relation to Issuing Banks

If it becomes unlawful for an Issuing Bank to issue or leave outstanding any Letter of Credit, then:

(a)	that Issuing Bank shall promptly notify the Agent upon becoming aware of that event;
(b)	upon the Agent notifying the Company, the Issuing Bank shall not be obliged to issue any Letter of Credit;
(c)	the Company and each Obligor shall procure that Na Pali shall use its best endeavours to procure the release of each Letter of Credit issued by that Issuing Bank and outstanding at such time; and

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(d)	unless any other Lender has agreed to be an Issuing Bank pursuant to the terms of this Agreement, the L/C Facility shall cease to be available for the issue of Letters of Credit.
10.3	Voluntary cancellation
(a)	Subject to paragraph (b) below, the Company may, if it gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, cancel the whole or any part (being, if in part, a minimum amount of €5,000,000 and a multiple of €1,000,000) of the Available Commitments with respect to the Revolving Facility or the L/C Facility. Any cancellation under this Clause 10.3 shall reduce the Commitments of the Lenders rateably under the relevant Facility. Any notice of cancellation of the Available Commitments with respect to the Revolving Facility shall be accompanied by: (i) (to the extent the Terms Loans have not been fully repaid and cancelled on the date of such notice) evidence that Na Pali and its Subsidiaries will have sufficient working capital available to them following such cancellation having regard to the working capital needs of Na Pali and its Subsidiaries identified in the Business Plan and (ii) (to the extent the Term Loans have been fully repaid and cancelled on the date of such notice) a consolidated statement of the cash position of Na Pali and its Subsidiaries.
(b)	The Borrowers (and the Company on behalf of Na Pali) shall not cancel any part of the Available Commitment with respect to a Term Facility.
10.4	Voluntary prepayment of Term Loans
(a)	Subject to paragraph (c) below, a Borrower to which a Term Loan has been made may, if it or the Company gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of that Term Loan (but, if in part, being an amount that reduces the Base Currency Amount of that Term Loan by a minimum amount of €5,000,000 and a multiple of €1,000,000).
(b)	A Term Loan may only be prepaid after the last day of the Availability Period (or, if earlier, the day on which the applicable Available Facility is zero).
(c)	A Term Loan shall only be prepaid in accordance with paragraph (a) above if all the Term Loans are:

(i)	prepaid at the same time; and
(ii)	prepaid in amounts which reduce the Facility A Loan and the Facility B Loan by the same amount, such prepayments being applied against Repayment Instalments in chronological order.

10.5 Voluntary prepayment of Revolving Facility Utilisations

Na Pali may, if it or the Company gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of a Revolving Facility Utilisation (but if in part, being an amount that reduces the Base Currency Amount of the Revolving Facility Utilisation by a minimum amount of €5,000,000 and a multiple of €1,000,000).

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10.6 Voluntary prepayment of L/C Facility Utilisations

Na Pali may, if it or the Company gives the Agent not less than 5 Business Days’ (or such shorter period as the Majority Lenders may agree) prior notice, prepay the whole or any part of a L/C Facility Utilisation (but if in part, being an amount that reduces the Base Currency Amount of the L/C Facility Utilisation by a minimum amount of €5,000,000 and a multiple of €1,000,000).

10.7	Right of cancellation and repayment in relation to a single Lender or Issuing Bank
(a)	If:

(i)	any sum payable to any Lender by an Obligor is required to be increased under paragraph (c) of Clause 17.2 (Tax gross-up); or
(ii)	any Lender or Issuing Bank claims indemnification from the Company or an Obligor under Clause 17.3 (Tax indemnity) or Clause 18.1 (Increased costs),

the Company may, whilst the circumstance giving rise to the requirement for increased payment or indemnification continues, give the Agent notice:

(i)	(if such circumstances relate to a Lender) of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender’s participation in the Utilisations; or
(ii)	(if such circumstances relate to the Issuing Bank) of repayment of any outstanding Letter of Credit issued by it and cancellation of its appointment as an Issuing Bank under this Agreement in relation to any Letters of Credit to be issued in the future.

(b)	On receipt of a notice referred to in paragraph (a) above in relation to a Lender, the Commitment of that Lender shall immediately be reduced to zero.
(c)	On the last day of each Interest Period which ends after the Company has given notice under paragraph (a) above in relation to a Lender (or, if earlier, the date specified by the Company in that notice), each Borrower to which a Utilisation is outstanding shall repay that Lender’s participation in that Utilisation together with all interest and other amounts accrued under the Finance Documents.

10.8	Right of cancellation and repayment in relation to a Defaulting Lender
(a)	If any Lender becomes a Defaulting Lender, the Company may, at any time whilst the Lender continues to be a Defaulting Lender, give the Agent 5 Business Days’ notice of cancellation of each Available Commitment of that Lender.
(b)	On the notice referred to in paragraph (a) above becoming effective, each Commitment of the Defaulting Lender shall immediately be reduced to zero.
(c)	On the last day of each Interest Period which ends after the Company has given notice under paragraph (a) above in relation to a Lender (or, if earlier, the date specified by the Company in that notice), each Borrower to which a Utilisation is outstanding shall

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	repay that Lender’s participation in that Utilisation together with all interest and other amounts accrued under the Finance Documents.
(d)	The Agent shall as soon as practicable after receipt of a notice referred to in paragraph (a) above, notify all the Lenders
11.	MANDATORY PREPAYMENT
11.1	Exit

Upon the occurrence of:

(i)	a Change of Control; or
(ii)	any mandatory prepayment event (in whole or in part) of any Financial Indebtedness under the the 2009 ABL Agreement, the Senior Notes, the SG Bonds and/or the Rhône Financing Documents (or any document entered into in replacement or refinancing thereof (in whole or in part)) as a result of the implementation of (x) any provision relating to any change in the shareholding of Quiksilver, Inc., the composition of the board of directors or any governing body of the latter or (y) any other provisions relating to the change of control of Quiksilver, Inc. (however described) under any of such documents or agreements; or
(iii)	the sale, disposal or transfer (for any reason whatsoever) (other than (i) the QSH/Biarritz Holdings Contribution and (ii) the entering into of the Transaction Security Documents) by Quiksilver, Inc. or any of its Subsidiaries of any of the Material Trademarks or the sale, disposal or transfer (for any reason whatsoever) by Quiksilver, Inc. or any of its Subsidiaries of any person holding, directly or indirectly, any of the Material Trademarks; or
(iv)	the sale, disposal or transfer (for any reason whatsoever) of all or substantially all of the assets of the European Group or the Group whether in a single transaction or a series of related transactions; or
(v)	a US Group Change of Control; or
(vi)	the sale, disposal or transfer (for any reason whatsoever) of all or substantially all of the assets of the US Group whether in a single transaction or a series of related transactions,

	the Facilities will be cancelled and all outstanding Utilisations and Ancillary Outstandings, together with accrued interest, and all other amounts accrued under the Finance Documents, shall become immediately due and payable (and, for the avoidance of doubt, the L/C Facility Utilisations shall be immediately repaid).
11.2	Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow
(a)	For the purposes of this Clause 11.2, Clause 11.3 (Application of mandatory prepayments) and Clause 11.4 (Mandatory Prepayment Accounts):

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“DC Shoes Disposal” means a sale, lease, transfer or other disposal by Quiksilver, Inc. or any of its Subsidiaries of all or any material part of the DC Shoes Business and/or the DC Shoes Trademarks (whether by a voluntary or involuntary single transaction or series of transactions) (other than (i) pursuant to a sale, lease, transfer or other disposal to Quiksilver, Inc. or any of its Subsidiaries and (ii) the entering into of Security in respect thereof).

“DC Shoes Disposal Proceeds” means the consideration receivable by Quiksilver, Inc. or any of its Subsidiaries (including any amount receivable in repayment of intercompany debt) for any DC Shoes Disposal made by Quiksilver, Inc. or any of its Subsidiaries after deducting the portion of such proceeds actually applied towards the repayment in full of the then outstanding Financial Indebtedness under the 2009 ABL Agreement.

“DC Shoes Trademarks” means the “DC” and “DC Shoes” trade names and related marks, trademarks and logos.

“Disposal” means a sale, lease, licence, transfer, loan or other disposal by a person of any asset (of any nature whatsoever), undertaking or business (whether by a voluntary or involuntary single transaction or series of transactions) other than asset sales listed in paragraphs (a), (b), (c), (e), (f), (g) and (h) of the definition of Permitted Disposals.

“Disposal Proceeds” means the consideration receivable by any member of the European Group (other than QSH) (including any amount receivable in repayment of intercompany debt) for any Disposal made by any member of the European Group (other than QSH) except for Excluded Disposal Proceeds and after deducting:

(i)	any reasonable costs and expenses which are incurred by any member of the European Group with respect to such Disposal to persons who are not members of the European Group; and
(ii)	any Tax incurred and required to be paid by the seller in connection with such Disposal (as reasonably determined by the seller, on the basis of existing rates and taking account of any available credit, deduction or allowance).

“European Issuance Proceeds” means all proceeds of any equity, quasi-equity or debt capital market issuance (i) made by Biarritz Holdings or any of its Subsidiaries or (ii) made by Quiksilver, Inc. or any of its Subsidiaries and secured in whole or in part by assets held by members of the European Group (other than QSH) and after deducting any reasonable expenses which are incurred by any member of the European Group with respect to that issuance.

“Excluded Disposal Proceeds” means in respect of Disposals relating to assets other than shares, securities or on-going business, the related Disposal Proceeds which do not exceed in the aggregate in any Financial Year €2,000,000 (or its equivalent in other currencies).

“Excluded Insurance Proceeds” means any proceeds of an insurance claim which the Company notifies the Agent are, or are to be, applied:

(i) to meet a third party claim;

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(ii)	to cover operating losses in respect of which the relevant insurance claim was made; or
(iii)	in the replacement, reinstatement and/or repair of the assets or otherwise in amelioration of the loss in respect of which the relevant insurance claim was made,

in each case as soon as possible (but in any event within 180 days, or such longer period as the Majority Lenders may agree) after receipt.

“Insurance Proceeds” means the proceeds of any insurance claim under any insurance maintained by any member of the European Group (other than QSH) except for Excluded Insurance Proceeds and after deducting any reasonable expenses in relation to that claim which are incurred by any member of the Group to persons who are not members of the Group to the extent the aggregate amount of all such proceeds equals or exceeds €500,000 in any Financial Year of the Group.

“Reimbursement Proceeds” means the proceeds of any reimbursement (other than any reimbursement by way of set-off specifically contemplated by the Structure Memorandum) or (in the case of the NP Cash Collateral) of any release:

(i)	by a TopCo Obligor, any Subsidiary of the latter or any member of the Group to Na Pali or the Company of any intercompany debt (other than (x) any debt from Tyax as debtor, (y) any debt arising from the Cash Pooling Agreement or any commercial receivables and (z) any other debt owed by Na Pali to the Company and vice versa);
(ii)	of the Note (other than by way of set-off against liabilities of the Company pursuant to the Stock Purchase Agreement);
(iii)	from the NP Cash Collateral less any amount paid to the Rossignol Vendors by J.P. Morgan Europe Limited under the J.P. Morgan Guarantee or by Quiksilver Europa under the Shareholders Agreement simultaneously with such release from the NP Cash Collateral.

(b) The Company shall ensure that the Borrowers prepay Utilisations in the following amounts at the times and in the order of application contemplated by Clause 11.3 (Application of mandatory prepayments):

(i)	the amount of Reimbursement Proceeds;
(ii)	an amount equal to the amount of any mandatory prepayment or repayment of any Financial Indebtedness under the 2009 ABL Agreement, the Senior Notes or the Rhône Financing Documents (or any other Financial Indebtedness incurred in refinancing thereof) to the extent that such mandatory prepayment or repayment is triggered by an obligation to apply the proceeds of unsecured equity, quasi-equity or debt capital market issuances by Quiksilver, Inc. in repayment or prepayment of the 2009 ABL Agreement, the Senior Notes, the Rhône Financing Documents or such other Financial Indebtedness pursuant to the finance documents governing such Financial Indebtedness;
(iii)	the amount of Disposal Proceeds;

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(iv)	the amount of Insurance Proceeds;
(v)	the amount of European Issuance Proceeds;
(vi)	the amount of DC Shoes Disposal Proceeds up to the outstanding Facility A Loan from time to time; and
(vii)	the amount equal to 75% of Excess Cashflow (up to a maximum amount of €8,500,000 for the Financial Year commencing on 1 November 2010) for any Financial Year of the Company commencing on or after 1 November 2010.

11.3	Application of mandatory prepayments
(a)	A prepayment made under Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow) shall be applied in the following order:

(i)	first, in prepayment of Term Loans as contemplated in paragraph (c) below;
(ii)	second, in cancellation of Available Commitments under the Revolving Facility (and the Available Commitment of the Lenders under the Revolving Facility will be cancelled rateably);
(iii)	third, in prepayment of Revolving Facility Utilisations and cancellation of Revolving Facility Commitments;
(iv)	fourth, in cancellation of Available Commitments under the L/C Facility (and the Commitments of each Lender under the L/C Facility will be cancelled rateably);
(v)	fifth, in prepayment of outstanding Letters of Credit and cancellation of L/C Facility Commitments; and
(vi)	then, in repayment and cancellation of the Ancillary Outstandings and Ancillary Commitments.

(b) The Borrowers shall prepay the Loans at the following times:

(i)	in the case of any prepayment relating to the amounts of Reimbursement Proceeds, Disposal Proceeds, Insurance Proceeds, European Issuance Proceeds or DC Shoes Disposal Proceeds, promptly upon receipt of those proceeds;
(ii)	in the case of any prepayment referred to in paragraph (b)(ii) of Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow), simultaneously with the mandatory prepayment or repayment of any Financial Indebtedness under the 2009 ABL Agreement or the Senior Notes or the Rhône Financing Documents or the mandatory prepayment or repayment of any Financial Indebtedness incurred in refinancing thereof; and
(iii)	in the case of any prepayment relating to an amount of Excess Cashflow referred to in paragraph (b)(vii) of Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow), within 7 days of delivery

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pursuant to Clause 23.1 (Financial statements) of the annual financial statements of the Company for the relevant Financial Year.

(c) A prepayment under Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow) shall prepay the Term Loans as follows:

(i)	in the case of European Issuance Proceeds (other than proceeds of any equity, quasi-equity or debt capital market issuance made by Na Pali or any of its Subsidiaries (the “Na Pali Issuance Proceeds”)) or in the case of prepayment amounts referred to in paragraph (b)(ii) of Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow), in prepayment of the Facility A Loan and, when the Facility A Loan has been prepaid in full, prepayment of the Facility B Loan;
(ii)	in the case of Na Pali Issuance Proceeds, in prepayment of the Facility B Loan and, when the Facility B Loan has been prepaid in full, prepayment of the Facility A Loan;
(iii)	in the case of Disposal Proceeds (other than Disposal Proceeds relating to Disposals made by Na Pali and its Subsidiaries (the “Na Pali Disposal Proceeds”)), in prepayment of the Facility A Loan and, when the Facility A Loan has been prepaid in full, prepayment of the Facility B Loan;
(iv)	in the case of Na Pali Disposal Proceeds, in prepayment of the Facility B Loan and, when the Facility B Loan has been prepaid in full, prepayment of the Facility A Loan;
(v)	in the case of DC Shoes Disposal Proceeds, in prepayment of the Facility A Loan, provided that when the Facility A Loan has been prepaid in full any remaining DC Shoes Disposal Proceeds shall be applied in accordance with Clause 25.32 (DC Shoes Disposal Proceeds);
(vi)	in the case of any Reimbursement Proceeds received by the Company, in prepayment of the Facility A Loan and, when the Facility A Loan has been prepaid in full, prepayment of the Facility B Loan;
(vii)	in the case of any Reimbursement Proceeds received by Na Pali, in prepayment of the Facility B Loan and, when the Facility B Loan has been prepaid in full, prepayment of the Facility A Loan;
(viii)	in the case of any Insurance Proceeds, in prepayment of the Facility A Loan and the Facility B Loan in equal amounts; and
(ix)	in the case of prepayment amounts referred to in paragraph (b)(vii) of Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow), in prepayment of the Facility B Loan and, when the Facility B Loan has been prepaid in full, prepayment of the Facility A Loan,

each such prepayment being applied against Repayment Instalments on a pro rata basis.

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11.4	Mandatory Prepayment Accounts
(a)	The Company shall ensure that:

(i)

Disposal Proceeds, Insurance Proceeds, DC Shoes Disposal Proceeds, European Issuance Proceeds, Reimbursement Proceeds and repayment amounts referred to in paragraph (b)(ii) of Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow) are paid into a Mandatory Prepayment Account as soon as reasonably practicable after receipt by a member of the Group or the relevant Subsidiary of Quiksilver, Inc.; and

(ii)

an amount equal to any Excess Cashflow is paid into a Mandatory Prepayment Account.

(b)	The Company and Na Pali irrevocably authorise the Agent to apply amounts credited to the Mandatory Prepayment Account to pay amounts due and payable under Clause 11.3 (Application of mandatory prepayments) and otherwise under the Finance Documents.
(c)	A Lender, Security Agent or Agent with which a Mandatory Prepayment Account is held acknowledges and agrees that (i) interest shall accrue at normal commercial rates on amounts credited to those accounts and that the account holder shall be entitled to receive such interest (which shall be paid in accordance with the mandate relating to such account) unless a Default is continuing and (ii) each such account is subject to the Transaction Security.
11.5	Restrictions on Mandatory Prepayments
(a)	Mandatory prepayments required pursuant to the terms of Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow) will be limited to an amount determined according to the following formula (to the extent the amount owed by a Borrower corresponds to amounts, proceeds or distributions received by a Subsidiary of such Borrower):
	Cash of the relevant Borrower + [(amount of distributable profits of the relevant Borrower’s Subsidiaries + amount of distributable reserves of such Subsidiaries)] X [percentage of shares held directly or indirectly by the applicable Borrower in each of its Subsidiaries] + [amount of shareholder capital accounts and loans by the relevant Borrower to its Subsidiaries] + [amount of loans which could be made by such Borrower’s Subsidiaries to such Borrower without violating applicable laws and regulations].
(b)	Each Obligor shall, subject to applicable laws and regulations, directly or indirectly through Subsidiaries, employ all available means and cause each Subsidiary to employ all available means to ensure the distribution (in any form, including capital account distributions or loans) of amounts necessary to make all mandatory prepayments required hereunder.
(c)	To the extent that any Borrower’s obligation to make a mandatory prepayment under Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess

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Cashflow) is limited by the provisions of this Clause 11.5, the balance of such Borrower’s portion of such mandatory prepayment shall be paid by the other Borrower to the extent permitted hereunder to be applied in accordance with Clause 11.3 (Application of mandatory prepayments) and to the extent permitted by applicable laws and regulations. Any prepayment obligation by any Borrower which is limited by the provisions of this Clause 11.5 and which cannot be allocated to prepayment by the other Borrower as previously provided, shall be on-going and shall be reinstated at the time and to the extent that the events or circumstances giving rise to such limitation shall cease to exist.

11.6 Excluded proceeds

Where Excluded Insurance Proceeds include amounts which are intended to be used for a specific purpose within a specified period (as set out in the relevant definition of Excluded Insurance Proceeds), the Company shall ensure that those amounts are used for that purpose and, if requested to do so by the Agent, shall promptly deliver a certificate to the Agent at the time of such application and at the end of such period confirming the amount (if any) which has been so applied within the requisite time periods provided for in the relevant definition.

12.	RESTRICTIONS
12.1	Notices of Cancellation or Prepayment

Any notice of cancellation, prepayment or authorisation given by any Party under Clause 10 (Illegality, Voluntary Prepayment and Cancellation) shall (subject to the terms of those Clauses) be irrevocable and, unless a contrary indication appears in this Agreement, any such notice shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.

12.2 Interest and other amounts

Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and Break Costs but otherwise without premium or penalty.

12.3 No reborrowing of Term Facilities

No Borrower may reborrow any part of a Term Facility which is prepaid.

12.4 Reborrowing of Revolving Facility and the L/C Facility

Unless a contrary indication appears in this Agreement, any part of the Revolving Facility or the L/C Facility which is prepaid or repaid may be reborrowed in accordance with the terms of this Agreement.

12.5 Prepayment in accordance with Agreement

No Borrower shall repay or prepay all or any part of the Utilisations or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement.

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12.6 No reinstatement of Commitments

No amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.

12.7 Agent’s receipt of Notices

If the Agent receives a notice under Clause 10 (Illegality, Voluntary Prepayment and Cancellation), it shall promptly forward a copy of that notice or election to either the Company or the affected Lender, as appropriate.

12.8 Effect of Repayment and Prepayment on Commitments

If all or part of a Utilisation under a Facility is repaid or prepaid and is not available for redrawing (other than by operation of Clause 4.2 (Further conditions precedent)), an amount of the Commitments (equal to the Base Currency Amount of the amount of the Utilisation which is repaid or prepaid) in respect of that Facility will be deemed to be cancelled on the date of repayment or prepayment. Any cancellation under this Clause 12.8 shall reduce the Commitments of the Lenders rateably under that Facility.

SECTION 5 — COSTS OF UTILISATION

13.	INTEREST
13.1	Calculation of interest

The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:

(a)	Margin;
(b)	EURIBOR; and
(c)	Mandatory Cost, if any.
13.2	Payment of interest
(a)	The Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest Period (and, if the Interest Period is longer than six Months, on the dates falling at six Monthly intervals after the first day of the Interest Period).
(b)	If the Annual Pilot Consolidated Financial Statements and related Compliance Certificate received by the Agent show that a higher Margin should have applied during a certain period, then the Company shall (or shall ensure that the relevant Borrower shall) promptly pay to the Agent any amounts necessary to put the Agent and the Lenders in the position they would have been in had the appropriate rate of the Margin applied during such period.
(c)	If the Annual Pilot Consolidated Financial Statements and related Compliance Certificate received by the Agent show that a lower Margin should have applied

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	during a certain period, then the Lenders shall make appropriate adjusting payments (which shall only be made by way of credits against future payments to be made pursuant to this Clause 13.2 to such Lenders which are still party to this Agreement), provided that payments to be made by the Lenders shall only be made by those Lenders which actually received the excess Margin and provided further that any Lender which has assigned or transferred all or part of its participation in the Facilities shall no longer be bound to make any payment adjustment with respect to its participation so assigned or transferred as from the relevant assignment date or Transfer Date.
13.3	Default interest
(a)	If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue to the fullest extent permitted by law on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to paragraph (b) below, is 2 per cent. higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting reasonably). Any interest accruing under this Clause 13.3 shall be immediately payable by the Obligor on demand by the Agent.
(b)	If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:

(i)	the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(ii)	the rate of interest applying to the overdue amount during that first Interest Period shall be 2 per cent. higher than the rate which would have applied if the overdue amount had not become due.

(c)	Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount only if, within the meaning of article 1154 of the French Code civil, such interest is due for a period of at least one year, but will remain immediately due and payable.
13.4	Notification of rates of interest

The Agent shall promptly notify the Lenders and the relevant Borrower (or the Company) of the determination of a rate of interest under this Agreement.

13.5 Effective Global Rate (Taux Effectif Global)

For the purposes of articles L.313-1 et seq., R.313-1 and R.313-2 of the French Code de la consommation, the Parties acknowledge that by virtue of certain characteristics of the Facilities (and in particular the variable interest rate applicable to Loans and the Borrowers’ right to select the duration of the Interest Period of each Loan) the taux effectif global cannot be calculated at the date of this Agreement. However, the Borrowers acknowledge that they have received from the Agent a letter containing an indicative calculation of the taux effectif global, based on examples calculated on assumptions as to the taux de période and durée de

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période set out in the letter (the “TEG Letter”). The Parties acknowledge that such letter forms part of this Agreement.

14.	INTEREST PERIODS
14.1	Selection of Interest Periods and Terms
(a)	A Borrower (or the Company on behalf of a Borrower) may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan is a Term Loan and has already been borrowed) in a Selection Notice.
(b)	Each Selection Notice for a Term Loan is irrevocable and must be delivered to the Agent by the Borrower (or the Company on behalf of the Borrower) to which that Term Loan was made not later than the Specified Time.
(c)	If a Borrower (or the Company) fails to deliver a Selection Notice to the Agent in accordance with paragraph (b) above, the relevant Interest Period will be three Months.
(d)	Subject to this Clause 14, a Borrower (or the Company) may select an Interest Period of one, three or six Months or any other period agreed between the Company and the Agent (acting on the instructions of all the Lenders in relation to the relevant Loan).
(e)	An Interest Period for a Loan shall not extend beyond the Termination Date applicable to its Facility.
(f)	Each Interest Period for a Term Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.
(g)	A Revolving Facility Loan has one Interest Period only.
14.2	Non-Business Days

If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).

15.	CHANGES TO THE CALCULATION OF INTEREST
15.1	Absence of quotations

Subject to Clause 15.2 (Market disruption), if EURIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Specified Time on the Quotation Day, the applicable EURIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

15.2	Market disruption
(a)	If a Market Disruption Event occurs in relation to any Interest Period, then the rate of interest on each Lender’s share of the applicable Loan for the Interest Period shall be the percentage rate per annum which is the sum of:

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(i)	the Margin;
(ii)	the rate notified to the Agent by that Lender as soon as practicable and in any event before interest is due to be paid in respect of that Interest Period, to be that which expresses as a percentage rate per annum the cost to that Lender of funding its participation in that Loan from whatever source it may reasonably select; and
(iii)	the Mandatory Cost, if any, applicable to that Lender’s participation in the Loan.

(b) In this Agreement “Market Disruption Event” means:

(i)	at or about noon on the Quotation Day for the relevant Interest Period the Screen Rate is not available and none or only one of the Reference Banks supplies a rate to the Agent to determine EURIBOR for the relevant currency and Interest Period; or
(ii)	before close of business in Paris on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in the Facilities exceed 35% of the Facilities) that the cost to it of obtaining matching deposits in the Relevant Interbank Market would be in excess of EURIBOR.

15.3	Alternative basis of interest or funding
(a)	If a Market Disruption Event occurs and the Agent or the Company so requires, the Agent and the Company shall enter into negotiations (for a period of not more than thirty days) with a view to agreeing a substitute basis for determining the rate of interest.
(b)	Any alternative basis agreed pursuant to paragraph (a) above shall, with the prior consent of all the Lenders and the Company, be binding on all Parties.

15.4	Break Costs
(a)	Each Borrower shall, within two Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.
(b)	Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
16.	FEES
16.1	Commitment fee
(a)	The Company shall pay to the Agent (for the account of each Lender) a fee in the Base Currency computed at the rate of:

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(i)	40 per cent. of the applicable Margin per annum on that Lender’s Available Commitment under Facility A for the Availability Period applicable to Facility A;
(ii)	40 per cent. of the applicable Margin per annum on that Lender’s Available Commitment under Facility B for the Availability Period applicable to Facility B; and
(iii)	40 per cent. of the applicable Margin per annum on that Lender’s Available Commitment under the Revolving Facility for the Availability Period applicable to the Revolving Facility.

(b)	The accrued commitment fee is payable on the last day of each successive period of three Months which ends during the relevant Availability Period, on the last day of the relevant Availability Period and on the cancelled amount of the relevant Lender’s Commitment at the time the cancellation is effective.
(c)	No commitment fee is payable to the Agent (for the account of a Lender) on any Available Commitment of that Lender for any day on which that Lender is a Defaulting Lender.
16.2	Arrangement, Participation and Coordination fees
(a)	The Company and/or Na Pali shall pay to the Arrangers an arrangement fee in the amount and at the times agreed in a Fee Letter.
(b)	The Company and/or Na Pali shall pay to the Lenders a participation fee in the amount and at the times agreed in a Fee Letter.
(c)	The Company and/or Na Pali shall pay to Société Générale a coordination fee in the amount and at the times agreed in a Fee Letter.

16.3 Agency fee

The Company shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.

16.4 Security Agent fee

The Company shall pay to the Security Agent (for its own account) the Security Agent fee in the amount and at the times agreed in a Fee Letter.

16.5	Fees payable in respect of Letters of Credit
(a)	The Company or Na Pali shall pay to each Issuing Bank (for its own account) a fronting fee on the outstanding amount of each Letter of Credit requested by it from such Issuing Bank for the period from the issue of that Letter of Credit until its Expiry Date at the rate per annum specified in a Fee Letter.
(b)	The Company or Na Pali shall pay to the Issuing Bank (who shall transfer such amounts to the Agent) (for the account of each Lender under the L/C Facility) a Letter of Credit fee in the Base Currency (computed at the rate per annum equal to 1.20 percent.

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	per annum) on the outstanding amount of each Letter of Credit requested by it for the period from the issue of that Letter of Credit until its Expiry Date. This fee shall be distributed according to each Lender’s L/C Proportion of that Letter of Credit.
(c)	The accrued fronting fee and Letter of Credit fee on a Letter of Credit shall be payable on the last day of each month (or such shorter period as shall end on the Expiry Date for that Letter of Credit) starting on the date of issue of that Letter of Credit. The accrued fronting fee and Letter of Credit fee is also payable to the Agent or the Issuing Bank (as applicable) on the cancelled amount of any Lender’s L/C Facility Commitment at the time the cancellation is effective if that Commitment is cancelled in full and the Letter of Credit is prepaid or repaid in full.
16.6	Interest, commission and fees on Ancillary Facilities

The rate and time of payment of interest, commission, fees and any other remuneration in respect of each Ancillary Facility shall be determined by agreement between the relevant Ancillary Lender and the Borrower of that Ancillary Facility based upon normal market rates and terms.

SECTION 6 — ADDITIONAL PAYMENT OBLIGATIONS

17.	TAX GROSS UP AND INDEMNITIES
17.1	Definitions
(a)	In this Agreement:
	“Protected Party” means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Finance Document.
	“Qualifying Lender” means a Lender which:

(i)	has its Facility Office in France; or
(ii)	fulfils the conditions imposed by French Law taking into account, as the case may be, any double taxation agreement in force on the relevant date (subject to the completion of any necessary procedural formalities), in order for a payment not to be subject to (or as the case may be, to be exempt from) any Tax Deduction.

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

“Tax Deduction” means a deduction or withholding for or on account of Tax from a payment under a Finance Document.

“Tax Payment” means an increased payment made by an Obligor to a Finance Party under Clause 17.2 (Tax gross-up) or a payment under Clause 17.3 (Tax indemnity).

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	“Treaty Lender” means a Lender which is entitled to a payment under a double taxation agreement (subject to the completion of any necessary procedural formalities) without a Tax Deduction or with the benefit of a Tax Credit.
(b)	Unless a contrary indication appears, in this Clause 17 a reference to “determines” or “determined” means a determination made in the absolute discretion of the person making the determination and applying the relevant tax law and regulations.
17.2	Tax gross-up
(a)	Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
(b)	The Company shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender or Issuing Bank shall notify the Agent on becoming so aware in respect of a payment payable to that Lender or Issuing Bank. If the Agent receives such notification from a Lender or Issuing Bank it shall notify the Company and that Obligor.
(c)	If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d)	An Obligor is not required to make an increased payment to a Lender under paragraph (c) above for a Tax Deduction in respect of tax imposed by France from a payment of interest on a Loan, if on the date on which the payment falls due:

(i)

the payment could have been made to the relevant Lender without a Tax Deduction if it was a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or double taxation agreement, or any published practice or concession of any relevant taxing authority; or

(ii)

the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under paragraph (g) below.

(e)	If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
(f)	Within thirty days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

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(g) A Treaty Lender and each Obligor which makes a payment to which that Treaty Lender is entitled shall co-operate in completing any procedural formalities necessary for that Obligor to obtain authorisation to make that payment without a Tax Deduction.

17.3	Tax indemnity
(a)	The Company or the relevant Obligor shall (within three Business Days of demand by the Agent) pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
(b)	Paragraph (a) above shall not apply:

(i) with respect to any Tax assessed on a Finance Party:

(A)	under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or
(B)	under the law of the jurisdiction in which that Finance Party’s Facility Office is located in respect of amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or

(ii) to the extent a loss, liability or cost:

(A)	is compensated for by an increased payment under Clause 17.2 (Tax gross-up); or
(B)	would have been compensated for by an increased payment under Clause 17.2 (Tax gross-up) but was not so compensated solely because one of the exclusions in paragraph (d) of Clause 17.2 (Tax gross-up) applied.

(c)	A Protected Party making, or intending to make a claim under paragraph (a) above shall promptly notify the Agent of the event which will give, or has given, rise to the claim, following which the Agent shall notify the Company.
(d)	A Protected Party shall, on receiving a payment from an Obligor under this Clause 17.3, notify the Agent.
17.4	Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a)	a Tax Credit is attributable to that Tax Payment; and
(b)	that Finance Party has obtained, utilised and retained that Tax Credit,

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the Finance Party shall pay an amount to the Obligor which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been made by the Obligor.

17.5 Stamp taxes

The Company shall pay and, within three Business Days of demand, indemnify each Finance Party against any cost, loss or liability that such Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document.

17.6	Value added tax
(a)	All amounts set out, or expressed to be payable under a Finance Document by any Party to a Finance Party which (in whole or in part) constitute the consideration for VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on the relevant supply, and accordingly, subject to paragraph (c) below, if VAT is chargeable on any supply made by any Finance Party to any Party under a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying the consideration) an amount equal to the amount of the VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party).
(b)	If VAT is chargeable on any supply made by any Finance Party (the “Supplier”) to any other Finance Party (the “Recipient”) under a Finance Document, and any Party (the “Relevant Party”) is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in respect of that consideration), such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party). The Recipient will promptly pay to the Relevant Party an amount equal to any credit or repayment from the relevant tax authority which it reasonably determines relates to the VAT chargeable on that supply.
(c)	Where a Finance Document requires any Party to reimburse a Finance Party for any costs or expenses, that Party shall also at the same time pay and indemnify the Finance Party against all VAT incurred by the Finance Party in respect of the costs or expenses to the extent that the Finance Party reasonably determines that neither it nor any other member of any group of which it is a member for VAT purposes is entitled to credit or repayment from the relevant tax authority in respect of the VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party).
18.	INCREASED COSTS
18.1	Increased costs
(a)	Subject to Clause 18.3 (Exceptions) the Company shall, within three Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Agreement.

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(b) In this Agreement “Increased Costs” means:

(i)	a reduction in the rate of return from a Facility or on a Finance Party’s (or its Affiliate’s) overall capital;
(ii)	an additional or increased cost; or
(iii)	a reduction of any amount due and payable under any Finance Document,

	which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or an Ancillary Commitment or funding or performing its obligations under any Finance Document or Letter of Credit.
18.2	Increased cost claims
(a)	A Finance Party intending to make a claim pursuant to Clause 18.1 (Increased costs) shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Company.
(b)	Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.
18.3	Exceptions
(a)	Clause 18.1 (Increased costs) does not apply to the extent any Increased Cost is:

(i)	attributable to a Tax Deduction required by law to be made by an Obligor;
(ii)	compensated for by Clause 17.3 (Tax indemnity) (or would have been compensated for under Clause 17.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in paragraph (b) of Clause 17.3 (Tax indemnity) applied);
(iii)	compensated for by the payment of the Mandatory Cost; or
(iv)	attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.

(b)	In this Clause 18.3 reference to a “Tax Deduction” has the same meaning given to the term in Clause 17.1 (Definitions).
19.	OTHER INDEMNITIES
19.1	Currency indemnity
(a)	If any sum due from an Obligor under the Finance Documents (a “Sum”), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the “First Currency”) in which that Sum is payable into another currency (the “Second Currency”) for the purpose of:

(i) making or filing a claim or proof against that Obligor; or

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(ii) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

	that Obligor shall as an independent obligation, within three Business Days of demand, indemnify (to the extent permitted by law) the Arrangers and each other Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b)	Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.
19.2	Other indemnities
(a)	The Company shall (or shall procure that an Obligor will), within three Business Days of demand, indemnify the Arrangers and each other Finance Party against any cost, loss or liability incurred by it as a result of:

(i)	the occurrence of any Event of Default;
(ii)	a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of Clause 31 (Sharing among the Finance Parties);
(iii)	funding, or making arrangements to fund, its participation in a Utilisation requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Finance Party alone);
(iv)	issuing or making arrangements to issue a Letter of Credit requested by the Company or a Borrower in a Utilisation Request but not issued by reason of the operation of any one or more of the provisions of this Agreement; or
(v)	a Utilisation (or part of a Utilisation) not being prepaid in accordance with a notice of prepayment given by a Borrower or the Company.

(b) The Company shall promptly indemnify each Finance Party, each Affiliate of a Finance Party and each officer or employee of a Finance Party or its Affiliate, against any cost, loss or liability incurred by that Finance Party or its Affiliate (or officer or employee of that Finance Party or Affiliate) in connection with or arising out of the Refinancing or the funding of the Refinancing (including but not limited to those incurred in connection with any litigation, arbitration or administrative proceedings or regulatory enquiry concerning the Refinancing), unless such loss or liability is caused by the gross negligence or wilful misconduct of that Finance Party or its Affiliate (or employee or officer of that Finance Party or Affiliate). Any Affiliate or any officer or employee of a Finance Party or its Affiliate may rely on this Clause 19.2.

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19.3 Indemnity to the Agent

The Company shall promptly indemnify the Agent against any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:

(a)	investigating any event which it reasonably believes is a Default; or
(b)	acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.
19.4	Indemnity to the Security Agent
(a)	Each Obligor shall promptly indemnify the Security Agent and every Delegate against any cost, loss or liability incurred by any of them as a result of:

(i)	the taking, holding, protection or enforcement of the Transaction Security,
(ii)	the exercise of any of the rights, powers, discretions and remedies vested in the Security Agent and each Delegate by the Finance Documents or by law; or
(iii)	any default by any Obligor in the performance of any of the obligations expressed to be assumed by it in the Finance Documents.

(b)	The Security Agent may, in priority to any payment to the Secured Parties, indemnify itself out of the Charged Property in respect of, and pay and retain, all sums necessary to give effect to the indemnity in this Clause 19.4 and shall have a lien on the Transaction Security and the proceeds of the enforcement of the Transaction Security for all monies payable to it.
20.	MITIGATION BY THE LENDERS
20.1	Mitigation
(a)	Each Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of Clause 10.1 (Illegality) (or, in respect of the Issuing Banks, Clause 10.2 (Illegality in relation to Issuing Bank)), Clause 17 (Tax Gross Up and Indemnities) or Clause 18 (Increased Costs) or Schedule 4 (Mandatory Cost Formula) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
(b)	Paragraph (a) above does not in any way limit the obligations of any Obligor under the Finance Documents.
20.2	Limitation of liability
(a)	The Company shall promptly indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under Clause 20.1 (Mitigation).

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(b)	A Finance Party is not obliged to take any steps under Clause 20.1 (Mitigation) if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
21.	COSTS AND EXPENSES
21.1	Transaction expenses

The Company shall promptly on demand pay the Agent, the Arrangers, the Issuing Banks and the Security Agent the amount of all costs and expenses (including legal fees) reasonably incurred by any of them (and, in the case of the Security Agent, by any Delegate) in connection with the negotiation, preparation, printing, execution, syndication and perfection of:

(a)	this Agreement and any other documents referred to in this Agreement and the Transaction Security; and
(b)	any other Finance Documents executed after the date of this Agreement.
21.2	Amendment costs

If (a) an Obligor requests an amendment, waiver or consent or (b) an amendment is required pursuant to Clause 32.10 (Change of currency), the Company shall, within three Business Days of demand, reimburse each of the Agent and the Security Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent and the Security Agent (and, in the case of the Security Agent, by any Delegate) in responding to, evaluating, negotiating or complying with that request or requirement.

21.3 Enforcement and preservation costs

The Company shall, within three Business Days of demand, pay to the Arrangers and each other Secured Party the amount of all costs and expenses (including legal fees) incurred by it in connection with the enforcement of or the preservation of any rights under any Finance Document and the Transaction Security and any proceedings instituted by or against the Security Agent as a consequence of taking or holding the Transaction Security or enforcing these rights.

SECTION 7 — REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT

22.	REPRESENTATIONS
22.1	General

Each Obligor makes the representations and warranties set out in this Clause 22 to each Finance Party, provided that Quiksilver, Inc. and QSH shall not make for themselves the representations and warranties set out in Clauses 22.10 (Deduction of Tax), 22.11 (No default), 22.12 (No misleading information), 22.14 (No proceedings pending or threatened), 22.15 (No breach of laws), 22.16 (Environmental laws), 22.17 (Taxation), 22.18 (Security and Financial Indebtedness), 22.20 (Good title to assets), 22.25 (Accounting reference date), 22.27 (Pensions), 22.29 (Existing guarantees and off-balance sheet liabilities) and 22.30

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(Equity capital of Pilot) and provided further that Quiksilver, Inc. shall not make the representations and warranties set out in Clauses 22.21 (Legal and beneficial ownership), 22.22 (Shares), 22.23 (Intellectual Property) and 22.26 (Centre of main interests and establishments).

22.2	Status
(a)	It and each of its Subsidiaries which is a member of the European Group is a company with limited liability (with the exception of Tyax which is a société en nom collectif), duly incorporated and validly existing under the law of its jurisdiction of incorporation.
(b)	It and each of its Subsidiaries which is a member of the European Group has the power to own its assets and carry on its business as it is being conducted.
22.3	Binding obligations

Subject to the Legal Reservations:

(a)	the obligations expressed to be assumed by it in each Finance Document to which it is a party are legal, valid, binding and enforceable obligations; and
(b)	(without limiting the generality of paragraph (a) above), each Transaction Security Document to which it is a party creates the security interests which that Transaction Security Document purports to create and those security interests are valid and effective.

22.4 Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, the Finance Documents and the granting of the Transaction Security do not and will not conflict with:

(a)	any law or regulation applicable to it;
(b)	its constitutional documents and the constitutional documents of any member of the Group; or
(c)	any agreement (including for the avoidance of doubt the 2009 ABL Agreement, the Senior Notes and the Rhône Financing Documents) or instrument binding upon it or any of its Subsidiaries or any of its or any of its Subsidiaries’ assets or constitute a default or termination event (however described) under any such agreement or instrument.
22.5	Power and authority
(a)	It has the power to enter into, perform and deliver, and has taken, or will have taken prior to the relevant time, all necessary action to authorise its entry into, performance and delivery of, the Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents.

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(b)	No limit on its powers will be exceeded as a result of the borrowing, grant of security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
22.6	Validity and admissibility in evidence
(a)	All Authorisations required or desirable:

(i)	to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
(ii)	to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,

	have been obtained or effected and are in full force and effect.
(b)	All Authorisations necessary for the conduct of the business, trade and ordinary activities of members of the Group have been obtained or effected and are in full force and effect if failure to obtain or effect those Authorisations has or is reasonably likely to have a Material Adverse Effect.
22.7	Governing law and enforcement
(a)	The choice of governing law of the Finance Documents will be recognised and enforced in its Relevant Jurisdictions.
(b)	Any judgment obtained in relation to a Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in its Relevant Jurisdictions.
22.8	Insolvency
No:
(a)	corporate action, legal proceeding or other procedure or step described in Clause 26.7 (Insolvency of ) and paragraph (a) of Clause 26.8 (Insolvency proceedings); or
(b)	creditors’ process described in Clause 26.9 (Creditors’ process),

has been taken or, to the knowledge of the Company, Na Pali or any TopCo Obligor, threatened (in writing) in relation to a member of the Group or the relevant TopCo Obligor; and none of the circumstances described in Clause 26.6 (Insolvency) applies to a member of the Group or a TopCo Obligor.

22.9 No filing or stamp taxes

Under the laws of its Relevant Jurisdiction it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents, except any filing, recording or enrolling or any tax or fee payable as contemplated in the relevant Transaction Security Document.

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22.10 Deduction of Tax

Neither the Company nor Na Pali is required under the law of its jurisdiction of incorporation to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Lender which is a Qualifying Lender (subject, in the case of a Treaty Lender, to the completion of procedural formalities).

22.11	No default
(a)	No Event of Default (other than on the Closing Date only, any Event of Default arising pursuant to Clause 26.16 (Material adverse change)) and, on the date of this Agreement and the Closing Date, no Default (other than on the Closing Date only, any Default arising pursuant to Clause 26.16 (Material adverse change)) is continuing or is reasonably likely to result from the making of any Utilisation or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.
(b)	No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries’) assets are subject which has or is reasonably likely to have a Material Adverse Effect.
22.12	No misleading information

Save as disclosed in writing to the Agent and the Arrangers prior to the date of this Agreement:

(a)	any factual information contained in the Information Package was true and accurate in all material respects as at the date of the relevant report or document containing the information or (as the case may be) as at the date the information is expressed to be given;
(b)	the Business Plan has been prepared in accordance with the Accounting Principles as applied to the Original Financial Statements, and the financial projections contained in the Business Plan have been prepared on the basis of recent historical information, are fair and based on reasonable assumptions and have been approved by the board of directors of the Company;
(c)	any financial projection or forecast contained in the Information Package has been prepared on the basis of recent historical information and on the basis of reasonable assumptions and was fair (as at the date of the relevant report or document containing the projection or forecast) and arrived at after careful consideration;
(d)	the expressions of opinion or intention provided by or on behalf of an Obligor for the purposes of the Information Package were made after careful consideration and (as at the date of the relevant report or document containing the expression of opinion or intention) were fair and based on reasonable grounds;
(e)	no event or circumstance has occurred or arisen and no information has been omitted from the Information Package and no information has been given or withheld that

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	results in the information, opinions, intentions, forecasts or projections contained in the Information Package being untrue or misleading in any material respect;
(f)	all material information provided to a Finance Party by the Obligors in connection with the Group or the Obligors on or before the date of this Agreement and not superseded before that date (whether or not contained in the Information Package) is accurate and not misleading in any material respect and all projections provided to any Finance Party on or before the date of this Agreement have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied; and
(g)	all other written information provided by any Obligor or any member of the Group (including its advisers) to a Finance Party was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any respect.
22.13	Financial Statements
(a)	Its Original Financial Statements were prepared in accordance with the Accounting Principles, consistently applied.
(b)	Its unaudited Original Financial Statements fairly represent its financial condition and results of operations (consolidated in the case of the Company) for the relevant Financial Semester.
(c)	Its audited Original Financial Statements give a true and fair view of its financial condition and results of operations (consolidated in the case of the Company) during the relevant financial year.
(d)	There has been no material adverse change in its assets, business or financial condition (or the assets, business or consolidated financial condition of the Group, in the case of the Company) since the date of the Original Financial Statements, other than the changes reflected in the Information Package disclosed to the Lenders as of the date of this Agreement.
(e)	Its most recent financial statements delivered pursuant to Clause 23.1 (Financial statements) :

(i)	have been prepared in accordance with the Accounting Principles as applied to the Original Financial Statements; and
(ii)	give a true and fair view of (if audited) or fairly present (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.

(f) The Budgets and the Business Plan supplied under this Agreement were arrived at after careful consideration and have been prepared in good faith on the basis of recent historical information and on the basis of assumptions which were considered by the Company to be reasonable as at the date they were prepared and supplied and have been reviewed by Ernst & Young as financial adviser of the Group.

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(g)	Since the date of the most recent financial statements delivered pursuant to Clause 23.1 (Financial statements) there has been no material adverse change in the business, assets or financial condition of the Group taken as a whole.
22.14	No proceedings pending or threatened

No litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency which, if adversely determined, are reasonably likely to have a Material Adverse Effect have (to the best of its knowledge and belief (having made due and careful enquiry)) been started or threatened in writing against it or any of its Subsidiaries which is a member of the European Group.

22.15	No breach of laws
(a)	It has not (and none of its Subsidiaries which is a member of the European Group has) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
(b)	No labour disputes are current or, to the best of its knowledge and belief (having made due and careful enquiry), threatened in writing against any member of the Group which have or are reasonably likely to have a Material Adverse Effect.
22.16	Environmental laws
(a)	Each member of the Group is in compliance with Clause 25.3 (Environmental compliance) and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect.
(b)	No Environmental Claim has been commenced or (to the best of its knowledge and belief (having made due and careful enquiry)) is threatened against any member of the Group where that claim has or is reasonably likely, if determined against that member of the Group, to have a Material Adverse Effect.
22.17	Taxation
(a)	It is not (and none of its Subsidiaries which is a member of the European Group is) materially overdue in the filing of any Tax returns and it is not (and none of its Subsidiaries which is a member of the European Group is) overdue in the payment of any amount in respect of Tax of €2,000,000 (or its equivalent in any other currency) or more.
(b)	No claims or investigations are being, or are reasonably likely to be, made or conducted against it (or any of its Subsidiaries which is a member of the European Group) with respect to Taxes such that the aggregate amount of such claims and liabilities for the whole European Group equals or exceeds €2,000,000 (or its equivalent in any other currency) or more.
(c)	It is resident for Tax purposes only in the jurisdiction of its incorporation.

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22.18	Security and Financial Indebtedness
(a)	No Security or Quasi-Security exists over all or any of the present or future assets of any member of the European Group other than as permitted by this Agreement (provided, for the avoidance of doubt, that this Agreement does not prevent the existence of Security or Quasi-Security over present or future assets of QSH, other than Charged Property of QSH).
(b)	No member of the European Group has any Financial Indebtedness outstanding other than as permitted by this Agreement.
22.19	Ranking

The Transaction Security has or will have first ranking priority and it is not subject to any prior ranking or pari passu ranking Security.

22.20 Good title to assets

It and each member of the European Group has a good, valid and (subject to any Permitted Security) marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.

22.21 Legal and beneficial ownership

It and each of its Subsidiaries is the sole legal and beneficial owner of the respective assets over which it purports to grant Security.

22.22 Shares

The shares of companies which are subject to the Transaction Security are fully paid and not subject to any option to purchase or similar rights. The constitutional documents of companies whose shares are subject to the Transaction Security do not and could not restrict or inhibit any transfer of those shares on creation or enforcement of the Transaction Security.

22.23 Intellectual Property

(a) It and each of its Subsidiaries:

(i)	is the sole legal and beneficial owner of or has licensed to it or has the right to use on normal commercial terms all the Intellectual Property which is material in the context of its business and which is required by it in order to carry on its business as it is being conducted and as contemplated in the Business Plan;
(ii)	does not (nor does any of its Subsidiaries), in carrying on its businesses, infringe any Intellectual Property of any third party in any respect which has or is reasonably likely to have a Material Adverse Effect; and
(iii)	has taken all formal or procedural actions (including payment of fees) required to maintain any material Intellectual Property owned by it.

(b) The revenue generated by products bearing the Material Trademarks represents at least 80% of the consolidated revenue of the Group (excluding revenues from the DC

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	Shoes Business) for the most recently closed six-month period for which financial information is available and such Material Trademarks constitute all of the marks and trademarks which are necessary, useful and sufficient to generate such revenue.
22.24	Structure Chart
(a)	The Structure Chart delivered to the Agent pursuant to Schedule 2 (Conditions Precedent) is true, complete and accurate in all material respects and shows the following information:

(i)	Quiksilver, Inc., QSH, Biarritz Holdings and each of the Subsidiaries of the latter, including current name, their jurisdiction of incorporation and/or establishment, a list of shareholders and indicating whether a company is a Dormant Subsidiary or is not a company with limited liability; and
(ii)	all minority interests in Biarritz Holdings and each of its Subsidiaries and any person in which Biarritz Holdings or any of its Subsidiaries hold shares in its issued share capital or equivalent ownership interest of such person.

(b)	All necessary intra-Group loans, transfers, share exchanges and other steps resulting in the final Group structure are set out in the Structure Chart and have been or will be taken in compliance with all relevant laws and regulations and all requirements of relevant regulatory authorities.
22.25	Accounting reference date

The Accounting Reference Date of each member of the Group is 31 October.

22.26 Centre of main interests and establishments

For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings (the “Regulation”), the centre of main interest (as that term is used in Article 3(1) of the Regulation) of the Obligors incorporated in the European Union, is situated in its jurisdiction of incorporation and it has no “establishment” (as that term is used in Article 2(h) of the Regulations) in any other jurisdiction.

22.27 Pensions

All pension schemes operated by or maintained for the benefit of members of the Group and/or any of their employees are fully funded based on applicable statutory requirements and no action or omission has been taken by any member of the Group in relation to such a pension scheme which has or is reasonably likely to have a Material Adverse Effect (including, without limitation, the termination or commencement of winding-up proceedings of any such pension scheme or any member of the Group ceasing to employ any member of such a pension scheme).

22.28 No adverse consequences

(a) It is not necessary under the laws of its Relevant Jurisdictions:

(i) in order to enable any Finance Party to enforce its rights under any Finance Document; or

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(ii) by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,

	that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in any of its Relevant Jurisdictions.
(b)	No Finance Party is or will be deemed to be resident, domiciled or carrying on business in its Relevant Jurisdictions by reason only of the execution, performance and/or enforcement of any Finance Document.
22.29	Existing guarantees and off-balance sheet liabilities

No member of the European Group has given or incurred any guarantee or off-balance sheet liabilities other than as permitted by this Agreement.

22.30 Equity capital of Pilot

No later than 31 October 2009, the Company’s equity capital (capitaux propres) shall be equal to at least half of its share capital (capital social) in accordance with article L.225-248 of the French Code de commerce.

22.31 Investment Company Act

Neither Quiksilver, Inc. nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended.

22.32 Carried Forward Tax Losses

The Group’s tax losses to be carried forward as of 31 October 2008 is equal to at least €210,000,000 (such minimum amount, the “Carried Forward Tax Losses”).

22.33 J.P. Morgan Guarantee

The maximum aggregate amount of the payment obligations of Na Pali under the J.P. Morgan Guarantee and the Issuance and Reimbursement Agreement shall not exceed €35,600,000 at any time during the life of the Facilities.

22.34	Times when representations made
(a)	Except the representations and warranties set out in Clause 22.30 (Equity capital of Pilot), all the representations and warranties in this Clause 22 are made by each relevant Original Obligor on the date of this Agreement and (other than representations and warranties set out in paragraphs (d) and (g) of Clause 22.13 (Financial Statements)) on the Closing Date and by Biarritz Holdings, Quiksilver Europa and QSH on the Closing Date.
(b)	The representations and warranties set out in Clause 22.2 (Status) to Clause 22.7 (Governing law and enforcement), Clause 22.10 (Deduction of Tax), Clause 22.11 (No default), paragraph (g) of Clause 22.12 (No misleading information), paragraphs (e) and (g) of Clause 22.13 (Financial Statements), Clause 22.14 (No proceedings pending or threatened) to Clause 22.22 (Shares), Clause 22.26 (Centre of main

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	interests and establishments), Clause 22.27 (Pensions), Clause 22.31 (Investment Company Act) and Clause 22.33 (J.P. Morgan Guarantee) (the “Repeating Representations”) are deemed to be made by each Obligor on the date of each Utilisation Request, on each Utilisation Date and on the first day of each Interest Period, provided that the representation and warranty set out in paragraph (g) of Clause 22.13 (Financial Statements) shall not be made on the Closing Date.
(c)	The representations and warranties set out in Clause 22.30 (Equity capital of Pilot) are deemed to be made by the Company and each TopCo Obligor (other than Quiksilver, Inc. and QSH) on 31 October 2009.
(d)	The representations and warranties set out in paragraph (b) of Clause 22.23 (Intellectual Property) are deemed to be made on the last day of each Financial Semester.
(e)	Each representation or warranty deemed to be made after the date of this Agreement shall be deemed to be made by reference to the facts and circumstances existing at the date the representation or warranty is deemed to be made.
(f)	This Clause 22.34 is subject in all respects to the limitations set forth in the introductory paragraph of Clause 22.1 (General).
23.	INFORMATION UNDERTAKINGS

The undertakings in this Clause 23 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

In this Clause 23:

“Annual Financial Statements” means the financial statements for a Financial Year delivered pursuant to paragraphs (a) and (b) of Clause 23.1 (Financial statements).

“Annual Pilot Consolidated Financial Statements” means the Pilot Consolidated Financial Statements for a Financial Year delivered pursuant to paragraph (a) of Clause 23.1 (Financial statements).

“Pilot Consolidated Financial Statements” means the portion of each Business Plan (delivered to the Agent on the date of this Agreement pursuant to Schedule 2 (Conditions Precedent) and thereafter pursuant to paragraph (b) of Clause 23.4 (Business Plan)) comprising a consolidated balance sheet, a consolidated profit and loss account and a consolidated cash flow statement for the Company and its Subsidiaries (together with all annexes relating thereto), provided that within 90 days following the end of each Financial Year and each Financial Semester a new version of the Business Plan shall be delivered to the Agent including the foregoing financial statements for such Financial Year or Financial Semester, as the case may be.

“Deloitte Letter” means the letter setting out the procedures applicable to Deloitte’s review of the Pilot Consolidated Financial Statements, in form and substance reasonably satisfactory to the Majority Lenders.

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23.1 Financial statements

The Company shall supply to the Agent in sufficient copies for all the Lenders:

(a)	as soon as they are available, but in any event within 90 days after the end of each of its Financial Years, the Pilot Consolidated Financial Statements for that Financial Year;
(b)	as soon as they are available, but in any event within 180 days after the end of each of its Financial Years:

(i)	its audited financial statements for that Financial Year;
(ii)	the audited financial statements of Biarritz Holdings, Quiksilver Europa and Na Pali and the consolidated financial statements of Na Pali for that Financial Year; and
(iii)	the audited financial statements of any other Material Subsidiary for that Financial Year; and

(c)	as soon as they are available, but in any event within 90 days after the end of each Financial Semester ending 30 April its financial statements and the Pilot Consolidated Financial Statements for that Financial Semester.
23.2	Provision and contents of Compliance Certificate
(a)	The Company shall supply a Compliance Certificate to the Agent with each set of its Pilot Consolidated Financial Statements for each Financial Year and each Financial Semester.
(b)	The Compliance Certificate shall, amongst other things, set out (in reasonable detail) computations as to compliance with Clause 24 (Financial Covenants).
(c)	Each Compliance Certificate shall be signed by one legal representative of the Company and shall be reported on by the Company’s Auditors in the form agreed by the Company and the Majority Lenders.
23.3	Requirements as to financial statements
(a)	The Company shall procure that each set of financial statements and Pilot Consolidated Financial Statements delivered pursuant to this Clause 23 includes a balance sheet, profit and loss account and cashflow statement. In addition the Company shall procure that each set of Pilot Consolidated Financial Statements shall be reviewed by the Auditors in accordance with the “agreed upon procedure” defined in the Deloitte Letter together with any comments and notes relating thereto from the Auditors (in accordance with the Deloitte Letter) and the Senior Management.
(b)	Each set of financial statements delivered pursuant to Clause 23.1 (Financial statements) :

(i) shall be certified by a legal representative of the relevant company as giving a true and fair view of (in the case of Annual Financial Statements for any

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	Financial Year), or fairly representing (in other cases), its financial condition and operations as at the date as at which those financial statements were drawn up and, in the case of the Annual Financial Statements, shall be accompanied by any letter addressed to the management of the relevant company by the Auditors and accompanying those Annual Financial Statements;
(ii)	in the case of Pilot Consolidated Financial Statements, shall be accompanied by a statement by a legal representative of the Company comparing actual performance for the period to which the financial statements relate to:

(A)	the projected performance for that period set out in the Budget; and
(B)	the actual performance for the corresponding period in the preceding Financial Year of the Group; and

(iii) shall be prepared using the Accounting Principles, accounting practices and financial reference periods consistent with those applied:

(A)	in the case of the Company, in the preparation of the Initial Business Plan; and
(B)	in the case of any Obligor, in the preparation of the Original Financial Statements for that Obligor,

unless, in relation to any set of financial statements, the Company notifies the Agent that there has been a change in the Accounting Principles or the accounting practices and its Auditors (or, if appropriate, the Auditors of the Obligor) deliver to the Agent:

(C)

a description of any change necessary for those financial statements to reflect the Accounting Principles or accounting practices upon which the Initial Business Plan or, as the case may be, that Obligor’s Original Financial Statements were prepared; and

(D)

sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine whether Clause 24 (Financial Covenants) has been complied with, to determine the Margin as set out in the definition of “Margin”, to determine the amount of any prepayments to be made from excess cashflow under Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow) and to make an accurate comparison between the financial position indicated in those financial statements and the Initial Business Plan (in the case of the Company) or that Obligor’s Original Financial Statements (in the case of an Obligor).

	Any reference in this Agreement to any financial statements shall be construed as a reference to those financial statements as adjusted to reflect the basis upon which the Initial Business Plan or, as the case may be, the Original Financial Statements were prepared.
(c)	If any Lender wishes to discuss the financial position of any Obligor or any member of the Group with the Auditors, the Agent on the instructions and on behalf of such Lender may notify the Company, stating the questions or issues which the Lender

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wishes to discuss with the Auditors. In this event, the Company must ensure that the Auditors are authorised (at the expense of the Company):

(i)	to discuss the financial position of each Obligor and each member of the Group with the relevant Lender on request from that Lender; and
(ii)	to disclose to the relevant Lender and the Agent any information which that Lender and the Agent on behalf of that Lender may reasonably request.

23.4	Business Plan
(a)	The Company shall supply to the Agent in sufficient copies for all the Lenders, as soon as the same become available but in any event no later than 30 days before the start of each of its Financial Years, an updated Business Plan covering the following four year period (including such Financial Year) reviewed by Ernst & Young (or any other financial adviser as agreed in writing by the Agent acting upon instructions of the Majority Lenders) as financial adviser of the Group.
(b)	The Company shall supply to the Agent in sufficient copies for all the Lenders, as soon as the same become available but in any event within 90 days after the start of each of its Financial Years, an updated Business Plan covering the following four year period (including such Financial Year) and including the Pilot Consolidated Financial Statements for the immediately preceding Financial Year reviewed by Ernst & Young (or any other financial adviser as agreed in writing by the Agent acting upon the instructions of the Majority Lenders) as financial adviser of the Group.
23.5	Budget
(a)	The Company shall supply to the Agent in sufficient copies for all the Lenders, as soon as the same become available but in any event within 30 Business Days before the start of each of its Financial Years, an annual Budget for that Financial Year.
(b)	The Company shall ensure that each Budget:

(i)	is in the same format as the Budget delivered to the Agent pursuant to Schedule 2 (Conditions Precedent) and includes a projected consolidated profit and loss, balance sheet and cashflow statement for the Group and projected financial covenant calculations;
(ii)	is prepared in accordance with the Accounting Principles and the accounting practices and financial reference periods applied to financial statements under Clause 23.1 (Financial statements); and
(iii)	has been approved by the Président of the Company.

(c) If the Company updates or changes the Budget, it shall within not more than 10 Business Days of the update or change being made deliver to the Agent, in sufficient copies for each of the Lenders, such updated or changed Budget together with a written explanation of the main changes in that Budget.

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23.6 Material Subsidiaries

The Company shall supply to the Agent within 90 days after the start of each of its Financial Years a report issued by its Auditors stating which of its Subsidiaries are Material Subsidiaries.

23.7 Presentations

Once in every Financial Year, or more frequently if requested to do so by the Agent if the Agent reasonably suspects a Default is continuing or may have occurred or may occur, at least two legal representatives of the Company (one of whom shall be the chief financial officer) must give a presentation to the Finance Parties about the on-going business and financial performance of the Group.

23.8 Year-end

The Obligors shall not change the Group’s Financial Year and shall procure that each member of the Group’s Financial Year end will not change.

23.9 Information: miscellaneous

The Company shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):

(a)	as soon as the same become available but in any event no later than on the 5th Business Day of each calendar month a cash position statement of the Group detailing (a) the sources and uses of the cash within the Group for the past month and (b) the forecast of the sources and uses of the cash within the Group for the three month period following the date of delivery of such statement, such cash position statement being certified by a legal representative of the Company;
(b)	at the same time as they are dispatched, copies of all documents dispatched by the Borrowers to their creditors generally (or any class of them) (other than the documents delivered to GE Factofrance under the NP Factoring Agreements in the normal course of such factoring programme);
(c)	promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened in writing or pending against any European Obligor or any member of the Group, and which, if adversely determined, are reasonably likely to have a Material Adverse Effect or which would involve a liability, or a potential or alleged liability, exceeding €2,000,000 (or its equivalent in other currencies);
(d)	promptly upon becoming aware of it, any event giving rise to a mandatory prepayment referred to under Clause 11 (Mandatory Prepayment);
(e)	promptly, such information as the Security Agent may reasonably require about the Charged Property and compliance of the Obligors with the terms of any Transaction Security Documents; and
(f)	promptly on request, such further information regarding the financial condition, assets and operations of the Obligors, the Group and/or any member of the Group (including

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	any requested amplification or explanation of any item in the financial statements, budgets or other material provided by any Obligor under this Agreement), any changes to the composition of the Senior Management and an up to date copy of any Obligor’s shareholders’ register (or equivalent in its jurisdiction of incorporation)) as any Finance Party through the Agent may reasonably request.
23.10	Notification of default
(a)	Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless that Obligor has proven that a notification has already been provided by another Obligor).
(b)	Promptly upon a request by the Agent, the Company shall supply to the Agent a certificate signed by two legal representatives on its behalf certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
23.11	“Know your customer” checks
(a)	If:

(i)	the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;
(ii)	any change in the status of an Obligor or the composition of the shareholders of an Obligor after the date of this Agreement; or
(iii)	a proposed assignment or transfer by a Lender of any of its rights and/or obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

	obliges the Agent or any Lender (or, in the case of paragraph (iii) above, any prospective new Lender) to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (iii) above, on behalf of any prospective new Lender) in order for the Agent, such Lender or, in the case of the event described in paragraph (iii) above, any prospective new Lender to carry out and be satisfied with the results of all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(b)	Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied with the results of all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(c)	Following the giving of any notice pursuant to paragraph (a) of Clause 28.2 (Additional Guarantors), if the accession of such Additional Guarantor obliges the

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	Agent or any Lender to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Company shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the accession of such Subsidiary to this Agreement as an Additional Guarantor.
24.	FINANCIAL COVENANTS
24.1	Financial definitions

“Business Acquisition” means the acquisition from an entity which is not Pilot or one of its Subsidiaries of a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them) or the incorporation of a company, in each case to the extent it would constitute a Permitted Acquisition.

“Capital Expenditure” means any expenditure or obligation in respect of expenditure which, in accordance with the Accounting Principles, is treated as capital expenditure (and including the capital element of any expenditure or obligation incurred in connection with a Finance Lease).

“Cashflow” means, in respect of any Relevant Period, net income of the Group for that Relevant Period after:

(a)	adding back the amount of depreciation and amortization (as defined in the Business Plan) for that Relevant Period;
(b)	adding the amount of any increase in provisions, other non-cash debits and other non-cash charges (which are not Current Assets or Current Liabilities) and deducting the amount of any non-cash credits (which are not Current Assets or Current Liabilities) in each case to the extent taken into account in establishing net income for that Relevant Period;
(c)	adding the amount of any decrease (and deducting the amount of any increase) in Working Capital for that Relevant Period;
(d)	adding the amount of any decrease (and deducting the amount of any increase) in non trade working capital (as defined in the Business Plan) for that Relevant Period;
(e)	deducting the amount of any Capital Expenditure actually made during that Relevant Period by any member of the Group and the aggregate of any cash consideration paid for, or the cash cost, of any Business Acquisitions;
(f)	adding (to the extent not already taken into account in determining net income) the amount of any dividends or other profit distributions received in cash by any member of the Group during that Relevant Period from any entity which is itself not a member of the Group and deducting (to the extent not already deducted in determining net

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	income) the amount of any dividends paid in cash during that Relevant Period to minority shareholders in members of the Group;
(g)	adding the amount of financing intercompany (as defined in the Business Plan) for that Relevant Period;
(h)	adding the amount of the profit sharing and subsidies (as defined in the Business Plan) for that Relevant Period,

and so that no amount shall be added (or deducted) more than once.

“Consolidated Shareholders’ Funds” means the Group’s share capital and reserves, regulated provisions, retained earnings (positive or negative) and profits including minority shareholders’ interests being “Total des Capitaux Propres” in the Pilot Consolidated Financial Statements.

“Current Assets” means the aggregate (on a consolidated basis) of all inventory, work in progress, trade and other receivables of each member of the Group including prepayments in relation to operating items and sundry debtors (but excluding Cash and Cash Equivalent Investments) maturing within twelve months from the date of computation but excluding amounts in respect of:

(a)	receivables in relation to Tax;
(b)	Exceptional Items and other non-operating items;
(c)	insurance claims; and
(d)	any interest owing to any member of the Group.

“Current Liabilities” means the aggregate (on a consolidated basis) of all liabilities (including trade creditors, accruals and provisions) of each member of the Group falling due within twelve months from the date of computation but excluding amounts in respect of:

(a)	liabilities for Financial Indebtedness and Finance Charges;
(b)	liabilities for Tax;
(c)	Exceptional Items and other non-operating items; `
(d)	insurance claims; and
(e)	liabilities in relation to dividends declared but not paid by the Company or by a member of the Group in favour of a person which is not a member of the Group.

“Debt Service” means, in respect of any Relevant Period, the aggregate of:

(a)	Net Finance Charges for that Relevant Period;
(b)	the aggregate of all scheduled and mandatory repayments of Financial Indebtedness falling due and any voluntary prepayments made during that Relevant Period but excluding:

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(i)	any amounts falling due under any overdraft or revolving facility (including, without limitation, the Revolving Facility, any Ancillary Facility and the L/C Facility) and which were available for simultaneous redrawing according to the terms of that facility;
(ii)	any mandatory prepayment made pursuant to Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow);
(iii)	any such obligations owed to any member of the Group; and
(iv)	any prepayment of Financial Indebtedness existing on the Closing Date which is required to be repaid under the terms of this Agreement; and

(c) the amount of the capital element of any payments in respect of that Relevant Period payable under any Finance Lease entered into by any member of the Group,

and so that no amount shall be included more than once.

“Debt Service Cover Ratio” means the ratio of Cashflow (after adding back Net Finance Charges) to Debt Service in respect of any Relevant Period.

“EBIT” means, in respect of any Relevant Period, the consolidated operating profit of the Group before taxation (excluding the results from discontinued operations):

(a)	before deducting any interest, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments whether paid, payable or capitalised by any member of the Group (calculated on a consolidated basis) in respect of that Relevant Period;
(b)	not including any accrued interest owing to any member of the Group;
(c)	before taking into account any Exceptional Items;
(d)	after deducting the amount of any profit (or adding back the amount of any loss) of any member of the Group which is attributable to minority interests;
(e)	plus or minus the Group’s share of the profits or losses (after finance costs and tax) of Non-Group Entities;
(f)	excluding the charge to profit represented by the expensing of stock options; and
(g)	after deducting the amount of any royalties and fees paid by the Group to Non-Group Entities in respect of that Relevant Period,

in each case, to the extent added, deducted or taken into account, as the case may be, for the purposes of determining operating profits of the Group before taxation.

“EBITDA” means, in respect of any Relevant Period, EBIT for that Relevant Period after adding back any amount attributable to the amortisation or depreciation of assets of members of the Group.

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“Exceptional Items” means any exceptional, one off, non-recurring or extraordinary items.

“Excess Cashflow” means, for any period for which it is being calculated, Cashflow for that period less (except to the extent already deducted in calculating Cashflow) Debt Service for that period.

“Finance Charges” means, for any Relevant Period, the aggregate amount of the accrued interest, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments in respect of Financial Indebtedness whether paid or payable by any member of the Group (calculated on a consolidated basis) in respect of that Relevant Period:

(a)	including any upfront fees or costs;
(b)	including the interest (but not the capital) element of payments in respect of Finance Leases;
(c)	including any commission, fees, discounts and other finance payments payable by (and deducting any such amounts payable to) any member of the Group under any interest rate hedging arrangement,

and so that no amount shall be added (or deducted) more than once.

“Gearing” means the ratio (expressed as a percentage) of Total Net Debt to Consolidated Shareholders’ Funds.

“Leverage Ratio” means, in respect of any Relevant Period, the ratio of Total Net Debt on the last day of that Relevant Period to EBITDA in respect of that Relevant Period.

“Net Finance Charges” means, for any Relevant Period, the Finance Charges for that Relevant Period after deducting any interest payable in that Relevant Period to any member of the Group on any Cash or Cash Equivalent Investment.

“Non-Group Entity” means any investment or entity (which is not itself a member of the Group (including associates and Joint Ventures)) in which any member of the Group has an ownership interest.

“Relevant Proceeds” means Reimbursement Proceeds, Disposal Proceeds, Issuance Proceeds or Insurance Proceeds (each as defined in Clause 11.2 (Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow)).

“Total Net Debt” means, at any time, the aggregate amount of all obligations of members of the Group for or in respect of Financial Indebtedness (but excluding any Financial Indebtedness under paragraphs (f) and (g) of the definition thereof) at that time but:

(a)	excluding any such obligations to Pilot or any of its Subsidiaries;
(b)	including, in the case of Finance Leases only, their capitalised value; and
(c)	deducting the aggregate amount of Cash and Cash Equivalent Investments held by any member of the Group at that time,

and so that no amount shall be included or excluded more than once.

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“Working Capital” means, on any date, Current Assets less Current Liabilities.

24.2 Financial condition

The Company shall ensure that:

(a) Debt Service Cover: The Debt Service Cover Ratio in respect of any Relevant Period ending on the dates specified in column 1 below shall not on such dates be less than the ratio set out in column 2 below opposite that Relevant Period.

Column 1	Column 2
Relevant Period	Ratio
Relevant Period expiring 31 October 2009		-0.1:1
Relevant Period expiring 30 April 2010		-0.4:1
Relevant Period expiring 31 October 2010		0.7:1
Relevant Period expiring 30 April 2011		0.9:1
Relevant Period expiring 31 October 2011		0.8:1
Relevant Period expiring 30 April 2012		0.7:1
Relevant Period expiring 31 October 2012		0.6:1
Thereafter		0.8:1

(b) Leverage: The Leverage Ratio in respect of any Relevant Period ending on the dates specified in column 1 below shall not exceed on such dates the ratio set out in column 2 below opposite that Relevant Period.

Column 1	Column 2
Relevant Period	Ratio
Relevant Period expiring 31 October 2009		4.7:1
Relevant Period expiring 30 April 2010		4.0:1
Relevant Period expiring 31 October 2010		3.5:1
Relevant Period expiring 30 April 2011		2.5:1
Relevant Period expiring 31 October 2011		2.3:1
Relevant Period expiring 30 April 2012		1.6:1
Relevant Period expiring 31 October 2012		1.4:1
Thereafter		0.8:1

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(c) Gearing: Gearing in respect of any Relevant Period ending on the dates specified in column 1 below shall not exceed on such dates the ratio set out in column 2 below opposite that Relevant Period.

Column 1	Column 2
Relevant Period	Ratio
Relevant Period expiring 31 October 2009		520	%
Relevant Period expiring 30 April 2010		325	%
Relevant Period expiring 31 October 2010		305	%
Relevant Period expiring 30 April 2011		195	%
Relevant Period expiring 31 October 2011		135	%
Relevant Period expiring 30 April 2012		85	%
Relevant Period expiring 31 October 2012		75	%
Thereafter		35	%

24.3 Financial testing

The financial covenants set out in Clause 24.2 (Financial condition) shall be calculated in accordance with the Accounting Principles and tested by reference to each of the Pilot Consolidated Financial Statements delivered pursuant to paragraphs (a) and (c) of Clause 23.1 (Financial statements) and/or each Compliance Certificate delivered pursuant to Clause 23.2 (Provision and contents of Compliance Certificate).

25. GENERAL UNDERTAKINGS

The undertakings in this Clause 25 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.

Authorisations and compliance with laws

25.1 Authorisations

Each Obligor shall (and shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries will) promptly:

(a)	obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)	supply certified copies to the Agent of,

any Authorisation required under any law or regulation of a Relevant Jurisdiction to:

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(i)	enable it to perform its obligations under the Transaction Documents to which it is a party;
(ii)	ensure the legality, validity, enforceability or admissibility in evidence of any Transaction Document to which it is a party; and
(iii)	carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.

25.2 Compliance with laws

Each European Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries will) comply in all respects with all laws to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.

25.3 Environmental compliance

Each Credit Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries which is a member of the Group will):

(i)	comply with all Environmental Law;
(ii)	obtain, maintain and ensure compliance with all requisite Environmental Permits;
(iii)	implement procedures to monitor compliance with and to prevent liability under any Environmental Law,

          where failure to do so has or is reasonably likely to have a Material Adverse Effect.

25.4 Environmental claims

Each Credit Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries which is a member of the Group will), promptly upon becoming aware of the same, inform the Agent in writing of:

(a)	any Environmental Claim against any member of the Group which is current, pending or threatened in writing; and
(b)	any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any member of the Group,

where the claim, if determined against that member of the Group, has or is reasonably likely to have a Material Adverse Effect.

25.5	Taxation
(a)	Each European Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that

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each of its Material Subsidiaries which is a member of the European Group will) pay and discharge all Taxes imposed upon it or its assets within the time period allowed (other than Taxes which do not exceed in the aggregate for all European Obligors and Material Subsidiaries €1,000,000 at any time) without incurring penalties unless and only to the extent that:

(i)	such payment is being contested in good faith;
(ii)	adequate reserves are being maintained for those Taxes and the costs required to contest them which have been disclosed in its latest financial statements delivered to the Agent under Clause 23.1 (Financial statements) ; and
(iii)	such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.

(b) No member of the Group may change its residence for Tax purposes.

Restrictions on business focus

25.6 Merger

(a) No Obligor (other than Quiksilver, Inc.) shall (and each Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries which is a member of the European Group will) enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction other than:

(i)	the solvent liquidation or reorganisation of any member of the Group which is not an Obligor and is not subject to a Transaction Security so long as any payments or assets distributed as a result of such liquidation or reorganisation are distributed to other members of the Group;
(ii)	any transactions contemplated by the Structure Memorandum; and
(iii)	any merger by QSH (other than with Biarritz Holdings or any Subsidiary thereof) where (i) QSH is the surviving entity and (ii) no Transaction Security created by or pursuant to any Transaction Security Document is adversely affected in any manner whatsoever by such amalgamation, consolidation or merger.

(b)	Quiksilver, Inc. shall not enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction other than a merger pursuant to which Quiksilver, Inc. will be the surviving entity and which will not result in a Change of Control.
25.7	Change of business

No European Obligor shall (and each Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries will) make a substantial change to the general nature of its business or (with respect to the members of the Group) of the business of the Group taken as a whole from that carried on by the Group at the date of this Agreement.

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25.8	Acquisitions
(a)	Except as permitted under paragraph (b) below, no Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) will) acquire a company or any shares or securities (or, in each case, any interest in any of them).
(b)	Paragraph (a) above does not apply to an acquisition of a company, of shares or securities (or, in each case, any interest in any of them) which is a Permitted Acquisition.
25.9	Joint ventures

No Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) will):

(i)	enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or
(ii)	transfer any assets or lend to or guarantee or give an indemnity for or give Security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).

Restrictions on dealing with assets and Security

25.10 Preservation of assets

Each Credit Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries which is a member of the Group will) maintain in good working order and condition (ordinary wear and tear excepted) all of its assets necessary in the conduct of its business.

25.11 Pari passu ranking

Each Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries will) ensure that at all times any unsecured and unsubordinated claims of a Finance Party or Hedge Counterparty against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.

25.12 Negative pledge

In this Clause 25.12, “Quasi-Security” means a transaction described in paragraph (b) below.

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Except as permitted under paragraph (c) below:

(a)	No Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) will) create or permit to subsist any Security over any of its assets.
(b)	No Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) will):

(i)	sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor or any other member of the European Group;
(ii)	sell, transfer or otherwise dispose of any of its receivables on recourse terms;
(iii)	enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
(iv)	enter into any other preferential arrangement having a similar effect,

	in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.
(c)	Paragraphs (a) and (b) above do not apply to any Security or (as the case may be) Quasi-Security, which is Permitted Security.

25.13	Disposals
(a)	Except as permitted under paragraph (b) below, no Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) will) enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.
(b)	Paragraph (a) above does not apply to any sale, lease, transfer or other disposal which is a Permitted Disposal.
25.14	Arm’s length basis

No Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group will) enter into any transaction with any person except on arm’s length terms (or terms more favourable than arm’s length terms for such member of the Group) and for full market value.

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Restrictions on movement of cash — cash out

25.15	Loans or credit
(a)	Except as permitted under paragraph (b) below, no Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) will) be a creditor in respect of any Financial Indebtedness.
(b)	Paragraph (a) above does not apply to a Permitted Loan.
25.16	No Guarantees or indemnities or off-balance sheet liabilities
(a)	Except as permitted under paragraph (b) below, no Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) will) incur or allow to remain outstanding any guarantee in respect of any obligation of any person or any off-balance sheet liabilities as defined in the Accounting Principles.
(b)	Paragraph (a) does not apply to a guarantee or an off-balance sheet liability which is a Permitted Guarantee.
25.17	Dividends and share redemption

No Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a TopCo Obligor (other than QSH) or a Credit Obligor will):

(i)	declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital);
(ii)	repay or distribute any dividend or share premium reserve;
(iii)	pay or allow any member of the Group to pay any management, advisory or other fee (of any nature whatsoever) to or to the order of any of the direct or indirect shareholders of the Company (including any TopCo Obligor and any Subsidiary of the latter which is not a Subsidiary of the Company); or
(iv)	redeem, repurchase, defease, reduce, retire or repay any of its share capital or resolve to do so,

provided that, notwithstanding the foregoing, each Credit Obligor and Quiksilver Europa shall be authorized to declare, make or pay dividends or any other sums specifically authorized under the Intercreditor Agreement.

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25.18 Royalties

No Credit Obligor shall (and each TopCo Obligor shall procure (in accordance with article 1120 of the French Civil code (promesse de porte-fort)) that no member of the Group will) pay any royalties or any amount of any nature whatsoever to QSH, Biarritz Holdings or any other entity outside the Group for the use by such member of the Group of any of the marks owned by QSH, Biarritz Holdings or any other entity outside the Group unless specifically authorised under the Intercreditor Agreements.

25.19	Capital Expenditure
(a)	No TopCo Obligor (other than Quiksilver, Inc. and QSH) shall (and each TopCo Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) but not a member of the Group will) incur Capital Expenditure (including acquisitions of businesses and undertakings).
(b)	No Credit Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the Group will), except as agreed by the Majority Lenders, incur Capital Expenditure (including the acquisition of marks, businesses and undertakings) other than Capital Expenditures in any Financial Year which do not exceed the amount set opposite such Financial Year for the Group as a whole, as set out below (the “Capex Basket”),

	Capital Expenditure
Financial Year ending	(€)
30 October 2009		24,000,000
30 October 2010		17,300,000
30 October 2011		20,700,000
30 October 2012		23,000,000
30 October 2013		23,000,000

provided that, upon written notification to the Agent from the Company up to 50% of the Capex Basket unused in a given Financial Year (“N”) may be carried over for use in the next Financial Year (N+1).

Restrictions on movement of cash — cash in

25.20	Financial Indebtedness
(a)	No TopCo Obligor (other than Quiksilver Inc. and QSH) shall (and each TopCo Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries which is a member of the European Group (other than QSH) but not a member of the Group will) incur or allow

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	to remain outstanding any Financial Indebtedness, except the Financial Indebtedness existing on the date of this Agreement set out in Schedule 14 (Existing Financial Indebtedness).
(b)	No Credit Obligor shall (and each Obligor shall procure (in accordance with article 1120 of the French Civil code (promesse de porte-fort)) that none of its Subsidiaries which is a member of the Group will) incur or allow to remain outstanding any Financial Indebtedness, except the Financial Indebtedness:

(i)	(A) existing on the date of this Agreement and set out in Schedule 14 (Existing Financial Indebtedness), (B) arising under the letters of credit set out in Schedule 15 (Existing Letters of Credit) until their incorporation as Existing Letters of Credit hereunder and (C) arising under bank loans and overdraft facilities owed to the Lenders for the period commencing on the date of this Agreement and ending on the Closing Date (for the avoidance of doubt, such bank loans and overdraft facilities shall not be permitted to remain outstanding after the Closing Date), provided that all such Financial Indebtedness under bank loans and overdraft facilities shall not exceed the amount of the NP Perimeter Indebtedness to be Refinanced and the principal amount of the indebtedness under the Pilot Facility Agreement;
(ii)	arising under non-speculative Treasury Transactions;
(iii)	arising under a foreign exchange transaction for spot or forward delivery entered into in connection with protection against fluctuation in currency rates where that foreign exchange exposure arises in the ordinary course of trade, but not a foreign exchange transaction for investment or speculative purposes;
(iv)	arising under any Finance Document;
(v)	arising under any Permitted Loan or Permitted Guarantee;
(vi)	arising under (i) the NP Factoring Agreements and (ii) any Working Capital Financing;
(vii)	counter-indemnity obligation in respect of any guarantee, bond, standby or documentary letter of credit or any other similar instrument issued by a bank or financial institution in an aggregate amount not to exceed €10,000,000; and
(viii)	incurred in the ordinary course of business (i) by members of the Group registered in South Africa in an aggregate amount not to exceed €3,000,000 (or its equivalent in other currencies) at any time and (ii) by members of the Group registered in Russia in an aggregate amount not to exceed €3,000,000 (or its equivalent in other currencies) at any time, provided that in any case the Company shall notify to the Agent the details of such Financial Indebtedness immediately upon incurrence such Financial Indebtedness.

Miscellaneous

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25.21	Miscellaneous
(a)	Each TopCo Obligor undertakes not to demand or request repayment of any indebtedness or any Financial Indebtedness (whether or not due and payable) owed to it by any member of the Group until the day after the Termination Date save as contemplated by the Subordination Agreement.
(b)	Each of QSH and Biarritz Holdings undertakes not to distribute to Quiksilver, Inc. (or any Subsidiary thereof which is not a member of the European Group) (and Quiksilver, Inc. undertakes not to (i) take any action for the purpose of making such distribution or (ii) accept the benefit of such distribution) in any manner whatsoever (including through dividend distributions or reimbursement of shareholder loans) the royalties or any other amount of any nature whatsoever received by it from Biarritz Holdings and its Subsidiaries with respect to the licences on the trademarks owned by it.
(c)	Each Obligor shall (and each Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries will) take all corporate actions required by law to ratify the execution by it of any of the Finance Documents.
(d)	QSH, Biarritz Holdings and Na Pali shall (and Quiksilver, Inc. shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that QSH, Biarritz Holdings and Na Pali will) not rescind, amend, supplement or otherwise modify any of the Licence Agreements without the prior consent of the Majority Lenders.
25.22	Insurance
(a)	Each Credit Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries which is a Material Subsidiary will) maintain insurances on and in relation to its business and assets against those risks and to the extent as is usual for companies carrying on the same or substantially similar business and pay all premiums relating thereto on their due date.
(b)	All insurances must be with reputable independent insurance companies or underwriters.
25.23	Access

Each Credit Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries which is a member of the Group will, (not more than once in every Financial Year unless the Agent reasonably suspects a Default is continuing or may occur) permit the Agent and/or the Security Agent and/or accountants or other professional advisers and contractors of the Agent or Security Agent free access at all reasonable times and on reasonable notice at the risk and cost of the Credit Obligor to (a) the premises, assets, books, accounts and records of each member of the European Group and (b) meet and discuss matters with Senior Management.

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25.24	Intellectual Property
(a)	Each Obligor shall (and each Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries which is a member of the Group will):

(i)	preserve and maintain the subsistence and validity of the Intellectual Property necessary for the business of the Group;
(ii)	use reasonable endeavours to prevent any infringement in any material respect of the Intellectual Property;
(iii)	make registrations and pay all registration fees and taxes necessary to maintain the Intellectual Property in full force and effect and record its interest in that Intellectual Property; and
(iv)	not use or permit the Intellectual Property to be used in a way or take any step or omit to take any step in respect of that Intellectual Property which may materially and adversely affect the existence or value of the Intellectual Property or imperil the right of any member of the Group to use such property.

(b)	Biarritz Holdings specifically undertakes not to dispose of and to maintain the subsistence and validity of the Quiksilver and Roxy and related marks owned by it and to maintain or grant to the members of the Group the licenses on these trademarks that are necessary for the activity of the Group.
(c)	The Company shall deliver to the Agent at the same time as the delivery of the Business Plan pursuant to Clause 23.4 (Business Plan) (and at such other times in the Company’s discretion) a certified update of the list of the trademarks delivered by it pursuant to Part I of Schedule 2 (Conditions Precedent) so that the representation set forth in paragraph (b) of Clause 22.23 (Intellectual Property) is correct at such time.
25.25	Amendments
(a)	Except as permitted under paragraphs (b) and (c) below, no Obligor shall (and each Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries will) rescind, amend, supplement or otherwise modify any of the Transaction Documents to which it is a party without the prior consent of the Majority Lenders.
(b)	The Rossignol Documents may be amended in order to permit the direct payment by JPMorgan Chase Bank N.A. to the Rossignol Vendors of the NP Cash Collateral as permitted pursuant to the Subordination Agreement.
(c)	The Note may be terminated, and the Stock Purchase Agreement may be amended, in connection with the set-off of the Note against liabilities of the Company pursuant to the Stock Purchase Agreement.
25.26	Treasury Transactions

No Obligor (other than Quiksilver, Inc. and QSH) shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-

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fort)) that none of its Subsidiaries which is a member of the European Group will) enter into any Treasury Transaction, other than:

(i)	the hedging transactions documented by the Hedging Agreements;
(ii)	spot and forward delivery foreign exchange contracts entered into in the ordinary course of business and not for speculative purposes;
(iii)	any Treasury Transaction entered into for the hedging of interest rate exposures pursuant to the SG Financing Documents; and
(iv)	the Cash Pooling Agreement.

25.27

Further assurance

(a)

Each Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries will) promptly do all such acts or execute all such documents (including assignments, transfers, mortgages, charges, notices and instructions) as the Security Agent may reasonably specify (and in such form as the Security Agent may reasonably require in favour of the Security Agent or its nominee(s)):

(i)	to perfect the Security created or intended to be created under or evidenced by the Transaction Security Documents (which may include the execution of a mortgage, charge, assignment or other Security over all or any of the assets which are, or are intended to be, the subject of the Transaction Security) or for the exercise of any rights, powers and remedies of the Security Agent or the Finance Parties provided by or pursuant to the Finance Documents or by law;
(ii)	to confer on the Security Agent or confer on the Finance Parties Security over any property and assets of that Obligor located in any jurisdiction equivalent or similar to the Security intended to be conferred by or pursuant to the Transaction Security Documents (including, without limitation, any new trademarks disclosed to the Agent pursuant to Clause 25.24 (Intellectual Property); and/or
(iii)	to facilitate the realisation of the assets which are, or are intended to be, the subject of the Transaction Security.

(b)

Each Obligor shall (and each Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries will) take all such action as is available to it (including making all filings and registrations) as may be necessary for the purpose of the creation, perfection, protection or maintenance of any Security conferred or intended to be conferred on the Security Agent or the Finance Parties by or pursuant to the Finance Documents.

25.28

Equity capital of Pilot

Each TopCo Obligor (other than Quiksilver, Inc. and QSH) and the Company shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that (i) each of its Subsidiaries which is a TopCo Obligor or (ii) the Company will) take the actions set out in the Structure Memorandum so that no later

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than 1 November 2009 the Company’s equity capital (capitaux propres) is equal to at least half of its share capital (capital social), and at all times thereafter remains equal to at least half of its share capital (capital social) to the extent required by article L225-248 of the French Code de commerce. As soon as possible and in any event no later than 1 November 2009, the Company shall deliver to the Agent a copy of the resolution of the extraordinary general assembly of the Company acknowledging that the Company’s equity capital (capitaux propres) is equal to at least half of its share capital (capital social).

25.29 Banks accounts

Each Credit Obligor shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries which is a Material Subsidiary will) maintain all of its bank accounts with a Lender or an Affiliate of a Lender (other than (i) bank accounts maintained in connection with the NP Factoring Agreements or any Working Capital Financing, and (ii) bank accounts maintained with Barclays Plc or its Affiliates in the United Kingdom or local banks in South Africa, in each case in connection with the Group’s operations in such jurisdictions).

25.30 Post-signing conditions

The Company shall within 2 Business Days of the date of this Agreement deliver to the Agent (i) evidence (in form and substance satisfactory to the Agent, acting reasonably) that the 2005 ABL Agreement has been terminated, all Financial Indebtedness thereunder (other than letters of credit issued thereunder and outstanding on the date hereof which letters of credit have been supported by standby letters of credit agreement issued under the 2009 ABL Agreement) has been repaid in full with the proceeds of the Rhône Financing and/or drawings under the 2009 ABL Agreement and the related Encumbrances securing such Financial Indebtedness under the 2005 ABL Agreement have been released, and (ii) copies of the fully executed Rhone Financing Documents and the 2009 ABL Agreement.

25.31	Post-closing conditions
(a)	The Company and/or Na Pali shall (I) within two months of the Closing Date (i) enter into Hedging Agreements that cover a period of not less than the three year period following the Closing Date and are in respect of not less than 70% of the aggregate Facilities (other than the L/C Facility) from time to time (the entering into such Hedging Agreements being made in accordance with the terms of the Hedging Letter) and (ii) promptly provide the Agent with certified true copies of each such Hedging Agreements entered into and (II) maintain such Hedging Agreements in accordance with the terms of the Hedging Letter.
(b)	Each Obligor must use, and must procure that any other member of the Group that is a potential provider of Transaction Security uses, all reasonable endeavours lawfully available to avoid or mitigate the constraints on the provision of Security provided for in the Agreed Security Principles.
25.32	DC Shoes Disposal Proceeds

Each Obligor shall (and each Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each of its Subsidiaries will) take all such actions and measures necessary to use any remaining DC Shoes Disposal Proceeds not

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applied towards repayment of the Facility A Loan in accordance with Clause 11.3 (Application of mandatory prepayments) for the purpose of at the option of the Company, either (x) releasing the NP Cash Collateral and substituting Quiksilver, Inc. in lieu of Na Pali thereunder or (y) increasing the share capital of Quiksilver Europa by way of cash contribution (through a share capital increase of Biarritz Holdings), releasing the NP Cash Collateral and substituting Quiksilver Europa in lieu of Na Pali thereunder, in each case unless the NP Cash Collateral was released prior to the receipt of DC Shoes Disposal Proceeds.

25.33 Factoring

Each Borrower shall (and each Obligor (other than QSH) shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that each Borrower will) maintain the NP Factoring Agreements (or replace them by a Working Capital Financing) and their ability to transfer receivables to the factor under the relevant programme in such a manner that enables the Borrowers to finance the working capital needs of the Group (including in case of clean down of the Revolving Facility as provided under Clause 5.7 (Clean down)).

25.34	Subordinated Debt
(a)	Except as permitted under paragraph (b) below, no Obligor shall (and each Obligor shall procure (in accordance with article 1120 of the French Code civil (promesse de porte-fort)) that none of its Subsidiaries will):

(i)	repay or prepay any principal amount (or capitalised interest) outstanding under the Subordinated Debt;
(ii)	pay any interest or any other amounts payable in connection with the Subordinated Debt; or
(iii)	purchase, redeem, defease or discharge any amount outstanding with respect to Subordinated Debt.

(b)	Paragraph (a) does not apply to a payment, repayment, prepayment, purchase, redemption, defeasance or discharge which is permitted under the Subordination Agreement.
26.	EVENTS OF DEFAULT

Each of the events or circumstances set out in this Clause 26 is an Event of Default (save for Clause 26.21 (Acceleration).

26.1 Non-payment

An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place at and in the currency in which it is expressed to be payable unless:

(a) its failure to pay is caused by:

(i) administrative or technical error; or

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(ii) a Disruption Event; and

(b)	payment is made within three Business Days of its due date.
26.2	Financial covenants and other obligations
(a)	Any requirement of Clause 24 (Financial Covenants) is not satisfied or an Obligor does not comply with the provisions of Clause 23 (Information Undertakings) or Clause 25.30 (Post-signing conditions).
(b)	An Obligor does not comply with any provision of any Transaction Security Document.
26.3	Other obligations
(a)	An Obligor does not comply with any provision of the Finance Documents (other than those referred to in Clause 26.1 (Non-payment), Clause 26.2 (Financial covenants and other obligations)).
(b)	No Event of Default under paragraph (a) above will occur if the failure to comply is capable of remedy and is remedied within 15 Business Days of the earlier of (i) the Agent giving notice to the Company or the relevant Obligor and (ii) the Company or an Obligor becoming aware of the failure to comply.
26.4	Misrepresentation

Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made, unless the failure to comply is capable of remedy and is remedied within 15 Business Days of the earlier of (i) the Agent giving written notice to the Company or (ii) the relevant Obligor becoming aware of the misrepresentation.

26.5	Cross default
(a)	Financial Indebtedness

(i)

Any Financial Indebtedness (including for the avoidance of doubt any Financial Indebtedness under the 2009 ABL Agreement, the Rhône Financing Documents, the Senior Notes or the SG Bonds) of any TopCo Obligor, Quiksilver Americas, Inc. (including, without limitation, with respect to the Financial Indebtedness under the 2009 ABL Agreement) or any member of the Group is not paid when due nor within any originally applicable grace period, provided that in the case of any Financial Indebtedness under the Rhône Financing Documents, such Financial Indebtedness has not been paid within the seven-day period following its due date or the last day of any originally applicable grace period (as the case may be).

(ii)

Any Financial Indebtedness (including for the avoidance of doubt any Financial Indebtedness under the 2009 ABL Agreement, the Rhône Financing Documents, the Senior Notes or the SG Bonds) of any TopCo Obligor, Quiksilver Americas, Inc. (including, without limitation, with respect to the

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	Financial Indebtedness under the 2009 ABL Agreement) or any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).
(iii)	Any commitment for any Financial Indebtedness (including for the avoidance of doubt any Financial Indebtedness under the 2009 ABL Agreement, the Rhône Financing Documents, the Senior Notes or the SG Bonds) of any TopCo Obligor, Quiksilver Americas, Inc. (including, without limitation, with respect to the Financial Indebtedness under the 2009 ABL Agreement) or any member of the Group is cancelled or suspended by a creditor of any TopCo Obligor or any member of the Group as a result of an event of default (however described).
(iv)	Any creditor of any TopCo Obligor or any member of the Group becomes entitled to declare any Financial Indebtedness (including for the avoidance of doubt any Financial Indebtedness under the 2009 ABL Agreement, the Rhône Financing Documents, the Senior Notes or the SG Bonds) of any TopCo Obligor, Quiksilver Americas, Inc. (including, without limitation, with respect to the Financial Indebtedness under the 2009 ABL Agreement) or of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described), provided that in the case of events of default (however described) (other than payment defaults), such events of default have remained unremedied and not waived for a period of 30 days following the relevant date on which they occurred.
(v)	With respect to (x) the Financial Indebtedness of the members of the Group, no Event of Default will occur under this Clause 26.5 if the aggregate amount of Financial Indebtedness of the members of the Group or commitment for Financial Indebtedness falling within paragraphs (i) to (iv) above is less than €500,000 (or its equivalent in any other currency or currencies) and (y) the Financial Indebtedness of Quiksilver, Inc. and Quiksilver Americas, Inc., no Event of Default will occur under this Clause 26.5 if the aggregate amount of Financial Indebtedness of Quiksilver, Inc. or commitment for Financial Indebtedness falling within paragraphs (i) to (iv) above is less than €5,000,000 (or its equivalent in any other currency or currencies).

(b) Other Obligations

(i)

Any default (other than in connection with Financial Indebtedness) of any TopCo Obligor or any member of the Group resulting in a payment obligation has occurred and has not been remedied within any originally applicable grace period, unless such payment obligation is being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with the Accounting Principles and such TopCo Obligor or member of the Group has reserved sufficient cash to satisfy such payment obligation.

(ii)

No Event of Default will occur under paragraph (b)(i) above (A) if the non-payment by the members of the Group within any originally applicable grace period results from any commercial arrangement between the relevant members of the Group and their creditors relating to commercial receivables

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the purpose of which is to extend the originally agreed payment term by an additional time period of no more than 4 months, provided that the aggregate amount of the commercial receivables benefiting from such payment extension period shall not exceed €5,000,000 (or its equivalent in any other currency or currencies) at any time, (B) if the aggregate amount of payment obligations of the TopCo Obligors (other than Quiksilver, Inc.) and the members of the Group falling within paragraph (b)(i) above is less than €5,000,000 (or its equivalent in any other currency or currencies) or (C) if the aggregate amount of payment obligations of Quiksilver, Inc. falling within paragraph (b)(i) above is less than €5,000,000 (or its equivalent in any other currency or currencies).

(iii)

The NP Factoring Agreements (or any new factoring agreement in replacement thereof) is terminated (and not simultaneously replaced by a Working Capital Financing) or GE Factofrance (or any new factor in replacement thereof) notifies the termination of the NP Factoring Agreements (or any new factoring agreement in replacement thereof).

26.6	Insolvency
(a)	A TopCo Obligor (other than Quiksilver, Inc.) or a member of the Group is unable or admits inability to pay its debts as they fall due or is deemed to or declared to be unable to pay its debts under applicable law, suspends or threatens (in writing) to suspend making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (other than the Lenders generally with respect to the Facilities) with a view to rescheduling any of its indebtedness other than with respect to the commercial receivables referred to in paragraph (b)(ii) of Clause 26.5 (Cross default).
(b)	Any TopCo Obligor (other than Quiksilver, Inc.) or any member of the Group which conducts business in France is in a state of “cessation des paiements”, or any TopCo Obligor or any member of the Group becomes insolvent for the purpose of any insolvency law.
(c)	A moratorium is declared in respect of any indebtedness of any TopCo Obligor (other than Quiksilver, Inc.) or any member of the Group. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.
26.7	Insolvency of TopCo Obligors
(a)	Quiksilver, Inc. institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors;
(b)	Quiksilver, Inc. applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property;
(c)	any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is otherwise appointed in respect of Quiksilver, Inc. and the appointment continues undischarged, undismissed or unstayed for sixty (60) calendar days;

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(d)	any proceeding under any Debtor Relief Law relating to Quiksilver, Inc. or to all or any material part of its property is instituted without the consent of Quiksilver, Inc. and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding;
(e)	Any actions are taken by any TopCo Obligor or by any third party for the declaration of insolvency (“concurso”) of any TopCo Obligor.
(f)	Any action is taken by any TopCo Obilgor to obtain the protection in any pre-insolvency scenarios granted by article 5.3 of Spanish Insolvency Law as drafted by RDL 3/2009.
26.8	Insolvency proceedings
(a)	Any corporate action (other than the corporate actions to be taken in connection with the solvent liquidation of Tyax), legal proceedings or other procedure or step is taken in relation to:

(i)	the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any TopCo Obligor or any member of the Group;
(ii)	a composition, compromise, assignment or arrangement with any creditor of any TopCo Obligor or any member of the Group (other than any commercial arrangement of any member of the Group referred to in paragraph (b)(ii) of Clause 26.5 (Cross default) (subject to the conditions provided therein).
(iii)	the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer in respect of any TopCo Obligor or any member of the Group or any of its assets; or
(iv)	enforcement of any Security over any assets of any TopCo Obligor or any member of the Group,

	or any analogous procedure or step is taken in any jurisdiction.
(b)	Any TopCo Obligor or any member of the Group commences proceedings for “conciliation” in accordance with articles L.611-4 to L.611-15 of the French Code de commerce.
(c)	A judgment for “sauvegarde”, “redressement judiciaire” or “liquidation judiciaire” is entered in relation to the Company or any member of the Group under articles L.620-1 to L.670-8 of the French Code de commerce.
26.9	Creditors’ process

Any of the enforcement proceedings provided for in French law n° 91-650 of 9 July 1991, or any expropriation, attachment, sequestration, distress or execution or any analogous process in any jurisdiction affects any asset or assets of (i) a TopCo Obligor (other than Quiksilver, Inc. and QSH) or any member of the Group having an aggregate value of €5,000,000 or (ii)

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Quiksilver, Inc. and QSH having an aggregate value of €5,000,000, and in each case is not discharged within 15 days.

26.10	Unlawfulness and invalidity
(a)	It is or becomes unlawful for a TopCo Obligor or any member of the Group to perform any of its obligations under the Finance Documents or any Transaction Security created or expressed to be created or evidenced by the Transaction Security Documents ceases to be effective or any subordination created or security ranking agreed under the Intercreditor Agreements is or becomes unlawful.
(b)	Any obligation or obligations of any TopCo Obligor or any member of the Group under any Finance Documents are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lenders under the Finance Documents.
(c)	Any Finance Document ceases to be in full force and effect or any Transaction Security or any subordination created or security ranking agreed under the Intercreditor Agreements ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to it (other than a Finance Party) to be ineffective.
26.11	Intercreditor Agreements
(a)	Any party to the Intercreditor Agreements (other than a Finance Party) fails to comply with the provisions of, or does not perform its obligations under, the Intercreditor Agreements; or
(b)	a representation or warranty given by that party in the Intercreditor Agreements is incorrect in any material respect,

and, if the non-compliance or circumstances giving rise to the misrepresentation are capable of remedy, it is not remedied within 10 days of the earlier of the Agent giving notice to that party or that party becoming aware of the non-compliance or misrepresentation.

26.12 Cessation of business

Any TopCo Obligor or any member of the Group which is a Material Subsidiary suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business except as a result of a transaction permitted by this Agreement.

26.13 Audit qualification

The Auditors of the Group qualify (including through reservations of any nature whatsoever) the annual consolidated financial statements of the Company reviewed by the Auditors in accordance with the “agreed upon procedure” defined in the Deloitte Letter.

26.14 Expropriation

The authority or ability of any member of the Group to conduct its business is limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention,

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restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any member of the Group or any of its assets.

26.15	Litigation
(a)	Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced against any TopCo Obligor (other than Quiksilver, Inc.) or a member of the Group where the amount at stake exceeds €10,000,000 and/or where the amount at stake when aggregated with the amount at stake in respect of any other litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes which have been commenced since the date of this Agreement against any TopCo Obligor (other than Quiksilver, Inc.) or any member of the Group exceeds €15,000,000, unless such litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are being contested in good faith and by appropriate proceedings for which adequate reserves have been established in accordance with the Accounting Principles and such TopCo Obligor or Group member has reserved sufficient cash to satisfy any related judgment.
(b)	Any TopCo Obligor or any member of the Group fails to comply with any final judgment or final court order made against it for an amount (i) in the case of the TopCo Obligors or the members of the Group (other than Quiksilver, Inc.) (when aggregated with the aggregate amount of all other final judgments and final court orders made against the TopCo Obligors (other than Quiksilver, Inc.) and the member of the Group and not complied with by the latters) in excess of €2,500,000 (or its equivalent in any other currency or currencies) or (ii) in the case of Quiksilver, Inc. (when aggregated with the aggregate amount of all other final judgments and final court orders made against it and not complied with) in excess of €10,000,000.

26.16 Material adverse change

Any event or circumstance occurs which the Majority Lenders reasonably believe has or is reasonably likely to have a Material Adverse Effect.

26.17 Cessation of tax consolidation of the Group

The Group ceases to be consolidated for French Tax purposes.

26.18 Carried forward tax losses

Pilot loses the ability to use a portion of the Carried Forward Tax Losses due to a change of activity or a final reassessment by the French tax authorities, and in the case of tax reassessments such reassessment shows tax loss carryforwards at 31 October 2008 of less than the Carried Forward Tax Losses.

26.19 Equity capital of Pilot

The Company’s equity capital (capitaux propres) (i) has not been restored to at least half of its share capital (capital social) on or prior to 31 October 2009 as contemplated in the Structure Memorandum in order to comply with article L.225-248 of the French Code de commerce or (ii) falls below half of its share capital (capital social) at any time after 31

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October 2009 and is not restored in accordance with article L.225-248 of the French Code de commerce.

26.20 NP Cash Collateral Release

All of the cash subject to the NP Cash Collateral shall not have been released upon the earlier of (i) the payment of any Rossignol Liabilities and (ii) the payment of any Rossignol Liabilities Royalties.

26.21

Acceleration

(a)

On and at any time after the occurrence of an Event of Default which is continuing the Agent may without mise en demeure or any other judicial or extra judicial step, and shall if so directed by the Majority Lenders, by notice to the Company but subject to the mandatory provisions of articles L.620-1 to L.670-8 of the French Code de commerce (and provided that such notice shall not be required to be given to Quiksilver, Inc. upon the occurrence of an Event of Default under Clause 26.7 (Insolvency of TopCo Obligors)):

(i)	cancel the Total Commitments and/or Ancillary Commitments at which time they shall immediately be cancelled;
(ii)	declare that all or part of the Utilisations, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, at which time they shall become immediately due and payable;
(iii)	declare that cash cover in respect of each Letter of Credit is immediately due and payable at which time it shall become immediately due and payable;
(iv)	declare all or any part of the amounts (or cash cover in relation to those amounts) outstanding under the Ancillary Facilities to be immediately due and payable, at which time they shall become immediately due and payable; and/or
(v)	exercise or direct the Security Agent to exercise any or all of its rights, remedies, powers or discretions under the Finance Documents.

(b) During the Availability Period with respect to the Term Facilities, none of the Finance Parties shall be entitled to:

(i)	cancel any of its Commitments to the extent to do so would prevent or limit the making of a Utilisation;
(ii)	rescind, terminate, cancel, accelerate or cause repayment or prepayment of any amounts outstanding under this Agreement or any of the Facilities or exercise any similar right or remedy or make or enforce any claim under the Finance Documents it may have to the extent to do so would prevent or limit the making of a Utilisation;
(iii)	refuse to participate in the making of a Utilisation; or

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(iv) exercise any right of set-off or counterclaim in respect of a Utilisation to the extent to do so would prevent or limit the making of a Utilisation,

in each case, solely on the basis of a Default arising under Clause 26.16 (Material adverse change) or as a result of any of the representations and warranties set forth in paragraphs (d) and (g) of Clause 22.13 (Financial Statements) not being true or correct; provided that, immediately after the Closing Date all such rights, remedies and entitlements shall be available to the Finance Parties notwithstanding that they may not have been used or been available for use on the Closing Date.

SECTION 8 — CHANGES TO PARTIES

27.	CHANGES TO THE LENDERS
27.1	Assignments and transfers by the Lenders
(a)	Subject to this Clause 27, a Lender (the “Existing Lender”) may:

(i)	assign any of its rights; or
(ii)	transfer any of its rights (including such as relate to that Lender’s participation in each Loan) and obligations,

	under any Finance Document to another bank or financial institution or to a trust, fund (including CDOs and CLOs) or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets (the “New Lender”).
(b)	The consent of the Finance Parties is hereby given to a transfer by an Existing Lender to a New Lender, provided that any transfer or assignment of rights and/or rights and obligations with respect to the L/C Facility shall be subject to the prior consent of the Issuing Banks as to the identity of the New Lender.
27.2	Conditions of assignment or transfer
(a)	The consent of the Company is required for an assignment or transfer by an Existing Lender, provided that no such consent shall be required if the assignment or transfer is:

(i)	to another Lender or an Affiliate (which shall include, for the purposes of this Clause 27 and for the avoidance of doubt, in the case of Natixis, any company of the Groupe Caisses d’Epargne or the Groupe Banques Populaires) of a Lender, or
(ii)	made at a time when a Default is continuing.

(b) The consent of the Company to an assignment or transfer must not be unreasonably withheld or delayed. The Company will be deemed to have given its consent five Business Days after the Existing Lender has requested it unless consent is expressly refused in writing by the Company within that time.

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(c)	The consent of the Company to an assignment or transfer must not be withheld solely because the assignment or transfer may result in an increase to the Mandatory Cost.
(d)	An assignment will only be effective as among the Finance Parties on:

(i)	receipt by the Agent of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender has become entitled to the same rights and will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender;
(ii)	the New Lender entering into the documentation required for it to accede as a party to the Security Sharing Agreement; and
(iii)	performance by the Agent of all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.

(e)	A transfer will only be effective if the procedure set out in Clause 27.5 (Procedure for transfer) is complied with.
(f)	If:

(i)	a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(ii)	as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under Clause 17 (Tax Gross Up and Indemnities) or Clause 18 (Increased Costs),

	then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those Clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.
(g)	The Facilities may be assigned or transferred in amounts of not less than €5,000,000 and increments of €1,000,000 in excess thereof (or if less, the remaining amount held by such Lender).
27.3	Assignment or transfer fee

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of €2,500.

27.4	Limitation of responsibility of Existing Lenders
(a)	Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(i) the legality, validity, effectiveness, adequacy or enforceability of the Transaction Documents, the Transaction Security or any other documents;

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(ii)	the financial condition of any Obligor;
(iii)	the performance and observance by any Obligor or any other member of the Group of its obligations under the Transaction Documents or any other documents; or
(iv)	the accuracy of any statements (whether written or oral) made in or in connection with any Transaction Document or any other document,

	and any representations or warranties implied by law are excluded.
(b)	Each New Lender confirms to the Existing Lender, the other Finance Parties and the Secured Parties that it:

(i)

has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Transaction Document or the Transaction Security; and

(ii)

will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

(c) Nothing in any Finance Document obliges an Existing Lender to:

(i)	accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this Clause 27; or
(ii)	support any losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Transaction Documents or otherwise.

27.5	Procedure for transfer
(a)	Subject to the conditions set out in Clause 27.2 (Conditions of assignment or transfer) a transfer is effected in accordance with paragraph (c) below when the Agent executes an otherwise duly completed Transfer Agreement delivered to it by the Existing Lender and the New Lender at least 5 Business Days prior to the proposed Transfer Date. The Agent shall, subject to paragraph (b) below, as soon as reasonably practicable after receipt by it of a duly completed Transfer Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Agreement.
(b)	The Agent shall only be obliged to execute a Transfer Agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.

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(c) By virtue of the execution of a Transfer Agreement, as from the Transfer Date:

(i)	to the extent that in the Transfer Agreement the Existing Lender seeks to transfer its rights and obligations under the Finance Documents and in respect of the Transaction Security, the Existing Lender shall be discharged to the extent provided for in the Transfer Agreement from further obligations towards each of the Obligors and the other Finance Parties under the Finance Documents;
(ii)	the rights and obligations of the Existing Lender with respect to the Obligors shall be transferred to the New Lender, to the extent provided for in the Transfer Agreement;
(iii)	the Agent, the Arrangers, the Security Agent, the New Lender, the other Lenders, the Issuing Banks and any relevant Ancillary Lender shall have the same rights and obligations between themselves and in respect of the Transaction Security as they would have had had the New Lender been an Original Lender with the rights and/or obligations to which it is entitled and subject as a result of the transfer and to that extent the Agent, the Arrangers, the Security Agent, the Issuing Banks and any relevant Ancillary Lender and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and
(iv)	the New Lender shall become a Party as a “Lender”.

27.6 Copy of Transfer Agreement to Company

The Agent shall, as soon as reasonably practicable after it has executed a Transfer Agreement, send to the Company a copy of that Transfer Agreement.

27.7 Security on Lenders’ rights

Without prejudice to the rights granted to the lenders pursuant to this Clause 27, each Lender may, at any time, without consulting with or obtaining any authorization from an Obligor, pledge, grant a Security over or assign as a security in any manner whatsoever (by way of assignment as security or by any other mean) all or part of its rights pursuant to any Finance Document in order to secure the obligations of such Lender, including:

(a)	any pledge, assignment as security or other Security granted in order to guarantee obligations vis a vis a central bank; and
(b)	when the Lender is an instrument vehicle, any pledge, assignment as security or other Security granted to any holder (or trustee or agent of holders) of bonds or other capital market instruments issued by such Lender in order to secure such bonds or capital market instruments.

Provided that such pledge, assignment security or other Security cannot have the effect to:

(i) release a Lender from its obligations pursuant to the Finance Documents or make the beneficiary of such pledge, assignment as security or Security party to any Finance Document; or

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(ii) oblige any Obligor to make any payment or grant to any person broader rights than the payments or rights to which the relevant Lender is entitled to pursuant to the Finance Documents.

28.	CHANGES TO THE OBLIGORS
28.1	Assignment and transfers by Obligors

No Obligor or any other member of the Group may assign any of its rights or transfer any of its rights or obligations under the Finance Documents.

28.2	Additional Guarantors
(a)	On or prior to the Closing Date, the Company shall procure that each of Biarritz Holdings, Quiksilver Europa and QSH shall have acceded to this Agreement and the Intercreditor Agreements as Additional Guarantors and delivered to the Agent the Guarantees and Security Documents listed in Part V of Schedule 2).
(b)	Subject to the Agreed Security Principles and to the extent legally possible, the Company shall procure that any member of the Group which is a Material Subsidiary and which is not an Obligor shall within 10 days following a written request from the Agent and in any event promptly upon such member of the Group becoming a Material Subsidiary pursuant to paragraph (b)(iii) of the definition thereof, become an Additional Guarantor and grant Security as the Agent may require and shall accede to the Intercreditor Agreements.
(c)	A member of the Group shall become an Additional Guarantor if:

(i)	the Company and the proposed Additional Guarantor deliver to the Agent a duly completed and executed Accession Letter; and
(ii)	the Agent has received all of the documents and other evidence listed in Part VI of Schedule 2 (Conditions Precedent) in relation to that Additional Guarantor, each in form and substance reasonably satisfactory to the Agent.

(d)	The Agent shall notify the Company and the Lenders promptly upon being reasonably satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part VI of Schedule 2 (Conditions Precedent).
28.3	Repetition of Representations

Delivery of an Accession Letter constitutes confirmation by the relevant Subsidiary that the representations and warranties referred to in paragraphs (a) (solely in the case of Biarritz Holdings, Quiksilver Europa and QSH) and (b) of Clause 22.34 (Times when representations made) are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.

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SECTION 9 — THE FINANCE PARTIES

29.	ROLE OF THE AGENT, THE ARRANGERS, THE ISSUING BANKS AND OTHERS
29.1	Appointment of the Agent
(a)	Each of the Arrangers, the Lenders and the Issuing Banks appoints the Agent to act as its agent under and in connection with the Finance Documents.
(b)	Each of the Arrangers, the Lenders and the Issuing Banks authorises the Agent to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.
29.2	Duties of the Agent
(a)	Subject to paragraph (b) below, the Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.
(b)	Without prejudice to Clause 27.6 (Copy of Transfer Agreement to Company), paragraph (a) above shall not apply to any Transfer Agreement.
(c)	Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(d)	If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.
(e)	If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent, the Arrangers or the Security Agent) under this Agreement it shall promptly notify the other Finance Parties.
(f)	The Agent’s duties under the Finance Documents are solely mechanical and administrative in nature.
29.3	Role of the Arrangers

Except as specifically provided in the Finance Documents, the Arrangers have no obligations of any kind to any other Party under or in connection with any Finance Document.

29.4	No fiduciary duties
(a)	Nothing in this Agreement constitutes the Agent, the Arrangers and/or the Issuing Banks as a trustee or fiduciary of any other person.

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(b)	None of the Agent, the Security Agent, the Arrangers, the Issuing Banks or any Ancillary Lender shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.
29.5	Business with the Group

The Agent, the Security Agent, each Arranger, the Issuing Banks and each Ancillary Lender may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.

29.6	Rights and discretions
(a)	The Agent and the Issuing Banks may rely on:

(i)	any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and
(ii)	any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

(b) The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:

(i)	no Default has occurred (unless it has actual knowledge of a Default arising under Clause 26.1 (Non-payment));
(ii)	any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised; and
(iii)	any notice or request made by the Company (other than a Utilisation Request or Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors.

(c)	The Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other experts.
(d)	The Agent may act in relation to the Finance Documents through its personnel and agents.
(e)	The Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.
(f)	Without prejudice to the generality of paragraph (e) above, the Agent may disclose the identity of a Defaulting Lender to the other Finance Parties and the Company and shall disclose the same upon the written request of the Company or the Majority Lenders.
(g)	Notwithstanding any other provision of any Finance Document to the contrary, none of the Agent, the Arrangers or the Issuing Banks is obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

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29.7	Majority Lenders’ instructions
(a)	Unless a contrary indication appears in any Finance Document, the Agent shall (i) exercise any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it as Agent) and (ii) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.
(b)	Unless a contrary indication appears in a Finance Document, any instructions given by the Majority Lenders will be binding on all the Finance Parties other than the Security Agent who shall be bound by instructions given in accordance with the Intercreditor Agreements.
(c)	The Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any cost, loss or liability (together with any associated VAT) which it may incur in complying with the instructions.
(d)	In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.
(e)	The Agent is not authorised to act on behalf of a Lender in any legal or arbitration proceedings relating to any Finance Document, without having first obtained that Lender’s authority to act on its behalf in those proceedings. This paragraph (e) shall not apply to any legal or arbitration proceeding relating to the perfection, preservation or protection of rights under the Transaction Security Documents or enforcement of the Transaction Security or Transaction Security Documents.
29.8	Responsibility for documentation

None of the Agent, the Arrangers, the Issuing Banks or any Ancillary Lender:

(a)	is responsible for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, the Arrangers, the Issuing Banks, an Ancillary Lender, an Obligor or any other person given in or in connection with any Finance Document or the Reports or the transactions contemplated in the Finance Documents;
(b)	is responsible for the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or the Transaction Security or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Finance Document or the Transaction Security; or
(c)	is responsible for any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.

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29.9	Exclusion of liability
(a)	Without limiting paragraph (b) below (and without prejudice to the provisions of paragraph (e) of Clause 32.11 (Disruption to Payment Systems etc.)), none of the Agent, the Issuing Banks, or any Ancillary Lender will be liable (including, without limitation, for negligence or any other category of liability whatsoever) for any action taken by it under or in connection with any Finance Document or the Transaction Security, unless directly caused by its gross negligence or wilful misconduct.
(b)	No Party (other than the Agent, an Issuing Bank or an Ancillary Lender (as applicable)) may take any proceedings against any officer, employee or agent of the Agent, any Issuing Bank or any Ancillary Lender, in respect of any claim it might have against the Agent, an Issuing Bank or an Ancillary Lender or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document or any Transaction Document and any officer, employee or agent of the Agent, an Issuing Bank or any Ancillary Lender may rely on this Clause.
(c)	The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.
(d)	Nothing in this Agreement shall oblige the Agent or the Arrangers to carry out any “know your customer” or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Agent and the Arrangers that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arrangers.
29.10	Lenders’ indemnity to the Agent

Each Lender shall (in proportion to its share of the Total Commitments or, if the Commitments in the relevant Facility are then zero, to its share of the Total Commitments and outstanding Utilisations) indemnify the Agent, within three Business Days of demand, against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than by reason of the Agent’s gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to Clause 32.11 (Disruption to Payment Systems etc.) notwithstanding the Agent’s negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance Document).

29.11	Resignation of the Agent
(a)	The Agent may resign and appoint one of its Affiliates acting through an office in France as successor by giving notice to the Lenders and the Company.
(b)	Alternatively the Agent may resign by giving notice to the Lenders and the Company, in which case the Majority Lenders (after consultation with the Company) may appoint a successor Agent.

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(c)	If the Majority Lenders have not appointed a successor Agent in accordance with paragraph (b) above within 30 days after notice of resignation was given, the retiring Agent (after consultation with the Company) may appoint a successor Agent (acting through an office in France).
(d)	The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.
(e)	The Agent’s resignation notice shall only take effect upon the appointment of a successor.
(f)	Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 29. Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
29.12	Replacement of the Agent
(a)	After consultation with the Company, the Majority Lenders may, by giving 30 days’ notice to the Agent (or, at any time the Agent is an Impaired Agent, by giving any shorter notice determined by the Majority Lenders) replace the Agent by appointing a successor Agent (acting through an office in France).
(b)	The retiring Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the Lenders) make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.
(c)	The appointment of the successor Agent shall take effect on the date specified in the notice from the Majority Lenders to the retiring Agent. As from this date, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents but shall remain entitled to the benefit of this Clause 29 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date).
(d)	Any successor Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
29.13	Confidentiality
(a)	In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
(b)	If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.

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(c)	Notwithstanding any other provision of any Finance Document to the contrary, neither the Agent nor any Arranger is obliged to disclose to any other person (i) any confidential information or (ii) any other information if the disclosure would or might in its reasonable opinion constitute a breach of any law or a breach of a fiduciary duty.
29.14	Relationship with the Lenders
(a)	The Agent may treat each Lender as a Lender, entitled to payments under this Agreement and acting through its Facility Office unless it has received not less than five Business Days’ prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
(b)	Each Lender shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 4 (Mandatory Cost Formula).
(c)	Each Lender shall supply the Agent with any information that the Security Agent may reasonably specify (through the Agent) as being necessary or desirable to enable the Security Agent to perform its functions as Security Agent. Each Lender shall deal with the Security Agent exclusively through the Agent and shall not deal directly with the Security Agent.
(d)	Any Lender may by notice to the Agent appoint a person to receive on its behalf all notices, communications, information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under Clause 34.6 (Electronic communication)) electronic mail address and/or any other information required to enable the sending and receipt of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address, department and officer by that Lender for the purposes of Clause 34.2 (Addresses) and paragraph (a)(iii) of Clause 34.6 (Electronic communication) and the Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.
29.15	Credit appraisal by the Lenders, Issuing Banks and Ancillary Lenders

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender, Issuing Bank and Ancillary Lender confirms to the Agent, the Arrangers, the Issuing Banks and each Ancillary Lender that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:

(a)	the financial condition, status and nature of each member of the Group;
(b)	the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and the Transaction Security and any other agreement, arrangement or

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	document entered into, made or executed in anticipation of, under or in connection with any Finance Document or the Transaction Security;
(c)	whether that Secured Party has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the Transaction Security, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
(d)	the adequacy, accuracy and/or completeness of the Reports and any other information provided by the Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and
(e)	the right or title of any person in or to, or the value or sufficiency of any part of the Charged Property, the priority of any of the Transaction Security or the existence of any Security affecting the Charged Property.
29.16	Reference Banks

If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of which it is an Affiliate) ceases to be a Lender, the Agent shall (in consultation with the Company) appoint another Lender or an Affiliate of a Lender to replace that Reference Bank.

29.17 Agent’s management time

Any amount payable to the Agent under Clause 19.3 (Indemnity to the Agent), Clause 21 (Costs and Expenses) and Clause 29.10 (Lenders’ indemnity to the Agent) shall include the cost of utilising the Agent’s management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Agent may notify to the Company and the Lenders, and is in addition to any fee paid or payable to the Agent under Clause 16 (Fees).

29.18 Deduction from amounts payable by the Agent

If any Party owes an amount to the Agent under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.

29.19 Reliance and engagement letters

Each Finance Party and Secured Party confirms that each of the Arrangers and the Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Arrangers or Agent) the terms of any reliance letter or engagement letters relating to the Reports or any reports or letters provided by accountants in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those Reports, reports or letters and to sign such letters

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on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.

30. CONDUCT OF BUSINESS BY THE FINANCE PARTIES

No provision of this Agreement will:

(a)	interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b)	oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c)	oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
31.	SHARING AMONG THE FINANCE PARTIES
31.1	Payments to Finance Parties

If a Finance Party (a “Recovering Finance Party”) receives or recovers any amount from an Obligor (including following a set-off) other than in accordance with Clause 32 (Payment Mechanics) and applies that amount to a payment due under the Finance Documents then:

(a)	the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Agent;
(b)	the Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by the Agent and distributed in accordance with Clause 32 (Payment Mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and
(c)	the Recovering Finance Party shall, within three Business Days of demand by the Agent, pay to the Agent an amount (the “Sharing Payment”) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with Clause 32.6 (Partial payments).
31.2	Redistribution of payments

The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) in accordance with Clause 32.6 (Partial payments).

31.3	Recovering Finance Party’s rights
(a)	On a distribution by the Agent under Clause 31.2 (Redistribution of payments), the Recovering Finance Party will be subrogated to the rights of the Finance Parties which have shared in the redistribution which Finance Parties agree that they will in that connection waive the benefit of article 1252 of the French Code civil.

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(b)	If and to the extent that the Recovering Finance Party is not able to rely on its rights under paragraph (a) above, the relevant Obligor shall be liable to the Recovering Finance Party for a debt equal to the Sharing Payment which is immediately due and payable.
31.4	Reversal of redistribution

If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

(a)	each Finance Party which has received a share of the relevant Sharing Payment pursuant to Clause 31.2 (Redistribution of payments) shall, upon request of the Agent, pay to the Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay); and
(b)	that Recovering Finance Party’s rights of subrogation in respect of any reimbursement shall be cancelled and the relevant Obligor will be liable to the reimbursing Finance Party for the amount so reimbursed.
31.5	Exceptions
(a)	This Clause 31 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this Clause, have a valid and enforceable claim against the relevant Obligor.
(b)	A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(i)	it notified the other Finance Party of the legal or arbitration proceedings; and
(ii)	the other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

31.6	Ancillary Lenders
(a)	This Clause 31 shall not apply to any receipt or recovery by a Lender in its capacity as an Ancillary Lender at any time prior to service of notice under Clause 26.21 (Acceleration).
(b)	Following service of notice under Clause 26.21 (Acceleration), this Clause 31 shall apply to all receipts or recoveries by Ancillary Lenders except to the extent that the receipt or recovery represents a reduction from the Designated Gross Amount for an Ancillary Facility to its Designated Net Amount.

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SECTION 10 — ADMINISTRATION

32.	PAYMENT MECHANICS
32.1	Payments to the Agent
(a)	On each date on which an Obligor or a Lender is required to make a payment under a Finance Document excluding a payment under the terms of an Ancillary Document, that Obligor or Lender shall make the same available to the Agent or, in the case of payments due under Letters of Credit, an Issuing Bank (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent or, in the case of payments due under Letters of Credit, an Issuing Bank as being customary at the time for settlement of transactions in the relevant currency in the place of payment.
(b)	Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in a principal financial centre in a Participating Member State or London) with such bank as the Agent specifies.
32.2	Distributions by the Agent
(a)	Except as otherwise provided in this Agreement, the Agent agrees that promptly after its receipt of each payment from or on behalf of any Borrower in respect of any of the obligations hereunder (Loans, interest and other sums) (the “Obligations”), the Agent shall distribute such payment to the Lenders entitled thereto (other than any Lender that has consented in writing to waive its pro rata share of any such payment) pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received.
(b)	Each payment received by the Agent under the Finance Documents for another Party shall, subject to Clause 32.3 (Distributions to an Obligor) and Clause 32.4 (Clawback) be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than five Business Days’ notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London).
(c)	Notwithstanding anything to the contrary contained herein, the provisions of the preceding paragraph (a) shall be subject to the express provisions of this Agreement which require, or permit, differing payments to be made to Lenders which are not Defaulting Lenders as opposed to Defaulting Lenders.
32.3	Distributions to an Obligor

The Agent may (with the consent of the Obligor or in accordance with Clause 33 (Set-Off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.

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32.4	Clawback
(a)	Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.
(b)	If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.
32.5	Impaired Agent
(a)	If, at any time, the Agent becomes an Impaired Agent, an Obligor or a Lender which is required to make a payment under the Finance Documents to the Agent in accordance with Clause 32.1 (Payments to the Agent) may instead either pay that amount directly to the required recipient or pay that amount to an interest-bearing account held with an Acceptable Bank within the meaning of paragraph (a) of the definition of “Acceptable Bank” and in relation to which no Insolvency Event has occurred and is continuing, in the name of the Obligor or the Lender making the payment and designated as an account for the benefit of the Party or Parties beneficially entitled to that payment under the Finance Documents. In each case such payments must be made on the due date for payment under the Finance Documents.
(b)	All interest accrued on the amount standing to the credit of the account shall be for the benefit of the beneficiaries of that account pro rata to their respective entitlements.
(c)	A Party which has made a payment in accordance with this Clause 32.5 shall be discharged of the relevant payment obligation under the Finance Documents and shall not take any credit risk with respect to the amounts standing to the credit of the account.
(d)	Promptly upon the appointment of a successor Agent in accordance with Clause 29.12 (Replacement of the Agent), each Party which has made a payment to an account in accordance with this Clause 32.5 shall give all requisite instructions to the bank with whom such account is held to transfer the amount (together with any accrued interest) to the successor Agent for distribution in accordance with Clause 32.2 (Distributions by the Agent).
32.6	Partial payments
(a)	If the Agent receives a payment for application against amounts due in respect of any Finance Documents that is insufficient to discharge all the amounts then due and payable by an Obligor under those Finance Documents, the Agent shall apply that payment towards the obligations of that Obligor under those Finance Documents in the following order:

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(i)	first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent, the Issuing Banks and the Security Agent under those Finance Documents;
(ii)	secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under those Finance Documents;
(iii)	thirdly, in or towards payment pro rata of any principal due but unpaid under those Finance Documents and any amount due but unpaid under Clause 7.3 (Claims under a Letter of Credit) and Clause 7.4 (Indemnities); and
(iv)	fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

(b)	The Agent shall, if so directed by the Majority Lenders, vary the order set out in paragraphs (a)(ii) to (iv) above.
(c)	Paragraphs (a) and (b) above will override any appropriation made by an Obligor.
32.7	No set-off by Obligors

All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

32.8	Business Days
(a)	Any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
(b)	During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.
32.9	Currency of account
(a)	Subject to paragraphs (b) to (e) below, euro is the currency of account and payment for any sum due from an Obligor under any Finance Document.
(b)	A repayment of a Utilisation or Unpaid Sum or a part of a Utilisation or Unpaid Sum shall be made in the currency in which that Utilisation or Unpaid Sum is denominated on its due date.
(c)	Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.
(d)	Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(e)	Any amount expressed to be payable in a currency other than euros shall be paid in that other currency.

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32.10	Change of currency
(a)	Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:

(i)	any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Company); and
(ii)	any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).

(b)	If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Company) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.
32.11	Disruption to Payment Systems etc.

If either the Agent determines (in its discretion) that a Disruption Event has occurred or the Agent is notified by the Company that a Disruption Event has occurred:

(a)	the Agent may, and shall if requested to do so by the Company, consult with the Company with a view to agreeing with the Company such changes to the operation or administration of the Facilities as the Agent may deem necessary in the circumstances;
(b)	the Agent shall not be obliged to consult with the Company in relation to any changes mentioned in paragraph (a) if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;
(c)	the Agent may consult with the Finance Parties in relation to any changes mentioned in paragraph (a) but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;
(d)	any such changes agreed upon by the Agent and the Company shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 38 (Amendments and Waivers);
(e)	the Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this Clause 32.11; and

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(f)	the Agent shall notify the Finance Parties of all changes agreed pursuant to paragraph (d) above.
33.	SET-OFF
(a)	A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
(b)	Any credit balances taken into account by an Ancillary Lender when operating a net limit in respect of any overdraft under an Ancillary Facility shall on enforcement of the Finance Documents be applied first in reduction of the overdraft provided under that Ancillary Facility in accordance with its terms.
34.	NOTICES
34.1	Communications in writing

Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.

34.2 Addresses

The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:

(a)	in the case of the Company, that identified with its name below;
(b)	in the case of each Lender, each Issuing Bank, each Ancillary Lender or any other Obligor, that notified in writing to the Agent on or prior to the date on which it becomes a Party; and
(c)	in the case of the Agent or the Security Agent, that identified with its name below,

or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than five Business Days’ notice.

34.3	Delivery
(a)	Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:

(i)	if by way of fax, when received in legible form; or
(ii)	if by way of letter, when it has been left at the relevant address or five Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

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	and, if a particular department or officer is specified as part of its address details provided under Clause 34.2 (Addresses), if addressed to that department or officer.
(b)	Any communication or document to be made or delivered to the Agent or the Security Agent will be effective only when actually received by the Agent or Security Agent and then only if it is expressly marked for the attention of the department or officer identified with the Agent’s or Security Agent’s signature below (or any substitute department or officer as the Agent or Security Agent shall specify for this purpose).
(c)	All notices from or to an Obligor shall be sent through the Agent.
(d)	Any communication or document made or delivered to the Company in accordance with this Clause 34.3 will be deemed to have been made or delivered to each of the Obligors.
34.4	Notification of address and fax number

Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to Clause 34.2 (Addresses) or changing its own address or fax number, the Agent shall notify the other Parties.

34.5 Communication when Agent is Impaired Agent

If the Agent is an Impaired Agent the Parties may, instead of communicating with each other through the Agent, communicate with each other directly and (while the Agent is an Impaired Agent) all the provisions of the Finance Documents which require communications to be made or notices to be given to or by the Agent shall be varied so that communications may be made and notices given to or by the relevant Parties directly. This provision shall not operate after a replacement Agent has been appointed.

34.6	Electronic communication
(a)	Any communication to be made between the Agent or the Security Agent and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent, the Security Agent and the relevant Lender:

(i)	agree that, unless and until notified to the contrary, this is to be an accepted form of communication;
(ii)	notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
(iii)	notify each other of any change to their address or any other such information supplied by them.

(b) Any electronic communication made between the Agent and a Lender or the Security Agent will be effective only when actually received in readable form and in the case of any electronic communication made by a Lender to the Agent or the Security Agent only if it is addressed in such a manner as the Agent or Security Agent shall specify for this purpose.

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34.7 Use of websites

The Company may satisfy its obligation under this Agreement to deliver any information in relation to those Lenders (the “Website Lenders”) who accept this method of communication by posting this information onto an electronic website designated by the Company and the Agent (the “Designated Website”) if:

(i)	the Agent expressly agrees (after consultation with each of the Lenders) that it will accept communication of the information by this method;
(ii)	both the Company and the Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(iii)	the information is in a format previously agreed between the Company and the Agent.

	If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Agent shall notify the Company accordingly and the Company shall at its own cost supply the information to the Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event the Company shall at its own cost supply the Agent with at least one copy in paper form of any information required to be provided by it.
(b)	The Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Company and the Agent.
(c)	The Company shall promptly upon becoming aware of its occurrence notify the Agent if:

(i)	the Designated Website cannot be accessed due to technical failure;
(ii)	the password specifications for the Designated Website change;
(iii)	any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(iv)	any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or
(v)	the Company becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.

	If the Company notifies the Agent under paragraph (c)(i) or paragraph (c)(v) above, all information to be provided by the Company under this Agreement after the date of that notice shall be supplied in paper form unless and until the Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.
(d)	Any Website Lender may request, through the Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the

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	Designated Website. The Company shall at its own cost comply with any such request within ten Business Days.
34.8	English language
(a)	Any notice given under or in connection with any Finance Document must be in English.
(b)	All other documents provided under or in connection with any Finance Document must be:

(i)	in English; or
(ii)	if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.

35.	CALCULATIONS AND CERTIFICATES
35.1	Accounts

In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

35.2 Certificates and determinations

Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

35.3 Day count convention

Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.

36. PARTIAL INVALIDITY

If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

37. REMEDIES AND WAIVERS

No failure to exercise, nor any delay in exercising, on the part of any Finance Party or Secured Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

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38.	AMENDMENTS AND WAIVERS
38.1	Required consents
(a)	Subject to Clauses 38.2 (Technical Amendments) and 38.3 (Exceptions), any term of the Finance Documents may be amended or waived only with the consent of the Majority Lenders and the Company and any such amendment or waiver will be binding on all Parties.
(b)	The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this Clause 38.
(c)	Each Obligor agrees to any such amendment or waiver permitted by this Clause 38 which is agreed to by the Company. This includes any amendment or waiver which would, but for this paragraph (c), require the consent of all of the Guarantors.
38.2	Technical Amendments

Notwithstanding the provisions of this Clause 38, the Agent may without consulting the Lenders, decide upon purely administrative matters and, without referring to the Lenders, enter into amendments of a purely technical nature to fix errors which are manifest upon reading this Agreement.

38.3	Exceptions
(a)	An amendment or waiver that has the effect of changing or which relates to:

(i)	the definition of “Majority Lenders” in Clause 1.1 (Definitions);
(ii)	an extension to the date of payment of any amount under the Finance Documents;
(iii)	a reduction in the Margin or a reduction in the amount of any payment of principal, interest, fees or commission payable (except any adjustment of the Margin in accordance with the definition of “Margin”);
(iv)	a change in currency of payment of any amount under the Finance Documents;
(v)	an increase in or an extension of any Commitment or the Total Commitments;
(vi)	a change to the Borrowers or Guarantors other than in accordance with Clause 28 (Changes to the Obligors);
(vii)	any provision which expressly requires the consent of all the Lenders;
(viii)	Clause 2.2 (Finance Parties’ rights and obligations), Clause 11 (Mandatory Prepayment), Clause 27 (Changes to the Lenders) or this Clause 38;
(ix)	(other than as expressly permitted by the provisions of any Finance Document) the nature or scope of:

(A) the Charged Property; or

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(B) the manner in which the proceeds of enforcement of the Transaction Security are distributed;

(x)	the release of any Transaction Security unless permitted under this Agreement or any other Finance Document; or
(xi)	subject to the provisions of the Intercreditor Agreements, any amendment to the order of priority or subordination under the Intercreditor Agreements,

	shall not be made without the prior consent of all the Lenders.
(b)	An amendment or waiver which relates to the rights or obligations of the Agent, the Arrangers, the Issuing Banks, the Security Agent, any Ancillary Lender or a Hedge Counterparty (each in their capacity as such) may not be effected without the consent of the Agent, the Arrangers, the Issuing Banks, the Security Agent, that Ancillary Lender or, as the case may be, that Hedge Counterparty.
38.4	Replacement of Lenders
(a)	If at any time:

(i)	any Lender becomes a Non-Consenting Lender (as defined in paragraph (c) below); or
(ii)	an Obligor becomes obliged to repay any amount in accordance with Clause 10.1 (Illegality) or to pay additional amounts pursuant to Clause 18.1 (Increased costs) or Clause 17.2 (Tax gross-up) to any Lender in excess of amounts payable to the other Lenders generally,

then the Company may, on 3 Business Days’ prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to Clause 27 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Company, and which is acceptable to the Agent (acting reasonably) and (in the case of any transfer of an L/C Facility Commitment), the Issuing Banks, which confirms its willingness to assume and does assume all the obligations of the transferring Lender (including the assumption of the transferring Lender’s participations on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender’s participation in the outstanding Utilisations and all accrued interest and/or Letter of Credit fees, Break Costs and other amounts payable in relation thereto under the Finance Documents.

(b)

The replacement of a Lender pursuant to this Clause shall be subject to the following conditions:

(i)	the Company shall have no right to replace the Agent or Security Agent;
(ii)	neither the Agent nor the Lender shall have any obligation to the Company to find a Replacement Lender;

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(iii)	in the event of a replacement of a Non-Consenting Lender such replacement must take place no later than 5 Business Days after the date the Non-Consenting Lender notifies the Company and the Agent of its failure or refusal to give a consent in relation to, or agree to any waiver or amendment to the Finance Documents requested by the Company; and
(iv)	in no event shall the Lender replaced under this paragraph (b) be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents.

(c) In the event that:

(i)	the Company or the Agent (at the request of the Company) has requested the Lenders to give a consent in relation to, or to agree to a waiver or amendment of, any provisions of the Finance Documents;
(ii)	the consent, waiver or amendment in question requires the approval of all the Lenders; and
(iii)	Lenders whose Commitments aggregate more than 90 per cent. of the Total Commitments (or, if the Total Commitments have been reduced to zero, whose participations in the outstanding Utilisations aggregated more than 90 per cent. of the Total Commitments immediately prior to that reduction) have consented or agreed to such waiver or amendment,

	then any Lender who does not and continues not to consent or agree to such waiver or amendment shall be deemed a “Non-Consenting Lender”.
38.5	Disenfranchisement of Defaulting Lenders
(a)	For so long as a Defaulting Lender has any Available Commitment, in ascertaining the Majority Lenders or whether any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments, Total L/C Facility Commitments or Total Revolving Facility Commitments has been obtained to approve any request for a consent, waiver, amendment or other vote under the Finance Documents, that Defaulting Lender’s Commitments will be reduced by the amount of its Available Commitments.
(b)	For the purposes of this Clause 38.4, the Agent may assume that the following Lenders are Defaulting Lenders:

(i)	any Lender which has notified the Agent that it has become a Defaulting Lender;
(ii)	any Lender in relation to which it is aware that any of the events or circumstances referred to in paragraphs (a), (b) or (c) of the definition of “Defaulting Lender” has occurred,

unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Agent) or the Agent is otherwise aware that the Lender has ceased to be a Defaulting Lender

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38.6	Replacement of a Defaulting Lender
(a)	The Company may, at any time a Lender has become and continues to be a Defaulting Lender, by giving 5 Business Days’ prior written notice to the Agent and such Lender:

(i)	replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to Clause 27 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement;
(ii)	require such Lender to (and such Lender shall) transfer pursuant to Clause 27 (Changes to the Lenders) all (and not part only) of the undrawn Revolving Facility Commitment and/or Total L/C Facility Commitment of the Lender; or
(iii)	require such Lender to (and such Lender shall) transfer pursuant to Clause 27 (Changes to the Lenders) all (and not part only) of its rights and obligations in respect of the Revolving Facility and/or L/C Facility,

to a Lender or other bank, financial institution, trust, fund or other entity (a “Replacement Lender”) selected by the Company, and which (unless the Agent is an Impaired Agent) is acceptable to the Agent (acting reasonably) and (in the case of any transfer of an L/C Facility Commitment) to the Issuing Banks, which confirms its willingness to assume and does assume all the obligations or all the relevant obligations of the transferring Lender (including the assumption of the transferring Lender’s participations or unfunded participations (as the case may be) on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender’s participation in the outstanding Utilisations and all accrued interest and/or Letter of Credit fees, Break Costs and other amounts payable in relation thereto under the Finance Documents.

(b) Any transfer of rights and obligations of a Defaulting Lender pursuant to this Clause shall be subject to the following conditions:

(i)	the Company shall have no right to replace the Agent or Security Agent;
(ii)	neither the Agent nor the Defaulting Lender shall have any obligation to the Company to find a Replacement Lender;
(iii)	the transfer must take place no later than 5 Business Days’ after the notice referred to in paragraph (a) above; and
(iv)	in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents.

39.	CONFIDENTIALITY
39.1	Confidential Information

Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clause 39.2 (Disclosure of Confidential Information), and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.

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39.2 Disclosure of Confidential Information

Any Finance Party may disclose:

(a)

to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this paragraph (a) is informed in writing of its confidential nature except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information;

(b)

to any person:

(i)	to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;
(ii)	with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person’s Affiliates, Related Funds, Representatives and professional advisers;
(iii)	appointed by any Finance Party or by a person to whom paragraph (b)(i) or (ii) above applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under paragraph (d) of Clause 29.14 (Relationship with the Lenders));
(iv)	who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in paragraph (b)(i) or (ii) above;
(v)	to whom information is required or requested to be disclosed by any court of competent jurisdiction, governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
(vi)	to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to Clause 27.7 (Security on Lenders’ rights);
(vii)	to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;
(viii)	who is a Party; or

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(ix) with the consent of the Company;

in each case, such Confidential Information as that Finance Party shall consider appropriate if:

(A)	in relation to paragraphs (b)(i), (b)(ii) and b(iii) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(B)	in relation to paragraph (b)(iv) above, the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
(C)	in relation to paragraphs (b)(v), (b)(vi) and (b)(vii) above, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances.

39.3 Entire agreement

This Clause 39 (Confidentiality) constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.

SECTION 11 — GOVERNING LAW AND ENFORCEMENT

40. GOVERNING LAW

This Agreement is governed by French law.

41.	ENFORCEMENT — JURISDICTION OF FRENCH COURTS
(a)	Subject to paragraph (b) below, the Tribunal de Commerce of Paris has exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement) (a “Dispute”).
(b)	Paragraph (a) above is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

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42. ELECTION OF DOMICILE

Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor otherwise domiciled in France) irrevocably elects domicile at c/o Pilot SAS, 26/28 rue Danielle Casanova, 75002 Paris, France for the purpose of serving any judicial or extra-judicial documents in relation to any action or proceedings referred to above.

SECTION 12 — MISCELLANEOUS

43. LIMITED RECOURSE AGAINST QSH

Notwithstanding anything to the contrary in this Agreement or any other Finance Document, the Finance Parties acknowledge and agree that all the liabilities of QSH arising from time to time under or in connection with the Finance Documents shall be limited to the proceeds of realisation of the Charged Property of QSH. The preceding sentence is without prejudice to the rights of the Finance Parties to call an Event of Default and/or to accelerate the Facilities under Clause 27 (Events of Default). All payments to be made under the Finance Documents to the Finance Parties by QSH shall be made solely out of and limited to the extent of the proceeds of realisation of the Charged Property of QSH and with respect to QSH the Finance Parties shall be entitled to have recourse only to such Charged Property (but this will not prevent the taking of proceedings in relation to QSH for that purpose (provided that any recovery from QSH as a result of such proceedings shall be limited to the value of the Charged Property of QSH)). In the event that the proceeds of realisation of the Charged Property of QSH are less than the aggregate amount outstanding under the Finance Documents, then the Finance Parties shall irrevocably and unconditionally release QSH from all further obligations under the Finance Documents. For the avoidance of doubt, this Clause 43 does not affect in any manner whatsoever the obligations of the other Obligors under the Finance Documents, the obligations of each Obligor being independent from each other and cumulatives.

44. ADDITIONAL WORKING CAPITAL FINANCING EXCEPTIONS

Following the request of the Company after the first anniversary of the date of this Agreement, the parties hereto shall negotiate in good faith modifications to the definitions, undertakings and other provisions of this Agreement relating to the Working Capital Financings permitted under this Agreement in order to permit additional types of working capital, liquidity or other revolving facilities to be entered into to replace the NP Factoring Agreements and the then existing Working Capital Financings on terms satisfactory to the Majority Lenders (acting reasonably).

This Agreement has been entered into on the date stated at the beginning of this Agreement.

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Schedule 1

The Original Lenders

							Revolving
Name of Original	Facility A		Facility B		L/C Facility		Facility
Lender	Commitment		Commitment		Commitment		Commitment
Banque Populaire du Sud Ouest	€	0	€	8,516,931	€	1,839,080	€	4,295,495
BNP Paribas	€	14,400,000	€	18,641,854	€	3,218,391	€	9,401,979
Caisse Régionale de Crédit Agricole Mutuel Pyrénées-Gascogne	€	0	€	23,947,991	€	13,333,333	€	12,078,117
CIC — Société Bordelaise	€	0	€	15,446,108	€	2,298,851	€	7,790,211
Crédit Lyonnais	€	22,600,000	€	13,315,610	€	0	€	6,715,699
HSBC France	€	0	€	7,456,742	€	13,793,103	€	3,760,791
Natixis	€	0	€	6,657,805	€	2,758,621	€	3,357,850
Société Générale	€	18,000,000	€	21,016,959	€	2,758,621	€	10,599,858

156

Schedule 2

Conditions Precedent

Part I
Conditions precedent to signing of this Agreement

1. Original Obligors

(a)	A copy of the constitutional documents and the up-to-date share register of each Original Obligor (including a K-bis extract, a non-bankruptcy certificate (certificat de non faillite) and lien searches (états de privilièges et nantissements) for each French Original Obligor and the equivalent documents for each other Original Obligor, not more than 10 days old);
(b)	A copy of a resolution of the board of directors (or any other appropriate corporate body) of each Original Obligor:

(i)	approving the terms of, and the transactions contemplated by, the Finance Documents referred to in paragraph 2 (Finance Documents) below to which it is a party and resolving that it execute, deliver and perform the Finance Documents referred to in paragraph 2 (Finance Documents) below to which it is a party and any document contemplated to be delivered under or in connection with any of the foregoing transactions or documents;
(ii)	authorising a specified person or persons to execute the Finance Documents referred to in paragraph 2 (Finance Documents) below to which it is a party on its behalf;
(iii)	authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request and Selection Notice) to be signed and/or despatched by it under or in connection with the Finance Documents referred to in paragraph 2 (Finance Documents) to which it is a party; and
(iv)	in the case of an Original Obligor other than the Company, authorising the Company to act as its agent in connection with the Finance Documents.

(c)	A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above in relation to the Finance Documents and related documents and, if applicable, a copy of any power of attorney authorizing such person to execute such documents.
(d)	A certificate of an authorised signatory of the Company or other relevant Original Obligor certifying that each copy document relating to it specified in

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this Part I is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of this Agreement.

2. Finance Documents

(a)	This Agreement executed by the Original Obligors.
(b)	The Fee Letters executed by the Company and Na Pali and the TEG Letter executed by the Borrowers.
(c)	The agreed forms of the Intercreditor Agreements.
(d)	The Hedging Letter executed by the Company.

3.	Legal opinions
	Forms of the legal opinions referred to in paragraph 4 of Part II below.
4.	Other documents and evidence

(a)	The Structure Memorandum describing and analyzing (i) the indebtedness of the Group towards third parties (including any significant intercompany liabilities of the Group and, in particular, the payment liabilities resulting from Rossignol Sale), (ii) the steps through which the Financial Indebtedness under the Pilot Facility Agreement and the NP Perimeter Indebtedness To Be Refinanced will be refinanced with the proceeds of the Facilities, (iii) the proposed intercompany transactions relating to the NP Permanent Advance, the €208,248,624.48 ORAs issued by the Company and the €68,500,000 ORAs issued by Na Pali, (iv) any proposed corporate restructuring transactions within the Group to be implemented prior to the Termination Date, (v) the carried forward tax losses existing on the date of this Agreement and their use during the life of the Facilities, (vi) the upstreaming of cash in order to repay the indebtedness of QS Finance under the SG Financing and (vii) the French tax consolidation of the Group.
(b)	A memorandum from Ernst & Young, financial advisers of the Group, addressed to, or capable of being relied upon by, the Agent, the Arrangers and the Lenders, analysing the Initial Business Plan.
(c)	An up to date structure chart including Quiksilver, Inc., Biarritz Holdings, QSH and all the Subsidiaries of QSH.
(d)	The Initial Business Plan.
(e)	The Budget for 2009.
(f)	A copy, certified by an authorised signatory of the Company to be a true copy, of the financial statements referred to in paragraphs (a), (b), (c) and (e) of the definition of Original Financial Statements and of the latest unaudited financial statements of each Original Obligor (together with any reports prepared by the Auditors relating thereto).

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(g)	Evidence that the fees, costs and expenses (including legal fees) then due by the Borrowers to the Finance Parties have been paid.
(h)	A memorandum from Mitch Milstein, in-house intellectual property counsel of the Group, addressed to, or capable of being relied upon by, the Reliance Parties setting out the names, territorial perimeters, registration numbers, licenses, royalties and existing security interests in respect of all the trademarks owned by Biarritz Holdings and its Subsidiaries and confirming that (i) Biarritz Holdings owns the Material Trademarks (including Quiksilver, Quiksilver & Mountain & Wave and Roxy) and (ii) all of the foregoing is free of any lien of any nature whatsoever.
(i)	(i) An estimate of the consolidated profit and loss account of the Company and its Subsidiaries for the nine months ending on or about 31 July 2009, (ii) an estimate of the consolidated cash and indebtedness position of the Company and it Subsidiaries on or about the date of this Agreement, (iii) the Capital Expenditure incurred on or about the date of this Agreement and (iv) the back-log on or about the date of this Agreement, in each case as certified by a legal representative of the Company.
(j)	A copy of the Stock Purchase Agreement.
(k)	A copy of the “Statement of Adjustment” to be delivered by Chartreuse et Mont Blanc SAS to Quiksilver, Inc. in accordance with clause 2.4(c) of the Stock Purchase Agreement.
(l)	Copies of the final verions of the 2009 ABL Agreement and the Rhône Financing Documents.
(m)	A certificate executed by a legal representative of Quiksilver, Inc. certifying that (i) the 2005 ABL Agreement has been terminated, all Financial Indebtedness thereunder (other than letters of credit issued thereunder and outstanding on the date hereof which letters of credit have been supported by standby letters of credit issued under the 2009 ABL Agreement) has been repaid in full with the proceeds of the Rhône Financing and drawings under the 2009 ABL Agreement and (ii) the related Encumbrances securing such Financial Indebtedness under the 2005 ABL Agreement have been released.

5. Miscellaneous

(a)	A list of the Material Trademarks on the date of this Agreement.
(b)	A certificate signed by a legal representative of the Company certifying the amount of the NP Perimeter Indebtedness to be Refinanced.
(c)	A certificate signed by a legal representative of the Company certifying that none of the NP Perimeter Indebtedness to be Refinanced has been rescinded, cancelled or terminated on the date of this Agreement.

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Part II

Conditions precedent to the first Utilisation of the Facilities

1. Acceding Guarantors

Each of Biarritz Holdings, Quiksilver Europa and QSH shall have acceded to this Agreement and the Intercreditor Agreements pursuant to Clause 28.2 (Additional Guarantors).

2. Obligors

(a)	A copy of the constitutional documents and the up-to-date share register of each Obligor (including a K-bis extract, a non-bankruptcy certificate (certificat de non faillite) and lien searches (états de privilièges et nantissements) for each French Obligor and the equivalent documents for each other Obligor, not more than 10 days old);
(b)	A copy of a resolution of the board of directors (or any other appropriate corporate body) of each Obligor:

(i)	approving the terms of, and the transactions contemplated by, the Finance Documents referred to in paragraph 2 (Transaction Documents) below to which it is a party and resolving that it execute, deliver and perform the Finance Documents referred to in paragraph 2 (Transaction Documents) below to which it is a party and any document contemplated to be delivered under or in connection with any of the foregoing transactions or documents;
(ii)	authorising a specified person or persons to execute the Finance Documents referred to in paragraph 2 (Transaction Documents) below to which it is a party on its behalf; and
(iii)	authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices (including, if relevant, any Utilisation Request and Selection Notice) to be signed and/or dispatched by it under or in connection with the Finance Documents referred to in paragraph 2 (Transaction Documents) below to which it is a party; and
(iv)	in the case of an Obligor other than the Company, authorising the Company to act as its agent in connection with the Finance Documents.

(c) A specimen of the signature of each person authorised by the resolution referred to in paragraph (b) above in relation to the Finance Documents and related documents and, if applicable, a copy of any power of attorney authorizing such person to execute such documents.

160

(d)

A certificate of the Company and Quiksilver, Inc. (signed by a legal representative of these companies) confirming (i) that borrowing or guaranteeing or securing, as appropriate, the Total Commitments of the Lenders would not cause any borrowing, guarantee, security or similar limit binding on any Obligor to be exceeded and (ii) that such transactions and the transactions contemplated by the Structure Memorandum are in the corporate interest of each French Obligor.

(e)

A certificate of an authorised signatory of the Company or other relevant Obligor certifying that each copy document relating to it specified in this Part II is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of this Agreement.

3. Transaction Documents

(a)	The Transaction Security Documents (listed in Part V) executed by the relevant Obligors.
(b)	A copy of all notices required to be sent under the Transaction Security Documents executed by the relevant Obligors and duly acknowledged by the addressee as contemplated in the relevant Transaction Security Documents.
(c)	A copy of all other documents to be provided under the Transaction Security Documents.
(d)	An original executed copy of the Quiksilver, Inc. Undertaking/Macquarie.
(e)	Fully executed copies of the Intercreditor Agreements.
(f)	A copy of all Transaction Documents (other than this Agreement).

4. Legal opinions

(a)

A legal opinion of Skadden, Arps, Slate, Meagher & Flom LLP, legal adviser to the Borrowers, (i) as to French law covering (1) the valid existence of the Borrowers, (2) the capacity and due authorisation of the Borrowers to enter into the Finance Documents to which they are a party and (3) the absence of insolvency proceedings against the Borrowers on the date of this Agreement (subject to the customary reservations and qualifications) and the Closing Date and (ii) as to the laws of the relevant States of the United States of America (1) covering the valid existence of Quiksilver, Inc., (2) covering the capacity and due authorisation of Quiksilver, Inc. to enter into the Finance Documents to which it is a party, (3) covering the validity of the Finance Documents governed by the laws of the relevant States of the United States of America and (4) confirming that the entering into the Finance Documents by the Obligors does not conflict with or breach any of the provisions of the 2009 ABL Agreement, the Rhône Financing Documents and/or the US Indenture;

(b)

A legal opinion of AMMC Law, legal adviser to QSH and Biarritz Holdings as to Luxembourg law covering (1) the valid existence of QSH and Biarritz Holdings, (2) the capacity and due authorisation of QSH and Biarritz Holdings to enter into the Finance Documents to which it is a party and (3) the absence

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	of insolvency proceedings against QSH and Biarritz Holdings on the date of this Agreement and the Closing Date (subject to customary reservations and qualifications);
(c)	A legal opinion of Jausas, legal advisers to Quiksilver Europa as to Spanish law covering (1) the valid existence of Quiksilver Europa, (2) the capacity and due authorisation of Quiksilver Europa to enter into the Finance Documents to which it is a party and (3) the absence of insolvency proceedings against Quiksilver Europa on the date of this Agreement and the Closing Date (subject to customary reservations and qualifications);
(d)	A legal opinion of White & Case LLP, legal advisers to the Agent and the Arrangers as to French law covering the validity of this Agreement, the Intercreditor Agreements and the Transaction Security Documents governed by French law; and
(e)	Legal opinions of legal advisors to the Agent and the Arrangers as to Spanish and Luxembourg law covering the validity of the Transaction Security Documents governed by Spanish and Luxembourg law,

	each substantially in the form distributed to the Original Lenders prior to signing this Agreement.
5.	Other documents and evidence

(a)	An addendum to the Structure Memorandum addressed to, or capable of being relied upon by, the same parties covered in the initial Structure Memorandum, confirming that the Pre-Closing Permitted Restructuring has been duly and legally completed as described in the Structure Memorandum.
(b)	An up to date structure chart including Quiksilver, Inc., QSH and all the Subsidiaries of QSH.
(c)	A list of the Material Subsidiaries on the Closing Date.
(d)	A Certificate of a legal representative of the Company addressed to the Finance Parties confirming which companies within the Group are Material Subsidiaries.
(e)	A written confirmation addressed by GE Factofrance to the Na Pali confirming that, neither the entering into of this Agreement by the Borrowers nor the proposed intercompany restructuring transactions referred to in the Structure Memorandum, will (i) constitute a termination event under the NP Factoring Agreements, (ii) enable GE Factofrance to change the terms of the factoring programme under the NP Factoring Agreements or (iii) enable GE Factofrance to reduce the scope of and/or the aggregate amount of receivables which are transferred pursuant to the factoring programme under the NP Factoring Agreements.
(f)	Evidence that the NP Permanent Advance has been fully distributed by Na Pali to the Company as contemplated in the Structure Memorandum.

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(g)	Evidence that all applicable anti-money laundering and “know your customer” laws, regulations and procedures (including internal procedures of each Lender) applicable to each Obligor have been complied with.
(h)	Evidence that the fees, costs and expenses (including legal fees) then due by the Borrowers to the Finance Parties have been paid or will be paid on the Closing Date.
(i)	A copy of any other authorisation or other document or assurance which the Agent, acting reasonably, deems necessary in connection with the entry into and performance of the transactions contemplated by any Transaction Document or the Structure Memorandum or for the validity and enforceability of any Finance Document.
(j)	A copy of a funds flow statement consistent with the Structure Memorandum.
(k)	A copy of the valuation report from the Commissaire aux Apports appointed in the context of the contribution of the Na Pali ORAs to the Company confirming a valuation of Na Pali of at least €250,000,000 and a valuation of the Na Pali ORAs which are the object of the contribution of at least €40,000,000.
(l)	A copy of the resolution of the extraordinary general assembly of the Company convened in accordance with paragraph 1 of article L. 225-248 of the Code de Commerce which notwithstanding the fact that the Company’s equity capital (capitaux propres) is less than half of its share capital (capital social) rejects the dissolution of the Company and decides the continuation of the latter.
(m)	A copy of the resolution of the extraordinary general assembly of the Company approving the share capital decrease of the Company and evidence that such share capital decrease has been consummated all as described in Step 3 of the Structure Memorandum.
(n)	A copy of the resolutions of the sole shareholder of Na Pali approving the distribution of dividends as described in steps 2 and 6 of the Structure Memorandum and evidence that such dividends have been paid.
(o)	Evidence that the SG Forward Financing has been entered into in accordance with the terms of the Security Sharing Agreement.
(p)	A copy of the SG Financing Documents.
(q)	(i) An estimate of the year-to-date consolidated profit and loss account of the Company and its Subsidiaries on or about the Closing Date, (ii) an estimate of the consolidated cash and indebtedness position of the Company and it Subsidiaries on or about the Closing Date, (iii) the Capital Expenditure incurred on or about the Closing Date and (iv) the back-log on or about the Closing Date, in each case as certified by a legal representative of the Company.

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(r)	Evidence that the application of the proceeds of drawing of Facility A will result in the full repayment (and release of the relevant security interests) of the indebtedness under the Pilot Facility Agreement, the cancellation of any commitment thereunder and the release of any security interest granted in connection therewith.
(s)	Evidence that the application of the proceeds of drawing of Facility B will be applied only to repay NP Perimeter Indebtedness To Be Refinanced and that on the Closing Date all of the NP Perimeter Indebtedness To Be Refinanced shall be repaid in full, all commitments thereunder cancelled and all security interests granted in connection therewith released.
(t)	Evidence that the proposed intercompany transactions relating to the NP Permanent Advance, the €208,248,624.48 ORAs issued by the Company and the €68,500,000 ORAs issued by Na Pali have been consummated as described in the Structure Memorandum.
(u)	Evidence of the transfer of the receivables referred to under steps 2, 4 and 6 of the Structure Memorandum and of the extinguishment of the latter.
(v)	Copies of the corporate approvals and agreements relating to the QSH/Biarritz Holdings Contribution and evidence that the QSH/Biarritz Holdings Contribution has been consummated.
(w)	A certificate executed by a legal representative of the Company demonstrating EBITDA of the Group for the three month period ending 31 July 2009, which shall not be less than €10,500,000.
(x)	An executed copy of the Deloitte Letter.

164

Part III
Conditions precedent to any Utilisation of a Facility

(a)	The relevant Borrower (or the Company on its behalf) has delivered a duly completed Utilisation Request.
(b)	Evidence that the fees, costs and expenses then due by the Borrowers to the Finance Parties have been paid or will be paid on the Utilisation Date.

165

Part IV
Conditions precedent required to be
delivered by an Additional Guarantor (other than Biarritz Holdings, Quiksilver Europa
and QSH)

1.	An Accession Letter executed by the Additional Guarantor and the Company.
2.	A copy of the constitutional documents and the up-to-date share register of each Additional Guarantor (including a K-bis extract and a non-bankruptcy certificate (certificat de non faillite) for each Additional Guarantor organized under the laws of France, not more than 10 days old).
3.	A copy of a resolution of the board of directors (or any other appropriate corporate body) of the Additional Guarantor:

(a)	approving the terms of, and the transactions contemplated by, the Accession Letter and the Finance Documents and resolving that it execute, deliver and perform the Accession Letter and any other Finance Document to which it is party;
(b)	authorising a specified person or persons to execute the Accession Letter and other Finance Documents on its behalf;
(c)	authorising a specified person or persons, on its behalf, to sign and/or dispatch all other documents and notices to be signed and/or dispatched by it under or in connection with the Finance Documents to which it is a party; and
(d)	authorising the Company to act as its agent in connection with the Finance Documents

4.	A specimen of the signature of each person authorised by the resolution referred to in paragraph 3 above.
5.	[A copy of a resolution signed by all the holders of the issued shares of the Additional Guarantor, approving the terms of, and the transactions contemplated by, the Finance Documents to which the Additional Guarantor is a party.]1
6.	A certificate of the Additional Guarantor (signed by a legal representative of the Additional Guarantor) confirming that guaranteeing or securing, as appropriate, the Total Commitments would not cause any guarantee, security or similar limit binding on it to be exceeded.

¹ If required by legal counsel in the relevant jurisdictions.

166

7.	A certificate of an authorised signatory of the Additional Guarantor certifying that each copy document listed in this Part IV of Schedule 2 is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of the Accession Letter.
8.	A copy of any other authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration or other document, opinion or assurance which the Agent considers to be necessary or desirable in connection with the entry into and performance of the transactions contemplated by the Accession Letter or for the validity and enforceability of any Finance Document.
9.	If available, the latest audited financial statements of the Additional Guarantor.
10.	The following legal opinions, each addressed to the Agent, the Security Agent and the Lenders:

(a)	A legal opinion of the legal advisers to the Agent in form and substance substantially similar to the legal opinion delivered on the Closing Date.
(b)	A legal opinion of the legal advisers to the Additional Guarantor in the jurisdiction of its incorporation in form and substance substantially similar to the legal opinion delivered on the Closing Date.

11.	The Guarantees duly executed by such Additional Guarantors and any security documents which, subject to the Agreed Security Principles, are required by the Agent to be executed by the proposed Additional Guarantor as provided under Part VI of this Schedule 2.
12.	Any notices or documents required to be given or executed under the terms of those security documents.
13.	Such documentary evidence as legal counsel to the Agent may require, that such Additional Guarantor has complied with any law in its jurisdiction relating to financial assistance or analogous process.

167

Part V
Transaction Security Documents and security related documents to be delivered on the
Closing Date

1. At least two originals of the following security documents (in form and substance satisfactory to all the Lenders) shall be received by the Agent prior the Closing Date:

(a)	a New York law guarantee agreement executed by Quiksilver, Inc. as guarantor to secure the obligations of Pilot under Facility A and of Na Pali under the Facilities;
(b)	a Luxembourg law first demand guarantee agreement executed by Biarritz Holdings S.à r.l as guarantor to secure the obligations of Pilot and Na Pali under the Facilities;
(c)	a Spanish law first demand guarantee agreement executed by Quiksilver Europa SL as guarantor to secure the obligations of Pilot and Na Pali under the Facilities;
(d)	a French law first demand guarantee agreement executed by Pilot as guarantor to secure the obligations of Na Pali under the Facilities;
(e)	a Luxembourg law first ranking pledge agreement executed by QS Holdings S.à r.l as pledgor over 100% of the ordinary shares and restricted shares (and all other securities whatsoever) owned by it in Biarritz Holdings S.à r.l to secure the obligations of Pilot and Na Pali under the Facilities;
(f)	a Spanish law first ranking pledge agreement executed by Biarritz Holdings S.à r.l as pledgor over 100% of the shares owned by it in Quiksilver Europa SL to secure the obligations of Pilot and Na Pali under the Facilities;
(g)	a French law first ranking pledge agreement (nantissement de compte titres) executed by Quiksilver Europa SL as pledgor over 100% of the ordinary shares and all other securities whatsoever issued by Pilot and owned by Quiksilver Europa SL to secure the obligations of Pilot and Na Pali under the Facilities;
(h)	a French law first ranking pledge agreement (nantissement de compte titres) executed by Pilot as pledgor over 100% over the shares and all other securities whatsoever issued by Na Pali and owned by Pilot (including the NP ORAs, if any) to secure the obligations of Pilot and Na Pali under the Facilities;
(i)	a French law first ranking pledge agreement (nantissement de compte titres) executed by Biarritz Holdings S.à r.l as pledgor over the Pilot ORAs to secure the obligations of Pilot and Na Pali under the Facilities;
(j)	a first ranking pledge agreement executed by Na Pali as pledgor over the shares owned by it in each Material Subsidiary, governed by the law of the

168

	jurisdiction of incorporation of the relevant Material Subsidiary, to secure the obligations of Na Pali under the Facility B, the L/C Facility and the Revolving Facility;
(k)	a Luxembourg law first ranking pledge agreement executed by Biarritz Holdings S.à r.l as pledgor over the marks and trademarks owned by it (such marks and trademarks to include the Material Trademarks and other trademarks held by Biarritz Holdings and used by Pilot and its Subsidiaries) to secure the obligations of Pilot and Na Pali under the Facilities and the obligations of QS Finance S.à r.l under the SG Financing Documents, provided that such pledge shall provide that all the marks and trademarks which are identified on the lists provided by the Company to the Agent pursuant to Clause 25.24(c) (Intellectual Property) are pledged at all times;
(l)	a first ranking notarized and registered mortgage deed (hypothèque conventionnelle inscrite) executed by Na Pali as mortgagor over the walls of Na Pali’s corporate seat in Saint-Jean-de-Luz to secure the obligations of Na Pali under the Facility B, the L/C Facility and the Revolving Facility;
(m)	a French law first ranking pledge agreement executed by Na Pali as pledgor over its on-going concern (fonds de commerce) located at 32 avenue des Champs-Elysées, 75008 Paris to secure the obligations of Na Pali under the Facility B, the L/C Facility and the Revolving Facility;
(n)	a French law assignment by way of security agreement (cession de créances professionnelles à titre de garantie) executed by Na Pali as assignor of:

(i)	the commercial receivables originated by it which do not fall within the scope of the factoring programme pursuant to the NP Factoring Agreements or any other factoring programme in replacement thereof in accordance with this Agreement; and
(ii)	any receivable (other than commercial receivables) due to it by Quiksilver, Inc. or any Subsidiary of Quiksilver. Inc. under any existing (to the extent those receivables have not been repaid distributed or otherwise extinguished on the Closing Date) or future intercompany loans,

to secure the obligations of Na Pali under Facility B, the L/C Facility and the Revolving Facility;

(o) a French law first ranking pledge agreement executed by Pilot as pledgor over any amount due to it by Chartreuse et Mont Blanc SAS under the EUR 10,000,000 Subordinated Promissory Note dated 12 November 2008 issued by Chartreuse et Mont Blanc SAS, provided that such pledge shall not restrict setoff against payments owed to the purchaser under the stock purchase agreement dated 12 November 2008 entered into for the purpose of the Rossignol Sale, to secure the obligations of Pilot and Na Pali under the Facilities;

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(p)

first ranking pledge agreements executed by Pilot and Biarritz Holdings S.à r.l as pledgors over any existing (to the extent those receivables have not been repaid, distributed or otherwise extinguished on the Closing Date) or future receivables (other than commercial receivables) held by any of them against Quiksilver, Inc. or any of its Subsidiaries, to secure the obligations of Pilot and Na Pali under the Facilities; and

(q)

a first ranking pledge agreement executed by QS Holdings S.à r.l as pledgor over any existing (to the extent those receivables have not been repaid, distributed or otherwise extinguished on the Closing Date) or future receivables (other than commercial receivables) owned by QS Holdings S.à r.l against Biarritz Holdings S.à r.l or any of its Subsidiaries to secure the obligations of Pilot and Na Pali under the Facilities.

2.	A copy of all notices required to be sent under the Transaction Security Documents duly acknowledged by the addressee in accordance with and at the times provided for in the Transaction Security Documents.
3.	If the Transaction Security Document to be executed by the relevant Obligor creates a Security over shares in a Subsidiary of that Obligor:

(a)	where such Subsidiary is not itself an Obligor, a certified copy of the constitutional documents of such Subsidiary in a form acceptable to the Agent;
(b)	appropriate corporate resolutions from each such Subsidiary (including any “agrément”); and
(c)	a certified copy of all documents (such as, with respect to each Subsidiary organized under the laws of France, registre de mouvement de titres, comptes de titulaires de valeurs mobilières) evidencing the ownership of any security issued by such Subsidiary owned by that Obligor and evidencing Security thereon in accordance with the Transaction Security Documents.

170

Part VI
Transaction Security Documents and security related documents to be delivered by the
Additional Guarantors (other than Biarritz Holdings, Quiksilver Europa and QSH)

1.	A Guarantee (in form and substance satisfactory to the Lenders) to be executed by the relevant Additional Guarantor.
2.	All Transactions Security Documents (in form and substance satisfactory to the Lenders) listed in paragraph 4 of Schedule 10.
3.	A copy of all notices required to be sent under the Transaction Security Documents duly acknowledged by the addressee in accordance with and at the times provided for in the Transaction Security Documents.
4.	If the Transaction Security Document to be executed by the relevant Additional Guarantor creates a Security over shares in a Subsidiary of that Additional Guarantor:

(a)	where such Subsidiary is not itself an Obligor, a certified copy of the constitutional documents of such Subsidiary in a form acceptable to the Agent;
(b)	appropriate corporate resolutions from each such Subsidiary (including any “agrément”); and
(c)	a certified copy of all documents (such as, with respect to each Subsidiary organized under the laws of France, registre de mouvement de titres, comptes de titulaires de valeurs mobilières) evidencing the ownership of any security issued by such Subsidiary owned by that Additional Guarantor and evidencing Security thereon in accordance with the Transaction Security Documents.

171

Schedule 3

Requests

Part I
Utilisation Request
Loans

From: [Borrower] [Company]*

To:     [Agent]

Dated:

Dear Sirs

[Company] — [     ] Facilities Agreement
dated [     ] (the “Facilities Agreement”)

1.	We refer to the Facilities Agreement. This is a Utilisation Request. Terms defined in the Facilities Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
2.	We wish to borrow a Loan on the following terms:

(a)	Borrower: [     ]
(b)	Proposed Utilisation Date: [     ] (or, if that is not a Business Day, the next Business Day)
(c)	Facility to be utilised: [Facility A]/[Facility B]/[Revolving Facility]**
(d)	Amount: [     ] or, if less, the Available Facility
(e)	Interest Period: [     ]

3.	We confirm that each condition specified in Clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.
4.	[The proceeds of this Loan should be credited to [account]].
5.	This Utilisation Request is irrevocable.

Yours faithfully

authorised signatory for

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[the Company on behalf of [insert name of relevant Borrower]]/ [insert name of Borrower]*

NOTES:

*	Amend as appropriate. The Utilisation Request can be given by the Borrower or by the Company.
**	Select the Facility to be utilised and delete references to the other Facilities.

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Part II
L/C Request
Letters of Credit

From: [Na Pali] [Company]*

To:     [Agent]

Dated:

Dear Sirs

[Company] — [     ] Facilities Agreement
dated [     ] (the “Facilities Agreement”)

1.	We refer to the Facilities Agreement. This is an L/C Request. Terms defined in the Facilities Agreement have the same meaning in this L/C Request unless given a different meaning in this L/C Request.
2.	We wish to arrange for a Letter of Credit to be issued by the Issuing Bank specified below (which has agreed to do so) on the following terms:

(a)	Applicant/account party: Na Pali
(b)	Issuing Bank: [     ]
(c)	Proposed Utilisation Date: [     ] (or, if that is not a Business Day, the next Business Day)
(d)	Facility to be utilised: L/C Facility
(e)	Currency of Letter of Credit: [     ]
(f)	Amount: [     ] or, if less, the Available Facility in relation to the L/C Facility
(g)	Term: [     ]

3.	We confirm that each condition specified in paragraph (b) of Clause 6.5 (Issuance of Letters of Credit) is satisfied on the date of this L/C Request.
4.	We attach a copy of the proposed Letter of Credit.
5.	The purpose of this proposed Letter of Credit is [     ].
6.	This L/C Request is irrevocable.
7.	This L/C Request and the Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No. 600.

174

Yours faithfully,

authorised signatory for

[the Company on behalf of Na Pali]*

NOTES:

* Amend as appropriate. The L/C Request can be given by Na Pali or by the Company.

175

Part III
Selection Notice

Applicable to a Term Loan

From: [Borrower] [Company]*

To:     [Agent]

Dated:

Dear Sirs

[Company] — [ ] Facilities Agreement
dated [     ] (the “Facilities Agreement”)

1.	We refer to the Facilities Agreement. This is a Selection Notice. Terms defined in the Facilities Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.
2.	We refer to the following Facility [A/B] Loan with an Interest Period ending on [     ]**.

or

[We request that the next Interest Period for the above Facility [A]/[B] Loan[s] is [ ]].

3. This Selection Notice is irrevocable.

Yours faithfully

authorised signatory for

[the Company on behalf of] [insert name of Relevant Borrower] *

NOTES:

*	Amend as appropriate. The Selection Notice can be given by the Borrower or the Company.
**	Insert details of all Term Loans for the relevant Facility which have an Interest Period ending on the same date.

176

Schedule 4

Mandatory Cost Formula

1.	The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces all or any of its functions) or (b) the requirements of the European Central Bank.
2.	On the first day of each Interest Period (or as soon as possible thereafter) the Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender, in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by the Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum.
3.	The Additional Cost Rate for any Lender lending from a Facility Office in a Participating Member State will be the percentage notified by that Lender to the Agent. This percentage will be certified by that Lender in its notice to the Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in all Loans made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Facility Office.
4.	The Additional Cost Rate for any Lender lending from a Facility Office in the United Kingdom will be calculated by the Agent as follows:

(a)	in relation to a sterling Loan:
	AB + C(B - D)+E x 0.01 per cent. per annum           100 - (A + C)
(b)	in relation to a Loan in any currency other than sterling:
	E x 0.01 per cent. per annum.     300
	Where:

A	is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.
B	is the percentage rate of interest (excluding the Margin and the Mandatory Cost and, if the Loan is an Unpaid Sum, the additional rate

177

	of interest specified in paragraph (a) of Clause 9.3 (Default interest)) payable for the relevant Interest Period on the Loan.
C	is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.
D	is the percentage rate per annum payable by the Bank of England to the Agent on interest bearing Special Deposits.
E	is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by the Agent as being the average of the most recent rates of charge supplied by the Reference Banks to the Agent pursuant to paragraph 7 below and expressed in pounds per £1,000,000.

5. For the purposes of this Schedule:

(a)	“Eligible Liabilities” and “Special Deposits” have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 or (as may be appropriate) by the Bank of England;
(b)	“Fees Rules” means the rules on periodic fees contained in the FSA Supervision Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;
(c)	“Fee Tariffs” means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate); and
(d)	“Tariff Base” has the meaning given to it in, and will be calculated in accordance with, the Fees Rules.

6.	In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.
7.	If requested by the Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Services Authority, supply to the Agent, the rate of charge payable by that Reference Bank to the Financial Services Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Services Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1,000,000 of the Tariff Base of that Reference Bank.
8.	Each Lender shall supply any information required by the Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information on or prior to the date on which it becomes a Lender:

178

(a)	the jurisdiction of its Facility Office; and
(b)	any other information that the Agent may reasonably require for such purpose.

Each Lender shall promptly notify the Agent of any change to the information provided by it pursuant to this paragraph.

9.	The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by the Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies the Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the same jurisdiction as its Facility Office.
10.	The Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.
11.	The Agent shall distribute the additional amounts received as a result of the Mandatory Cost to the Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.
12.	Any determination by the Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all Parties.
13.	The Agent may from time to time, after consultation with the Company and the Lenders, determine and notify to all Parties any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all Parties.

179

Schedule 5

Form of Transfer Agreement

To: [     ] as Agent and [      ] as Security Agent

From: [The Existing Lender] (the “Existing Lender”) and [The New Lender] (the “New Lender”)

Dated:

Pilot SAS — Facilities Agreement
dated [     ] (the “Facilities Agreement”)

1.	We refer to the Facilities Agreement and to the Security Sharing Agreement (as defined in the Facilities Agreement). This agreement (the “Agreement”) shall take effect as a Transfer Agreement for the purpose of the Facilities Agreement and as an Accession Agreement for the purposes of the Security Sharing Agreement (and as defined in the Security Sharing Agreement). Terms defined in the Facilities Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
	The Existing Lender wishes to [transfer/assign] and the New Lender wishes to acquire [all] [the part specified in Schedule 1 to this Transfer Agreement] of the Existing Lender’s Commitment, rights [and obligations] referred to in Schedule 1 to this Transfer Agreement.
2.	The Existing Lender and the New Lender agree to the [transfer/assignment] (cession) of [all] [the part specified in Schedule 1 to this Transfer Agreement] of the Existing Lender’s Commitment, rights [and obligations] referred to in Schedule 1 to this Transfer Agreement in accordance with Clause 27.5 (Procedure for transfer) of the Facilities Agreement.2
3.	The proposed Transfer Date is [•].
4.	The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of Clause 34.2 (Addresses) are set out in Schedule 1 to this Transfer Agreement.
5.	The New Lender expressly acknowledges the limitations on the Existing Lender’s obligations set out in Clause 27.4 (Limitation of responsibility of Existing Lenders) of the Facilities Agreement.

² The New Lender may, in the case of a transfer of rights by the Existing Lender under this Transfer Agreement, if it considers it necessary to make the transfer effective as against third parties, arrange for it to be notified by way of signification to the Obligors in accordance with article 1690 of the French Code Civil.

180

6. The New Lender confirms, for the benefit of the Agent and without any liability to any Obligor, that it is:

(a)	a Qualifying Lender other than a Treaty Lender;
(b)	a Treaty Lender;
(c)	not a Qualifying Lender.3

7.	The New Lender confirms to the other Finance Parties represented by the Agent that it has become entitled to the same rights and that it will assume the same obligations to those Parties as it would have been under if it was an Original Lender.
8.	[We refer to clause 20.2 (Change of Secured Creditors or New Secured Creditors) of the Security Sharing Agreement:
	In consideration of the New Lender being accepted as a Senior Facilities Lender for the purposes of the Security Sharing Agreement (and as defined in the Security Sharing Agreement), the New Lender confirms that, as from the Transfer Date, it intends to be party to the Security Sharing Agreement as a Senior Facilities Lender, and undertakes to perform all the obligations expressed in the Security Sharing Agreement to be assumed by a Senior Facilities Lender and agrees that it shall be bound by all the provisions of the Security Sharing Agreement, as if it had been an original party to the Security Sharing Agreement.]
9.	[This Agreement has been entered into on the date stated at the beginning of this Agreement.]
10.	[This Agreement is governed by French law. The Tribunal of Commerce of Paris shall have jurisdiction in relation to any dispute concerning it.]
11.	[This Agreement has been executed in [ ] originals.]

³ Delete as applicable. Each New Lender is required to confirm which of these three categories it falls within.

181

Schedule 1
Commitment/rights [and obligations] to be transferred

[insert relevant details]
[Facility Office address, fax number and attention details for notices and account details for
payments]

[Existing Lender]	[New Lender]
By:	By:

This Transfer Agreement is accepted by the Agent and the Transfer Date is confirmed as [• ].

[Agent]

By:

182

Schedule 6

Form of Accession Letter

To: [     ] as Agent and [     ] as Security Agent for itself and each of the other parties to the Intercreditor Agreements referred to below

From: [Subsidiary] and [Company]

Dated: [•]

Dear Sirs,

[Company] — [•]     Facilities Agreement dated [•]     (the “Facilities Agreement”)

1.	We refer to the Facilities Agreement and to the Intercreditor Agreements. This is an Accession Letter. This letter (the “Accession Letter”) shall take effect as an Accession Letter for the purposes of the Facilities Agreement, as an Accession Agreement for the purposes of the Subordination Agreement (and as defined in the Subordination Agreement) and as an Accession Agreement for the purposes of the Security Sharing Agreement (and as defined in the Security Sharing Agreement). Terms defined in the Facilities Agreement have the same meaning in this Accession Letter unless given a different meaning in this Accession Letter.
2.	[Subsidiary] agrees to become an Additional Guarantor and to be bound by the terms of the Facilities Agreement and the other Finance Documents (other than the Intercreditors Agreement) as an Additional Guarantor pursuant to Clause 28.2 (Additional Guarantors) of the Facilities Agreement. [Subsidiary] is a company duly incorporated under the laws of [name of relevant jurisdiction].
3.	[Subsidiary’s] administrative details are as follows:

Address:	[•]
Fax No:	[•]
Attention:	[•]

4. The Additional Guarantor confirms that it intends to be party to the Subordination Agreement as an Obligor and an Intra-Group Debtor (each as defined in the Subordination Agreement) and to the Security Sharing Agreement as an Obligor (and as defined in the Security Sharing Agreement), undertakes to perform all the obligations expressed to be assumed by an Obligor and an Intra-Group Debtor (each as defined in the Subordination Agreement and as defined in the Security Sharing

183

	Agreement) and agrees that it shall be bound by all the provisions of the Subordination Agreement and the Security Sharing Agreement as if it had been an original party to the Subordination Agreement and the Security Sharing Agreement.
5.	[In consideration of the Additional Guarantor being accepted as Subordinated Creditor for the purposes of the Subordination Agreement, the Additional Guarantor also confirms that it intends to be party to the Subordination Agreement as a Subordinated Creditor, and undertakes to perform all the obligations expressed in the Subordination Agreement to be assumed by a Subordinated Creditor and agrees that it shall be bound by all the provisions of the Subordination Agreement, as if it had been an original party to the Subordination Agreement]
6.	This Accession Letter is governed by French law.

[Company] [Subsidiary]

184

Schedule 7

Form of Compliance Certificate

To: [     ] as Agent

From: [Company]

Dated:

Dear Sirs

[Company] — [     ] Facilities Agreement
dated [      ] (the “Facilities Agreement”)

1.	We refer to the Facilities Agreement. This is a Compliance Certificate. Terms defined in the Facilities Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
2.	We confirm that:
	[Insert details of covenants to be certified].
	[We confirm that Leverage Ratio is [ ]:1 and that, therefore, the Facility A Margin should be [ ]% and the Facility B and Revolving Facility Margin should be [ ]%.]
3.	[We confirm that no Default is continuing.]**
4.	[We confirm that the following companies constitute Material Subsidiaries for the purposes of the Facilities Agreement: [      ].]
	[We confirm that the [aggregate of the earnings before interest, tax, depreciation and amortisation (calculated on the same basis as EBITDA, as defined in Clause 24 (Financial Covenants))] / [aggregate gross assets, aggregate net assets and aggregate turnover] of the Guarantors (calculated on an unconsolidated basis and excluding all intra-group items and investments in Subsidiaries of any member of the Group) exceeds [ ]% of the [EBITDA, as defined in Clause 24 (Financial Covenants)] [consolidated gross assets, consolidated net assets and consolidated turnover of the Group].

Signed
	Director	Director
	Of	of
	[Company]	[Company]

^* If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.

185

[insert applicable certification language]**

for and on behalf of

[name of Auditors of the Company]***

**	To be agreed with the Company’s Auditors and the Lenders prior to signing the Agreement.
***	Only applicable if the Compliance Certificate accompanies the audited financial statements and is to be signed by the Auditors. To be agreed with the Company’s auditor’s prior to signing the Agreement.

186

Schedule 8

Timetables

Part I
Loans

	Loans in euro —
Delivery of a duly completed Utilisation Request (Clause 5.1 (Delivery of a Utilisation Request)) or a Selection Notice (Clause 14.1 (Selection of Interest Periods and Terms))	U-3  9.30am
Agent determines (in relation to a Utilisation) the Base Currency Amount of the Loan, if required under Clause 5.4 (Lenders’ participation)	U-3  Noon
Agent notifies the Lenders of the Loan in accordance with Clause 5.4 (Lenders’ participation)	U-3  3.00pm
EURIBOR is fixed	Quotation Day as of 11.00 a.m. (Brussels time) in respect of EURIBOR

“U” = date of utilisation or, if applicable, in the case of a Term Loan that has already been borrowed, the first day of the relevant Interest Period for that Term Loan.

“U — X” = X Business Days prior to date of utilisation

187

Part II

Letters of Credit

	Letters of Credit	Letters of Credit in other
	in euro	currencies
Delivery of a duly completed L/C Request (Clause 6.2 (Delivery of an L/C Request for Letters of Credit))	U-3  11.00 am	U-3  11.00 am
Agent notifies the Company if a currency is approved as an Optional Currency in accordance with Clause 4.3 (Conditions relating to Optional Currencies)		U-4
Agent determines (in relation to a Utilisation) the Base Currency Amount of the Letter of Credit if required under paragraph (d) of Clause 6.5 (Issuance of Letters of Credit) and notifies the Issuing Bank and Lenders participating in the Letter of Credit in accordance with paragraph (d) of Clause 6.5 (Issuance of Letters of Credit).	U-3  1.00 pm	U-3  1.00 pm
[Delivery of duly completed Extension Request (Clause 6.6 (Extension of a Letter of Credit))]	U-3  11.00 am	U-3  11.00 am

“U”	=	date of utilisation[, or, if applicable, in the case of a Letter of Credit to be extended in accordance with Clause 6.6 (Extension of a Letter of Credit), the last day of the term of the Letter of Credit prior to its extension]
“U-X”	=	Business Days prior to date of utilisation

188

Schedule 9

Material Subsidiaries

Emerald Coast SAS

Sumbawa SL

Lanai Ltd.

Cariboo SAS

Omareef SAS

189

Schedule 10

Agreed Security Principles

1.	SECURITY PRINCIPLES
(i)	The guarantees and Security to be provided pursuant to this Agreement will be given in accordance with the agreed security principles set out in this Schedule 10 (the “Agreed Security Principles”). This Schedule 10 addresses the manner in which the Agreed Security Principles will impact on the guarantees and Security proposed to be taken in relation to the Refinancing.
(ii)	The Agreed Security Principles embody recognition by all parties that general statutory limitations, financial assistance, corporate benefit, fraudulent preference and “thin capitalisation” rules and fiduciary duties of the directors or officers may limit the ability of a member of the Group to provide a guarantee or Transaction Security.
2.	ENFORCEMENT EVENT

The following principles will be reflected in the terms of any Transaction Security:

(i)	Save where it is not possible under applicable law, Security created under any Transaction Security Document (other than a Transaction Security Document governed by French law) will be enforceable upon the occurrence of an Event of Default (and so long as such Event of Default is continuing) or such other trigger event as is agreed has occurred; and
(ii)	Security created under any Transaction Security Document governed by French law will be enforceable upon the occurrence of a payment default under any Finance Document.
	In the case of any Transaction Security granted over commercial receivables (“créances clients”), prior to a Default, no notification will be given to the relevant debtors of such Security.
3.	SHARES

Any Transaction Security Document creating a pledge over the shares of a company will be governed by the laws of the company whose shares are being secured and not by the laws of the country of the Obligor granting the security.

Until an Event of Default has occurred or such other trigger event as is agreed has occurred, the charging Obligor will be (i) permitted to receive dividends on pledged shares to the extent permitted under the Finance Documents and (ii) retain and exercise voting rights.

190

4.	ADDITIONAL GUARANTORS
(i)	Each Additional Guarantor incorporated or established in the same jurisdiction as an Original Obligor shall provide the same type and scope of Security as that provided by the relevant Original Obligor, including a first-ranking pledge by its Holding Company or Holding Companies over the entire issued share capital of that Additional Guarantor which it respectively holds, provided that where that Additional Guarantor has other types of assets over which Security may be taken, that Additional Guarantor shall provide such other Security over those assets as the Security Agent (acting on the instructions of the Majority Lenders) reasonably determines can be provided in accordance with paragraph 1 of this Schedule 10, and provided further that each Additional Guarantor incorporated in France shall deliver a pledge over its on-going business (“fonds de commerce”).
(ii)	Each Additional Guarantor incorporated or established in any jurisdiction other than those in which the Original Obligors are incorporated or established shall provide the following in accordance with and subject to paragraph 1 of this Schedule 10:

(a)	a first ranking pledge (governed by the law of the place of incorporation of the relevant Additional Guarantor) by its Holding Company or Holding Companies over the entire issued share capital of that Additional Guarantor which it respectively holds;
(b)	a first ranking fixed and floating security over all its present and future assets if applicable in the relevant jurisdiction; and

such other Security over all or any of its assets as the Security Agent (acting on the instructions of the Majority Lenders) reasonably determines can be provided.

191

Schedule 11

List of Securities

See the attached.

192

Schedule 12

List of Loans

See the attached.

193

Schedule 13

Guarantees and Off-Balance Sheet Liabilities

See the attached.

194

Schedule 14

Existing Financial Indebtedness

See the attached.

195

Schedule 15

Existing Letters of Credit

196

SIGNATURES

THE COMPANY

PILOT SAS

By:

Title:

THE BORROWERS

PILOT SAS

By:

Title:

Address:

26/28 rue Danielle Casanova

75002 Paris

Attn:

Fax:

NA PALI SAS

By:

Title:

THE ORIGINAL GUARANTORS

QUIKSILVER, INC.

By:

Title:

PILOT SAS

By:

Title:

197

THE ARRANGERS

BNP PARIBAS

By:

Title:

CRÉDIT LYONNAIS

By:

Title:

SOCIÉTÉ GÉNÉRALE CORPORATE &
INVESTMENT BANKING

By:

Title:

THE AGENT

BNP PARIBAS

By:

Title:

Address:

BNP Paribas

37 place du Marché Saint Honoré

75031 Paris Cedex 01 (France)

Tel.

Fax

E-mail:

198

THE SECURITY AGENT

SOCIETE GENERALE

By:

Title:

Address:

Attn:

Fax:

THE ISSUING BANK

CAISSE REGIONALE DE CREDIT
AGRICOLE MUTUEL PYRENEES-
GASCOGNE

By:

Title:

199

THE ORIGINAL LENDERS

BANQUE POPULAIRE DU SUD OUEST

By:

Title:

BNP PARIBAS

By:

Title:

CAISSE REGIONALE DE CREDIT
AGRICOLE MUTUEL PYRENEES-
GASCOGNE

By:

Title:

CIC — SOCIETE BORDELAISE

By:

Title:

CREDIT LYONNAIS

By:

Title:

HSBC FRANCE

By:

Title:

200

NATIXIS

By:

Title:

SOCIETE GENERALE

By:

Title:

201

TABLE OF CONTENTS

	Page
SECTION 1 — INTERPRETATION		3
1. Definitions and Interpretation		3
1.1 Definitions		3
1.2 Construction		42
SECTION 2 — THE FACILITIES		45
2. The Facilities		45
2.1 The Facilities		45
2.2 Finance Parties’ rights and obligations		46
2.3 Obligors’ Agent		46
3. Purpose		47
3.1 Purpose		47
3.2 Monitoring		47
4. Conditions of Utilisation		47
4.1 Initial conditions precedent		47
4.2 Further conditions precedent		48
4.3 Conditions relating to Optional Currencies		48
4.4 Maximum number of Utilisations		48
SECTION 3 — UTILISATION		49
5. Utilisation — Loans		49
5.1 Delivery of a Utilisation Request		49
5.2 Completion of a Utilisation Request for Loans		49
5.3 Currency and amount		49
5.4 Lenders’ participation		50
5.5 Limitations on Utilisations		50
5.6 Cancellation of Commitments		50
5.7 Clean down		50
6. Utilisation — Letters of Credit		51
6.1 The L/C Facility		51
6.2 Delivery of an L/C Request for Letters of Credit		51
6.3 Completion of an L/C Request for Letters of Credit		51
6.4 Currency and amount		52
6.5 Issuance of Letters of Credit		52
6.6 Extension of a Letter of Credit		53
6.7 Reduction of a Letter of Credit		53

i

	Page
6.8 Revaluation of Letters of Credit		54
6.9 Cancellation of L/C Facility Commitments		54
7. Letters of Credit		54
7.1 Existing Letters of Credit		54
7.2 Immediately payable		54
7.3 Claims under a Letter of Credit		55
7.4 Indemnities		55
7.5 Cash collateral by Non-Acceptable L/C Lender		57
7.6 Cash cover by Borrower		58
7.7 Rights of contribution		59
8. Ancillary Facilities		59
8.1 Type of Facility		59
8.2 Availability		59
8.3 Terms of Ancillary Facilities		60
8.4 Repayment of Ancillary Facility		61
8.5 Ancillary Outstandings		62
8.6 Adjustment for Ancillary Facilities upon acceleration		62
8.7 Information		63
8.8 Revolving Facility Commitment amounts		63
SECTION 4 — REPAYMENT, PREPAYMENT AND CANCELLATION		63
9. Repayment		63
9.1 Repayment of Term Loans		63
9.2 Repayment of Revolving Facility Loans		64
9.3 Final Repayment		65
9.4 Mandatory Cancellation of the Revolving Facility		65
10. Illegality, Voluntary Prepayment and Cancellation		65
10.1 Illegality		65
10.2 Illegality in relation to Issuing Banks		65
10.3 Voluntary cancellation		66
10.4 Voluntary prepayment of Term Loans		66
10.5 Voluntary prepayment of Revolving Facility Utilisations		66
10.6 Voluntary prepayment of L/C Facility Utilisations		67
10.7 Right of cancellation and repayment in relation to a single Lender or Issuing Bank		67
10.8 Right of cancellation and repayment in relation to a Defaulting Lender		67
11. Mandatory Prepayment		68
11.1 Exit		68

ii

	Page
11.2 Disposal, Insurance, Issuance and Reimbursement Proceeds and Excess Cashflow		68
11.3 Application of mandatory prepayments		71
11.4 Mandatory Prepayment Accounts		73
11.5 Restrictions on Mandatory Prepayments		73
11.6 Excluded proceeds		74
12. Restrictions		74
12.1 Notices of Cancellation or Prepayment		74
12.2 Interest and other amounts		74
12.3 No reborrowing of Term Facilities		74
12.4 Reborrowing of Revolving Facility and the L/C Facility		74
12.5 Prepayment in accordance with Agreement		74
12.6 No reinstatement of Commitments		75
12.7 Agent’s receipt of Notices		75
12.8 Effect of Repayment and Prepayment on Commitments		75
SECTION 5 — COSTS OF UTILISATION		75
13. Interest		75
13.1 Calculation of interest		75
13.2 Payment of interest		75
13.3 Default interest		76
13.4 Notification of rates of interest		76
13.5 Effective Global Rate (Taux Effectif Global)		76
14. Interest Periods		77
14.1 Selection of Interest Periods and Terms		77
14.2 Non-Business Days		77
15. Changes to the Calculation of Interest		77
15.1 Absence of quotations		77
15.2 Market disruption		77
15.3 Alternative basis of interest or funding		78
15.4 Break Costs		78
16. Fees		78
16.1 Commitment fee		78
16.2 Arrangement, Participation and Coordination fees		79
16.3 Agency fee		79
16.4 Security Agent fee		79
16.5 Fees payable in respect of Letters of Credit		79
16.6 Interest, commission and fees on Ancillary Facilities		80

iii

	Page
SECTION 6 — ADDITIONAL PAYMENT OBLIGATIONS		80
17. Tax Gross Up and Indemnities		80
17.1 Definitions		80
17.2 Tax gross-up		81
17.3 Tax indemnity		82
17.4 Tax Credit		82
17.5 Stamp taxes		83
17.6 Value added tax		83
18. Increased Costs		83
18.1 Increased costs		83
18.2 Increased cost claims		84
18.3 Exceptions		84
19. Other Indemnities		84
19.1 Currency indemnity		84
19.2 Other indemnities		85
19.3 Indemnity to the Agent		86
19.4 Indemnity to the Security Agent		86
20. Mitigation by The Lenders		86
20.1 Mitigation		86
20.2 Limitation of liability		86
21. Costs and Expenses		87
21.1 Transaction expenses		87
21.2 Amendment costs		87
21.3 Enforcement and preservation costs		87
SECTION 7 — REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT		87
22. Representations		87
22.1 General		87
22.2 Status		88
22.3 Binding obligations		88
22.4 Non-conflict with other obligations		88
22.5 Power and authority		88
22.6 Validity and admissibility in evidence		89
22.7 Governing law and enforcement		89
22.8 Insolvency		89
22.9 No filing or stamp taxes		89
22.10 Deduction of Tax		90
22.11 No default		90

iv

	Page
22.12 No misleading information		90
22.13 Financial Statements		91
22.14 No proceedings pending or threatened		92
22.15 No breach of laws		92
22.16 Environmental laws		92
22.17 Taxation		92
22.18 Security and Financial Indebtedness		93
22.19 Ranking		93
22.20 Good title to assets		93
22.21 Legal and beneficial ownership		93
22.22 Shares		93
22.23 Intellectual Property		93
22.24 Structure Chart		94
22.25 Accounting reference date		94
22.26 Centre of main interests and establishments		94
22.27 Pensions		94
22.28 No adverse consequences		94
22.29 Existing guarantees and off-balance sheet liabilities		95
22.30 Equity capital of Pilot		95
22.31 Investment Company Act		95
22.32 Carried Forward Tax Losses		95
22.33 J.P. Morgan Guarantee		95
22.34 Times when representations made		95
23. Information Undertakings		96
23.1 Financial statements		97
23.2 Provision and contents of Compliance Certificate		97
23.3 Requirements as to financial statements		97
23.4 Business Plan		99
23.5 Budget		99
23.6 Material Subsidiaries		100
23.7 Presentations		100
23.8 Year-end		100
23.9 Information: miscellaneous		100
23.10 Notification of default		101
23.11 “Know your customer” checks		101
24. Financial Covenants		102
24.1 Financial definitions		102

v

	Page
“Working Capital” means, on any date, Current Assets less Current Liabilities		106
24.2 Financial condition		106
24.3 Financial testing		107
25. General Undertakings		107
25.1 Authorisations		107
25.2 Compliance with laws		108
25.3 Environmental compliance		108
25.4 Environmental claims		108
25.5 Taxation		108
25.6 Merger		109
25.7 Change of business		109
25.8 Acquisitions		110
25.9 Joint ventures		110
25.10 Preservation of assets		110
25.11 Pari passu ranking		110
25.12 Negative pledge		110
25.13 Disposals		111
25.14 Arm’s length basis		111
25.15 Loans or credit		112
25.16 No Guarantees or indemnities or off-balance sheet liabilities		112
25.17 Dividends and share redemption		112
25.18 Royalties		113
25.19 Capital Expenditure		113
25.20 Financial Indebtedness		113
25.21 Miscellaneous		115
25.22 Insurance		115
25.23 Access		115
25.24 Intellectual Property		116
25.25 Amendments		116
25.26 Treasury Transactions		116
25.27 Further assurance		117
25.28 Equity capital of Pilot		117
25.29 Banks accounts		118
25.30 Post-signing conditions		118
25.31 Post-closing conditions		118
25.32 DC Shoes Disposal Proceeds		118
25.33 Factoring		119

vi

	Page
25.34 Subordinated Debt		119
26. Events of Default		119
26.1 Non-payment		119
26.2 Financial covenants and other obligations		120
26.3 Other obligations		120
26.4 Misrepresentation		120
26.5 Cross default		120
26.6 Insolvency		122
26.7 Insolvency of TopCo Obligors		122
26.8 Insolvency proceedings		123
26.9 Creditors’ process		123
26.10 Unlawfulness and invalidity		124
26.11 Intercreditor Agreements		124
26.12 Cessation of business		124
26.13 Audit qualification		124
26.14 Expropriation		124
26.15 Litigation		125
26.16 Material adverse change		125
26.17 Cessation of tax consolidation of the Group		125
26.18 Carried forward tax losses		125
26.19 Equity capital of Pilot		125
26.20 NP Cash Collateral Release		126
26.21 Acceleration		126
SECTION 8 — CHANGES TO PARTIES		127
27. Changes to the Lenders		127
27.1 Assignments and transfers by the Lenders		127
27.2 Conditions of assignment or transfer		127
27.3 Assignment or transfer fee		128
27.4 Limitation of responsibility of Existing Lenders		128
27.5 Procedure for transfer		129
27.6 Copy of Transfer Agreement to Company		130
27.7 Security on Lenders’ rights		130
28. Changes to the Obligors		131
28.1 Assignment and transfers by Obligors		131
28.2 Additional Guarantors		131
28.3 Repetition of Representations		131
SECTION 9 — THE FINANCE PARTIES		132

vii

	Page
29. Role of the Agent, the Arrangers, the Issuing Banks and others		132
29.1 Appointment of the Agent		132
29.2 Duties of the Agent		132
29.3 Role of the Arrangers		132
29.4 No fiduciary duties		132
29.5 Business with the Group		133
29.6 Rights and discretions		133
29.7 Majority Lenders’ instructions		134
29.8 Responsibility for documentation		134
29.9 Exclusion of liability		135
29.10 Lenders’ indemnity to the Agent		135
29.11 Resignation of the Agent		135
29.12 Replacement of the Agent		136
29.13 Confidentiality		136
29.14 Relationship with the Lenders		137
29.15 Credit appraisal by the Lenders, Issuing Banks and Ancillary Lenders		137
29.16 Reference Banks		138
29.17 Agent’s management time		138
29.18 Deduction from amounts payable by the Agent		138
29.19 Reliance and engagement letters		138
30. Conduct of Business by the Finance Parties		139
31. Sharing among the Finance Parties		139
31.1 Payments to Finance Parties		139
31.2 Redistribution of payments		139
31.3 Recovering Finance Party’s rights		139
31.4 Reversal of redistribution		140
31.5 Exceptions		140
31.6 Ancillary Lenders		140
SECTION 10 — ADMINISTRATION		141
32. Payment Mechanics		141
32.1 Payments to the Agent		141
32.2 Distributions by the Agent		141
32.3 Distributions to an Obligor		141
32.4 Clawback		142
32.5 Impaired Agent		142
32.6 Partial payments		142
32.7 No set-off by Obligors		143

viii

	Page
32.8 Business Days		143
32.9 Currency of account		143
32.10 Change of currency		144
32.11 Disruption to Payment Systems etc.		144
33. Set-Off		145
34. Notices		145
34.1 Communications in writing		145
34.2 Addresses		145
34.3 Delivery		145
34.4 Notification of address and fax number		146
34.5 Communication when Agent is Impaired Agent		146
34.6 Electronic communication		146
34.7 Use of websites		147
34.8 English language		148
35. Calculations and Certificates		148
35.1 Accounts		148
35.2 Certificates and determinations		148
35.3 Day count convention		148
36. Partial Invalidity		148
37. Remedies And Waivers		148
38. Amendments and Waivers		149
38.1 Required consents		149
38.2 Technical Amendments		149
38.3 Exceptions		149
38.4 Replacement of Lenders		150
38.5 Disenfranchisement of Defaulting Lenders		151
38.6 Replacement of a Defaulting Lender		152
39. Confidentiality		152
39.1 Confidential Information		152
39.2 Disclosure of Confidential Information		153
39.3 Entire agreement		154
SECTION 11 — GOVERNING LAW AND ENFORCEMENT		154
40. Governing Law		154
41. Enforcement — Jurisdiction of French Courts		154
42. Election of Domicile		155
SECTION 12 — MISCELLANEOUS		155
43. limited recourse Against qSH		155

ix

			Page
44. Additional Working Capital Financing Exceptions				155
Schedule 1 The Original Lenders				156
Schedule 2 Conditions Precedent				157
	Part I	Conditions precedent to signing of this Agreement		157
	Part II	Conditions precedent to the first Utilisation of the Facilities		160
	Part III	Conditions precedent to any Utilisation of a Facility		165
	Part IV	Conditions precedent required to be delivered by an Additional Guarantor (other than Biarritz Holdings, Quiksilver Europa and QSH)		166
	Part V	Transaction Security Documents and security related documents to be delivered on the Closing Date		168
	Part VI	Transaction Security Documents and security related documents to be delivered by the Additional Guarantors (other than Biarritz Holdings, Quiksilver Europa and QSH)		171
Schedule 3 Requests				172
	Part I	Utilisation Request Loans		172
	Part II	L/C Request Letters of Credit		174
	Part III	Selection Notice		176
Schedule 4 Mandatory Cost Formula				177
Schedule 5 Form of Transfer Agreement				180
Schedule 6 Form of Accession Letter				183
Schedule 7 Form of Compliance Certificate				185
Schedule 8 Timetables				187
	Part I	Loans		187
	Part II	Letters of Credit		188
Schedule 9 Material Subsidiaries				189
Schedule 10 Agreed Security Principles				190
Schedule 11 List of Securities				192
Schedule 12 List of Loans				193
Schedule 13 Guarantees and Off-Balance Sheet Liabilities				194
Schedule 14 Existing Financial Indebtedness				195
Schedule 15 Existing Letters of Credit				196

x

EX-10.6

Exhibit 10.6

Unofficial translation from the French

July 31, 2009

AMENDMENT NO. 5

TO THE CREDIT FACILITY AGREEMENT
DATED MARCH 14, 2008
(AS AMENDED BY AMENDMENT NO. 1 DATED AUGUST 14, 2008,
AMENDMENT NO. 2 DATED OCTOBER 30, 2008, AMENDMENT NO. 3
DATED MARCH 9, 2009 AND AMENDMENT NO. 4 DATED JUNE 30, 2009)

by and among

BNP PARIBAS
CRÉDIT LYONNAIS
SOCIÉTÉ GÉNÉRALE
as Banks

and

BNP PARIBAS
as Security Agent (Agent des Sûretés)

and

SOCIÉTÉ GÉNÉRALE
as Credit Agent (Agent du Credit)

and

PILOT SAS
as Borrower

and

QUIKSILVER, INC.

WHITE & CASE _LLP
11, boulevard de la Madeleine
75001 Paris

BETWEEN THE UNDERSIGNED:

(1)	BNP PARIBAS, a corporation (société anonyme) with share capital of € 2,526,774,896, whose registered office is located 16, boulevard des Italiens, 75009 Paris, incorporated with the Paris Trade and Companies Register under the unique identification number 662 042 449,
(2)	CRÉDIT LYONNAIS, a corporation (société anonyme) whose registered office is located 18, rue de la République, 69002 Lyon and whose headquarters are located 19, boulevard des Italiens, 75002 Paris, incorporated with the Lyon Trade and Companies Register under the unique identification number 954 509 741,
(3)	SOCIÉTÉ GÉNÉRALE, a corporation (société anonyme) with share capital of € 799,478,491.25, whose registered office is located 29, boulevard Haussmann, 75009 Paris, incorporated with the Paris Trade and Companies Register under the unique identification number 552 120 222,
	(parties (1) to (3) above being collectively designated as the “Banks”),
(4)	BNP PARIBAS, as designated above, in the capacity of Security Agent pursuant to the terms and conditions of the Credit Facility (Convention de Credit) (as defined below),
(5)	SOCIÉTÉ GÉNÉRALE, as designated above, in the capacity of Credit Agent pursuant to the terms and conditions of the Credit Facility,
(6)	PILOT SAS, simplified form joint stock company (société par actions simplifiée) with share capital of € 124,813,632, whose registered office is located 26/28, rue Danielle Casanova, 75002 Paris, incorporated with the Paris Trade and Companies Register under the unique identification number 070 501 374 (hereinafter, the “Borrower” or “Pilot”),
(7)	QUIKSILVER, INC., a company incorporated in the State of Delaware, whose registered office is located 15202 Graham Street, Huntington Beach, California 92649, U.S.A. (hereinafter, “Quiksilver, Inc.”).

WHEREAS:

(A) According to the terms and conditions of a facility agreement executed on March 14, 2008, as modified by an amendment dated August 14, 2008 (“AMENDMENT NO. 1”), an amendment dated October 30, 2008 (“AMENDMENT NO. 2”), an amendment dated March 9, 2009 (“AMENDMENT NO. 3”) and an amendment dated June 30, 2009 (“AMENDMENT NO. 4”) (this agreement, as modified, the “Credit Facility”), the Banks granted to the Borrower a renewable credit of a maximum principal amount of € 70,000,000.

- 2 -

(B)	According to the terms and conditions of Amendment No. 2, the Banks extended the term of the Facility (as defined in the Credit Facility), reduced to a maximum principal amount of € 55,000,000, until March 14, 2009.
(C)	According to the terms and conditions of Amendment No. 3, the Banks again extended the term of the Facility (as defined in the Credit Facility), until June 30, 2009.
(D)	According to the terms and conditions of Amendment No. 4, the Banks again extended the term of the Facility (as defined in the Credit Facility), until July 31, 2009.
(E)	Pursuant to a letter dated July 29, 2009, the Borrower and Quiksilver, Inc. have requested the Banks to agree to grant another extension of the term of the Facility, until September 29, 2009.
(F)	The purpose of this Agreement is to define the terms and conditions of the extension of the Credit requested by the Borrower and Quiksilver, Inc.

THE FOLLOWING HAS THEREFORE BEEN AGREED

ARTICLE 1 — DEFINITIONS AND INTERPRETATIONS

1.1.	Definitions
(a)	For the purposes of the Agreement, except where otherwise stipulated, the terms and expressions defined in the Preamble shall have the same meaning in the rest of the Agreement.
(b)	The terms and expressions used in the Agreement but not defined therein shall have the meaning ascribed to them in the Credit Facility.
(c)	The following terms and expressions used in the Agreement shall, unless a different interpretation is required by the context, have the following meaning:
	“Agreement” means this amendment, the Preamble thereto and any potential amendments, which form an integral part thereof;
	“Effective Date” means July 31, 2009, subject to all of the conditions precedent listed in Article 4 (Conditions Precedent) having been fulfilled, in accordance with the provisions of the said article, at that date;
	“Signing Date” means the date of signature of this Agreement by the parties.
	“2005 ABL Agreement” means the credit facility dated June 3, 2005 (as amended) executed by and between Quiksilver, Inc., Quiksilver Americas, Inc.,

- 3 -

Bank of America, N.A., Union Bank of California, N.A., JPMorgan Chase Bank, N.A., JPMorgan Chase Bank, N.A., Toronto Branch, J.P. Morgan Securities Inc. and certain financial establishments in the capacity of lenders.

“2009 ABL Agreement” means that certain credit agreement dated as of July 31, 2009, among Quiksilver Americas, Inc, the other borrowers party thereto, Quiksilver, Inc., the lenders party thereto, the ABL agent, Bank of America, N.A. and General Electric Capital Corporation, as co-collateral agents, and the other agents party thereto, and any refinancings, refundings, renewals or extensions thereof permitted hereunder.

“Rhône Europe Loan Agreement” means the credit facility dated July 31, 2009 executed by and between Mountain and Wave S.à. r.l., Quiksilver, Inc., the lenders, parties to the said agreement, and Rhône Group L.L.C.

“Rhône United States Loan Agreement” means the credit facility dated July 31, 2009 executed by and between Quiksilver, Inc., Quiksilver Americas, the lenders, parties to the said agreement, and Rhône Group L.L.C.

“Rhône Financing” means the financing made available pursuant to the Rhône Europe Loan Agreement and the Rhône United States Loan Agreement.

1.2. Interpretations

For purposes of this Agreement, except where a different interpretation is required by the context:

(a)

Any reference, within the Agreement, to an “Article”, a “Paragraph”, to the “Preamble” or to a “Schedule” must, except where otherwise stipulated or when a different interpretation is required by the context, be interpreted as being a reference to an article, a paragraph, a preamble or a schedule to the Agreement.

(b)

Any reference, within the Agreement, to a document, a contract, a treaty (including the Agreement) or a deed must be understood as being a reference to this document, this contract, this treaty or this deed, as potentially modified or completed in accordance with the terms and conditions of the Agreement and including, if applicable, any document, contract, treaty or deed that may be substituted thereto via novation.

ARTICLE 2 — MODIFICATION OF THE CREDIT FACILITY

2.1. Modification of article 1 of the Credit Facility

The parties to this Agreement agree that, as from the Effective Date, subject to the satisfaction of all of the conditions precedent listed at Article 4 (Conditions Precedent), the following defined term shall be added to the list of defined term in article 1 (Definitions) of the Credit Facility:

- 4 -

“Refinancing Credit Facility” means the Facilities Agreement dated July 31, 2009, by and among Pilot SAS and Na Pali in the capacity of Borrowers, Quiksilver, Inc. and Pilot SAS in the capacity of Guarantors, BNP Paribas, Crédit Lyonnais and Société Générale Corporate & Investment Banking in the capacity of Mandated Arrangers, BNP Paribas in the capacity of Agent, Société Générale in the capacity of Security Agent and Caisse Régionale de Crédit Agricole Mutuel Pyrénées Gascogne as issuing bank.

2.2. Modification of article 2 of the Credit Facility

The parties to this Agreement agree that, as from the Effective Date, subject to the satisfaction of all of the conditions precedent cited at Article 4 (Conditions Precedent), article 2 (Amount and Term) of the Credit Facility shall be deleted and replaced by the following new article:

“2. AMOUNT AND TERM

The Banks have made available to the Borrower, in accordance with the methods and conditions defined in the Agreement, a Facility of a maximum amount of € 70,000,000.00 (seventy million euros), as from March 14, 2008 and for a term of six months. By Amendment No. 1 dated August 14, 2008, the Facility was extended until October 31, 2008.

At the Borrower’s request, by October 15, 2008 at the latest, this Facility could be renewed once, by the unanimous decision of the Banks, up until March 14, 2009, date by which the capital and interest must have been fully reimbursed.

On October 9, 2008, the Borrower requested an extension of the term of the Facility.

By Amendment No. 2 dated October 30, 2008, the Banks acted unanimously to extend the aforementioned Facility, reduced to a maximum amount of € 55,000,000 (fifty-five million euros) as from October 30, 2008 up until March 14, 2009.

On March 9, 2009, the Borrower requested an extension of the term of the Facility.

By a unanimous decision, the Banks extended the aforementioned Facility up until June 30, 2009, the amount in principal of the Facility remaining limited to € 55,000,000 (fifty-five million euros).

On June 25, 2009, the Borrower requested an extension of the term of the Facility.

By a unanimous decision, the Banks extended the aforementioned Facility up until July 31, 2009, the amount in principal of the Facility remaining limited to € 55,000,000 (fifty-five million euros).

On July 29, 2009, the Borrower requested an extension of the term of the Facility.

- 5 -

By a unanimous decision, the Banks hereby extend the aforementioned Facility up until September 29, 2009, the amount in principal of the Facility remaining limited to € 55,000,000 (fifty-five million euros).

Each Bank participates in the Facility at the level of the amounts indicated in Schedule 1.

Each Bank undertakes, individually and without joint liability with the other Banks, to participate in the Facility. The Banks cannot be held liable for any potential participation default and for the failure of one or several of the other Banks.”

2.3. Modification of article 7.2 (Effective Global Rate) of the Credit Facility

The parties to this Agreement agree that, as from the Effective Date, article 7.2 (Effective Global Rate) of the Credit Facility shall be replaced by the following new article:

“7.2 Effective Global Rate

As the Facility generates interest at a floating rate, it is impossible to calculate an Effective Global Rate valid for the entire term of the Credit. However, the Credit Agent shall inform the Borrower, by way of an example, that in the event of the utilization of the maximum Facility amount as from the signature of the Agreement, and on the basis of all of the financial conditions described herein and of the most recent level of the EURIBOR 3-month rate published on July 30, 2009, i.e., .899% per annum increased by 2.8% per annum, the period rate on this basis for an Interest Period is 3.699%. The Effective Global Rate, which is the annual rate in proportion to the period rate, therefore reaches 3.71% per annum.

ARTICLE 3 — REPRESENTATIONS AND UNDERTAKINGS OF THE BORROWER AND QUIKSILVER, INC.

(a)

In signing this Agreement, the Borrower and Quiksilver, Inc. acknowledge that the Banks agree to extend the Facility for the sole purpose of enabling the global refinancing of the financial indebtedness of the Borrower and its Subsidiaries that shall be implemented by September 29, 2009 at the latest (the “Refinancing”) as described in the Facilities Agreement to be executed this day by and between Pilot SAS and Na Pali in the capacity of Borrowers, Quiksilver, Inc. and Pilot SAS in the capacity of Guarantors, BNP Paribas, Crédit Lyonnais and Société Générale Corporate & Investment Banking in the capacity of Mandated Arrangers, BNP Paribas in the capacity of Agent, Société Générale in the capacity of Security Agent, and Caisse Regionale de Crédit Agricole Mutuel Pyrénées Gascogne in the capacity of Issuing Bank (the “Refinancing Facility Agreement”).

(b)

Following the contribution by QS Holdings S.à r.l. to Biarritz Holdings S.à. r.l. of all the shares of Quiksilver Europa, S.L., Quiksilver, Inc. agrees that the ownership percentage of (i) QS Holdings in Biarritz Holdings, (ii) Biarritz Holdings in Quiksilver Europa, and (iii) Quiksilver Europa in the Borrower shall be maintained at a level equal to its level at the Effective Date.

- 6 -

ARTICLE 4 — CONDITIONS PRECEDENT

(a) Subject to the provisions of paragraph (b) below, this Agreement shall become effective on July 31, 2009 on condition that, as of this date:

(i)	the Credit Agent has received all of the documents listed in Schedule A (Conditions Precedent) and has confirmed in writing (thereby acting on the instructions of all of the Banks) to the Borrower that such documents and certificates are satisfactory, both in form and in content;
(ii)	the representations made by the Borrower at article 10 of the Credit Facility are accurate;
(iii)	the Security mentioned at article 4 of the Credit Facility remains valid and guarantees all of the amounts owed by the Borrower pursuant to the terms and conditions of the Credit Facility (as modified by this Agreement);
(iv)	no Prepayment Event has occurred; and
(v)	no Material Adverse Event has occurred.

(b) In the event that the conditions precedent listed in paragraph (a) have not been fulfilled by July 31, 2009, this Agreement shall lapse and the parties shall be released from any obligation pursuant to this Agreement. As a result, all of the Drawings made on the Credit, both in their principal and in interest, shall be due and payable as of July 31, 2009.

ARTICLE 5 — WAIVER

As from this moment, the Banks hereby waive their right to claim any breach of obligations and any Mandatory Prepayment Event (Cas d’Exigibilité Anticipés) as set out in the Facilities Agreement (including notably any breach of the provisions contained in Article 11.2 (h) of the Facilities Agreement) on the basis of the signature this day of the Refinancing Facility Agreement by the Borrower and by Quiksilver, Inc. and of the completion of the transactions described therein.

ARTICLE 6 — CONDITION SUBSEQUENT

The Company shall within 2 Business Days of the date of this Agreement deliver to the Agent (i) evidence (in form and substance satisfactory to the Agent, acting reasonably) that the 2005 ABL Agreement has been terminated, all amounts owing thereunder (other than letters of credit issued thereunder and outstanding on the date hereof which letters of credit have been supported by standby letters of credit agreement issued under the 2009 ABL Agreement) has been repaid in full with the proceeds of the Rhône Financing and/or drawings under the 2009 ABL Agreement and the related Encumbrances securing such Financial Indebtedness under the 2005 ABL Agreement have been released, and (ii)

- 7 -

copies of the fully executed Rhone Financing Documents and the 2009 ABL Agreement; failing which this present Agreement shall automatically terminate and all amounts owed by the Borrower pursuant to the Facility shall become immediately payable.

ARTICLE 7 — INTERDEPENDENCE OF THE UNDERTAKINGS MADE BY EACH PARTY

The decisions and/or undertakings by each of the parties to this Agreement are made in consideration of the decisions and/or undertakings of the other parties, such interdependence of undertakings constituting an essential factor in the consent of each party, without which such party would not have taken part in the present.

In particular, the performance by each party of its undertakings and/or obligations as of the Effective Date is subject to the simultaneous performance of the respective undertakings and/or obligations of the other parties to be performed at the said date.

ARTICLE 8 — MODIFICATIONS — AMENDMENTS

Any modification to this Agreement and to any other document related hereto must be the subject of a written agreement between the parties.

This Agreement, as from its Effective Date, shall have the value of an amendment to the Credit Facility. All other provisions of the Credit Facility not modified by this Agreement shall remain unchanged and shall retain their full and entire effectiveness. It is stipulated that this Agreement does not act as a novation to the Credit Facility and that the Surety shall retain its full and entire effectiveness.

ARTICLE 9 — PARTIAL INVALIDITY

In the event of a provision of this Agreement becoming null and void, unlawful or not liable to be enforced, in full or in part, such annulment or invalidity shall have no impact upon the other provisions of this Agreement. In this case, the parties must immediately and in so far as is possible replace the impacted stipulation with a similar provision that will comply as far as possible with the financial aim of the impacted stipulation, in accordance with the spirit of this Agreement.

ARTICLE 10 — APPLICABLE LEGAL REGIME

This Agreement shall be governed by and interpreted in accordance with French law.

- 8 -

ARTICLE 11 — COMPETENT JURISDICTION – DOMICILE

11.1. Competent jurisdiction

The Borrower and Quiksilver, Inc. irrevocably accept that any dispute relating to the validity, interpretation or performance of this Agreement or arising therefrom shall be brought before the Paris Commercial Courts.

11.2. Domicile

For the performance of the present and the consequences thereof, the parties designate domicile as follows:

(i)	for BNP Paribas, at 10, allée de Tourny, BP 99, 33024 Bordeaux cedex;
(ii)	for Credit Lyonnais, at the Direction Entreprises Dauphiné Savoie located 1, rue Molière, 38000 Grenoble;
(iii)	for Société Générale, at its registered office as given hereinabove;
(iv)	for the Borrower, at its registered office as given hereinabove; and
(v)	for Quiksilver, Inc., at its registered office as given hereinabove.

Executed in Paris, on July 31, 2009 on seven (7) original copies
BNP PARIBAS	BNP PARIBAS
as Bank	as Security Agent
By:	By:
CRÉDIT LYONNAIS
as Bank
By:

- 9 -

SOCIÉTÉ GÉNÉRALE	SOCIÉTÉ GÉNÉRALE
as Bank	as Credit Agent
By:	By:
PILOT SAS
as Borrower
By:
Title:
QUIKSILVER, INC.
By:
Title:

- 10 -

Schedule A

Conditions Precedent

(a)	Signature by Pilot SAS and Na Pali as Borrowers (Emprunteurs) and by Quiksilver, Inc. and Pilot SAS as Guarantors (Garants) of the Refinancing Facility Agreement and satisfaction of all of the conditions precedent referred to in Part I of Schedule 2 of the Refinancing Facility Agreement.
(b)	Delivery of a deed confirming and reiterating the guarantee granted by Quiksilver, Inc. in accordance with article 4 of the Credit Facility in order to ensure the maintenance of the said guarantee, in connection with the extension granted pursuant to the terms and conditions of the Agreement.
(c)	Delivery of a declaration signed by a legal representative of Pilot confirming:

(i)	that no Prepayment Event has occurred and is continuing pursuant to the Credit Facility; and
(ii)	that no Material Adverse Event has occurred pursuant to the Credit Facility.

(d)	Payment to the Credit Agent of the fees, costs and expenses of the Banks’ legal advisers incurred as of the Date of Signature pursuant to the preparation, negotiation and finalization of the Agreement, which have been notified by the Credit Agent to the Borrower.
(e)	Payment to Société Générale, as documentation agent for the implementation of the Refinancing, of the fees, costs and expenses of the Banks’ legal advisers pursuant to the preparation, negotiation and finalization of the Refinancing Facility Agreement and any document that shall be drawn up in accordance with the Refinancing Facility Agreement or for the purpose of the Refinancing incurred as of the Date of Signature which have been notified by Société Générale to the Borrower.
(f)	Delivery of legal opinions by counsel to Pilot and Quiksilver, Inc. substantially in the form of the opinions delivered on March 13, 2009, confirming (i) capacity and due authorization of Pilot et Quiksilver, Inc.,  (ii) the validity and enforceability of the Guarantee Acknowledgment, and that (iii)  the signature of the Agreement and the provisions contained therein are not contrary to and do not violate the ABL Agreement and the Indenture dated July 22, 2005 governing the Senior Notes, among Quiksilver, Inc., the subsidiary Guarantors party thereto and Wilmington Trust Guarantor as Trustee.

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Schedule B

Article 11.2 (Negative Covenants)

“11.2 Negative Covenants

Except with the prior agreement of the Banking Majority, the Borrower, for so long as it shall continue to be a debtor pursuant to the Agreement, makes an undertaking:

(A) The Borrower, for so long as it shall continue to be a debtor pursuant to the Agreement, undertakes (and acts as guarantor (as defined by Article 1120 of the [French] Civil Code) with regard to its Subsidiaries for those of the following undertakings that concern them (Quiksilver, Inc. acting as guarantor (as defined by Article 1120 of the [French] Civil Code) of the compliance by the Borrower and each of its Subsidiaries of the latter for the following undertakings)), except with the prior agreement of the Majority of the Banks:

a)  Not to modify, and to ensure that the Group members do not modify, the relevant corporate purpose, legal status or nature of commercial activities as in existence on the day of the signature of the Agreement.

b)  Not to carry out any Change in Control [of Na Pali or Pilot], and to ensure that no such Change in Control is carried out.

c) Not to carry out any reduction in the Borrower’s share capital, and to ensure that the Borrower does not make any payment of dividends, interim dividends or share buy-back programs (and not to put to the vote of the relevant management bodies of the Borrower any draft resolution on the distribution of dividends in favor of its shareholders).

d) Not to carry out any reorganization transaction (including in the form of a merger, merger by absorption, demerger or partial asset contribution) having an impact upon the Borrower or upon any one of its Subsidiaries.

e)  Not to grant (and to ensure that no member of the Group neither grants nor tolerates) security for any present or future debt (other than to allow the financing of an asset acquisition, when such security relates exclusively to the said asset and when it guarantees the payment or the financing thereof), or security for any guarantee undertaking concluded with or toward any entity whatsoever, present or future, for any mortgage, pledge, endorsement (or their equivalent under any legal regime other than French law) or other rights or guarantees of any kind whatsoever over all or part of its assets or income, present or future, or over the assets or income, present of future, of its Subsidiaries, without granting to the Banks the same security, of the same rank, or without conferring upon

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them any other type of security that the Banks shall deem to be an equivalent thereto, with the exception of the following securities that may be granted by Na Pali and its Subsidiaries:

(i)   any legal privilege arising in the ordinary course of the Group’s business and not further to a default or omission by a member of the Group;

(ii)  any security resulting from any retention right regarding an asset of any Group member in the normal course of its business, and not resulting from a default or omission by a member of the relevant Group member.

f)   To inform the Credit Agent immediately and in writing of the implementation by any creditor, notably by any financial or lending establishment, of any forfeiture of term or any prepayment event, with or without advance notice, in relation to any loan, credit or other financial assistance granted to the Borrower or to any member of the Group.

g)   To inform the Credit Agent immediately and in writing of any positive or negative undertakings (“to do” or “not to do”) made or to be made by a member of the Group to any financial or credit establishment, the non-performance or breach of which could result in the forfeiture of term of the prepayment of the obligation in relation to which such undertaking would have been made, and to allow the Banks to benefit, in the event of such an undertaking having been made, either from the same undertaking (if not already granted herein) or from equivalent rights or advantages satisfactory to such Banks;

h)  That no member of the Group shall contract any bank or financial lending of any kind whatsoever with any third parties, with Quiksilver, Inc. or with the latter’s Subsidiaries (including the members of the Group), to the exclusion of any borrowing pursuant to:

(i)  the Loan Facility;

(ii) the existing cash pooling agreement between Na Pali and its Subsidiaries;

(iii) a loan in a maximum amount of €1,000,000 to be entered into with a member of the Group registered in Poland;

(iv) a loan in a maximum amount of €3,000,000 to be entered into with a member of the Group registered in Czech Republic;

(v) the Intercompany loans, a detailed list of which was provided by the Borrower to the Agent on the date hereof;

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(vi) the factoring agreement executed with GE Factofrance by Na Pali and certain of its Subsidiaries.

i)  That no member of the Group shall grant nor consent any additional loan or advance (including intra-group loans or advances on current accounts) to third parties or to any one of the members of the group consisting of Quiksilver, Inc. and of its Subsidiaries (excluding the lending granted in the context of the existing cash pooling agreement between Na Pali and its Subsidiaries and the intra-group loans described in Schedule 7)

j)  Not to carry and to ensure that none of its Subsidiaries carries out any asset acquisition or sale with the exception of any acquisition or sale of assets other than brands, real estate, shares, partnership shares and/or business interests, and subject to the said acquisitions or sales being executed in the context of the normal business activity of the relevant Group member and under normal market conditions.

k)  Not to take part in the creation of any joint venture and to ensure that its Subsidiaries do not take part in the creation of any joint venture.

l)  Not to make any payment of any kind whatsoever (including the payment of any royalties and management fees) or any reimbursement of any debt or borrowing whatsoever and of any kind that may be due to Quiksilver, Inc. or to one of the latter’s Subsidiaries.

m) To ensure that none of its Subsidiaries make any payment of any kind whatsoever (including the payment of all royalties or management fees) or any reimbursement of any debt or borrowing whatsoever and of any kind that may be due to Quiksilver, Inc. or to any one of the latter’s Subsidiaries (other than members of the Group), with exception of payments arising from the normal business activity of its Subsidiaries and carried out under normal market.

(B) For so long as the Borrower shall continue to be a debtor pursuant to the Agreement, Quiksilver, Inc. acts as guarantor (as defined by Article 1120 of the [French] Civil Code) of the fact that QS Holdings Sàrl shall not grant any security of any kind over the shares of Biarritz Holdings and that Biarritz Holdings shall not grant any security of any kind over its assets (including over the marks held by the latter (including Quiksilver, Quiksilver & Mountain & Wave and Roxy)).”

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TABLE OF CONTENTS

	Page
ARTICLE 1 — DEFINITIONS AND INTERPRETATIONS		3
1.1. Definitions		3
1.2. Interpretations		4
ARTICLE 2 — MODIFICATION OF THE CREDIT FACILITY		4
2.1. Modification of article 1 of the Credit Facility		4
2.2. Modification of article 2 of the Credit Facility		5
2.3. Modification of article 7.2 (Effective Global Rate) of the Credit Facility		6
ARTICLE 3 — REPRESENTATIONS AND UNDERTAKINGS OF THE BORROWER AND QUIKSILVER, INC.		6
ARTICLE 4 — CONDITIONS PRECEDENT		7
ARTICLE 5 — WAIVER		7
ARTICLE 6 — CONDITION SUBSEQUENT		7
ARTICLE 7 — INTERDEPENDENCE OF THE UNDERTAKINGS MADE BY EACH PARTY		8
ARTICLE 8 — MODIFICATIONS — AMENDMENTS		8
ARTICLE 9 — PARTIAL INVALIDITY		8
ARTICLE 10 — APPLICABLE LEGAL REGIME		8
ARTICLE 11 — COMPETENT JURISDICTION – DOMICILE		9
11.1. Competent jurisdiction		9
11.2. Domicile		9
SCHEDULE A CONDITIONS PRECEDENT		11

(i)