Crocs
Annual Report 2015

Plain-text annual report

Use these links to rapidly review the documentCrocs, Inc. Table of Contents to the Annual Report on Form 10-K For the Year Ended December 31, 2015 INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTSTable of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KCommission File No. 0-51754CROCS, INC.(Exact name of registrant as specified in its charter)7477 East Dry Creek ParkwayNiwot, Colorado 80503(303) 848-7000(Address, including zip code and telephone number, including area code, of registrant's principal executive offices)Securities registered pursuant to Section 12(b) of the Act:Securities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No ýIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ýIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ý No oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes ý No oIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and willý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the fiscal year ended December 31, 2015oro TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the transition period from to Delaware(State or other jurisdiction ofincorporation or organization) 20-2164234(I.R.S. EmployerIdentification No.)Title of each class: Name of each exchange on which registered:Common Stock, par value $0.001 per share The NASDAQ Global Select Marketnot be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-Kor any amendment to the Form 10-K. ýIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See thedefinitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No ýThe aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2015 was $1.1 billion. For the purpose of theforegoing calculation only, all directors and executive officers of the registrant and owners of more than 10% of the registrant's common stock are assumed tobe affiliates of the registrant. This determination of affiliate status is not necessarily conclusive for any other purpose.The number of shares of the registrant's common stock outstanding as of February 22, 2016 was 73,010,000.DOCUMENTS INCORPORATED BY REFERENCEPart III incorporates certain information by reference from the registrant's proxy statement for the 2016 annual meeting of stockholders to be filed no laterthan 120 days after the end of the registrant's fiscal year ended December 31, 2015. Large accelerated filer ý Accelerated filer o Non-accelerated filer o(do not check if asmaller reporting company) Smaller reporting company oTable of Contents Special Note Regarding Forward-Looking Statements Statements in this Form 10-K and in documents incorporated by reference herein (or otherwise made by us or on our behalf) may contain "forward-lookingstatements" within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, we may make other written and oral communicationsfrom time to time that contain such statements. Forward-looking statements include statements as to industry trends, our future expectations and other mattersthat do not relate strictly to historical facts and are based on certain assumptions of our management. These statements, which express management's currentviews concerning future events or results, use words like "anticipate," "assume," "believe," "continue," "estimate," "expect," "future," "intend," "plan,""project," "strive," and future or conditional tense verbs like "could," "may," "might," "should," "will," "would," and similar expressions or variations. Forward-looking statements are subject to risks, uncertainties, and other factors which may cause actual results to differ materially from future results expressed orimplied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statementsinclude, without limitation, those described in the section titled "Risk Factors" (Item 1A. of this annual report on Form 10-K). Moreover, such forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements to reflect events orcircumstances after the date of such statements.Table of Contents Crocs, Inc.Table of Contents to the Annual Report on Form 10-KFor the Year Ended December 31, 2015 1 PART I Item 1. Business 2Item 1A. Risk Factors 11Item 1B. Unresolved Staff Comments 25Item 2. Properties 25Item 3. Legal Proceedings 26Item 4. Mine Safety Disclosures 27 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities 28Item 6. Selected Financial Data 31Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 33Item 7A. Quantitative and Qualitative Disclosures About Market Risk 65Item 8. Financial Statements and Supplementary Data 67Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 67Item 9A. Controls and Procedures 67Item 9B. Other Information 69 PART III Item 10. Directors, Executive Officers and Corporate Governance 72Item 11. Executive Compensation 72Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 72Item 13. Certain Relationships and Related Transactions, and Director Independence 73Item 14. Principal Accountant Fees and Services 73 PART IV Item 15. Exhibits and Financial Statement Schedules 73Signatures 79Table of Contents PART I ITEM 1. Business The CompanyCrocs, Inc. and its consolidated subsidiaries (collectively the "Company," "we," "our," or "us") are engaged in the design, development, manufacturing,worldwide marketing and distribution of casual lifestyle footwear and accessories for men, women, and children. We strive to be the global leader in the saleof molded footwear featuring fun, comfort, color, and functionality. The Company, a Delaware corporation, is the successor of a Colorado corporation of thesame name, and was originally organized in 1999 as a limited liability company. Our products include footwear and accessories that utilize our proprietaryclosed-cell resin, called Croslite, as well as casual lifestyle footwear that use a range of materials. Our Croslite material enables us to produce innovative,lightweight, non-marking, and odor-resistant footwear. We currently sell our products in more than 65 countries through domestic and international retailersand distributors, and directly to consumers through our company-operated retail stores, outlets, webstores, and kiosks.Since the initial introduction of our popular Beach and Crocs Classic designs in 2002, we have expanded our classic products to include a variety of newstyles and products. Going forward, we are focusing on our core molded footwear heritage, as well as developing innovative casual lifestyle footwear. Thebroad appeal of our footwear has allowed us to market our products to a wide range of distribution channels, including family footwear stores, departmentstores, sporting goods stores and traditional footwear retailers, as well as a variety of specialty and independent retail channels, and via the internet.ProductsOur product offerings have grown significantly since we first introduced the single-style clog in six colors in 2002. We currently offer a wide variety offootwear products including clogs, sandals, wedges, flats, sneakers, and boots. During the years ended December 31, 2015, 2014, and 2013, approximately76.2%, 73.5%, and 71.1%, respectively, of unit sales consisted of products geared toward adults compared to 23.8%, 26.5%, and 28.9%, respectively, of unitsales of products geared toward children.A key differentiating feature of our footwear products is the Croslite material, which is uniquely suited for comfort and functionality. Croslite is carefullyformulated to create extremely lightweight, comfortable, and non-marking footwear that conforms to the shape of the foot and increase comfort. Croslite is aclosed-cell resin material which is water resistant, virtually odor free and allows many of our footwear styles to be cleaned simply with water. As we haveexpanded our product offering, we have incorporated traditional materials, such as textile fabric and leather, into many of our styles; however, we continue toutilize the Croslite material for the foot bed, sole, and other key structural components for many of these styles.We strive to provide our global consumer with a year-round product assortment featuring fun, comfortable, casual, colorful, and innovative styles. Ourcollections are designed to meet the needs of the family by focusing on key wearing occasions. Our goal is to deliver world-class product assortments for thefamily with all of the comfort features and benefits Crocs is known for. We have discontinued our non-core products in order to focus on growing our core-molded heritage category while developing more compelling casual footwear platforms.At the heart of our brand resides the Classic, our first and most iconic style for adults and kids that embodies our innovation in molding and design, deliversall-day comfort, and has established a new category in the footwear marketplace. The unique look and feel of the Classic can be experienced throughout ourentire product line due to the use and design of our proprietary material Croslite. We have expanded our core molded product line, introduced in 2002, withthe addition of dual density technology, warm lined styles, seasonal flips and slides. Licensed style partnerships from Disney, Marvel, Sanrio,2Table of ContentsNickelodeon, and Warner Bros., among others, provide popularity to our kids' core line along with our kids-only product innovations, including lights, color-change materials, and interactive elements.In addition, we have extended our core product assortment with new styling including 'built for her' and 'built for him' silhouettes, which are offered inmultiple color and graphic treatments. Our core products are available across a range of channels of distribution and span both stylish and active wearingoccasions for the entire family.Sales and MarketingEach season we focus on presenting a compelling "brand story and experience" for our new product collections and our broader casual lifestyle assortment.Our marketing efforts center on story-telling across diverse wearing occasions and product silhouettes. For the years ended December 31, 2015, 2014, and2013, total advertising costs were $58.2 million, $44.7 million, and $47.6 million, respectively.We run our business across three major regions: the Americas, Asia Pacific and Europe. In developing our market growth and expansion strategy, we prioritizesix core markets including: (i) the United States, (ii) Japan, (iii) China, (iv) South Korea, (v) Germany, and (vi) the United Kingdom. These countries havebeen identified as large-scale geographies where we believe the greatest opportunities for growth exist. Accordingly, our product development efforts for our2016 product line are largely focused on expanding our market share in these locations. We are also focusing our marketing efforts on these regions in aneffort to increase customer awareness of both our brand and our full product range.We have three primary sales channels: wholesale, retail, and e-commerce (discussed in more detail below). Our marketing efforts are aimed at driving businessto both our wholesale partners and our company-operated retail and e-commerce stores. Our marketing efforts in the wholesale and retail channels are focusedon visual product merchandising with alignment on key stories, activation materials, and creative materials. Retail stores provide a unique opportunity toengage with customers in a three-dimensional manner. Strong emphasis is placed on making the store experience a meaningful and memorable showcase ofour larger assortment of casual lifestyle footwear and key new product launches.Wholesale ChannelDuring the years ended December 31, 2015, 2014, and 2013, approximately 54.2%, 55.7%, and 56.5% of net revenues, respectively, were derived from salesthrough the wholesale channel which consists of sales to distributors and third-party retailers. Wholesale customers include family footwear retailers, nationaland regional retail chains, department stores, sporting goods stores, and independent footwear retailers. No single customer accounted for 10% or more of ourrevenues for any of the years ended December 31, 2015, 2014, and 2013.Many of our agreements allow us to accept returns from wholesale customers for defective products and quality issues, on an exception basis, and to extendpricing discounts in lieu of defective product returns. We also may accept returns from our wholesale customers, on an exception basis, for the purpose ofstock re-balancing to ensure that our products are merchandised in the proper assortments.We use third-party distributors in select markets where we believe such arrangements are preferable to direct sales. These third-party distributors purchaseproducts pursuant to a price list and are granted the right to resell the products in a defined territory, usually a country or group of countries. Our typicaldistribution agreements have terms of one to four years, are generally terminable upon 30 days prior notice, and have minimum sales requirements that allowus to terminate or renegotiate the contract if minimum requirements are not met.3Table of ContentsRetail ChannelDuring the years ended December 31, 2015, 2014, and 2013, approximately 34.7%, 35.5%, and 35.0%, respectively, of our net revenues were derived fromsales through our retail channel. We operate our retail channel through three integrated platforms: full-service retail locations, outlet locations, andkiosk/store-in-store locations. Our three types of store platforms enable us to organically promote the breadth of our product offering in high-traffic, highlyvisible locations. Our strategy for expanding our global retail business is to increase our market share in a disciplined manner by selectively openingadditional stores in new and existing markets, as well as increasing sales in existing stores. We will continue to moderate the pace of our retail expansion in2016 with a focus on outlet locations as well as enhancing the profitability of existing locations. We opened 42 company-operated stores during the yearended December 31, 2015 and closed 68 company-operated stores. As retail store performance will vary in new and existing markets due to many factors,including maturity of the market and brand recognition, we periodically evaluate the fixed assets and leasehold improvements related to our retail locationsfor impairment.•Full-Service Retail LocationsOur company-operated retail locations allow us to effectively showcase the full extent of our new and existing products to customers at retail pricing.In addition, our full-service retail locations enable us to interact with our customers on a personal level in order to ensure a satisfying shoppingexperience. On average, the optimal space for our retail locations is between approximately 1,500 and 1,800 square feet, depending on the geographicvicinity of the property, and is typically located in high-traffic shopping malls or districts. During the year ended December 31, 2015, we closed51 stores and opened 15 new stores. As of December 31, 2015, 2014, and 2013, we operated 275, 311, and 327 global full-service retail stores,respectively.•Outlet LocationsOur company-operated outlet locations allow us to sell discontinued and overstock merchandise directly to consumers at discounted prices. We alsosell full priced products in certain of our outlet stores. Outlet locations follow a similar size model as our full-service retail stores; however, they aregenerally located within outlet shopping locations. During the year ended December 31, 2015, we closed four outlet locations and opened 16 newoutlet locations. As of December 31, 2015, 2014, and 2013, we operated 186, 174, and 170 global outlet stores, respectively.•Kiosk / Store-in-Store LocationsOur company-operated kiosks and store-in-store locations allow us to market specific product lines with the further flexibility to tailor products toconsumer preferences in shopping malls and other high foot traffic areas. With bright and colorful displays, efficient use of retail space, and limitedcapital investment, we believe that kiosks and shop in shops locations can be an effective outlet for marketing our products where this business modelis applicable. During the year ended December 31, 2015, we closed 13 kiosk and store-in-store locations and opened 11 new kiosk and store-in-storelocations. As of December 31, 2015, 2014, and 2013, we operated 98, 100, and 122 global kiosks and store-in-stores, respectively.4Table of ContentsThe following table illustrates the net change in 2015 with respect to the number of our company-operated retail locations by reportable operating segmentand country:E-commerce ChannelAs of December 31, 2015, we offered our products through 12 company-operated e-commerce webstores worldwide. During the years ended December 31,2015, 2014, and 2013, approximately 11.1%, 8.8%, and 8.5%, respectively, of our net revenues were derived from sales through our e-commerce channel. Oure-commerce presence enables us to have increased access to our customers and provides us with an opportunity to educate them about our products andbrand. Improving our e-commerce capabilities is one of our key strategies in positioning Crocs for sustained growth. Going forward, we will continue toimprove our consumer's online experience and look for new ways to leverage digital technologies to connect with them.5 December 31,2014 Opened Closed December 31,2015 Company-operated retail locations Americas United States 185 4 10 179 Canada 13 — 3 10 Puerto Rico 7 — — 7 Other 5 — 5 — Total Americas 210 4 18 196 Asia Pacific Korea 83 5 4 84 Japan 54 4 6 52 China 43 19 7 55 Hong Kong 23 1 3 21 Singapore 18 1 4 15 Australia 13 1 3 11 United Arab Emirates (UAE) 10 5 1 14 South Africa(1) 9 — — 9 Taiwan 5 — 5 — Total Asia Pacific 258 36 33 261 Europe Russia 39 2 4 37 Germany 20 — 2 18 Great Britain 15 — 5 10 France 14 — 2 12 Netherlands 7 — 1 6 Finland 6 — 1 5 Spain 6 — — 6 Other 10 — 2 8 Total Europe 117 2 17 102 Total 585 42 68 559 (1)Our South Africa operations were designated as held for sale as of December 31, 2015. These locations were subsequently sold onJanuary 19, 2016. See Note 5—Property and Equipment and Note 21—Subsequent Events to the consolidated financial statements foradditional information.Table of ContentsBusiness Segments and Geographic InformationFor 2015, we had three reportable operating segments based on the geographic nature of our operations: Americas, Asia Pacific, and Europe. We also have an"Other businesses" category which aggregates insignificant operating segments that do not meet the reportable segment threshold and representsmanufacturing operations located in Mexico, Italy and Asia. For 2014 and 2013, we had four reportable operating segments: Americas, Asia Pacific, Japanand Europe. Subsequent to December 31, 2014, Crocs' internal reports reviewed by the Chief Operating Decision Maker ("CODM") began consolidatingJapan into the Asia Pacific segment. This change aligned the Company's internal reporting to its new strategic model and management structure, as Japan andAsia Pacific are now managed and analyzed as one operating segment by management and the CODM. Accordingly, prior period segment results have beenreclassified to reflect this change. The composition of our reportable operating segments is consistent with that used by our CODM to evaluate performanceand allocate resources. See additional discussion of our segments including results of operations and assets by segment in Note 18 in the accompanying notesto the consolidated financial statements.AmericasThe Americas segment consists of revenues and expenses related primarily to product sales in the North and South America geographic regions. Regionalwholesale channel customers consist of a broad range of family footwear, sporting goods and department stores as well as specialty retailers and distributors.The regional retail channel sells directly to consumers through 196 company-operated store locations in the Americas as well as through webstores. Duringthe years ended December 31, 2015, 2014, and 2013, revenues from the Americas segment constituted approximately 43.7%, 40.9%, and 41.9% of ourconsolidated revenues, respectively. Specifically, revenues from the United States of America constituted approximately 35.8%, 36.3%, and 33.7% of ourconsolidated revenues, respectively, for the years ended December 31, 2015, 2014, and 2013.Asia PacificThe Asia Pacific segment consists of revenues and expenses related primarily to product sales throughout Asia, Australia, New Zealand, the Middle East andSouth Africa. The Asia Pacific wholesale channel consists of sales to a broad range of retailers similar to the wholesale channel we have established in theAmericas segment. We also sell products directly to the consumer through 261 company-operated stores located in Asia as well as through our webstores.During the years ended December 31, 2015, 2014, and 2013, revenues from the Asia segment constituted 39.0%, 39.6%, and 40.0%, of our consolidatedrevenues, respectively.EuropeThe Europe segment consists of revenues and expenses related primarily to product sales throughout Europe and Russia. The Europe segment wholesalechannel customers consist of a broad range of retailers, similar to the wholesale channel we have established in the Americas segment. We also sell ourproducts directly to the consumer through 102 company-operated stores located in Europe as well as through our webstores. During the years endedDecember 31, 2015, 2014, and 2013, revenues from the Europe segment constituted 17.3%, 19.5%, and 18.1% of our consolidated revenues, respectively.Distribution and LogisticsOn an ongoing basis, we look to enhance our distribution and logistics network to further streamline our supply chain, increase our speed to market, andlower operating costs. During the year ended December 31, 2015, we stored our raw material and finished goods inventories in company-operated warehouseand distribution facilities located in the United States, Mexico, the Netherlands, Japan,6Table of ContentsFinland, South Africa, Russia, and Italy. We also utilize distribution centers which are operated by third parties located in the United States, China, Japan,Hong Kong, Australia, Korea, Singapore, India, Taiwan, the United Arab Emirates, Russia, Brazil, Argentina, Chile, Puerto Rico, and Italy. Throughout 2015,we continued to engage in efforts to consolidate our global warehouse and distribution facilities to facilitate a lean cost structure. As of December 31, 2015,our company-operated warehouse and distribution facilities provided us with approximately 1.0 million square feet and our third-party operated distributionfacilities provided us with approximately 0.4 million square feet. We also ship a portion of our products directly to our customers from our internal and third-party manufacturers.Raw Materials"Croslite", our branded proprietary closed-cell resin, is the primary raw material used in the majority of our footwear and some of our accessories. Croslite issoft, durable, and allows our material to be non-marking in addition to being extremely lightweight. We continue to invest in research and development inorder to refine our materials to enhance these properties and to target the development of new properties for specific applications.Croslite material is produced by compounding elastomer resins that we or one of our third-party processors purchase from major chemical manufacturers,together with certain other production inputs such as color dyes. At this time, we have identified multiple suppliers that produce the elastomer resins used inthe Croslite material. We may, however, in the future identify and utilize materials produced by other suppliers as an alternative to, or in addition to, theelastomer resins we currently use in the production of our proprietary material. All of the other raw materials that we use to produce the Croslite products arereadily available for purchase from multiple suppliers.Since our inception, we have substantially increased the number of footwear products we offer. Many of these new products are constructed using leather,textile fabrics, or other non-Croslite materials. We, or our third-party manufacturers, obtain these materials from a number of third-party sources and webelieve these materials are broadly available. We also outsource the compounding of the Croslite material and continue to purchase a portion of ourcompounded raw materials from a third party in Europe.Design and DevelopmentWe continue to dedicate significant resources to product design and development as we expand the footwear styles we offer based on opportunities weidentify in the marketplace. Our design and development process is highly collaborative and we continually strive to improve our development function sowe can bring products to market quickly and at reduced costs, while maintaining product quality. We spent $14.0 million, $16.7 million, and $15.4 millionin research, design, and development activities for the years ended December 31, 2015, 2014, and 2013, respectively.Manufacturing and SourcingOur strategy is to maintain a flexible, globally diversified, low-cost manufacturing base. We currently have company-operated production facilities inMexico and Italy. We also contract with third-party manufacturers to produce certain of our footwear styles or to provide support to our internal productionprocesses. Our internal manufacturing capabilities enable us to rapidly make changes to production, providing us with the flexibility to quickly respond toorders for high demand models and colors throughout the year, while outsourcing allows us to capitalize on the efficiencies and cost benefits of usingcontracted manufacturing services. We believe this strategy will continue to minimize our production costs, increase overall operating efficiencies, andshorten production and development times.In the years ended December 31, 2015, 2014, and 2013, we manufactured approximately 11.3%, 13.9%, and 15.1%, respectively, of our footwear productsinternally. We sourced the remaining footwear production from multiple third-party manufacturers primarily in China, Vietnam, Eastern Europe and7Table of ContentsSouth America. During the years ended December 31, 2015, 2014, and 2013, our largest third-party manufacturer in China produced approximately 26.6%,27.5%, and 28.0%, respectively, of our footwear unit volume. We do not have written supply agreements with our primary third-party manufacturers in Asia.Intellectual Property and TrademarksWe rely on a combination of trademarks, copyrights, trade secrets, trade dress and patent protections to establish, protect and enforce our intellectual propertyrights in our product designs, brands, materials, and research and development efforts, although no such methods can afford complete protection. We own orlicense the material trademarks used in connection with the marketing, distribution, and sale of all of our products, both domestically and internationally, inmost countries where our products are currently either sold or manufactured. Our major trademarks include the Crocs logo and the Crocs word mark, both ofwhich are registered or pending registration in the U.S., the European Union, Japan, Taiwan, China, and Canada among other places. We also haveregistrations or pending trademark applications for the marks Jibbitz, Jibbitz Logo, YOU by Crocs, YOU by Crocs Logo, Tail Logo, Bite, Bite Logo,Crocband, Crocs Tone, and Crocs Littles, "Croslite" and the Croslite logo, as well as other marks in various countries around the world.In the U.S., our patents are generally in effect for up to 20 years from the date of the filing of the patent application. Our trademarks registered within andoutside of the U.S. are generally valid as long as they are in use and their registrations are properly maintained and have not been found to become generic.We believe our trademarks are crucial to the successful marketing and sale of our products. We will continue to strategically register, both domestically andinternationally, the trademarks and copyrights we utilize today and those we develop in the future. We will also continue to aggressively police our patents,trademarks and copyrights and pursue those who infringe upon them, both domestically and internationally, as we deem necessary.We consider the formulations of the materials covered by our trademark Croslite and used to produce our shoes to be a valuable trade secret. Croslite materialis manufactured through a process that combines a number of components in various proportions to achieve the properties for which our products are known.We use multiple suppliers to source these components but protect the formula by using exclusive supply agreements for key components, confidentialityagreements with our third-party processors, and by requiring our employees to execute confidentiality agreements concerning the protection of ourconfidential information. Other than our third-party processors, we are unaware of any third party using our formula in the production of shoes. We believethe comfort and utility of our products depend on the properties achieved from the compounding of Croslite material and constitute a key competitiveadvantage for us, and we intend to continue to vigorously protect this trade secret.We also actively combat counterfeiting through monitoring of the global marketplace. We use our employees, sales representatives, distributors, and retailers,as well as outside investigators and attorneys, to police against infringing products by encouraging them to notify us of any suspect products and to assistlaw enforcement agencies. Our sales representatives and distributors are also educated on our patents, pending patents, trademarks and trade dress to assist inpreventing potentially infringing products from obtaining retail shelf space. The laws of certain countries do not protect intellectual property rights to thesame extent or in the same manner as do the laws of the U.S., and, therefore, we may have difficulty obtaining legal protection for our intellectual property incertain foreign jurisdictions.SeasonalityDue to the seasonal nature of our footwear, which is more heavily focused on styles suitable for warm weather, revenues generated during our fourth quarter istypically less than revenues generated during our first three quarters, when the northern hemisphere is experiencing warmer weather. We continue to8Table of Contentsexpand our product line to include more winter oriented styles to reduce the seasonality of our revenues. Our quarterly results of operations may alsofluctuate significantly as a result of a variety of other factors, including the timing of new model introductions, or general economic, or consumer confidence.Accordingly, results of operations and cash flows for any one quarter are not necessarily indicative of expected results for any other quarter or for any otheryear.BacklogWe receive a significant portion of orders from our wholesale customers and distributors that remain unfilled as of any date and, at that point, represent ordersscheduled to be shipped at a future date. We refer to these unfilled orders as backlog, which can be canceled by our customers at any time prior to shipment.Backlog only relates to wholesale and distributor orders for the next season and current season fill-in orders and excludes potential sales in our retail andinternet channels. Backlog as of a particular date is affected by a number of factors, including seasonality, manufacturing schedule and the timing of productshipments. Further, the mix of future and immediate delivery orders can vary significantly period over period. Backlog also is affected by the timing ofcustomers' orders and product availability. Due to these factors and business model changes around the globe, we believe backlog is an imprecise indicator offuture revenues that may be achieved in a fiscal period and cannot be relied upon.Foreign Currency Fluctuations on Revenues and Operating Income (Loss)As a global company, we have significant revenues, costs, assets, liabilities and intercompany balances denominated in currencies other than the U.S. Dollar.Accordingly, any amounts recorded in foreign currencies are translated into U.S. Dollars for consolidated financial reporting and are impacted by foreigncurrency fluctuations. While we enter into foreign currency exchange forward contracts as economic hedges to reduce our exposure to changes in exchangerates, the volatility of foreign currency exchange rates is dependent on many factors that cannot be forecasted with reliable accuracy and our forwardcontracts may not prove effective in reducing our exposures.CompetitionThe global casual, athletic and fashion footwear markets are highly competitive. Although we believe that we do not compete directly with any singlecompany with respect to the entire spectrum of our products, we believe portions of our wholesale, retail, and ecommerce businesses compete with companiesincluding, but not limited to, Deckers Outdoor Corp., Skechers USA Inc., Steve Madden, Ltd., Wolverine World Wide, Inc. and VF Corporation. Ourcompany-operated retail locations also compete with footwear retailers such as Genesco, Inc., Macy's, Dillard's, Dick's Sporting Goods Inc., The FinishLine Inc., and Footlocker, Inc.The principal elements of competition in these markets include brand awareness, product functionality, design, quality, pricing, customer service, andmarketing and distribution. We believe that our unique footwear designs, the Croslite material, our prices, our expanded product line, and our distributionnetwork continue to position us well in the marketplace. However, a number of companies in the casual footwear industry have greater financial resources,more comprehensive product lines, broader market presence, longer standing relationships with wholesalers, longer operating histories, greater distributioncapabilities, stronger brand recognition and greater marketing resources than we have. Furthermore, we face competition from new players who have beenattracted to the market with products similar to ours as the result of the unique design and success of our footwear products.EmployeesAs of December 31, 2015, we had approximately 5,400 full-time, part-time, and seasonal employees, of which approximately 3,600 were engaged in retail-related functions.9Table of ContentsAvailable InformationOur internet address is www.crocs.com where we post the following filings, free of charge, as soon as reasonably practicable after they are electronically filedwith or furnished to the Securities and Exchange Commission: our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports onForm 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the"Exchange Act"). Copies of any of these documents will be provided in print to any stockholder who submits a request in writing to Integrated CorporateRelations, 761 Main Avenue, Norwalk, CT 06851.10Table of Contents ITEM 1A. Risk Factors Described below are certain risks that our management believes are applicable to our business and the industry in which we operate. These risks have thepotential to materially adversely affect our business, results of operations, cash flows, financial condition, liquidity, or access to sources of financing. Therisks included here are not exhaustive and there may be additional risks that are not presently material or known. You should carefully consider each of thefollowing risks described below in conjunction with all other information presented in this report. Since we operate in a very competitive and rapidlychanging environment, new risk factors emerge from time to time and it is not possible for management to predict all such risk factors, nor can it assess theimpact of all such risk factors on our business.Uncertainty about current and future global economic conditions may adversely affect consumer spending and the financial health of our customers andothers with whom we do business, which may adversely affect our financial condition, results of operations and cash resources.Uncertainty about current and future global economic conditions may cause consumers and retailers to defer purchases or cancel purchase orders for ourproducts in response to tighter credit, decreased cash availability, and weakened consumer confidence. Our financial success is sensitive to changes ingeneral economic conditions, both globally and in specific markets, that may adversely affect the demand for our products including recessionary economiccycles, higher interest borrowing rates, higher fuel and other energy costs, inflation, increases in commodity prices, higher levels of unemployment, higherconsumer debt levels, higher tax rates and other changes in tax laws, or other economic factors. For example, in 2015 and 2014, we experienced difficulty inour Asia Pacific segment primarily due to decreased performance in our China business which resulted in delayed payments of receivables and increasedreserves for uncollectable accounts receivable. In 2015 and 2014, we also experienced volatility in sales in our Asia Pacific segment due to the continuedadverse macroeconomic conditions in China. If global economic and financial market conditions deteriorate or remain weak for an extended period of time,the following factors could have a material adverse effect on our business, operating results, cash flows and financial condition:•Slower consumer spending may result in our inability to maintain or increase our sales to new and existing customers, causing reduced orders or ordercancellations from wholesale accounts that are directly impacted by fluctuations in the broader economy, which may reduce in increased difficulty inmanaging inventory, higher discounting efforts, and lower product margins. •If consumer demand for our products declines, we may be unable to open and operate new retail stores, or continue to operate existing stores, due tothe high fixed cost nature of the retail segment. •Fluctuations in foreign currency exchange rates relative to the U.S. Dollar could have a material impact on our reported financial results andcondition. •Any decrease in available credit caused by a weakened global economy may result in financial difficulties for our wholesale and retail customers,product suppliers and other service providers, as well as the financial institutions that are counterparties to our credit facility and derivativetransactions. If credit pressures or other financial difficulties result in insolvency for these parties, it could adversely impact our estimated reserves, ourability to obtain future financing, and our financial results. •If our wholesale customers experience diminished liquidity, we may experience a reduction in product orders, an increase in customer ordercancellations, and/or the need to extend customer payment terms which could lead to higher accounts receivable balances, reduced cash flows, greaterexpense associated with collection efforts, and increased bad debt expense.11Table of Contents•If our manufacturers or other parties in our supply chain experience diminished liquidity, they may not meet their obligations to us, and we mayexperience the inability to meet customer product demands in a timely manner.China's deteriorating macro-economic environment could adversely affect sales in our Asia Pacific segment which may adversely affect our financialcondition and results of operations.Current and future global economic conditions may adversely affect consumer spending and the financial health of our customers and others with whom wedo business which may adversely affect our financial condition, results of operations, and cash resources. Macro-economic conditions in China havedeteriorated over the past several quarters resulting in softening consumer demand and payment delays from our China distributors which have negativelyimpacted the sales volumes and cash collections for our China operations. During 2015, we increased our allowance for doubtful accounts by an additional$23.2 million related to receivables in China as a result of distributors defaulting on their payment obligations. As a result of this adjustment, our remainingnet receivable balance in China is $5.1 million as of December 31, 2015. If the economic conditions in China continue to decline, we may experience furtherreductions in consumer demand in the China market resulting in additional losses. As our China operations represent approximately 8% of our total revenue,the impact of declining sales volumes in China could have a material adverse impact on our financial results in future periods.We are currently in negotiations with multiple China distributors regarding our terms of payment and there can be no assurance that these negotiationswill be successful. If we are not able to agree on acceptable terms with our China distributors, we may need to establish new distributor relationships andwe cannot guarantee if we will be able to do so within a reasonable time frame, if at all.In the third quarter of 2015, multiple China distributors failed to comply with the terms of their payment obligations. As a result, we have ceased allshipments to these distributors until we are able to develop mutually beneficial terms of payment for both current sales and aged receivables. There are noassurances our efforts to obtain payment will be successful. In the event we are not able to reach an agreement with these distributors we may terminate ourrelationship and look for new partners in the region. At this time we do not know how long it will take to establish new distributor relationships onacceptable terms to us or if we will be able to establish such relationships at all. If we are unable to establish new partnerships within a reasonable time frame,we could experience a significant decline in sales volumes within China in future periods which could have a material adverse effect on our businessincluding our financial results, cash flows, and financial condition.Foreign currency fluctuations could have a material adverse effect on our results of operations and financial condition.As a global company, we have significant revenues, costs, assets, liabilities, and intercompany balances denominated in currencies other than the U.S. Dollar.We pay the majority of expenses attributable to our foreign operations in the functional currency of the country in which such operations are conducted andpay the majority of our overseas third-party manufacturers in U.S. Dollars. Our ability to sell our products in foreign markets and the U.S. Dollar value of thesales made in foreign currencies can be significantly influenced by foreign currency fluctuations. In 2015, we experienced a decrease of $31.9 million inrevenue in our Asia Pacific segment related to foreign currency translation losses as a result of decreases in the value of the Japanese Yen and Chinese Yuancompared to the U.S. Dollar and a decrease of $43.3 million in our Europe segment related to foreign currency translation losses as a result of decreases in thevalue of the Euro and Ruble compared to the U.S. Dollar. A decrease in the value of foreign currencies relative to the U.S. Dollar could result in lowerrevenues, product price pressures, and increased losses from currency exchange rates. Price increases caused by currency exchange rate fluctuations couldmake our products less competitive or have an adverse effect on our profitability as most of our purchases from third-party12Table of Contentssuppliers are denominated in U.S. Dollars. Currency exchange rate fluctuations could also disrupt the business of the third-party manufacturers that produceour products by making their purchases of raw materials more expensive and more difficult to finance.While we enter into foreign currency exchange forward contracts as economic cash flow hedges to reduce our exposure to changes in exchange rates, thevolatility of foreign currency exchange rates is dependent on many factors that cannot be forecasted with reliable accuracy and our forward contracts may notprove effective in reducing our exposures.We face significant competition.The footwear industry is highly competitive. Continued growth in the market for casual footwear has encouraged the entry of new competitors into themarketplace and has increased competition from established companies. Our competitors include most major athletic and non-athletic footwear companiesand retailers with their own private label footwear products. A number of our competitors have significantly greater financial resources than us, morecomprehensive product lines, a broader market presence, longer standing relationships with wholesalers, a longer operating history, greater distributioncapabilities, stronger brand recognition, and spend substantially more than we do on product marketing. Our competitors' greater financial resources andcapabilities in these areas may enable them to better withstand periodic downturns in the footwear industry and general economic conditions, compete moreeffectively on the basis of price and production, and more quickly develop new products. Some of our competitors are offering products that are substantiallysimilar, in design and materials, to Crocs branded footwear. In addition, access to offshore manufacturing is also making it easier for new companies to enterthe markets in which we compete. If we fail to compete successfully in the future, our sales and profits may decline, we may lose market share, our financialcondition may deteriorate, and the market price of our common stock would likely fall.Our business relies significantly on the use of information technology and any material disruption to operational technology or failure to protect theintegrity and security of customer and employee information could harm our reputation and/or our ability to effectively operate our business.We rely heavily on the use of information technology systems and networks in our operations and supporting departments including marketing, accounting,finance, and human resources. The future success and growth of our business depend on streamlined processes made available through information systems,global communications, internet activity, and other network processes. Despite our current security measures, our systems, and those of our third-party serviceproviders, may be vulnerable to information security breaches, acts of vandalism, computer viruses, credit card fraud, phishing, and interruption or loss ofvaluable business data. Any disruption to these systems or networks could result in product fulfillment delays, key personnel being unable to perform dutiesor communicate throughout the organization, loss of retail and internet sales, significant costs for data restoration, and other adverse impacts on our businessand reputation.Over the last several years, we have implemented numerous information systems designed to support various areas of our business, including a fully-integrated global accounting, operations, and finance enterprise resource planning (ERP) system, and warehouse management, order management, retailpoint-of-sale, and internet point-of-sale systems, as well as various interfaces between these systems and supporting back office systems. Issues inimplementing or integrating new systems with our current operations, failure of these systems to operate effectively, problems with transitioning to upgradedor replacement systems, or a breach in security of these systems could cause delays in product fulfillment and reduced efficiency of our operations. This couldrequire significant additional capital investments, including to remediate problems, and may have an adverse effect on our results of operations and financialcondition.13Table of ContentsWe routinely possess sensitive customer and employee information. Hackers and data thieves are increasingly sophisticated and operate large-scale andcomplex automated attacks. Any breach of our network may result in the loss of valuable business data, misappropriation of our consumers' or employees'personal information, or a disruption of our business. Despite our existing security procedures and controls, if our network becomes compromised, it couldgive rise to unwanted media attention, materially damage our customer relationships, harm our business, reputation, results of operations, cash flows, andfinancial condition which could result in fines or lawsuits, and may increase the costs we incur to protect against such information security breaches, such asincreased investment in technology, the costs of compliance with consumer protection laws, and costs resulting from consumer fraud.We may be unable to successfully execute our long-term growth strategy, maintain or grow our current revenue and profit levels, or accurately forecastgeographic demand and supply for our products.Our ability to maintain our revenue and profit levels or to grow in the future depends on, among other things, the continued success of our efforts to maintainour brand image, our ability to bring compelling and profit enhancing footwear offerings to market, and our ability to expand within our current distributionchannels and increase sales of our products into new locations internationally. Successfully executing our long-term growth and profitability strategy willdepend on many factors, including:•Our ability to strengthen the Crocs brand globally into a leading casual lifestyle footwear provider; •Our ability to focus on relevant geographies and markets, product innovation and profitable new growth platforms while maintaining demand for ourcurrent offerings; •Our ability to effectively manage our retail stores (including closures of existing stores) while meeting operational and financial targets at the retailstore level; •Our ability to accurately forecast the global demand for our products and the timely execution of supply chain strategies to deliver product around theglobe efficiently based on that demand; •Our ability to use and protect the Crocs brand and our other intellectual property in new markets and territories; •Our ability to Achieve and maintain a strong competitive position in new and existing markets; •Our ability to attract and retain qualified distributors or agents or to continue to develop direct sales channels; •Our ability to consolidate our network to leverage resources and simplify our fulfillment process; and •Our ability to execute a multi-channel advertising and marketing campaign to effectively communicate our message directly to our consumers andemployees.If we are unable to successfully implement any of the above mentioned strategies and many other factors mentioned throughout this section, our businessmay fail to grow, our brand may suffer, and our results of operations and cash flows may be adversely impacted.There can be no assurance that the strategic plans we have begun to implement will be successful.In July 2014, we announced strategic plans for long-term improvement and growth of our business, which is comprised of four key initiatives:(1) streamlining the global product and marketing portfolio, (2) reducing direct investment in smaller geographic markets, (3) creating a more efficientorganizational structure including reducing duplicative and excess overhead which will also enhance the decision making process, and (4) closing orconverting retail locations around the world. The initial charges for the strategic plan were incurred in the first quarter of 2014 and continued through 2015.During 2014 and 2015, we closed 172 retail locations, offset by 112 new retail locations opened.14Table of ContentsWhile these strategic plans, along with other steps to be taken, are intended to improve and grow our business, there can be no assurance that this will be thecase, or that additional steps or material accounting charges will not be required. If additional steps are required, there can be no assurance that they will beproperly implemented or will be successful. The implementation of our new strategy may take a significant amount of time and resources to implement, andmay not impact our financial condition, results of operations and cash flows in the short term, or at all.We conduct significant business activity outside the U.S. which exposes us to risks of international commerce.A significant portion of our revenues is from foreign sales. Our ability to maintain the current level of operations in our existing international markets issubject to risks associated with international sales operations as well as the difficulties associated with promoting products in unfamiliar cultures. In additionto foreign manufacturing, we operate retail stores and sell our products to retailers outside of the U.S. Foreign manufacturing and sales activities are subject tonumerous risks including: tariffs, anti-dumping fines, import and export controls, and other non-tariff barriers such as quotas and local content rules; delaysassociated with the manufacture, transportation and delivery of products; increased transportation costs due to distance, energy prices, or other factors; delaysin the transportation and delivery of goods due to increased security concerns; restrictions on the transfer of funds; restrictions, due to privacy laws, on thehandling and transfer of consumer and other personal information; changes in governmental policies and regulations; political unrest, changes in law,terrorism, or war, any of which can interrupt commerce; potential violations of U.S. and foreign anti-corruption and anti-bribery laws by our employees,business partners or agents, despite our policies and procedures relating to compliance with these laws; expropriation and nationalization; difficulties inmanaging foreign operations effectively and efficiently from the U.S.; difficulties in understanding and complying with local laws, regulations and customsin foreign jurisdictions; longer accounts receivable patterns and difficulties in collecting foreign accounts receivables; difficulties in enforcing contractualand intellectual property rights; greater risk that our business partners do not comply with our policies and procedures relating to labor, health and safety;and increased accounting and internal control expenses. In addition, we are subject to customs laws and regulations with respect to our export and importactivity which are complex and vary within legal jurisdictions in which we operate. We cannot assure that there will be no control failure around customsenforcement despite the precautions we take. We are currently subject to audits by various customs authorities including the U.S. and Mexico. Any failure tocomply with customs laws and regulations could be discovered during a U.S. or foreign government customs audit, or customs authorities may disagree withour tariff treatments, and such actions could result in substantial fines and penalties, which could have an adverse effect on our financial position and resultsof operations.Our success depends substantially on the value of our brand and failure to strengthen and preserve this value, either through our actions or those of ourbusiness partners, could have a negative impact on our financial results.We believe much of our success has been attributable to the strengthening of the Crocs global brand. To be successful in the future, particularly outside of theU.S., where the Crocs brand is less well-known and perceived differently, we believe we must timely and appropriately respond to changing consumerdemand and leverage the value of our brand across all sales channels. We may have difficulty managing our brand image across markets and internationalborders as certain consumers may perceive our brand image to be outdated and one-dimensional prior to purchasing our products. Brand value is based inpart on consumer perceptions on a variety of subjective qualities. In the past, several footwear companies including ours have experienced periods of rapidgrowth in revenues and earnings followed by periods of declining sales and losses, our business may be similarly affected in the future. Business incidents,such as perceived product safety issues, whether isolated or recurring, that erode consumer trust, particularly if the incidents receive considerable publicity orresult in litigation, can significantly reduce brand value and have a negative impact on our financial results. Consumer demand for our products and ourbrand equity could diminish significantly if we fail to preserve the quality of our products, are perceived to act in an unethical or socially15Table of Contentsirresponsible manner, fail to comply with laws and regulations, or fail to deliver a consistently positive consumer experience in each of our markets.Additionally, counterfeit reproductions of our products or other infringement of our intellectual property rights, including from unauthorized uses of ourtrademarks by third parties, could harm our brand and adversely impact our business.If our online sales platform does not function effectively, our operating results could be materially adversely affected.Many of our customers buy our products on our e-commerce webstores as well as third-party webstores. Any failure on our part to provide effective, reliable,user-friendly e-commerce platforms, that offer a wide assortment of our merchandise, could place us at a competitive disadvantage, result in the loss of sales,and could have a material adverse impact on our business and results of operations. Sales in our e-commerce channel may also divert sales from our retail andwholesale channels.Opening and operating additional retail locations, which require substantial financial commitments and fixed costs, are subject to numerous risks anddeclines in revenue of such retail locations could adversely affect our profitability.Although we have slowed the expansion of our retail sales channel, we intend to continue to open outlet locations. Our ability to open new locationssuccessfully depends on our ability to identify suitable store locations, negotiate acceptable lease terms, hire, train, and retain store personnel and satisfy thefashion preferences in new geographic areas. Many of our retail locations are located in shopping malls where we depend on obtaining prominent locationsand the overall success of the malls to generate customer traffic. We cannot control the success of individual malls and an increase in store closures by otherretailers may lead to mall vacancies and reduced foot traffic. Reduced customer traffic could reduce sales of existing retail stores or hinder our ability to openretail stores in new markets, which could negatively affect our operating results and cash flows. In addition, some of our retail stores and kiosks occupy streetlocations that are heavily dependent on customer traffic generated by tourism. Any substantial decrease in tourism resulting from an economic slowdown,political, social or military events or otherwise, is likely to adversely affect sales in our existing stores and kiosks, particularly those with street locations.Opening retail stores globally involves substantial investment, including the construction of leasehold improvements, furniture and fixtures, equipment,information systems, inventory and personnel. Operating global retail stores incurs fixed costs; if we have insufficient sales, we may be unable to reduce suchfixed costs and avoid losses or negative cash flows.We may be required to record impairments of long-lived assets relating to our retail operations.The testing of our retail stores' long-lived assets for impairment requires us to make significant estimates about our future performance and cash flows that areinherently uncertain. These estimates can be affected by numerous factors, including changes in economic conditions, our results of operations, andcompetitive conditions in the industry. Due to the high fixed cost structure associated with our retail operations, negative cash flows or the closure of a storecould result in write downs of inventory, impairment of leasehold improvements, impairment losses on other long-lived assets, severance costs, significantlease termination costs or the loss of working capital, which could adversely impact our financial position, results of operations or cash flows. For example,during 2015, 2014, and 2013, we recorded impairments $15.3 million, $8.8 million and $10.9 million, respectively, of which $9.6 million, $8.8 million and$10.6 million, respectively, related to our retail stores. These impairment charges may increase as we evaluate our retail operations. The recording ofadditional impairments in the future may have a material adverse impact on our financial results.16Table of ContentsWe depend on key personnel across the globe, the loss of whom would harm our business.We rely on executives and senior management to drive the financial and operational performance of our business. Turnover of executives and seniormanagement can adversely impact our stock price, our results of operations, and our client relationships and may make recruiting for future managementpositions more difficult or may require us to offer more generous executive compensation packages to attract top executives. Changes in other keymanagement positions may temporarily affect our financial performance and results of operations as new management becomes familiar with our business. Inrecent years, we have experienced management turnover. Our future success depends on our ability to identify, attract and retain qualified personnel on atimely basis. In addition, we must successfully integrate any newly hired management personnel within our organization in order to achieve our operatingobjectives. Effective in January 2015, Gregg Ribatt was appointed as our Chief Executive Officer and effective in December 2015, Carrie Teffner wasappointed as Executive Vice President and Chief Financial Officer. Ms. Teffner resigned as a member of the Board prior to her start date with the Company.The key initiatives directed by these executives may take time to implement and yield positive results, if at all. If our new executives do not perform up toexpectations, we may experience declines in our financial performance and/or delays in our long-term growth strategy.As a global company, we also rely on a limited number of key international personnel to perform their functions at a high level in many of our geographicregions. In certain instances, one or two personnel may be the primary knowledge base for business operations in a geographic region. The loss of keyinternational personnel could adversely impact our operations and our client relationships.If we do not accurately forecast consumer demand, we may have excess inventory to liquidate or have greater difficulty filling our customers' orders, eitherof which could adversely affect our business.The footwear industry is subject to cyclical variations, consolidation, contraction and closings, as well as fashion trends, rapid changes in consumerpreferences, the effects of weather, general economic conditions and other factors affecting demand and possibly impairing our brand image. In addition,sales to our wholesale customers are generally subject to rights of cancellation and rescheduling by the customer. These factors make it difficult to forecastconsumer demand. If we overestimate demand for our products, we may be forced to liquidate excess inventories at discounted prices resulting in lower grossmargins. Conversely, if we underestimate consumer demand, we could have inventory shortages which can result in lower sales, delays in shipments tocustomers, strains on our relationships with customers and diminished brand loyalty. A decline in demand for our products, or any failure on our part tosatisfy increased demand for our products, could adversely affect our business and results of operations. In addition, an inability to accurately forecastconsumer demand could cause our revenue and earnings guidance to differ materially from our financial results.Expanding our footwear product line may be difficult and expensive. If we are unable to successfully continue such expansion, our brand may be adverselyaffected and we may not be able to maintain or grow our current revenue and profit levels.To successfully expand our footwear product line, we must anticipate, understand, and react to the rapidly changing tastes of consumers and provideappealing merchandise in a timely manner. New footwear models that we introduce may not be successful with consumers or our brand may fall out of favorwith consumers. If we are unable to anticipate, identify, or react appropriately to changes in consumer preferences, our revenues may decrease, our brandimage may suffer, our operating performance may decline, and we may not be able to execute our growth plans.In producing new footwear models, we may encounter difficulties that we did not anticipate during the product development stage. Our developmentschedules for new products are difficult to predict and are subject to change in response to consumer preferences and competing products. If we are not able to17Table of Contentsefficiently manufacture new products in quantities sufficient to support retail and wholesale distribution, we may not be able to recover our investment in thedevelopment of new styles and product lines and we would continue to be subject to the risks inherent to having a limited product line. Even if we developand manufacture new footwear products that consumers find appealing, the ultimate success of a new style may depend on our pricing. We have a limitedhistory of introducing new products in certain target markets; as such, we may set the prices of new styles too high for the market to bear or we may notprovide the appropriate level of marketing in order to educate the market and potential consumers about our new products. Achieving market acceptance willrequire us to exert substantial product development and marketing efforts, which could result in a material increase in our selling, general and administrativeexpenses and there can be no assurance that we will have the resources necessary to undertake such efforts effectively or that such efforts will be successful.Failure to gain market acceptance for new products could impede our ability to maintain or grow current revenue levels, reduce profits, adversely affect theimage of our brands, erode our competitive position and result in long-term harm to our business.Our quarterly revenues and operating results are subject to fluctuation as a result of a variety of factors, including seasonal variations, which couldincrease the volatility of the price of our common stock.Sales of our products are subject to seasonal variations and are sensitive to weather conditions. As a significant portion of our revenues are attributable tofootwear styles that are more suitable for fair weather and are derived from sales in the northern hemisphere, we typically experience our highest sales activityduring the second and third quarters of the calendar year, when there is fair weather in the northern hemisphere. While we continue to create new footwearstyles that are more suitable for cold weather, the effects of favorable or unfavorable weather on sales can be significant enough to affect our quarterly resultswhich could adversely affect our common stock price. Quarterly results may also fluctuate as a result of other factors, including new style introductions,general economic conditions or changes in consumer preferences. Results for any one quarter are not necessarily indicative of results to be expected for anyother quarter or for any year and revenues for any particular period may fluctuate. This could lead to results outside of analyst and investor expectations,which could increase volatility of our stock price.We depend heavily on third-party manufacturers located outside the U.S.Third-party manufacturers located in China and Vietnam produced the majority of our footwear products in 2015 and are expected to do so in 2016. Wedepend on the ability of these manufacturers to finance the production of goods ordered, maintain adequate manufacturing capacity and meet our qualitystandards. We compete with other companies for the production capacity of our third-party manufacturers, and we do not exert direct control over themanufacturers' operations. As such, we have experienced at times, delays or inabilities to fulfill customer demand and orders, particularly in China. Wecannot guarantee that any third-party manufacturer will have sufficient production capacity, meet our production deadlines or meet our quality standards.In addition, we do not have supply contracts with many of these third-party manufacturers and any of them may unilaterally terminate their relationship withus at any time or seek to increase the prices they charge us. As a result, we are not assured of an uninterrupted supply of products of an acceptable quality andprice from our third-party manufacturers. Foreign manufacturing is subject to additional risks, including transportation delays and interruptions, workstoppages, political instability, expropriation, nationalization, foreign currency fluctuations, changing economic conditions, changes in governmentalpolicies and the imposition of tariffs, import and export controls, and other barriers. We may not be able to offset any interruption or decrease in supply of ourproducts by increasing production in our internal manufacturing facilities due to capacity constraints, and we may not be able to substitute suitablealternative third-party manufacturers in a timely manner or at acceptable prices. Any disruption in the supply of products from our third-party manufacturersmay harm our business and could result in a loss of sales and an increase in production costs, which would adversely affect our results of operations. Inaddition, manufacturing delays18Table of Contentsor unexpected demand for our products may require us to use faster, more expensive transportation methods, such as aircraft, which could adversely affect ourprofit margins. The cost of fuel is a significant component in transportation costs. Increases in the price of petroleum products can adversely affect our profitmargins.In addition, because a large portion of our footwear products is manufactured in China and Vietnam, the possibility of adverse changes in trade or politicalrelations between the U.S. and these countries, political instability in China, increases in labor costs, or adverse weather conditions could significantlyinterfere with the production and shipment of our products, which would have a material adverse effect on our operations and financial results.We manufacture a portion of our products which causes us to incur greater fixed costs. Any difficulties or disruptions in our manufacturing operationscould adversely affect our sales and results of operations.We produce a portion of our footwear products at our internal manufacturing facilities in Mexico and Italy. Ownership of these facilities adds fixed costs toour cost structure which are not as easily scalable as variable costs. In addition, the manufacture of our products from the Croslite material requires the use ofa complex process and we may experience difficulty in producing footwear that meets our high quality control standards. We will be required to absorb thecosts of manufacturing and disposing of products that do not meet our quality standards. Any increases in our manufacturing costs could adversely impactour profit margins. Furthermore, our manufacturing capabilities are subject to many of the same risks and challenges faced by our third-party manufacturers,including our ability to scale our production capabilities to meet the needs of our customers. Our manufacturing may also be disrupted for reasons beyondour control, including work stoppages, fires, earthquakes, floods or other natural disasters. Any disruption to our manufacturing operations will hinder ourability to deliver products to our customers in a timely manner and could have a material and adverse effect on our business, results of operations and cashflows.Our third-party manufacturing operations must comply with labor, trade and other laws; failure to do so may adversely affect us.We require our third-party manufacturers to meet our quality control standards and footwear industry standards for working conditions and other matters,including compliance with applicable labor, environmental, and other laws; however, we do not control our third-party manufacturers or their respectivelabor practices. A failure by any of our third-party manufacturers to adhere to quality standards or labor, environmental and other laws could cause us to incuradditional costs for our products, generate negative publicity, damage our reputation and the value of our brand, and discourage customers from buying ourproducts. We also require our third-party manufacturers to meet certain product safety standards. A failure by any of our third-party manufacturers to adhere tosuch product safety standards could lead to a product recall which could result in critical media coverage and harm our business and reputation and couldcause us to incur additional costs.In addition, if we or our third-party manufacturers violate U.S. or foreign trade laws or regulations, we may be subject to extra duties, significant monetarypenalties, the seizure and the forfeiture of the products we are attempting to import, or the loss of our import privileges. Possible violations of U.S. or foreignlaws or regulations could include inadequate record keeping of our imported products, misstatements or errors as to the origin, quota category, classification,marketing or valuation of our imported products, fraudulent visas or labor violations. The effects of these factors could render our conduct of business in aparticular country undesirable or impractical and have a negative impact on our operating results. We cannot predict whether additional U.S. or foreigncustoms quotas, duties, taxes or other charges, or if restrictions will be imposed upon the importation of foreign produced products in the future or what effectsuch actions could have on our business, financial condition, or results of operations.19Table of ContentsOur revolving credit facility contains financial covenants that require us to maintain certain financial metrics and ratios and restrictive covenants thatlimit our flexibility. A breach of those covenants may cause us to be in default under the facility, and our lenders could foreclose on our assets.The credit agreement for our revolving credit facility requires us to maintain certain financial covenants. A failure to maintain current revenue levels or aninability to control costs or capital expenditures could negatively impact our ability to meet these financial covenants. If we breach any of these restrictivecovenants, the lenders could either refuse to lend funds to us or accelerate the repayment of any outstanding borrowings under the revolving credit facility.We may not have sufficient assets to repay such indebtedness upon a default or receive a waiver of the default from the lender. If we are unable to repay theindebtedness, the lender could initiate a bankruptcy proceeding or collection proceedings with respect to our assets, all of which secure our indebtednessunder the revolving credit facility.The credit agreement also contains certain restrictive covenants that limit and in some circumstances prohibit, our ability to, among other things incuradditional debt, sell, lease or transfer our assets, pay dividends on our common stock, make capital expenditures and investments, guarantee debt orobligations, create liens, repurchase our common stock, enter into transactions with our affiliates and enter into certain merger, consolidation or otherreorganizations transactions. These restrictions could limit our ability to obtain future financing, make acquisitions or needed capital expenditures, withstandthe current or future downturns in our business or the economy in general, conduct operations or otherwise take advantage of business opportunities that mayarise, any of which could place us at a competitive disadvantage relative to our competitors.Our financial success may be limited to the strength of our relationships with our wholesale customers and to the success of such wholesale customers.Our financial success is related to the willingness of our current and prospective wholesale customers to carry our products. We do not have long termcontracts with any of our wholesale customers. Sales to our wholesale customers are generally on an order-by-order basis and are subject to rights ofcancellation and rescheduling by the customer. If we cannot fill our customers' orders in a timely manner, the sales of our products and our relationships withthose customers may suffer. Alternatively, if our customers experience diminished liquidity or other financial issues, we may experience a reduction inproduct orders, an increase in customer order cancellations and/or the need to extend customer payment terms which could lead to higher accounts receivablebalances, reduced cash flows, greater expense associated with collection efforts, and increased bad debt expense. Specifically, we recorded a reserve fordoubtful accounts of approximately $23.2 million in China for the year ended December 31, 2015, primarily as a result of delayed payments from our partnerstores in China. Additional problems with our wholesale customers, including continued payment delays in the Asia Pacific segment or other segments fromregional wholesale partners may have a material adverse effect on our product sales, financial condition, results of operations and our ability to grow ourproduct line.We depend on a limited number of suppliers for key production materials, and any disruption in the supply of such materials could interrupt productmanufacturing and increase product costs.We depend on a limited number of sources for the primary materials used to make our footwear. We source the elastomer resins that constitute the primary rawmaterials used in compounding our Croslite products, which we use to produce our various footwear products, from multiple suppliers. If the suppliers we relyon for elastomer resins were to cease production of these materials, we may not be able to obtain suitable substitute materials in time to avoid interruption ofour production cycle. We are also subject to market issues related to supply and demand for our raw materials. We may have to pay substantially higher pricesin the future for the elastomer resins or any substitute materials we use, which would increase our production costs and could have a significantly adverseimpact on our profit margins and results of operations. If we are unable to obtain suitable elastomer resins or if we are unable to procure sufficient20Table of Contentsquantities of the Croslite material, we may not be able to meet our production requirements in a timely manner or may need to modify our productcharacteristics resulting in less favorable market acceptance which could result in lost potential sales, delays in shipments to customers, strained relationshipswith customers and diminished brand loyalty.Failure to adequately protect our trademarks and other intellectual property rights and counterfeiting of our brands could divert sales, damage our brandimage and adversely affect our business.We utilize trademarks, trade names, copyrights, trade secrets, issued and pending patents and trade dress and designs on nearly all of our products. We believethat having distinctive marks that are readily identifiable is important to our brand, our success and our competitive position. The laws of some countries, forexample, China, do not protect intellectual property rights to the same extent as do U.S. laws. We frequently discover products that are counterfeitreproductions of our products or that otherwise infringe on our intellectual property rights. If we are unsuccessful in challenging another party's products onthe basis of trademark or design or utility patent infringement, particularly in some foreign countries, or if we are required to change our name or use adifferent logo, continued sales of such competing products by third parties could harm our brand and adversely impact our business, financial condition,revenues, and results of operations by resulting in the shift of consumer preference away from our products. If our brands are associated with inferiorcounterfeit reproductions, the integrity and reputation of our brands could be adversely affected. Furthermore, our efforts to enforce our intellectual propertyrights are typically met with defenses and counterclaims attacking the validity and enforceability of our intellectual property rights. We may face significantexpenses and liability in connection with the protection of our intellectual property, and if we are unable to successfully protect our rights or resolveintellectual property conflicts with others, our business or financial condition could be adversely affected.We also rely on trade secrets, confidential information, and other unpatented proprietary rights and information related to, among other things, the Croslitematerial and product development, particularly where we do not believe patent protection is appropriate or obtainable. Using third-party manufacturers andcompounding facilities may increase the risk of misappropriation of our trade secrets, confidential information and other unpatented proprietary information.The agreements we use in an effort to protect our intellectual property, confidential information, and other unpatented proprietary information may beineffective or insufficient to prevent unauthorized use or disclosure of such trade secrets and information. A party to one of these agreements may breach theagreement and we may not have adequate remedies for such breach. As a result, our trade secrets, confidential information, and other unpatented proprietaryrights and information may become known to others, including our competitors. Furthermore, our competitors or others may independently develop ordiscover such trade secrets and information, which would render them less valuable to us.We have substantial cash requirements in the U.S.; however, a majority of our cash is generated and held outside of the U.S. The consequential risks ofholding cash abroad could adversely affect our financial condition and results of operations.We have substantial cash requirements in the U.S., but the majority of our cash is generated and held abroad. We generally consider unremitted earnings ofsubsidiaries operating outside of the U.S. to be indefinitely reinvested and it is not our current intent to change this position. Cash held outside of the U.S. isprimarily used for the ongoing operations of the business in the locations in which the cash is held. Most of the cash held outside of the U.S. could berepatriated to the U.S., but under current law, would be subject to U.S. federal and state income taxes, less applicable foreign tax credits. In some countries,repatriation of certain foreign balances is restricted by local laws and could have adverse tax consequences if we were to move the cash to another country.Certain countries, including China, may have monetary laws which may limit our ability to utilize cash resources in those countries for operations in othercountries. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or21Table of Contentsother countries and may adversely affect our liquidity. Since repatriation of such cash is subject to limitations and may be subject to significant taxation, wecannot be certain that we will be able to repatriate such cash on favorable terms or in a timely manner. If we incur operating losses on a continued basis andrequire cash that is held in international accounts for use in our U.S. operations, a failure to repatriate such cash in a timely and cost-effective manner couldadversely affect our business, financial condition and results of operations.We are subject to periodic litigation, which could result in unexpected expense of time and resources.From time to time, we are called upon to defend ourselves against lawsuits relating to our business. Due to the inherent uncertainties of litigation, we cannotaccurately predict the ultimate outcome of any such proceedings. We are currently involved in several, potentially adverse legal proceedings. For a detaileddiscussion of our current material legal proceedings, see Item 3. Legal Proceedings in Part I of this Form 10-K. An unfavorable outcome in any of theseproceedings or any future legal proceedings could have an adverse impact on our business, financial condition and results of operations. In addition, anysignificant litigation in the future, regardless of its merits, could divert management's attention from our operations and result in substantial legal fees. In thepast, securities class action litigation has been brought against us. If our stock price is volatile, we may become involved in this type of litigation in thefuture. Any litigation could result in substantial costs and a diversion of management's attention and resources that are needed to successfully run ourbusiness.We may fail to meet analyst expectations, which could cause the price of our stock to decline.Our common stock is traded publicly and various securities analysts follow our financial results and frequently issue reports on us which include informationabout our historical financial results as well as their estimates of our future performance. These estimates are based on their own opinions and are oftendifferent from management's estimates or expectations of our business. If our operating results are below the estimates or expectations of public marketanalysts and investors, our stock price could decline.Changes in tax laws and unanticipated tax liabilities and the results of tax audits or litigation could adversely affect our effective income tax rate andprofitability.We are subject to income taxes in the United States and numerous foreign jurisdictions. Our effective income tax rate in the future could be adversely affectedby a number of factors, including changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assetsand liabilities, changes in tax laws, the outcome of income tax audits in various jurisdictions around the world and any repatriation of non-U.S. earnings forwhich we have not previously provided for U.S. taxes. We regularly assess all of these matters to determine the adequacy of our tax provision, which issubject to significant discretion and we could face significant adverse impact if our assumptions are incorrect and/or face significant cost to defend ourpractices from international and U.S. tax authorities. We are regularly subject to, and are currently undergoing, audits by tax authorities in the United Statesand foreign jurisdictions for prior tax years. Please refer to Item 3. Legal Proceedings in Part I of this Form 10-K as well as Note 17—Commitments andContingencies in the accompanying notes to the consolidated financial statements for additional details regarding current tax audits. Although we believeour tax estimates are reasonable and we intend to defend our positions through litigation if necessary, the final outcome of tax audits and related litigation isinherently uncertain and could be materially different than that reflected in our historical income tax provisions and accruals. Moreover, we could be subjectto assessments of substantial additional taxes and/or fines or penalties relating to ongoing or future audits. The adverse resolution of any audits or litigationcould have an adverse effect on our financial position and results of operations. Future changes in domestic or international tax laws and regulations couldalso adversely affect our income tax liabilities. Recent developments, including the European Commission's investigations of local country tax authorityrulings and whether those rulings comply with European22Table of ContentsUnion rules on state aid, as well as the Organization for Economic Co-operation and Development's project on Base Erosion and Profit Shifting, may result inchanges to long-standing tax principles. Any such changes could adversely affect our effective tax rate or result in higher cash tax liabilities.We are required to pay regular dividends on the Series A Convertible Preferred Stock, par value $0.001 per share ("Series A Preferred Stock") issued toBlackstone Capital Partners VI L.P. ("Blackstone") in 2014, which ranks senior to our common stock, and we may be required under certaincircumstances to repurchase the outstanding shares of Series A Preferred Stock; such obligations could adversely affect our liquidity and financialcondition.The Series A Preferred Stock ranks senior to our common stock with respect to dividend rights, and holders of Series A Preferred Stock are entitled tocumulative dividends payable quarterly in cash at a rate of 6% per annum of the stated value of $1,000 per share. These regular cash dividends on ourSeries A Preferred Stock are payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. If we fail to make timely dividend payments,the dividend rate will increase to 8% per annum until such time as all accrued but unpaid dividends have been paid in full. In addition, the holders of ourSeries A Preferred Stock have certain redemption rights, including upon certain change in control events involving us, which, if exercised, could require us torepurchase all of the outstanding shares of Series A Preferred Stock at 100% or more of the stated value of the shares, plus all accrued but unpaid dividends.Our obligations to pay regular dividends to the holders of our Series A Preferred Stock or any required repurchase of the outstanding shares of Series APreferred Stock could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities,acquisitions, and other general corporate purposes. Our obligations to the holders of Series A Preferred Stock could also limit our ability to obtain additionalfinancing or increase our borrowing costs, which could have an adverse effect on our financial condition.Our financial results may be adversely affected if substantial investments in businesses and operations fail to produce expected returns.From time to time, we may invest in business infrastructure, acquisitions of new businesses, and expansion of existing businesses, such as our retailoperations, which require substantial cash investment and management attention. We believe cost effective investments are essential to business growth andprofitability; however, significant investments are subject to typical risks and uncertainties inherent in acquiring or expanding a business. The failure of anysignificant investment to provide the returns or profitability we expect or the failure to integrate newly acquired businesses could have a material adverseeffect on our financial results and divert management attention from more profitable business operations.If our internal controls are ineffective, our operating results and market confidence in our reported financial information could be adversely affected.Our internal control over financial reporting may not prevent or detect misstatements because of its inherent limitations, including the possibility of humanerror, the circumvention or overriding of controls or fraud. Even effective internal controls can provide only reasonable assurance with respect to thepreparation and fair presentation of financial statements. If we fail to maintain the adequacy of our internal controls or if we experience difficulties in theirimplementation, our business and operating results and market confidence in our reported financial information could be harmed and we could fail to meetour financial reporting obligations.As of December 31, 2015, we identified material weaknesses in our internal control over financial reporting, which led us to conclude that our internalcontrol over financial reporting as of such date was not effective. The material weaknesses identified related to controls over the period end closingprocedures and inventory monitoring. These material weaknesses are more fully explained below in Part II Item 9A of this Form 10-K.23Table of ContentsThe existence of such material weaknesses preclude management from concluding that our internal control over financial reporting is effective and precludesour independent auditors from issuing an unqualified opinion that our internal controls are effective. In addition, these material weaknesses could causeinvestors to lose confidence in our financial reporting and may negatively affect the price of our common stock. We also can make no assurances that we willbe able to timely and cost effectively remediate these internal control deficiencies. Moreover, effective internal controls are necessary to produce reliablefinancial reports and to prevent fraud. If we are unable to satisfactorily remediate these deficiencies or if we discover other deficiencies in our internal controlover financial reporting, such deficiencies may lead to misstatements in our financial statements or otherwise negatively impact our financial statements,business, results of operations, and reputation.Natural disasters could negatively impact our operating results and financial condition.Natural disasters such as earthquakes, hurricanes, tsunamis or other adverse weather and climate conditions, whether occurring in the U.S. or abroad, and theconsequences and effects thereof, including damage to our supply chain, manufacturing or distribution centers, energy shortages, and public health issues,could disrupt our operations or the operations of our vendors and other suppliers, or result in economic instability that may negatively impact our operatingresults and financial condition.The issuance of 200,000 shares of our Series A Preferred Stock to Blackstone in 2014 and certain of its permitted transferees reduces the relative votingpower of holders of our common stock, may dilute the ownership of such holders, and may adversely affect the market price of our common stock.On January 27, 2014, we issued 200,000 shares of Series A Preferred Stock to Blackstone and certain of its permitted transferees (collectively, the "BlackstonePurchasers") pursuant to an Investment Agreement between us and Blackstone, dated December 28, 2013 (as amended, the "Investment Agreement"). TheBlackstone Purchasers currently own all of the outstanding shares of Series A Preferred Stock, and based on the number of shares of our common stockoutstanding as of December 31, 2015, the Blackstone Purchasers collectively own Series A Preferred Stock convertible into approximately 15.9% of ourcommon stock. As holders of our Series A Preferred Stock are entitled to vote, on an as-converted basis, together with holders of our common stock as a singleclass on all matters submitted to a vote of our common stock holders, the issuance of the Series A Preferred Stock to the Blackstone Purchasers has effectivelyreduced the relative voting power of the holders of our common stock.In addition, conversion of the Series A Preferred Stock to common stock will dilute the ownership interest of existing holders of our common stock, and anysales in the public market of the common stock issuable upon conversion of the Series A Preferred Stock could adversely affect prevailing market prices ofour common stock. We have granted the Blackstone Purchasers registration rights in respect of the shares of Series A Preferred Stock and any shares ofcommon stock issued upon conversion of the Series A Preferred Stock. These registration rights would facilitate the resale of such securities into the publicmarket, and any such resale would increase the number of shares of our common stock available for public trading. Sales by the Blackstone Purchasers of asubstantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect onthe price of our common stock.Blackstone may exercise significant influence over us, including through its ability to elect up to two members of our Board of Directors.As of December 31, 2015, the shares of Series A Preferred Stock owned by the Blackstone Purchasers represent approximately 15.9% of the voting rights ofour common stock, on an as-converted basis, so the Blackstone Purchasers will have the ability to significantly influence the outcome of any mattersubmitted for the vote of our stockholders. In addition, the Certificate of Designations of the Series A Preferred Stock grants certain consent rights to theholders of Series A Preferred Stock in respect of certain actions24Table of Contentsby the Company, including the issuance of pari passu or senior equity securities of the Company, certain amendments to our certificate of incorporation orbylaws, any increase in the size of our Board of Directors (the "Board") above eight members, the payment of certain distributions to our stockholders, and theincurrence or refinancing of a certain level of indebtedness. The Blackstone Purchasers may have interests that diverge from, or even conflict with, those ofour other stockholders. For example, Blackstone and its affiliates may have an interest in directly or indirectly pursuing acquisitions, divestitures, financingsor other transactions that, in their judgment, could enhance their other equity investments, even though such transactions might involve risks to us.Blackstone and its affiliates are in the business of making or advising on investments in companies, including businesses that may directly or indirectlycompete with certain portions of our business. They may also pursue acquisition opportunities that may be complementary to our business, and, as a result,those acquisition opportunities may not be available to us.In addition, the Investment Agreement grants Blackstone certain rights to designate directors to serve on our Board. For so long as the Blackstone purchasers(i) beneficially own at least 95% of the Series A Preferred Stock or the as-converted common stock purchased pursuant to the Investment Agreement or(ii) maintain beneficial ownership of at least 12.5% of our outstanding common stock (the "Two-Director Threshold"), Blackstone will have the right todesignate for nomination two directors to our Board. For so long as the Blackstone purchasers beneficially own shares of Series A Preferred Stock or the as-converted common stock purchased pursuant to the Investment Agreement that represent less than the Two-Director Threshold but more than 25% of thenumber of shares of the as-converted common stock purchased pursuant to the Investment Agreement, Blackstone will have the right to designate fornomination one director to our Board. The directors designated by Blackstone are entitled to serve on Board committees, subject to applicable law and stockexchange rules.Our restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that could discourage a third party fromacquiring us and consequently decrease the market value of an investment in our stock.Our restated certificate of incorporation, amended and restated bylaws, and Delaware corporate law each contain provisions that could delay, defer, or preventa change in control of us or changes in our management. These provisions could discourage proxy contests and make it more difficult for our stockholders toelect directors and take other corporate actions, which may prevent a change of control or changes in our management that a stockholder might considerfavorable. In addition, Section 203 of the Delaware General Corporation Law may discourage, delay, or prevent a change in control of us. Any delay orprevention of a change of control or change in management that stockholders might otherwise consider to be favorable could cause the market price of ourcommon stock to decline. ITEM 1B. Unresolved Staff Comments None. ITEM 2. Properties Our principal executive and administrative offices are located at 7477 East Dry Creek Parkway, Niwot, Colorado 80503. We lease, rather than own, all of ourdomestic and international facilities. We currently enter into short-term and long-term leases for kiosk, manufacturing, office, outlet, retail, and warehousespace. The terms of our leases include fixed monthly rents and/or contingent rents based on percentage of25Table of Contentsrevenues for certain of our retail locations, and expire at various dates through the year 2033. The general location, use and approximate size of our principalproperties are given below.In addition to the principal properties listed above, we maintain small branch sales offices in the United States, Canada, South America, Taiwan, Hong Kong,Australia, Korea, China, the United Arab Emirates, India and Europe. We also lease more than 550 retail, outlet and kiosk/store in store locations worldwide.See Item 1 of this Form 10-K for further discussion regarding global company-operated stores. ITEM 3. Legal Proceedings We are currently subject to an audit by U.S. Customs & Border Protection ("CBP") in respect of the period from 2006 to 2010. In October 2013, CBP issuedthe final audit report. In that report CBP projects that unpaid duties totaling approximately $12.4 million are due for the period under review andrecommends collection of the duties due. We responded that these projections are erroneous and provided arguments that demonstrate the amount due inconnection with this matter is considerably less than the projection. Additionally, on December 12, 2014, we made an offer to settle CBP's potential claimsand tendered $3.5 million. At this time, it is not possible to determine how long it will take CBP to evaluate our offer or to predict whether our offer will beaccepted. Likewise, if a settlement cannot be reached, it is not possible to predict with any certainty whether CBP will seek to assert a claim for penalties inaddition to any unpaid duties, but such an assertion is a possibility.We are currently subject to an audit by the Brazilian Federal Tax Authorities related to imports of footwear from China between 2010 and 2014. OnJanuary 13, 2015, we were notified about the issuance of assessments totaling approximately $3.7 million for the period January 2010 through May 2011.We have disputed these assessments and asserted defenses to the claims. On February 25, 2015, we received additional assessments totaling approximately$8.4 million related to the remainder of the audit period. We have also disputed these assessments and asserted defenses and filed an appeal to these claims. Itis anticipated that this matter will take up to several years to be resolved. It is not possible at this time to predict the outcome of this matter.On August 8, 2014, a purported class action lawsuit was filed in California State Court against a Crocs subsidiary, Crocs Retail, LLC (Zaydenberg v. CrocsRetail, LLC, Case No. BC554214). The lawsuit alleged various employment law violations related to overtime, meal and break periods, minimum wage,timely payment of wages, wage statements, payroll records and business expenses. We filed an answer on February 6, 2015, denying the allegations andasserting several defenses. On June 3, 2015, a second purported class action lawsuit was filed in California State Court against Crocs Retail, LLC (ChristopherS. Duree and Richard Morely v. Crocs, Inc., Case No. BC583875), making substantially the same allegations26Location Reportable Operating Segment(s)that Use this Property Use ApproximateSquare Feet Ontario, California Americas Warehouse 399,000 Leon, Mexico Americas, Asia Pacific, Europe Manufacturing/warehouse/offices 392,000 Shenzen, China Asia Pacific Warehouse/offices 263,000 Rotterdam, the Netherlands Europe Warehouse 174,000 Niwot, Colorado Americas Corporate headquarters and regional offices 158,000 Narita, Japan(1) Asia Pacific Warehouse 156,000 Padova, Italy Americas, Asia Pacific, Europe Manufacturing/warehouse/offices 45,000 Singapore Asia Pacific Regional offices 37,000 Hoofddorf, the Netherlands Europe Regional offices 31,000 Bhiwandi, India Asia Warehouse 29,000 Gordon's Bay, South Africa Asia Pacific Warehouse/offices 28,000 Boston, Massachusetts Americas Global Commercial Center 16,000 Tokyo, Japan Asia Pacific Regional offices 14,000 Shanghai, China Asia Pacific Regional offices 13,000 (1)The warehouse facilities in this location are fully or partially subleased.Table of Contentsas in the Zaydenberg lawsuit. The parties attended a mediation on June 26, 2015, and reached a settlement for $1.5 million, which will release the claims inboth lawsuits. On September 4, 2015, the California State Court granted preliminary approval of the settlement and set the final approval hearing forDecember 14, 2015. At the final approval hearing, the California State Court entered its final order approving the settlement and final judgement. Weconsider this matter closed.Although we are subject to other litigation from time to time in the ordinary course of business, including employment, intellectual property and productliability claims, we are not party to any other pending legal proceedings that we believe would reasonably have a material adverse impact on its business,financial position, results of operations or cash flows. ITEM 4. Mine Safety Disclosures None.27Table of Contents PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market InformationOur common stock, par value $0.001, is listed on the NASDAQ Global Select Market and trades under the stock symbol "CROX". The following table showsthe high and low sales prices of our common stock for the periods indicated. 28Fiscal Year 2015—Three Months Ended High Low March 31, 2015 $12.78 $10.25 June 30, 2015 $16.05 $11.55 September 30, 2015 $15.86 $12.52 December 31, 2015 $12.30 $9.26 Fiscal Year 2014—Three Months Ended High Low March 31, 2014 $16.88 $14.41 June 30, 2014 $15.78 $14.15 September 30, 2014 $16.83 $12.25 December 31, 2014 $13.47 $11.33 Table of ContentsPerformance GraphThe following performance graph illustrates a five-year comparison of cumulative total return of our common stock, the NASDAQ Composite Index and theDow Jones U.S. Footwear Index from December 31, 2010 through December 31, 2015. The graph assumes an investment of $100 on December 31, 2010 andassumes the reinvestment of all dividends and other distributions. Comparison of Cumulative Total Return on Investment The Dow Jones U.S. Footwear Index is a sector index and includes companies in the major line of business in which we compete. This index does notencompass all of our competitors or all of our product categories and lines of business. The Dow Jones U.S. Footwear Index consists of Crocs, Inc., NIKE, Inc.,Deckers Outdoor Corp., Iconix Brand Group, Inc., Skechers U.S.A., Inc. Steven Madden Ltd. and Wolverine World Wide, Inc., among other companies. AsCrocs, Inc. is part of the Dow Jones U.S. Footwear Index, the price and returns of our stock have an effect on this index. The Nasdaq Composite Index is amarket capitalization-weighted index and consists of more than 3,000 common equities, including Crocs, Inc. The stock performance shown on theperformance graph above is not necessarily indicative of future performance. We do not make or endorse any predictions as to future stock performance.HoldersThe approximate number of stockholders of record of our common stock was 90 as of February 22, 2016.DividendsWe have never declared or paid cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in theforeseeable future. Our financing arrangements contain certain restrictions on our ability to pay cash dividends on our common stock. In addition, theCertificate of Designations governing the Series A Convertible Preferred Stock that we issued in January 2014 restricts29 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 Crocs, Inc. $86.27 $84.05 $92.99 $72.96 $59.81 Dow Jones US Footwear Index $111.21 $116.53 $178.83 $208.06 $254.36 Nasdaq Composite Index $98.2 $113.82 $157.44 $178.53 $188.75 Table of Contentsus from declaring and paying certain dividends on our common stock if we fail to pay all accumulated and unpaid regular dividends and/or declared andunpaid participating dividends to which the preferred holders are entitled. Any future determination to declare cash dividends on our common stock will bemade at the discretion of our Board of Directors (the "Board"), subject to compliance with covenants under any then-existing financing agreements and theterms of the Certificate of Designations.Purchases of Equity Securities by the Issuer30Period TotalNumber ofShares(or Units)Purchased AveragePrice Paidper Share(or Unit) Total Number ofShares (or Units)Purchased asPart of PubliclyAnnounced Plansor Programs(1) Approximate DollarValue of Shares or UnitsThat May Yet BePurchased Under thePlans or Programs(in thousands) October 1, 2015 to October 31, 2015 — $— — $128,647 November 1, 2015 to November 30, 2015 — $— — $128,647 December 1, 2015 to December 31, 2015 917,971 $10.86 917,971 $118,676 Total 917,971 $10.86 917,971 $118,676 (1)On December 26, 2013, our board approved the repurchase of up to $350.0 million of our common stock, which was announced onDecember 30, 2013. This authorization replaced our previous stock repurchase authorizations. During the three months endedDecember 31, 2015, we repurchased approximately 918 thousand shares at a weighted average price of $10.86 per share for anaggregate price of approximately $10.0 million excluding related commission charges, under our publicly-announced repurchaseplan. As of December 31, 2015, approximately $118.7 million of shares remained available for repurchase under our share repurchaseauthorization. The number, price, structure and timing of the repurchases, if any, will be at our sole discretion and future repurchaseswill be evaluated by us depending on market conditions, liquidity needs and other factors. Share repurchases may be made in the openmarket or in privately negotiated transactions. The repurchase authorization does not have an expiration date and does not oblige usto acquire any particular amount of our common stock. The Board of Directors may suspend, modify or terminate the repurchaseprogram at any time without prior notice.Table of Contents ITEM 6. Selected Financial Data The following table presents selected historical financial data for each of our last five fiscal years. The information in this table should be read in conjunctionwith the consolidated financial statements and accompanying notes and with Management's Discussion and Analysis of Financial Conditions and Results ofOperations included in Item 7 of this Form 10-K.31 Year Ended December 31, 2015 2014 2013 2012 2011 (in thousands, except per share data) Revenues $1,090,630 $1,198,223 $1,192,680 $1,123,301 $1,000,903 Cost of sales 579,825 603,893 569,482 515,324 464,493 Restructuring charges — 3,985 — — — Gross profit 510,805 590,345 623,198 607,977 536,410 Gross margin % 46.8% 49.3% 52.3% 54.1% 53.6%Selling, general and administrative expenses 559,095 565,712 549,154 460,393 404,803 Selling, general and administrative expenses as a% of revenue 51.3% 47.2% 46.0% 41.0% 40.4%Restructuring charges 8,728 20,532 — — — Asset impairment charges 15,306 8,827 10,949 1,410 528 Income (loss) from operations $(72,324)$(4,726)$63,095 $146,174 $131,079 Income (loss) before income taxes $(74,744)$(8,549)$59,959 $145,548 $136,690 Income tax benefit (expense) (8,452) 3,623 (49,539) (14,205) (23,902)Net income (loss) $(83,196)$(4,926)$10,420 $131,343 $112,788 Dividends on Series A convertible preferredstock: (11,833) (11,301) — — — Dividend equivalents on Series A convertiblepreferred shares related to redemption valueaccretion and beneficial conversion feature (2,978) (2,735) — — — Net income (loss) attributable to commonstockholders $(98,007)$(18,962)$10,420 $131,343 $112,788 Basic $(1.30)$(0.22)$0.12 $1.46 $1.27 Diluted $(1.30)$(0.22)$0.12 $1.44 $1.24 Weighted average common shares Basic 75,604 85,140 87,989 89,571 88,318 Diluted 75,604 85,140 89,089 90,588 89,981 Cash provided by (used in) operating activities $9,698 $(11,651)$83,464 $128,356 $142,376 Cash used in investing activities $(18,627)$(57,992)$(69,758)$(65,943)$(41,664)Cash provided by (used in) financing activities $(101,260)$23,431 $(1,161)$(16,625)$8,917 Table of Contents32 As of December 31, 2015 2014 2013 2012 2011 (in thousands) Cash and cash equivalents $143,341 $267,512 $317,144 $294,348 $257,587 Inventories $168,192 $171,012 $162,341 $164,804 $129,627 Working capital $278,852 $441,523 $453,149 $455,177 $370,040 Total assets $608,020 $806,931 $875,159 $829,638 $695,453 Long term liabilities $19,294 $27,849 $63,487 $54,300 $48,370 Total stockholders' equity $245,972 $452,518 $624,744 $617,400 $491,780 Table of Contents ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Business OverviewWe are a designer, developer, manufacturer, worldwide marketer, and distributor of casual lifestyle footwear, and accessories for men, women, and children.We strive to be the global leader in the sale of molded footwear featuring fun, comfort, color, and functionality. Our products include footwear andaccessories that utilize our proprietary closed-cell resin, called Croslite, as well as casual lifestyle footwear that use a range of materials. Our Croslite materialenables us to produce innovative, lightweight, non-marking, and odor-resistant footwear. We currently sell our products in more than 65 countries throughdomestic and international retailers and distributors, and directly to end-user consumers through our company-operated retail stores, outlets, webstores, andkiosks.Since the initial introduction of our popular Beach and Crocs Classic designs, we have expanded our classic products to include a variety of new styles.Going forward, we are focusing on our core molded footwear heritage, as well as developing innovative new casual lifestyle footwear. By streamlining theproduct portfolio and reducing non-core product development, we believe that we can realize our strategy of generating a more powerful consumerconnection to our brand and products.The broad appeal of our footwear has allowed us to market our products to a wide range of distribution channels, including family footwear stores,department stores, sporting goods stores, and traditional footwear retailers, as well as a variety of specialty and independent retail channels and via theinternet. We intend to continue to drive cohesive global brand positioning from region to region and year to year to create a clearer and more consistentproduct portfolio and message. We attempt to implement this strategy through developing powerful product stories supported by effective and consistentglobal marketing campaigns.Use of Non-GAAP Financial MeasuresIn addition to financial measures presented on the basis of accounting principles generally accepted in the United States of America ("U.S. GAAP"), wepresent current period "adjusted selling, general and administrative expenses", which is a non-GAAP financial measure, within this Management's Discussionand Analysis. Adjusted results exclude the impact of items that management believes affect the comparability or underlying business trends in ourconsolidated financial statements in the periods presented.We also present certain information related to our current period results of operations in this Item 7 through "constant currency", which is a non-GAAPfinancial measure and should be viewed as a supplement to our results of operations and presentation of reportable segments under U.S. GAAP. Constantcurrency represents current period results that have been restated using prior year average foreign exchange rates for the comparative period to enhance thevisibility of the underlying business trends excluding the impact of foreign currency exchange rate fluctuations.Management uses adjusted results to assist in comparing business trends from period to period on a consistent non-GAAP basis in communications with theBoard, stockholders, analysts, and investors concerning our financial performance. We believe that these non-GAAP measures are useful to investors andother users of our consolidated financial statements as an additional tool to evaluate operating performance. We believe they also provide a useful baselinefor analyzing trends in our operations. Investors should not consider these non-GAAP measures in isolation from, or as a substitute for, financial informationprepared in accordance with U.S. GAAP. Please refer to our 'Results of Operations' within this section for a reconciliation of adjusted selling, general andadministrative expenses to GAAP selling, general and administrative expenses.33Table of Contents2015 Financial HighlightsDuring the year ended December 31, 2015, we experienced a revenue decline of 9.0% compared to the year ended December 31, 2014 primarily due tounfavorable exchange rates driven by a stronger U.S. Dollar which reduced revenue by $85.3 million or 7.1%. Sales volume increased revenue by$37.8 million, or 3.1%, which was offset by a $34.4 million, or 2.9%, decrease associated with store closures, and a $25.7 million, or 2.1%, decrease in loweraverage sales price.The following are significant developments in our businesses during the year ended December 31, 2015:•We sold 57.8 million pairs of shoes worldwide, an increase of 3.7% compared to 2014. •Gross profit decreased $79.5 million, or 13.5%, to $510.8 million and gross margin percentage decreased 243 basis points to 46.8% compared to2014. The revenue from higher unit sales during 2015 was offset by a lower price per unit and higher cost per unit compared to prior year. The impactof foreign currency on gross margin was $41.7 million, or 7.1%, and the impact of store closures was $34.4 million, or 2.9%. •Selling, general and administrative ("SG&A") expenses decreased $6.6 million, or 1.2%, to $559.1 million compared to the same period in 2014. Thischange was primarily driven by increased marketing and bad debt expense, as well as the impact of foreign exchange currency loss, which was morethan offset by decreases in professional services, wages and salaries and building expenses. •We incurred $8.7 million in restructuring charges as a result of our strategic plans for long-term improvement and growth of the business. Thesecharges primarily related to severance costs and contract termination costs principally associated with the early termination of operating leases. •We incurred $15.3 million in asset impairment charges during 2015. Of this amount, $5.7 million related to an impairment of our South Africa assetgroup, currently, held for sale, and $9.6 million related to certain underperforming retail locations in our Americas, Europe, and Asia Pacific segmentsthat were unlikely to generate sufficient cash flows to fully recover the carrying value of the stores' assets over their remaining economic life. •Net income (loss) attributable to common stockholders decreased $79.0 million to a net loss of $98.0 million compared to net loss of $19.0 million for2014. Net loss per share was $1.30 during the year ended December 31, 2015 compared to net loss per share of $0.22 during the year endedDecember 31, 2014. These decreases are primarily the result of decreased gross profit and increased asset impairment charges offset by decreasedrestructuring charges and SG&A expense. •We continued to slow the expansion of our retail channel and focus on the long-term profitability of current locations. We opened 42 company-operated stores during the year ended December 31, 2015, a quarter of which were outlet or low investment kiosk/store-in-store locations, and closed68 company-operated stores. •During 2015, we repurchased approximately 6.5 million shares at an average price of $13.24 per share for a total value of $85.9 million, includingrelated commission charges. As of December 31, 2015, we have remaining repurchase authorizations of $118.7 million.Future OutlookDuring 2016, we will continue our strategic plans for long-term improvement and growth of the business. Our plans comprise four key initiatives including(1) streamlining the global product and marketing portfolio, (2) reducing direct investment in smaller geographic markets, (3) creating a more efficientorganizational structure by reducing excess overhead costs and enhancing the decision making process, and (4) closing or converting Crocs branded retailstores around the world.34Table of ContentsThese changes will better position Crocs to adapt to changing customer demands and global economic developments. We are focusing on our core moldedfootwear heritage, as well as developing innovative new casual lifestyle footwear platforms. By streamlining the product portfolio and reducing non-coreproduct development, we will create a more powerful consumer connection to the brand.We are refining our business model around the world, prioritizing direct investment in larger-scale geographies to focus our resources on the demographicswith the largest growth prospects, moving away from direct investment in the retail and wholesale businesses in smaller markets and transferring significantcommercial responsibilities to distributors and third-party agents. Further, we intend to expand our engagement with leading wholesale accounts in selectmarkets to drive sales growth, optimize product placement and enhance brand reputation.We believe declining collections from our China operations is associated with deteriorating macro-economic conditions in China resulting in decliningcustomer demand and deteriorating working capital position of our distributors. We are unable to predict future economic conditions in China, but ifeconomic conditions in China continue to decline, we may experience further reductions in consumer demand in our China markets. As our China operationsrepresent approximately 8% of our total revenue, the net impact of declining sales volumes in China could have a material adverse impact on our financialresults in future periods.35Table of ContentsResults of OperationsComparison of the Years Ended December 31, 2015 to 2014Revenues. During the year ended December 31, 2015, revenue declined 9.0% compared to the same period in 2014. The decrease in revenue is due to thenet impact of (i) a $85.3 million, or 7.1%, decrease associated with foreign currency exchange rate adjustments associated with a strong U.S. Dollar, (ii) a$37.8 million, or 3.1%, increase associated with higher sales volumes, and (iii) a $34.4 million, or 2.9%, decrease associated with store closures, partiallyoffset by (iv) a $25.7 million, or 2.1%, decrease associated with a lower average selling price due to changes in product mix.During the year ended December 31, 2015, revenues from our wholesale channel decreased $76.6 million, or 11.5%, compared to the same period in 2014.The decrease in wholesale channel revenue is driven primarily by a $52.1 million unfavorable impact related to foreign currency translation, primarily in ourEurope segment, a $30.5 million unfavorable impact due to lower average sales prices related to a lower priced product style mix, primarily in our Americassegment, partially offset by higher sales volume in our Americas and Europe segments.36 Year Ended December 31, 2015 2014 $ Change % Change (in thousands, except per share data andaverage selling price) Revenues $1,090,630 $1,198,223 $(107,593) (9.0)%Cost of sales 579,825 603,893 (24,068) (4.0)Restructuring charges — 3,985 (3,985) (100.0)Gross profit 510,805 590,345 (79,540) (13.5)Selling, general and administrative expenses 559,095 565,712 (6,617) (1.2)Restructuring charges 8,728 20,532 (11,804) (57.5)Asset impairment charges 15,306 8,827 6,479 73.4 Loss from operations (72,324) (4,726) (67,598) 1,430.3 Foreign currency transaction loss, net (3,332) (4,885) 1,553 (31.8)Interest income 967 1,664 (697) (41.9)Interest expense (969) (806) (163) 20.2 Other income, net 914 204 710 348.0 Loss before income taxes (74,744) (8,549) (66,195) 774.3 Income tax benefit (expense) (8,452) 3,623 (12,075) (333.3)Net loss $(83,196)$(4,926)$(78,270) 1,588.9%Dividends on Series A convertible preferred stock (11,833) (11,301) (532) 4.7 Dividend equivalents on Series A convertible preferred sharesrelated to redemption value accretion and beneficialconversion feature (2,978) (2,735) (243) 8.9 Net loss attributable to common stockholders $(98,007)$(18,962)$(79,045) 416.9%Net income (loss) per common share: Basic $(1.30)$(0.22)$(1.08) 490.9%Diluted $(1.30)$(0.22)$(1.08) 490.9%Gross margin 46.8% 49.3% (250)bps (5.1)%Operating margin (6.6)% (0.4)% (620)bps 1,550.0%Footwear unit sales 57,763 55,700 2,063 3.7%Average footwear selling price $18.53 $20.92 $(2.39) (11.4)%Table of ContentsDuring the year ended December 31, 2015, revenues from our retail channel decreased $47.3 million, or 11.1%, compared to the same period in 2014,primarily driven by the Asia Pacific segment, which decreased $23.1 million primarily as a result of a lower average selling price related to a lower pricedproduct mix, the unfavorable impact of foreign currency translation, and store closures. Additionally we experienced a $15.4 million decrease in the Europesegment largely associated with the impact of store closures.During the year ended December 31, 2015, revenues from our e-commerce channel increased $16.3 million, or 15.6%, compared to the same period in 2014,primarily driven by increased sales volumes in all segments, partially offset by the unfavorable impact of foreign currency translation and lower average salesprices, also in all segments. Our e-commerce sales totaled approximately 11.1% and 8.7% of our consolidated net sales during the year ended December 31,2015 and 2014, respectively. We continue to benefit from our online presence through web stores worldwide enabling us to have increased access to ourcustomers in a low cost, attractive manner and providing us with an opportunity to educate them about our products and brand.The following table summarizes our total revenue by channel for the years ended December 31, 2015 and 2014:37 Year EndedDecember 31, Change ConstantCurrencyChange(1) 2015 2014 $ % $ % (in thousands) Wholesale: Americas $210,887 $228,615 $(17,728) (7.8)%$(10,241) (4.5)%Asia Pacific 255,897 290,610 (34,713) (11.9) (16,194) (5.6)Europe 123,131 147,561 (24,430) (16.6) 1,886 1.3 Other businesses 1,096 794 302 38.0 194 24.4 Total wholesale 591,011 667,580 (76,569) (11.5) (24,355) (3.6)Retail: Americas 197,306 206,053 (8,747) (4.2) (6,652) (3.2)Asia Pacific 136,320 159,464 (23,144) (14.5) (11,552) (7.2)Europe 44,873 60,309 (15,436) (25.6) (3,012) (5.0)Total retail 378,499 425,826 (47,327) (11.1) (21,216) (5.0)E-commerce: Americas 68,017 55,247 12,770 23.1 13,434 24.3 Asia Pacific 32,274 23,836 8,438 35.4 10,256 43.0 Europe 20,829 25,734 (4,905) (19.1) (380) (1.5)Total e-commerce 121,120 104,817 16,303 15.6 23,310 22.2 Total revenues $1,090,630 $1,198,223 $(107,593) (9.0)%$(22,261) (1.9)%(1)Reflects year over year change as if the current period results were in "constant currency," which is a non-GAAP financial measure. See"Use of Non-GAAP Financial Measures" above for more information.Table of ContentsThe table below illustrates the overall change in the number of our company-operated retail locations by type of store and reportable operating segment as ofDecember 31, 2015 and 2014:The table below sets forth our comparable store sales by reportable operating segment for the year ended December 31, 2015 as compared to the same periodin 2014:The table below sets forth Direct to Consumer ("DTC") comparable stores sales, which includes our e-commerce and retail operating segments, for the yearended December 31, 2015 as compared to the same period in 2014:38 December 31,2014 Opened Closed December 31,2015 Company-operated retail locations Type Kiosk/store in store 100 11 13 98 Retail stores 311 15 51 275 Outlet stores 174 16 4 186 Total 585 42 68 559 Operating segment Americas 210 4 18 196 Asia Pacific 258 36 33 261 Europe 117 2 17 102 Total 585 42 68 559 Constant Currency(2)Year EndedDecember 31, 2015 Constant Currency(2)Year EndedDecember 31, 2014 Comparable store sales (retail only)(1) Americas (3.2)% (4.4)%Asia Pacific (4.5)% (4.7)%Europe 3.0% 0.7%Global (2.8)% (3.7)% Constant Currency(2)Year EndedDecember 31, 2015 Constant Currency(2)Year EndedDecember 31, 2014 DTC comparable store sales (includes retail and e-commerce)(1) Americas 3.3% (3.8)%Asia Pacific 3.0% 0.6%Europe 7.8% (0.6)%Global 3.9% (1.9)%(1)Comparable store status is determined on a monthly basis. Comparable store sales begin in the thirteenth month of a store'soperation. Stores in which selling square footage has changed more than 15% as a result of a remodel, expansion or reductionare excluded until the thirteenth month in which they have comparable prior year sales. Temporarily closed stores areexcluded from the comparable store sales calculation during the month of closure. Location closures in excess of three monthsare excluded until the thirteenth month post re-opening. Comparable store sales exclude the impact of our internet channelrevenues and are calculated on a currency neutral basis using historical annual average currency rates. Ecommerce revenue isbased on same site sales period over period.Table of ContentsComparable store sales decreased 2.8% on a global basis for the year ended December 31, 2015, compared to a decrease of 3.7% for the year endedDecember 31, 2014. Comparable store sales for our direct to consumer customers, which includes retail and ecommerce, increased 3.9% on a global basis forthe year ended December 31, 2015, compared to a decrease of 1.9% for the year ended December 31, 2014.The metric "revenue adjusted for business model changes" is used by management to assess period-over-period change in the performance of our continuingoperations as compared to the same quarter of the previous year. This metric is calculated on a constant currency basis and removes the impact of storeclosures and eliminated product lines from prior period results. We believe this metric is useful in analyzing business trends related to our ongoing operationsby excluding products and locations that have been eliminated and by removing foreign currency translation adjustments which can mask the underlyingperformance of the business.The table below sets forth revenues for the year ended December 31, 2015 adjusted for the prior year impact of business model changes: Revenue adjusted for business model changes increased 2.5% for the year ended December 31, 2015 compared to 5.1% for the year ended December 31,2014.39(2)Reflects quarter over quarter change on a "constant currency" basis, which is a non-GAAP financial measure that restatescurrent period results using prior year foreign exchange rates for the comparative period to enhance visibility of theunderlying business trends, excluding the impact of foreign currency. Year EndedDecember 31, (in thousands) GAAP revenues, for the period ended December 31, 2014 $1,198,223 Less: constant currency adjustment(1) (87,661)Less: decrease associated with store closures (34,894)Less: decrease associated with eliminated product lines (11,921)Non-GAAP revenues, adjusted for business model changes $1,063,747 GAAP revenues, for the period ended December 31, 2015 $1,090,630 Percentage change 2.5% Year EndedDecember 31, (in thousands) GAAP revenues, for the period ended December 31, 2013 $1,192,680 Less: constant currency adjustment(1) (15,612)Less: decrease associated with store closures (22,027)Less: decrease associated with eliminated product lines (15,483)Non-GAAP revenues, adjusted for business model changes $1,139,558 GAAP revenues, for the period ended December 31, 2014 $1,198,223 Percentage change 5.1%(1)Constant currency in a non-GAAP measure that restates current period results using prior year average foreign exchange ratesfor the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreigncurrency exchange rate fluctuations.Table of ContentsImpact on revenues due to foreign exchange rate fluctuations. Changes in average foreign currency exchange rates used to translate revenue from ourfunctional currencies to our reporting currency during the year ended December 31, 2015 resulted in a $85.3 million decrease in revenue compared to thesame period in 2014.Gross profit. During the year ended December 31, 2015, gross profit decreased $79.5 million, or 13.5%, compared to the same period in 2014, and wasprimarily attributable to the 9.0% decrease in revenue partially offset by a decrease of $24.1 million, or 4.0% to cost of sales compared to the same period in2014 primarily due to foreign currency translation. Gross margin percentage decreased 250 basis points compared to the same period in 2014.Impact on gross profit due to foreign exchange rate fluctuations. Changes in average foreign currency exchange rates used to translate revenue and costsof sales from our functional currencies to our reporting currency during the year ended December 31, 2015 decreased our gross profit by $41.7 million, or7.1%, compared to the same period in 2014.Selling, general and administrative expenses. SG&A expenses decreased $6.6 million, or 1.2%, during the year ended December 31, 2015 compared to thesame period in 2014. This change was primarily driven by wage and salary decreases of $22.1 million, and a $17.0 million decrease in building expensespartially offset by a $13.6 million increase in marketing expenses, and a $13.6 million increase in bad debt expense, largely associated with our Asia Pacificoperations relating to China. During the year ended December 31, 2015, our bad debt expense was $25.7 million compared to $12.1 million in the sameperiod in the prior year. Substantially all of this increase in bad debt expense is due to lower collections from our China operations, which is included in ourAsia Pacific segment.We believe declining collections from our China operations is associated with deteriorating macro-economic conditions in China resulting in decliningcustomer demand and the deteriorating working capital position of our distributors. We are unable to predict future economic conditions in China, but ifeconomic conditions in China continue to decline, we may experience further reductions in consumer demand in our China markets. As our China operationsrepresent approximately 8% of our total revenue in 2015, the net impact of declining sales volumes in China could have a material adverse impact on ourfinancial results in future periods.In addition to these fluctuations, we have identified certain selling, general and administrative expenses that affect the comparability or underlying businesstrends in our condensed consolidated financial statements. The following table summarizes these expenses and describes the additional drivers of the40Table of Contentsincrease above by reconciling our GAAP selling, general and administrative expenses to non-GAAP selling, general and administrative expenses:Impact on Selling, General, and Administrative Expenses due to Foreign Exchange Rate Fluctuations. Changes in average foreign currency exchangerates used to translate expenses from our functional currencies to our reporting currency during the year ended December 31, 2015, negatively impacted, orincreased, selling, general and administrative expenses by approximately $35.6 million compared to 2014.Restructuring charges. During the years ended December 31, 2015 and 2014, we recorded $8.7 million and $24.5 million, respectively, in restructuringcharges. These restructuring charges arose primarily as a result of our strategic plans for long-term improvement and growth of the business. Restructuringcharges for the years ended December 31, 2015 and 2014 consisted of:•$5.5 million and $12.5 million in severance costs during the years ended December 31, 2015 and 2014, respectively; •$2.6 million and $4.2 million in contract termination costs primarily related to the early termination of operating leases during the years endedDecember 31, 2015 and 2014, respectively; and •$0.6 million and $7.8 million in other restructuring charges primarily related to expenses to exiting stores and legal fees during the years endedDecember 31, 2015 and included the write-off of obsolete inventory and store exiting and legal fees for the year ended December 31, 2014.41 Year EndedDecember 31, 2015 2014 (in thousands) Selling, general and administrative expenses reconciliation: GAAP selling, general and administrative expenses $559,095 $565,712 ERP implementation and other contract termination fees(1) (12,569) (13,268)Reorganization charges(2) (8,391) (8,872)Legal settlements and disbursement(3) (7,895) (2,646)Bad debt expense related to South Africa(4) (613) — Non-GAAP selling, general and administrative expenses $529,627 $540,926 (1)This represents operating expenses related to the implementation of our new enterprise resource planning ("ERP") system andthe termination of certain IT contracts for better alignment with strategic initiatives as well as fees associated with thetermination of certain royalty and other contracts. (2)This relates to severance expenses, bonuses, store closure costs, consulting fees and other expenses related to recentrestructuring and reorganization activities and our investment agreement with Blackstone. (3)Expenses in 2015 relate primarily to legal expenses for matters surrounding disbursements to invalid vendors and Californiawage settlements. Expenses in 2014 relate primarily to other legal settlements. (4)Certain bad debt and impairment expenses were incurred in 2015 relating to the planned sale of operations in South Africa.Table of ContentsAsset impairment charges. During the year ended December 31, 2015 and 2014, we incurred $15.3 million and $8.8 million, respectively, in assetimpairment charges. For the year ended December 31, 2015, $9.6 million of this amount related to certain underperforming retail locations, primarily in ourAmericas and Europe segments, which were unlikely to generate sufficient cash flows to fully recover the carrying value of the stores' assets over theirremaining economic life and $5.7 million related to the impairment of our South Africa asset group that is currently held for sale.Foreign currency transaction loss, net. The line item entitled foreign currency transaction loss, net is comprised of foreign currency gains and losses fromthe re-measurement and settlement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currencyderivative instruments. During the year ended December 31, 2015 and 2014, the effect of foreign currency transactions was a net loss of $3.3 million and$4.9 million, respectively.Income tax expense. During the year ended December 31, 2015, we recognized income tax expense of $8.5 million on pre-tax book loss of $74.7 million,representing an effective tax rate of (11.3)%, compared to an income tax benefit of $3.6 million on pre-tax book loss of $8.5 million in 2014, whichrepresented an effective tax rate of 42.4%. Generally, our effective tax rate varies primarily based on our profitability level and the relative earnings ofoperations across multiple jurisdictions. Beyond operating results, the most significant rate drivers relate to U.S. tax accrued on foreign unremitted earningsand continued varying need for valuation allowances.The following are key jurisdictions impacting our tax rate for 2015 and 2014, respectively: The principal drivers impacting the rate other than the overall profitability or loss of the Company disclosed in our rate reconciliation table in Note 14—Income Taxes includes:•The tax effect of non-deductible/non-taxable items changes from a $9.9 million tax benefit in 2014 (resulting in a favorable rate impact of 115.8%) toa $2.2 million tax benefit in 2015 (resulting in a favorable rate impact of 2.9%). The incremental benefit recognized in 2014 primarily related to thenon-taxable nature of both foreign exchange gains and dividends in foreign jurisdictions. These benefits did not occur in the current year and are notanticipated to recur on an ongoing basis. •The change in the 'Effect of rate differences' line of the rate reconciliation table is principally driven by differences in pre-tax book income betweenthe periods compared, and the source of this income, which is subject to different jurisdiction tax rates. We employ a tax planning strategy thatdirectly impacts the total tax expense directly attributable to the level of foreign earnings in the specific jurisdictions. However, we note that theimpact on the effective rate is different due to book earnings42 For the Year Ended December 31, 2015 United States Netherlands Japan Canada China Korea (in thousands) Book income (loss) $(83,537)$25,988 $(69)$(850)$(21,572)$4,141 Income tax expense $(3,345)$4,262 $2,345 $(391)$4,433 $1,081 Effective tax rate 4.0% 16.4% (3,398.6)% 46.0% (20.5)% 26.1% For the Year Ended December 31, 2014 United States Netherlands Japan Canada(1) China Korea (in thousands) Book income (loss) $(34,027)$8,606 $9,571 $913 $(9,144)$4,434 Income tax expense $(9,692)$4,955 $3,928 $(2,623)$(623)$642 Effective tax rate 28.5% 57.6% 41.0% (287.3)% 6.8% 14.5%(1)Primarily driven by a $2.9 million net benefit related to a tax settlement with the Canada Revenue Agency.Table of Contentsrecorded in the equivalent period. The relative impact of this has existed in the recent past; however, there is no assurance that this item will berecurring beyond 2019. Through at least 2019, we will continue to have an equivalent favorable impact on the tax provision and effective tax ratebased on the specific foreign earnings. We currently do not anticipate significant near-term changes to its overall tax strategies, meaning that relativeincome tax benefits provided from the expected U.S. federal tax rate are anticipated to recur in the foreseeable future. The amount of this tax benefit, ifany, is subject to continued profitability in various foreign jurisdictions. The other notable difference between the two periods relates to the 2014impact of restructuring related to our Brazilian operations that is not anticipated to recur in the future.•The impact of the 'U.S. tax on foreign earnings' line of the rate reconciliation table includes the impact of foreign inclusions, including tax expenseaccrued on undistributed foreign earnings, and related foreign tax credits. During 2014, inclusions for these items resulted in $6.6 million of taxexpense, reflecting an unfavorable impact of 77.4% on the total provision. During 2015, inclusions for these items resulted in $32.9 million of taxexpense, reflecting an unfavorable impact of 43.9% on the total provision. While foreign inclusions are primarily related to business results during aspecific period, we note the primary difference between the two periods relates to the $24.6 million tax charge recognized for the accrual ofunremitted foreign earnings during 2015. We anticipate the continuation of foreign earnings repatriation to the extent of the currently-accruedamount of $128.0 million. After such time, we will assess various cash needs in the U.S. and may repatriate future current year earnings up to theextent of future current foreign earnings on an annual basis. •Prior to fiscal year 2014, we asserted that undistributed earnings of our foreign subsidiaries were permanently reinvested. Primarily due to the increasein our U.S. operating obligations during the current fiscal year and continued share repurchases of $86.0 million in 2015, management concluded thatthe ability to access certain amounts of foreign earnings would provide greater flexibility to meet domestic cash flow needs without constrainingforeign objectives. Accordingly, in the fourth quarter of 2015, we withdrew the permanent reinvestment assertion on $79.0 million of earningsgenerated by certain of our foreign subsidiaries through fiscal year 2013. We provided for U.S. income taxes on $128.0 million of undistributedforeign earnings, resulting in a recognition of a deferred tax liability of approximately $24.6 million. Exceptions may be made on a year-by-year basisto repatriate current year earnings of certain foreign subsidiaries based on cash needs in the U.S. No withholding tax is due with respect to therepatriation of these earnings to the U.S. and none has been provided for. •We continue to evaluate the realizability of its deferred tax assets. As such, additional valuation allowances of $10.9 million on deferred tax assets arenot anticipated to be realized. This is in addition to the $5.4 million accrued on deferred tax assets during 2014. Furthermore, the change in thevaluation allowance reflected on the cumulative schedule of deferred tax assets includes $2.8 million, which does not impact the tax provision. Thisamount reflects the impact on equity based on changes in cumulative translation adjustment. The specific circumstances regarding management'sassertion of the realizability of certain deferred tax assets is discussed as part of the disclosures in Note 14—Income Taxes. We maintain totalvaluation allowances of approximately $56.6 million as of December 31, 2015, which may be reduced in the future depending upon the achieved orsustained profitability of certain entities. •During both 2014 and 2015, we recorded tax expense for audits settled during the year of $13.5 million and $1.2 million, respectively. The amountincluded in settlements during 2015 is net against total uncertain tax position releases during the same period relating to the same positions.Furthermore, the uncertain tax benefits line item in 2015 includes net accruals related to current year positions recorded, and is consistent withamounts accrued during prior years. We have released a significant portion of historical uncertain tax benefits based on effective and actualsettlements. As such, there is not currently an expectation that uncertain tax positions will significantly impact our tax expense on an ongoing basis.43Table of Contents•We recognized state tax benefits during the period due to net operating loss recorded in the U.S., as well as applicable state modifications related tothe taxability of foreign dividends.Comparison of the Years Ended December 31, 2014 to 2013Revenues. During the year ended December 31, 2014, revenues remained relatively flat, increasing $5.5 million, or 0.5%, compared to 2013 primarily dueto an increase of 1.4 million, or 2.5%, in global footwear unit sales primarily driven by improved year-over-year performance in our wholesale and internetchannels. This increase was partially offset by a decrease of $0.35 per unit, or 1.6%, in average footwear selling price.For the year ended December 31, 2014, revenues from our wholesale channel decreased $6.2 million, or 0.9%, compared to 2013, which was primarily drivenby lower unit sales in our Americas and Asia Pacific segments including decreased performance in China as a result of increased distributor inventory levelsand lower replenishment orders and lower average selling price in Europe and our Asia Pacific segment.44 Year Ended December 31, 2014 2013 $ Change % Change (in thousands, except per share data and averageselling price) Revenues $1,198,223 $1,192,680 $5,543 0.5%Cost of sales 603,893 569,482 34,411 6.0 Restructuring charges 3,985 — 3,985 100.0 Gross profit 590,345 623,198 (32,853) (5.3)Selling, general and administrative expenses 565,712 549,154 16,558 3.0 Restructuring charges 20,532 — 20,532 100.0 Asset impairment charges 8,827 10,949 (2,122) (19.4)Income (loss) from operations (4,726) 63,095 (67,821) (107.5)Foreign currency transaction loss, net (4,885) (4,678) (207) 4.4 Interest income 1,664 2,432 (768) (31.6)Interest expense (806) (1,016) 210 (20.7)Other income, net 204 126 78 61.9 Income (loss) before income taxes (8,549) 59,959 (68,508) (114.3)Income tax benefit (expense) 3,623 (49,539) 53,162 (107.3)Net income (loss) $(4,926)$10,420 $(15,346) (147.3)%Dividends on Series A convertible preferred stock (11,301) — (11,301) (100.0)Dividend equivalents on Series A convertible preferred sharesrelated to redemption value accretion and beneficialconversion feature (2,735) — (2,735) (100.0)Net income (loss) attributable to common stockholders $(18,962)$10,420 $(29,382) (282.0)%Net income (loss) per common share: Basic $(0.22)$0.12 $(0.34) (283.3)%Diluted $(0.22)$0.12 $(0.34) (283.3)%Gross margin 49.3% 52.3% (300)bps (5.7)%Operating margin (0.4)% 5.3% (570)bps (107.5)%Footwear unit sales 55,700 54,326 1,374 2.5%Average footwear selling price $20.92 $21.27 $(0.35) (1.6)%Table of ContentsThese decreases were partially offset by a 19.2% increase in unit sales in Europe primarily driven by product volume expansion through new wholesale doorsand continued support from existing customers.For the year ended December 31, 2014, revenues from our retail channel increased $7.8 million, or 1.9%, compared to 2013, which was primarily driven by a3.8% increase in footwear unit sales, primarily attributable to the Americas and Asia Pacific segments. This increase was partially offset by lower averageselling prices in those segments. Additionally, we experienced an overall decrease of 3.7% in comparable store sales compared to the prior year. During theyear ended December 31, 2014, we opened 70 and closed 104 company-operated stores.For the year ended December 31, 2014, revenues from our internet channel increased $3.9 million, or 3.9%, compared to 2013, which was primarily driven byincreased internet sales in our Asia Pacific segment partially offset by a decrease in internet sales in our Americas and Europe segments and lower averageselling prices in all segments except Europe. Our internet sales totaled approximately 8.8% and 8.5% of our consolidated net sales during the years endedDecember 31, 2014 and 2013, respectively. We continued to benefit from our online presence through webstores worldwide enabling us to have increasedaccess to our customers in a low cost, attractive manner and providing us with an opportunity to educate them about our products and brand. During the yearended December 31, 2014, we decreased our global company-operated e-commerce sites to 12 in order to focus our internet strategy in our principalgeographical locations.The following table summarizes our total revenue by channel for the years ended December 31, 2014 and 2013:45 Year Ended December 31, Change Constant CurrencyChange(1) 2014 2013 $ % $ % (in thousands) Wholesale: Americas $228,615 $239,104 $(10,489) (4.4)%$(7,286) (3.0)%Asia Pacific 290,610 303,187 (12,577) (4.1) (5,625) (1.9)Europe 147,561 131,215 16,346 12.5 16,189 12.3 Other businesses 794 254 540 212.6 533 209.8 Total wholesale 667,580 673,760 (6,180) (0.9) 3,811 0.6 Retail: Americas 206,053 202,925 3,128 1.5 4,552 2.2 Asia Pacific 159,464 156,586 2,878 1.8 4,513 2.9 Europe 60,309 58,507 1,802 3.1 3,240 5.5 Total retail 425,826 418,018 7,808 1.9 12,305 2.9 E-commerce: Americas 55,247 56,523 (1,276) (2.3) (960) (1.7)Asia Pacific 23,836 17,842 5,994 33.6 6,867 38.5 Europe 25,734 26,537 (803) (3.0) (868) (3.3)Total e-commerce 104,817 100,902 3,915 3.9 5,039 5.0 Total revenues $1,198,223 $1,192,680 $5,543 0.5%$21,155 1.8%(1)Reflects year over year change as if the current period results were in "constant currency," which is a non-GAAP financial measure. See"Use of Non-GAAP Financial Measures" above for more information.Table of ContentsThe table below illustrates the overall change in the number of our company-operated retail locations by type of store and reportable operating segment as ofDecember 31, 2014 and 2013:The table below sets forth our comparable store sales by reportable operating segment for the year ended December 31, 2014 as compared to the same periodin 2013:The table below sets forth our DTC comparable stores sales, which includes our e-commerce and retail operating segments, for the year ended December 31,2014 as compared to the same period in 2013:46 December 31,2013 Opened Closed December 31,2014 Company-operated retail locations Type Kiosk/store in store 122 8 30 100 Retail stores 327 40 56 311 Outlet stores 170 22 18 174 Total 619 70 104 585 Operating segment Americas 216 16 22 210 Asia Pacific 285 44 71 258 Europe 118 10 11 117 Total 619 70 104 585 Constant Currency(2)Year EndedDecember 31, 2014 Constant Currency(2)Year EndedDecember 31, 2013 Comparable store sales (retail only)(1) Americas (4.4)% (5.8)%Asia Pacific (4.7)% 0.7%Europe 0.7% 2.4%Global (3.7)% (2.7)% Constant Currency(2)Year EndedDecember 31, 2014 Constant Currency(2)Year EndedDecember 31, 2013 DTC comparable store sales (includes retail and e-commerce)(1) Americas (3.8)% (7.3)%Asia Pacific 0.6% 3.3%Europe (0.6)% 4.3%Global (1.9)% (2.6)%(1)Comparable store status is determined on a monthly basis. Comparable store sales begin in the thirteenth month of a store'soperation. Stores in which selling square footage has changed more than 15% as a result of a remodel, expansion, or reductionare excluded until the thirteenth month in which they have comparable prior year sales. Temporarily closed stores areexcluded from the comparable store sales calculation during the month of closure. Location closures in excess of three monthsare excluded until the thirteenth month post re-opening. Comparable store sales exclude the impact of our internet channelrevenues and are calculated on a currency neutral basis using historical annual average currency rates. Ecommerce revenue isbased on same site sales period over period.Table of ContentsComparable store sales decreased 3.7% on a global basis for the year ended December 31, 2015, compared to a decrease of 2.7% for the year endedDecember 31, 2014. Comparable store sales for our direct to consumer customers, which includes retail and ecommerce, decreased 1.9% on a global basis forthe year ended December 31, 2015, compared to a decrease of 2.6% for the year ended December 31, 2014.The metric "revenue adjusted for business model changes" is used by management to assess period-over-period change in the performance of our continuingoperations as compared to the same quarter of the previous year. This metric is calculated on a constant currency basis and removes the impact of storeclosures and eliminated product lines from prior period results. We believe this metric is useful in analyzing business trends related to our ongoing operationsby excluding products and locations that have been eliminated and by removing foreign currency translation adjustments which can mask the underlyingperformance of the business.The table below sets forth revenues for the year ended December 31, 2014 adjusted for the prior year impact of business model changes: Revenue adjusted for business model changes increased 5.1% for the year ended December 31, 2014 compared to 13.3% for the year ended December 31,2013.47(2)Reflects quarter over quarter change that restates current period results using prior year foreign exchange rates for thecomparative period to enhance visibility of the underlying business trends, excluding the impact of foreign currency. Year EndedDecember 31, (in thousands) GAAP revenues, for the period ended December 31, 2013 $1,192,680 Less: constant currency adjustment(1) (15,612)Less: decrease associated with store closures (22,027)Less: decrease associated with eliminated product lines (15,483)Non-GAAP revenues, adjusted for business model changes $1,139,558 GAAP revenues, for the period ended December 31, 2014 $1,198,223 Percentage change 5.1% Year EndedDecember 31, (in thousands) GAAP revenues, for the period ended December 31, 2012 $1,123,301 Less: constant currency adjustment(1) (29,109)Less: decrease associated with store closures (27,812)Less: decrease associated with eliminated product lines (13,731)Non-GAAP revenues, adjusted for business model changes $1,052,649 GAAP revenues, for the period ended December 31, 2013 $1,192,680 Percentage change 13.3%(1)Constant currency in a non-GAAP measure that restates current period results using prior year average foreign exchange ratesfor the comparative period to enhance the visibility of the underlying business trends excluding the impact of foreigncurrency exchange rate fluctuations.Table of ContentsImpact on Revenues due to Foreign Exchange Rate Fluctuations. Changes in average foreign currency exchange rates used to translate revenues from ourfunctional currencies to our reporting currency during the year ended December 31, 2014 decreased our revenues by $15.6 million compared to 2013.Gross profit. During the year ended December 31, 2014, gross profit decreased $32.9 million, or 5.3%, compared to 2013, which was primarily attributableto a $34.4 million, or 6.0%, increase in cost of sales, excluding restructuring, partially offset by a 0.5% increase in revenue. Gross margin percentagedecreased 298 basis points compared to the same period in 2013. The decline in gross margin percentage was primarily driven by an increase in obsoleteinventory of $8.1 million for the year ended December 31, 2014 compared to 2013 primarily driven by inventory obsolescence in China, $4.0 million ofcosts related to restructuring and the evolution of our product assortment and is consistent with our product strategy. In addition, we experienced unit salesvolume difficulty in our Americas market, lower than expected unit sales in China leading to decreased gross margins, as average margins in China aretypically higher than the global average, and increased shipping costs globally.Impact on Gross Profit due to Foreign Exchange Rate Fluctuations. Changes in average foreign currency exchange rates used to translate revenues andcosts of sales from our functional currencies to our reporting currency during the year ended December 31, 2014 decreased our gross profit by $9.2 millioncompared to 2013.Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $16.6 million, or 3.0%, during the year endedDecember 31, 2014 compared to the same period in 2013. As a percentage of revenue, selling, general and administrative expenses increased 117 basis pointsto 47.2% from 46.0% during the year ended December 31, 2014 compared to 2013. This increase was predominately due to year over year increases of$16.7 million in professional fees and other outside services, $10.2 million increases in bad debt expense, primarily related to delayed payments fromdistributors in China and Southeast Asia, and an increase of $7.2 million related to rising rental rates and repairs and maintenance for retail locations. Weslowed the expansion of our retail channel and closed 104 company-operated locations between December 31, 2013 and December 31, 2014. These increaseswere partially offset by a decrease of approximately $5.4 million related to the reduction in headcount, $2.7 million related to travel reductions and othercost saving and mitigation initiatives.In addition to these fluctuations, we have identified certain selling, general and administrative expenses that affect the comparability or underlying businesstrends in our consolidated financial statements. The following table summarizes these expenses as well as details the additional drivers of the increase aboveby reconciling our GAAP selling, general and administrative expenses to non-GAAP selling, general and administrative expenses:48 Year EndedDecember 31, 2014 2013 (in thousands) Selling, general and administrative expenses reconciliation: GAAP selling, general and administrative expenses $565,712 $549,154 ERP implementation(1) (13,268) (8,893)Reorganization charges(2) (8,872) (466)Legal settlements(3) (2,646) (5,714)Brazil tax credits(4) — (6,094)Non-GAAP selling, general and administrative expenses $540,926 $527,987 (1)This represents operating expenses related to the implementation of our new ERP system and the add-back of accelerateddepreciation and amortization on tangible and intangibleTable of ContentsImpact on Selling, General, and Administrative Expenses due to Foreign Exchange Rate Fluctuations. Changes in average foreign currency exchangerates used to translate expenses from our functional currencies to our reporting currency during the year ended December 31, 2014, negatively impacted, orincreased, selling, general and administrative expenses by approximately $6.0 million compared to 2013.Restructuring Charges. We recorded $24.5 million in restructuring charges during the year ended December 31, 2014. These restructuring charges aroseprimarily as a result of our strategic plans for long-term improvement and growth of the business. Restructuring charges for the year ended December 31, 2014consisted of:(i)$12.5 million in severance costs, of which $3.7 million was related to the termination of executive management and $3.6 million was related to thereductions in workforce announced on July 21, 2014; (ii)$7.8 million in other restructuring costs primarily related to the write-off of long-lived assets associated with the exiting of retail locations andobsolete inventory; and (iii)$4.2 million in contract termination costs primarily related to the early termination of operating leases and sponsorship agreements.Asset Impairment Charges. We recorded $8.8 million in asset impairment charges during the year ended December 31, 2014, a decrease of $2.1 millioncompared to 2013, related to certain underperforming retail locations in our Americas, Europe, and Asia Pacific segments that were unlikely to generatesufficient cash flows to fully recover the carrying value of the stores' assets over their remaining economic life.Foreign Currency Transaction Losses. The line item entitled foreign currency transaction losses, net is comprised of foreign currency gains and losses fromthe re-measurement and settlement of monetary assets and liabilities denominated in non-functional currencies and the impact of certain foreign currencyderivative instruments. During the year ended December 31, 2014, losses on foreign currency transactions increased $0.2 million, or 4.4%, as compared to2013.Income tax expense. During the year ended December 31, 2014, we recognized a benefit from income tax of $3.6 million compared to an expense of$49.5 million in 2013. Our effective tax rate decreased primarily due to the release of certain unrecognized tax benefits as the result of settling the Company'saudits with the Canada Revenue Agency and the Internal Revenue Service. Our effective tax rate for the year ended December 31, 2014 differs from thefederal U.S. statutory rate primarily because of the release of certain unrecognized tax benefits as well as differences between income tax rates between U.S.and foreign jurisdictions.Presentation of Reportable SegmentsFor 2015, we had three reportable operating segments based on the geographic nature of our operations: America, Asia Pacific, and Europe. We also have an"Other businesses" category which aggregates insignificant operating segments that do not meet the reportable segment threshold and representsmanufacturing operations located in Mexico, Italy and Asia.For 2014 and 2013, we had four reportable operating segments: Americas, Asia Pacific, Japan and Europe. Subsequent to December 31, 2014, our internalreports reviewed by the Chief Operating Decision Maker49items related to our current ERP system and supporting platforms that will no longer be utilized once the implementation of anew ERP is complete.(2)This relates to bonuses, consulting fees and other expenses related to recent restructuring activities and our investmentagreement with Blackstone. (3)This represents legal settlement expenses. (4)This represents a net expense related to the resolution of a statutory tax audit in Brazil.Table of Contents("CODM") began consolidating Japan into the Asia Pacific segment. This aligned our internal reporting to our new strategic model and managementstructure, as Japan and Asia Pacific were managed and analyzed as one operating segment in 2015 by management and the CODM. Accordingly, prior periodsegment results have been reclassified to reflect this change. The composition of our reportable operating segments is consistent with that used by our CODMto evaluate performance and allocate resources.Each of our reportable operating segments derives its revenues from the sale of footwear and accessories to external customers as well as intersegment sales.Revenues of the "Other businesses" category are primarily made up of intersegment sales. The remaining revenues for the "Other businesses" represent non-footwear product sales to external customers. Intersegment sales are not included in the measurement of segment operating income or regularly reviewed bythe CODM and are eliminated when deriving total consolidated revenues.The primary financial measure utilized by the CODM to evaluate performance and allocate resources is segment operating income. Segment performanceevaluation is based primarily on segment results without allocating corporate expenses, or indirect general, administrative and other expenses. Segmentprofits or losses of our reportable operating segments include adjustments to eliminate intersegment profit or losses on intersegment sales. As such,reconciling items for segment operating income represent unallocated corporate and other expenses as well as intersegment eliminations. Segment assetsconsist of cash and cash equivalents, accounts receivable, and inventory as these balances are regularly reviewed by the CODM.50Table of ContentsComparison of the Years Ended December 31, 2015 and 2014 by SegmentThe following table sets forth information related to our reportable operating business segments for the years ended December 31, 2015 and 2014:Americas Operating Segment. During the year ended December 31, 2015, revenues from our Americas segment decreased $13.7 million, or 2.8%, comparedto the same period in 2014 primarily due to51 Year Ended December 31, Change Constant CurrencyChange(3) 2015 2014 $ % $ % (in thousands, except % data) Revenues: Americas $476,210 $489,915 $(13,705) (2.8)%$(3,459) (0.7)%Asia Pacific 424,491 473,910 (49,419) (10.4) (17,490) (3.7)Europe 188,833 233,604 (44,771) (19.2) (1,506) (0.6)Total segment revenues 1,089,534 1,197,429 (107,895) (9.0) (22,455) (1.9)Other businesses 1,096 794 302 38.0 194 24.4 Total consolidated revenues $1,090,630 $1,198,223 $(107,593) (9.0)%$(22,261) (1.9)%Operating income: Americas $49,422 $48,347 $1,075 2.2%$1,251 2.6%Asia Pacific 48,447 75,135 (26,688) (35.5) (20,730) (27.6)Europe 15,629 24,517 (8,888) (36.3) (2,507) (10.2)Total segment operating income 113,498 147,999 (34,501) (23.3) (21,986) (14.9)Reconciliation of total segment operatingincome to income before income taxes: Other businesses(1) (30,092) (19,400) (10,692) 55.1 (13,410) 69.1 Intersegment eliminations — (1,498) 1,498 (100.0) — — Unallocated corporate and other(2) (155,730) (131,827) (23,903) 18.1 (36,917) 28.0 Total consolidated operating income(loss) (72,324) (4,726) (67,598) 1,430.3 $(72,313) 1,530.1%Foreign currency transaction gain (loss),net (3,332) (4,885) 1,553 (31.8) Interest income 967 1,664 (697) (41.9) Interest expense (969) (806) (163) 20.2 Other income (expense), net 914 204 710 348.0 Income (loss) before income taxes $(74,744)$(8,549)$(66,195) 774.3% (1)During the year ended December 31, 2015, operating losses of Other businesses increased $10.7 million compared to 2014, primarilydue to a $12.0 million decrease in gross margin. (2)Includes a corporate component consisting primarily of corporate support and administrative functions, costs associated with share-based compensation, research and development, brand marketing, legal, depreciation on corporate and other assets not allocated tooperating segments and other corporate costs. For the year ended December 31, 2015, 'Unallocated corporate and other' operatinglosses increased $23.9 million compared to the same period in 2014, primarily due to an increase in administrative expenses. (3)Reflects year over year change as if the current period results were in "constant currency," which is a non-GAAP financial measure. See"Use of Non-GAAP Financial Measures" above for more information.Table of Contentsunfavorable foreign currency fluctuations, a negative impact of store closures, and decreased average selling prices, partially offset by increased salesvolume,.During the year ended December 31, 2015, segment operating income increased $1.1 million, or 2.2%, compared to the same period in 2014 primarily relatedto the net effect of:(i)a decrease in revenue of $13.7 million, or 2.8%, slightly offset by a decrease in cost of sales of $3.9 million, or 1.5%; (ii)a decrease of $12.3 million, or 6.9%, in selling, general and administrative expenses related to lower employee compensation expense, lower buildingexpense, and lower depreciation and amortization expense, partially offset by higher marketing expense; (iii)a decrease in restructuring expense of $1.8 million related to severance and store closure costs; and (iv)an increase in retail asset impairment of $3.2 million.Asia Pacific Operating Segment. During the year ended December 31, 2015, revenues from our Asia Pacific segment decreased $49.4 million, or 10.4%,compared to the same period in 2014 primarily due a decrease associated with unfavorable foreign currency fluctuations, lower average selling prices, thenegative impact of store closures, partially offset by a slightly higher sales volume.Our Asia Pacific operating segment continues to perform poorly primarily due to adverse macro-economic conditions and overall weakness in China'seconomy. The macro-economic environment in China has deteriorated over the past several quarters which has decreased revenue from our China operationsby 53.0%, for the year ended December 31, 2015 as compared to the same period in 2014. We have also experienced significant declines in collection ratesfrom our China operations due to the adverse macro-economic environment and the deteriorating working capital position of our distributors. The impact ofthese declines became apparent in September 2015, when multiple China distributors defaulted on their payment obligations. As a result, we have reassessedthe collectability of our accounts receivable balances, for our China operations, and we concluded a significant increase in reserves is required. Accordingly,we have increased our China allowance for doubtful accounts by an additional $23.2 million, resulting in total allowances for our China operations of$30.3 million as of December 31, 2015. Our net accounts receivable balance for our China operations as of December 31, 2015 is $5.1 million.If the economic conditions in China continue to decline, we may experience further reductions in consumer demand in our China markets which could resultin additional declines. As our China operations represent approximately 8% of our total revenue, declining sales volumes in China could have a materialadverse impact on our financial results in future periods.During the year ended December 31, 2015, segment operating income decreased $26.7 million, or 35.5%, compared to the same period in 2014 primarilyrelated to the net effect of:(i)a decrease in revenue of $49.4 million, or 10.4% due to unfavorable foreign currency fluctuations, and a decrease in footwear units sold, partiallyoffset by a decrease in cost of sales of $21.7 million, or 10.1%; (ii)a decrease of $3.6 million, or 2.0%, in selling, general and administrative expenses primarily as a result of bad debt expense relating to China,partially offset by lower employee compensation related expenses and lower rent and occupancy related expenses; (iii)a decrease in restructuring expense of $1.1 million related to severance and store closure costs; and (iv)an increase in retail asset impairment of $3.7 million.Europe Operating Segment. During the year ended December 31, 2015, revenues from our Europe segment decreased $44.8 million, or 19.2%, compared tothe same period in 2014, primarily due to unfavorable52Table of Contentsforeign currency fluctuations, and the negative impact of store closures, partially offset an increase in sales volume.During the year ended December 31, 2015, segment operating income decreased $8.9 million, or 36.3%, compared to the same period in 2014 primarilyrelated to the net effect of:(i)a decrease in revenue of $44.8 million, or 19.2%, and a decrease in cost of sales by $16.4 million, or 14.1%; (ii)a decrease of $17.9 million, or 20.6% , in selling, general and administrative expenses related to lower employee compensation related expenses,lower professional services expense, partially offset by an increase in marketing and sales expenses; (iii)a decrease in restructuring charges of $1.1 million related to severance and store closure costs; and (iv)a decrease in asset impairment of $0.4 million.53Table of ContentsComparison of the Years Ended December 31, 2014 and 2013 by SegmentThe following table sets forth information related to our reportable operating business segments for the years ended December 31, 2014 and 2013:54 Year Ended December 31, Change Constant CurrencyChange(3) 2014 2013 $ % $ % (in thousands, except % data) Revenues: Americas $489,915 $498,552 $(8,637) (1.7)%$(3,694) (0.7)%Asia Pacific 473,910 477,615 (3,705) (0.8) 5,755 1.2 Europe 233,604 216,259 17,345 8.0 18,561 8.6 Total segment revenues 1,197,429 1,192,426 5,003 0.4 20,622 1.7 Other businesses 794 254 540 212.6 533 209.8 Total consolidated revenues $1,198,223 $1,192,680 $5,543 0.5%$21,155 1.8%Operating income: Americas $48,347 $61,894 $(13,547) (21.9)%$(13,944) (22.5)%Asia Pacific 75,135 118,253 (43,118) (36.5) (38,855) (32.9)Europe 24,517 16,192 8,325 51.4 7,021 43.4 Total segment operating income 147,999 196,339 (48,340) (24.6) (45,778) (23.3)Reconciliation of total segment operatingincome to income before income taxes: Other businesses(1) (19,400) (20,811) 1,411 (6.8) 1,504 (7.2)Intersegment eliminations (1,498) 61 (1,559) (2,555.7) (1,559) (2,555.7)Unallocated corporate and other(2) (131,827) (112,494) (19,333) 17.2 (13,500) 12.0 Total consolidated operating income(loss) (4,726) 63,095 (67,821) (107.5)$(59,333) (94.0)%Foreign currency transaction gain (loss),net (4,885) (4,678) (207) 4.4 Interest income 1,664 2,432 (768) (31.6) Interest expense (806) (1,016) 210 (20.7) Other income (expense), net 204 126 78 61.9 Income (loss) before income taxes $(8,549)$59,959 $(68,508) (114.3)% (1)During the year ended December 31, 2014, operating losses of Other businesses decreased $1.4 million compared to 2013, primarilydue to a $1.5 million increase in gross margin offset by a $0.1 million increase in selling, general and administrative expenses. (2)Includes a corporate component consisting primarily of corporate support and administrative functions, costs associated with share-based compensation, research and development, brand marketing, legal, depreciation on corporate and other assets not allocated tooperating segments and costs of the same nature of certain corporate holding companies. For the year ended December 31, 2014,Unallocated corporate and other operating losses increased $19.3 million compared to the same period in 2013, primarily due to$8.9 million restructuring charges related to the termination of certain employees and executives and a write-off of obsolete inventoryrelated to an exited business line and an $8.1 million increase in selling, general and administrative expenses primarily related to theimplementation of our ERP system and our investment agreement with Blackstone partially offset by cost savings in variablecompensation. (3)Reflects year over year change as if the current period results were in "constant currency," which is a non-GAAP financial measure. See"Use of Non-GAAP Financial Measures" above for more information.Table of ContentsAmericas Operating Segment. During the year ended December 31, 2014, revenues from our Americas segment decreased $8.6 million, or 1.7%, comparedto 2013 primarily due to a 3.2% decrease in footwear units sold and a $4.9 million unfavorable impact from foreign currency fluctuations driven byweakening of the Brazilian Real against the U.S. Dollar. This decrease was partially offset by a 2.2% increase in average footwear unit selling price. Duringthe year ended December 31, 2014, revenue declines for the region were realized primarily in the wholesale channel which decreased $10.5 million, or 4.4%,and in the internet channel which decreased $1.3 million, or 2.3%, compared to 2013. The decrease in wholesale channel revenue was predominately drivenby a mix of lower than anticipated at-once orders as a result of accounts remaining lean on inventory in the first half of the year and a decline in activity inour Latin and South American markets partially offset by an increase in activity in the United States. The decrease in internet channel revenue waspredominately driven by a decrease in average footwear selling price partially offset by an increase in footwear unit sales and increased conversion andtraffic. Partially offsetting this decrease was a $3.1 million, or 1.5%, increase in retail channel revenues, which is primarily the result of higher unit sales.Comparable store sales decreased 4.4% due to the impact of foreign currency translation adjustments into our reporting currency.During the year ended December 31, 2014, segment operating income decreased $13.5 million, or 21.9%, compared to 2013 primarily related to:(i)a decrease in segment gross margins of $13.2 million, or 5.3%, primarily related to higher material costs and an increase of $1.2 million of inventorywritten off related to obsolete inventory including raw materials, footwear and other accessories; (ii)$4.3 million in restructuring charges related to the reorganization of our business in Brazil, severance costs in the United States and an inventorywrite-down related to an exited business line; and (iii)Partially offsetting these negative impacts to operating income was a decrease of $2.8 million, or 1.6%, in selling, general and administrativeexpenses as a result of lower marketing expenses partially offset by higher rent and maintenance fees.Asia Pacific Operating Segment. During the year ended December 31, 2014, revenues from our Asia Pacific segment decreased $3.7 million, or 0.8%,compared to 2013 primarily due to a 12.5% decrease in average footwear selling price and a $9.4 million unfavorable impact from foreign currencyfluctuations partially offset by a 1.2% increase in footwear units sold. During the year ended December 31, 2014, we realized revenue growth of 33.6% in theregion in the internet channel compared to 2013. Partially offsetting this increase was a decrease of $11.6 million, or 4.0%, in the wholesale channelrevenues, primarily due to a decrease in third and fourth quarter performance in our China business as a result of increased distributor inventory levels andlower replenishment orders. Our retail channel revenues increased $7.8 million, or 1.9%, primarily due to increased traffic during the year and the addition of44 company-operated stores since December 31, 2013 as we focused on high-traffic, outlet locations partially offset by a 4.7% decrease in comparable storesales. The closure of 71 underperforming company-operated stores and temporary locations since December 31, 2013 did not have an unfavorable impact onrevenues.During the year ended December 31, 2014, segment operating income decreased $43.1 million, or 36.5%, compared to 2013 primarily related to:(i)an increase of $14.0 million, or 8.6%, in selling, general and administrative expenses due to an increase in reserves for doubtful accounts as a result ofdelayed payments from distributors in China and Southeast Asia and an increase in sales expenses, that was partially offset by a reduction ofemployee expenses related to the reduction of retail locations; (ii)a decrease in segment gross margins of $21.8 million, or 7.8%, primarily related to an increase of $4.0 million of inventory written off related toobsolete inventory including raw materials, footwear and other accessories;55Table of Contents(iii)$4.6 million in restructuring charges related to severance and store closure costs; and (iv)a $2.6 million increase in retail asset impairment charges related to the long-lived assets.Europe Operating Segment. During the year ended December 31, 2014, revenues from our Europe segment increased $17.3 million, or 8.0%, compared to2013 primarily due to a 15.1% increase in footwear units sold, which was partially offset by a 8.8% decrease in average footwear unit selling price. Thiscontrasting increase in average footwear units sold and decrease in average footwear unit selling price is primarily related to discounting on certain productsduring the first half of the year in our wholesale channel. In addition to sales metrics, our Europe segment realized a $1.2 million unfavorable impact fromforeign currency fluctuations driven by the weakening of the Russian Ruble against the U.S. Dollar. During the year ended December 31, 2014, we realizedrevenue growth in the region in the wholesale and retail channels compared to 2013. Our wholesale channel revenue increased $16.3 million, or 12.5%,primarily due to the expansion in our number of wholesale doors and strong sales performance throughout the region. Our direct-to-consumer channelrevenues increased $1.8 million, or 3.1%, primarily due to the 0.7% increase in comparable store sales and a 4.3% increase in the average footwear unitselling price.During the year ended December 31, 2014, segment operating income increased $8.3 million, or 51.4%, compared to 2013 primarily related to:(i)a decrease to asset impairments of $4.9 million; (ii)a decrease of 4.4 million, or 4.8%, in selling, general and administrative expenses; (iii)an increase in gross margin of $3.0 million, or 2.6%; and (iv)a $3.9 million restructuring charge related to severance and store closures, which partially offset the above increases.Liquidity and Capital ResourcesCash FlowsDuring the year ended December 31, 2015, cash and cash equivalents decreased $124.2 million, or 46.5%, to $143.3 million compared to $267.5 million atDecember 31, 2014. The primary driver of this decrease is the repurchase of $85.9 million of our common stock associated with repurchases including relatedcommission charges under our publicly-announced repurchase plan, strategic reinvestments into the business including $5.8 million in capital spendprimarily related to our ERP system implementation, dividend payments of $11.9 million on our Series A Preferred Stock, of which $3.0 million was recordedas dividends payable and prepaid dividends as of December 31, 2015, and debt payments, including principal and interest, of $3.0 million related to long-term bank borrowings.Cash provided by operations was $9.7 million for the year ended December 31, 2015 compared to cash used in operations of $11.7 million for the year endedDecember 31, 2014. This increase was primarily driven by the change in working capital accounts year over year which accounted for $36.4 million of ourcash provided by operating activities. During the year ended December 31, 2015, we paid $19.9 million in56 2015 2014 2013 (in thousands) Cash provided by (used in) operating activities $9,698 $(11,651)$83,464 Cash used in investing activities (18,627) (57,992) (69,758)Cash provided by (used in) financing activities (101,260) 23,431 (1,161)Effect of exchange rate changes on cash (13,982) (3,420) 10,251 Net increase (decrease) in cash and cash equivalents $(124,171)$(49,632)$22,796 Table of Contentscash related to taxes that were accrued for as of December 31, 2014, which accounted for half of this change.In 2015, we completed the implementation and customization of our fully-integrated global operational and financial accounting and resource planningsystem, or ERP system. This ERP system was placed into service in the first quarter of 2015. The total cost of the ERP system implementation was$102.3 million of which $74.6 million was capitalized and $27.7 million was expensed. This amount represents a 309.2% increase over the projected initialpre-blueprinting cost estimate disclosed in our Form 10-K for the year ended December 31, 2012. The cost increase, as compared to the original pre-blueprinting estimate, is primarily a result of the following: (i) project scope changes including: expanding the number of locations where the new systemwas implemented and enhancements in the security, reporting and governance tools; (ii) increased costs to develop data conversion software to convert datafrom the previous ERP system to the new ERP system, and (iii) increased consulting costs primarily associated with system enhancements. The ERP system isbeing amortized using the straight-line method over an estimated economic useful life of seven years.Working CapitalAs of December 31, 2015, accounts receivable, net decreased $17.6 million compared to December 31, 2014. During the year ended December 31, 2015, werecorded a reserve for doubtful accounts of $23.2 million in our Asia Pacific segment primarily as a result of delayed payments from our partner stores inChina. As of December 31, 2015, other long-term assets decreased by approximately $4.3 million primarily due to the decrease in derivative instrumentsrecorded on our balance sheet, as no such instruments were outstanding as of December 31, 2015. As of December 31, 2015, accounts payable increased$20.4 million compared to December 31, 2014. As a result of the January 2015 implementation of our new ERP system, we accelerated payments of ouroutstanding payables in late 2014 to accommodate the transition. Accrued expenses and other liabilities increased $11.6 million compared to December 31,2014 primarily due to an accrued loss on our South Africa operations held for sale as of December 31, 2015.We anticipate our cash flows from operations will be sufficient to meet the ongoing needs of our business for the next twelve months. In order to provideadditional liquidity in the future and to help support our strategic goals, we have a revolving credit facility with a syndicate of lenders, including PNC Bank,National Association ("PNC") as lead lender, which was amended on February 18, 2016, and as amended, provides us with up to $75.0 million in borrowingcapacity and matures in February 2021 (see Revolving Credit Facility below). Additional future financing may be necessary and there can be no assurancethat, if needed, we will be able to secure additional debt or equity financing on terms acceptable to us or at all.Sale of Preferred StockOn December 28, 2013, we entered into, and on January 27, 2014, we closed on an investment agreement with Blackstone, whereby we sold them 200,000shares of the Company's Series A Preferred Stock for $182.2 million of net proceeds. The Series A Preferred Stock has a par value $0.001 per share, with anaggregate stated value of $200.0 million, or $1,000 per share, and an aggregate purchase price of $198.0 million, or $990.00 per share.The Series A Preferred Stock ranks senior to our common stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. Holdersof Series A Preferred Stock are entitled to cumulative dividends payable quarterly in cash at a rate of 6% per annum as well as any dividends declared or paidon our common stock and are entitled to vote together with the holders of common stock on an as-converted basis. As of December 31, 2015, accrueddividends were $3.0 million, which were paid to Blackstone on January 4, 2016.57Table of ContentsThe Series A Preferred Stock has several conversion features as well as redemption rights. The conversion rate is subject to customary anti-dilution and otheradjustments subject to certain share caps and other restrictions. As of December 31, 2015, the Blackstone investment, on an as converted to common stockbasis, represented approximately 15.9% of our outstanding common stock. We intend to continue to use the net proceeds, as well as excess cash, to fund therepurchase of our common stock pursuant to the $350.0 million stock repurchase authorization approved by the Board discussed further below. We believethis investment provides an opportunity to drive shareholder value and refine the strategic direction of the business.Stock Repurchase Plan AuthorizationsWe continue to evaluate options to maximize the returns on our cash and to maintain an appropriate capital structure, including, among other alternatives,repurchases of our common stock.On December 26, 2013, the Board approved the repurchase of up to $350.0 million of our common stock, subject to certain restrictions on repurchases underour revolving credit facility. This replaced all of our existing stock repurchase authorizations. The number, price, structure and timing of the repurchases willbe at our sole discretion and future repurchases will be evaluated by us depending on market conditions, liquidity needs and other factors. Share repurchasesmay be made in the open market or in privately negotiated transactions. The repurchase authorization does not have an expiration date and does not obligeus to acquire any particular amount of our common stock. The Board may suspend, modify or terminate the repurchase program at any time without priornotice.During the year ended December 31, 2015, we repurchased approximately 6.5 million shares at an average price of $13.24 for an aggregate price ofapproximately $85.9 million including related commission charges, under a publicly-announced repurchase plan.During the year ended December 31, 2014, we repurchased approximately 10.6 million shares at an average price of $13.75 for an aggregate price ofapproximately $145.6 million excluding related commission charges, under a publicly-announced repurchase plan.As of December 31, 2015, subject to certain restrictions on repurchases under our revolving credit facility, we had $118.7 million of our common sharesavailable for repurchase under the repurchase authorizations.On February 18, 2016, we entered into the Eleventh Amendment to the Credit Agreement (as defined below) which limits the amount that the we canrepurchase to $50.0 million per year, subject to certain conditions.Revolving Credit FacilityOn December 16, 2011, we entered into an Amended and Restated Credit Agreement (as amended, the "Credit Agreement"), with the lenders named thereinand PNC Bank, National Association ("PNC"), as a lender and administrative agent for the lenders. On December 27, 2013, we entered into the ThirdAmendment of the Credit Agreement which allowed for the payment of dividends on the Series A preferred stock and permitted the Company to have greaterflexibility to repurchase its Common Stock. On April 2, 2015, we entered into the Sixth Amendment to the Credit Agreement which amended certaindefinitions of the financial covenants and certain covenant ratios to be more favorable. On September 1, 2015, we entered into the Eighth Amendment to theCredit Agreement which further amended certain definitions of the financial covenants and certain covenant ratios to become more favorable to us. OnDecember 24, 2015, we entered into the Tenth Amendment to the Credit Agreement which further amended certain definitions of the financial covenants tobecome more favorable to us.On February 18, 2016, the Company entered into the Eleventh Amendment to the Credit Agreement. The Eleventh amendment primarily: (i) extended thematurity date to February 18, 2021, (ii) resized the borrowing capacity of the facility to $75.0 million, (iii) amended certain definitions of the financial58Table of Contentscovenants to become more favorable to the Company, (iv) allows up to $50 million in stock repurchases per year, and (v) limited certain capital expendituresand commitments to an aggregate of $50 million per year. The Company anticipates it will be in compliance with its covenants as of March 31, 2016,however, there can be no assurance that the Company will be in compliance at that date. See Note 11—Revolving Credit Facility & Bank Borrowing, forfurther details regarding applicable covenant terms and interest rates associated the Credit Agreement.As of December 31, 2015 and December 31, 2014, the Company had no outstanding borrowings under the Credit Agreement. As of December 31, 2015 andDecember 31, 2014, the Company had outstanding letters of credit of $1.3 million and $1.8 million, respectively, which were reserved against the borrowingbase under the terms of the Credit Agreement. During the years ended December 31, 2015, 2014, and 2013, Crocs capitalized $0.2 million, $0.1 million, and$0.1 million, respectively, in fees and third party costs which were incurred in connection with the Credit Agreement, as deferred financing costs. As ofDecember 31, 2015, the Company was not in compliance with the fixed charge coverage ratio and the leverage ratio under the Credit Agreement. OnFebruary 18, 2016, we received a waiver of our December 31, 2015 financial covenant obligations from the lenders.Asia Pacific Revolving Credit FacilityOn August 28, 2015, a Crocs subsidiary entered into a revolving credit facility agreement with HSBC Bank (China) Company Limited, Shanghai Branch("HSBC") as the lender. The revolving credit facility enables Crocs to borrow uncommitted dual currency revolving loan facilities up to RMB 40.0 million,or the USD equivalent, and import facilities up to RMB 60.0 million, or the USD equivalent, with a combined facility limit of RMB 60.0 million. Thisrevolving credit facility supports possible future net working capital needs in China. For loans denominated in USD, the interest rate is 2.1% per annum plusLIBOR for three months or any other period as may be determined by HSBC at the end of each interest period. For loans denominated in RMB, interest equalsthe one year benchmark lending rate effective on the loan drawdown date set forth by the People's Bank of China with a 10% mark-up and is payable on thematurity date of the related loan. The revolving credit facility is guaranteed by Crocs, Inc. and certain accounts receivables in China are pledged as securityunder the revolving credit facility. The revolving credit facility can be canceled or suspended at any time at the lenders discretion and contains provisionsrequiring Crocs to maintain compliance with certain restrictive covenants. As of December 31, 2015, we received notification from the lender that the facilityhas been temporarily suspended.Long-term Bank BorrowingsOn December 10, 2012, Crocs entered into a Master Installment Payment Agreement ("Master IPA") with PNC in which PNC financed the Company's recentimplementation of a new ERP system, which began in October 2012 and was substantially completed in early 2015. The terms of each note payable, underthe Master IPA, consist of a fixed interest rate and payment terms based on the amount borrowed and the timing of activity throughout the implementation ofthe ERP system. The Master IPA is subject to cross-default, cross-termination, and is coterminous with the Credit Agreement.As of December 31, 2015 and 2014, Crocs had $6.4 million and $11.6 million, respectively, of debt outstanding under five separate notes payable, of which$4.8 million and $5.3 million, respectively, represents current installments. As of December 31, 2015, the notes bear interest rates ranging from 2.45% to2.79% and maturities ranging from September 2016 to September 2017. As this debt arrangement relates solely to the construction and implementation of anERP system for use by the entity, interest expense was capitalized to the consolidated balance sheets and amortized over the life of the assets, starting on theJanuary 1, 2015 in-service date. During the years ended December 31, 2015 and 2014, Crocs capitalized $0.0 million and $0.4 million, respectively, ininterest expense related to this debt arrangement to the consolidated balance sheets. Interest rates and payment terms are subject to changes as furtherfinancing occurs under the Master IPA.59Table of ContentsCapital AssetsDuring the year ended December 31, 2015, net capital assets acquired, inclusive of intangible assets, were $16.9 million compared to $57.0 million duringthe same period in 2014. The decrease is primarily due to lower capital spend in our ERP system, which was placed into service in January 2015.Repatriation of CashAs we are a global business, we have cash balances which are located in various countries and are denominated in various currencies. Fluctuations in foreigncurrency exchange rates impact our results of operations and cash positions. Future fluctuations in foreign currencies may have a material impact on our cashflows and capital resources. Cash balances held in foreign countries may have additional restrictions and covenants associated with them which couldadversely impact our liquidity and our ability to timely access and transfer cash balances between entities.We generally consider unremitted earnings of subsidiaries operating outside of the U.S. to be indefinitely reinvested; however, our Board has approved aforeign cash repatriation strategy. As part of this strategy, we repatriated approximately $127.3 million during the year ended December 31, 2015 for whichincome taxes have already been accrued or paid. Further cash repatriation will depend on future cash requirements in the U.S. We maintain approximately$128 million of foreign earnings for which tax has previously been provided, and which has not been repatriated at this time.Most of the cash balances held outside of the U.S. could be repatriated to the U.S., but under current law, would be subject to U.S. federal and state incometaxes less applicable foreign tax credits. In some countries, repatriation of certain foreign balances is restricted by local laws and could have adverse taxconsequences if we were to move the cash to another country. Certain countries have monetary laws which may limit our ability to utilize cash resources inthose countries for operations in other countries. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or othercountries and could adversely affect our liquidity. As of December 31, 2015, we held $111.9 million of our total $143.3 million in cash in internationallocations. This cash is primarily used for the ongoing operations of the business in the locations in which the cash is held. Of the $111.9 million, $1.4 millioncould potentially be restricted, as described above. If the remaining $110.5 million were to be immediately repatriated to the U.S., no additional tax expensewould be incurred as all amounts are currently provided for in the our statement of operations.Contractual ObligationsIn December 2011, Crocs renewed and amended its supply agreement with Finproject S.p.A. (formerly known as Finproject s.r.l.), which provides Crocs theexclusive right to purchase certain raw materials used to manufacture our products. The agreement also provides that Crocs meets minimum purchaserequirements to maintain exclusivity throughout the term of the agreement, which expires December 31, 2016. Historically, the minimum purchaserequirements have not been onerous and Crocs does not expect them to become onerous in the future. Depending on the material purchased, pricing wasbased either on contracted price or was subject to quarterly reviews and fluctuates based on order volume, currency fluctuations, and raw material prices.Pursuant to the agreement, Crocs guarantees the payment for certain third-party manufacturer purchases of these raw materials up to a maximum potentialamount of €3.5 million (approximately $3.8 million as of December 31, 2015).60Table of ContentsThe following table summarizes aggregate information about our significant contractual cash obligations as of December 31, 2015:61 Total Less than1 Year 1 - 3 Years 3 - 5 Years More than5 Years (in thousands) Operating lease obligations(1) $357,831 $77,127 $104,186 $71,208 $105,310 Inventory purchase obligations with third-partymanufacturers(2) 158,152 158,152 — — — Dividends payable(3) 72,866 12,000 24,000 24,000 12,866 Other contracts(4) 13,642 1,685 11,466 486 5 Debt obligations(5)(8) 6,399 4,772 1,620 7 — Minimum licensing royalties(6) 2,853 2,723 130 — — Capital lease obligations(7) 28,464 10,042 10,750 7,672 — Total $640,207 $266,501 $152,152 $103,373 $118,181 (1)Our operating lease obligations consist of leases for retail stores, offices, warehouses, vehicles, and equipment expiring at variousdates through 2033. This balance represents the minimum cash commitment under contract to various third parties for operating leaseobligations including the effect of rent escalation clauses and deferred rent and minimum sublease rentals due in the future under non-cancelable subleases. This balance does not include certain contingent rent clauses that may require additional rental amounts basedon sales volume, inventories, etc. as these amounts are not determinable for future periods. (2)Our inventory purchase obligations with third party manufacturers consist of open purchase orders for footwear products and includean immaterial amount of purchase commitments with certain third-party manufacturers for yet-to-be-received finished product wheretitle passes to us upon receipt. All purchase obligations with third party manufacturers are expected to be paid within one year. (3)Dividends payable are associated with our Series A Preferred Stock at a rate of 6.0% of the stated value of the stock. The amountsrepresent expected dividend payments over the eight year redemption accretion period. (4)Other contracts consist of various agreements with third-party providers. (5)Our current debt obligations consist of five separate notes issued under our agreement with PNC to finance the purchase andimplementation of our new ERP system, which bear interest rates ranging from 2.45% to 2.79% and maturities ranging from September2016 to September 2017. We will continue to finance the ERP implementation on an as needed basis through this agreement. Interestrates and payment terms are subject to change as further financing occurs. (6)Our minimum licensing royalties consist of usage-based payments for the right to use various licenses, trademarks and copyrights inthe production of our footwear and accessories. Royalty obligations are based on minimum guarantees under contract; however, mayinclude additional royalty obligations based on sales volume that are not determinable for future periods. (7)Our capital lease obligations consist of leases for office equipment expiring at various dates through 2016. This balance represents theminimum cash commitment under contract to various third-parties for capital lease obligations. (8)Amounts include anticipated interest payments. (9)We do not expect to settle any uncertain tax positions within one year. Therefore, we have not included any amounts in thecontractual obligations table above.Table of ContentsOff-Balance Sheet ArrangementsWe had no material off-balance sheet arrangements as of December 31, 2015.Critical Accounting Policies and EstimatesGeneralOur discussion and analysis of financial condition and results of operations, outside of discussions regarding constant currency and non-GAAP financialmeasures, is based on the consolidated financial statements which have been prepared in accordance with GAAP. The preparation of these financialstatements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and contingencies as of the date of the financialstatements and the reported amounts of revenues and expenses during the reporting periods. We evaluate our assumptions and estimates on an on-goingbasis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the resultsof which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual resultsmay differ from these estimates under different assumptions or conditions. The following discussion pertains to accounting policies management believes aremost critical to the portrayal of our financial condition and results of operations as well as the accounting policies that management considers subjective.Reserves for Uncollectible Accounts Receivable. We make ongoing estimates related to the collectability of our accounts receivable and maintain a reservefor estimated losses resulting from the inability of our customers to make required payments. Our estimates are based on a variety of factors, including thelength of time receivables are past due, economic trends and conditions affecting our customer base, significant non-recurring events and historical write-offexperience. Specific provisions are recorded for individual receivables when we become aware of a customer's inability or unwillingness to meet its financialobligations. Because we cannot predict future changes in the financial stability of our customers, actual future losses from uncollectible accounts may differfrom our estimates and we may experience changes in the amount of reserves we recognize for accounts receivable that we deem uncollectible. If the financialcondition of some of our customers were to deteriorate, resulting in their inability to make payments, a larger reserve might be required. In the event wedetermine that a smaller or larger reserve is appropriate, we would record a credit or a charge to selling, general and administrative expenses in the period inwhich we made such a determination.Sales Returns, Allowances and Discounts. We record reductions to revenue for estimated customer returns, allowances and discounts. Our estimated salesreturns and allowances are based on customer return history and actual outstanding returns yet to be received. Provisions for customer specific discountsbased on contractual obligations with certain major customers are recorded as reductions to net sales. We may accept returns from our wholesale anddistributor customers on an exception basis at the sole discretion of management for the purpose of stock re-balancing, to ensure that our products aremerchandised in the proper assortments. Additionally, at the sole discretion of management, we may provide markdown allowances to key wholesale anddistributor customers to facilitate the "in-channel" markdown of products where we have experienced less than anticipated sell-through. We also recordreductions to revenue for estimated customer credits as a result of price mark-downs in certain markets. Fluctuations in our estimates for sales returns,allowances and discounts may be caused by many factors, including, but not limited to, fluctuations in our sales revenue and changes in demand for ourproducts. Our judgment in determining these estimates is impacted by various factors including customer acceptance of our new styles, customer inventorylevels, shipping delays or errors, known or suspected product defects, the seasonal nature of our products and macroeconomic factors affecting our customers.Because we cannot predict or control certain of these factors, the actual amounts of customer returns and allowances may differ from our estimates.62Table of ContentsInventory Valuation. Inventories are valued at the lower of cost or market. Inventory cost is determined using the moving average cost method. At leastannually, or more frequently if events and circumstances indicate fair value is less than carrying value, we evaluate our inventory for possible impairmentusing standard categories to classify inventory based on the degree to which we believe that the products may need to be discounted below cost to sell withina reasonable period. We base inventory fair value on several subjective and unobservable assumptions including estimated future demand and marketconditions and other observable factors such as current sell-through of our products, recent changes in demand for our product, shifting demand between theproducts we offer, global and regional economic conditions, historical experience selling through liquidation and "off-price" channels and the amount ofinventory on hand. If the estimated inventory fair value is less than its carrying value, the carrying value is adjusted to market value and the resultingimpairment charge is recorded in cost of sales on the consolidated statements of operations. The ultimate results achieved in selling excess and discontinuedproducts in future periods may differ significantly from management's fair value estimates. See Note 2—Inventories in the accompanying notes to theconsolidated financial statements for additional information regarding inventory.Impairment of Long-Lived Assets. We test long-lived assets to be held and used for impairment when events or circumstances indicate the carrying value ofa long-lived asset may not be fully recoverable. Events that may indicate the impairment of a long-lived asset (or asset group, as defined below) include: (i) asignificant decrease in its market price, (ii) a significant adverse change in the extent or manner in which it is being used or in its physical condition, (iii) asignificant adverse change in legal factors or business climate that could affect its value, including an adverse action or assessment by a regulator, (iv) anaccumulation of costs significantly in excess of the amount originally expected for its acquisition or construction, (v) its current period operating or cashflow losses combined with historical operating or cash flow losses or a forecast of its cash flows demonstrate continuing losses associated with its use, and(vi) a current expectation that, more likely than not, it will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.If such facts indicate a potential impairment of a long-lived asset (or asset group), we assess the recoverability by determining if its carrying value exceeds thesum of its projected undiscounted cash flows expected from its use and eventual disposition over its remaining economic life. If the asset is not supported onan undiscounted cash flow basis, the amount of impairment is measured as the difference between its carrying value and its fair value. Assets held for sale arereported at the lower of the carrying amount or fair value less costs to sell. Fair value is determined by independent third-party appraisals, the net presentvalue of expected cash flows, or other valuation techniques as appropriate. Assets to be abandoned or from which no further benefit is expected are writtendown to zero at the time that the determination is made and the assets are removed entirely from service.An asset group is the lowest level of assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets andliabilities. For assets involved in our retail business, our asset group is at the retail store level. Our estimates of future cash flows over the remaining useful lifeof the asset group are based on management's operating budgets and forecasts. These budgets and forecasts take into consideration inputs from our regionalmanagement related to growth rates, pricing, new markets and other factors expected to affect the business, as well as management's forecasts for inventory,receivables, capital spending, and other cash needs. These considerations and expectations are inherently uncertain, and estimates included in our operatingforecasts beyond a three to six month future period are extremely subjective. Accordingly, actual cash flows may differ significantly from our estimated futurecash flows.Impairment charges are driven by, among other things, changes in our strategic operational and financial decisions, global and regional economic conditions,demand for our product and other corporate initiatives which may eliminate or significantly decrease the realization of future benefits from our long-livedassets and result in impairment charges in future periods. Significant impairment charges recognized during a reporting period could have an adverse effecton our reported financial results.63Table of ContentsAssets and Liabilities Held for Sale. The Company classifies a disposal group to be sold as held for sale when management approves and commits to aformal plan to actively market a disposal group and expects the sale to close within twelve months. Upon classifying a disposal group as held for sale, thedisposal group is recorded at the lower of its carrying amount or its estimated fair value, reduced for selling costs. In determining the fair value of a disposalgroup, the Company considers both the net book value of the disposal group as a whole and the impact of any related foreign currency translationadjustments recorded within stockholders' equity. Any losses are recognized as asset impairment charges in the Consolidated Statement of Operations.Depreciation expense is no longer recorded for any assets within a disposal group that is classified as held for sale.The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent changes arereported as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the disposalgroup at the time it was initially classified as held for sale.Share-based Compensation. We estimate the fair value of our stock option awards using a Black Scholes valuation model, the inputs of which requirevarious assumptions including the expected volatility of our stock price and the expected life of the option. The expected volatility assumptions are derivedusing our historical stock price volatility and the historical volatilities of competitors whose shares are traded in the public markets. These assumptionsreflect our best estimates, however; they involve inherent uncertainties based on market conditions generally outside of our control. If factors change and weuse a different methodology for deriving the Black Scholes assumptions, our share- based compensation expense may differ materially in the future from thatrecorded in the current period. Additionally, we make certain estimates about the number of awards which will be made under performance based incentiveplans. As a result, if other assumptions or estimates had been used, share-based compensation expense could have been materially impacted. Furthermore, ifwe use different assumptions in future periods, share-based compensation expense could be materially impacted in future periods. See Note 10—Equity in theaccompanying notes to the consolidated financial statements for additional information regarding our share-based compensation.Provisions for Contingencies and Legal Proceedings. We estimate our provision for general contingencies, including potential losses in relation to tax andcustoms matters and legal proceedings, based on an assessment of the probability of the contingency and accrue if information available indicates that it isprobable that a liability has been incurred. When it has been determined that a liability has been incurred, and information available indicates that theestimated amount of loss can be reasonably estimated and/or is within a range of amounts, that amount is accrued for in the consolidated financial statements.Income Taxes. We account for income taxes using the asset and liability method which requires the recognition of deferred tax assets and liabilities for theexpected future tax consequences of temporary differences between the carrying amounts and the tax bases of other assets and liabilities. We provide forincome taxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. We use a two-step approach for recognizing andmeasuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. The impact of anuncertain tax position that is more likely than not of being sustained upon examination by the relevant taxing authority must be recognized at the largestamount that is more likely than not to be sustained. No portion of an uncertain tax position will be recognized if the position has less than a 50% likelihoodof being sustained. Interest expense is recognized on the full amount of deferred benefits for uncertain tax positions. While the validity of any tax position isa matter of tax law, the body of statutory, regulatory and interpretive guidance on the application of the law is complex and often ambiguous.Our annual tax rate is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate.Significant judgment is required in determining our annual tax expense and in evaluating our tax positions. Tax laws require items to be included in our tax64Table of Contentsreturns at different times than when these items are reflected in the consolidated financial statements. As a result, the annual tax rate reflected in ourconsolidated financial statements is different than that reported in our tax return (our cash tax rate). Some of these differences are permanent, such as expensesthat are not deductible in our tax return, and some differences reverse over time, such as depreciation expense. These timing differences create deferred taxassets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax basis of assetsand liabilities. The tax rates used to determine deferred tax assets or liabilities are the enacted tax rates in effect for the year in which the differences areexpected to reverse. Based on an evaluation of all available information, we recognize future tax benefits, such as net operating loss carryforwards, to theextent that realizing these benefits is considered more likely than not.We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing our forecasted taxable income using both historical andprojected future operating results, the reversal of existing temporary differences, taxable income in prior carry back years (if permitted) and the availability oftax planning strategies. A valuation allowance is required to be established unless management determines that it is more likely than not that we willultimately realize the tax benefit associated with a deferred tax asset. Undistributed earnings of a subsidiary are accounted for as a temporary difference,except that deferred tax liabilities are not recorded for undistributed earnings of a foreign subsidiary that are deemed to be indefinitely reinvested in theforeign jurisdiction. We have operated under a specific plan for reinvestment of undistributed earnings of our foreign subsidiaries which demonstrates thatsuch earnings will be indefinitely reinvested in the applicable tax jurisdictions. Should we change our plans, we would be required to record a significantamount of deferred tax liabilities. We recognize interest and penalties related to unrecognized tax benefits within the "Income tax expense" line in theaccompanying consolidated statement of operations. Accrued interest and penalties are included within the related tax liability line in the consolidatedbalance sheets. See Note 14—Income Taxes in the accompanying notes to the consolidated financial statements for additional information regarding ourincome taxes.Recent Accounting Pronouncements. See Note 1—Organization and Summary of Significant Accounting Policies in the accompanying notes to theconsolidated financial statements for recently adopted and issued accounting pronouncements. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Interest Rate RiskWe centrally manage our debt and investment portfolios considering investment opportunities and risks, tax consequences and overall financing strategies.Our exposure to market risk includes interest rate fluctuations in connection with our revolving credit facility and certain financial instruments. In addition tothe revolving credit facility, we have incurred short- and long-term indebtedness related to the implementation of our ERP system. Borrowings under thesedebt instruments bear fixed interest rates and therefore, do not have the potential for market risk.Borrowings under the revolving credit facility bear interest at a variable rate. For domestic rate loans, the interest rate is equal to the highest of (i) the dailyfederal funds open rate as quoted by ICAP North America, Inc. plus 0.5%, (ii) PNC's prime rate and (iii) a daily LIBOR rate plus 1.0%, in each case there is anadditional margin ranging from 0.25% to 1.00% based on certain conditions. For LIBOR rate loans, the interest rate is equal to a LIBOR rate plus a marginranging from 1.25% to 2.00% based on certain conditions. Borrowings under the revolving credit facility are therefore subject to risk based upon prevailingmarket interest rates. Interest rates fluctuate as a result of many factors, including governmental monetary and tax policies, domestic and internationaleconomic and political considerations and other factors that are beyond our control. As of December 31, 2015 and 2014, there were no borrowings under therevolving credit facility.65Table of ContentsWe additionally hold cash equivalents including certificate of deposits, time deposits and money market funds. Interest income generated from these cashequivalents will fluctuate with the general level of interest rates. As of December, 2015, we held $7.5 million in cash equivalents subject to variable interestrates. If the prevailing market interest rates relative to these investments increased or decreased by10% during the year ended December 31, 2015, interestincome would have increased or decreased by approximately $0.1 million.Foreign Currency Exchange RiskAs a global company, we have significant revenues and costs denominated in currencies other than the U.S. Dollar. We pay the majority of expensesattributable to our foreign operations in the functional currency of the country in which such operations are conducted and pay the majority of our overseasthird-party manufacturers in U.S. Dollars. Our ability to sell our products in foreign markets and the U.S. Dollar value of the sales made in foreign currenciescan be significantly influenced by foreign currency fluctuations. Fluctuations in the value of foreign currencies relative to the U.S. Dollar could result indownward price pressure for our products and increase losses from currency exchange rates. An increase or decrease of 1% in value of the U.S. Dollar relativeto foreign currencies would have increased or decreased loss before taxes during the year ended December 31, 2015 by approximately $1.0 million. Thevolatility of the applicable exchange rates is dependent on many factors that cannot be forecasted with reliable accuracy. In the event our foreign sales andpurchases increase and are denominated in currencies other than the U.S. Dollar, our operating results may be affected by fluctuations in the exchange rate ofcurrencies we receive for such sales. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," for a discussionof the impact of foreign exchange rate variances experienced during the years ended December 31, 2015 and 2014.We transact business in various foreign countries and are therefore exposed to foreign currency exchange rate risk inherent in revenues, costs, and monetaryassets and liabilities denominated in non-functional currencies. We have entered into foreign currency exchange forward contracts and currency swapderivative instruments to selectively protect against volatility in the value of non-functional currency denominated monetary assets and liabilities, and offuture cash flows caused by changes in foreign currency exchange rates.The following table summarizes the notional amounts of the outstanding foreign currency exchange contracts at December 31, 2015 and 2014. The notionalamounts of the derivative financial instruments shown below are denominated in their U.S. Dollar equivalents and represent the amount of all contracts of66Table of Contentsthe foreign currency specified. These notional values do not necessarily represent amounts exchanged by the parties and, therefore, are not a direct measure ofour exposure to the foreign currency exchange risks. ITEM 8. Financial Statements and Supplementary Data The consolidated financial statements and supplementary data are as set forth in the index to consolidated financial statements on page F-1. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. ITEM 9A. Controls and Procedures Evaluation of Disclosure Controls and ProceduresUnder the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conductedan evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) underthe Exchange Act, as of December 31, 2015 (the "Evaluation Date"). Based on the evaluation of our disclosure controls and procedures as of December 31,2015, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of the material weaknesses in internal control over financialreporting described below in Management's Report on Internal Control Over Financial Reporting, our disclosure controls and procedures were not effective,as of that date.Notwithstanding such material weaknesses, which are described below in Management's Report on Internal Control over Financial Reporting, ourmanagement has concluded that the consolidated financial67 December 31, 2015 2014 (in thousands) Foreign currency exchange forward contracts by currency: Japanese Yen $98,390 $44,533 Euro 34,219 134,755 British Pound Sterling 21,859 17,230 South Korean Won 7,981 14,590 Mexican Peso 7,277 13,180 Australian Dollar 6,459 7,913 South African Rand 6,402 4,355 Indian Rupee 5,036 3,356 Canadian Dollar 1,980 3,005 New Taiwan Dollar 1,798 3,229 Swedish Krona 1,655 1,918 Hong Kong Dollar 668 814 Russian Ruble 667 1,838 Singapore Dollar — 61,887 Chinese Yuan Renminbi — 5,376 Norwegian Krone — 917 New Zealand Dollar — 743 Brazilian Real — — Total notional value, net $194,391 $319,639 Latest maturity date January 2016 January 2015 Table of Contentsstatements included in this Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periodspresented in conformity with accounting principles generally accepted in the U.S.Management's Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f)and 15d-15(f). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015, using the criteria set forthin the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for externalpurposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and proceduresthat: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of theCompany, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations ofmanagement and directors of the Company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, useor disposition of the Company's assets that could have a material effect on the financial statements.Management has concluded our internal control over financial reporting is ineffective as of December 31, 2015 as management identified materialweaknesses as further described below. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, suchthat there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected ona timely basis.Management identified the following control deficiencies that constitute individually, or in the aggregate, material weaknesses in our internal control overfinancial reporting as of December 31, 2015:Financial Close Process. We identified deficiencies related to the operating effectiveness of controls over the completeness and accuracy of our review andapproval of certain journal entries and period end adjusting entries. In addition, we did not consistently maintain or perform on a timely basis our controlprocedures over certain account analyses, data integrity, documentation, review and approval of year-end accounting entries to ensure the accuracy andcompleteness of the entries recorded. We also identified deficiencies regarding the review and approval of our income tax entries related to our deferredincome tax accounts and the related impacts on income tax expense or benefit.We also lacked a sufficient balance of personnel commensurate with our financial close reporting requirements. If not corrected, these controls could impactthe accuracy and completeness of our financial statements.Inventory Accounting Controls. We identified deficiencies related to the operating effectiveness of our controls to ensure the existence, valuation,accuracy, and completeness of inventory on hand. Specifically, our physical inventory procedures were not performed with sufficient consistency to ensurethe underlying quantities were accurate. Additionally, our cost absorption control procedures were not consistently maintained or performed on a timelybasis in accordance with Company's policy, to ensure inventory was properly valued. If not corrected, these ineffective controls could impact the accuracyand completeness of our cost of sales and inventory balances.Deloitte & Touche LLP, our independent registered public accounting firm, has issued a report on our internal control over financial reporting, which isincluded herein.68Table of ContentsChanges in Internal Control over Financial ReportingOther than the material weaknesses noted above, there has been no change in our internal control over financial reporting during the three months endedDecember 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Remediation Efforts to Address Identified Material WeaknessesManagement is dedicated to remediate the control deficiencies that gave rise to the material weaknesses in our internal control over financial reporting. If notremediated, the material weaknesses in our internal controls may result in material misstatements in our financial statements.The following steps are among the measures that have been implemented or that we intend to implement after the date of this filing to address our materialweaknesses as of December 31, 2015:Financial Close Process. We are performing a review to identify opportunities to improve the operation of our financial close control activities. We intendto engage a third party service provider to assist with our review and remediation efforts and to make recommendations related to our staffing levels andstructure. Furthermore, we are undertaking additional training of the personnel recording and reviewing journal entries to ensure consistent compliance withour policies and controls over the account analysis, documentation, review, and approval of manual journal entries as well as data integrity procedures. Wewill also direct our internal auditors to perform additional testing around these processes to ensure the sufficiency of our remediation efforts.Inventory Accounting Controls. We are performing a review to identify opportunities to improve the operation of our inventory accounting controlactivities. We intend to engage a third party service provider to assist with our review and remediation efforts. Furthermore, we are undertaking additionaltraining of our supply chain personnel to ensure inventory control procedures are adequate, performed timely, and are properly recorded in accordance withour policies. We will also provide enhanced training on cost absorption analysis procedures to ensure inventory values are properly maintained. We will alsodirect our internal auditors to perform additional testing of our inventory procedures to assess the sufficiency of our remediation efforts.We are committed to maintaining a strong internal control environment. The Audit Committee has directed management to develop a detailed plan andtimetable for the completion of the implementation of the remedial measures outlined above and will continue to monitor such implementation. In addition,under the direction of the Audit Committee, management will continue to review and make necessary changes to the overall design of our internal controlenvironment, as well as to our policies and procedures in order to improve the overall effectiveness of our internal control over financial reporting.As we implement these remediation efforts, we may determine that additional steps may be necessary to remediate the material weaknesses. We cannot assureyou that these remediation efforts will be successful or that our internal control over financial reporting will be effective in accomplishing all controlobjectives all of the time. We will continue to assess the effectiveness of our remediation efforts in connection with our evaluations of internal control overfinancial reporting. ITEM 9B. Other Information None.69Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders ofCrocs, Inc.Niwot, ColoradoWe have audited Crocs, Inc. and subsidiaries' (the "Company") internal control over financial reporting as of December 31, 2015, based on criteria establishedin Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). TheCompany's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting, included in the accompanying "Management's Report on Internal Control Over Financial Reporting". Our responsibility is toexpress an opinion on the Company's internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on that risk, and performing such other procedures as we considered necessaryin the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principalfinancial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally acceptedaccounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management anddirectors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition ofthe company's assets that could have a material effect on the financial statements.Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override ofcontrols, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of theeffectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because ofchanges in conditions, or that the degree of compliance with the policies or procedures may deteriorate.A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibilitythat a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis. The followingmaterial weaknesses have been identified and included in management's assessment: the Company did not maintain effective internal controls related to thefinancial close process and inventory accounting. These material weaknesses were considered in determining the nature, timing, and extent of audit testsapplied in our audit of the consolidated financial statements as of and for the year ended December 31, 2015, of the Company and this report does not affectour report on such financial statements.In our opinion, because of the effect of the material weaknesses identified above on the achievement of the objectives of the control criteria, the Companyhas not maintained effective internal control over financial70Table of Contentsreporting as of December 31, 2015, based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee ofSponsoring Organizations of the Treadway Commission.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financialstatements as of and for the year ended December 31, 2015, of the Company and our report dated February 29, 2016 expressed an unqualified opinion onthose financial statements and includes an explanatory paragraph relating to a change in the method of accounting for income taxes as of December 31, 2015due to the adoption of Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes./s/ DELOITTE & TOUCHE LLPDenver, COFebruary 29, 201671Table of Contents PART III ITEM 10. Directors, Executive Officers and Corporate Governance The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2016 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after December 31, 2015.Code of EthicsWe have a written code of ethics in place that applies to all our employees, including our principal executive officer, principal financial officer, principalaccounting officer and controller. A copy of our business code of conduct and ethics policy is available on our website: www.crocs.com. We are required todisclose certain changes to, or waivers from, our code of ethics for our senior financial officers. We intend to use our website as a method of disseminating anychange to, or waiver from, our business code of conduct and ethics policy as permitted by applicable SEC rules. ITEM 11. Executive Compensation The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2016 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after December 31, 2015. ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2016 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after December 31, 2015, with the exception of those items listed below.Securities Authorized for Issuance under Equity Compensation PlansAs shown in the table below, we reserved 4.4 million shares of common stock for future issuance pursuant to exercise of outstanding awards under equitycompensation plans as of December 31, 2015.72Plan Category Number ofSecurities to be Issuedon Exercise ofOutstandingOptions and Rights Weighted AverageExercise Price ofOutstandingOptions(2) Number of SecuritiesRemaining Availablefor FutureIssuance UnderPlans, ExcludingSecurities Availablein First Column Equity compensation plans approved by stockholders(1) 4,384,129 $14.09 8,218,218 Equity compensation plans not approved by stockholders — — — Total 4,384,129 $14.09 8,218,218 (1)On June 8, 2015, the Company's stockholders approved the Crocs, Inc. 2015 Equity Incentive Plan (the "Plan"). The number of sharesavailable for issuance under the Plan (subject to changes in capitalization) consist of (i) 7.0 million newly available shares;(ii) 1.2 million shares available for issuance under the 2007 Plan as of June 8, 2015; and (iii) 2007 Plan shares associated withoutstanding options or awards that are cancelled or forfeited after June 8, 2015. The Plan provides for the grant of incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, and other stock-basedawards. The Plan replaces the Company's 2007 EquityTable of Contents ITEM 13. Certain Relationships and Related Transactions and Director Independence The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2016 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after December 31, 2015. ITEM 14. Principal Accountant Fees and Services The information required by this item is incorporated herein by reference to our definitive proxy statement for the 2016 Annual Meeting of Stockholders tobe filed with the SEC within 120 days after December 31, 2015. PART IV ITEM 15. Exhibits and Financial Statement Schedules (1) Financial StatementsThe financial statements filed as part of this report are listed on the index to the consolidated financial statements on page F-1.(2) Financial Statement SchedulesAll financial statement schedules have been omitted because they are not required, are not applicable or the information is included in the consolidatedfinancial statements or notes thereto.73Incentive Plan (As Amended and Restated), and no further awards will be made under the 2007 Plan. The Plan became effectiveimmediately upon stockholder approval.(2)The weighted-average exercise price of outstanding options pertains only to 1.3 million shares issuable on the exercise of outstandingoptions and rights.Table of Contents(3) Exhibit list74ExhibitNumber Description 3.1 Restated Certificate of Incorporation of Crocs, Inc. (incorporated herein by reference to Exhibit 4.1 to Crocs, Inc.'s Registration Statement onForm S-8, filed on March 9, 2006 (File No. 333-132312)). 3.2 Certificate of Amendment to Restated Certificate of Incorporation of Crocs, Inc. (incorporated herein by reference to Exhibit 3.1 to Crocs, Inc.'sCurrent Report on Form 8-K, filed on July 12, 2007). 3.3 Amended and Restated Bylaws of Crocs, Inc. (incorporated herein by reference to Exhibit 4.2 to Crocs, Inc.'s Registration Statement on Form S-8, filed on March 9, 2006 (File No. 333-132312)). 3.4 Certificate of Designations of Series A Convertible Preferred Stock of Crocs, Inc. (incorporated herein by reference to Exhibit 3.1 to Crocs, Inc.'sCurrent Report on Form 8-K, filed on January 27, 2014). 4.1 Specimen Common Stock Certificate (incorporated herein by reference to Exhibit 4.2 to Crocs, Inc.'s Registration Statement on Form S-1/A,filed on January 19, 2006 (File No. 333-127526)). 10.1*Form of Indemnification Agreement between Crocs, Inc. and each of its directors and executive officers (incorporated herein by reference toExhibit 10.1 to Crocs, Inc.'s Registration Statement on Form S-1, filed on August 15, 2005 (File No. 333-127526)). 10.2*Crocs, Inc. 2005 Equity Incentive Plan (the "2005 Plan") (incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s RegistrationStatement on Form S-1, filed on August 15, 2005 (File No. 333-127526) ). 10.3*Amendment No. 1 to the 2005 Plan (incorporated herein by reference to Exhibit 10.2.2 to Crocs, Inc.'s Registration Statement on Form S-1/A,filed on January 19, 2006 (File No. 333-127526)). 10.4*Form of Notice of Grant of Stock Option under the 2005 Plan (incorporated herein by reference to Exhibit 10.3 to Crocs, Inc.'s RegistrationStatement on Form S-1, filed on August 15, 2005 (File No. 333-127526)). 10.5*Form of Notice of Grant of Stock Option for Non-Exempt Employees under the 2005 Plan (incorporated herein by reference to Exhibit 10.4 toCrocs, Inc.'s Registration Statement on Form S-1, filed on August 15, 2005 (File No. 333-127526)). 10.6*Form of Stock Purchase Agreement under the 2005 Plan (incorporated herein by reference to Exhibit 10.5 to Crocs, Inc.'s Registration Statementon Form S-1, filed on August 15, 2005 (File No. 333-127526)). 10.7*Form of Stock Option Agreement under the 2005 Plan (incorporated herein by reference to Exhibit 10.6 to Crocs, Inc.'s Registration Statementon Form S-1, filed on August 15, 2005 (File No. 333-127526)). 10.8*Form of Restricted Stock Award Grant Notice under the 2005 Plan (incorporated herein by reference to Exhibit 10.7 to Crocs, Inc.'s RegistrationStatement on Form S-1, filed on August 15, 2005 (File No. 333-127526) ). Table of Contents75ExhibitNumber Description 10.9*Form of Restricted Stock Award Agreement under the 2005 Plan (incorporated herein by reference to Exhibit 10.8 to Crocs, Inc.'s RegistrationStatement on Form S-1, filed on August 15, 2005 (File No. 333-127526)). 10.10*Form of Non Statutory Stock Option Agreement under the 2005 Plan (incorporated herein by reference to Exhibit 10.9 to Crocs, Inc.'sRegistration Statement on Form S-1, filed on August 15, 2005 (File No. 333-127526) ). 10.11*Crocs, Inc. Amended and Restated 2007 Senior Executive Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.15 toCrocs, Inc.'s Annual Report on Form 10-K, filed on March 17, 2009). 10.12*2008 Cash Incentive Plan (As Amended and Restated Effective June 4, 2012) (incorporated herein by reference to Exhibit 10.1 to Crocs, Inc.'sCurrent Report on Form 8-K, filed on June 7, 2012). 10.13*Crocs, Inc. 2007 Equity Incentive Plan (As Amended and Restated) (the "2007 Plan") (incorporated herein by reference to Exhibit 10.1 toCrocs, Inc.'s Current Report on Form 8-K, filed on July 1, 2011). 10.14*Form of Incentive Stock Option Agreement under the 2007 Plan (incorporated herein by reference to Exhibit 10.1 to Crocs, Inc.'s QuarterlyReport on Form 10-Q, filed on November 14, 2007). 10.15*Form of Non-Statutory Stock Option Agreement under the 2007 Plan (incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s QuarterlyReport on Form 10-Q, filed on November 14, 2007). 10.16*Form of Non-Statutory Stock Option Agreement for Non-Employee Directors under the 2007 Plan (incorporated herein by reference toExhibit 10.3 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on November 14, 2007). 10.17*Form of Restricted Stock Unit Agreement under the 2007 Plan (incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s Current Reporton Form 8-K, filed on July 1, 2011). 10.18*Employment Agreement, dated May 18, 2009, between Crocs, Inc. and Daniel P. Hart (incorporated herein by reference to Exhibit 10.1 toCrocs, Inc.'s Quarterly Report on Form 10-Q, filed on August 5, 2010). 10.19 Amended and Restated Credit Agreement, dated December 16, 2011, among Crocs, Inc., Crocs Retail, Inc., Ocean Minded, Inc., Jibbitz, LLC,Bite, Inc., the lenders named therein and PNC Bank, National Association, as a lender and administrative agent for the lenders (the "Amendedand Restated Credit Agreement") (incorporated herein by reference to Crocs, Inc.'s Current Report on Form 8-K, filed on December 19, 2011). 10.20 First Amendment to the Amended and Restated Credit Agreement, dated December 10, 2012, among Crocs, Inc., Crocs Retail, Inc., OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein and PNC Bank, National Association, as a lender and administrative agent(incorporated herein by reference to Crocs, Inc.'s Current Report on Form 8-K, filed on December 11, 2012). Table of Contents76ExhibitNumber Description 10.21 Second Amendment to Amended and Restated Credit Agreement, dated June 12, 2013, among Crocs, Inc., Crocs Retail, Inc., OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein and PNC Bank, National Association, as a lender and administrative agent(incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on July 30, 2013). 10.22 Third Amendment to Amended and Restated Credit Agreement, dated December 27, 2013, among Crocs, Inc., Crocs Retail, Inc., OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein and PNC Bank, National Association, as a lender and administrative agent(incorporated herein by reference to Exhibit 10.1 to Crocs, Inc.'s Current Report on Form 8-K, filed on December 30, 2013). 10.23 Fourth Amendment to Amended and Restated Credit Agreement, dated March 27, 2014, among Crocs, Inc., Crocs Retail, Inc., OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein and PNC Bank, National Association, as a lender and administrative agent(incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on May 1, 2014). 10.24 Fifth Amendment to Amended and Restated Credit Agreement, dated September 26, 2014, among Crocs, Inc., Crocs Retail, Inc., OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein and PNC Bank, National Association, as a lender and administrative agent(incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on October 29, 2014) 10.25 Sixth Amendment to Amended and Restated Credit Agreement, dated April 2, 2015, among Crocs, Inc., Crocs Retail, LLC, Ocean Minded, Inc.,Jibbitz, LLC, Bite, Inc., the lenders named therein, and PNC Bank, National Association, as a lender and administrative agent (incorporatedherein by reference to Exhibit 10.1 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on August 7, 2015). 10.26 Seventh Amendment to Amended and Restated Credit Agreement, dated April 21, 2015, among Crocs, Inc., Crocs Retail, LLC, OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein, and PNC Bank, National Association, as a lender and administrative agent(incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on August 7, 2015). 10.27 Eighth Amendment to Amended and Restated Credit Agreement, dated September 1, 2015, among Crocs, Inc., Crocs Retail, LLC, OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein, and PNC Bank, National Association, as a lender and administrative agent(incorporated herein by reference to Exhibit 10.1 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on November 9, 2015). 10.28 Ninth Amendment to Amended and Restated Credit Agreement, dated November 3, 2015, among Crocs, Inc., Crocs Retail, LLC, OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein, and PNC Bank, National Association, as a lender and administrative agent(incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on November 9, 2015). 10.29†Tenth Amendment to Amended and Restated Credit Agreement, dated December 24, 2015, among Crocs, Inc., Crocs Retail, LLC, OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., the lenders named therein, and PNC Bank, National Association, as a lender and administrative agent. Table of Contents77ExhibitNumber Description 10.30†Eleventh Amendment to Amended and Restated Credit Agreement, dated February 18, 2016, among Crocs, Inc., Crocs Retail, LLC, OceanMinded, Inc., Jibbitz, LLC, Bite, Inc., and PNC Bank, National Association, as a lender and administrative agent. 10.31*Crocs, Inc. Change of Control Plan (as Amended and Restated) (incorporated herein by reference to Exhibit 10.1 to Crocs, Inc.'s QuarterlyReport on Form 10-Q, filed on May 1, 2014). 10.32 Investment Agreement, dated December 28, 2013, between Crocs, Inc. and Blackstone Capital Partners VI L.P. (incorporated herein by referenceto Exhibit 10.1 to Crocs, Inc.'s Current Report on Form 8-K, filed on December 30, 2013). 10.33 First Amendment to Investment Agreement, dated January 27, 2014, between Crocs, Inc. and Blackstone Capital Partners VI L.P. (incorporatedherein by reference to Exhibit 10.1 to Crocs, Inc.'s Current Report on Form 8-K, filed on January 27, 2014). 10.34*Form of Severance Agreement (incorporated herein by reference to Exhibit 10.1 to Crocs, Inc.'s Quarterly Report on Form 10-Q, filed on July 30,2014). 10.35*Employment Offer Letter, dated May 13, 2014, between Crocs, Inc. and Andrew Rees (incorporated herein by reference to Exhibit 10.1 toCrocs, Inc.'s Current Report on Form 8-K, filed on May 14, 2014). 10.36 Registration Rights Agreement, dated January 27, 2014 (incorporated herein by reference to Exhibit 10.2 to Crocs, Inc.'s Current Report onForm 8-K, filed on January 27, 2014). 10.37*Employment Offer Letter, dated December 15, 2014, between Crocs, Inc. and Gregg Ribatt (incorporated herein by reference to Exhibit 10.1 toCrocs, Inc.'s Current Report on Form 8-K, filed on December 15, 2014). 10.38*Crocs, Inc. 2015 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 to Crocs, Inc.'s Current Report on Form 8-K, filed onJune 9, 2015). 10.39*Employment Offer Letter, dated November 4, 2015, between Crocs, Inc. and Carrie Teffner (incorporated herein by reference to Exhibit 10.1 toCrocs, Inc.'s Current Report on Form 8-K, filed on November 5, 2015). 21†Subsidiaries of the registrant. 23.1†Consent of Deloitte & Touche LLP. 31.1†Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adoptedpursuant to Section 302 of the Sarbanes-Oxley Act. 31.2†Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 as adoptedpursuant to Section 302 of the Sarbanes- Oxley Act. 32†Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906of the Sarbanes-Oxley Act. 101.INS†XBRL Instance Document 101.SCH†XBRL Taxonomy Extension Schema Document 101.CAL†XBRL Taxonomy Extension Calculation Linkbase Document Table of Contents78ExhibitNumber Description 101.DEF†XBRL Taxonomy Extension Definition Linkbase Document 101.LAB†XBRL Taxonomy Extension Label Linkbase Document 101.PRE†XBRL Taxonomy Extension Presentation Linkbase Document*Compensatory plan or arrangement †Filed herewith.Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, as of February 29, 2016.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated.79 CROCS, INC.a Delaware Corporation By: /s/ GREGG S. RIBATT Name: Gregg S. Ribatt Title: Chief Executive OfficerSignature Title Date /s/ GREGG S. RIBATTGregg S. Ribatt Chief Executive Officer and Director February 29, 2016/s/ CARRIE W. TEFFNERCarrie W. Teffner Executive Vice President and Chief FinancialOfficer February 29, 2016/s/ IAN M. BICKLEYIan M. Bickley Director February 29, 2016/s/ RONALD L. FRASCHRonald L. Frasch Director February 29, 2016/s/ JASON K. GIORDANOJason K. Giordano Director February 29, 2016/s/ PRAKASH A. MELWANIPrakash A. Melwani Director February 29, 2016/s/ THOMAS J. SMACHThomas J. Smach Chairman of the Board February 29, 2016/s/ DOREEN A. WRIGHTDoreen A. Wright Director February 29, 2016Table of Contents INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS F-1Financial Statements: Report of Independent Registered Public Accounting Firm F-2 Consolidated Statements of Operations for the Years Ended December 31, 2015, 2014, and 2013 F-3 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2015, 2014, and2013 F-4 Consolidated Balance Sheets as of December 31, 2015 and 2014 F-5 Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2015, 2014, and 2013 F-6 Consolidated Statements of Cash Flows for the Years Ended December 31, 2015, 2014, and 2013 F-7 Notes to Consolidated Financial Statements F-8 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders ofCrocs, Inc.Niwot, ColoradoWe have audited the accompanying consolidated balance sheets of Crocs, Inc. and subsidiaries (the "Company") as of December 31, 2015 and 2014, and therelated consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the periodended December 31, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion onthese financial statements based on our audits.We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2015and 2014, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2015, in conformity withaccounting principles generally accepted in the United States of America.As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for the classification of income taxbalances as of December 31, 2015 due to the adoption of Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal controlover financial reporting as of December 31, 2015, based on the criteria established in Internal Control—Integrated Framework (2013) issued by theCommittee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2016 expressed an adverse opinion on theCompany's internal control over financial reporting./s/ DELOITTE & TOUCHE LLPDenver, ColoradoFebruary 29, 2016F-2Table of Contents CROCS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ thousands, except per share data) The accompanying notes are an integral part of these consolidated financial statements.F-3 Year Ended December 31, 2015 2014 2013 Revenues $1,090,630 $1,198,223 $1,192,680 Cost of sales 579,825 603,893 569,482 Restructuring charges — 3,985 — Gross profit 510,805 590,345 623,198 Selling, general and administrative expenses 559,095 565,712 549,154 Restructuring charges 8,728 20,532 — Asset impairment charges 15,306 8,827 10,949 Income (loss) from operations (72,324) (4,726) 63,095 Foreign currency transaction loss, net (3,332) (4,885) (4,678)Interest income 967 1,664 2,432 Interest expense (969) (806) (1,016)Other income, net 914 204 126 Income (loss) before income taxes (74,744) (8,549) 59,959 Income tax benefit (expense) (8,452) 3,623 (49,539)Net income (loss) $(83,196)$(4,926)$10,420 Dividends on Series A convertible preferred stock (11,833) (11,301) — Dividend equivalents on Series A convertible preferred shares related toredemption value accretion and beneficial conversion feature (2,978) (2,735) — Net income (loss) attributable to common stockholders $(98,007)$(18,962)$10,420 Net income (loss) per common share: Basic $(1.30)$(0.22)$0.12 Diluted $(1.30)$(0.22)$0.12 Table of Contents CROCS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) ($ thousands) The accompanying notes are an integral part of these consolidated financial statements.F-4 Year Ended December 31, 2015 2014 2013 Net income (loss) $(83,196)$(4,926)$10,420 Other comprehensive income (loss): Foreign currency translation gain (loss), net (32,561) (33,004) (5,335)Reclassification of cumulative foreign exchange translation adjustments to netincome (loss), net of tax of $0, $0, and $(3), respectively — — 299 Total comprehensive income (loss) $(115,757)$(37,930)$5,384 Table of Contents CROCS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ($ thousands, except number of shares) The accompanying notes are an integral part of these consolidated financial statements.F-5 December 31, 2015 2014 ASSETS Current assets: Cash and cash equivalents $143,341 $267,512 Accounts receivable, net of allowances of $49,364 and $32,392, respectively 83,616 101,217 Inventories 168,192 171,012 Deferred tax assets, net — 4,190 Income tax receivable 10,233 9,332 Other receivables 14,233 11,989 Prepaid expenses and other assets 26,334 30,156 Total current assets 445,949 595,408 Property and equipment, net 49,490 68,288 Intangible assets, net 82,297 97,337 Goodwill 1,973 2,044 Deferred tax assets, net 6,608 17,886 Other assets 21,703 25,968 Total assets $608,020 $806,931 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $63,336 $42,923 Accrued expenses and other liabilities 91,835 80,216 Deferred tax liabilities, net — 11,869 Accrued restructuring 738 4,511 Income taxes payable 6,416 9,078 Current portion of long-term borrowings and capital lease obligations 4,772 5,288 Total current liabilities 167,097 153,885 Long-term income tax payable 4,547 8,843 Long-term borrowings and capital lease obligations 1,627 6,381 Long-term accrued restructuring 230 348 Other liabilities 12,890 12,277 Total liabilities 186,391 181,734 Commitments and contingencies Series A convertible preferred stock, par value $0.001 per share, 1,000,000 shares authorized,200,000 shares issued and outstanding, redemption amount and liquidation preference of$203,000 and $203,067 as of December 31, 2015 and December 31, 2014, respectively 175,657 172,679 Stockholders' equity: Preferred stock, par value $0.001 per share, 4,000,000 shares authorized, none outstanding — — Common stock, par value $0.001 per share, 250,000,000 shares authorized, 93,101,007 and72,851,418 shares issued and outstanding, respectively, as of December 31, 2015 and92,325,201 and 78,516,566 shares issued and outstanding, respectively, as of December 31,2014 94 92 Treasury stock, at cost, 20,249,589 and 13,808,635 shares as of December 31, 2015 andDecember 31, 2014, respectively (283,913) (200,424)Additional paid-in capital 353,241 345,732 Retained earnings 227,463 325,470 Accumulated other comprehensive loss (50,913) (18,352)Total stockholders' equity 245,972 452,518 Total liabilities, commitments and contingencies and stockholders' equity $608,020 $806,931 Table of Contents CROCS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY ($ thousands) Common Stock Treasury Stock AccumulatedOtherComprehensiveIncome TotalStockHolders'Equity AdditionalPaid inCapital RetainedEarnings Shares Amount Shares Amount Balance—December 31,2012 88,663 $91 2,384 $(44,214)$307,823 $334,012 $19,688 $617,400 Amortization of stockcompensation — — — — 14,483 — — 14,483 Forfeitures (78) — — — (2,014) — — (2,014)Exercises of stockoptions and issuanceof restricted stockawards 715 1 (22) 1,039 1,240 — — 2,280 Repurchase of commonstock for taxwithholding (16) — 16 (256) — — — (256)Purchase of treasurystock (834) — 834 (12,533) — — — (12,533)Net income — — — — — 10,420 — 10,420 Foreign currencytranslation, net of tax — — — — — — (5,335) (5,335)Reclassification ofcumulative foreignexchange translationadjustments to netincome — — — — — — 299 299 Balance—December 31,2013 88,450 $92 3,212 $(55,964)$321,532 $344,432 $14,652 $624,744 Amortization of stockcompensation — — — — 14,896 — — 14,896 Forfeitures (144) — — — (2,129) — — (2,129)Exercises of stockoptions and issuanceof restricted stockawards 853 — (46) 2,185 (843) — — 1,342 Repurchase of commonstock for taxwithholding (53) — 53 (787) — — — (787)Purchase of treasurystock (10,590) — 10,590 (145,858) — — — (145,858)Dividends—Series Apreferred stock — — — — — (11,301) — (11,301)Accretion—Series Apreferred stock — — — — — (2,735) — (2,735)Adjustment forbeneficial conversionfeature of Series Apreferred stock — — — — 12,276 — — 12,276 Net loss — — — — — (4,926) — (4,926)Foreign currencytranslation, net of tax — — — — — — (33,004) (33,004)Balance—December 31,2014 78,516 $92 13,809 $(200,424)$345,732 $325,470 $(18,352)$452,518 Amortization of stockcompensation — — — — 13,094 — — 13,094 Forfeitures — — — — (1,908) — — (1,908)Tax shortfall fromshare-based plans (2,841) (2,841)Exercises of stockoptions and issuanceof restricted stockawards 832 2 (56) 2,698 (836) — — 1,864 Repurchase of commonstock for taxwithholding (22) — 22 (261) — — — (261) The accompanying notes are an integral part of these consolidated financial statements.F-6Purchase of treasurystock (6,475) — 6,475 (85,926) — — — (85,926)Dividends—Series Apreferred stock — — — — — (11,833) — (11,833)Accretion—Series Apreferred stock — — — — — (2,978) — (2,978)Net loss — — — — — (83,196) — (83,196)Foreign currencytranslation, net of tax — — — — — (32,561) (32,561)Balance—December 31,2015 72,851 $94 20,250 $(283,913)$353,241 $227,463 $(50,913)$245,972 Table of Contents CROCS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ($ thousands) The accompanying notes are an integral part of these consolidated financial statements.F-7 Year Ended December 31, 2015 2014 2013 Cash flows from operating activities: Net income (loss) $(83,196)$(4,926)$10,420 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 35,993 37,413 41,506 Unrealized (gain) loss on foreign exchange, net (814) (11,100) (6,420)Deferred income taxes 289 829 23,536 Asset impairment charges 15,306 8,827 10,949 Provision for doubtful accounts, net 25,997 12,087 1,930 Share-based compensation 11,236 12,503 11,871 Inventory write-down charges 3,108 7,490 3,419 Non-cash restructuring charges — 6,413 — Other non-cash items 4,029 534 1,193 Changes in operating assets and liabilities: Accounts receivable, net of allowances (15,604) (15,288) (17,166)Inventories (8,586) (31,251) (5,274)Prepaid expenses and other assets 1,755 21,698 (4,225)Accounts payable 23,260 (12,106) (5,740)Accrued expenses and other liabilities 8,765 (15,824) 14,256 Accrued restructuring (3,677) 4,859 — Income taxes (8,163) (33,809) 3,209 Cash provided by (used in) operating activities 9,698 (11,651) 83,464 Cash flows from investing activities: Cash paid for purchases of property and equipment (12,826) (15,991) (40,424)Proceeds from disposal of property and equipment (2) 236 250 Cash paid for intangible assets (5,660) (41,035) (28,404)Change in restricted cash (139) (1,202) (1,180)Cash used in investing activities (18,627) (57,992) (69,758)Cash flows from financing activities: Proceeds from preferred stock offering, net of issuance costs of $0.0 million and $15.8 million, respectively — 182,220 — Dividends—Series A preferred stock (11,900) (8,234) — Proceeds from bank borrowings — — 23,375 Repayment of bank borrowings and capital lease obligations (5,290) (5,177) (13,160)Deferred debt issuance costs 191 (75) (100)Deferred offering costs — — (767)Issuances of common stock 1,864 1,342 2,280 Purchase of treasury stock, net of issuances (85,926) (145,858) (12,533)Repurchase of common stock for tax withholding (261) (787) (256)Excess tax benefit from share-based compensation 62 — — Cash provided by (used in) financing activities (101,260) 23,431 (1,161)Effect of exchange rate changes on cash (13,982) (3,420) 10,251 Net increase (decrease) in cash and cash equivalents (124,171) (49,632) 22,796 Cash and cash equivalents—beginning of period 267,512 317,144 294,348 Cash and cash equivalents—end of period $143,341 $267,512 $317,144 Supplemental disclosure of cash flow information—cash paid during the period for: Interest, net of capitalized interest $917 $616 $693 Income taxes $19,923 $33,655 $20,274 Supplemental disclosure of non-cash investing and financing activities: Assets acquired under capitalized leases $20 $— $61 Accrued purchases of property and equipment $851 $771 $2,165 Accrued purchases of intangibles $— $2,988 $4,742 Intrinsic value of beneficial conversion feature—Series A preferred stock $— $12,276 $— Accrued dividends $3,000 $3,067 $— Accretion of dividend equivalents $2,978 $2,735 $— Change in assets held for sale $1,595 $— $— Table of Contents CROCS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION & SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOrganizationCrocs, Inc. and its subsidiaries (collectively the "Company," "Crocs," "we," "our" or "us") are engaged in the design, development, manufacturing, marketing,and distribution of footwear and accessories for men, women, and children.Basis of PresentationThe consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in theUnited States of America ("U.S. GAAP"). The consolidated financial statements include the accounts of the Company's wholly owned subsidiaries.In April 2011, Crocs and an unrelated third party formed Crocs Gulf, LLC ("Crocs Gulf") for the purpose of selling the Company's products in the United ArabEmirates. Crocs has acquired all voting and dividend rights associated with Crocs Gulf and has therefore determined that Crocs Gulf is a wholly ownedsubsidiary.Noncontrolling InterestsAs of December 31, 2015, all of the Company's subsidiaries were, in substance, wholly owned.Transactions with AffiliatesThe Company receives inventory count services from RGIS, a wholly owned subsidiary of Blackstone which currently owns all of the outstanding shares ofCompany's Series A convertible preferred stock ("Series A preferred stock"), which is convertible into approximately 15.9% of the Company's common stock.Crocs paid a total of $0.5 million to RGIS for services received during 2015.2. RECENT ACCOUNTING PRONOUNCEMENTSFinancial InstrumentsIn January 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-01: Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The pronouncement requires equity investments (except thoseaccounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fairvalue recognized in net income, requires public business entities to use the exit price notion when measuring the fair value of financial instruments fordisclosure purposes, requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, andeliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required tobe disclosed for financial instruments measured at amortized cost. These changes become effective for fiscal years beginning after December 15, 2017. Theexpected adoption method of ASU 2016-01 is being evaluated by the Company and the adoption is not expected to have a significant impact on theCompany's consolidated financial statements.F-8Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)Classification of Deferred TaxesIn November 2015, the FASB issued ASU 2015-17: Financial Instruments—Overall: Recognition and Measurement of Financial Assets and FinancialLiabilities, which provides guidance to simplify the financial statement presentation of deferred income taxes. The new guidance requires an entity to presentdeferred tax assets and liabilities as non-current in a classified balance sheet. Prior to the issuance of this guidance, deferred tax liabilities and assets wererequired to be separately classified into a current amount and a non-current amount in the balance sheet. The new guidance represents a change in accountingprinciple and is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Company elected to earlyadopt this guidance as of December 31, 2015 and to apply it prospectively. Prior period information was not adjusted. Because the application of thisguidance affects the balance sheet classification only, adoption of this guidance did not have a material impact on our consolidated financial statements. As aresult, 2015 current deferred tax assets and liabilities have been adjusted by approximately $15.9 million and are now reflected as noncurrent under the newstandard.InventoryIn July 2015, the FASB issued ASU 2015-11: Simplifying the Measurement of Inventory, which modifies existing requirements regarding measuringinventory at the lower of cost or market. Specifically, this standard eliminates the need to determine and consider replacement cost or net realizable value lessan approximately normal profit margin when measuring inventory. This standard is effective prospectively after December 15, 2016, with early adoptionpermitted. The Company is currently evaluating the impact that this pronouncement will have on its consolidated financial statements.Debt Issuance CostsIn April 2015, the FASB issued ASU 2015-03: Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to arecognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debtdiscounts. ASU 2015-03 requires retrospective adoption and will be effective for fiscal years beginning after December 15, 2015. Early adoption is permitted.Crocs does not expect this pronouncement will have a material impact on the consolidated financial statements.Share-Based PaymentsIn June 2014, the FASB issued ASU 2014-12 in response to the EITF consensus on Issue 13-D. The ASU clarifies that entities should treat performance targetsthat can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would notrecord compensation expense related to an award for which transfer to the employee is contingent on the entity's satisfaction of a performance target until itbecomes probable that the performance target will be met. The ASU does not contain any new disclosure requirements. This ASU is effective for all entitiesfor reporting periods (including interim periods) beginning after December 15, 2015. Crocs does not expect this pronouncement will have a material impacton the consolidated financial statements.Revenue RecognitionIn May 2014, the FASB issued their final standard on revenue from contracts with customers. The standard, issued as ASU 2014-09: Revenue from Contractswith Customers (Topic 606) by the FASB, outlinesF-9Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)2. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenuerecognition guidance, including industry-specific guidance. The core principle of the revenue model is that "an entity recognizes revenue to depict thetransfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange forthose goods or services." ASU 2014-09 becomes effective for reporting periods (including interim periods) beginning after December 15, 2017. Earlyapplication is permitted for reporting periods (including interim periods) beginning after December 15, 2016. This new standard permits the use of either theretrospective or cumulative effect transition method. Crocs is currently evaluating the impact that this pronouncement will have on the condensedconsolidated financial statements. Crocs has not yet selected a transition method or determined the effect of the standard on financial reporting once thestandard is effective.Other new pronouncements issued but not effective until after December 31, 2015 are not expected to have a material impact on the Company's financialposition, results of operations or cash flows.3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESManagement EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments, and assumptions that affect thereported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reportingperiod. Management believes that the estimates, judgments, and assumptions made when accounting for items and matters such as, but not limited to, theallowance for doubtful accounts, customer rebates, sales returns, impairment assessments and charges, recoverability of assets (including deferred tax assets),uncertain tax positions, share-based compensation expense, the assessment of lower of cost or market on inventory, useful lives assigned to long-lived assets,depreciation, and provisions for contingencies are reasonable based on information available at the time they are made. Management also makes estimates inthe assessments of potential losses in relation to tax and customs matters and threatened or pending legal proceedings (see Note 17—Commitments &Contingencies and Note 19—Legal Proceedings). Actual results could materially differ from these estimates. For matters not related to income taxes, if a lossis considered probable and the amount can be reasonably estimated, Crocs recognizes an expense for the estimated loss. If there is the potential to recover aportion of the estimated loss from a third party, Crocs makes a separate assessment of recoverability and reduces the estimated loss if recovery is deemedprobable.Accumulated Other Comprehensive IncomeActivity within the accumulated other comprehensive income ("AOCI") balance consists solely of gains and losses resulting from the translation of foreignsubsidiary financial statements to the Company's reporting currency. Foreign currency translation resulting in changes to other comprehensive income andrelated reclassification adjustments are presented net of tax effects on the consolidated statements of other comprehensive income. Foreign currencyreclassification adjustments are included within the line item entitled 'Foreign currency transaction loss, net' on the consolidated statements of operations.F-10Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Fair ValueFair value is the price that would be received from the sale of an asset or transfer of a liability in an orderly transaction between market participants at themeasurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, Crocs considersthe principal or most advantageous market in which a hypothetical sale or transfer would take place and considers assumptions that market participantswould use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of non-performance.The fair value hierarchy is made up of three levels of inputs, which may be used to measure fair value:Level 1—observable inputs such as quoted prices for identical instruments in active markets;Level 2—observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets thatare not active and model derived valuations in which all significant inputs are observable in active markets; andLevel 3—unobservable inputs for which there is little or no market data, which require Crocs to develop its own assumptions. Crocs categorizes fair valuemeasurements within the fair value hierarchy based upon the lowest level of the most significant inputs used to determine such fair value measurement.Cash equivalents primarily include time deposits and certificates of deposit with original maturities of three months or less. Time deposits and certificates ofdeposit included in cash equivalents are valued at amortized cost, which approximates fair value. These investments have been classified as a Level 1measurement.Derivative financial instruments are required to be recorded at their fair value, on a recurring basis. The fair values of any derivative instruments, shouldCrocs enter into them, would be determined using a discounted cash flow valuation model. The significant inputs used in the model are readily available inpublic markets or can be derived from observable market transactions, and therefore, have been classified as Level 2. These inputs are based on the prevailingLIBOR deposit rates and include the applicable exchange rates, forward rates, and discount rates.The Company's other financial instruments are not required to be carried at fair value on a recurring basis. The carrying value of these financial instruments,including cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximates fair value due to their short maturities. The carryingvalues of capital lease obligations and the line of credit approximate their fair values based on borrowing rates currently available to Crocs, with similarterms.Inventories and long-lived assets such as property and equipment and intangible assets are also not required to be carried at fair value on a recurring basis.For a discussion of inventory values, see "Inventory Valuation" below. Crocs reviews the carrying amounts of property and equipment and intangible assetswhen events and circumstances indicate the carrying value of the asset may not be recoverable. For such determination, Crocs generally uses either an incomeapproach with inputs that are mainly unobservable, such as expected future cash flows, or a market approach using observable inputs such as replacementcost or third party appraisals, as appropriate. Estimated future cash flows are based on management's operating budgets and forecasts which take intoconsideration both observable and unobservable inputs including growth rates, pricing, new markets and other factors expected to affect the business, as wellas management's forecasts for inventory, receivables, capital spending, and other cash needs. Crocs considersF-11Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)this type of estimate to be classified as a Level 3 measurement. See Note 9—Fair Value Measurements for further discussion related to fair valuemeasurements.Cash and Cash EquivalentsCash and cash equivalents represent cash and short-term, highly liquid investments with maturities of three months or less at the date of purchase. Crocsconsiders receivables from credit card companies to be cash equivalents, if expected to be received within five days.Accounts ReceivableAccounts receivable represent amounts due from customers. Accounts receivable are recorded at invoiced amounts, net of reserves and allowances, and do notbear interest. Crocs uses its best estimate to determine the required allowance for doubtful accounts based on a variety of factors including the length of timereceivables are past due, economic trends and conditions affecting the Company's customer base and historical collection experience. Specific provisions arerecorded for individual receivables when the Company becomes aware of a customer's inability to meet its financial obligations. See Note 13—Allowancesfor further discussion related to provisions for doubtful accounts, sale returns and allowances, and reserve for unapplied rebates.Inventory ValuationInventories are valued at the lower of cost or market. Inventory cost is determined using the moving average cost method. At least annually, or morefrequently if events and circumstances indicate fair value is less than carrying value, Crocs evaluates its inventory for possible impairment. Crocs estimatesinventory fair value based on several subjective assumptions including estimated future demand and market conditions, as well as other observable factorssuch as current sell-through of the Company's products, recent changes in demand for Crocs products, global and regional economic conditions, historicalexperience selling through liquidation and price discounted channels, and the amount of inventory on hand. If the estimated inventory fair value is less thanits carrying value, the carrying value is adjusted to market value and the resulting impairment charge is recorded in 'Cost of sales' on the consolidatedstatements of operations. See Note 4—Inventories for further discussion related to inventories.Property and EquipmentProperty, equipment, furniture, and fixtures are stated at cost and depreciation is computed using the straight-line method based on the assets estimated usefullife, which typically ranges from two to five years. Leasehold improvements are stated at cost and amortized on the straight-line basis over their estimatedeconomic useful lives or the lease term, whichever is shorter. Depreciation of manufacturing assets is included in cost of sales on the consolidated statementsof operations. Depreciation related to corporate, non-product and non-manufacturing assets is included in 'Selling, general and administrative expenses' onthe consolidated statements of operations.Assets and Liabilities Held for SaleThe Company classifies a disposal group to be sold as held for sale when management approves and commits to a formal plan to actively market a disposalgroup and expects the sale to close within twelve months. Upon classifying a disposal group as held for sale, the disposal group is recorded at the lower of itsF-12Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)carrying amount or its estimated fair value, reduced for selling costs. In determining the fair value of a disposal group, the Company considers both the netbook value of the disposal group as a whole and the impact of any related foreign currency translation adjustments recorded within stockholders' equity. Anylosses are recognized as asset impairment charges in the Consolidated Statement of Operations. Depreciation expense is no longer recorded for any assetswithin a disposal group that is classified as held for sale.The fair value of a disposal group less any selling costs is assessed each reporting period it remains classified as held for sale and any subsequent changes arereported as an adjustment to the carrying value of the disposal group, as long as the new carrying value does not exceed the carrying value of the disposalgroup at the time it was initially classified as held for sale.Impairment of Long-Lived AssetsLong-lived assets to be held and used are evaluated for impairment when events or circumstances indicate the carrying value of a long-lived asset may not befully recoverable. Events that may indicate the impairment of a long-lived asset (or asset group, as defined below) include (i) a significant decrease in itsmarket price, (ii) a significant adverse change in the extent or manner in which it is being used or in its physical condition, (iii) a significant adverse changein legal factors or business climate that could affect its value, including an adverse action or assessment by a regulator, (iv) an accumulation of costssignificantly in excess of the amount originally expected for its acquisition or construction, (v) its current period operating or cash flow losses combined withhistorical operating or cash flow losses or a forecast of its cash flows demonstrate continuing losses associated with its use, and (vi) a current expectation that,more likely than not, it will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. If such facts indicate apotential impairment of a long-lived asset (or asset group), Crocs assesses the recoverability by determining if its carrying value exceeds the sum of itsprojected undiscounted cash flows from its use and eventual disposition over its remaining economic life. If the asset's carrying value is not supported, on anundiscounted cash flow basis, the amount of impairment is measured as the difference between the asset's carrying value and its estimated fair value. Assetsheld for sale are reported at the lower of the carrying amount or fair value less costs to sell. Assets, or groups of assets, to be abandoned or from which nofuture benefit is expected, are written down to zero in the period it is determined the asset or asset groups will no longer be used, and the assets, or assetgroups, are removed entirely from service. An asset group is the lowest level of assets and liabilities for which identifiable cash flows are largely independentof the cash flows of other assets and liabilities. For assets involved in Crocs' retail business, the asset group is at the retail store level. See Note 5—Propertyand Equipment for a discussion of impairment losses recorded during the periods presented.Intangible AssetsIntangible assets that are determined to have finite lives are amortized over their estimated useful lives on a straight-line basis and are evaluated forimpairment when events or circumstances indicate a carrying value may not be fully recoverable. Customer relationships are amortized on a straight-linebasis. Intangible assets that are determined to have indefinite lives, such as trade names, are not amortized and are evaluated for impairment at least annually,or more frequently when circumstances imply possible impairment. Recoverability is based on the estimated future undiscounted cash flows of the asset. Ifthe asset is not supported on an undiscounted cash flow basis, the amount of impairment is measured as the difference between its carrying value and itsestimated fair value.F-13Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Amortization of manufacturing intangible assets is included in cost of sales on the consolidated statements of operations. Amortization related to corporate,non-product, and non-manufacturing assets, such as the Company's global information systems, is included in selling, general, and administrative expenseson the consolidated statements of operations. The following table sets forth Crocs' definite lived intangible assets and the periods over which they areamortized.Capitalized SoftwareCrocs capitalizes certain internal and external software acquisition and development costs, including the costs of employees and contractors devoting time tosoftware development projects and external direct costs for materials and services. Initial costs associated with internally-developed-and-used software areexpensed until it is determined that the project has reached the application development stage. Once in its development stage, subsequent additions,modifications or upgrades to an internal-use software project are capitalized to the extent that they add functionality. Software maintenance and trainingcosts are expensed in the period in which they are incurred. Capitalized software primarily consists of Crocs' enterprise resource system software, warehousemanagement software, and point of sale software. At least annually, Crocs considers the potential impairment of capitalized software by assessing thesubstantive service potential of the software, as well as changes, if any, in the extent or manner in which the software is used or is expected to be used, and theactual cost of software development or modification compared to expected cost. See Note 6—Goodwill and Intangible Assets for further discussion.GoodwillGoodwill represents the excess purchase price paid over the fair value of assets acquired and liabilities assumed in acquisitions. Goodwill is considered anindefinite lived asset and therefore is not amortized. The Company assesses goodwill for impairment annually on the last day of the year, or more frequentlyif events and circumstances indicate impairment may have occurred. If the carrying value of goodwill exceeds its implied fair value, the Company records animpairment loss equal to the difference. See Note 6—Goodwill and Intangible Assets for discussion of goodwill balances and discussion of impairment lossesrecorded during the periods presented.Earnings per ShareBasic and diluted earnings per common share ("EPS") is presented using the two-class method, which is an earnings allocation formula that determinesearnings per share for common stock and any participating securities according to dividend rights and participation rights in undistributed earnings. Underthe two-class method, EPS is computed by dividing the sum of distributed and undistributed earnings attributable to common stockholders by the weightedaverage number of shares of common stock outstanding during the period. A participating security is a security that may participate in undistributedF-14Intangible Asset Class Weighted Average Amortization PeriodPatents 10 yearsCustomer relationships Estimated customer lifeCore technology 5 yearsNon-competition agreement Contractual termCapitalized software Shorter of 7 years or useful lifeTable of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)earnings with common stock had those earnings been distributed in any form. The Company's Series A convertible preferred stock issued in 2014 representsparticipating securities as holders of the Series A preferred stock are entitled to receive any and all dividends declared or paid on common stock on an as-converted basis. In addition, shares of the Company's non-vested restricted stock and restricted stock unit awards are considered participating securities asthey represent unvested share-based payment awards containing non-forfeitable rights to dividends. As such, these participating securities must be includedin the computation of EPS pursuant to the two-class method on a pro-rata, as-converted basis. Diluted EPS reflects the potential dilution from securities thatcould share in the Company's earnings. In addition, the dilutive effect of each participating security, if any, is calculated using the more dilutive of the two-class method described above. This method assumes the if-converted method, which assumes conversion to common stock as of the beginning of thereporting date for any security that is more dilutive upon conversion. Anti-dilutive securities are excluded from diluted EPS. See Note 15—Earnings PerShare for further discussion.Beneficial Conversion FeatureThe issuance of the Company's Series A preferred stock generated a beneficial conversion feature, which arises when a debt or equity security is issued withan embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price thatis less than the market price of the underlying stock at the commitment date. Crocs recognized the beneficial conversion feature by allocating the intrinsicvalue of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effectiveconversion price per share and the fair value of common stock per share on the commitment date, to additional paid-in capital, resulting in a discount on theSeries A preferred stock. Crocs is accreting the discount over eight years from the date of issuance through the redemption date. Accretion expense isrecognized as dividend equivalents over the eight-year period utilizing the effective interest method.Recognition of RevenuesRevenues are recognized when the customer takes title and assumes risk of loss, collection of related receivables is probable, persuasive evidence of anarrangement exists, and the sales price is fixed or determinable. Title passes on shipment or on receipt by the customer depending on the country in which thesale occurs and the agreement terms with the customer. Allowances for estimated returns and discounts are recognized when the related revenue is recognized.Shipping and Handling Costs and FeesShipping and handling costs are expensed as incurred and are included in 'Cost of sales' in the consolidated statements of operation. Shipping and handlingfees billed to customers are included in revenues.Share-based CompensationCrocs share-based compensation plans allows stock options, restricted stock, and stock performance awards to be granted to plan participants, which includescertain officers, employees and members of the Company's Board of Directors (the "Board"). Awards granted under these plans are fair valued, and areamortized, net of estimated forfeitures, over the vesting period using the straight-line method. The fairF-15Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)value of stock options is calculated by using the Monte Carlo simulation model and the Black Scholes option pricing model, both of which require estimatesfor expected volatility, expected dividends, the risk-free interest rate, and the term of the option. If any of the assumptions used in these models or theanticipated number of shares to be awarded change significantly, share-based compensation expense may differ materially in the future from that recorded inthe current period. Share-based compensation expense associated with Crocs' manufacturing and retail employees is included in 'Cost of sales' in theconsolidated statements of operations. Share-based compensation expense associated with selling, marketing and administrative employees is included'Selling, general and administrative expenses' on the consolidated statements of operations. Share-based compensation directly associated with theconstruction or implementation of certain long-term projects for internal use are capitalized to the consolidated balance sheets and will be amortized over theuseful life of the assets beginning on the date the asset is placed in service. See Note 12—Equity for additional information related to share-basedcompensation.Defined Contribution PlansCrocs has a 401(k) plan known as the Crocs, Inc. 401(k) Plan (the "Plan"). The Plan is available to Crocs U.S. employees and provides employees with taxdeferred salary deductions and alternative investment options. The Plan does not provide employees with the option to invest in the Company's commonstock. Employees may contribute up to 75.0% of their salary, subject to certain limitations. The Company matches employees' contributions to the Plan up toa maximum of 4.0% of eligible compensation. The Company's expense related to the matching contributions to the Plan was $6.0 million, $7.1 million and$6.8 million for the years ended December 31, 2015, 2014, and 2013, respectively.AdvertisingAdvertising costs are expensed as incurred and production costs are expensed when the advertising is first run. Total advertising costs reflected in 'Selling,general, and administrative expenses' on the consolidated statement of operations were $58.2 million, $44.7 million and $47.6 million for the years endedDecember 31, 2015, 2014, and 2013, respectively.Research and DevelopmentResearch and development costs are expensed as incurred. Research and development expenses were $14.0 million, $16.7 million and $15.4 million for theyears ended December 31, 2015, 2014, and 2013, respectively, and are included in 'Selling, general, and administrative expenses' in the consolidatedstatement of operations.Foreign Currency Translation and Foreign Currency TransactionsCrocs' reporting currency is the U.S. Dollar. Assets and liabilities of foreign operations denominated in local currencies are translated at the rate of exchangeat the balance sheet date. Revenues and expenses are translated at the weighted average rate of exchange during the applicable period. Adjustments resultingfrom translating foreign functional currency financial statements into U.S. Dollars are included in the foreign currency translation adjustment, a component ofaccumulated other comprehensive income in stockholders' equity.F-16Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)Gains and losses generated by transactions denominated in currencies other than the local functional currencies are reflected in the consolidated statement ofoperations in the period in which they occur and are primarily associated with payables and receivables arising from intercompany transactions.Derivative Foreign Currency ContractsCrocs is directly and indirectly affected by fluctuations in foreign currency rates, which may adversely impact its financial performance. To mitigate thepotential impact of foreign currency exchange rate risk, Crocs may employ derivative financial instruments including forward contracts and option contracts.Forward contracts are agreements to buy or sell a quantity of a currency at a predetermined future date and at a predetermined rate. An option contract is anagreement that conveys the purchaser the right, but not the obligation, to buy or sell a quantity of a currency at a predetermined rate during a period or at atime in the future. These derivative financial instruments are viewed as risk management tools and are not used for trading or speculative purposes. Crocsrecognizes derivative financial instruments as either assets or liabilities in the consolidated balance sheets and measure those instruments at fair value.Changes in the fair value of derivatives not designated or effective as hedges are recorded in 'Foreign currency transaction loss, net' in the consolidatedstatements of operations. Crocs had no derivative instruments that qualified for hedge accounting during any of the periods presented. See Note 9—FairValue Measurements and Financial Instruments for further discussion.Income TaxesIncome taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expectedfuture tax consequences of temporary differences between the carrying amounts and the tax basis of other assets and liabilities. Crocs provides for incometaxes at the current and future enacted tax rates and laws applicable in each taxing jurisdiction. Crocs uses a two-step approach for recognizing andmeasuring tax benefits taken or expected to be taken in a tax return and disclosures regarding uncertainties in income tax positions. Crocs recognizes interestand penalties related to income tax matters in income tax expense in the consolidated statement of operations. See Note 14—Income Taxes for furtherdiscussion.Taxes Assessed by Governmental AuthoritiesTaxes assessed by governmental authorities that are directly imposed on a revenue transaction, including value added tax, are recorded on a net basis and aretherefore excluded from sales.F-17Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)4. INVENTORIESThe following table summarizes inventories by major classification as of December 31, 2015 and 2014:Inventory Write-downDuring the year ended December 31, 2015, Crocs recorded approximately $3.1 million of inventory write-down charges related to inventory with a marketvalue lower than cost, which are reported in 'Cost of sales' in the consolidated statement of operations. During the year ended December 31, 2014, Crocsrecorded approximately $11.5 million of inventory write-down charges related to obsolete inventory with a market value lower than cost, of which$4.0 million was reported in the 'Restructuring charges' included in gross margin with the remaining amounts reported in 'Cost of sales' in the consolidatedstatements of operations. During the year ended December 31, 2013, Crocs recorded approximately $3.4 million of inventory write-down charges related toobsolete inventory with a market value lower than cost. These charges were related to certain obsolete raw materials, footwear, and accessories and arereported in 'Cost of sales' in the consolidated statement of operations.5. PROPERTY AND EQUIPMENTThe following table summarizes property and equipment by major classification as of December 31, 2015 and 2014:F-18 December 31, 2015 2014 (in thousands) Finished goods $162,341 $167,515 Work-in-progress 918 703 Raw materials 4,933 2,794 Total inventories, net $168,192 $171,012 December 31, 2015 2014 (in thousands) Machinery and equipment $36,864 $48,989 Leasehold improvements 81,593 91,962 Furniture, fixtures and other 23,576 23,818 Assets held for sale(1) 1,595 — Construction-in-progress 3,512 3,318 Property and equipment, gross(2) 147,140 168,087 Less: Accumulated depreciation(3) (97,650) (99,799)Property and equipment, net $49,490 $68,288 (1)This amount represents the South Africa disposal group assets held for sale. (2)Includes $0.1 million and $0.2 million of certain equipment held under capital leases and classified as equipment as ofDecember 31, 2015 and 2014, respectively.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)5. PROPERTY AND EQUIPMENT (Continued)During the years ended December 31, 2015, 2014, and 2013, Crocs recorded $16.3 million, $23.2 million, and $24.3 million, respectively, of depreciationexpense of which $1.8 million, $1.7 million, and $2.9 million, respectively, was recorded in 'Cost of sales', with the remaining amounts recorded in 'Selling,general and administrative expenses' on the consolidated statements of operations.The Company recognized a loss on disposals of property and equipment of $1.4 million for the year ended December 31, 2015, and $0.0 million for bothyears ended December 31, 2014 and 2013, which is included in the 'other income, net' line on the consolidated statement of operations.Property and Equipment Asset ImpairmentsCrocs evaluates its long-lived assets for impairment when events or circumstances indicate the carrying value of a long-lived asset may not be fullyrecoverable. During the years ended December 31, 2015, 2014, and 2013, Crocs recorded $9.6 million, $8.8 million, and $10.6 million, respectively, inimpairment charges related to underperforming retail locations that were unlikely to generate sufficient cash flows to fully recover the assets' carrying valueover the remaining economic life. During the year ended December 31, 2015, Crocs recorded an additional $5.7 million of impairment charges associatedwith assets held for sale in South Africa. The following table summarizes these asset impairment charges, by reportable operating segment, for the years endedDecember 31, 2015, 2014, and 2013:Long-Lived Assets Held for SaleAs of December 31, 2015, the Company reclassified its operations in South Africa as held for sale as management approved and committed to a formal plan toactively market the disposal group and expects the sale to close within the next twelve months. Upon classifying the South Africa disposal group as held forsale, the Company measured the disposal group at the lower of its carrying value or fair value less any costs to sell, resulting in an impairment loss of$5.7 million during the three months ended December 31, 2015.F-19(3)Includes $0.0 million and $0.1 million of accumulated depreciation related to certain equipment held under capital leases asof December 31, 2015 and 2014, which are depreciated using the straight-line method over the lease term. During the yearended December 31, 2015, approximately $11.0 million of accumulated depreciation was related to assets that were written offor disposed. Year Ended December 31, 2015 2014 2013 ImpairmentCharge Number ofStores(1) ImpairmentCharge Number ofStores(1) ImpairmentCharge Number ofStores(1) (in thousands, except store count data) Americas $7,237 27 $4,001 36 $3,861 23 Asia Pacific 6,450(2) 36(2) 2,807 14 185 2 Europe 1,584 21 2,019 27 6,565 35 Total asset impairment $15,271 84 $8,827 77 $10,611 60 (1)Represents stores with partially and fully depreciated assets. (2)Includes $5.7 million of impairment related to assets held for sale in nine South Africa retail locations.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)6. GOODWILL & INTANGIBLE ASSETSThe following table summarizes the goodwill and identifiable intangible assets as of December 31, 2015 and 2014:During the years ended December 31, 2015, 2014, and 2013, amortization expense recorded for intangible assets with finite lives was $19.7 million,$14.2 million and $17.2 million, respectively, of which $5.8 million, $4.9 million and $6.0 million, respectively, was recorded in 'Cost of sales', with theremaining amounts recorded in 'Selling, general and administrative expenses' on the consolidated statements of operations.F-20 December 31, 2015 December 31, 2014 GrossCarryingAmount AccumulatedAmortization Net CarryingAmount GrossCarryingAmount AccumulatedAmortization NetCarryingAmount (in thousands) Capitalized software $162,700(1)$(82,596)(2)$80,104 $157,615(1)$(62,591)(2)$95,024 Customer relationships 4,016 (4,016) — 5,945 (5,798) 147 Patents, copyrights, and trademarks 6,892 (5,135) 1,757 6,702 (4,931) 1,771 Core technology(3) 3,498 (3,498) — 4,170 (4,170) — Other 776 (637) 139 698 (636) 62 Total finite lived intangible assets 177,882 (95,882) 82,000 175,130 (78,126) 97,004 Indefinite lived intangible assets(3) 297 — 297 333 — 333 Goodwill(3) 1,973 — 1,973 2,044 — 2,044 Goodwill and intangible assets $180,152 $(95,882)$84,270 $177,507 $(78,126)$99,381 (1)Includes $4.1 million of software held under a capital lease classified as capitalized software as of each of December 31, 2015 and2014. During 2013, Crocs began an implementation of a new enterprise resource planning, ("ERP") system, which was placed intoservice in 2015. As of December 31, 2015 and 2014, Crocs capitalized $4.1 million and $36.1 million, respectively, for costsassociated with the development of and added functionality to the ERP system. (2)Includes $3.1 million and $2.5 million of accumulated amortization of software held under a capital lease as of December 31, 2015and 2014, respectively, which is amortized using the straight-line method over the useful life. (3)Changes in core technology, goodwill, and indefinite lived intangible assets relate entirely to the impact of foreign currencytranslation.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)6. GOODWILL & INTANGIBLE ASSETS (Continued)The following table summarizes estimated future annual amortization of intangible assets as of December 31, 2015:Goodwill ImpairmentCrocs assesses goodwill for impairment at the reporting unit level on an annual basis on the last day of the year, or more frequently if events andcircumstances indicate impairment may have occurred. If the carrying value of the goodwill exceeds its implied fair value, Crocs records an impairment lossequal to the difference. During the years ended December 31, 2015 and 2014, Crocs did not record any impairments related to goodwill. During the yearended December 31, 2013, Crocs recorded $0.3 million of goodwill impairment related to the retail channel of the Crocs Benelux B.V. business purchased byCrocs Stores B.V. subsidiary in July 2012. Goodwill and associated impairments are part of the Europe segment.F-21Fiscal years ending December 31, Amortization(in thousands) 2016 $18,100 2017 16,397 2018 14,513 2019 12,983 2020 10,483 Thereafter 9,524 Total $82,000 Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIESThe following table summarizes accrued expenses and other current liabilities as of December 31, 2015 and 2014:Asset Retirement ObligationsCrocs records a liability equal to the fair value of the estimated future cost to retire an asset, if the liability's fair value can be reasonably estimated. Crocs'asset retirement obligation ("ARO") liabilities are primarily associated with the disposal of property and equipment that the Company is contractuallyobligated to remove at the end of certain retail and office leases in order to restore the facilities back to original condition as specified in the related leaseagreements. Crocs estimates the fair value of these liabilities based on current store closing costs and discounts the costs back as if they were to be performedat the inception of the lease. At the inception of such leases, Crocs records the ARO as a liability and also records a related asset in an amount equal to theestimated fair value of the obligation. The capitalized asset is then depreciated on a straight-line basis over the useful life of the asset. Upon retirement of theARO liability, any difference between the actual retirement costs incurred and the previously recorded estimated ARO liability is recognized as a gain or lossin the consolidated statements of operations. Crocs' ARO liability as of December 31, 2015 and 2014 was $2.0 million and $2.2 million, respectively.F-22 December 31, 2015 2014 (in thousands) Accrued compensation and benefits $20,973 $23,824 Professional services 15,019 16,212 Fulfillment, freight and duties 14,776 12,110 Accrued rent and occupancy 7,639 9,675 Sales/use and VAT tax payable 7,018 5,897 Accrued loss on disposal group(1) 6,743 — Customer deposits 3,236 3,075 Dividend payable 3,000 3,067 Travel and entertainment liabilities 2,150 199 Accrued legal liabilities 1,971 2,150 Deferred revenue and royalties payable 1,430 2,005 Other(2) 7,880 2,002 Total accrued expenses and other current liabilities $91,835 $80,216 (1)This amount represents accrued losses related to the South Africa disposal group held for sale and is inclusive of $6.7 millionin foreign currency translation adjustments recorded within stockholders' equity. (2)The amounts in 'Other' consist of various accrued expenses, of which no individual item accounted for more than 5% of thetotal balance as of December 31, 2015 or 2014.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)8. RESTRUCTURING ACTIVITIESRestructuringOn July 21, 2014, Crocs announced strategic plans for long-term improvement and growth of the business. These plans comprise four key initiativesincluding: (1) streamlining the global product and marketing portfolio, (2) reducing direct investment in smaller geographic markets, (3) creating a moreefficient organizational structure by reducing excess overhead and enhancing the decision making process, and (4) closing retail locations around the world.The initial effects of these plans were incurred in 2014 and were continued throughout 2015. During the years ended December 31, 2015 and 2014, theCompany recorded restructuring charges of $8.7 million and $24.5 million, respectively. As of December 31, 2015, Crocs concluded its restructuring efforts.The following table summarizes restructuring activity during the years ended December 31, 2015 and 2014:The following table summarizes the Company's total restructuring charges incurred during the years ended December 31, 2015 and 2014 by reportablesegment:F-23 Year EndedDecember 31, 2015 2014 (in thousands) Severance costs $5,472 $12,500 Lease / contract exit and related costs 2,623 4,251 Other(1) 633 7,766 Total restructuring charges $8,728 $24,517 (1)The amounts in 'Other' consist of various asset and inventory impairment charges prompted by the aforementionedrestructuring plan, legal fees and facility maintenance fees. Year EndedDecember 31, 2015 2014 (in thousands) Americas $890 $4,259 Asia Pacific 3,542 7,422 Europe 2,824 3,934 Corporate 1,472 8,902 Total restructuring charges $8,728 $24,517 Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)8. RESTRUCTURING ACTIVITIES (Continued)The following table summarizes the Company's accrued restructuring balance and associated activity from December 31, 2014 through December 31, 2015:As of December 31, 2015 and 2014, Crocs had a liability of approximately $1.0 million and $4.9 million, respectively, related to locations already closedand reductions in workforce in accrued restructuring on the consolidated balance sheet.9. FAIR VALUE MEASUREMENTSRecurring Fair Value MeasurementsGAAP provides for a fair value hierarchy that prioritizes the inputs to the valuation techniques used to measure fair value into three broad levels. Level 1inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.Level 2 inputs are inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.Level 3 inputs are unobservable inputs for the asset or liability. See Note 3—Summary of Significant Accounting Policies for additional detail regardingCrocs' fair value measurement determinations.As of December 31, 2015 and 2014, Crocs' assets and liabilities subject to fair value measurements consisted of cash equivalents of $7.5 million and$23.3 million, respectively, which are Level 1 assets, and foreign currency derivative liabilities of $0.1 million and $0.0 million, respectively, which areLevel 2 assets. The Company's Level 1 assets are classified in the consolidated balance sheets as 'Cash and cash equivalents' and 'Prepaid expenses and otherassets' and the Level 2 assets are classified in the consolidated balance sheets as 'Accrued expenses and other liabilities'.Non-Recurring Fair Value MeasurementsThe majority of the Company's non-financial instruments, which include inventories, property and equipment, and intangible assets, are not required to becarried at fair value on a recurring basis. However, if certain triggering events occur such that a non-financial instrument is required to be evaluated forimpairment and the carrying value is not recoverable, the carrying value would be adjusted to the lower of its cost or fair value and an impairment chargewould be recorded. See Note 5—Property and Equipment and Note 6—Goodwill & Intangible Assets for discussions on impairment charges recorded duringthe periods presented.F-24 December 31,2014 Additions CashPayments Adjustments(2) December 31,2015 (in thousands) Severance costs $3,154 $5,472 $(8,000)$ $626 Lease/ contract exit and related costs 1,401 2,623 (3,807) (217) — Other(1) 304 633 (595) 342 Total accrued restructuring $4,859 $8,728 $(12,402)$(217)$968 (1)Includes expenses related to exiting stores and legal fees. (2)Represents reversal of prior year accrual as a result of subleasing an exited facility at a better than anticipated rate.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)10. DERIVATIVE FINANCIAL INSTRUMENTSCrocs transacts business in various foreign countries and is therefore exposed to foreign currency exchange rate risk inherent in revenues, costs, and monetaryassets and liabilities denominated in non-functional currencies. In general, Crocs enters into foreign currency exchange forward contracts and currency swapderivative instruments to selectively protect against volatility in the value of non-functional currency denominated monetary assets and liabilities, and offuture cash flows caused by changes in foreign currency exchange rates. As these derivative instruments do not qualify as hedging instruments under theaccounting standards for derivatives and hedging, they are recorded at fair value as a derivative asset or liability on the balance sheet with theircorresponding change in fair value recognized in 'Foreign currency transaction loss, net' in the consolidated statements of operations. For purposes of thecash flow statement, Crocs classifies the cash flows from derivative instruments at settlement from undesignated instruments in the same category as the cashflows from the related hedged items, generally within 'Cash provided by (used in) operating activities'.The following table summarizes the notional amounts of outstanding foreign currency exchange contracts as of December 31, 2015 and December 31, 2014.The notional amounts of the derivative financial instruments shown below are denominated in their U.S. Dollar equivalents and represent the amount of allcontracts of the foreign currency specified. These notional values do not necessarily represent amounts exchanged by the parties and, therefore, are not adirect measure of the Company's exposure to the foreign currency exchange risks.F-25 December 31, 2015 2014 (in thousands) Foreign currency exchange forward contracts by currency: Japanese Yen $98,390 $44,533 Euro 34,219 134,755 British Pound Sterling 21,859 17,230 South Korean Won 7,981 14,590 Mexican Peso 7,277 13,180 Australian Dollar 6,459 7,913 South African Rand 6,402 4,355 Indian Rupee 5,036 3,356 Canadian Dollar 1,980 3,005 New Taiwan Dollar 1,798 3,229 Swedish Krona 1,655 1,918 Hong Kong Dollar 668 814 Russian Ruble 667 1,838 Singapore Dollar — 61,887 Chinese Yuan Renminbi — 5,376 Norwegian Krone — 917 New Zealand Dollar — 743 Brazilian Real — — Total notional value, net $194,391 $319,639 Latest maturity date January 2016 January 2015 Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)10. DERIVATIVE FINANCIAL INSTRUMENTS (Continued)The following table presents the amounts affecting the condensed consolidated statements of operations from derivative instruments and exposure from day-to-day business transactions in various foreign currencies for the years ended December 31, 2015, 2014, and 2013:The line 'Foreign currency transaction loss, net' on the consolidated statements of operations includes both realized and unrealized gains/losses fromunderlying foreign currency activity and derivative contracts. These gains and losses are reported on a net basis.11. REVOLVING CREDIT FACILITY & BANK BORROWINGSSenior Revolving Credit FacilityOn December 16, 2011, Crocs entered into an Amended and Restated Credit Agreement (as amended, the "Credit Agreement"), with the lenders named thereinand PNC Bank, National Association ("PNC"), as a lender and administrative agent for the lenders. On December 27, 2013, Crocs entered into the ThirdAmendment to Amended and Restated Credit Agreement (the "Third Amendment"). The Third Amendment, among other things, allowed for the payment ofdividends on the Series A preferred stock and permitted the Company to have greater flexibility to repurchase its Common Stock. See Note 16—Series APreferred Stock for further details regarding the payment of dividends on the Series A preferred stock.On April 2, 2015, Crocs entered into the Sixth Amendment to Amended and Restated Credit Agreement (the "Sixth Amendment") pursuant to which certainterms of the Credit Agreement were amended. The Sixth Amendment primarily amended certain definitions of the financial covenants to be more favorable toCrocs including (i) setting the minimum fixed charge coverage ratio to 1.00 to 1.00 through December 31, 2015, 1.15 to 1.00 through March 31, 2016 and1.25 to 1.00 for each quarter thereafter, (ii) setting the leverage ratio to 4.00 to 1.00 through March 31, 2016 and 3.75 to 1.00 for each quarter thereafter, and(iii) reducing the Company's global cash requirement from $100.0 million to $50.0 million.On September 1, 2015, the Company entered into the Eighth Amendment to Amended and Restated Credit Agreement (the "Eighth Amendment") pursuant towhich certain terms of the Credit Agreement were amended. The Eighth Amendment primarily amended certain definitions of the financial covenants tobecome more favorable to the Company including (i) increasing the exclusion of cash and non-cash charges from the EBITDAR calculation up to$85.0 million, not to exceed $65.0 million with respect to cash charges, (ii) setting the minimum fixed charge coverage ratio to 0.95 to 1.00 for the periodended September 30, 2015, (iii) allowing up to $40.0 million in stock repurchases to be made during the quarter ended September 30, 2015, (iv) suspendingstock repurchases if the fixed charge coverage ratio is less than 1.00 to 1.00, and (v) eliminating the administrative agent basket through December 31, 2015.F-26 Year Ended December 31, 2015 2014 2013 (in thousands) Foreign currency gain (loss) $3,980 $(1,097)$(17,680)Derivatives not designated as hedging instruments: Foreign currency exchange forwards gain (loss) (7,312) (3,788) 13,002 Foreign currency transaction loss, net $(3,332)$(4,885)$(4,678)Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)11. REVOLVING CREDIT FACILITY & BANK BORROWINGS (Continued)On December 24, 2015, the Company entered into the Tenth Amendment to Amended and Restated Credit Agreement (the "Tenth Amendment"), pursuant towhich certain terms of the Credit Agreement were amended. The Tenth Amendment primarily: (i) permitted $18.9 million in bad debt write-downs to beadded back to EBITDAR, and (ii) increased the other EBITDAR add-back limit from $85.0 million (as permitted by Amendment Eight) to $100.0 million.On February 18, 2016, the Company entered into the Eleventh Amendment to the Amended and Restated Credit Agreement which primarily: (i) extended thematurity date to February, 2021, (ii) resized the borrowing capacity of the facility to $75.0 million, (iii) amended certain definitions of the financialcovenants to become more favorable to the Company, (iv) set the minimum fixed charge coverage ratio to 1.00 to 1.00 for the period ended June 30, 2016and 1.10 to 1.00 thereafter, (v) set the maximum leverage ratio to 2.50 to 1.00 for the period ended June 30, 2016 and 2.00 to 1.00 thereafter, (vi) allows up to$50.0 million in stock repurchases to be made each fiscal year, subject to certain restrictions, and (vii) limited certain capital expenditures and commitmentsto an aggregate of $50.0 million per year. The Eleventh Amendment also changed the variable lending rate. For domestic rate loans, including swing loans,the interest rate is equal to a daily base rate plus a margin ranging from 0.50% to 0.75% based on certain conditions. For LIBOR rate loans, the interest rate isequal to a LIBOR rate plus a margin ranging from 1.50% to 1.75% based on certain conditions.As of December 31, 2015, the Company was not in compliance with the fixed charge coverage ratio and the leverage ratio under the Credit Agreement. OnFebruary 18, 2016, the Company received a waiver from the lenders of the financial covenants as of December 31, 2015 and the Company entered into theEleventh Amendment to Amended and Restated Credit Agreement. The Company anticipates it will be in compliance with its covenants as of March 31,2016, however, there can be no assurance that the Company will be in compliance at that date.As of December 31, 2015 and December 31, 2014, the Company had no outstanding borrowings under the Credit Agreement. As of December 31, 2015 andDecember 31, 2014, the Company had outstanding letters of credit of $1.3 million and $1.8 million, respectively, which were reserved against the borrowingbase under the terms of the Credit Agreement. During the years ended December 31, 2015, 2014, and 2013, Crocs capitalized $0.2 million, $0.1 million, and$0.1 million, respectively, in fees and third party costs which were incurred in connection with the Credit Agreement, as deferred financing costs.Asia Pacific Revolving Credit FacilityOn August 28, 2015, a Crocs subsidiary entered into a revolving credit facility agreement with HSBC Bank (China) Company Limited, Shanghai Branch("HSBC") as the lender. The revolving credit facility enables Crocs to borrow uncommitted dual currency revolving loan facilities up to RMB 40.0 million,or the USD equivalent, and import facilities up to RMB 60.0 million, or the USD equivalent, with a combined facility limit of RMB 60.0 million. Thisrevolving credit facility supports possible future net working capital needs in China. For loans denominated in USD, the interest rate is 2.1% per annum plusLIBOR for three months or any other period as may be determined by HSBC at the end of each interest period. For loans denominated in RMB, interest equalsthe one year benchmark lending rate effective on the loan drawdown date set forth by the People's Bank of China with a 10% mark-up and is payable on thematurity date of the related loan. The revolving credit facility is guaranteed by Crocs, Inc. and certain accounts receivables in China are pledged as securityunder the revolving credit facility. The revolving credit facility can be canceled or suspended at any time at the discretion of the lender and containsprovisions requiring CrocsF-27Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)11. REVOLVING CREDIT FACILITY & BANK BORROWINGS (Continued)to maintain compliance with certain restrictive covenants. As of December 31, 2015, Crocs had no outstanding borrowings under the revolving credit facility.As of December 31, 2015, the Company has received notification from the lender that the revolving credit facility has been temporarily suspended.Long-term Bank BorrowingsOn December 10, 2012, Crocs entered into a Master Installment Payment Agreement ("Master IPA") with PNC in which PNC financed the Company's recentimplementation of a new ERP system, which began in October 2012 and was substantially completed in early 2015. The terms of each note payable, underthe Master IPA, consist of a fixed interest rate and payment terms based on the amount borrowed and the timing of activity throughout the implementation ofthe ERP system. The Master IPA is subject to cross-default, cross-termination, and is coterminous with the Credit Agreement.As of December 31, 2015 and 2014, Crocs had $6.4 million and $11.6 million, respectively, of debt outstanding under five separate notes payable, of which$4.8 million and $5.3 million, respectively, represents current installments. As of December 31, 2015, the notes bear interest rates ranging from 2.45% to2.79% and maturities ranging from September 2016 to September 2017. As this debt arrangement relates solely to the construction and implementation of anERP system for use by the entity, interest expense was capitalized to the consolidated balance sheets and amortized over the life of the assets, starting on theJanuary 1, 2015 in-service date. During the years ended December 31, 2015 and 2014, Crocs capitalized $0.0 million and $0.4 million, respectively, ininterest expense related to this debt arrangementF-28Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)11. REVOLVING CREDIT FACILITY & BANK BORROWINGS (Continued)to the consolidated balance sheets. Interest rates and payment terms are subject to changes as further financing occurs under the Master IPA.F-29 December 31, 2015 Unused BorrowingCapacity(2) Carrying Value(3) Weighted AverageInterest Rate(1) BorrowingCurrency U.S.D.Equivalent December 31,2015 December 31,2014 (in thousands) Debt obligations Senior revolving creditfacility LIBOR plus 1.25% - 2.00% $75,000(4)$75,000(4)$— $— Asia Pacific revolving creditfacility LIBOR plus 2.10% RMB—(5) —(5) — — Long-term bank borrowings 2.63% 6,375 11,646 Total $75,000 6,375 11,646 Capital lease obligations 24 23 Total debt and capitallease obligations $6,399 $11,669 Current maturities $4,772 $5,288 Long-term debt and capitallease obligations $1,627 $6,381 (1)Carrying value represents the weighted average interest rate in effect at December 31, 2015 for all borrowings outstanding pursuant toeach debt instrument, including any applicable margin. The interest rates presented represent stated rates and do not include theimpact of the derivative instruments, deferred financing costs, original issue premiums or discounts and commitment fees, all of whichaffect Crocs' overall cost of borrowing. (2)Unused borrowing capacity represents the maximum available under the applicable facility at December 31, 2015 without regard tocovenant compliance calculations or other conditions precedent to borrowing. (3)As the interest rate of each credit agreement is variable, typically based on the daily LIBOR rates plus an additional margin, theestimated fair value of each debt instrument approximates its carrying value. (4)On February 18, 2016, the Company entered into the Eleventh Amendment to the Amended and Restated Credit Agreement, whichextended the maturity date to February 2021, resized the borrowing capacity of the facility to $75.0 million, and amended certaindefinitions of the financial covenants to become more favorable to the Company. (5)As of December 31, 2015, Crocs received notification that the Asia Pacific revolving credit facility had been temporarily suspended.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)11. REVOLVING CREDIT FACILITY & BANK BORROWINGS (Continued)The maturities of the Company's debt obligations as of December 31, 2015 are presented below:As of December 31, 2015 and 2014, the fair value of the Company's debt instruments approximates their reported carrying amounts.12. EQUITYEquity Incentive PlansOn August 15, 2005, the Company adopted the 2005 Equity Incentive Plan (the "2005 Plan"), which permitted the issuance of up to 14.0 million commonshares in connection with the grant of non-qualified stock options, incentive stock options, and restricted stock to eligible employees, consultants, andmembers of the Board. As of December 31, 2015 and 2014, 0.5 million and 0.6 million stock options, respectively, were outstanding under the 2005 Plan.Following the adoption of the 2007 Equity Incentive Plan (the "2007 Plan"), described below, no additional grants were made under the 2005 Plan.On July 9, 2007, the Company adopted and on June 28, 2011 the Company amended the 2007 Plan, which increased the allowable number of shares ofcommon stock reserved for issuance under the 2007 Plan from 9.0 million to 15.3 million (subject to adjustment for future stock splits, stock dividends, andsimilar changes in the Company's capitalization) in connection with the grant of non-qualified stock options, incentive stock options, restricted stock,restricted stock units, stock appreciation rights, performance units, common stock, or any other share-based award to eligible employees, consultants, andmembers of the Board. As of December 31, 2015 and 2014, 3.5 million and 3.1 million shares of common stock, respectively, were issuable under the 2007Plan pursuant to outstanding stock options and RSUs. Following the adoption of the 2015 Equity Incentive Plan (the "2015 Plan"), described below, noadditional grants will be made under the 2007 Equity Incentive Plan.On June 8, 2015, the Company adopted the 2015 Plan. Shares reserved and authorized for issuance under the Plan consist of 7,000,000 shares, plus up to1,192,777 shares available for issuance under the Company's 2007 Plan as of June 8, 2015, plus up to 4,916,835 shares subject to outstanding awards underthe 2007 Plan that are cancelled or forfeited after the effective date of the 2015 Plan. Shares in the 2015 Plan are subject to adjustment for future stock splits,stock dividends, and similar changes in Crocs' capitalization in connection with the grant of non-qualified stock options, incentive stock options,F-30 December 31,2015 (in thousands) Maturities of debt and capital lease obligations 2016 $4,772 2017 1,616 2018 4 Thereafter 7 Total principal debt maturities $6,399 Current portion $4,772 Noncurrent portion $1,627 Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. EQUITY (Continued)restricted stock, restricted stock units, stock appreciation rights, performance units, common stock, or any other share-based award to eligible employees,consultants, and members of the Board.Restricted stock awards and units generally vest annually on a straight-line basis over three or four years depending on the terms of the award agreement.Stock Option ActivityThe following table summarizes stock option activity for the years ended December 31, 2015, 2014, and 2013:During the years ended December 31, 2015, 2014, and 2013, options issued were valued using the Black Scholes option pricing model using the followingassumptions:The weighted average computed value of options granted during the years ended December 31, 2015, 2014, and 2013 was approximately $4.74, $5.35, and$7.33, respectively. The aggregate intrinsic value of options exercised during the years ended December 31, 2015, 2014, and 2013 was $1.7 million,$2.7 million,F-31 Shares Weighted AverageExercise Price Weighted AverageRemainingContractual Life(Years) AggregateIntrinsicValue (in thousands) Outstanding as of December 31, 2012 2,621,686 $13.03 5.55 $11,373 Granted 177,000 $15.62 Exercised (333,395)$6.84 Forfeited or expired (360,139)$18.18 Outstanding as of December 31, 2013 2,105,152 $13.34 4.86 $10,790 Granted 119,000 $14.22 Exercised (265,675)$5.05 Forfeited or expired (262,347)$21.02 Outstanding as of December 31, 2014 1,696,130 $13.52 3.88 $4,435 Granted 35,000 $13.52 Exercised (284,791)$6.54 Forfeited or expired (150,590)$21.82 Outstanding as of December 31, 2015 1,295,749 $14.09 2.83 $1,261 Exercisable at December 31, 2015 1,159,445 $14.06 2.21 $1,261 Vested and expected to vest at December 31, 2015 1,295,749 $14.09 2.78 $1,261 Year Ended December 31, 2015 2014 2013Expected volatility 43% 44% - 50% 50 - 64%Dividend yield — — —Risk-free interest rate 1.50% - 1.72% 1.41% - 1.71% 0.81% - 1.62%Expected life (in years) 4.00 4.00 4.00Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. EQUITY (Continued)and $2.8 million, respectively. During the years ended December 31, 2015 and 2014, Crocs received $1.9 million and $1.3 million in cash in connection withthe exercise of stock options with no income tax benefit due to the Company's use of ASC 740—'Income Taxes' (with-and-without approach) ("ASC 740")ordering for purposes of determining when excess benefits have been realized (see Note 14—Income Taxes). The total grant date fair value of stock optionsvested during the years ended December 31, 2015, 2014, and 2013 was $0.7 million, $0.8 million, and $1.2 million, respectively.As of December 31, 2015, Crocs had $0.7 million of total unrecognized share-based compensation expense related to unvested options, net of expectedforfeitures, which is expected to be amortized over the remaining weighted average period of 2.52 years.Stock options under both the 2005 Plan and the 2007 Plan generally vest ratably over four years with the first year vesting at the end of the first year,followed by monthly vesting for the remaining three years.Restricted Stock Awards and UnitsFrom time to time, Crocs grants restricted stock awards ("RSAs") and restricted stock units ("RSUs") to its employees. RSAs and RSUs generally vest overthree or four years, depending on the terms of the grant. Unvested RSAs have the same rights as those of common shares including voting rights and non-forfeitable dividend rights. However, ownership of unvested RSAs cannot be transferred until they are vested. An unvested RSU is a contractual right toreceive a share of common stock only upon its vesting. RSUs have dividend equivalent rights which accrue over the term of the award and are paid if andwhen the RSUs vest, but they have no voting rights.Crocs typically grants time-based RSUs and performance-based RSUs. Time-based RSUs are typically granted on an annual basis to certain non-executiveemployees and vest in three annual installments on a straight-line basis beginning one year after the grant date. During the years ended December 31, 2015,2014, and 2013, the Board approved grants of 0.4 million, 0.3 million, and 0.4 million RSUs to certain non-executives. Performance-based RSUs aretypically granted on an annual basis to certain executiveF-32Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. EQUITY (Continued)employees and consist of a time-based and performance-based component. The following represents the vesting schedule of performance-based RSUs grantedduring the year ended December 31, 2015:F-33 Performance Vested RSUsTime Vested RSUs Performance GoalsBy Weight Potential Award Further Time VestingVest in 3 annualinstallments beginning oneyear after the date of grant Weight 50% -Achievement of at least 85%of a one-year EarningsBefore Interest and Taxes("EBIT") performance target Executive may earn from 0%to 200% of the performance-based RSUs based on thelevel of achievement of theperformance goal 1/3 of the earned RSUs vestupon certification ofachievement by theCompensation Committeeand 2/3 vest equally on theone- and two-yearanniversary of thecertification date Weight 30% - Achievement of at least 85%of a one-year revenueperformance target Executive may earn from 0%to 200% of the performance-based RSUs based on thelevel of achievement of theperformance goal 1/3 of the earned RSUs vestupon certification ofachievement by theCompensation Committeeand 2/3 vest equally on theone-and two-yearanniversary of thecertification date Weight 20% - Achievement of at least 80%of a one-year free cash flowperformance target Executive may earn from 0%to 200% of the performance-based RSUs based on thelevel of achievement of theperformance goal 1/3 of the earned RSUs vestupon certification ofachievement by theCompensation Committeeand 2/3 vest equally on theone- and two-yearanniversary of thecertification dateTable of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. EQUITY (Continued)The following represents the vesting schedule of performance-based RSUs granted during the year ended December 31, 2014:The following represents the vesting schedule of performance-based RSUs granted during the years ended December 31, 2013:F-34 Performance Vested RSUs (50% of Award)Time Vested RSUs(50% of Award) Performance Goals—eachweighted 50% Potential Award Further Time VestingVest in 3 annualinstallments beginning oneyear after the date of grant Achievement of at least 70%of a one-year cumulativeearnings per shareperformance goal Executive may earn from50% to 200% of the targetnumber of RSUs based onthe level of achievement ofthe performance goal Earned RSUs vest 50% uponsatisfaction of performancegoal and 50% on the one-year anniversary of the endof the performance period Achievement of at least 90%of a one-year revenueperformance goal Executive may earn from50% to 200% of the targetnumber of RSUs based onthe level of achievement ofthe performance goal Earned RSUs vest 50% uponsatisfaction of performancegoal and 50% on the one-year anniversary of the endof the performance period Performance Vested RSUs (50% of Award)Time Vested RSUs(50% of Award) Performance Goal Potential Award Further Time VestingVest in 3 annualinstallments beginning oneyear after the date of grant Achievement of at least 70%of a two-year cumulativeearnings per shareperformance goal Executive may earn from50% to 200% of the targetnumber of RSUs based onthe level of achievement ofthe performance goal Earned RSUs vest 50% uponsatisfaction of performancegoal and 50% one year laterTable of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. EQUITY (Continued)During the years ended December 31, 2015, 2014, and 2013, the Board approved the grant of 1.5 million, 0.9 million, and 0.9 million, respectively, RSUs orRSAs to certain executives as part of a performance incentive program.The following table summarizes RSA and RSU activity during the years ended December 31, 2015, 2014, and 2013:The total grant date fair value of RSAs vested during the years ended December 31, 2015, 2014, and 2013 was $0.2 million, $1.0 million, and $1.3 million,respectively. As of December 31, 2015, Crocs had $0.1 million of total unrecognized share-based compensation expense related to non-vested restrictedstock awards, net of expected forfeitures, all of which was related to time-based awards. As of December 31, 2015, the unvested RSAs are expected to beamortized over the remaining weighted average period of 0.44 years.The total grant date fair value of RSUs vested during the years ended December 31, 2015, 2014, and 2013 was $8.2 million, $9.6 million and $7.1 million,respectively. As of December 31, 2015, Crocs had $18.5 million of total unrecognized share-based compensation expense related to unvested restricted stockunits, net of expected forfeitures, of which $5.7 million is related to performance-based awards and $12.8 million is related to time-based awards. As ofDecember 31, 2015, the unvested RSUs are expected to be amortized over the remaining weighted average period of 1.84 years, which consists of a remainingF-35 Restricted Stock Awards Restricted Stock Units Shares WeightedAverageGrant DateFair Value Units WeightedAverageGrant DateFair Value Unvested at December 31, 2012 355,509 $13.37 1,414,661 $20.61 Granted 21,590 $16.56 1,637,114 $14.96 Vested (89,006)(1)$14.81 (329,542)(1)$21.52 Forfeited (77,603)$12.46 (756,566)$14.71 Unvested at December 31, 2013 210,490 $13.43 1,965,667 $16.50 Granted 9,973 $15.04 1,749,993 $16.05 Vested (68,420)(1)$15.03 (541,888)(1)$17.64 Forfeited (144,555)$12.67 (1,176,301)$16.51 Unvested at December 31, 2014 7,488 $15.61 1,997,471 $15.78 Granted 15,987 $15.01 2,866,562 $10.14 Vested (15,480)(1)$15.30 (505,025)(1)$16.20 Forfeited (1,328)$15.00 (1,270,630)$14.14 Unvested at December 31, 2015 6,667 $15.00 3,088,378 $10.75 (1)The RSAs vested during the years ended December 31, 2015, 2014, and 2013 consisted entirely of time-based awards. The RSUsvested during the year ended December 31, 2015 consisted of 67,893 performance-based awards and 437,132 time-based awards. TheRSUs vested during the year ended December 31, 2014 consisted of 30,946 performance-based awards and 510,942 time-basedawards. The RSUs vested during the year ended December 31, 2013 consisted of 52,288 performance-based awards and 277,254 time-based awards.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)12. EQUITY (Continued)weighted average period of 1.73 years related to performance-based awards and a remaining weighted average period of 1.95 years related to time-basedawards.Share-based CompensationDuring the years ended December 31, 2015, 2014, and 2013, Crocs recorded $11.2 million, $12.7 million, and $12.5 million, respectively, of pre-tax share-based compensation expense of which $0.0 million, $0.2 million, and $0.7 million, respectively, related solely to the construction and implementation of theCompany's ERP, which was capitalized to the consolidated balance sheets and amortized over the useful life of the software beginning on the January 1,2015 in-service date.Appointment of CFOOn November 4, 2015, the Board appointed Carrie Teffner as Executive Vice President and Chief Financial Officer, effective December 16, 2015. Inconnection with her appointment, Ms. Teffner resigned as a member of the Board and now serves as the Company's principal financial officer and principalaccounting officer.Upon the commencement of her employment, Ms. Teffner was granted a time-vesting RSU award representing the right to receive shares of the Company'scommon stock equal to $1,000,000, based on a 30-day weighted-average stock price as of the date Ms. Teffner's appointment was publicly announced. RSUswill vest in three annual installments beginning on the first anniversary of her start date, subject to her continued employment with the Company as of eachvesting date.In addition, Ms. Teffner was granted a performance-vesting RSU award, representing the right to receive shares of the Company's common stock equal to$1,000,000, based on a 30-day weighted-average stock price as of the date Ms. Teffner's appointment was publicly announced. The RSUs vest based on theachievement of certain share price levels on or before the fourth anniversary of her start date, subject to continued employment with the Company.F-36Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)13. ALLOWANCESThe changes in the allowance for doubtful accounts, inclusive of unapplied rebate reserves, and reserve for sales returns and allowances for the years endedDecember 31, 2015, 2014, and 2013, are as follows:Consolidated reserves and allowancesDuring the year ended December 31, 2015, Crocs had multiple China distributors default on their payment obligations. As a result, the Company reassessedthe collectability of its accounts receivable balances for its China operations and concluded that a significant increase in the allowance for doubtful accountswas required. Accordingly, Crocs has increased its China allowance for doubtful accounts by $23.2 million, resulting in total allowances in China of$36.4 million and $21.1 million as of December 31, 2015 and 2014, respectively. The Company's net accounts receivable balance for its China operations asof December 31, 2015 and 2014 was $5.1 million and $17.5 million, respectively.F-37 Allowance fordoubtful accounts Reserve for salesreturns andallowances Reserve forunapplied rebates Total (in thousands) Beginning balance at December 31, 2012 $(3,441)$(7,086)$(2,788) $(13,315)Reduction in revenue — (55,784) (5,420) (61,204)Expense (1,930) — — (1,930)Recoveries, applied amounts, and write-offs 1,715 57,460 6,761 65,936 Ending balance at December 31, 2013 (3,656) (5,410) (1,447) (10,513)Reduction in revenue — (69,834) (5,397) (75,231)Expense (12,087) — — (12,087)Recoveries, applied amounts, and write-offs 2,134 68,030 (4,725) 65,439 Ending balance at December 31, 2014 (13,609) (7,214) (11,569) (32,392)Reduction in revenue — (71,649) (11,106) (82,755)Expense (26,225) — — (26,225)Recoveries, applied amounts, and write-offs 3,466 74,224 14,318 92,008 Ending balance at December 31, 2015 $(36,368)$(4,639)$(8,357) $(49,364)Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)13. ALLOWANCES (Continued)The changes in the allowance for doubtful accounts, inclusive of unapplied rebate reserves, and reserves for sale returns and allowances related to Chinaoperations for the years ended December 31, 2015, 2014, and 2013, are as follows:China reserves and allowancesAs of December 31, 2015 and 2014, China operations accounted for $41.6 million and $38.6 million, respectively, of the Company's total gross accountsreceivable balances, of which $38.2 million and $36.9 million, respectively, were past due. As of December 31, 2015 and 2014, China operations had totalaccounts receivable reserves of $36.4 million and $21.1 million, respectively, associated with these receivables.F-38 Allowance fordoubtful accounts Reserve for salesreturns andallowances Reserve forunapplied rebates Total (in thousands) Beginning balance at December 31, 2012 $(77)$(87)$(2,865) $(3,029)Reduction in revenue — (2,371) — (2,371)Expense 37 — — 37 Recoveries, applied amounts, and write-offs 16 2,233 1,814 4,063 Ending balance at December 31, 2013 (24) (225) (1,051) (1,300)Reduction in revenue — (6,921) — (6,921)Expense (8,552) — — (8,552)Recoveries, applied amounts, and write-offs 136 3,103 (7,572) (4,333)Ending balance at December 31, 2014 (8,440) (4,043) (8,623) (21,106)Reduction in revenue — (7,769) (3,511) (11,280)Expense (23,163) — — (23,163)Recoveries, applied amounts, and write-offs 1,315 11,618 6,172 19,105 Ending balance at December 31, 2015 $(30,288)$(194)$(5,962) $(36,444)Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)14. INCOME TAXESThe following table sets forth income before taxes and the expense for income taxes for the years ended December 31, 2015, 2014, and 2013:The following table sets forth income reconciliations of the statutory federal income tax rate to actual rates based on income or loss before income taxes forthe years ended December 2015, 2014, and 2013:F-39 December 31, 2015 2014 2013 (in thousands) Income (loss) before taxes: U.S. $(83,537)$(34,622)$(7,818)Foreign 8,793 26,073 67,777 Total income (loss) before taxes (74,744) (8,549) 59,959 Income tax expense: Current income taxes U.S. federal 480 (12,049) 3,311 U.S. state 195 (23) 355 Foreign 7,488 7,620 22,337 Total current income taxes 8,163 (4,452) 26,003 Deferred income taxes: U.S. federal (3,902) 400 14,968 U.S. state (118) 236 3,639 Foreign 4,309 193 4,929 Total deferred income taxes 289 829 23,536 Total income tax expense (benefit) $8,452 $(3,623)$49,539 December 31, 2015 2014 2013 (in thousands) Federal income tax rate $(26,160) 35.0%$(2,992) 35.0%$20,781 35.0%State income tax rate, net of federal benefit (543) 0.7 2,598 (30.4) (373) (0.6)Effect of rate differences (3,678) 4.9 5,317 (62.2) (28,671) (47.9)Non-deductible / Non-taxable items (2,181) 2.9 (9,904) 115.8 2,231 3.4 Change in valuation allowance 10,892 (14.5) 5,370 (62.8) 21,370 35.6 U.S. tax on foreign earnings 32,879 (43.9) 6,620 (77.4) 22,877 38.2 Uncertain tax positions (3,952) 5.3 (25,172) 294.4 4,091 6.8 Audit settlements 1,167 (1.6) 13,448 (157.3) 3,035 5.1 Non-deductible write-off of intercompany debt — — — — 1,114 1.9 Non-deductible impairment — — — — 2,118 3.5 Write-off of income tax receivable — — 1,577 (18.4) — — Other 28 (0.1) (485) 5.7 966 1.6 Effective income tax rate $8,452 (11.3)%$(3,623) 42.4%$49,539 82.6%Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)14. INCOME TAXES (Continued)The following table sets forth deferred income tax assets and liabilities as of December 2015 and 2014:F-40 December 31, 2015 2014 (in thousands) Current deferred tax assets: Accrued expenses $— $13,217 Unrealized loss on foreign currency — 342 Other — — Valuation allowance — (7,008)Total current deferred tax assets(1) $— $6,551 Current deferred tax liabilities: Unremitted earnings of foreign subsidiary $— $(14,186)Other — (44)Total current deferred tax liabilities(1) $— $(14,230)Non-current deferred tax assets: Stock compensation expense $7,142 $9,760 Long-term accrued expenses 26,114 6,773 Net operating loss and charitable contribution carryovers 22,518 20,047 Intangible assets 4,725 1,517 Property and equipment — 12,097 Future uncertain tax position offset 456 445 Unrealized loss on foreign currency 466 — Foreign tax credit 27,109 6,259 Other 5,548 1,207 Valuation allowance (56,572) (40,273)Total non-current deferred tax assets $37,506 $17,832 Non-current deferred tax liabilities: Unremitted earnings of foreign subsidiary $(24,572)$— Property and equipment (6,432) — Total non-current deferred tax liabilities $(31,004)$— (1)In November 2015, the FASB issued guidance to simplify the financial statement presentation of deferred income taxes. Thenew guidance requires an entity to present deferred tax assets and liabilities as non-current in a classified balance sheet. Priorto the issuance of this guidance, deferred tax liabilities and assets were required to be separately classified into a currentamount and a non-current amount in the balance sheet. The new guidance represents a change in accounting principle and iseffective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The Companyelected to early adopt this guidance as of December 31, 2015 and to apply it prospectively. Prior period information was notadjusted. Because the application of this guidance affects the balance sheet classification only, adoption of this guidance didnot have a material impact on our consolidated financial statements.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)14. INCOME TAXES (Continued)As of December 31, 2015, U.S. income and foreign withholding taxes have not been provided on for approximately $249.3 million of unremitted earnings ofsubsidiaries operating outside of the U.S. These earnings are estimated to represent the excess of the financial reporting over the tax basis in Crocs'investments in those subsidiaries. These earnings, which are considered to be indefinitely reinvested, would become subject to U.S. income tax if they wereremitted to the U.S. The amount of unrecognized deferred U.S. income tax liability on the unremitted earnings has not been determined because thehypothetical calculation is not practicable.Crocs maintains a valuation allowance of $56.5 million on certain deferred tax assets in various tax jurisdictions for which the Company believes it is notmore-likely-than-not to realize, and relate primarily to state and foreign net operation losses and other tax attributes across all jurisdictions.As a result of certain accounting realization requirements, the table of deferred tax assets and liabilities shown above does not include certain deferred taxassets as of December 31, 2015 that arose directly from tax deductions related to equity compensation in excess of compensation recognized for financialreporting. Equity would be increased by $18.2 million if and when such deferred tax assets are ultimately realized. Crocs applies ASC 740 with-and-withoutordering for purposes of determining when excess tax benefits have been realized.The following table sets forth a reconciliation of the beginning and ending amount of unrecognized tax benefits during the years ended December 31, 2015,2014, and 2013:Unrecognized tax benefits of $5.0 million, $8.4 million and $31.6 million as of December 31, 2015, 2014, and 2013, respectively, if recognized, wouldreduce the annual effective tax rate offset by deferred tax assets recorded for uncertain tax positions.The Company also recorded a net benefit of $2.8 million related to increases in 2015 unrecognized tax benefits, net of amounts effectively settled underaudit in several major jurisdictions including Japan and Finland. Although the timing of the resolution, settlement, and closure of any audits is highlyuncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. However, given thenumber of years remaining that are subject to examination, Crocs is unable to estimate the full range of possible adjustments to the balance of grossunrecognized tax benefits.As it relates to the impact of uncertain tax positions on the rate reconciliation, the primary impact includes audit settlements, net increases in positionchanges (both are noted as part of the tax position tabular disclosure), and accrued interest expense. The gross impact of positions effectively settled aredisclosedF-41 December 31, 2015 2014 2013 (in thousands) Unrecognized tax benefit—January 1 $8,444 $31,616 $31,900 Gross increases—tax positions in prior period 643 7 572 Gross decreases—tax positions in prior period (385) (3,711) (2,086)Gross increases—tax positions in current period 549 904 3,743 Settlements (4,126) (20,210) (2,291)Lapse of statute of limitations (168) (162) (222)Unrecognized tax benefit—December 31 $4,957 $8,444 $31,616 Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)14. INCOME TAXES (Continued)separately as audit settlements. The net benefit related to audit settlements is not expected to recur in future periods. Note that the interest component, whilecarried as a liability on the balance sheet and recorded as a component of tax expense, is excluded from the tabular disclosure pursuant to the guidance underASC 740-10-50.Interest and penalties related to income tax liabilities are included in income tax expense in the consolidated statement of operations. For the years endedDecember 31, 2015, 2014 and 2013, Crocs recorded approximately $0.2 million, $0.8 million and $0.6 million, respectively, of penalties and interest. Duringthe year ended December 31, 2015, Crocs released $0.6 million of interest from settlements, lapse of statutes, and change in certainty. The cumulativeaccrued balance of penalties and interest was $0.5 million, $0.9 million and $5.0 million, as of December 31, 2015, 2014 and 2013, respectively.The following table sets forth the tax years subject to examination for the major jurisdictions where the Company conducts business as of December 31,2015:State income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of anyfederal changes remains subject to examination by various state jurisdictions for a period up to two years after formal notification to the states.F-42Netherlands 2008 to 2015 Canada 2008 to 2015 Japan 2009 to 2015 China 2007 to 2015 Singapore 2011 to 2015 United States 2011 to 2015 Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)15. EARNINGS PER SHAREThe following table illustrates the basic and diluted earnings (loss) per share ("EPS") computations for the years ended December 31, 2015, 2014, and 2013.See Note 3—Summary of Significant Accounting Policies for additional detail regarding the Company's EPS calculations.Diluted EPS is calculated using the two-class method for options and RSUs and the if-converted method for Series A preferred stock. For the years endedDecember 31, 2015, 2014, and 2013, 2.1 million, 2.0 million, and 1.0 million options and RSUs, respectively, were excluded in the calculation of dilutedEPS under the two-class method because the effect would be anti-dilutive. The Series A preferred shares were excluded in the calculation of diluted EPSunder the if-converted method because the effect would be anti-dilutive. If converted, Series A preferred stock would represent approximately 15.9% of theCompany's common stock outstanding or 13.8 million additional common shares, as of December 31, 2015. See Note 16—Series A Preferred Stock for furtherdetails regarding the preferred share offering.Stock Repurchase Plan AuthorizationsCrocs continues to evaluate options to maximize the returns on its cash and maintain an appropriate capital structure, including, among other alternatives,repurchases of common stock. On December 26, 2013, Crocs' Board approved the repurchase of up to $350.0 million of the Company's common stock. Thenumber, price, structure, and timing of the repurchases will be at the Company's sole discretion and future repurchases will be evaluated by the Companydepending on market conditions, liquidity needs, and other factors. Share repurchases may be made in the open market or in privately negotiatedtransactions. The repurchase authorization does not have an expiration date and does not obligate Crocs to acquire any particular amount of its commonstock. The Board may suspend, modify or terminate the repurchase program at any time without prior notice.During the year ended December 31, 2015, Crocs repurchased approximately 6.5 million shares at a weighted average price of $13.24 per share for anaggregate price of approximately $85.9 million, including related commission charges, under the publicly announced repurchase plan. During the year endedF-43 Year Ended December 31, 2015 2014 2013 (in thousands) Numerator Net income (loss) attributable to common stockholders $(98,007)$(18,962)$10,420 Less: adjustment for income allocated to participating securities — — (36)Net income (loss) attributable to common stockholders—basic and diluted $(98,007)$(18,962)$10,384 Denominator Weighted average common shares outstanding—basic 75,604 85,140 87,989 Plus: dilutive effect of stock options and unvested restricted stock units — — 1,100 Weighted average common shares outstanding—diluted 75,604 85,140 89,089 Net income (loss) attributable per common share: Basic $(1.30)$(0.22)$0.12 Diluted $(1.30)$(0.22)$0.12 Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)15. EARNINGS PER SHARE (Continued)December 31, 2014, Crocs repurchased approximately 10.6 million shares at a weighted average price of $13.75 per share for an aggregate price ofapproximately $145.6 million, excluding related commission charges. As of December 31, 2015, subject to certain restrictions on repurchases under theCompany's revolving credit facility, Crocs had $118.7 million remaining under the repurchase authorizations.16. SERIES A PREFERRED STOCKOn January 27, 2014, Crocs issued 200,000 shares of Series A preferred stock to Blackstone Capital Partners VI L.P. ("Blackstone") and certain of itspermitted transferees, for an aggregate purchase price of $198.0 million, or $990.00 per share, pursuant to an Investment Agreement between Crocs andBlackstone, dated December 28, 2013 (as amended, the "Investment Agreement"). In connection with the issuance of the Series A preferred stock, Crocsreceived proceeds of $182.2 million after deducting the issuance discount of $2.0 million and direct and incremental expenses of $15.8 million includingfinancial advisory fees, closing costs, legal expenses, and other offering-related expenses.Participation Rights and DividendsThe Series A preferred stock ranks senior to the Company's common stock with respect to dividend rights and rights on liquidation, winding-up, anddissolution. The Series A preferred stock has a stated value of $1,000 per share, and holders of Series A preferred stock are entitled to cumulative dividendspayable quarterly in cash at a rate of 6% per annum. If Crocs fails to make timely dividend payments, the dividend rate will increase to 8% per annum untilsuch time as all accrued but unpaid dividends have been paid in full. Holders of Series A preferred stock are entitled to receive dividends declared or paid onthe Company's common stock and are entitled to vote together with the holders of the Company's common stock as a single class, in each case, on an as-converted basis. As of December 31, 2015 and 2014, Crocs had accrued dividends of $3.0 million and $3.1 million, respectively on the consolidated balancesheets, which were paid in cash to holders of the Series A preferred stock on January 4, 2016 and January 2, 2015, respectively. Holders of Series A preferredstock have certain limited special approval rights, including with respect to the issuance of pari passu or senior equity securities of the Company.Conversion FeaturesThe Series A preferred stock is convertible at the option of the holders at any time after the closing into shares of common stock at an implied conversionprice of $14.50 per share, subject to adjustment. At the Company's election, all or a portion of the Series A preferred stock will be convertible into therelevant number of shares of common stock on or after the third anniversary of the closing, if the closing price of the common stock equals or exceeds $29.00for 20 consecutive trading days. The Series A preferred stock is convertible into 13,793,100 shares of common stock based on the conversion rate in place asof December 31, 2015. The conversion rate is subject to the following customary anti-dilution and other adjustments:(1)The occurrence of common stock dividends or distributions, stock splits or combinations, and equity reclassifications. (2)The distribution of rights, options, or warrants to all holders of common stock entitling them to purchase shares of common stock at a price per sharethat is less than the closing price of the Company's common stock.F-44Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)16. SERIES A PREFERRED STOCK (Continued)(3)Pursuant to a tender offer or exchange offer to purchase outstanding shares of common stock for consideration valued at an amount greater than theclosing price of the Company's common stock. (4)If the Company distributes evidences of its indebtedness, assets, other property or securities or rights, options or warrants to acquire its capital stock. (5)If the Company has any stockholder rights plan in effect with respect to the common stock on the date of conversion, upon conversion of the Series Apreferred stock, the holder will also receive (in addition to the common stock pursuant to the conversion) the rights under such rights plan, unlessthose rights (a) become exercisable before the conversion of the Series A preferred stock, or (b) are separated from the common stock (each a "TriggerEvent"). Upon the occurrence of a Trigger Event, the Series A preferred stock conversion rate will be adjusted in accordance with (1) or (2) describedabove. (6)If the Company issues shares of common stock (or other instruments convertible into common stock) for valuable consideration, the conversion priceis adjusted if (a) the offering price is less than the conversion price and (b) if the offering is at a price less than the fair market value of the Company'scommon stock on the date of issuance.Redemption FeaturesAt any time after the eighth anniversary of the closing, Crocs will have the right to redeem and the holders of the Series A preferred stock will have the rightto require Crocs to repurchase all or any portion of the Series A preferred stock at 100% of the stated value thereof plus all accrued and unpaid dividends.Upon certain change of control events involving the Company, the holders can require Crocs to repurchase the Series A preferred stock at 101% of the statedvalue thereof plus all accrued and unpaid dividends.In accordance with FASB ASC Topic 480-10-S99-3A, SEC Staff Announcement: Classification and Measurement of Redeemable Securities, redemptionfeatures, which are not solely within the control of the issuer, are required to be presented outside of permanent equity on the consolidated balance sheets.Under the Investment Agreement and as noted above, the holder has the option to redeem the Series A preferred stock any time after January 27, 2022 or upona change in control. As such, the Series A preferred stock is presented in temporary or mezzanine equity on the consolidated balance sheets and will beaccreted up to the stated redemption value of $203.0 million using an appropriate accretion method over a redemption period of eight years, as this representsthe earliest probable date at which the Series A preferred stock will become redeemable.17. COMMITMENTS AND CONTINGENCIESRental Commitments and ContingenciesCrocs rents space for its retail stores, offices, warehouses, vehicles, and equipment under operating leases expiring at various dates through 2033. Certainleases contain rent escalation clauses (step rents) that require additional rental amounts in the later years of the term. Rent expense for leases with step rents orrent holidays is recognized on a straight-line basis over the lease term beginning on the lease inceptionF-45Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)17. COMMITMENTS AND CONTINGENCIES (Continued)date. Deferred rent is included in the consolidated balance sheets in 'Accrued expenses and other current liabilities.'The following table summarizes the composition of rent expense under operating leases for the years ended December 31, 2015, 2014, and 2013:Purchase CommitmentsIn December 2011, Crocs renewed and amended its supply agreement with Finproject S.p.A. (formerly known as Finproject s.r.l.), which provides Crocs theexclusive right to purchase certain raw materials used to manufacture its products. The agreement also provides that Crocs meets minimum purchaserequirements to maintain exclusivity throughout the term of the agreement, which expires December 31, 2016. Historically, the minimum purchaserequirements have not been onerous and Crocs does not expect them to become onerous in the future. Depending on the material purchased, pricing wasbased either on contracted price or was subject to quarterly reviews and fluctuates based on order volume, currency fluctuations, and raw material prices.Pursuant to the agreement, Crocs guarantees the payment for certain third-party manufacturer purchases of these raw materials up to a maximum potentialamount of €3.5 million (approximately $3.8 million as of December 31, 2015).F-46Fiscal years ending December 31, 2016 $77,127 2017 57,258 2018 46,928 2019 37,621 2020 33,587 Thereafter 105,310 Total minimum lease payments(1) $357,831 (1)Minimum lease payments have not been reduced by minimum sublease rentals of $0.2 million due in the future under non-cancelable subleases. They also do not include contingent rentals, which may be paid under certain retail leases on a basis ofpercentage of sales in excess of stipulated amounts. Year Ended December 31, 2015 2014 2013 (in thousands) Minimum rentals(1) $96,579 $108,466 $101,721 Contingent rentals 14,929 16,875 18,178 Less: Sublease rentals (322) (868) (646)Total rent expense $111,186 $124,473 $119,253 (1)Minimum rentals include all lease payments as well as fixed and variable common area maintenance, parking and storage fees,which were approximately $9.1 million, $9.6 million, and $9.7 million during the years ended December 31, 2015, 2014, and2013, respectively.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)17. COMMITMENTS AND CONTINGENCIES (Continued)As of December 31, 2015 and 2014, Crocs had firm purchase commitments with certain third-party manufacturers of $158.2 million and $202.3 million,respectively.Government Tax AuditsCrocs is regularly subject to, and is currently undergoing, audits by tax authorities in the United States and several foreign jurisdictions for prior tax years.See Note 19—Legal Proceedings for further details regarding potential loss contingencies related to government tax audits and other current legalproceedings.18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATIONDuring 2013 and 2014, Crocs had four reportable operating segments based on the geographic nature of the Company's operations: Americas, Asia Pacific,Japan, and Europe. Crocs' 'Other businesses' category aggregates insignificant operating segments that do not meet the reportable segment threshold andincludes manufacturing operations located in Mexico, Italy and Asia. The composition of the Company's reportable operating segments is consistent withthat used by Crocs' chief operating decision maker, ("CODM") to evaluate performance and allocate resources.Subsequent to December 31, 2014, Crocs' internal reports reviewed by the CODM began consolidating Japan into the Asia Pacific segment. This changealigned the Company's internal reporting to its new strategic model and management structure, as Japan and Asia Pacific are now managed and analyzed asone operating segment by management and the CODM. Accordingly, Crocs now has three reportable segments for 2015 as well as the 'Other Businesses'category and prior period segment results have been reclassified to reflect this change.Each of the reportable operating segments derives its revenues from the sale of footwear and accessories to external customers as well as intersegment sales.Revenues of the 'Other businesses' category are primarily made up of intersegment sales. The remaining revenues for 'Other businesses' represent non-footwearproduct sales to external customers. Intersegment sales are not included in the measurement of segment operating income or regularly reviewed by the CODMand are eliminated when deriving total consolidated revenues.Segment performance is evaluated based on segment results without allocating corporate expenses, or indirect general, administrative, and other expenses.Segment profits or losses include adjustments toF-47Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Continued)eliminate intersegment sales. As such, reconciling items for segment operating income represent unallocated corporate and other expenses as well asintersegment eliminations.F-48 Year Ended December 31, 2015 2014 2013 (in thousands) Revenues: Americas $476,210 $489,915 $498,552 Asia Pacific 424,491 473,910 477,615 Europe 188,833 233,604 216,259 Total segment revenues 1,089,534 1,197,429 1,192,426 Other businesses 1,096 794 254 Total consolidated revenues $1,090,630 $1,198,223 $1,192,680 Operating income: Americas $49,422(1)$48,347(1)$61,894(1)Asia Pacific 48,447(2) 75,135(2) 118,253(2)Europe 15,629(3) 24,517(3) 16,192(3)Total segment operating income 113,498 147,999 196,339 Reconciliation of total segment operating income to income beforeincome taxes: Other businesses (30,092) (19,400) (20,811)Intersegment eliminations — (1,498) 61 Unallocated corporate and other(4) (155,730) (131,827) (112,494)Total consolidated operating income (loss) (72,324) (4,726) 63,095 Foreign currency transaction loss, net (3,332) (4,885) (4,678)Interest income 967 1,664 2,432 Interest expense (969) (806) (1,016)Other income (expense), net 914 204 126 Income (loss) before income taxes $(74,744)$(8,549)$59,959 Depreciation and amortization: Americas $7,401 $11,670 $10,384 Asia Pacific 3,913 6,724 6,486 Europe 2,229 3,761 5,108 Total segment depreciation and amortization 13,543 22,155 21,978 Other businesses 7,634 5,900 8,002 Unallocated corporate and other(4) 14,816 9,358 11,526 Total consolidated depreciation and amortization $35,993 $37,413 $41,506 (1)Includes $7.2 million, $4.0 million, and $3.9 million for the years ended December 31, 2015, 2014, and 2013, respectively, of assetimpairment charges related to 27, 36, and 23 underperforming retail locations, respectively.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Continued)The following table sets forth asset information related to Crocs' reportable operating business segments as of December 31, 2015 and December 31, 2014:F-49(2)Includes $0.7 million, $2.8 million, and $0.2 million for the years ended December 31, 2015, 2014, and 2013, respectively, of assetimpairment charges related to 27, 14, and two underperforming retail locations, respectively. Additionally in the year endedDecember 31, 2015, Crocs recorded $5.8 million in impairment charges related to South Africa assets, pertaining to 9 retail locations,classified as available for sale. (3)Includes $1.6 million, $2.0 million, and $6.6 million for the years ended December 31, 2015, 2014, and 2013 of asset impairmentcharges related to 21, 27, and 35 underperforming retail locations. (4)Includes a corporate component consisting primarily of corporate support and administrative functions, costs associated with share-based compensation, research and development, brand marketing, legal, restructuring, depreciation and amortization of corporate andother assets not allocated to operating segments and costs of the same nature related to certain corporate holding companies. December 31, 2015 2014 (in thousands) Assets(1): Americas $148,104 $127,077 Asia Pacific 169,865 200,910 Europe 46,137 166,285 Total segment current assets 364,106 494,272 Supply Chain 14,778 18,132 Corporate(2) 16,265 27,337 Deferred tax assets, net — 4,190 Income tax receivable 10,233 9,332 Other receivables 14,233 11,989 Prepaid expenses and other current assets 26,334 30,156 Total current assets 445,949 595,408 Property and Equipment, net 49,490 68,288 Intangible assets, net 82,297 97,337 Goodwill 1,973 2,044 Deferred tax assets, net 6,608 17,886 Other assets 21,703 25,968 Total consolidated assets $608,020 $806,931 (1)Assets by segment include cash and equivalents, net accounts receivable, and inventory. (2)Corporate assets primarily consist of cash and equivalents and inventory.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)18. OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION (Continued)There were no customers who represented 10% or more of consolidated revenues during the years ended December 31, 2015, 2014, and 2013. The followingtable sets forth certain geographical information regarding Crocs' revenues during the years ended December 31, 2015, 2014, and 2013:The following table sets forth geographical information regarding property and equipment assets as of December 31, 2015 and 2014:19. LEGAL PROCEEDINGSThe Company is currently subject to an audit by U.S. Customs & Border Protection ("CBP") in respect of the period from 2006 to 2010. In October 2013, CBPissued the final audit report. In that report CBP projects that unpaid duties totaling approximately $12.4 million are due for the period under review andrecommends collection of the duties due. Crocs responded that these projections are erroneous and provided arguments that demonstrate the amount due inconnection with this matter is considerably less than the projection. Additionally, on December 12, 2014, Crocs made an offer to settle CBP's potential claimsand tendered $3.5 million. At this time, it is not possible to determine how long it will take CBP to evaluate Crocs' offer or to predict whether Crocs' offer willbe accepted. Likewise, if a settlement cannot be reached, it is not possible to predict with any certainty whether CBP will seek to assert a claim for penaltiesin addition to any unpaid duties, but such an assertion is a possibility.Crocs is currently subject to an audit by the Brazilian Federal Tax Authorities related to imports of footwear from China between 2010 and 2014. OnJanuary 13, 2015, Crocs was notified about the issuance of assessments totaling approximately $3.7 million for the period January 2010 through May 2011.CrocsF-50 Year Ended December 31, 2015 2014 2013 (in thousands) Location United States $392,463 $435,154 $401,948 International(1) 698,167 763,069 790,732 Total revenues $1,090,630 $1,198,223 $1,192,680 (1)Not more than 10% of international revenue was derived in any individual international country. December 31, 2015 2014 (in thousands) Location United States $32,954 $45,046 International 16,536 23,242 Total long-lived assets(1) $49,490 $68,288 (1)Not more than 10% of long-lived assets resided in any individual foreign country in 2015 or 2014.Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)19. LEGAL PROCEEDINGS (Continued)has disputed these assessments and asserted defenses to the claims. On February 25, 2015, Crocs received additional assessments totaling approximately$8.4 million related to the remainder of the audit period. Crocs has also disputed these assessments and asserted defenses and filed an appeal to these claims.It is anticipated that this matter will take up to several years to be resolved. It is not possible at this time to predict the outcome of this matter.On August 8, 2014, a purported class action lawsuit was filed in California State Court against a Crocs subsidiary, Crocs Retail, LLC (Zaydenberg v. CrocsRetail, LLC, Case No. BC554214). The lawsuit alleged various employment law violations related to overtime, meal and break periods, minimum wage,timely payment of wages, wage statements, payroll records and business expenses. Crocs filed an answer on February 6, 2015, denying the allegations andasserting several defenses. On June 3, 2015, a second purported class action lawsuit was filed in California State Court against Crocs Retail, LLC (ChristopherS. Duree and Richard Morely v. Crocs, Inc., Case No. BC583875), making substantially the same allegations as in the Zaydenberg lawsuit. The partiesattended a mediation on June 26, 2015, and reached a settlement for $1.5 million, which will release the claims in both lawsuits. On September 4, 2015, theCalifornia State Court granted preliminary approval of the settlement and set the final approval hearing for December 14, 2015. At the final approval hearing,the California State Court entered its final order approving the settlement and final judgement. Crocs considers this matter closed.As of December 31, 2015, Crocs estimates that the resolution of these litigation matters and other disputes could result in a loss that is reasonably possiblebetween $0.0 million and $5.9 million in aggregate. The Company has accrued $5.6 million associated with our estimated obligation related to these legalclaims, which is reported in the balance sheet in line 'Accrued expenses and other liabilities'.Although Crocs is subject to other litigation from time to time in the ordinary course of business, including employment, intellectual property and productliability claims, Crocs is not party to any other pending legal proceedings that Crocs believes would reasonably have a material adverse impact on itsbusiness, financial position, results of operations or cash flows.20. UNAUDITED QUARTERLY CONSOLIDATED FINANCIAL INFORMATIONF-51 For the Quarter Ended March 31,2015 June 30,2015 September 30,2015 December 31,2015 (in thousands, except per share data) Revenues $262,193 $345,671 $274,088 $208,678 Gross profit $127,370 $189,870 $120,821 $72,744 Restructuring $3,663 $2,810 $981 $1,274 Asset impairment charges $— $2,075 $5,460 $7,771 Income (loss) from operations $(2,362)$16,349 $(20,730)$(65,581)Net income (loss) $(2,425)$13,426 $(24,024)$(70,173)Net income (loss) attributable to common shareholders $(5,979)$9,690 $(27,776)$(73,942)Basic income (loss) per common share $(0.08)$0.11 $(0.37)$(1.01)Diluted income (loss) per common share $(0.08)$0.11 $(0.37)$(1.01)Table of ContentsCROCS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)20. UNAUDITED QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (Continued) During the three months ended December 31, 2014, Crocs recorded the following charges that affect the comparability of information between periods:•Inventory write-down charges of $10.0 million related to obsolete inventory including raw materials, footwear, and accessories. See Note 4—Inventories for further discussions regarding these charges.21. SUBSEQUENT EVENTSASU 2010-09 to ASC Topic 855, Subsequent Events, requires the Company to disclose the date through which subsequent events have been evaluated. TheCompany has evaluated subsequent events through the date the financial statements were issued, and has determined there are no other subsequent eventsthan those presented below.On January 19, 2016, the Company sold its operations in South Africa to and entered into a franchise agreement with the buyer. South Africa operations werepresented as assets held for sale as of December 31, 2015 and during the three month period ended December 31, 2015, the carrying value of the entire assetgroup was written down to its estimated fair value less costs to sell.On February 18, 2016, the Company entered into the Eleventh Amendment to the Amended and Restated Credit Agreement. See Note 11—Revolving CreditFacility & Bank Borrowings.F-52 For the Quarter Ended March 31,2014 June 30,2014 September 30,2014 December 31,2014 (in thousands, except per share data) Revenues $312,429 $376,920 $302,401 $206,473 Gross profit $156,227 $202,571 $155,017 $76,530 Restructuring $2,250 $4,060 $7,585 $6,637 Asset impairment charges $— $3,230 $2,600 $2,997 Income (loss) from operations $16,822 $41,911 $1,113 $(64,572)Net income (loss) $9,124 $23,277 $15,767 $(53,094)Net income (loss) attributable to common shareholders $6,373 $19,523 $12,009 $(56,867)Basic income (loss) per common share $0.06 $0.19 $0.12 $(0.70)Diluted income (loss) per common share $0.06 $0.19 $0.12 $(0.70)Exhibit 10.29 EXECUTION VERSION TENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT This Tenth Amendment to Amended and Restated Credit Agreement (the “Amendment”), is made this 24th day of December, 2015 amongCROCS, INC., a corporation organized under the laws of the State of Delaware (“Crocs”), CROCS RETAIL, LLC, a limited liability company organizedunder the laws of the State of Colorado (“Retail”), OCEAN MINDED, INC., a corporation organized under the laws of the State of Colorado (“Ocean”),JIBBITZ, LLC, a limited liability company organized under the laws of the State of Colorado (“Jibbitz”), BITE, INC., a corporation organized under thelaws of the State of Colorado (“Bite”, together with Crocs, Retail, Ocean, Jibbitz and each other Person joined as a borrower from time to time to the CreditAgreement (as defined below), collectively “Borrowers” and each a “Borrower”), the Lenders who have executed this Amendment and constitute RequiredLenders (collectively, the “Consenting Lenders” and each individually a “Consenting Lender”) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), asagent for Lenders (PNC, in such capacity, the “Administrative Agent”). All capitalized terms used and not otherwise defined herein shall have the meaningascribed thereto in the below-defined Credit Agreement, as amended hereby. BACKGROUND A. On December 16, 2011, Borrowers, Lenders and Administrative Agent entered into, inter alia, that certain Amended and Restated CreditAgreement (as same has been or may hereafter be amended, modified, renewed, extended, restated or supplemented from time to time, including withoutlimitation as amended by that certain First Amendment to Amended and Restated Credit Agreement by and among the parties hereto dated as ofDecember 10, 2012, that certain Second Amendment to Amended and Restated Credit Agreement by and among the parties hereto dated as of June 12, 2013,that certain Third Amendment to Amended and Restated Credit Agreement by and among the parties hereto dated as of December 27, 2013, that certainFourth Amendment to Amended and Restated Credit Agreement by and among the parties hereto dated as of March 27, 2014, that certain Fifth Amendmentto Amended and Restated Credit Agreement by and among the parties hereto dated as of September 26, 2014, that certain Sixth Amendment to Amended andRestated Credit Agreement by and among the parties hereto dated as of April 2, 2015, that certain Seventh Amendment to Amended and Restated CreditAgreement by and among the parties hereto dated as of April 21, 2015, that certain Eighth Amendment to Amended and Restated Credit Agreement by andamong the parties hereto dated as of September 1, 2015, and that certain Ninth Amendment to Amended and Restated Credit Agreement by and amongparties hereto dated as of November 3, 2015, the “Credit Agreement”) to reflect certain financing arrangements among the parties thereto. B. The parties now wish to further modify the terms and provisions of the Credit Agreement on the terms and subject to the conditionscontained in this Amendment. NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:  Section 1. Amendments to Credit Agreement. Upon the Effective Date (as defined below), the definition of “Consolidated EBITDAR” inSection 1.1 of the Credit Agreement shall be amended and restated in its entirety as follows: Consolidated EBITDAR shall mean for any period the sum of (i) net income (or loss) of Borrowers on a Consolidated Basis forsuch period (excluding, in each case to the extent incurred or charged during the applicable period: (v) non-cash charges in respect of baddebt write-downs with respect to receivables due from customers located in China incurred during the period beginning July 1, 2015 andending September 30, 2015 in an aggregate amount not to exceed $18,900,000, (w) one-time non-cash charges with the consent ofAdministrative Agent in the aggregate not to exceed $25,000,000 for any trailing twelve month period ending after December 31, 2015,(x) any transaction costs associated with the Preferred Stock Issuance in an amount not to exceed $30,000,000 in the aggregate to the extentpaid within 180 days of the closing of the Preferred Stock Issuance, (y) cash and non-cash charges incurred during the period beginningJanuary 1, 2013 and ending June 30, 2014 in connection with store closings or restructuring, charges for inventory obsolescence, othercorporate restructuring activities or contingent liabilities, in an amount not to exceed $25,000,000 in the aggregate or $10,000,000 withrespect to cash charges), and (z) cash and non-cash charges incurred during the period beginning July 1, 2014 and ending December 31,2015 in connection with legal settlements, asset impairments, charges associated with ongoing U.S. customs audits, disbursements made toinvalid vendors, bad debt write downs and corporate restructuring activities, including, but not limited to, retail restructuring, costsassociated with the transition from a direct to distribution model in foreign markets, inventory charges and write-offs, global staffreductions and personnel charges, new office locations, charges associated with the Borrowers’ SAP software system, charges relating to theexit, sublease and other costs associated with the company plane and other corporate restructuring activities or contingent liabilities, in anamount not to exceed $100,000,000 in the aggregate or $65,000,000 with respect to cash charges, plus (ii) all interest expense of Borrowerson a Consolidated Basis for such period, plus (iii) all charges against income of Borrowers on a Consolidated Basis for such period forfederal, state and local taxes, plus (iv) depreciation expenses for such period, plus (v) amortization expenses for such period, plus (vi) non-cash share based compensation expenses, plus (vii) Borrowers’ aggregate Rental Expenses for such period. Section 2. Acknowledgment of Guarantors. With respect to the amendments to the Credit Agreement effected by this Amendment, eachGuarantor signatory hereto hereby acknowledges and agrees to this Amendment and confirms and agrees that its Guaranty Agreement (as modified andsupplemented in connection with this Amendment) and any other Loan Document to which it is a party is and shall continue to be, in full force and effect andis hereby ratified and confirmed in all respects except that, upon the effectiveness of, and on and after the date of this Amendment, each reference in suchGuaranty or Loan Document to the Credit Agreement, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be areference to the Credit Agreement as amended or modified by 2 this Amendment. Although Administrative Agent and the Consenting Lenders have informed the Guarantors of the matters set forth above, and theGuarantors have acknowledged the same, each Guarantor understands and agrees that neither Administrative Agent nor any Lender has any duty under theCredit Agreement, the Guaranty Agreements or any other Loan Document to so notify any Guarantor or to seek such an acknowledgement, and nothingcontained herein is intended to or shall create such a duty as to any transaction hereafter. Section 3. Conditions Precedent. This Amendment shall be effective upon satisfaction of the following conditions (the date of suchsatisfaction, the “Effective Date”): (a) Administrative Agent shall have received this Amendment fully executed by the Borrowers, the Guarantors,Administrative Agent and Consenting Lenders; and (b) Administrative Agent shall have received an amendment fee of $50,000, to be allocated pro-rata among AdministrativeAgent and Consenting Lenders, by wire transfer in immediately available funds. Section 4. Representations and Warranties. Each Loan Party: (a) reaffirms all representations and warranties made to Administrative Agent and Lenders under the Credit Agreement and allof the other Loan Documents and confirms that all are true and correct in all material respects as of the date hereof (except (i) to the extentany such representations and warranties specifically relate to a specific date, in which case such representations and warranties were true andcorrect in all material respects on and as of such other specific date, and (ii) to the extent any such representations and warranties arequalified by materiality, in which case such representations and warranties were true and correct in all respects); (b) reaffirms all of the covenants contained in the Credit Agreement, covenants to abide thereby until satisfaction in full ofthe Obligations and termination of the Credit Agreement and the other Loan Documents; (c) represents and warrants to the Administrative Agent and the Lenders that no Potential Default or Event of Default hasoccurred and is continuing under any of the Loan Documents or will result from this Amendment; (d) represents and warrants to the Administrative Agent and the Lenders that it has the authority and legal right to execute,deliver and carry out the terms of this Amendment, that such actions were duly authorized by all necessary limited liability company orcorporate action, as applicable, and that the officers executing this Amendment on its behalf were similarly authorized and empowered, andthat this Amendment does not contravene any provisions of its certificate of incorporation or formation, operating agreement, bylaws, orother formation documents, as applicable, or of any contract or agreement to which it is a party or by which any of its properties are bound;and 3 (e) represents and warrants to the Administrative Agent and the Lenders that this Amendment and all assignments,instruments, documents, and agreements executed and delivered in connection herewith, are valid, binding and enforceable in accordancewith their respective terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similarlaws affecting creditors’ rights generally. Section 5. General Provisions. (a) Payment of Expenses. Borrowers shall pay or reimburse Administrative Agent and Lenders for their reasonable attorneys’fees and expenses in connection with the preparation, negotiation and execution of this Amendment and the documents provided for hereinor related hereto. (b) Reaffirmation. Except as modified by the terms hereof, all of the terms and conditions of the Credit Agreement, asamended, and all of the other Loan Documents are hereby reaffirmed by each Loan Party and shall continue in full force and effect as thereinwritten. (c) Third Party Rights. No rights are intended to be created hereunder for the benefit of any third party donee, creditor, orincidental beneficiary. (d) Headings. The headings of any paragraph of this Amendment are for convenience only and shall not be used to interpretany provision hereof. (e) Modifications. No modification hereof or any agreement referred to herein shall be binding or enforceable unless inwriting and signed on behalf of the party against whom enforcement is sought. (f) Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of NewYork applied to contracts to be performed wholly within the State of New York. (g) Counterparts. This Amendment may be executed in any number of and by different parties hereto on separatecounterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the sameagreement. Any signature delivered by a party by facsimile transmission or PDF shall be deemed to be an original signature hereto. (Signature Pages Follow) 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers thereunto dulyauthorized as of the day and year first above written. BORROWERS: CROCS, INC. By:/s/ Gregg RibattName:Gregg RibattTitle:Chief Executive Officer CROCS RETAIL, LLC By:/s/ Gregg RibattName:Gregg RibattTitle:Manager OCEAN MINDED, INC. By:/s/ Gregg RibattName:Gregg RibattTitle:President JIBBITZ, LLC By:/s/ Gregg RibattName:Gregg RibattTitle:Manager BITE, INC. By:/s/ Gregg RibattName:Gregg RibattTitle:President [Signature Page to Tenth Amendment (Crocs)]  GUARANTORS: WESTERN BRANDS HOLDING COMPANY, LLC By:/s/ Gregg RibattName:Gregg RibattTitle:Manager [Signature Page to Tenth Amendment (Crocs)]  PNC BANK, NATIONAL ASSOCIATION,as a Lender and as Administrative Agent By:/s/ Steve C. RobertsName:Steve C. RobertsTitle:Vice President [Signature Page to Tenth Amendment (Crocs)]  HSBC BANK USA, N.A.,as a Lender By:/s/ Kathryn E. BenjaminName:Kathryn E. BenjaminTitle:Vice President [Signature Page to Tenth Amendment (Crocs)] Exhibit 10.30 ELEVENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT This Eleventh Amendment to Amended and Restated Credit Agreement (the “Amendment”), is made this 18th day of February 2016 amongCROCS, INC., a corporation organized under the laws of the State of Delaware (“Crocs”), CROCS RETAIL, LLC, a limited liability company organizedunder the laws of the State of Colorado (“Retail”), OCEAN MINDED, INC., a corporation organized under the laws of the State of Colorado (“Ocean”),JIBBITZ, LLC, a limited liability company organized under the laws of the State of Colorado (“Jibbitz”), BITE, INC., a corporation organized under thelaws of the State of Colorado (“Bite”, together with Crocs, Retail, Ocean, Jibbitz and each other Person joined as a borrower from time to time to the CreditAgreement (as defined below), collectively “Borrowers” and each a “Borrower”), the Lenders who have executed this Amendment (the “Consenting Lender”)and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, the “Administrative Agent”). All capitalized termsused and not otherwise defined herein shall have the meaning ascribed thereto in the below-defined Credit Agreement, as amended hereby. BACKGROUND A. On December 16, 2011, Borrowers, Lenders and Administrative Agent entered into, inter alia, that certain Amended and Restated CreditAgreement (as same has been or may hereafter be amended, modified, renewed, extended, restated or supplemented from time to time, including withoutlimitation as amended by that certain First Amendment to Amended and Restated Credit Agreement by and among the parties hereto dated as ofDecember 10, 2012, that certain Second Amendment to Amended and Restated Credit Agreement by and among the parties hereto dated as of June 12, 2013,that certain Third Amendment to Amended and Restated Credit Agreement by and among the parties hereto dated as of December 27, 2013, that certainFourth Amendment to Amended and Restated Credit Agreement by and among the parties hereto dated as of March 27, 2014, that certain Fifth Amendmentto Amended and Restated Credit Agreement by and among the parties hereto dated as of September 26, 2014, that certain Sixth Amendment to Amended andRestated Credit Agreement by and among the parties hereto dated as of April 2, 2015, that certain Seventh Amendment to Amended and Restated CreditAgreement by and among the parties hereto dated as of April 21, 2015, that certain Eighth Amendment to Amended and Restated Credit Agreement by andamong the parties hereto dated as of September 1, 2015, that certain Ninth Amendment to Amended and Restated Credit Agreement by and among partieshereto dated as of November 3, 2015, and that certain Tenth Amendment to Amended and Restated Credit Agreement by and among the parties hereto datedas of December 24, 2015, the “Credit Agreement”) to reflect certain financing arrangements among the parties thereto. B. Borrowers have requested and Administrative Agent and Consenting Lender has agreed to modify certain terms and provisions of the CreditAgreement, in each case, on the terms and subject to the conditions contained in this Amendment. NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:  Section 1. Amendments to Credit Agreement. Upon the Effective Date (as defined below): (a) The following definitions contained in Section 1.1 of the Credit Agreement shall be amended and restated in their entirety asfollows: Applicable Commitment Fee Rate shall mean (a) if the Revolving Facility Usage is greater than $25,000,000, an amount equal toone quarter of one percent (0.25%) and (b) if the Revolving Credit Usage is less than $25,000,000, an amount equal to threeeighths of one percent (0.375%). Applicable Letter of Credit Fee Rate shall mean a percentage equal to the Applicable Margin for Revolving Credit Loans accruinginterest at the LIBOR Rate Option. Applicable Margin shall mean (a) if the Revolver Availability is greater than thirty three percent (33%) of the aggregate RevolvingCommitments, (i) an amount equal to one and one half percent (1.50%) for Revolving Credit Loans accruing interest at the LIBORRate, and (ii) an amount equal to one half of one percent (0.50%) for Revolving Credit Loans accruing interest at the Base Rateand Swing Loans, and (b) if the Revolver Availability is less than thirty three percent (33%) of the aggregate RevolvingCommitments, (i) an amount equal to one and three quarters of one percent (1.75%) for Revolving Credit Loans accruing interestat the LIBOR Rate, and (ii) an amount equal to three quarters of one percent (0.75%) for Revolving Credit Loans accruing interestat the Base Rate and Swing Loans. Expiration Date shall mean, with respect to the Revolving Credit Commitments, February 18, 2021. Fixed Charge Coverage Ratio shall mean, with respect to any fiscal period, the ratio of (a) Consolidated EBITDA, minus UnfundedCapital Expenditures made during such period, minus distributions (including tax distributions) and dividends made during suchperiod (excluding any dividends or distributions paid in accordance with Section 8.2.5(iii) hereof), minus cash taxes paid duringsuch period, in each case, of the Borrowers on a Consolidated Basis, to (b) all Fixed Charges made during such period. Fixed Charges shall mean for any period, in each case, all cash actually expended by any Borrowers on a Consolidated Basis tomake: (a) interest payments on any Loans hereunder, plus (b) payments for all fees, commissions and charges set forth herein, plus(c) payments on Capitalized Leases, plus (d) payments with respect to any other Indebtedness for borrowed money. 2 Leverage Ratio shall mean, as of any date of determination, the ratio of (A) consolidated Indebtedness of Borrowers and itsSubsidiaries on such date, to (B) Consolidated EBITDA of the Borrowers and its Subsidiaries for the four (4) most recently endedfiscal quarters (or the four fiscal quarters ending on the date of determination if such date is the last day of a fiscal quarter). Pro Forma Basis shall mean, with respect to any Specified Transaction, that Borrower is in compliance on a pro forma basis withthe applicable covenant, ratio, calculation or requirement herein calculated as if such Specified Transaction and the relatedadjustments set forth below had occurred on the first day of the four fiscal quarter period most recently ended for which financialstatements have been delivered pursuant to Section 8.3.1 [Quarterly Financial Statements]. The following related adjustmentsshall be calculated as follows, each as evidenced by a quality of earnings report reasonably satisfactory to Agent: (i) incomestatement items (whether positive or negative) attributable to the applicable property or Person the subject of an acquisition, sale,transfer or other disposition of all or substantially all of the capital stock in any Subsidiary or any division or product line of theBorrower or any Subsidiary, shall be included, (ii) any retirement, incurrence or assumption of any Indebtedness by Borrower orany Subsidiary in connection with a Specified Transaction shall be deemed to have borne interest (a) in the case of fixed rateIndebtedness, at the rate applicable thereto, or (b) in the case of floating rate Indebtedness, at the rates which were or would havebeen applicable thereto during the period when such Indebtedness was or was deemed to be outstanding; and provided that,Consolidated EBTIDA may be further adjusted without duplication of any adjustments to Consolidated EBITDA by, withoutduplication, (x) any credit for acquisition-related costs and savings to the extent expressly required or permitted to be reflected inBorrower’s financial statements pursuant to Article 11 of Regulation S-X under the Securities Act of 1933, as amended, and(y) actions taken by the Borrower or any of its Subsidiaries prior to or during such period for the purpose of realizing reasonablyidentifiable and factually supportable cost savings, in each case under this clause (y) calculated by the Borrower, as evidenced bya quality of earnings reports reasonably satisfactory to Agent. Swing Loan Commitment shall mean PNC’s commitment to make Swing Loans to the Borrower pursuant to Section 2.1.2 [SwingLoan Commitment] hereof in an aggregate principal amount up to $7,500,000. (b) The following definitions shall be added to Section 1.1 of the Credit Agreement in the appropriate alphabetical sequence: Cash Dominion Period shall mean any period (a) commencing on the date that Revolver Availability is less than the greater of(i) $7,500,000 and (ii) 10% of the aggregate Revolving Commitments, in each case for five consecutive days and (b) ending onthe first date thereafter on which (i) 3 Revolver Availability is greater than the greater of (X) $7,500,000 and (Y) 10% of the aggregate Revolving Commitments, and(ii) average Revolver Availability (measured for the 30 consecutive days then ending) has been equal to or greater than(X) $7,500,000 and (Y) 10% of the aggregate Revolving Commitments. Consolidated EBITDA shall mean for any period the sum of (i) net income (or loss) of Borrowers on a Consolidated Basis for suchperiod (excluding, in each case to the extent incurred or charged during the applicable period: (u) non-cash charges in respect ofbad debt write-downs with respect to receivables due from customers located in China incurred during the period beginning July 1,2015 and ending September 30, 2015 in an aggregate amount not to exceed $18,900,000, (v) one-time non-cash charges with theconsent of Administrative Agent in the aggregate not to exceed $25,000,000 for any trailing twelve month period ending afterDecember 31, 2015, (w) cash and non-cash charges incurred during the period beginning July 1, 2014 and ending December 31,2015 in connection with legal settlements, asset impairments, charges associated with ongoing U.S. customs audits, disbursementsmade to invalid vendors, bad debt write downs and corporate restructuring activities, including, but not limited to, retailrestructuring, costs associated with the transition from a direct to distribution model in foreign markets, inventory charges andwrite-offs, global staff reductions and personnel charges, new office locations, charges associated with the Borrowers’ SAP softwaresystem, charges relating to the exit, sublease and other costs associated with the company plane and other corporate restructuringactivities or contingent liabilities, in an amount not to exceed $100,000,000 in the aggregate or $65,000,000 with respect to cashcharges, and (x) non-cash charges incurred during the fiscal quarter ending December 31, 2015 in an amount not to exceed$10,000,000); plus (ii) all interest expense (net of interest income) of Borrowers on a Consolidated Basis for such period, plus(iii) all charges against income of Borrowers on a Consolidated Basis for such period for federal, state and local taxes, plus(iv) depreciation expenses for such period, plus (v) amortization expenses for such period, plus (vi) non-cash share basedcompensation expenses, plus (vii) foreign currency transaction losses (net of any foreign currency transaction gains) for suchperiod. Notwithstanding the foregoing, for the fiscal quarter ending June 30, 2015 Consolidated EBITDA shall be deemed to be$34,386,000 and for the fiscal quarter ending September 30, 2015, Consolidated EBITDA shall be deemed to be $30,612,000. Covenant Triggering Event shall, with respect to any fiscal quarter, be deemed to have occurred (a) if, for the period commencing15 days prior to the last day of such fiscal quarter through and including the 15 day of the following fiscal quarter, Borrowers’average Revolving Facility Usage is greater than 25% of the aggregate Revolving Commitments, or (b) upon 4th the occurrence of the Revolving Facility Usage being greater than the Borrowing Base as more fully set forth in Section 8.3.4.7below. (c) The definition of “Consolidated EBITDAR” contained in Section 1.1 of the Credit Agreement is hereby deleted in its entirety. (d) The following Section 1.4 shall be added to the Credit Agreement: 1.4 Uniform Commercial Code Terms. All terms used herein and defined in the Uniform Commercial Code as adopted in theState of New York from time to time (the “Uniform Commercial Code”) shall have the meaning given therein unless otherwisedefined herein. Without limiting the foregoing, the terms “accounts”, “chattel paper” (and “electronic chattel paper” and“tangible chattel paper”), “commercial tort claims”, “deposit accounts”, “documents”, “equipment”, “financial asset”, “fixtures”,“general intangibles”, “goods”, “instruments”, “inventory”, “investment property”, “letter-of-credit rights”, “paymentintangibles”, “proceeds”, “promissory note” “securities”, “software” and “supporting obligations” as and when used herein shallhave the meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the definition of anycategory or type of collateral is expanded by any amendment, modification or revision to the Uniform Commercial Code, suchexpanded definition will apply automatically as of the date of such amendment, modification or revision. (e) The following Section 8.1.10 shall be added to the Credit Agreement: 8.1.10 Deposit Accounts. Each applicable Borrower, Administrative Agent and each depository bank at whichBorrowers maintain deposit accounts shall enter into a deposit account control agreement as required by the Security Agreement. Administrative Agent shall be permitted to, during a Cash Dominion Period, direct any depository bank party to a deposit accountcontrol agreement to transfer to Administrative Agent any funds so deposited on a daily basis or at other times acceptable toAdministrative Agent for application to the Obligations in accordance with this Agreement. (f) Section 8.2.3 of the Credit Agreement shall be amended by deleting the “and” at the end of clause (v) and replacing it with “;”;deleting the “.” at the end of clause (vi) and replaced it with the following: ; and (vii) guarantees by Borrowers of obligations of Foreign Subsidiaries under Other Hedging Transactions in an amount not toexceed $15,000,000 in the aggregate at any time. (g) Section 8.2.5(iii) of the Credit Agreement shall be amended and restated in its entirety as follows: 5 (iii) purchases, redemptions or retirements of equity interests of any Borrower, in an amount not to exceed $50,000,000 in anyfiscal year so long as (a) no Potential Default or Event of Default has occurred and is continuing or would occur, and (b) Borrowers’Revolver Availability would be not less than (i) $37,500,000 or (ii) 50% of the aggregate Revolving Commitments, in each case,after giving effect to such purchase, redemption or retirement; provided that the aggregate amount of all such purchases,redemptions or retirements does not exceed $350,000,000 in the aggregate since January 1, 2014; (h) Section 8.2.13 of the Credit Agreement shall be amended and restated in its entirety as follows: 8.2.13 Capital Expenditures and Leases. Each of the Loan Parties shall not, and shall not permit any of their Subsidiaries to,contract for, purchase or make any expenditure or commitments for Capital Expenditures in an aggregate amount for all LoanParties in excess of $50,000,000 per fiscal year. (i) Section 8.2.14 of the Credit Agreement shall be amended and restated in its entirety as follows: 8.2.14 Minimum Fixed Charge Coverage Ratio. Cause to be maintained as of the last day of any fiscal quarter for which aCovenant Triggering Event has occurred, a Fixed Charge Coverage Ratio for the Loan Parties , measured on a trailing twelvemonth basis, of not less than the ratio set forth below opposite the applicable measurement date: Measurement DateMinimum Fixed ChargeCoverage RatioMarch 31, 2016 and June 30, 20161.00 to 1.00September 30, 2016 and the last day of each fiscal quarterthereafter1.10 to 1.00 (j) Section 8.2.15 of the Credit Agreement shall be amended and restated in its entirety as follows: Maximum Leverage Ratio. Cause to be maintained as of the last day of any fiscal quarter for which a Covenant TriggeringEvent has occurred, a Leverage Ratio of the Loan Parties of not more than the ratio set forth below opposite the applicablemeasurement date: 6 Measurement Date Maximum Leverage RatioMarch 31, 2016 and June 30, 20162.50 to 1.00September 30, 2016 and the last day of each fiscal quarterthereafter2.00 to 1.00 (k) Section 8.2.16 of the Credit Agreement shall be amended and restated in its entirety as follows: Reserved. (l) Section 8.3.1 of the Credit Agreement shall be amended and restated in its entirety as follows: 8.3.1 Quarterly Financial Statements. Within forty five (45) days after the end of each fiscal quarter (other than the fiscalquarter ending December 31 for which Borrower shall have ninety (90) days after such fiscal quarter end), an unaudited balancesheet of Borrowers on a consolidated and consolidating basis and unaudited statements of income and stockholders’ equity andcash flow of Borrowers on a consolidated and consolidating basis reflecting results of operations from the beginning of the fiscalyear to the end of such quarter and for such quarter, prepared on a basis consistent with prior practices and complete and correct inall material respects, subject to normal and recurring year end adjustments and the absence of footnotes that individually and inthe aggregate are not material to Borrowers’ business; provided however that if Crocs files its quarterly report on Form 10-Q for theapplicable fiscal quarter and such quarterly report contains the financial statements and reports described above, in a formatacceptable to Administrative Agent in its Permitted Discretion, then Borrowers may satisfy the requirements of this Section 8.3.1by delivering a copy of such quarterly report to the Administrative Agent and each Lender. The reports shall be accompanied by aCompliance Certificate and a Net Mark to Market Exposure statement for each Lender (other than Administrative Agent). (m) The following Section 8.3.4.7 shall be added to the Credit Agreement: 8.3.4.7 Borrowing Base Certificate. To the extent a Covenant Triggering Event has not occurred with respect to anyfiscal quarter and the amount of outstanding Revolving Credit Loans (excluding outstanding Letters of Credit) as of the last day ofsuch fiscal quarter is greater than $0, then contemporaneously with delivery of the financial statements referenced in Section 8.3.1herein, Borrowers shall deliver to Administrative Agent a borrowing base certificate setting forth the sum of 7 (a) 75% of the gross book value of Borrowers’ accounts owing from account debtors located in the United States and Canada, plus(b) 50% of the gross book value of Borrowers’ inventory located in the United States and Canada (such sum, the “BorrowingBase”). If the Revolving Facility Usage at the time of delivery of the borrowing base certificate is greater than the Borrowing Base,then a Covenant Triggering Event shall be deemed to have occurred with respect to the most recently ended fiscal quarter. (n) Schedule 1.1(A) to the Credit Agreement shall be deleted in its entirety. (o) Schedule 1.1(B) to the Credit Agreement shall be deleted in its entirety and replaced with Schedule 1.1(B) attached to thisAmendment Section 2. Conformed Credit Agreement. Borrowers and Agent hereby acknowledge and agree that the Conformed Credit Agreementattached hereto as Exhibit A is a true, complete and correct version of the Credit Agreement as amended through the date immediately preceding the datehereof. Section 3. Schedules. Administrative Agent and the Consenting Lender acknowledge and agree that they accept the versions andupdates to the Schedules attached hereto as Exhibit B which have been delivered in accordance with Section 6.2 of the Credit Agreement. Section 4. Acknowledgment of Guarantors. With respect to the amendments to the Credit Agreement effected by this Amendment, eachGuarantor signatory hereto hereby acknowledges and agrees to this Amendment and confirms and agrees that its Guaranty Agreement (as modified andsupplemented in connection with this Amendment) and any other Loan Document to which it is a party is and shall continue to be, in full force and effect andis hereby ratified and confirmed in all respects except that, upon the effectiveness of, and on and after the date of this Amendment, each reference in suchGuaranty or Loan Document to the Credit Agreement, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be areference to the Credit Agreement as amended or modified by this Amendment. Although Administrative Agent and the Consenting Lenders have informedthe Guarantors of the matters set forth above, and the Guarantors have acknowledged the same, each Guarantor understands and agrees that neitherAdministrative Agent nor any Lender has any duty under the Credit Agreement, the Guaranty Agreements or any other Loan Document to so notify anyGuarantor or to seek such an acknowledgement, and nothing contained herein is intended to or shall create such a duty as to any transaction hereafter. Section 5. Conditions Precedent. This Amendment shall be effective upon satisfaction of the following conditions (the date of suchsatisfaction, the “Effective Date”): (a) Administrative Agent shall have received this Amendment fully executed by the Borrowers, the Guarantors,Administrative Agent and Consenting Lenders; and 8 (b) Administrative Agent shall have received a Fee Letter fully executed by the Borrowers, the Guarantors, AdministrativeAgent and Consenting Lenders. Section 6. Representations and Warranties. Each Loan Party: (a) reaffirms all representations and warranties made to Administrative Agent and Lenders under the Credit Agreement and allof the other Loan Documents and confirms that all are true and correct in all material respects as of the date hereof (except (i) to the extentany such representations and warranties specifically relate to a specific date, in which case such representations and warranties were true andcorrect in all material respects on and as of such other specific date, and (ii) to the extent any such representations and warranties arequalified by materiality, in which case such representations and warranties were true and correct in all respects); (b) reaffirms all of the covenants contained in the Credit Agreement, covenants to abide thereby until satisfaction in full ofthe Obligations and termination of the Credit Agreement and the other Loan Documents; (c) represents and warrants to the Administrative Agent and the Lenders that no Potential Default or Event of Default hasoccurred and is continuing under any of the Loan Documents or will result from this Amendment; (d) represents and warrants to the Administrative Agent and the Lenders that it has the authority and legal right to execute,deliver and carry out the terms of this Amendment, that such actions were duly authorized by all necessary limited liability company orcorporate action, as applicable, and that the officers executing this Amendment on its behalf were similarly authorized and empowered, andthat this Amendment does not contravene any provisions of its certificate of incorporation or formation, operating agreement, bylaws, orother formation documents, as applicable, or of any contract or agreement to which it is a party or by which any of its properties are bound;and (e) represents and warrants to the Administrative Agent and the Lenders that this Amendment and all assignments,instruments, documents, and agreements executed and delivered in connection herewith, are valid, binding and enforceable in accordancewith their respective terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similarlaws affecting creditors’ rights generally. Section 7. General Provisions. (a) Payment of Expenses. Borrowers shall pay or reimburse Administrative Agent and Lenders for their reasonable attorneys’fees and expenses in connection with the preparation, negotiation and execution of this Amendment and the documents provided for hereinor related hereto. 9 (b) Reaffirmation. Except as modified by the terms hereof, all of the terms and conditions of the Credit Agreement, asamended, and all of the other Loan Documents are hereby reaffirmed by each Loan Party and shall continue in full force and effect as thereinwritten. (c) Third Party Rights. No rights are intended to be created hereunder for the benefit of any third party donee, creditor, orincidental beneficiary. (d) Headings. The headings of any paragraph of this Amendment are for convenience only and shall not be used to interpretany provision hereof. (e) Modifications. No modification hereof or any agreement referred to herein shall be binding or enforceable unless inwriting and signed on behalf of the party against whom enforcement is sought. (f) Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of NewYork applied to contracts to be performed wholly within the State of New York. (g) Counterparts. This Amendment may be executed in any number of and by different parties hereto on separatecounterparts, all of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the sameagreement. Any signature delivered by a party by facsimile transmission or PDF shall be deemed to be an original signature hereto. (Signature Pages Follow) 10 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers thereunto dulyauthorized as of the day and year first above written. BORROWERS:CROCS, INC. By:/s/ Carrie W. TeffnerName:Carrie W. TeffnerTitle:Chief Financial Officer CROCS RETAIL, LLC By:/s/ Carrie W. TeffnerName:Carrie W. TeffnerTitle:Manager OCEAN MINDED, INC. By:/s/ Carrie W. TeffnerName:Carrie W. TeffnerTitle:Chief Financial Officer JIBBITZ, LLC By:/s/ Carrie W. TeffnerName:Carrie W. TeffnerTitle:Manager BITE, INC. By:/s/ Carrie W. TeffnerName:Carrie W. TeffnerTitle:Chief Financial Officer [Signature Page to Eleventh Amendment (Crocs)]  GUARANTORS: WESTERN BRANDS HOLDING COMPANY, LLC By:/s/ Carrie W. TeffnerName:Carrie W. TeffnerTitle:Manager [Signature Page to Eleventh Amendment (Crocs)]  PNC BANK, NATIONAL ASSOCIATION,as a Lender and as Administrative Agent By:/s/ Steve C. RobertsName:Steve C. RobertsTitle:Vice President [Signature Page to Eleventh Amendment (Crocs)]  SCHEDULE 1.1(B) COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES Page 1 of 2 Part 1 - Commitments of Lenders and Addresses for Notices to Lenders Lender Amount ofCommitmentfor RevolvingCredit Loans Commitment Ratable Share PNC Bank, National Association2 North Lake Avenue, Suite 440Pasadena, CA 91101Attention: Steve RobertsTelephone: 626-432-6128Telecopy: 626-432-4589$75,000,000$75,000,000100% Total$75,000,000$75,000,000100% SCHEDULE 1.1(B) - 1 SCHEDULE 1.1(B) COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES Page 2 of 2Part 2 - Addresses for Notices to Administrative Agent, Borrower and Guarantors: ADMINISTRATIVE AGENT PNC Bank, National Association2 North Lake Avenue, Suite 440Pasadena, CA 91101Attention: Steve RobertsTelephone: 626-432-6128Telecopy: 626-432-4589 With a Copy To:Agency Services, PNC Bank, National AssociationMail Stop: P7-PFSC-04-IAddress: 500 First AvenuePittsburgh, PA 15219Attention: Agency ServicesTelephone: 412-762-6442Telecopy: 412-762-8672 BORROWER: Crocs, Inc.7477 East Dry Creek ParkwayNiwot, CO 80503Attention: William PlonTelephone: 303-848-7461Email: WPlon@Crocs.com With a copy to: Perkins Coie LLP1900 Sixteenth Street, Suite 1400Denver, CO 80202Attention: Jason DayTelephone: (303) 291-2362Facsimile: (303) 291-2400 SCHEDULE 1.1(B) - 2 EXHIBIT A CONFORMED CREDIT AGREEMENT CONFORMED COPY — THROUGH 10 AMENDMENT Customer CUSIP 22704NAA0Facility CUSIP 22704NAB8 $100,000,000 REVOLVING CREDIT FACILITY AMENDED AND RESTATED CREDIT AGREEMENT by and among CROCS, INC.CROCS RETAIL, INC.OCEAN MINDED, INC.JIBBITZ LLCBITE, INC. and THE LENDERS PARTY HERETO and PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent Dated as of December 16, 2011 th TABLE OF CONTENTS Page 1.CERTAIN DEFINITIONS11.1Certain Definitions11.2Construction281.3Accounting Principles; Changes in GAAP28 2.REVOLVING CREDIT AND SWING LOAN FACILITIES292.1Revolving Credit Commitments292.1.1Revolving Credit Lorans292.1.2Swing Loan Commitment292.2Nature of Lenders’ Obligations with Respect to Revolving Credit Loans302.3Commitment Fees302.4Revolving Credit Loan Requests; Swing Loan Requests302.4.1Revolving Credit Loan Requests302.4.2Swing Loan Requests312.5Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative Agent; Repayment of RevolvingCredit Loans; Borrowings to Repay Swing Loans312.5.1Making Revolving Credit Loans312.5.2Presumptions by the Administrative Agent312.5.3Making Swing Loans322.5.4Repayment of Revolving Credit Loans322.5.5Borrowings to Repay Swing Loans322.5.6Swing Loans Under Cash Management Agreements322.6Notes332.7Use of Proceeds332.8Letter of Credit Subfacility332.8.1Issuance of Letters of Credit332.8.2Letter of Credit Fees342.8.3Disbursements, Reimbursement342.8.4Repayment of Participation Advances352.8.5Documentation362.8.6Determinations to Honor Drawing Requests362.8.7Nature of Participation and Reimbursement Obligations362.8.8Indemnity382.8.9Liability for Acts and Omissions382.8.10Issuing Lender Reporting Requirements392.9Defaulting Lenders39 i 2.10Increase in Revolving Credit Commitments412.10.1Increasing Lenders and New Lenders412.11Reduction of Revolving Credit Commitment42 3.RESERVED42 4.INTEREST RATES424.1Interest Rate Options424.1.1Revolving Credit Interest Rate Options; Swing Line Interest Rate434.1.2[RESERVED]434.1.3Rate Quotations434.2Interest Periods434.2.1Amount of Borrowing Tranche444.2.2Renewals444.3Interest After Default444.3.1Letter of Credit Fees, Interest Rate444.3.2Other Obligations444.3.3Acknowledgment444.4LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available444.4.1Unascertainable444.4.2Illegality; Increased Costs; Deposits Not Available444.4.3Administrative Agent’s and Lender’s Rights454.5Selection of Interest Rate Options45 5.PAYMENTS455.1Payments455.2Pro Rata Treatment of Lenders465.3Sharing of Payments by Lenders465.4Presumptions by Administrative Agent475.5Interest Payment Dates475.6Voluntary Prepayments475.6.1Right to Prepay475.6.2Replacement of a Lender485.7Mandatory Prepayments495.7.1Sale of Assets495.7.2Application Among Interest Rate Options495.8Increased Costs495.8.1Increased Costs Generally49 ii 5.8.2Capital Requirements505.8.3Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans505.8.4Delay in Requests505.9Taxes515.9.1Issuing Lender515.9.2Payments Free of Taxes515.9.3Payment of Other Taxes by the Loan Parties515.9.4Indemnification by the Loan Parties515.9.5Indemnification by the Lenders515.9.6Evidence of Payments525.9.7Status of Lenders525.9.8Treatment of Certain Refunds545.9.9Survival545.10Indemnity545.11Settlement Date Procedures555.12Mitigation Obligations56 6.REPRESENTATIONS AND WARRANTIES566.1Representations and Warranties566.1.1Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event ofDefault566.1.2Subsidiaries and Owners; Investment Companies566.1.3Validity and Binding Effect576.1.4No Conflict; Material Agreements; Consents576.1.5Litigation576.1.6Financial Statements576.1.7Margin Stock586.1.8Full Disclosure586.1.9Taxes586.1.10Patents, Trademarks, Copyrights, Licenses, Etc.596.1.11Liens in the Collateral596.1.12Insurance596.1.13ERISA Compliance596.1.14Environmental Matters606.1.15Solvency606.2Updates to Schedules60 7.CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT607.1First Loans and Letters of Credit607.1.1Deliveries61 iii 7.1.2Payment of Fees627.2Each Loan or Letter of Credit62 8.COVENANTS628.1Affirmative Covenants628.1.1Preservation of Existence, Etc.628.1.2Payment of Liabilities, Including Taxes, Etc.628.1.3Maintenance of Insurance628.1.4Maintenance of Properties and Leases638.1.5Visitation Rights638.1.6Keeping of Records and Books of Account638.1.7Compliance with Laws; Use of Proceeds638.1.8Further Assurances638.1.9Anti-Terrorism Laws638.2Negative Covenants648.2.1Indebtedness648.2.2Liens; Lien Covenants668.2.3Guaranties668.2.4Loans and Investments668.2.5Dividends and Related Distributions678.2.6Liquidations, Mergers, Consolidations, Acquisitions688.2.7Dispositions of Assets or Subsidiaries688.2.8Affiliate Transactions698.2.9Subsidiaries, Partnerships and Joint Ventures708.2.10Continuation of or Change in Business708.2.11Fiscal Year708.2.12Changes in Organizational Documents708.2.13Capital Expenditures and Leases708.2.14Minimum Fixed Charge Coverage Ratio718.2.15Maximum Leverage Ratio. The Loan Parties shall not at any time permit the Leverage Ratio to be greater than3.00 to 1.00718.3Reporting Requirements728.3.1Quarterly Financial Statements728.3.2Annual Financial Statements728.3.3Certificate of the Borrower728.3.4Notices73 9.DEFAULT749.1Events of Default749.1.1Payments Under Loan Documents749.1.2Breach of Warranty74 iv 9.1.3Breach of Negative Covenants or Visitation Rights749.1.4Breach of Other Covenants749.1.5Defaults in Other Agreements759.1.6Final Judgments or Orders759.1.7Loan Document Unenforceable759.1.8Uninsured Losses; Proceedings Against Assets759.1.9Events Relating to Plans759.1.10Change of Control759.1.11Relief Proceedings759.2Consequences of Event of Default769.2.1Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings769.2.2Bankruptcy, Insolvency or Reorganization Proceedings769.2.3Set-off769.2.4Application of Proceeds77 10.THE ADMINISTRATIVE AGENT7710.1Appointment and Authority7710.2Rights as a Lender7710.3Exculpatory Provisions7810.4Reliance by Administrative Agent7910.5Delegation of Duties7910.6Resignation of Administrative Agent7910.7Non-Reliance on Administrative Agent and Other Lenders8010.8No Other Duties, etc.8010.9Administrative Agent’s Fee8010.10Authorization to Release Collateral and Guarantors8010.11No Reliance on Administrative Agent’s Customer Identification Program81 11.MISCELLANEOUS8111.1Joint and Several Obligations8111.2Modifications, Amendments or Waivers8211.2.1Increase of Commitment8211.2.2Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment8211.2.3Release of Collateral or Guarantor8211.2.4Miscellaneous8211.3No Implied Waivers; Cumulative Remedies8311.4Expenses; Indemnity; Damage Waiver8311.4.1Costs and Expenses8311.4.2Indemnification by the Borrower84 v 11.4.3Reimbursement by Lenders8411.4.4Waiver of Consequential Damages, Etc.8511.4.5Payments8511.5Holidays8511.6Notices; Effectiveness; Electronic Communication8511.6.1Notices Generally8511.6.2Electronic Communications8611.6.3Change of Address, Etc.8611.7Severability8611.8Duration; Survival8611.9Successors and Assigns8611.9.1Successors and Assigns Generally8611.9.2Assignments by Lenders8711.9.3Register8811.9.4Participations8811.9.5Certain Pledges; Successors and Assigns Generally8911.10Confidentiality9011.10.1General9011.10.2Sharing Information With Affiliates of the Lenders9011.11Counterparts; Integration; Effectiveness9011.11.1Counterparts; Integration; Effectiveness9011.12CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURYTRIAL9111.12.1Governing Law9111.12.2SUBMISSION TO JURISDICTION9111.12.3WAIVER OF VENUE9111.12.4SERVICE OF PROCESS9211.12.5WAIVER OF JURY TRIAL9211.13USA Patriot Act Notice92 vi LIST OF SCHEDULES AND EXHIBITS SCHEDULES SCHEDULE 1.1(A)-PRICING GRID / COMMITMENT FEE GRIDSCHEDULE 1.1(B)-COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICESSCHEDULE 1.1(P)-PERMITTED LIENSSCHEDULE 6.1.1-QUALIFICATIONS TO DO BUSINESSSCHEDULE 6.1.2-SUBSIDIARIESSCHEDULE 6.1.14-ENVIRONMENTAL DISCLOSURESSCHEDULE 8.1.3-INSURANCE REQUIREMENTS RELATING TO COLLATERALSCHEDULE 8.2.1-PERMITTED INDEBTEDNESSSCHEDULE 8.2.4LOANS AND INVESTMENTS EXHIBITS EXHIBIT 1.1(A)-ASSIGNMENT AND ASSUMPTION AGREEMENTEXHIBIT 1.1(N)(1)-REVOLVING CREDIT NOTEEXHIBIT 1.1(N)(2)-SWING LOAN NOTEEXHIBIT 2.4.1-LOAN REQUESTEXHIBIT 2.4.2-SWING LOAN REQUESTEXHIBIT 5.9.7(A)-U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders That Are Not Partnerships For U.S. Federal IncomeTax Purposes)EXHIBIT 5.9.7(B)-U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Not Partnerships For U.S. Federal IncomeTax Purposes)EXHIBIT 5.9.7(C)-U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Partnerships For U.S. Federal Income TaxPurposes)EXHIBIT 5.9.7(D)-U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders That Are Partnerships For U.S. Federal Income TaxPurposes)EXHIBIT 8.3.3-QUARTERLY COMPLIANCE CERTIFICATE vii AMENDED AND RESTATED CREDIT AGREEMENT THIS CREDIT AGREEMENT (as hereafter amended, the “Agreement”) is dated as of December 16, 2011 and is made by and among CROCS, INC., aDelaware corporation (“Crocs”), CROCS RETAIL, INC., a Colorado corporation (“Crocs Retail”), OCEAN MINDED, INC., a Colorado corporation(“Ocean”), JIBBITZ LLC, a Colorado limited liability company (“Jibbitz”), BITE, INC., a Colorado corporation (“Bite”), together with Crocs, Crocs Retail,Ocean, Jibbitz and each Person joined hereto as a borrower from time to time, collectively referred to herein as, the “Borrowers” or “Borrower”), theLENDERS (as hereinafter defined), PNC CAPITAL MARKETS LLC, in its capacity as sole book runner and sole lead arranger (“Lead Arranger”) and PNCBANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders under this Agreement (hereinafter referred to in such capacity asthe “Administrative Agent”). Borrower, Administrative Agent and Lenders have entered into that certain Revolving Credit and Security Agreement dated as of September 25,2009 (the “Existing Credit Agreement”) pursuant to which Administrative Agent and Lenders made loans and other advances to Borrower. This Agreementamends and restates the Existing Credit Agreement but does not extinguish the obligations evidenced thereby. The Borrower has requested the Lenders to provide a revolving credit facility to the Borrower in an aggregate principal amount not to exceed$100,000,000. In consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties heretocovenant and agree as follows: 1. CERTAIN DEFINITIONS 1.1 Certain Definitions. In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have thefollowing meanings, respectively, unless the context hereof clearly requires otherwise:(1) Administrative Agent shall mean PNC Bank, National Association, and its successors and assigns. Administrative Agent’s Fee shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee]. Administrative Agent’s Letter shall have the meaning specified in Section 10.9 [Administrative Agent’s Fee]. Affiliate as to any Person shall mean any other Person (i) which directly or indirectly controls, is controlled by, or is under common controlwith such Person, (ii) which beneficially owns or holds 20% or more of any class of the voting or other equity interests of (1) 6 Amendment - All references in the Credit Agreement to “Revolver Commitments” shall be deemed to refer to “Revolving Credit Commitments”. Allreferences in the Credit Agreement to “Revolver Facility Usage” shall be deemed to refer to “Revolving Facility Usage”. th such Person, or (iii) 20% or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by suchPerson. Anti-Terrorism Laws shall mean any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, moneylaundering or bribery, and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws (including without limitation, any Lawsenforced or administered by the United States Treasury Department’s Office of Foreign Asset Control or the United States State Department) all as amended,supplemented or replaced from time to time.(2) Applicable Commitment Fee Rate shall mean the percentage rate per annum based on Borrowers’ Revolving Facility Usage as set forth onthe grid on Schedule 1.1(A) below the heading “Commitment Fee.” Applicable Letter of Credit Fee Rate shall mean the percentage rate per annum based on the Leverage Ratio then in effect according to thepricing grid on Schedule 1.1(A) below the heading “Letter of Credit Fee.” Applicable Margin shall mean, as applicable: (A) the percentage spread to be added to the Base Rate applicable to Revolving Credit Loans under the Base Rate Option based on theLeverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit Base Rate Spread”, or (B) the percentage spread to be added to the LIBOR Rate applicable to Revolving Credit Loans under the LIBOR Rate Option basedon the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit LIBOR Rate Spread”. Approved Fund shall mean any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions ofcredit in the ordinary course of business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of anentity that administers or manages a Lender. Assignment and Assumption Agreement shall mean an assignment and assumption agreement entered into by a Lender and an assigneepermitted under Section 11.9 [Successors and Assigns], in substantially the form of Exhibit 1.1(A). Authorized Officer shall mean, with respect to any Loan Party, the Chief Executive Officer, President, Chief Financial Officer, Treasurer orDirector of Treasury of such Loan Party or such other individuals, designated by written notice to the Administrative Agent from the Borrower, authorized toexecute notices, reports and other documents on behalf of the Loan Parties required hereunder. The Borrower may amend such list of individuals from time totime by giving written notice of such amendment to the Administrative Agent. (2) 5 Amendment 2th Availability shall mean the sum of (i) the difference between the Revolving Facility Usage and the aggregate Revolving CreditCommitments, plus (ii) Borrowers’ unrestricted cash maintained in deposit accounts in the United States (as evidenced by Borrower’s most recent accountstatements). Base Rate shall mean, for any day, a fluctuating per annum rate of interest equal to the highest of (a) the Federal Funds Open Rate, plus0.5%, (b) the Prime Rate, and (c) the Daily LIBOR Rate, plus 100 basis points (1.0%). Any change in the Base Rate (or any component thereof) shall takeeffect at the opening of business on the day such change occurs. Base Rate Option shall mean the option of the Borrower to have Loans bear interest at the rate and under the terms set forth inSection 4.1.1(i) [Revolving Credit Interest Rate Options]. Borrower shall have the meaning set forth in the preamble hereto. Borrowers on a Consolidated Basis shall mean the consolidation in accordance with GAAP of the accounts or other items of the Borrowersand their respective Subsidiaries. Borrowing Date shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the sameor a different Interest Rate Option, which shall be a Business Day. Borrowing Tranche shall mean specified portions of Loans outstanding as follows: (i) any Loans to which a LIBOR Rate Option applieswhich become subject to the same Interest Rate Option under the same Loan Request by the Borrower and which have the same Interest Period shallconstitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche. Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or requiredto be closed for business in Pittsburgh, Pennsylvania and if the applicable Business Day relates to any Loan to which the LIBOR Rate Option applies, suchday must also be a day on which dealings are carried on in the London interbank market. Capital Expenditures shall mean expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements,replacements, substitutions or additions thereto which have a useful life of more than one year, including the total principal portion of Capitalized Leases,which, in accordance with GAAP, would be classified as capital expenditures; provided, however, that the term “Capital Expenditures” shall not include(a) expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed with (i) insurance proceeds paidon account of the loss of or damage to the assets being replaced, substituted, restored or repaired or (ii) awards of compensation arising from the taking byeminent domain or condemnation of the assets being replaced, (b) the amount of any credit granted against the purchase price of equipment that is purchasedsimultaneously with the trade in of existing equipment granted by the seller of such equipment for the equipment being traded in at such time,(c) expenditures that are accounted for as capital expenditures by the Borrower or any of its Subsidiaries and that actually are paid for by a Person 3 other than the Borrower or any of its Subsidiaries and for which the Borrower has not or any of its Subsidiaries has not provided or is not required to provideor incur, directly or indirectly, any consideration or obligation to such Person or any other Person (whether before, during or after such period), (d) the bookvalue of any asset owned by the Borrower or any of its Subsidiaries prior to or during such period to the extent that such book value is included as a capitalexpenditure during such period as a result of such Person reusing or beginning to reuse such asset during such period without a corresponding expenditureactually having been made in such period, (e) purchases of replacement property, plant or equipment to the extent financed by asset sales of similar assetspermitted hereunder; and (f) any non-cash compensation or other non-cash costs reflected as additions to property, plant or equipment on the consolidatedbalance sheet of the Borrower and its Subsidiaries. Capitalized Leases shall mean the obligations of any Person to pay rent or any other amounts under any lease of (or other arrangementconveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capitallease obligations on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined inaccordance with GAAP, provided that obligations for payment of rent under operating leases if and to the extent such leases are or would be classified asoperating leases under Financial Accounting Standards Board Accounting Standards Codification 840 as in effect as of the date of this Agreement but arerequired to be reclassified as capital leases as a result of amendments to Financial Accounting Standards Board Accounting Standards Codification 840 madein accordance with those accounting standards proposed in the Proposed Accounting Standards Update exposure draft issued on August 17, 2010 shall notconstitute Capitalized Leases hereunder. Cash Management Agreements shall have the meaning specified in Section 2.5.6 [Swing Loans Under Cash Management Agreements]. Change of Control shall mean (a) 100% of the equity interests of any direct or indirect Subsidiary of Crocs is no longer owned directly orindirectly (on a fully diluted basis) by Crocs (except (i) directors’ qualifying shares for any Foreign Subsidiary as required by law and (ii) pursuant to anytransaction permitted hereunder); (b) (i) any person or group of persons (within the meaning of Section 13(d) or 14(a) of the Securities Exchange Act of 1934,as amended (the “Exchange Act”)) shall have acquired beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the Securities andExchange Commission under the Exchange Act) 20% or more of the voting equity interests of Crocs; or (ii) from and after the date hereof, individuals who onthe date hereof constitute the Board of Directors of Crocs (together with any new directors whose election by such Board of Directors or whose nomination forelection by the shareholders of Crocs was approved by a vote of a majority of the directors then still in office who were either directors on the date hereof orwhose election or nomination for election was previously approved) cease for any reason to constitute a majority of the board of directors of Crocs then inoffice; or (c) any merger, consolidation or sale of substantially all of the property or assets of any Borrower or any direct or indirect Subsidiary of anyBorrower except as permitted by Section 8.2.6. 4 Change in Law shall mean the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of anyLaw, (b) any change in any Law or in the administration, interpretation, implementation or application thereof by any Official Body or (c) the making orissuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Official Body; provided that notwithstanding anythingherein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations ordirectives thereunder or issued in connection therewith (whether or not having the force of Law) and (y) all requests, rules, regulations, guidelines,interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similarauthority) or the United States or foreign regulatory authorities (whether or not having the force of Law), in each case pursuant to Basel III, shall in each casebe deemed to be a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented. Closing Date shall mean the Business Day on which the first Loan shall be made, which shall be December 16, 2011. Code shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successorstatute of similar import, and the rules and regulations thereunder, as from time to time in effect. Collateral shall mean the collateral under the (i) Security Agreement (ii) Pledge Agreement, (iii) Patent, Trademark and Copyright SecurityAgreement, and (iv) any other security agreements entered into among Borrowers and Lenders subsequent to the Closing Date. Commitment shall mean as to any Lender the aggregate of its Revolving Credit Commitment and, in the case of PNC, its Swing LoanCommitment, and Commitments shall mean the aggregate of the Revolving Credit Commitments and Swing Loan Commitment of all of the Lenders. Commitment Fee shall have the meaning specified in Section 2.3 [Commitment Fees]. Compliance Certificate shall have the meaning specified in Section 8.3.3 [Certificate of the Borrower]. Connection Income Taxes shall mean Other Connection Taxes that are imposed on or measured by net income (however denominated) orthat are franchise Taxes or branch profits Taxes. Consolidated EBITDAR shall mean for any period the sum of (i) net income (or loss) of Borrowers on a Consolidated Basis for such period(excluding, in each case to the extent incurred or charged during the applicable period: (v) non-cash charges in respect of bad debt write-downs with respectto receivables due from customers located in China incurred during the period beginning July 1, 2015 and ending September 30, 2015 in an aggregateamount not to exceed $18,900,000, (w) one-time non-cash charges with the consent of Administrative Agent in the aggregate not to exceed $25,000,000 forany trailing twelve month period ending after December 31, 2015, (x) any transaction costs associated with the Preferred Stock Issuance in an 5 amount not to exceed $30,000,000 in the aggregate to the extent paid within 180 days of the closing of the Preferred Stock Issuance, (y) cash and non-cashcharges incurred during the period beginning January 1, 2013 and ending June 30, 2014 in connection with store closings or restructuring, charges forinventory obsolescence, other corporate restructuring activities or contingent liabilities, in an amount not to exceed $25,000,000 in the aggregate or$10,000,000 with respect to cash charges), and (z) cash and non-cash charges incurred during the period beginning July 1, 2014 and ending December 31,2015 in connection with legal settlements, asset impairments, charges associated with ongoing U.S. customs audits, disbursements made to invalid vendors,bad debt write downs and corporate restructuring activities, including, but not limited to, retail restructuring, costs associated with the transition from a directto distribution model in foreign markets, inventory charges and write-offs, global staff reductions and personnel charges, new office locations, chargesassociated with the Borrowers’ SAP software system, charges relating to the exit, sublease and other costs associated with the company plane and othercorporate restructuring activities or contingent liabilities, in an amount not to exceed $100,000,000 in the aggregate or $65,000,000 with respect to cashcharges, plus (ii) all interest expense of Borrowers on a Consolidated Basis for such period, plus (iii) all charges against income of Borrowers on aConsolidated Basis for such period for federal, state and local taxes, plus (iv) depreciation expenses for such period, plus (v) amortization expenses for suchperiod, plus (vi) non-cash share based compensation expenses, plus (vii) Borrowers’ aggregate Rental Expenses for such period.(3) Covered Entity shall mean (a) each Borrower, each Subsidiary of each Borrower, all Guarantors and all pledgors of Collateral and (b) eachPerson that, directly or indirectly, is in control of a Person described in clause (a) above. For purposes of this definition, control of a Person shall mean thedirect or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the electionof directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management andpolicies of such Person whether by ownership of equity interests, contract or otherwise.(4) Daily LIBOR Rate shall mean, for any day, the rate per annum determined by the Administrative Agent by dividing (x) the Published Rateby (y) a number equal to 1.00 minus the LIBOR Reserve Percentage on such day. Defaulting Lender shall mean any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fundany portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swing Loans or (iii) pay over to the Administrative Agent, theIssuing Lender, PNC (as the Swing Loan Lender) or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above,such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender’s good faith determination that a condition precedent tofunding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Borrower or the Administrative Agentin writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement(unless (3) 10 Amendment(4) 5 Amendment 6thth such writing or public statement indicates that such position is based on such Lender’s good faith determination that a condition precedent (specificallyidentified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements inwhich it commits to extend credit, (c) has failed, within two Business Days after request by the Administrative Agent, acting in good faith, to provide acertification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) tofund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement, provided that such Lender shallcease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent’s receipt of such certification in form and substance satisfactory tothe Administrative Agent, (d) has become the subject of a Bankruptcy Event or (e) has failed at any time to comply with the provisions of Section 5.3 withrespect to purchasing participations from the other Lenders, whereby such Lender’s share of any payment received, whether by setoff or otherwise, is in excessof its Ratable Share of such payments due and payable to all of the Lenders. As used in this definition and in Section 2.9 [Defaulting Lenders], the term “Bankruptcy Event” means, with respect to any Person, suchPerson or such Person’s direct or indirect parent company becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator,trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its businessappointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approvalof, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, orthe acquisition of any ownership interest, in such Person or such Person’s direct or indirect parent company by a Official Body or instrumentality thereof if,and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or fromthe enforcement of judgments or writs of attachment on its assets or permit such Person (or such Official Body or instrumentality) to reject, repudiate, disavowor disaffirm any contracts or agreements made by such Person. Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the United States of America. Drawing Date shall have the meaning specified in Section 2.8.3 [Disbursements, Reimbursement]. Environmental Laws shall mean all applicable federal, state, local, tribal, territorial and foreign Laws (including common law),constitutions, statutes, treaties, regulations, rules, ordinances and codes and any consent decrees, settlement agreements, judgments, orders, directives,policies or programs issued by or entered into with an Official Body pertaining or relating to: (i) pollution or pollution control; (ii) protection of humanhealth from exposure to regulated substances; (iii) protection of the environment and/or natural resources; (iv) the presence, use, management, generation,manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling, packaging, sale, transport, storage, collection, distribution, disposalor release or threat of release of regulated substances; (v) the presence of contamination; (vi) the protection of endangered or threatened species; and (vii) theprotection of environmentally sensitive areas. 7 ERISA shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time,and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect. ERISA Affiliate shall mean any trade or business (whether or not incorporated) that, together with the Borrower are treated as a singleemployer under Section 414 of the Code. ERISA Event shall mean (a) a reportable event (under Section 4043 of ERISA and regulations thereunder) with respect to a Pension Plan forwhich the 30-day notice requirement has not been waived; (b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063of 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 assuch a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal, within the meaning of Section 4203 or 4205 of ERISA, by Borroweror any ERISA Affiliate from a Multiemployer Plan or receipt by the Borrower or any ERISA Affiliate of notice from a Mulitemployer Plan that suchMultiemployer Plan is in reorganization (within the meaning of Section 4241 of ERISA); (d) the providing of a notice of intent to terminate, the treatment ofa Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Planor Multiemployer Plan; (e) an event or condition which could reasonably constitute grounds under Section 4042 of ERISA for the termination of, or theappointment 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 forPBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate. Event of Default shall mean any of the events described in Section 9.1 [Events of Default] and referred to therein as an “Event of Default.” Excluded Taxes shall mean any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deductedfrom a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in eachcase, (a) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicablelending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (b) that are Other Connection Taxes, (ii) in the case of aLender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan orCommitment pursuant to a law in effect on the date on which (a) such Lender acquires such interest in such Loan or Commitment (other than pursuant to anassignment request by the Borrower under Section 5.6.2 [Replacement of a Lender]) or (b) such Lender changes its lending office, except in each case to theextent that, pursuant to Section 5.9.7 [Status of Lenders], amounts with respect to such Taxes were payable either to such Lender’s assignor immediatelybefore such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient’sfailure to comply with 5.9.7 [Status of Lenders], and (iv) any U.S. federal withholding Taxes imposed under FATCA. (except to the extent imposed due to thefailure of the Borrower to provide documentation or information to the IRS). 8 Executive Order No. 13224 shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the samehas been, or shall hereafter be, renewed, extended, amended or replaced. Expiration Date shall mean, with respect to the Revolving Credit Commitments, December 16, 2017.(5) FATCA shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that issubstantively comparable and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof. Federal Funds Effective Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and roundedupward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of therates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such FederalReserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to asthe “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate onany day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced. Federal Funds Open Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the dailyfederal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite thecaption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for thepurpose of displaying such rate as selected by the Administrative Agent in its reasonable discretion (for purposes of this definition, an “Alternate Source”)(or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall at anytime, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement ratedetermined by the Administrative Agent at such time in its reasonable discretion (which determination shall be conclusive absent manifest error); providedhowever, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the immediately preceding BusinessDay. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies willchange automatically without notice to the Borrower, effective on the date of any such change. Fixed Charge Coverage Ratio shall mean the ratio of Consolidated EBITDAR to Fixed Charges. Fixed Charges shall mean for any period of determination the sum of cash interest expense, cash income taxes, scheduled principal installments onIndebtedness (as adjusted for (5) 1 Amendment 9st prepayments), Unfunded Capital Expenditures and payments under Capitalized Leases, Rental Expenses and cash dividends and distributions (including taxdistributions) when actually paid, in each case, of the Borrowers on a Consolidated Basis; provided however that to the extent paid in the applicable testingperiod, Fixed Charges shall not include any payments made in connection with a tax settlement with the Canadian tax authorities in an amount not to exceed$10,000,000 in the aggregate.(6) Foreign Lender shall mean (i) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (ii) if the Borrower is not a U.S. Person,a Lender that is resident or organized under the Laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. Foreign Subsidiary of any Person, shall mean any Subsidiary of such Person that is not organized or incorporated in the United States or anyState or territory thereof. GAAP shall mean generally accepted accounting principles as are in effect from time to time, subject to the provisions of Section 1.3[Accounting Principles], and applied on a consistent basis both as to classification of items and amounts. Global Cash means unrestricted cash of the Borrowers on a Consolidated Basis maintained in deposit accounts, as evidenced by theBorrowers’ most recent financial statements, and as confirmed on a Compliance Certificate; provided, however, that Global Cash shall not include cash ofany Foreign Subsidiary that is subject to a Lien securing any Indebtedness of such Foreign Subsidiary.(7) Guarantor shall mean Western Brands Holding Company, a Colorado corporation, Fury, Inc., a Colorado corporation(8), RA Footwear,LLC(9), a Colorado limited liability company and other Person who may hereafter guarantee payment or performance of Obligations. Guaranty of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of anyother Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bondor other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collectionin the ordinary course of business. Guaranty Agreement shall mean the Continuing Agreement of Guaranty and Suretyship, in form and substance satisfactory toAdministrative Agent in its reasonable discretion, executed and delivered by each of the Guarantors. (6) 4 Amendment(7) 6 Amendment(8) 5 Amendment — Fury, Inc. was dissolved.(9) 5 Amendment — consent to dissolution of RA Footwear, LLC within 90 days of September 26, 2014 10 Hedging Obligations of any Person shall mean any and all obligations of such Person under (i) any and all Lender Provided Hedges, (ii) anyand all other hedging transactions permitted by Administrative Agent hereunder (“Other Hedging Transactions”), (iii) any and all cancellations, buy backs,reversals, terminations or assignments of any Lender Provided Hedge or Other Hedging Transaction and (iv) any and all renewals, extensions andmodifications of any Lender Provided Hedge or Other Hedging Transaction and any and all substitutions for any Lender Provided Hedge or Other HedgingTransaction. Indebtedness shall mean, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured,liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (i) borrowed money, (ii) amountsraised under or liabilities in respect of any note purchase or acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under anyletter of credit agreement, (iv) Hedging Obligations (provided that any such amounts are limited to the Net Marked to Market Exposure of such HedgingObligations), (v) any other transaction (including forward sale or purchase agreements, Capitalized Leases and conditional sales agreements) having thecommercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables andaccrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which arenot more than sixty (60) days past their original due date), or (vi) any Guaranty of Indebtedness for borrowed money. Indemnified Taxes shall mean (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account ofany obligation of any Loan Party under any Loan Document, and (ii) to the extent not otherwise described in the preceding clause (i), Other Taxes. Indemnitee shall have the meaning specified in Section 11.4.2 [Indemnification by the Borrower]. Indemnity shall mean the Indemnity Agreement in form and substance satisfactory to Administrative Agent in its Permitted Discretionrelating to possible environmental liabilities associated with any of the owned or leased real property of the Loan Parties or their Subsidiaries. Information shall mean all information received from or on behalf of the Loan Parties or any of their Subsidiaries relating to the LoanParties or any of such Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, anyLender or the Issuing Lender on a non-confidential basis prior to disclosure by or on behalf of the Loan Parties or any of their Subsidiaries. Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before anycourt or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointmentof a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation,dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of 11thththth creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantialportion of its creditors; undertaken under any Law. Intercompany Subordination Agreement shall mean an Intercompany Subordination Agreement among the Loan Parties in form andsubstance satisfactory to Administrative Agent in its reasonable discretion. Interest Period shall mean the period of time selected by the Borrower in connection with (and to apply to) any election permittedhereunder by the Borrower to have Revolving Credit Loans bear interest under the LIBOR Rate Option. Subject to the last sentence of this definition, suchperiod shall be one, two or three Months. Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be (i) theBorrowing Date if the Borrower is requesting new Loans, or (ii) the date of renewal of or conversion to the LIBOR Rate Option if the Borrower is renewing orconverting to the LIBOR Rate Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which wouldotherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the nextcalendar month, in which case such Interest Period shall end on the next preceding Business Day, and (B) the Borrower shall not select, convert to or renew anInterest Period for any portion of the Loans that would end after the Expiration Date. Interest Rate Option shall mean any LIBOR Rate Option or Base Rate Option. IP Transfer Agreement shall mean that certain IP Transfer Agreement attached as Exhibit A to the Seventh Amendment, as amended,amended and restated, supplemented or otherwise modified from time to time upon the consent of Administrative Agent.(10) IRS shall mean the United States Internal Revenue Service. Issuing Lender shall mean PNC and/or Wells Fargo Bank N.A., in their capacities as issuers of Letters of Credit hereunder, and any otherLender that Borrower, Administrative Agent and such other Lender may agree may from time to time issue Letters of Credit hereunder. Joint Venture shall mean a corporation, partnership, limited liability company or other entity in which any Person other than the LoanParties and their Subsidiaries holds, directly or indirectly, an equity interest. Law shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,injunction, writ, decree, bond, judgment, authorization or approval of, lien or award by or settlement agreement with any Official Body. Lender Provided Hedge of any Person shall mean any of the following, in each case provided by any Lender or its Affiliate: (i) anytransaction (including an agreement with respect to any such transaction) now existing or hereafter entered into by such Person that is a (10) 7 Amendment 12th rate swap transaction, swap option, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bondoption, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, currency swap transaction, cross currency rateswap transaction, currency option, spot transaction, credit protection transaction, credit swap, credit default swap, credit default option, total return swap,credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell back transaction, securities lending transaction or any other similartransaction (including any option with respect to any of these transactions) or any combination thereof, whether or not any such transaction is governed by orsubject to any master agreement and (ii) 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 ExchangeMaster Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including anysuch obligations or liabilities under any Master Agreement. Lenders shall mean the financial institutions named on Schedule 1.1(B) and their respective successors and assigns as permitted hereunder,each of which is referred to herein as a Lender. For the purpose of any Loan Document which provides for the granting of a security interest or other Lien tothe Lenders or to the Administrative Agent for the benefit of the Lenders as security for the Obligations, “Lenders” shall include any Affiliate of a Lender towhich such Obligation is owed. Letter of Credit shall have the meaning specified in Section 2.8.1 [Issuance of Letters of Credit]. Letter of Credit Borrowing shall have the meaning specified in Section 2.8.3 [Disbursements, Reimbursement]. Letter of Credit Fee shall have the meaning specified in Section 2.8.2 [Letter of Credit Fees]. Letter of Credit Obligation shall mean, as of any date of determination, the aggregate amount available to be drawn under all outstandingLetters of Credit on such date (if any Letter of Credit shall increase in amount automatically in the future, such aggregate amount available to be drawn shallcurrently give effect to any such future increase) plus the aggregate Reimbursement Obligations and Letter of Credit Borrowings on such date. Letter of Credit Sublimit shall have the meaning specified in Section 2.8.1 [Issuance of Letters of Credit]. Leverage Ratio shall mean, as of any date of determination, the ratio of (A) consolidated Indebtedness of Borrowers and its Subsidiaries onsuch date plus the product of Borrowers’ Rental Expenses for the four (4) most recently ended fiscal quarters (or the four fiscal quarters ending on the date ofdetermination if such date is the last day of a fiscal quarter) multiplied by six (6), to (B) Consolidated EBITDAR of the Borrowers and its Subsidiaries for 13 the four (4) most recently ended fiscal quarters (or the four fiscal quarters ending on the date of determination if such date is the last day of a fiscal quarter).(11) LIBOR Rate shall mean, with respect to the Loans comprising any Borrowing Tranche to which the LIBOR Rate Option applies for anyInterest Period, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, if necessary, to thenearest 1/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays ratesat which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected bythe Administrative Agent which has been approved by the ICE Benchmark Administration Limited(12) as an authorized information vendor for the purposeof displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (for purposes of this definition, an“Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the Londoninterbank offered rate for U.S. Dollars for an amount comparable to such Borrowing Tranche and having a borrowing date and a maturity comparable to suchInterest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, acomparable replacement rate determined by the Administrative Agent, in its reasonable discretion, at such time (which determination shall be conclusiveabsent manifest error)), by (ii) a number equal to 1.00 minus the LIBOR Reserve Percentage. LIBOR may also be expressed by the following formula: LIBOR Rate =London interbank offered rates quoted by Bloomberg or appropriate successor as shown on Bloomberg Page BBAM11.00 - LIBOR Reserve Percentage The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR Rate Option applies that is outstanding on the effectivedate of any change in the LIBOR Reserve Percentage as of such effective date. The Administrative Agent shall give prompt notice to the Borrower of theLIBOR Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error. Notwithstanding theforegoing, if the LIBOR Rate determined as provided above would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.(13) LIBOR Rate Option shall mean the option of the Borrower to have Loans bear interest at the rate and under the terms set forth inSection 4.1.1(ii) [Revolving Credit LIBOR Rate Option]. LIBOR Reserve Percentage shall mean as of any day the maximum percentage in effect on such day, as prescribed by the Board ofGovernors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and (11) 3 Amendment(12) 5 Amendment(13) 6 Amendment 14rdthth emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”). Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of anynature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, depositarrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not alien or other encumbrance is created or exists at the time of the filing). Loan Documents shall mean this Agreement, the Administrative Agent’s Letter, the Guaranty Agreement, the Indemnity, the IntercompanySubordination Agreement, any Mortgage, the Notes, the Patent, Trademark and Copyright Security Agreement, the Pledge Agreement, the SecurityAgreement, any Lender Provided Hedge (including without limitation that certain Master Agreement dated on or around the date hereof by and amongCrocs, Colorado Footwear CV (Netherlands), Crocs Europe BV (Netherlands), Crocs Canada, Crocs Asia PTE — Japan Branch, Crocs Japan GK, CrocsSingapore PTE, Crocs Australia and Administrative Agent) and any other instruments, certificates or documents delivered in connection herewith ortherewith. Loan Parties shall mean the Borrower and the Guarantors. Loan Request shall have the meaning specified in Section 2.4 [Revolving Credit Loan Requests; Swing Loan Requests]. Loans shall mean collectively and Loan shall mean separately all Revolving Credit Loans and Swing Loans or any Revolving Credit Loanor Swing Loan. Material Adverse Change shall mean a material adverse change in (a) the financial condition, results of operations, assets, business orproperties of the Loan Parties taken as a whole, (b) any Borrower’s ability to duly and punctually pay or perform the Obligations in accordance with the termsthereof, (c) the value of the Collateral taken as a whole, or Administrative Agent’s Liens on a material portion of the Collateral or the priority of any suchLien or (d) the practical realization of the benefits of Administrative Agent’s and each Lender’s rights and remedies taken as a whole under this Agreementand the Loan Documents. Month, with respect to an Interest Period under the LIBOR Rate Option, shall mean the interval between the days in consecutive calendarmonths numerically corresponding to the first day of such Interest Period. If any LIBOR Rate Interest Period begins on a day of a calendar month for whichthere is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to endon the last Business Day of such final month. Multiemployer Plan shall mean any employee benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) ofERISA and to which the Borrower or any ERISA Affiliate is making or has an obligation to make contributions or, within the preceding five (5) Plan years,has made or had an obligation to make such contributions. 15 “Net Mark to Market Exposure” of any Person shall mean, as of any date of determination with respect to any Hedging Obligation, theexcess (if any) of all unrealized losses over all unrealized profits of such Person arising from such Hedging Obligation. “Unrealized losses” shall mean thefair market value of the cost to such Person of replacing the Lender Provided Hedge or Other Hedging Transaction giving rise to such Hedging Obligation asof the date of determination (assuming the Lender Provided Hedge or Other Hedging Transaction were to be terminated as of that date), and “unrealizedprofits” means the fair market value of the gain to such Person of replacing such Lender Provided Hedge or Other Hedging Transaction as of the date ofdetermination (assuming such Lender Provided Hedge or Other Hedging Transaction were to be terminated as of that date). Non-Consenting Lender shall have the meaning specified in Section 11.2 [Modifications, Amendments or Waivers]. Notes shall mean, collectively, the promissory notes in the form of Exhibit 1.1(N)(1) evidencing the Revolving Credit Loans and in theform of Exhibit 1.1(N)(2) evidencing the Swing Loan. Obligation shall mean any obligation or liability of any of the Loan Parties, howsoever created, arising or evidenced, whether direct orindirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with (i) this Agreement, the Notes, the Letters ofCredit, the Administrative Agent’s Letter or any other Loan Document whether to the Administrative Agent, any of the Lenders or their Affiliates or otherpersons provided for under such Loan Documents, (ii) any Lender Provided Hedge and (iii) any Other Lender Provided Financial Service Product. Official Body shall mean the government of the United States of America 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 EuropeanUnion or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including,without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or anysuccessor or similar authority to any of the foregoing). Other Connection Taxes shall mean, with respect to any Recipient, Taxes imposed as a result of such Recipient conducting or havingconducted a sufficient level of ongoing business or income-generating activity in the jurisdiction imposing such Tax to subject it to tax generally on theincome or privilege of doing business or unretained earnings associated with such activity (but, without broadening the scope of the foregoing, not includingany Tax imposed as a result of such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under,received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Documents, or sold or assigned an interestin any Loan or Loan Document). 16 Other Lender Provided Financial Service Product shall mean agreements or other arrangements under which any Lender or Affiliate of aLender provides any of the following products or services to any of the Loan Parties: (a) credit cards, (b) credit card processing services, (c) debit cards,(d) purchase cards, (e) ACH transactions, (f) cash management, including controlled disbursement, accounts or services, or (g) foreign currency exchange. Other Taxes shall mean all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from anypayment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, orotherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than anassignment made pursuant to Section 5.6.2 [Replacement of a Lender]). Panama IP shall mean the intellectual property listed on Schedule A to the Seventh Amendment.(14) Participant has the meaning specified in Section 11.9.4 [Participations]. Participant Register shall have the meaning specified in Section 11.9.4 [Participations]. Participation Advance shall have the meaning specified in Section 2.8.3 [Disbursements, Reimbursement]. Patent, Trademark and Copyright Security Agreement shall mean the Patent, Trademark and Copyright Security Agreement, in form andsubstance satisfactory to Administrative Agent in its reasonable discretion, executed and delivered by each of the Loan Parties to the Administrative Agentfor the benefit of the Lenders. Payment Date shall mean the first day of each calendar month after the date hereof and on the Expiration Date or upon acceleration of theNotes. Payment In Full shall mean the payment in full in cash of the Loans and other Obligations hereunder, termination of the Commitments andexpiration or termination of all Letters of Credit (other than in respect of (i) indemnity obligations which survive the termination of this Agreement and theother Loan Documents for which no claim or assertion has been made in writing by Administrative Agent or Lenders), and (ii) Letters of Credit, LenderProvided Hedges or Other Lender Provided Financial Services Products for which cash collateralization has been provided to Administrative Agent or IssuingLender in an amount reasonably acceptable to Administrative Agent or such Issuing Lender. PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor. Pension Plan shall mean any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than aMultiemployer Plan, that is subject to Title IV of (14) 7 Amendment 17th ERISA or is subject to the minimum funding standards under Section 412 of the Code and is sponsored or maintained by Borrower or any ERISA Affiliate orto which Borrower or any ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple employer or other plan described inSection 4064(a) of ERISA, has been obligated to make contributions at any time during the immediately preceding five plan years. Percent Rent shall mean such portion of rent paid by any Borrower for any leased real property that is determined by reference to, and iscomprised of a portion of, the revenue for such leased property.(15) Permitted Acquisitions shall mean acquisitions of the assets or equity of another Person so long as: (a) after giving effect to suchAcquisition, Borrowers have Availability of not less than $25,000,000(16); (b) the Total Costs (as defined below) of all such acquisitions do not exceed$50,000,000 for any single acquisition or $100,000,000 in any fiscal year. “Total Costs” shall mean cash or equity consideration plus the value of any otherstock or assets transferred, plus assumed Indebtedness less cash acquired plus all earn out payments, all deferred payments and direct transaction related costs;(17) (c) with respect to the acquisition of equity, (i) such acquired company shall be added as a Borrower to this Agreement and be jointly and severally liablefor all Obligations, and (ii) Administrative Agent shall be granted a first priority lien in all assets of such acquired company; (d) the acquired company orproperty is used or useful in the same or a similar line of business as the Borrowers were engaged in on the Closing Date (or any reasonable extensions orexpansions thereof); (e) Administrative Agent shall have received a first-priority security interest in all acquired assets or equity, subject to documentationsatisfactory to Administrative Agent; (f) the board of directors (or other comparable governing body) of such company shall have duly approved thetransaction; (g) the Borrowers shall have delivered to Agent (i) a pro forma balance sheet and pro forma financial statements and a Compliance Certificatedemonstrating that upon giving effect to such acquisition, Borrower is in compliance, on a Pro Forma Basis, with the financial covenants set forth inSection 8.2.14 [Minimum Fixed Charge Coverage Ratio] and 8.2.15 [Maximum Leverage Ratio] and 8.2.16 [Global Cash] as of the most recent fiscal quarterend and (ii) audited (to the extent audited exist) financial statements of the acquired entity for the two most recent fiscal years then ended, in form andsubstance reasonably acceptable to Administrative Agent, audited in accordance with GAAP(18); (h) if such acquisition includes general partnership interestsor any other equity interests that do not have a corporate (or similar) limitation on liability of the owners thereof, then such acquisition shall be effected byhaving such equity interests acquired by a corporate or other limited liability entity holding company directly or indirectly wholly-owned by a Borrower andnewly formed for the sole purpose of effecting such acquisition; and (i) no Potential Default or Event of Default shall have occurred or will occur after givingpro forma effect to such acquisition. Permitted Discretion shall mean a determination made in good faith and in the exercise of commercially reasonable (from the perspective ofa secured senior lender) business judgment. (15) 2 Amendment(16) 2 Amendment(17) 1 Amendment(18) 2 Amendment 18ndndstnd Permitted Foreign Investments shall mean (i) obligations issued or guaranteed by the United States of America or any agency thereof or any foreign country in which a ForeignSubsidiary is conducting business; (ii) commercial paper with maturities of not more than one hundred eighty (180) days and a published rating of not less than A-1 byStandard & Poor’s, P-1 by Moody’s Investors Service, Inc. (or the equivalent rating) or a combined rating of A-1/P-2 or A-2/P-1; (iii) certificates of time deposit and bankers’ acceptances having maturities of not more than one hundred eighty (180) days andrepurchase agreements backed by United States government securities of a commercial bank in the United States of America or in any foreign country inwhich a Foreign Subsidiary is conducting business if (i) such bank has a combined capital and surplus of at least $500,000,000, or (ii) its debt obligations, orthose of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally recognized investment ratingagency; (iv) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agencythereof or any foreign country in which a Foreign Subsidiary is conducting business; (v) investments made under the Cash Management Agreements; (vi) investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers, customers andother Persons and in settlement of delinquent obligations of, and other disputes with, customers, suppliers and other Persons arising in the ordinary course ofbusiness; (vii) investments (including debt obligations) received in connection with dispositions permitted pursuant to this Agreement; (viii) investments pursuant to Lender Provided Hedges; (ix) deposits made in the ordinary course of business to secure the performance of leases or other contractual arrangements; (x) to the extent constituting an investment, Capital Expenditures not prohibited by this Agreement; (xi) investments in deposit and securities accounts opened in the ordinary course of business and in compliance with the terms of theLoan Documents; (xii) unsecured repurchase agreements with a term of not more than thirty (30) days for securities described in clause (i) and (ii) aboveand entered into with a financial institution satisfying the criteria described in clause (iii) above; and (xiv) advances in the form of prepayment of expenses to a vendor, supplier or trade creditor in the ordinary course of business. 19 Permitted Investments shall mean: (i) obligations issued or guaranteed by the United States of America or any agency thereof; (ii) commercial paper with maturities of not more than one hundred eighty (180) days and a published rating of not less than A-1 byStandard & Poor’s, P-1 by Moody’s Investors Service, Inc. (or the equivalent rating) or a combined rating of A-1/P-2 or A-2/P-1. (iii) certificates of time deposit and bankers’ acceptances having maturities of not more than one hundred eighty (180) days andrepurchase agreements backed by United States government securities of a commercial bank if (i) such bank has a combined capital and surplus of at least$500,000,000, or (ii) its debt obligations, or those of a holding company of which it is a Subsidiary, are rated not less than A (or the equivalent rating) by anationally recognized investment rating agency; (iv) U.S. money market funds that invest solely in obligations issued or guaranteed by the United States of America or an agencythereof; (v) investments made under the Cash Management Agreements; (vi) investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers, customers andother Persons and in settlement of delinquent obligations of, and other disputes with, customers, suppliers and other Persons arising in the ordinary course ofbusiness; (vii) investments (including debt obligations) received in connection with dispositions permitted pursuant to this Agreement; (viii) investments pursuant to Lender Provided Hedges; (ix) deposits made in the ordinary course of business to secure the performance of leases or other contractual arrangements; (x) to the extent constituting an investment, Capital Expenditures not prohibited by this Agreement; (xi) investments in deposit and securities accounts opened in the ordinary course of business and in compliance with the terms of theLoan Documents; (xii) unsecured repurchase agreements with a term of not more than thirty (30) days for securities described in clause (i) and (ii) aboveand entered into with a financial institution satisfying the criteria described in clause (iii) above; and (xiii) advances in the form of prepayment of expenses to a vendor, supplier or trade creditor in the ordinary course of business. Permitted Liens shall mean: 20 (i) Liens in favor of Administrative Agent for the benefit of Administrative Agent or Lenders and Liens in favor of any Lender grantedto secure reimbursement obligations owing to such Lender in connection with the issuance of a letter of credit by such Lender in accordance with thisAgreement;(19) (ii) Liens for taxes, assessments or other governmental charges not delinquent or being Properly Contested; (iii) deposits or pledges to secure obligations under worker’s compensation, social security or similar laws, or under unemploymentinsurance; (iv) deposits or pledges to secure bids, tenders, contracts (other than contracts for the payment of money), leases, statutory obligations,surety and appeal bonds, performance bonds and other obligations of like nature arising in the ordinary course of business; (v) judgment Liens in respect of judgments that do not constitute an Event of Default under Section 9.1.6 [Final Judgments or Orders]; (vi) carriers’, warehousemen’s, mechanics’, workers’, materialmen’s or other like Liens arising in the ordinary course of business withrespect to obligations which are not due or which are being Properly Contested; (vii) Liens on property leased by any Loan Party or Subsidiary of a Loan Party under Capitalized Leases and operating leases permittedin Section 8.2.13 [Capital Expenditures and Leases] securing obligations of such Loan Party or Subsidiary to the lessor under such leases; (viii) any Lien existing on the date of this Agreement and described on Schedule 1.1(P), provided that the principal amount securedthereby is not hereafter increased, and no additional assets become subject to such Lien; (ix) Purchase Money Security Interests and Capitalized Leases; provided that the aggregate amount of loans and deferred paymentssecured by such Purchase Money Security Interests and Capitalized Leases shall not exceed $60,000,000 in the aggregate (excluding for the purpose of thiscomputation any loans or deferred payments secured by Liens described on Schedule 1.1(P)); (x) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinarycourse of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interferewith the ordinary conduct of business; (xi) any interest or title of lessor under any operating lease; (19) 1 Amendment 21st (xii) normal and customary rights of setoff upon deposits of cash in favor of banks and other depository institutions and Liens of acollecting bank arising under the Uniform Commercial Code on checks in the course of collection; (xiii) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personalproperty entered into in the ordinary course of business; (xiv) Liens pursuant to leases and subleases of real property which do not interfere with the ordinary course of business, which are madeon customary and usual terms applicable to similar properties and which are subordinated to Agent’s Liens in a manner reasonably satisfactory to Agent; (xv) any interest or title of a lessor or sublessor, licensor or sublicensor under any lease or license not prohibited by this Agreement; (xvi) Liens with respect to the cash collateralization of Lender Provided Hedges or Other Lender Provided Financial Service Products;and (xvii) first-priority Liens on assets (other than intellectual property) of a Foreign Subsidiary that is not a Loan Party to the extent suchLiens only secure Indebtedness of such Foreign Subsidiary that is permitted under Section 8.2.1(xvi).(20) Permitted Refinancing shall mean, with respect to any Person, any Indebtedness issued in exchange for, or the net proceeds of which areused to extend, refinance, renew, replace, defease or refund (collectively, to “Refinance”), the Indebtedness being Refinanced (or previous refinancingsthereof constituting a Permitted Refinancing); provided, that (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing doesnot exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premiums thereon andunderwriting discounts, defeasance costs, fees, commissions and expenses), (b) the weighted average life to maturity of such Permitted Refinancing is greaterthan or equal to the weighted average life to maturity of the Indebtedness being Refinanced, (c) such Permitted Refinancing shall not require any scheduledprincipal payments due prior to the Expiration Date in excess of, or prior to, the scheduled principal payments due prior to Expiration Date for theIndebtedness being Refinanced, and (d) such Permitted Refinancing shall be otherwise on terms not materially less favorable to the Borrower than thosecontained in the documentation governing the Indebtedness being Refinanced, including, without limitation, with respect to financial and other covenantsand events of default. Person shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust,unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity. Plan shall mean an employee benefit plan, as defined in Section 3(3) of ERISA, (including a (i) a Pension Plan, (ii) a Multiemployer Plan, or(iii) a Welfare Plan, as defined in (20) 6 Amendment 22th Section 3(1) of ERISA) which provides self insured benefits) which is maintained by the Borrower or any ERISA Affiliate or has at any time within thepreceding (5) years been maintained, or to which there has been an obligation to contribute, by any entity which was at the time an ERISA Affiliate. Pledge Agreement shall mean the Pledge Agreement, in form and substance satisfactory to Administrative Agent in its reasonablediscretion, executed and delivered by the applicable Loan Parties to the Administrative Agent for the benefit of the Lenders. PNC shall mean PNC Bank, National Association, its successors and assigns. Potential Default shall mean any event or condition which with notice or passage of time, or both, would constitute an Event of Default. Preferred Stock Issuance shall mean the issuance by Crocs of preferred equity interests in an amount not to exceed $200,000,000 during thefiscal quarter ending December 31, 2013 or ending March 31, 2014.(21) Prime Rate shall mean the interest rate per annum announced from time to time by the Administrative Agent at its Principal Office as itsthen prime rate, which rate may not be the lowest or most favorable rate then being charged commercial borrowers or others by the Administrative Agent. Any change in the Prime Rate shall take effect at the opening of business on the day such change is announced. Principal Office shall mean the main banking office of the Administrative Agent in Pittsburgh, Pennsylvania. Prior Security Interest shall mean a valid and enforceable perfected first-priority security interest under the Uniform Commercial Code inthe Collateral which is subject only to statutory Liens for taxes not yet due and payable or Purchase Money Security Interests. Pro Forma Basis shall mean, with respect to any Specified Transaction, that Borrower is in compliance on a pro forma basis with theapplicable covenant, ratio, calculation or requirement herein calculated as if such Specified Transaction and the related adjustments set forth below hadoccurred on the first day of the four fiscal quarter period most recently ended for which financial statements have been delivered pursuant to Section 8.3.1[Quarterly Financial Statements]. The following related adjustments shall be calculated as follows, each as evidenced by a quality of earnings reportreasonably satisfactory to Agent: (i) income statement items (whether positive or negative) attributable to the applicable property or Person the subject of anacquisition, sale, transfer or other disposition of all or substantially all of the capital stock in any Subsidiary or any division or product line of the Borroweror any Subsidiary, shall be included, (ii) any retirement, incurrence or assumption of any Indebtedness by Borrower or any Subsidiary in connection with aSpecified Transaction shall be deemed to have borne interest (a) in the case of fixed rate Indebtedness, at the rate applicable thereto, or (b) in the case offloating rate Indebtedness, at the rates which were or would have been applicable thereto during the period when such Indebtedness was or was deemed to beoutstanding; and provided that, Consolidated (21) 3 Amendment 23rd EBTIDAR may be further adjusted without duplication of any adjustments to Consolidated EBITDAR by, without duplication, (x) any credit for acquisition-related costs and savings to the extent expressly required or permitted to be reflected in Borrower’s financial statements pursuant to Article 11 of RegulationS-X under the Securities Act of 1933, as amended, and (y) actions taken by the Borrower or any of its Subsidiaries prior to or during such period for thepurpose of realizing reasonably identifiable and factually supportable cost savings, in each case under this clause (y) calculated by the Borrower, asevidenced by a quality of earnings reports reasonably satisfactory to Agent. Properly Contested shall mean, in the case of any Indebtedness or Lien, as applicable, of any Person (including any taxes) that is not paid asand when due or payable by reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) suchIndebtedness or Lien, as applicable, is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted;(ii) such Person has established appropriate reserves as shall be required in conformity with GAAP; (iii) the non-payment of such Indebtedness will not resultin a Material Adverse Change and will not result in the forfeiture of any assets of such Person; (iv) no Lien is imposed upon any of such Person’s assets withrespect to such Indebtedness unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Administrative Agent (except onlywith respect to property taxes that have priority as a matter of applicable state law) and enforcement of such Lien is stayed during the period prior to the finalresolution or disposition of such dispute; (v) if such Indebtedness or Lien, as applicable, results from, or is determined by the entry, rendition or issuanceagainst a Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appealor other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such Person forthwith payssuch Indebtedness and all penalties, interest and other amounts due in connection therewith. Published Rate shall mean the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under thecaption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be therate at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market for a one month period as published in anotherpublication selected by the Administrative Agent in its reasonable discretion). Purchase Money Security Interest shall mean Liens upon tangible personal property securing loans to any Loan Party or Subsidiary of aLoan Party or deferred payments by such Loan Party or Subsidiary for the purchase of such tangible personal property. Ratable Share shall mean the proportion that a Lender’s Commitment (excluding the Swing Loan Commitment) bears to the Commitments(excluding the Swing Loan Commitment) of all of the Lenders, provided that in the case of Section 2.9 [Defaulting Lenders] when a Defaulting Lender shallexist, “Ratable Share” shall mean the percentage of the aggregate Commitments (disregarding any Defaulting Lender’s Commitment) represented by suchLender’s Commitment. If the Commitments have terminated or expired, the Ratable Share shall be determined based upon the Commitments (excluding theSwing Loan Commitment) most recently in effect, giving effect to any assignments. 24 Recipient shall mean (i) the Administrative Agent, (ii) any Lender and (iii) the Issuing Lender, as applicable. Reimbursement Obligation shall have the meaning specified in Section 2.8.3 [Disbursements, Reimbursement]. Related Parties shall mean, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents andadvisors of such Person and of such Person’s Affiliates. Relief Proceeding shall mean any proceeding seeking a decree or order for relief in respect of any Loan Party or Subsidiary of a Loan Partyin a voluntary or involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for theappointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or Subsidiary of a LoanParty for any substantial part of its property, or for the winding-up or liquidation of its affairs, or an assignment for the benefit of its creditors. Rental Expenses shall mean rental expenses for all leased real property (excluding Percent Rent).(22) Reportable Compliance Event shall mean that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminalcomplaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual or probableviolation of any Anti-Terrorism Law.(23) Required Lenders shall mean(24) (A) If there exists fewer than three (3) Lenders, all Lenders (other than any Defaulting Lender), and (B) If there exists three (3) or more Lenders, Lenders (other than any Defaulting Lender) having more than fifty percent (50%) of theaggregate amount of the Revolving Credit Commitments of the Lenders (excluding any Defaulting Lender) or, after the termination of the Revolving CreditCommitments, the outstanding Revolving Credit Loans and Ratable Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting Lender);provided however that if there are three (3) or more Lenders, at least two (2) Lenders will be required to constitute Required Lenders. (C) For purposes of determining Required Lenders hereunder, PNC and any Affiliate of PNC that holds a Revolving CreditCommitment shall be deemed to be one (1) Lender. (22) 2 Amendment(23) 5 Amendment(24) 9 Amendment 25ndthth Required Share shall have the meaning assigned to such term in Section 5.11 [Settlement Date Procedures]. Revolver Availability shall mean, as of any date of determination, the difference between the Revolving Facility Usage as of such date ofdetermination and the aggregate Revolving Credit Commitments as of such date of determination.(25) Revolving Credit Commitment shall mean, as to any Lender at any time, the amount initially set forth opposite its name on Schedule1.1(B) in the column labeled “Amount of Commitment for Revolving Credit Loans,” as such Commitment is thereafter assigned or modified and RevolvingCredit Commitments shall mean the aggregate Revolving Credit Commitments of all of the Lenders. Revolving Credit Loans shall mean collectively and Revolving Credit Loan shall mean separately all Revolving Credit Loans or anyRevolving Credit Loan made by the Lenders or one of the Lenders to the Borrower pursuant to Section 2.1 [Revolving Credit Commitments] or 2.8.3[Disbursements, Reimbursement]. Revolving Facility Usage shall mean at any time the sum of the outstanding Revolving Credit Loans, the outstanding Swing Loans, and theLetter of Credit Obligations. Sanctioned Country shall mean a country that is the subject of, or a target of, a sanctions program maintained under any Anti-TerrorismLaw.(26) Sanctioned Person shall mean any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated,prohibited, sanctioned or debarred person, group, regime, entity or thing, the subject of, or target of, any limitations or prohibitions (including but not limitedto the blocking of property or rejection of transactions), under any Anti-Terrorism Law.(27) Security Agreement shall mean the Security Agreement, in form and substance satisfactory to Administrative Agent in its reasonablediscretion, executed and delivered by each of the Loan Parties to the Administrative Agent for the benefit of the Lenders. Settlement Date shall mean the Business Day on which the Administrative Agent elects to effect settlement pursuant Section 5.11[Settlement Date Procedures]. Seventh Amendment shall mean that certain Seventh Amendment to Amended and Restated Credit Agreement dated as of April 21, 2015by and among Borrowers, the Lenders party thereto, and Administrative Agent.(28) Solvent shall mean, with respect to any Person on any date of determination, taking into account such right of reimbursement, contributionor similar right available to such (25) 6 Amendment(26) 5 Amendment(27) 5 Amendment(28) 7 Amendment 26thththth Person from other Persons, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including, withoutlimitation, contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will berequired to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person is able to realize upon its assets andpay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (iv) such Person does notintend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature, and (v) suchPerson is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constituteunreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the factsand circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. Specified Transaction shall mean, with respect to any period, any Permitted Acquisition, disposition of assets, or incurrence or repayment ofIndebtedness, consummated by the Borrower or any of its Subsidiaries during such period (or the effects of which have occurred or are implemented duringsuch period) or other event that by the terms of this Agreement requires “pro forma compliance” with a test or covenant hereunder or requires such test orcovenant to be calculated on a “Pro Forma Basis”. Standard & Poor’s shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. Statements shall have the meaning specified in Section 6.1.6(i) [Historical Statements]. Subsidiary of any Person at any time shall mean any corporation, trust, partnership, any limited liability company or other business entity(i) of which more than 50% of the outstanding voting securities or other interests normally entitled to vote for the election of one or more directors or trustees(regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one ormore of such Person’s Subsidiaries, or (ii) which is controlled or capable of being controlled by such Person or one or more of such Person’s Subsidiaries. Subsidiary Equity Interests shall have the meaning specified in Section 6.1.2 [Subsidiaries and Owners; Investment Companies]. Swing Loan Commitment shall mean PNC’s commitment to make Swing Loans to the Borrower pursuant to Section 2.1.2 [Swing LoanCommitment] hereof in an aggregate principal amount up to $5,000,000. Swing Loan Note shall mean the Swing Loan Note of the Borrower in the form of Exhibit 1.1(N)(2) evidencing the Swing Loans, togetherwith all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part. 27 Swing Loan Request shall mean a request for Swing Loans made in accordance with Section 2.4.2 [Swing Loan Requests] hereof. Swing Loans shall mean collectively and Swing Loan shall mean separately all Swing Loans or any Swing Loan made by PNC to theBorrower pursuant to Section 2.1.2 [Swing Loan Commitment] hereof. Taxes shall mean all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments,fees or other charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto. Third Amendment Date shall mean December 27, 2013.(29) Unfunded Capital Expenditures shall mean, as to any Borrower, without duplication, a Capital Expenditure funded (a) from suchBorrower’s internally generated cash flow or (b) with the proceeds of a Revolving Credit Loan or a Swing Loan.(30) USA Patriot Act shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and ObstructTerrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced. U.S. Person shall mean any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code. U.S. Tax Compliance Certificate shall have the meaning specified in Section 5.9.7 [Status of Lenders]. Withholding Agent shall mean any Loan Party and the Administrative Agent. 1.2 Construction. Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to thisAgreement and each of the other Loan Documents: (i) references to the plural include the singular, the plural, the part and the whole and the words “include,”“includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (ii) the words “hereof,” “herein,” “hereunder,” “hereto” andsimilar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole; (iii) article, section, subsection,clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to anyPerson includes such Person’s successors and assigns; (v) reference to any agreement, including this Agreement and any other Loan Document together withthe schedules and exhibits hereto or thereto, document or instrument means such agreement, document or instrument as amended, modified, replaced,substituted for, superseded or restated; (vi) relative to the determination of any period of time, “from” means “from and including,” “to” means “to butexcluding,” and “through” means “through and including”; (vii) the words “asset” and “property” shall be construed to have the same meaning and effectand to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract (29) 3 Amendment(30) 4 Amendment 28rdth rights, (viii) section headings herein and in each other Loan Document are included for convenience and shall not affect the interpretation of this Agreementor such Loan Document, and (ix) unless otherwise specified, all references herein to times of day shall be references to Eastern Time. 1.3 Accounting Principles; Changes in GAAP. Except as otherwise provided in this Agreement, all computations and determinations as toaccounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP(including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP;provided, however, that all accounting terms used in Section 8.2 [Negative Covenants] (and all defined terms used in the definition of any accounting termused in Section 8.2 shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistentwith those used in preparing the Statements referred to in Section 6.1.6(i) [Historical Statements]). Notwithstanding the foregoing, if the Borrower notifies theAdministrative Agent in writing that the Borrower wishes to amend any financial covenant in Section 8.2 of this Agreement, any related definition and/or thedefinition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any changein GAAP occurring after the Closing Date on the operation of such financial covenants and/or interest, Letter of Credit Fee or Commitment Feedeterminations (or if the Administrative Agent notifies the Borrower in writing that the Required Lenders wish to amend any financial covenant inSection 8.2, any related definition and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Feedeterminations to eliminate the effect of any such change in GAAP), then the Administrative Agent, the Lenders and the Borrower shall negotiate in goodfaith to amend such ratios or requirements to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the RequiredLenders); provided that, until so amended, the Loan Parties’ compliance with such covenants and/or the definition of the term Leverage Ratio for purposes ofinterest, Letter of Credit Fee and Commitment Fee determinations shall be determined on the basis of GAAP in effect immediately before the relevant changein GAAP became effective, until either such notice is withdrawn or such covenants or definitions are amended in a manner satisfactory to the Borrower andthe Required Lenders, and the Loan Parties shall provide to the Administrative Agent, when they delivers their financial statements pursuant to Section 8.3.1[Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements] of this Agreement, such reconciliation statements as shall be reasonably requestedby the Administrative Agent; provided further that the Borrower shall not be obligated to pay an amendment fee (excluding costs and expenses andreasonable attorneys’ fees) in connection with such amendment and the pricing of the Loans shall not be increased in connection with such amendment. Nodelay by the Borrower, the Administrative Agent or the Required Lenders in requiring such an amendment shall limit such Person’s rights to require such anamendment at any time after such a change in accounting principles. 29 2. REVOLVING CREDIT AND SWING LOAN FACILITIES 2.1 Revolving Credit Commitments. 2.1.1 Revolving Credit Loans. Subject to the terms and conditions hereof and relying upon the representations and warranties hereinset forth, each Lender severally agrees to make Revolving Credit Loans to the Borrower at any time or from time to time on or after the date hereof to theExpiration Date; provided that after giving effect to each such Loan (i) the aggregate amount of Revolving Credit Loans from such Lender shall not exceedsuch Lender’s Revolving Credit Commitment minus such Lender’s Ratable Share of the Letter of Credit Obligations and (ii) the Revolving Facility Usageshall not exceed the Revolving Credit Commitments. Within such limits of time and amount and subject to the other provisions of this Agreement, theBorrower may borrow, repay and reborrow pursuant to this Section 2.1. 2.1.2 Swing Loan Commitment. Subject to the terms and conditions hereof and relying upon the representations and warranties hereinset forth, and in order to facilitate loans and repayments between Settlement Dates, PNC may, at its option, cancelable at any time for any reason whatsoever,make swing loans (the “Swing Loans”) to the Borrower at any time or from time to time after the date hereof to the Expiration Date, in an aggregate principalamount up to but not in excess of the Swing Loan Commitment, provided that after giving effect to such Loan, the Revolving Facility Usage shall not exceedthe Revolving Credit Commitments. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrower may borrow,repay and reborrow pursuant to this Section 2.1.2. 2.2 Nature of Lenders’ Obligations with Respect to Revolving Credit Loans. Each Lender shall be obligated to participate in each request forRevolving Credit Loans pursuant to Section 2.4 [Revolving Credit Loan Requests; Swing Loan Requests] in accordance with its Ratable Share. Theaggregate of each Lender’s Revolving Credit Loans outstanding hereunder to the Borrower at any time shall never exceed its Revolving Credit Commitmentminus its Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations. The obligations of each Lender hereunder are several. The failureof any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrower to any other party nor shall any other party be liable forthe failure of such Lender to perform its obligations hereunder. The Lenders shall have no obligation to make Revolving Credit Loans hereunder on or afterthe Expiration Date. 2.3 Commitment Fees. Accruing from the date hereof until the Expiration Date, the Borrower agrees to pay to the Administrative Agent for theaccount of each Lender according to its Ratable Share, a nonrefundable commitment fee (the “Commitment Fee”) equal to the Applicable Commitment FeeRate (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) multiplied by the average daily difference between theamount of (i) the Revolving Credit Commitments (for purposes of this computation, PNC’s Swing Loans shall be deemed to be borrowed amounts under itsRevolving Credit Commitment) and (ii) the Revolving Facility Usage; provided, however, that any Commitment Fee accrued with respect to the RevolvingCredit Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not bepayable by the Borrower so long as such Lender shall be a Defaulting Lender except to the 30 extent that such Commitment Fee shall otherwise have been due and payable by the Borrower prior to such time; and provided further that no CommitmentFee shall accrue with respect to the Revolving Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. Subject to theproviso in the directly preceding sentence, all Commitment Fees shall be payable in arrears on the first day of each calendar quarter with respect to theprevious calendar quarter. 2.4 Revolving Credit Loan Requests; Swing Loan Requests. 2.4.1 Revolving Credit Loan Requests. Except as otherwise provided herein, the Borrower may from time to time prior to theExpiration Date request the Lenders to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving CreditLoans pursuant to Section 4.2 [Interest Periods], by delivering to the Administrative Agent, not later than 1:00 p.m., (i) three (3) Business Days prior to theproposed Borrowing Date with respect to the making of Revolving Credit Loans to which the LIBOR Rate Option applies or the conversion to or the renewalof the LIBOR Rate Option for any Loans; and (ii) the same Business Day of the proposed Borrowing Date with respect to the making of a Revolving CreditLoan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for anyLoan, of a duly completed request therefor substantially in the form of Exhibit 2.4.1 or a request by telephone promptly confirmed in writing by letter,facsimile or telex in such form (each, a “Loan Request”), it being understood that the Administrative Agent may rely on the authority of any individualmaking such a telephonic request without the necessity of receipt of such written confirmation. Each Loan Request shall be irrevocable and shall specify theaggregate amount of the proposed Loans comprising each Borrowing Tranche, and, if applicable, the Interest Period, which amounts shall be in (x) integralmultiples of $500,000 and not less than $1,000,000 for each Borrowing Tranche under the LIBOR Rate Option, and (y) integral multiples of $500,000 andnot less than $500,000 for each Borrowing Tranche under the Base Rate Option. 2.4.2 Swing Loan Requests. Except as otherwise provided herein, the Borrower may from time to time prior to the Expiration Daterequest PNC to make Swing Loans by delivery to PNC not later than 1:00 p.m. on the proposed Borrowing Date of a duly completed request thereforsubstantially in the form of Exhibit 2.4.2 hereto or a request by telephone promptly confirmed in writing by letter, facsimile or telex (each, a “Swing LoanRequest”), it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without thenecessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify the proposed Borrowing Date and theprincipal amount of such Swing Loan, which shall be not less than $1,000,000. 2.5 Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative Agent; Repayment of Revolving Credit Loans;Borrowings to Repay Swing Loans. 2.5.1 Making Revolving Credit Loans. The Administrative Agent shall, promptly after receipt by it of a Loan Request pursuant toSection 2.4 [Revolving Credit Loan Requests; Swing Loan Requests], notify the Lenders of its receipt of such Loan Request specifying the informationprovided by the Borrower and the apportionment among the Lenders 31 of the requested Revolving Credit Loans as determined by the Administrative Agent in accordance with Section 2.2 [Nature of Lenders’ Obligations withRespect to Revolving Credit Loans]. Each Lender shall remit the principal amount of each Revolving Credit Loan to the Administrative Agent such that theAdministrative Agent is able to, and the Administrative Agent shall, to the extent the Lenders have made funds available to it for such purpose and subject toSection 7.2 [Each Loan or Letter of Credit], fund such Revolving Credit Loans to the Borrower in U.S. Dollars and immediately available funds at thePrincipal Office prior to 2:00 p.m., on the applicable Borrowing Date; provided that if any Lender fails to remit such funds to the Administrative Agent in atimely manner, the Administrative Agent may elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Lender on suchBorrowing Date, and such Lender shall be subject to the repayment obligation in Section 2.5.2 [Presumptions by the Administrative Agent]. 2.5.2 Presumptions by the Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior tothe proposed date of any Loan that such Lender will not make available to the Administrative Agent such Lender’s share of such Loan, the AdministrativeAgent may assume that such Lender has made such share available on such date in accordance with Section 2.5.1 [Making Revolving Credit Loans] and may,in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of theapplicable Loan available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agentforthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to theBorrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of theFederal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and(ii) in the case of a payment to be made by the Borrower, the interest rate applicable to Loans under the Base Rate Option; provided, however, that Agentshall first make demand for repayment upon such Lender prior to making demand on Borrowers. Any payment by the Borrower shall be without prejudice toany claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent. 2.5.3 Making Swing Loans. So long as PNC elects to make Swing Loans, PNC shall, after receipt by it of a Swing Loan Requestpursuant to Section 2.4.2, [Swing Loan Requests] fund such Swing Loan to the Borrower in U.S. Dollars and immediately available funds at the PrincipalOffice prior to 4:00 p.m. on the Borrowing Date. 2.5.4 Repayment of Revolving Credit Loans. The Borrower shall repay the Revolving Credit Loans together with all outstandinginterest thereon on the Expiration Date. 2.5.5 Borrowings to Repay Swing Loans. PNC may, at its option, exercisable at any time for any reason whatsoever, demandrepayment of the Swing Loans, and each Lender shall make a Revolving Credit Loan in an amount equal to such Lender’s Ratable Share of the aggregateprincipal amount of the outstanding Swing Loans, plus, if PNC so requests, accrued interest thereon, provided that no Lender shall be obligated in any eventto make Revolving Credit Loans in excess of its Revolving Credit Commitment minus its Ratable Share of Letter of Credit Obligations. Revolving CreditLoans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have been properly requested in 32 accordance with Section 2.4.1 [Revolving Credit Loan Requests] without regard to any of the requirements of that provision. PNC shall provide notice to theLenders (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving Credit Loans are to be made under this Section 2.5.5 andof the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not theconditions specified in Section 2.4.1 [Revolving Credit Loan Requests] are then satisfied) by the time PNC so requests, which shall not be earlier than 3:00p.m. on the Business Day next after the date the Lenders receive such notice from PNC. 2.5.6 Swing Loans Under Cash Management Agreements. In addition to making Swing Loans pursuant to the foregoing provisions ofSection 2.5.3 [Making Swing Loans], without the requirement for a specific request from the Borrower pursuant to Section 2.4.2 [Swing Loan Requests], PNCas the Swing Loan Lender may make Swing Loans to the Borrower in accordance with the provisions of the agreements between the Borrower and such SwingLoan Lender relating to the Borrower’s deposit, sweep and other accounts at such Swing Loan Lender and related arrangements and agreements regarding themanagement and investment of the Borrower’s cash assets as in effect from time to time (the “Cash Management Agreements”) to the extent of the dailyaggregate net negative balance in the Borrower’s accounts which are subject to the provisions of the Cash Management Agreements. Swing Loans madepursuant to this Section 2.5.6 in accordance with the provisions of the Cash Management Agreements shall (i) be subject to the limitations as to aggregateamount set forth in Section 2.1.2 [Swing Loan Commitment], (ii) not be subject to the limitations as to individual amount set forth in Section 2.4.2 [SwingLoan Requests], (iii) be payable by the Borrower, both as to principal and interest, at the rates and times set forth in the Cash Management Agreements (but inno event later than the Expiration Date), (iv) not be made at any time after such Swing Loan Lender has received written notice of the occurrence of an Eventof Default and so long as such shall continue to exist, or, unless consented to by the Required Lenders, a Potential Default and so long as such shall continueto exist, (v) if not repaid by the Borrower in accordance with the provisions of the Cash Management Agreements, be subject to each Lender’s obligationpursuant to Section 2.5.5 [Borrowings to Repay Swing Loans], and (vi) except as provided in the foregoing subsections (i) through (v), be subject to all of theterms and conditions of this Section 2. 2.6 Notes. The Obligation of the Borrower to repay the aggregate unpaid principal amount of the Revolving Credit Loans and Swing Loansmade to it by each Lender, together with interest thereon, shall be evidenced by a revolving credit Note and a swing Note dated the Closing Date payable tothe order of such Lender in a face amount equal to the Revolving Credit Commitment or Swing Loan Commitment as applicable, of such Lender. 2.7 Use of Proceeds. The proceeds of the Loans shall be used (i) to pay fees and expenses relating to this transaction, (ii) for Borrowers’working capital needs and capital expenditures and for general corporate purposes, (iii) to finance Permitted Acquisitions (including fees and expensesrelated to Permitted Acquisitions), (iv) to reimburse drawings under Letters of Credit, and (v) for other permitted uses hereunder, including, but not limited to,permitted dividends, distributions, purchases, redemptions and retirements of equity interests.(31) (31) 1 Amendment 33st 2.8 Letter of Credit Subfacility. 2.8.1 Issuance of Letters of Credit. The Borrower may at any time prior to the Expiration Date request the issuance of a standby ortrade letter of credit (each a “Letter of Credit”) on behalf of itself or another Loan Party, or the amendment or extension of an existing Letter of Credit, bydelivering or having such other Loan Party deliver to the Issuing Lender (with a copy to the Administrative Agent) a completed application and agreementfor letters of credit, or request for such amendment or extension, as applicable, in such form as the Issuing Lender may specify from time to time by no laterthan 10:00 a.m. at least five (5) Business Days, or such shorter period as may be agreed to by the Issuing Lender, in advance of the proposed date of issuance. Promptly after receipt of any letter of credit application, the Issuing Lender shall confirm with the Administrative Agent (by telephone or in writing) that theAdministrative Agent has received a copy of such Letter of Credit application and if not, such Issuing Lender will provide Administrative Agent with a copythereof. Unless the Issuing Lender has received notice from any Lender, Administrative Agent or the Borrower, at least one day prior to the requested date ofissuance, amendment or extension of the applicable Letter of Credit, that one or more applicable conditions in Section 7 [Conditions of Lending andIssuance of Letters of Credit] is not satisfied, then, subject to the terms and conditions hereof and in reliance on the agreements of the other Lenders set forthin this Section 2.8, the Issuing Lender or any of the Issuing Lender’s Affiliates will issue a Letter of Credit or agree to such amendment or extension, providedthat each Letter of Credit shall (A) have a maximum maturity of twelve (12) months from the date of issuance, and (B) in no event expire later than theExpiration Date and provided further that in no event shall (i) the Letter of Credit Obligations exceed, at any one time, $20,000,000 (the “Letter of CreditSublimit”) or (ii) the Revolving Facility Usage exceed, at any one time, the Revolving Credit Commitments. Each request by the Borrower for the issuance,amendment or extension of a Letter of Credit shall be deemed to be a representation by the Borrower that it shall be in compliance with the precedingsentence and with Section 7 [Conditions of Lending and Issuance of Letters of Credit] after giving effect to the requested issuance, amendment or extensionof such Letter of Credit. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to the beneficiary thereof, the applicableIssuing Lender will also deliver to Borrower and Administrative Agent a true and complete copy of such Letter of Credit or amendment. 2.8.2 Letter of Credit Fees. The Borrower shall pay (i) to the Administrative Agent for the ratable account of the Lenders a fee (the“Letter of Credit Fee”) equal to the Applicable Letter of Credit Fee Rate, and (ii) to the Issuing Lender for its own account a fronting fee equal to .125% perannum (in each case computed on the basis of a year of 360 days and actual days elapsed), which fees shall be computed on the daily average Letter of CreditObligations and shall be payable quarterly in arrears on the first day of each calendar quarter. The Borrower shall also pay to the Issuing Lender for theIssuing Lender’s sole account the Issuing Lender’s then in effect customary fees and administrative expenses payable with respect to the Letters of Credit asthe Issuing Lender may generally charge or incur from time to time in connection with the issuance, maintenance, amendment (if any), assignment or transfer(if any), negotiation, and administration of Letters of Credit. 2.8.3 Disbursements, Reimbursement. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, andhereby irrevocably and unconditionally 34 agrees to, purchase from the Issuing Lender a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Lender’s RatableShare of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. 2.8.3.1 In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the IssuingLender will promptly notify the Borrower and the Administrative Agent thereof. Provided that it shall have received such notice, the Borrower shallreimburse (such obligation to reimburse the Issuing Lender shall sometimes be referred to as a “Reimbursement Obligation”) the Issuing Lender prior to12:00 noon on each date that an amount is paid by the Issuing Lender under any Letter of Credit (each such date, a “Drawing Date”) by paying to theAdministrative Agent for the account of the Issuing Lender an amount equal to the amount so paid by the Issuing Lender. In the event the Borrower fails toreimburse the Issuing Lender (through the Administrative Agent) for the full amount of any drawing under any Letter of Credit by 12:00 noon on the DrawingDate, the Administrative Agent will promptly notify each Lender thereof, and the Borrower shall be deemed to have requested that Revolving Credit Loansbe made by the Lenders under the Base Rate Option to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilizedportion of the Revolving Credit Commitment and subject to the conditions set forth in Section 7.2 [Each Loan or Letter of Credit] other than any noticerequirements. Any notice given by the Administrative Agent or Issuing Lender pursuant to this Section 2.8.3.1 may be oral if immediately confirmed inwriting; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. 2.8.3.2 Each Lender shall upon any notice pursuant to Section 2.8.3.1 make available to the Administrative Agent for theaccount of the Issuing Lender an amount in immediately available funds equal to its Ratable Share of the amount of the drawing, whereupon the participatingLenders shall (subject to Section 2.8.3 [Disbursement; Reimbursement]) each be deemed to have made a Revolving Credit Loan under the Base Rate Optionto the Borrower in that amount. If any Lender so notified fails to make available to the Administrative Agent for the account of the Issuing Lender theamount of such Lender’s Ratable Share of such amount by no later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such Lender’s obligationto make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal FundsEffective Rate during the first three (3) days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Loans under theRevolving Credit Base Rate Option on and after the fourth day following the Drawing Date. The Administrative Agent and the Issuing Lender will promptlygive notice (as described in Section 2.8.3.1 above) of the occurrence of the Drawing Date, but failure of the Administrative Agent or the Issuing Lender togive any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender fromits obligation under this Section 2.8.3.2. 2.8.3.3 With respect to any unreimbursed drawing that is not converted into Revolving Credit Loans under the Base RateOption to the Borrower in whole or in part as contemplated by Section 2.8.3.1, because of the Borrower’s failure to satisfy the conditions set forth inSection 7.2 [Each Loan or Letter of Credit] other than any notice requirements, or for any other reason, the Borrower shall be deemed to have incurred fromthe Issuing Lender a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing. Such Letter 35 of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to the RevolvingCredit Loans under the Base Rate Option. Each Lender’s payment to the Administrative Agent for the account of the Issuing Lender pursuant toSection 2.8.3 [Disbursements, Reimbursement] shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing (each a“Participation Advance”) from such Lender in satisfaction of its participation obligation under this Section 2.8.3. 2.8.4 Repayment of Participation Advances. 2.8.4.1 Upon (and only upon) receipt by the Administrative Agent for the account of the Issuing Lender of immediatelyavailable funds from the Borrower (i) in reimbursement of any payment made by the Issuing Lender under the Letter of Credit with respect to which anyLender has made a Participation Advance to the Administrative Agent, or (ii) in payment of interest on such a payment made by the Issuing Lender undersuch a Letter of Credit, the Administrative Agent on behalf of the Issuing Lender will pay to each Lender, in the same funds as those received by theAdministrative Agent, the amount of such Lender’s Ratable Share of such funds, except the Administrative Agent shall retain for the account of the IssuingLender the amount of the Ratable Share of such funds of any Lender that did not make a Participation Advance in respect of such payment by the IssuingLender. 2.8.4.2 If the Administrative Agent is required at any time to return to any Loan Party, or to a trustee, receiver, liquidator,custodian, or any official in any Insolvency Proceeding, any portion of any payment made by any Loan Party to the Administrative Agent for the account ofthe Issuing Lender pursuant to this Section in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, ondemand of the Administrative Agent, forthwith return to the Administrative Agent for the account of the Issuing Lender the amount of its Ratable Share ofany amounts so returned by the Administrative Agent plus interest thereon from the date such demand is made to the date such amounts are returned by suchLender to the Administrative Agent, at a rate per annum equal to the Federal Funds Effective Rate in effect from time to time. 2.8.5 Documentation. Each Loan Party agrees to be bound by the terms of the Issuing Lender’s application and agreement for lettersof credit and the Issuing Lender’s written regulations and customary practices relating to letters of credit, though such interpretation may be different fromsuch Loan Party’s own. In the event of a conflict between such application or agreement and this Agreement, this Agreement shall govern. It is understoodand agreed that, except in the case of gross negligence or willful misconduct, the Issuing Lender shall not be liable for any error, negligence and/or mistakes,whether of omission or commission, in following any Loan Party’s instructions or those contained in the Letters of Credit or any modifications, amendmentsor supplements thereto. 2.8.6 Determinations to Honor Drawing Requests. In determining whether to honor any request for drawing under any Letter of Creditby the beneficiary thereof, the Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under suchLetter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit. 36 2.8.7 Nature of Participation and Reimbursement Obligations. Each Lender’s obligation in accordance with this Agreement to makethe Revolving Credit Loans or Participation Advances, as contemplated by Section 2.8.3 [Disbursements, Reimbursement], as a result of a drawing under aLetter of Credit, and the Obligations of the Borrower to reimburse the Issuing Lender upon a draw under a Letter of Credit, shall be absolute, unconditionaland irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.8 under all circumstances, including the followingcircumstances: (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Issuing Lender or any of itsAffiliates, the Borrower or any other Person for any reason whatsoever, or which any Loan Party may have against the Issuing Lender or any of its Affiliates,any Lender or any other Person for any reason whatsoever; (ii) the failure of any Loan Party or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditionsset forth in Sections 2.1 [Revolving Credit Commitments], 2.4 [Revolving Credit Loan Requests; Swing Loan Requests], 2.5 [Making Revolving CreditLoans and Swing Loans; Etc.] or 7.2 [Each Loan or Letter of Credit] or as otherwise set forth in this Agreement for the making of a Revolving Credit Loan, itbeing acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to makeParticipation Advances under Section 2.8.3 [Disbursements, Reimbursement]; (iii) any lack of validity or enforceability of any Letter of Credit; (iv) any claim of breach of warranty that might be made by any Loan Party or any Lender against any beneficiary of a Letter of Credit,or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or any Lender may have at any timeagainst a beneficiary, successor beneficiary any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any suchtransferee may be acting), the Issuing Lender or its Affiliates or any Lender or any other Person, whether in connection with this Agreement, the transactionscontemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and thebeneficiary for which any Letter of Credit was procured); (v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of orlack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or inconnection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provision ofservices relating to a Letter of Credit, in each case even if the Issuing Lender or any of its Affiliates has been notified thereof; (vi) payment by the Issuing Lender or any of its Affiliates under any Letter of Credit against presentation of a demand, draft orcertificate or other document which does not comply with the terms of such Letter of Credit; 37 (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in anytransaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property orservices relating to a Letter of Credit; (viii) any failure by the Issuing Lender or any of its Affiliates to issue any Letter of Credit in the form requested by any Loan Party,unless the Issuing Lender has received written notice from such Loan Party of such failure within three Business Days after the Issuing Lender shall havefurnished such Loan Party and the Administrative Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereonprior to receipt of such notice; (ix) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Partyor Subsidiaries of a Loan Party; (x) any breach of this Agreement or any other Loan Document by any party thereto; (xi) the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party; (xii) the fact that an Event of Default or a Potential Default shall have occurred and be continuing; (xiii) the fact that the Expiration Date shall have passed or this Agreement or the Commitments hereunder shall have been terminated;and (xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing. 2.8.8 Indemnity. The Borrower hereby agrees to protect, indemnify, pay and save harmless the Issuing Lender and any of its Affiliatesthat has issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, chargesand expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Issuing Lender or any ofits Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (A) the grossnegligence or willful misconduct of the Issuing Lender as determined by a final non-appealable judgment of a court of competent jurisdiction or (B) thewrongful dishonor by the Issuing Lender or any of Issuing Lender’s Affiliates of a proper demand for payment made under any Letter of Credit, except if suchdishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Official Body. 2.8.9 Liability for Acts and Omissions. As between any Loan Party and the Issuing Lender, or the Issuing Lender’s Affiliates, suchLoan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. Infurtherance and not in limitation of the foregoing, the Issuing Lender shall not be responsible for any of the following, including any losses or damages toany Loan Party or 38 other Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any partyin connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient,inaccurate, fraudulent or forged (even if the Issuing Lender or its Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrumenttransferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or inpart, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to whichsuch Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of anyLoan Party against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party and any beneficiary ofany Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable,telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission orotherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by thebeneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond thecontrol of the Issuing Lender or its Affiliates, as applicable, including any act or omission of any Official Body, and none of the above shall affect or impair,or prevent the vesting of, any of the Issuing Lender’s or its Affiliates rights or powers hereunder. Nothing in the preceding sentence shall relieve the IssuingLender from liability for the Issuing Lender’s gross negligence or willful misconduct in connection with actions or omissions described in such clauses(i) through (viii) of such sentence. In no event shall the Issuing Lender or its Affiliates be liable to any Loan Party for any indirect, consequential, incidental,punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the valueof any property relating to a Letter of Credit. Without limiting the generality of the foregoing, the Issuing Lender and each of its Affiliates (i) may rely on any oral or othercommunication believed in good faith by the Issuing Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter ofCredit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevantLetter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settleor compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initiallybeen honored, together with any interest paid by the Issuing Lender or its Affiliate; (iv) may honor any drawing that is payable upon presentation of astatement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being deliveredseparately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit;(v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and(vi) may settle or adjust any claim or demand made on the Issuing Lender or its Affiliate in any way related to any order issued at the applicant’s request to anair carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with anyLetter of Credit that 39 is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any waywith such Letter of Credit. In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the IssuingLender or its Affiliates under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken oromitted in good faith, shall not put the Issuing Lender or its Affiliates under any resulting liability to the Borrower or any Lender. 2.8.10 Issuing Lender Reporting Requirements. Each Issuing Lender shall, on the first Business Day of each month, provide toAdministrative Agent and Borrower a schedule of the Letters of Credit issued by it, in form and substance satisfactory to Administrative Agent, showing thedate of issuance of each Letter of Credit, the account party, the original face amount (if any), and the expiration date of any Letter of Credit outstanding atany time during the preceding month, and any other information relating to such Letter of Credit that the Administrative Agent may request. 2.9 Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then thefollowing provisions shall apply for so long as such Lender is a Defaulting Lender: (i) fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.3[Commitment Fees]; (ii) the Commitment and outstanding Loans of such Defaulting Lender shall not be included in determining whether the RequiredLenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 11.2[Modifications, Amendments or Waivers]); provided, that this clause (ii) shall not apply to the vote of a Defaulting Lender in the case of an amendment,waiver or other modification that increases the Commitments of such Lender, provides for an extension of the Expiration Date for such Lender’s Loans, oralters the definition of Required Lenders; (iii) if any Swing Loans are outstanding or any Letter of Credit Obligations exist at the time such Lender becomes a Defaulting Lender,then: (a) all or any part of the outstanding Swing Loans and Letter of Credit Obligations of such Defaulting Lender shallbe reallocated among the non-Defaulting Lenders in accordance with their respective Ratable Shares but only to the extent that (x) the Revolving FacilityUsage does not exceed the total of all non-Defaulting Lenders’ Revolving Credit Commitments, and (y) no Potential Default or Event of Default has occurredand is continuing at such time; (b) if the reallocation described in clause (a) above cannot, or can only partially, be effected, the Borrower shallwithin one Business Day following notice by the Administrative Agent (x) first, prepay such outstanding Swing Loans, and (y) second, cash collateralize forthe benefit of the Issuing Lender the Borrower’s obligations corresponding to such Defaulting Lender’s Letter of Credit Obligations (after giving effect to anypartial 40 reallocation pursuant to clause (a) above) in a deposit account held at the Administrative Agent for so long as such Letter of Credit Obligations areoutstanding; (c) if the Borrower cash collateralizes any portion of such Defaulting Lender’s Letter of Credit Obligations pursuantto clause (b) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.8.2 [Letter of Credit Fees] with respectto such Defaulting Lender’s Letter of Credit Obligations during the period such Defaulting Lender’s Letter of Credit Obligations are cash collateralized; (d) if the Letter of Credit Obligations of the non-Defaulting Lenders are reallocated pursuant to clause (a) above,then the fees payable to the Lenders pursuant to Section 2.8.2 shall be adjusted in accordance with such non-Defaulting Lenders’ Ratable Share; and (e) if all or any portion of such Defaulting Lender’s Letter of Credit Obligations are neither reallocated nor cashcollateralized pursuant to clause (a) or (b) above, then, without prejudice to any rights or remedies of the Issuing Lender or any other Lender hereunder, allLetter of Credit Fees payable under Section 2.8.2 with respect to such Defaulting Lender’s Letter of Credit Obligations shall be payable to the Issuing Lender(and not to such Defaulting Lender) until and to the extent that such Letter of Credit Obligations are reallocated and/or cash collateralized; and (iv) so long as such Lender is a Defaulting Lender, PNC shall not be required to fund any Swing Loans and the Issuing Lender shall notbe required to issue, amend or increase any Letter of Credit, unless such Issuing Lender is satisfied that the related exposure and the Defaulting Lender’s thenoutstanding Letter of Credit Obligations will be 100% covered by the Revolving Credit Commitments of the non-Defaulting Lenders and/or cash collateralwill be provided by the Borrower in accordance with Section 2.9(iii), and participating interests in any newly made Swing Loan or any newly issued orincreased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.9(iii)(a) (and such Defaulting Lender shallnot participate therein). If (i) a Bankruptcy Event with respect to any Lender shall occur following the date hereof and for so long as such event shall continue, or (ii) PNC or theIssuing Lender has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lendercommits to extend credit, PNC shall not be required to fund any Swing Loan and the Issuing Lender shall not be required to issue, amend or increase anyLetter of Credit, unless PNC or the Issuing Lender, as the case may be, shall have entered into arrangements with the Borrower or such Lender, satisfactory toPNC or the Issuing Lender, as the case may be, to defease any risk to it in respect of such Lender hereunder. The rights and remedies against a DefaultingLender under this Section 2.9 are in addition to other rights and remedies which the Borrower may have against such Defaulting Lender and which theAdministrative Agent or any Lender may have against such Defaulting Lender in each case under applicable Law. In the event that the Administrative Agent, the Borrower, PNC and the Issuing Lender agree in writing that a Defaulting Lender has adequately remedied allmatters that caused such Lender to be a Defaulting Lender, then the Administrative Agent will so notify the parties hereto, and the Ratable Share of the SwingLoans and Letter of Credit Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender’s Commitment, and on such date such Lender 41 shall purchase at par such of the Loans of the other Lenders (other than Swing Loans) as the Administrative Agent shall determine may be necessary in orderfor such Lender to hold such Loans in accordance with its Ratable Share. 2.10 Increase in Revolving Credit Commitments. 2.10.1 Increasing Lenders and New Lenders. The Borrower may, at any time and from time to time, request that (1) the current Lendersincrease their Revolving Credit Commitments (any current Lender which elects to increase its Revolving Credit Commitment shall be referred to as an“Increasing Lender”) or (2) one or more new lenders (each a “New Lender”) join this Agreement and provide a Revolving Credit Commitment hereunder,subject to the following terms and conditions: (i) No Obligation to Increase. No current Lender shall be obligated to increase its Revolving Credit Commitment and any increase inthe Revolving Credit Commitment by any current Lender shall be in the sole discretion of such current Lender. (ii) Defaults. There shall exist no Events of Default or Potential Default on the effective date of such increase after giving effect tosuch increase. (iii) Aggregate Revolving Credit Commitments. After giving effect to such increase, the total Revolving Credit Commitments shallnot exceed $125,000,000. (iv) Resolutions; Opinion. The Loan Parties shall deliver to the Administrative Agent on or before the effective date of such increasethe following documents in a form reasonably acceptable to the Administrative Agent: (1) certifications of their corporate secretaries with attachedresolutions certifying that the increase in the Revolving Credit Commitment has been approved by such Loan Parties, and (2) an opinion of counseladdressed to the Administrative Agent and the Lenders addressing the authorization and execution of the Loan Documents by, and enforceability of the LoanDocuments against, the Loan Parties. (v) Notes. The Borrowers shall execute and deliver (1) to each Increasing Lender a replacement revolving credit Note reflecting thenew amount of such Increasing Lender’s Revolving Credit Commitment after giving effect to the increase (and the prior Note issued to such IncreasingLender shall be deemed to be terminated) and (2) to each New Lender a revolving credit Note reflecting the amount of such New Lender’s Revolving CreditCommitment. (vi) Approval of New Lenders. Any New Lender shall be subject to the approval of the Administrative Agent (provided that suchapproval shall not be unreasonably withheld, conditioned or delayed). (vii) Increasing Lenders. Each Increasing Lender shall confirm its agreement to increase its Revolving Credit Commitment pursuant toan acknowledgement in a form acceptable to the Administrative Agent, signed by it and the Borrower and delivered to the Administrative Agent at least five(5) calendar days before the effective date of such increase. 42 (viii) New Lenders—Joinder. Each New Lender shall execute a joinder agreement in form and substance satisfactory to AdministrativeAgent pursuant to which such New Lender shall join and become a party to this Agreement and the other Loan Documents with a Revolving CreditCommitment in the amount set forth in such lender joinder. 2.11 Reduction of Revolving Credit Commitment. The Borrowers shall have the right at any time after the Closing Date upon five (5) calendardays’ prior written notice to the Administrative Agent (or such shorter period of time agreed to by the Administrative Agent) to permanently reduce (ratablyamong the Lenders in proportion to their Ratable Shares) the Revolving Credit Commitments, in a minimum amount of $500,000 and whole multiples of$500,000, or to terminate completely the Revolving Credit Commitments, without penalty or premium except as set forth herein, including withoutlimitation, in Section 5.6.2 [Replacement of a Lender], Section 5.8 [Increased Costs] and Section 5.10 [Indemnity]; provided that any such reduction ortermination shall be accompanied by prepayment of the Notes, together with outstanding Commitment Fees, and the full amount of interest accrued on theprincipal sum to be prepaid (and all amounts referred to in Section 5.10 [Indemnity] hereof) to the extent necessary to cause the aggregate Revolving FacilityUsage after giving effect to such prepayments to be equal to or less than the Revolving Credit Commitments as so reduced or terminated. Any notice toreduce the Revolving Credit Commitments under this Section 2.11 shall be irrevocable; provided that a notice of termination of all Revolving CreditCommitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such noticemay 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. 3. RESERVED 4. INTEREST RATES 4.1 Interest Rate Options. The Borrower shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by itfrom the Base Rate Option or LIBOR Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of thisAgreement, the Borrower may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising differentBorrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any BorrowingTranche; provided that there shall not be at any one time outstanding more than five (5) Borrowing Tranches in the aggregate among all of the Loans andprovided further that if an Event of Default or Potential Default exists and is continuing, the Borrower may not request, convert to, or renew the LIBOR RateOption for any Loans and the Required Lenders may demand that all existing Borrowing Tranches bearing interest under the LIBOR Rate Option shall beconverted immediately to the Base Rate Option, subject to the obligation of the Borrower to pay any indemnity under Section 5.10 [Indemnity] inconnection with such conversion. If at any time the designated rate applicable to any Loan made by any Lender exceeds such Lender’s highest lawful rate,the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate. 43 4.1.1 Revolving Credit Interest Rate Options; Swing Line Interest Rate. The Borrower shall have the right to select from the followingInterest Rate Options applicable to the Revolving Credit Loans: (i) Revolving Credit Base Rate Option: A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the casemay be, and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective asof the effective date of each change in the Base Rate; or (ii) Revolving Credit LIBOR Rate Option: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed)equal to the LIBOR Rate plus the Applicable Margin. Subject to Section 4.3 [Interest After Default], only the Base Rate Option applicable to Revolving Credit Loans shall apply to the Swing Loans. 4.1.2 [RESERVED] 4.1.3 Rate Quotations. The Borrower may call the Administrative Agent on or before the date on which a Loan Request is to bedelivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent orthe Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made. 4.2 Interest Periods. At any time when the Borrower shall select, convert to or renew a LIBOR Rate Option, the Borrower shall notify theAdministrative Agent thereof at least three (3) Business Days prior to the effective date of such LIBOR Rate Option by delivering a Loan Request. The noticeshall specify an Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shallapply to any selection of, renewal of, or conversion to a LIBOR Rate Option: 4.2.1 Amount of Borrowing Tranche. Each Borrowing Tranche of Loans under the LIBOR Rate Option shall be in integral multiplesof $500,000 and not less than $1,000,000 and 4.2.2 Renewals. In the case of the renewal of a LIBOR Rate Option at the end of an Interest Period, the first day of the new InterestPeriod shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day. 4.3 Interest After Default. To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event ofDefault shall have been cured or waived, and at the discretion of the Administrative Agent or upon written demand by the Required Lenders to theAdministrative Agent: 4.3.1 Letter of Credit Fees, Interest Rate. The Letter of Credit Fees and the rate of interest for each Loan otherwise applicable pursuantto Section 2.8.2 [Letter of Credit Fees] or Section 4.1 [Interest Rate Options], respectively, shall be increased by 2.0% per annum; 44 4.3.2 Other Obligations. Each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sumof the rate of interest applicable under the Revolving Credit Base Rate Option plus an additional 2.0% per annum from the time such Obligation becomesdue and payable and until it is paid in full; and 4.3.3 Acknowledgment. The Borrower acknowledges that the increase in rates referred to in this Section 4.3 reflects, among otherthings, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders are entitled toadditional compensation for such risk; and all such interest shall be payable by Borrower upon demand by Administrative Agent. 4.4 LIBOR Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available. 4.4.1 Unascertainable. If on any date on which a LIBOR Rate would otherwise be determined, the Administrative Agent shall havedetermined that: (i) adequate and reasonable means do not exist for ascertaining such LIBOR Rate, or (ii) a contingency has occurred which materially and adversely affects the London interbank eurodollar market relating to the LIBORRate, the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights]. 4.4.2 Illegality; Increased Costs; Deposits Not Available. If at any time any Lender shall have determined that: (i) the making, maintenance or funding of any Loan to which a LIBOR Rate Option applies has been made impracticable or unlawfulby compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directiveof any such Official Body (whether or not having the force of Law), or (ii) such LIBOR Rate Option will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of anysuch Loan, or (iii) after making all reasonable efforts, deposits of the relevant amount in Dollars for the relevant Interest Period for a Loan, or tobanks generally, to which a LIBOR Rate Option applies, respectively, are not available to such Lender with respect to such Loan, or to banks generally, in theinterbank eurodollar market, then the Administrative Agent shall have the rights specified in Section 4.4.3 [Administrative Agent’s and Lender’s Rights]. 4.4.3 Administrative Agent’s and Lender’s Rights. In the case of any event specified in Section 4.4.1 [Unascertainable] above, theAdministrative Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in Section 4.4.2 [Illegality;Increased Costs; Deposits Not Available] above, such Lender shall promptly so notify the Administrative Agent and endorse a certificate to such notice as tothe specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and theBorrower. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the 45 obligation of (A) the Lenders, in the case of such notice given by the Administrative Agent, or (B) such Lender, in the case of such notice given by suchLender, to allow the Borrower to select, convert to or renew a LIBOR Rate Option shall be suspended until the Administrative Agent shall have later notifiedthe Borrower, or such Lender shall have later notified the Administrative Agent, of the Administrative Agent’s or such Lender’s, as the case may be,determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Administrative Agent makes adetermination under Section 4.4.1 [Unascertainable] and the Borrower has previously notified the Administrative Agent of its selection of, conversion to orrenewal of a LIBOR Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of,conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans. If any Lender notifies the Administrative Agent of adetermination under Section 4.4.2 [Illegality; Increased Costs; Deposits Not Available], the Borrower shall, subject to the Borrower’s indemnificationObligations under Section 5.10 [Indemnity], as to any Loan of the Lender to which a LIBOR Rate Option applies, on the date specified in such notice eitherconvert such Loan to the Base Rate Option otherwise available with respect to such Loan or prepay such Loan in accordance with Section 5.6 [VoluntaryPrepayments]. Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Optionotherwise available with respect to such Loan upon such specified date. 4.5 Selection of Interest Rate Options. If the Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of Loans underthe LIBOR Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions ofSection 4.2 [Interest Periods], the Borrower shall be deemed to have converted such Borrowing Tranche to the Base Rate Option commencing upon the lastday of the existing Interest Period. 5. PAYMENTS 5.1 Payments. All payments and prepayments to be made in respect of principal, interest, Commitment Fees, Letter of Credit Fees,Administrative Agent’s Fee or other fees or amounts due from the Borrower hereunder shall be payable prior to 1:00 p.m. on the date when due withoutpresentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrower, and without set-off, counterclaim or otherdeduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Administrative Agent at the Principal Officefor the account of PNC with respect to the Swing Loans and for the ratable accounts of the Lenders with respect to the Revolving Credit Loans in U.S. Dollarsand in immediately available funds, and the Administrative Agent shall promptly distribute such amounts to the Lenders in immediately available funds;provided that in the event payments are received by 1:00 p.m. by the Administrative Agent with respect to the Loans and such payments are not distributedto the Lenders on the same day received by the Administrative Agent, the Administrative Agent shall pay the Lenders the Federal Funds Effective Rate withrespect to the amount of such payments for each day held by the Administrative Agent and not distributed to the Lenders. The Administrative Agent’s andeach Lender’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount ofprincipal of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an “account stated.” 46 5.2 Pro Rata Treatment of Lenders. Each borrowing of Revolving Credit Loans shall be allocated to each Lender according to its RatableShare, and each selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment by the Borrower with respect to principal,interest, Commitment Fees and Letter of Credit Fees (but excluding the Administrative Agent’s Fee and the Issuing Lender’s fronting fee) shall (except asotherwise may be provided with respect to a Defaulting Lender and except as provided in Section 4.4.3 [Administrative Agent’s and Lender’s Rights] in thecase of an event specified in Section 4.4 [LIBOR Rate Unascertainable; Etc.], 5.6.2 [Replacement of a Lender] or 5.8 [Increased Costs]) be payable ratablyamong the Lenders entitled to such payment in accordance with the amount of principal, interest, Commitment Fees, Facility Fees and Letter of Credit Fees,as set forth in this Agreement. Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Borrower of principal, interest, fees orother amounts from the Borrower with respect to Swing Loans shall be made by or to PNC according to Section 2.5.5 [Borrowings to Repay Swing Loans]. 5.3 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff, counterclaim or banker’s lien, by receipt ofvoluntary payment, by realization upon security, or by any other non-pro rata source, obtain payment in respect of any principal of or interest on any of itsLoans or other obligations hereunder resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interestthereon or other such obligations greater than the pro-rata share of the amount such Lender is entitled thereto, then the Lender receiving such greaterproportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such otherobligations 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 Lendersratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that: (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participationsshall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by Law (includingcourt order) to be paid by the Lender or the holder making such purchase; and (ii) the provisions of this Section 5.3 shall not be construed to apply to (x) any payment made by the Loan Parties pursuant to and inaccordance with the express terms of the Loan Documents or (y) any payment obtained by a Lender as consideration for the assignment of or sale of aparticipation in any of its Loans or Participation Advances to any assignee or participant, other than to the Borrower or any Subsidiary thereof (as to whichthe provisions of this Section 5.3 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 participationpursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation but withoutduplication as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation. 47 5.4 Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date onwhich any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the Borrower will not make suchpayment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance uponsuch assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such event, if the Borrower has not in fact made suchpayment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand theamount so distributed to such Lender or the Issuing Lender, with interest thereon, for each day from and including the date such amount is distributed to it tobut excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the AdministrativeAgent in accordance with banking industry rules on interbank compensation. 5.5 Interest Payment Dates. Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on each Payment Date. Interest on Loans to which the LIBOR Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans. Interest onmandatory prepayments of principal under Section 5.7 [Mandatory Prepayments] shall be due on the date such mandatory prepayment is due. Interest on theprincipal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligationbecomes due and payable (whether on the stated Expiration Date, upon acceleration or otherwise). 5.6 Voluntary Prepayments. 5.6.1 Right to Prepay. The Borrower shall have the right at its option from time to time to prepay the Loans in whole or part withoutpremium or penalty (except as provided in Section 5.6.2 [Replacement of a Lender] below, in Section 5.8 [Increased Costs] and Section 5.10 [Indemnity]). Whenever the Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Administrative Agent by 1:00 p.m. at least one(1) Business Day prior to the date of prepayment of the Revolving Credit Loans or no later than 1:00 p.m. on the date of prepayment of Swing Loans, settingforth the following information: (w) the date, which shall be a Business Day, on which the proposed prepayment is to be made; (x) a statement indicating the application of the prepayment between the Revolving Credit Loans and Swing Loans; (y) a statement indicating the application of the prepayment between Loans to which the Base Rate Option applies andLoans to which the LIBOR Rate Option applies; and (z) the total principal amount of such prepayment, which shall not be less than the lesser of (i) the Revolving Facility Usageor (ii) $500,000 for any Swing Loan or $500,000 for any Revolving Credit Loan. All prepayment notices shall be irrevocable; provided that, if a notice of prepayment is given in connection with a conditionalnotice of termination of all Revolving 48 Credit Commitments as contemplated by Section 2.11 [Reduction of Revolving Credit Commitment], then such notice of prepayment may be revoked if suchnotice of termination is revoked in accordance with Section 2.11 [Reduction of Revolving Credit Commitment]. The principal amount of the Loans forwhich a prepayment notice is given, together with interest on such principal amount except with respect to Loans to which the Base Rate Option applies,shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. Except as providedin Section 4.4.3 [Administrative Agent’s and Lender’s Rights], if the Borrower prepays a Loan but fails to specify the applicable Borrowing Tranche whichthe Borrower is prepaying, the prepayment shall be applied first to Loans to which the Base Rate Option applies, then to Loans to which the LIBOR RateOption applies. Any prepayment hereunder shall be subject to the Borrower’s Obligation to indemnify the Lenders under Section 5.10 [Indemnity]. 5.6.2 Replacement of a Lender. In the event any Lender (i) gives notice under Section 4.4 [LIBOR Rate Unascertainable, Etc.],(ii) requests compensation under Section 5.8 [Increased Costs], or requires the Borrower to pay any Indemnified Taxes or additional amount to any Lender orany Official Body for the account of any Lender pursuant to Section 5.9 [Taxes], (iii) is a Defaulting Lender, (iv) becomes subject to the control of an OfficialBody (other than normal and customary supervision), or (v) is a Non-Consenting Lender referred to in Section 11.2 [Modifications, Amendments or Waivers],then in any such event the Borrower may, at its sole expense, upon notice to such Lender and the Administrative Agent, require such Lender to assign anddelegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 11.9 [Successors and Assigns]),all of its interests, rights (other than existing rights to payments pursuant to Sections 5.8 [Increased Costs] or 5.9 [Taxes]) and obligations under thisAgreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender acceptssuch assignment), provided that: (i) the Borrower shall have paid to the Administrative Agent the assignment fee specified in Section 11.9 [Successors and Assigns]; (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and ParticipationAdvances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amountsunder Section 5.10 [Indemnity]) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case ofall other amounts); (iii) in the case of any such assignment resulting from a claim for compensation under Section 5.8.1 [Increased Costs Generally] orpayments required to be made pursuant to Section 5.9 [Taxes], such assignment will result in a reduction in such compensation or payments thereafter; and (iv) such assignment does not conflict with applicable Law. 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, thecircumstances entitling the Borrower to require such assignment and delegation cease to apply. 49 5.7 Mandatory Prepayments. 5.7.1 Sale of Assets. Within five (5) Business Days (or upon receipt if later, but in no event to exceed seventy five (75) after receipt) ofany sale of assets authorized by Sections 8.2.7(iv), (v) and (vii) [Disposition of Assets or Subsidiaries], the Borrower shall make a mandatory prepayment ofprincipal on the Revolving Loans equal to the sum of the after-tax proceeds (as estimated in good faith by the Borrower) less any reasonable commissionsand other reasonable and customary transaction costs, fees and expenses properly attributable to such sales, subject to Borrowers’ ability to reborrowRevolving Loans in accordance with the terms of the Agreement. 5.7.2 Application Among Interest Rate Options. All prepayments required pursuant to this Section 5.7 shall first be applied among theInterest Rate Options to the principal amount of the Loans subject to the Base Rate Option, then to Loans subject to a LIBOR Rate Option. In accordancewith Section 5.10 [Indemnity], the Borrower shall indemnify the Lenders for any loss or expense, including loss of margin, incurred with respect to any suchprepayments applied against Loans subject to a LIBOR Rate Option on any day other than the last day of the applicable Interest Period. 5.8 Increased Costs. 5.8.1 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 againstassets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the LIBORRate) or the Issuing Lender; (ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of thedefinition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or itsdeposits, reserves, other liabilities or capital attributable thereto; or (iii) impose on any Lender, the Issuing Lender or the London interbank market any other condition, cost or expense (other than Taxes)affecting this Agreement or 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 or such other Recipient of making, converting to, continuing or maintainingany Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, the Issuing Lender or such other Recipient ofparticipating 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 theamount of any sum received or receivable by such Lender, the Issuing Lender or other Recipient hereunder (whether of principal, interest or any otheramount) then, upon request of such Lender, the Issuing Lender or other Recipient, the Borrower will pay to such Lender, the Issuing Lender or otherRecipient, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender, as the case may be, for suchadditional costs incurred or reduction suffered. 50 5.8.2 Capital Requirements. If any Lender or the Issuing Lender determines that any Change in Law affecting such Lender or theIssuing Lender or any lending office of such Lender or such Lender’s or the Issuing Lender’s holding company, if any, regarding capital or liquidityrequirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Lender’s capital or on the capital of such Lender’s orthe Issuing Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participationsin Letters of Credit or Swing Loans held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or theIssuing Lender or such Lender’s or the Issuing Lender’s holding company could have achieved but for such Change in Law (taking into consideration suchLender’s or the Issuing Lender’s policies and the policies of such Lender’s or the Issuing Lender’s holding company with respect to capital adequacy), thenfrom time to time the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate suchLender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company for any such reduction suffered. 5.8.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans. A certificate of a Lender or theIssuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, asspecified in Sections 5.8.1 [Increased Costs Generally] or 5.8.2 [Capital Requirements] and delivered to the Borrower shall be conclusive absent manifesterror. The Borrower shall pay such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) daysafter receipt thereof. 5.8.4 Delay in Requests. Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to thisSection shall not constitute a waiver of such Lender’s or the Issuing Lender’s right to demand such compensation, provided that the Borrower shall not berequired to compensate a Lender or the Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than one hundredeighty (180) calendar days prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Borrower of the Change in Law giving riseto such increased costs or reductions and of such Lender’s or the Issuing Lender’s intention to claim compensation therefor (except that, if the Change in Lawgiving rise to such increased costs or reductions is retroactive, then the one hundred eighty (180) calendar day period referred to above shall be extended toinclude the period of retroactive effect thereof). 5.9 Taxes. 5.9.1 Issuing Lender. For purposes of this Section 5.9, the term “Lender” includes the Issuing Lender. 5.9.2 Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Documentshall be without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faithdiscretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then theapplicable Withholding Agent shall be entitled to make such deduction or withholding and shall 51 timely pay the full amount deducted or withheld to the relevant Official Body in accordance with applicable Law and, if such Tax is an Indemnified Tax,then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including suchdeductions and withholdings applicable to additional sums payable under this Section 5.9 [Taxes]) the applicable Recipient receives an amount equal to thesum it would have received had no such deduction or withholding been made. 5.9.3 Payment of Other Taxes by the Loan Parties. The Loan Parties shall timely pay to the relevant Official Body in accordance withapplicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes. 5.9.4 Indemnification by the Loan Parties. The Loan Parties shall jointly and severally indemnify each Recipient, within ten (10) daysafter demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payableunder this Section 5.9 [Taxes]) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and anyreasonable and documented expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed orasserted by the relevant Official Body. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to theAdministrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. 5.9.5 Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days afterdemand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified theAdministrative Agent for such Indemnified Taxes and without limiting the obligation of any of the Loan Parties to do so), (ii) any Taxes attributable to suchLender’s failure to comply with the provisions of Section 11.9.4 [Participations] relating to the maintenance of a Participant Register, and (iii) any ExcludedTaxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and anyreasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant OfficialBody. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifesterror. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any LoanDocument or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent underthis Section 5.9.5 [Indemnification by the Lenders]. 5.9.6 Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to an Official Body pursuant to thisSection 5.9 [Taxes], such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Official Bodyevidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the AdministrativeAgent. 52 5.9.7 Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any LoanDocument shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent,such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to bemade without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent,shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable theBorrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than suchdocumentation set forth in Section 5.9.7(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion,execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercialposition of such Lender. (ii) Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person. (A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date onwhich such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or theAdministrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax; (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the 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 becomes a Lender under thisAgreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following isapplicable: (i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party(x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN establishing an exemptionfrom, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any otherapplicable payments under any Loan Document, IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federalwithholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (ii) executed originals of IRS Form W-8ECI; 53 (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest underSection 881(c) of the Code, (x) a certificate substantially in the form of Exhibit 5.9.7(A) to the effect that such Foreign Lender 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 ofSection 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. TaxCompliance Certificate”) and (y) executed originals of IRS Form W-8BEN; or (iv) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY,accompanied by IRS Form W-8ECI, IRS Form W-8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit 5.9.7(B) orExhibit 5.9.7(C), IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if theForeign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interestexemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit 5.9.7(D) on behalf ofeach such direct and indirect partner; (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the 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 becomes a Lender under thisAgreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other formprescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with suchsupplementary documentation as may be prescribed by applicable Law to permit the Borrower or the Administrative Agent to determine the withholding ordeduction required to be made; and (D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed byFATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at suchtime or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribedby Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may benecessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has compliedwith such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D),“FATCA” shall include any amendments made to FATCA after the date of this Agreement. Upon reasonable request of the Borrower or the Administrative Agent, any Lender shall update any form or certification previously deliveredpursuant to this Section 5.9.7. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in anyrespect, it shall update such form or certification or promptly (and in any event 54 within twenty (20) calendar days after such expiration, obsolescence or inaccuracy) notify the Borrower and the Administrative Agent in writing of its legalinability to do so. 5.9.8 Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refundof any Taxes as to which it has been indemnified pursuant to this Section 5.9 [Taxes] (including by the payment of additional amounts pursuant to thisSection 5.9 [Taxes]), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under thisSection 5.9 [Taxes] with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party andwithout interest (other than any interest paid by the relevant Official Body with respect to such refund). Such indemnifying party, upon the request of suchindemnified party incurred in connection with obtaining such refund, shall repay to such indemnified party the amount paid over pursuant to thisSection 5.9.8 [Treatment of Certain Refunds] (plus any penalties, interest or other charges imposed by the relevant Official Body) in the event that suchindemnified party is required to repay such refund to such Official Body. Notwithstanding anything to the contrary in this Section 5.9.8 [Treatment ofCertain Refunds]), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 5.9.8 [Treatment ofCertain Refunds] the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would havebeen in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This paragraph shall not be construed torequire any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifyingparty or any other Person. 5.9.9 Survival. Each party’s obligations under this Section 5.9 [Taxes] shall survive the resignation of the Administrative Agent or anyassignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all Obligations. 5.10 Indemnity. In addition to the compensation or payments required by Section 5.8 [Increased Costs]or Section 5.9 [Taxes], the Borrower shallindemnify each Lender against all liabilities, losses or expenses (including loss of anticipated profits, any foreign exchange losses and any loss or expensearising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which suchfunds were obtained or from the performance of any foreign exchange contract) which such Lender sustains or incurs as a consequence of any: (i) payment, prepayment, conversion or renewal of any Loan to which a LIBOR Rate Option applies on a day other than the last dayof the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment orprepayment is then due), (ii) attempt by the Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests underSection 2.4 [Revolving Credit Loan Requests; Swing Loan Requests] or Section 4.2 [Interest Periods] or notice relating to prepayments under Section 5.6[Voluntary Prepayments], or 55 (iii) default by the Borrower in the performance or observance of any covenant or condition contained in this Agreement or any otherLoan Document, including any failure of the Borrower to pay when due (by acceleration or otherwise) any principal, interest, Commitment Fee or any otheramount due hereunder. If any Lender sustains or incurs any such loss or expense, it shall promptly upon knowledge of such loss or expense notify the Borrower ofthe amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging orattribution methods as such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or expense. Such notice shall set forth inreasonable detail the basis for such determination. Such amount shall be due and payable by the Borrower to such Lender ten (10) Business Days after suchnotice is given. 5.11 Settlement Date Procedures. In order to minimize the transfer of funds between the Lenders and the Administrative Agent, the Borrower mayborrow, repay and reborrow Swing Loans and PNC may make Swing Loans as provided in Section 2.1.2 [Swing Loan Commitments] hereof during the periodbetween Settlement Dates. The Administrative Agent shall notify each Lender of its Ratable Share of the total of the Revolving Credit Loans and the SwingLoans (each a “Required Share”). On such Settlement Date, each Lender shall pay to the Administrative Agent the amount equal to the difference betweenits Required Share and its Revolving Credit Loans, and the Administrative Agent shall pay to each Lender its Ratable Share of all payments made by theBorrower to the Administrative Agent with respect to the Revolving Credit Loans. The Administrative Agent shall also effect settlement in accordance withthe foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and on Mandatory Prepayment Dates and may at its option effectsettlement on any other Business Day. These settlement procedures are established solely as a matter of administrative convenience, and nothing containedin this Section 5.11 shall relieve the Lenders of their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant toSection 2.1.2 [Swing Loan Commitment]. The Administrative Agent may at any time at its option for any reason whatsoever require each Lender to payimmediately to the Administrative Agent such Lender’s Ratable Share of the outstanding Revolving Credit Loans and each Lender may at any time requirethe Administrative Agent to pay immediately to such Lender its Ratable Share of all payments made by the Borrower to the Administrative Agent withrespect to the Revolving Credit Loans. 5.12 Mitigation Obligations. If any Lender requests compensation under Section 5.8, or the Borrower is required to pay any additional amountto any Lender or any Official Body for the account of any Lender pursuant to Section 5.9, then such Lender shall use reasonable efforts to designate adifferent lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches oraffiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or materially reduce amounts payable pursuant toSection 5.8 or 5.9, as the case may be, in the future, (ii) would not subject such Lender to any unreimbursed cost or expense, (iii) would not otherwise bedisadvantageous to such Lender in any material respect and (iv) would not require such Lender to take any action inconsistent with its internal policies orlegal or regulatory restrictions. The Borrower hereby agrees to pay all reasonable and documented costs and expenses incurred by any Lender in connectionwith any such designation or assignment. 56 6. REPRESENTATIONS AND WARRANTIES 6.1 Representations and Warranties. The Loan Parties, jointly and severally, represent and warrant to the Administrative Agent and each of theLenders as follows: 6.1.1 Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event of Default. Each LoanParty and each Subsidiary of each Loan Party (i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization,(ii) has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct, (iii) is duly licensed orqualified and in good standing in each jurisdiction listed on Schedule 6.1.1 and in all other jurisdictions where the property owned or leased by it or thenature of the business transacted by it or both makes such licensing or qualification necessary, except where the failure to be so licensed or qualified wouldnot constitute a Material Adverse Change, (iv) has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents towhich it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is aparty, and all such actions have been duly authorized by all necessary proceedings on its part, (v) is in compliance in all material respects with all applicableLaws (other than Environmental Laws which are specifically addressed in Section 6.1.14 [Environmental Matters]) in all jurisdictions in which any LoanParty or Subsidiary of any Loan Party is presently or will be doing business except where the failure to do so would not constitute a Material AdverseChange, and (vi) has good and valid title to or valid leasehold interest in all properties, assets and other rights which it purports to own or lease or which arereflected as owned or leased on its books and records, free and clear of all Liens and encumbrances except Permitted Liens. No Event of Default or PotentialDefault exists or is continuing. 6.1.2 Subsidiaries and Owners; Investment Companies. Schedule 6.1.2 states (i) the name of each of the Borrower’s Subsidiaries, itsjurisdiction of organization and the amount, percentage and type of equity interests in such Subsidiary (the “Subsidiary Equity Interests”), (ii) the name ofeach holder of an equity interest in the Borrower (other than Crocs) and the amount, percentage and type of such equity interest (the “Borrower EquityInterests”), and (iii) any options, warrants or other rights outstanding to purchase any such equity interests referred to in clause (i) or (ii) (collectively the“Equity Interests”). The Borrower and each Subsidiary of the Borrower has good and valid title to all of the Subsidiary Equity Interests it purports to own,free and clear in each case of any Lien (other than restrictions on transfer arising under securities laws applicable to securities generally) and all suchSubsidiary Equity Interests have been validly issued, fully paid and nonassessable. None of the Loan Parties or Subsidiaries of any Loan Party is an“investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company”as such terms are defined in the Investment Company Act of 1940. 6.1.3 Validity and Binding Effect. This Agreement and each of the other Loan Documents (i) has been duly and validly executed anddelivered by each Loan Party, and (ii) constitutes, or will constitute, legal, valid and binding obligations of each Loan Party which is or will be a partythereto, enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or otherlaws affecting 57 creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. 6.1.4 No Conflict; Material Agreements; Consents. Neither the execution and delivery of this Agreement or the other LoanDocuments by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereofor thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation,bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizationaldocuments of any Loan Party or (ii) any Law or any material agreement or instrument or order, writ, judgment, injunction or decree to which any Loan Partyor any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of anyLien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party or any of its Subsidiaries (other than Liens grantedunder the Loan Documents). There is no default under such material agreement (referred to above) and none of the Loan Parties or their Subsidiaries is boundby any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law, in each case, which would result in aMaterial Adverse Change. No consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Personis required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents,except filings required to perfect security interests granted in the Loan Documents. 6.1.5 Litigation. Except as set forth on Schedule 6.1.5, there are no actions, suits, proceedings or investigations pending or, to theknowledge of any Loan Party, threatened against such Loan Party or any Subsidiary of such Loan Party at law or in equity before any Official Body as towhich there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected to result in a MaterialAdverse Change. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of any order, writ, injunction or any decree of any OfficialBody which could reasonably be expected to result in any Material Adverse Change. 6.1.6 Financial Statements. (i) Historical Statements. The Borrower has delivered to the Administrative Agent copies of its audited consolidated year-endfinancial statements for and as of the end of the fiscal years ended December 31, 2010. In addition, the Borrower has delivered to the Administrative Agentcopies of its unaudited consolidated interim financial statements for the fiscal year to date and as of the end of the fiscal quarter ended September 30, 2011(all such annual and interim statements being collectively referred to as the “Statements”). The Statements were compiled from the books and recordsmaintained by the Borrower’s management, are correct and complete and fairly represent the consolidated financial position of the Borrower and itsSubsidiaries as of the respective dates thereof and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAPconsistently applied, subject (in the case of the interim statements) to normal year-end audit adjustments and the absence of footnotes. 58 (ii) Accuracy of Financial Statements. Neither the Borrower nor any Subsidiary of the Borrower has any liabilities, contingent orotherwise, or forward or long-term commitments that are not disclosed in the Statements or in the notes thereto, and except as disclosed therein there are nounrealized or anticipated losses from any commitments of the Borrower or any Subsidiary of the Borrower which could reasonably be expected to cause aMaterial Adverse Change. Since December 31, 2010, no Material Adverse Change has occurred. 6.1.7 Margin Stock. None of the Loan Parties or any Subsidiaries of any Loan Party engages or intends to engage principally, or asone of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying marginstock (within the meaning of Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System). No part of the proceeds of anyLoan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose ofpurchasing or carrying any margin stock or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal ReserveSystem. None of the Loan Parties or any Subsidiary of any Loan Party holds or intends to hold margin stock in such amounts that more than 25% of thereasonable value of the assets of any Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock. 6.1.8 Full Disclosure. Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or otherdocuments furnished to the Administrative Agent or any Lender in connection herewith or therewith, contains, when taken as a whole, any untrue statementof a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances underwhich they were made, not misleading. There is no fact known to any Loan Party which materially adversely affects the business, property, assets, financialcondition, or results of operations of any Loan Party or Subsidiary of any Loan Party which has not been set forth in this Agreement or in the certificates,statements, agreements or other documents furnished in writing to the Administrative Agent and the Lenders prior to or at the date hereof in connection withthe transactions contemplated hereby. 6.1.9 Taxes. All federal, state, local and other tax returns required to have been filed with respect to each Loan Party and eachSubsidiary of each Loan Party have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and othergovernmental charges which have or may become due pursuant to said returns or to assessments received, except to the extent that (i) such taxes, fees,assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or otherappropriate provisions, if any, as shall be required by GAAP shall have been made and (ii) the failure to do so would not result in a Material Adverse Change. 6.1.10 Patents, Trademarks, Copyrights, Licenses, Etc. Each Loan Party and each Subsidiary of each Loan Party owns or possesses allthe material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and operate itsproperties and to carry on its business as presently conducted 59 and planned to be conducted by such Loan Party or Subsidiary, without known possible, alleged or actual conflict with the rights of others that would resultin a Material Adverse Change. 6.1.11 Liens in the Collateral. The Liens in the Collateral granted to the Administrative Agent for the benefit of the Lenders pursuant tothe Patent, Trademark and Copyright Security Agreement, the Pledge Agreement and the Security Agreement (collectively, the “Collateral Documents”)constitute and will continue to constitute Prior Security Interests in the Collateral (assuming the due filing of all financing statements and similar documentsnecessary to perfect such Liens). All filing fees and other expenses in connection with the perfection of such Liens have been or will be paid by the Borrower. 6.1.12 Insurance. The properties of each Loan Party and each of its Subsidiaries are insured pursuant to policies and other bonds whichare valid and in full force and effect and which provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure theassets and risks of each such Loan Party and Subsidiary in accordance with prudent business practice in the industry of such Loan Parties and Subsidiaries,except where the failure to do so could not reasonably be expected to result in a Material Adverse Change. 6.1.13 ERISA Compliance. (i) Each Plan is set forth on Schedule 6.1.13 hereof, which schedule shall be delivered to AdministrativeAgent within thirty (30) days after the Closing Date. Except as would not result in a Material Adverse Change, (a) each Plan is in compliance in all materialrespects with the applicable provisions of ERISA, the Code and other federal or state Laws, (b) each Plan that is intended to qualify under Section 401(a) ofthe Code has received a favorable determination letter from the IRS, an application for such a letter is currently being processed by the IRS with respectthereto or is a prototype or volume submitter plan entitled to rely on the favorable opinion or advisory letter issued by the IRS to the sponsor of suchprototype or volume submitter plan, and, to the knowledge of Borrower, nothing has occurred which would prevent, or cause the loss of, such qualificationand (c) the Borrower and each ERISA Affiliate have made all required contributions to each Plan and no application for a funding waiver or an extension ofany amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. (ii) Except as would not result in a Material Adverse Change, (a) no ERISA Event has occurred or is reasonably expected bythe Borrower or any ERISA Affiliate to occur; (b) no Pension Plan has an unfunded pension liability (i.e. excess of benefit liabilities over the current value ofthat Pension Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan for the applicable plan year); (c) neitherBorrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, a liability under Title IV of ERISA with respect to any Pension Plan (otherthan premiums due and not delinquent under Section 4007 of ERISA); (d) to the knowledge of the Borrower or any ERISA Affiliate, neither the Borrower norany ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and, to the knowledge of the Borrower or any ERISA Affiliate, no event hasoccurred 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 toa Multiemployer Plan; (e) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Sections 4069 or 60 4212(c) of ERISA; and (f) neither Borrower nor any ERISA Affiliate has breached any responsibilities, obligations or duties imposed upon it by ERISA withrespect to any Plan. 6.1.14 Environmental Matters. Each Loan Party is and, to the knowledge of each respective Loan Party and each of its Subsidiaries isand has been in compliance with applicable Environmental Laws except as disclosed on Schedule 6.1.14; and except where the failure to comply would notreasonably be expected to result in a Material Adverse Change. 6.1.15 Solvency. Before and after giving effect to the initial Loans hereunder, each of the Loan Parties is Solvent. 6.1.16 Anti-Terrorism Laws. (i) no Covered Entity is a Sanctioned Person and (ii) no Covered Entity, either in its own right or throughany third party, (A) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (B) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or SanctionedPerson in violation of any Anti-Terrorism Law; or (C) engages in any dealings or transactions prohibited by any Anti-Terrorism Law.(32) 6.2 Updates to Schedules. Should any of the information or disclosures provided on any of the Schedules attached hereto become outdated orincorrect in any material respect, the Borrower shall promptly provide the Administrative Agent in writing with such revisions or updates to such Schedule asmay be necessary or appropriate to update or correct same. No Schedule shall be deemed to have been amended, modified or superseded by any suchcorrection or update, nor shall any breach of warranty or representation resulting from the inaccuracy or incompleteness of any such Schedule be deemed tohave been cured thereby, unless and until the Required Lenders, in their sole and absolute discretion, shall have accepted in writing such revisions or updatesto such Schedule; [provided however, that the Borrower may update (i) Schedules 6.1.1 and (ii) Schedule 6.1.2 in connection with any transaction permittedunder Sections 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], 8.2.7 [Dispositions of Assets or Subsidiaries] and 6.2.9 [Subsidiaries, Partnershipsand Joint Ventures] without any Lender approval. 7. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT The obligation of each Lender to make Loans and of the Issuing Lender to issue Letters of Credit hereunder is subject to the performance by each ofthe Loan Parties of its Obligations to be performed hereunder at or prior to the making of any such Loans or issuance of such Letters of Credit and to thesatisfaction of the following further conditions (or waiver thereof in accordance with Section 11.1): 7.1 First Loans and Letters of Credit. 7.1.1 Deliveries. On the Closing Date, the Administrative Agent shall have received each of the following in form and substancesatisfactory to the Administrative Agent: (32) 5 Amendment 61th (i) A certificate of each of the Loan Parties signed by an Authorized Officer, dated the Closing Date stating that (w) all representationsand warranties of the Loan Parties set forth in this Agreement are true and correct in all material respects, (x) the Loan Parties are in compliance with each ofthe covenants and conditions hereunder, (y) no Event of Default or Potential Default exists, and (z) no Material Adverse Change has occurred since the dateof the last audited financial statements of the Borrower delivered to the Administrative Agent; (ii) A certificate dated as of the Closing Date and signed by the Secretary or an Assistant Secretary of each of the Loan Parties,certifying as appropriate as to: (a) all action taken by each Loan Party in connection with this Agreement and the other Loan Documents; (b) the names of theAuthorized Officers authorized to sign the Loan Documents and their true signatures; and (c) copies of its organizational documents as in effect on theClosing Date certified by the appropriate state official where such documents are filed in a state office together with certificates from the appropriate stateofficials as to the continued existence and good standing of each Loan Party in each state where organized or qualified to do business; (iii) This Agreement and each of the other Loan Documents signed by an Authorized Officer and all appropriate financing statementsand appropriate stock powers and certificates evidencing the pledged Collateral; (iv) A written opinion of counsel for the Loan Parties acceptable to Administrative Agent in its reasonable discretion; (v) Evidence that adequate insurance, including flood insurance, if applicable, required to be maintained under this Agreement is infull force and effect, with additional insured, mortgagee and lender loss payable special endorsements attached thereto in form and substance satisfactory tothe Administrative Agent and its counsel naming the Administrative Agent as additional insured, mortgagee and lender loss payee; (vi) A duly completed Compliance Certificate as of the last day of the fiscal quarter of Borrower most recently ended prior to theClosing Date, signed by an Authorized Officer of Borrower; (vii) All material consents required to effectuate the transactions contemplated hereby; (viii) A Lien search in acceptable scope and with acceptable results; (ix) An executed landlord’s waiver or other lien waiver agreement from the lessor, warehouse operator or other applicable Person foreach leased Collateral location as required under the Security Agreement; and (x) Such other documents in connection with such transactions as the Administrative Agent or said counsel may reasonably request. 7.1.2 Payment of Fees. The Borrower shall have paid all fees payable on or before the Closing Date as required by this Agreement, theAdministrative Agent’s Letter or any other Loan Document. 62 7.2 Each Loan or Letter of Credit. At the time of making any Loans or issuing, extending or increasing any Letters of Credit and after givingeffect to the proposed extensions of credit: (i) the representations and warranties of the Loan Parties shall then be true and correct in all material respects,except where such representation or warranty is made as of a specified date, in which case, as of such specified date, (ii) no Event of Default or PotentialDefault shall have occurred and be continuing, (iii) the making of the Loans or issuance, extension or increase of such Letter of Credit shall not contraveneany Law applicable to any Loan Party or Subsidiary of any Loan Party or any of the Lenders, and (iv) the Borrower shall have delivered to the AdministrativeAgent a duly executed and completed Loan Request or to the Issuing Lender an application for a Letter of Credit, as the case may be. 8. COVENANTS The Loan Parties, jointly and severally, covenant and agree that until Payment In Full, the Loan Parties shall comply at all times with the followingcovenants: 8.1 Affirmative Covenants. 8.1.1 Preservation of Existence, Etc. Each Loan Party shall, and shall cause each of its Subsidiaries to (i) maintain its legal existenceas a corporation, limited partnership or limited liability company and its good standing in its jurisdiction of formation or incorporation, and (ii) maintain itslicense or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license orqualification necessary, except where the failure to do so would not result in a Material Adverse Change and as otherwise expressly permitted in Section 8.2.6[Liquidations, Mergers, Etc.]. 8.1.2 Payment of Liabilities, Including Taxes, Etc. Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay anddischarge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, including alltaxes, assessments and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto,except to the extent that (i) such liabilities, including taxes, assessments or charges, are being contested in good faith and by appropriate and lawfulproceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made and(ii) the failure to do so would not result in a Material Adverse Change. 8.1.3 Maintenance of Insurance. Each Loan Party shall, and shall cause each of its Subsidiaries to, insure its properties and assetsagainst loss or damage by fire and such other insurable hazards as such assets are commonly insured (including fire, extended coverage, property damage,workers’ compensation, public liability and business interruption insurance) and against other risks (including errors and omissions) in such amounts assimilar properties and assets are insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financiallysound insurers, including self-insurance to the extent customary, all as reasonably determined by the Administrative Agent. The Loan Parties shall complywith the covenants and provide the endorsement set forth on Schedule 8.1.3 relating to property and related insurance policies covering the Collateral. 63 8.1.4 Maintenance of Properties and Leases. Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in good repair,working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all ofthose properties useful or necessary to its business, and from time to time, such Loan Party will make or cause to be made all appropriate repairs, renewals orreplacements thereof. 8.1.5 Visitation Rights. Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorizedemployees or representatives of the Administrative Agent to visit and inspect any of its properties and to examine and make excerpts from its books andrecords and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as any of the Lenders mayreasonably request, as long as, absent the occurrence and during the continuance of an Event of Default, such inspections and examinations do not cause anundue disruption of the business of the Loan Parties and their Subsidiaries, provided that so long as no Default or Event of Default has occurred and iscontinuing, the Administrative Agent shall provide the Borrower and the Administrative Agent with reasonable notice prior to any visit or inspection. 8.1.6 Keeping of Records and Books of Account. The Borrower shall, and shall cause each Subsidiary of the Borrower to, maintainand keep proper books of record and account which enable the Borrower and its Subsidiaries to issue financial statements in accordance with GAAP and asotherwise required by applicable Laws of any Official Body having jurisdiction over the Borrower or any Subsidiary of the Borrower, and in which full, trueand correct entries shall be made in all material respects of all its dealings and business and financial affairs. 8.1.7 Compliance with Laws; Use of Proceeds. Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with allapplicable Laws, including all Environmental Laws, except where failure to do so would not result in a Material Adverse Change. The Loan Parties will usethe Letters of Credit and the proceeds of the Loans only in accordance with Section 2.7 [Use of Proceeds] and as permitted by applicable Law. 8.1.8 Further Assurances. Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the AdministrativeAgent’s Lien on and Prior Security Interest in the Collateral and all other real and personal property of the Loan Parties whether now owned or hereafteracquired as a continuing first priority perfected Lien, subject only to Permitted Liens, and shall do such other acts and things as the Administrative Agent inits sole discretion may deem reasonably necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted under the LoanDocuments and to exercise and enforce its rights and remedies thereunder with respect to the Collateral. 8.1.9 Anti-Terrorism Laws.Each Loan Party covenants and agrees that (i) no Covered Entity will become a Sanctioned Person, (ii) noCovered Entity, either in its own right or through any third party, will (A) have any of its assets in a Sanctioned Country or in the possession, custody orcontrol of a Sanctioned Person in violation of any Anti-Terrorism Law; (B) do business in or with, or derive any of its income from investments in ortransactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; (C) 64 engage in any dealings or transactions prohibited by any Anti-Terrorism Law or (D) use the Loans or any Letter of Credit to fund any operations in, financeany investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law, (iii) the fundsused to repay the Obligations will not be derived from any unlawful activity, (iv) each Covered Entity shall comply with all Anti-Terrorism Laws and (v) theLoan Parties shall promptly notify the Administrative Agent in writing upon the occurrence of a Reportable Compliance Event.(33) 8.2 Negative Covenants. 8.2.1 Indebtedness. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assumeor suffer to exist any Indebtedness, except: (i) Indebtedness under the Loan Documents; (ii) Indebtedness incurred with respect to Purchase Money Security Interests and Capitalized Leases as and to the extent permittedunder Section 8.2.13 [Capital Expenditures and Leases]; (iii) Indebtedness of a Loan Party to another Loan Party which is subordinated pursuant to the Intercompany SubordinationAgreement; (iv) Indebtedness owing to Foreign Subsidiaries to the extent that such Indebtedness is subordinated to the Obligations pursuant to theIntercompany Subordination Agreement and such Indebtedness does not exceed $50,000,000 outstanding in the aggregate at any time;(34) (v) Any (i) Lender Provided Hedge, (ii) Other Hedging Transaction approved by the Administrative Agent and (iii) Indebtedness underany Other Lender Provided Financial Services Product; provided however, the Loan Parties and their Subsidiaries shall enter into a Lender Provided Hedge orOther Hedging Transaction only for hedging (rather than speculative) purposes; (vi) Guaranties of Indebtedness of Foreign Subsidiaries as permitted by Section 8.2.3(iii) and (iv) [Guaranties];(35) (vii) Indebtedness existing on the date hereof and set forth on Schedule 8.2.1 and Permitted Refinancings thereof; (viii) Indebtedness of any Loan Party or any of its Subsidiaries as an account party in respect of trade letters of credit; (33) 5 Amendment(34) 1 Amendment(35) 2 Amendment 65thstnd (ix) Endorsements of items for deposit or collection of commercial paper received in the ordinary course of business; (x) Indebtedness issued in the ordinary course of business solely to support any insurance or self-insurance obligations (including tosecure workers’ compensation and other similar insurance coverages); (xi) Indebtedness in respect of netting services, cash management, overdraft protections and otherwise in connection with depositaccounts; (xii) Unsecured Indebtedness to evidence the purchase price of capital stock, options or warrants of any Loan Party purchased fromcurrent or former officers, directors and employees of such Loan Party; (xiii) Indebtedness consisting of reimbursement obligations under surety, indemnity, performance, release and appeal bonds andguarantees thereof and letters of credit required in the ordinary course of business or in connection with the enforcement of rights or claims of the LoanParties and their Subsidiaries, in each case to the extent a Letter of Credit supports in whole or in part the obligations of the Loan Parties or any of theirSubsidiaries with respect to such bonds, guarantees or letters of credit; (xiv) Obligations for payment of rent under operating leases if and to the extent such leases are or would be classified as operatingleases under Financial Accounting Standards Board Accounting Standards Codification 840 as in effect as of the date of this Agreement but are required to bereclassified as capital leases as a result of amendments to Financial Accounting Standards Board Account Standards Codification 840 made in accordancewith those account standards proposed in the Proposed Accounting Standards Update exposure draft issued on August 17, 2010; (xv) Unsecured Indebtedness in an amount not exceeding $1,000,000 outstanding at any time in addition to any other amountspermitted under this Section 8.2.1; (xvi) Indebtedness of Foreign Subsidiaries from third party lenders and guaranties thereof permitted under Section 8.2.3(iii) [Guaranties]in an aggregate amount not to exceed $75,000,000 at any time;(36) (xvii) Guarantees of third party loans to franchisees of retail stores not to exceed $3,000,000 in the aggregate outstanding at any time; (xviii) Indebtedness of Foreign Subsidiaries owing to another Foreign Subsidiary; and (xix) Unsecured guaranties of Indebtedness of the Borrowers permitted by Section 8.2.3(i) [Guaranties]. (36) 6 Amendment 66th 8.2.2 Liens; Lien Covenants. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create,incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable todo so, except Permitted Liens. 8.2.3 Guaranties. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time, directly or indirectly,become or be liable in respect of any Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree, become or remain directly orcontingently liable upon or with respect to any obligation or liability of any other Person, except for (i) unsecured guaranties of Indebtedness of theBorrowers permitted hereunder, (ii) the endorsement of checks in the ordinary course of business, (iii) guaranties by Crocs or any Foreign Subsidiary ofIndebtedness not to exceed $75,000,000 in the aggregate outstanding at any time (excluding guaranties of Lender Provided Hedges);(37) (iv) guaranties byCrocs of obligations of Foreign Subsidiaries under Lender Provided Hedges; (v) guaranties by Crocs of contractual obligations of Foreign Subsidiaries thatdo not constitute Indebtedness and (vi) guaranties of third-party loans to franchisees of retail stores and other non-Affiliate third parties, which together withany loans or advances permitted under Section 8.2.4(vi) [Loans and Investments] hereof, shall not exceed $5,000,000 in the aggregate outstanding at anytime.(38) 8.2.4 Loans and Investments. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time make orsuffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whethergeneral or limited) or limited liability company interest in, or any other investment or interest in, or make any capital contribution to, any other Person, oragree, become or remain liable to do any of the foregoing, except: (i) trade credit extended on usual and customary terms in the ordinary course of business; (ii) as disclosed on Schedule 8.2.4 hereof; (iii) advances to employees to meet expenses incurred by such employees in the ordinary course of business; (iv) investments in and loans and advances to Foreign Subsidiaries to the extent that (A) such intercompany loans do not exceed$50,000,000 in the aggregate outstanding at any time, (b) no Potential Default or Event of Default has occurred or would occur after giving pro forma effectto such intercompany loans, and (c) Availability is greater than or equal to $35,000,000 after giving pro forma effect to such intercompany loans;(39) (v) (a) Permitted Investments and (b) Permitted Foreign Investments by Foreign Subsidiaries; (37) 6 Amendment(38) 2 Amendment(39) 6 Amendment 67thndth (vi) loans, advances and other investments in franchisees of retail stores and other non-Affiliate third parties, which together with anyguaranties permitted under Section 8.2.3(vi) [Guaranties] hereof, shall not exceed $5,000,000 in the aggregate outstanding at any time;(40) (vii) loans, advances and other investments in other Loan Parties; and (viii) loans, advances and other investments between or among Foreign Subsidiaries. 8.2.5 Dividends and Related Distributions.8.2.6 Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to,make or pay, or agree to become or remain liable to make or pay, any dividend or other distribution of any nature (whether in cash, property, securities orotherwise) on account of or in respect of its shares of capital stock, partnership interests or limited liability company interests on account of the purchase,redemption, retirement or acquisition of its shares of capital stock (or warrants, options or rights therefor), partnership interests or limited liability companyinterests, except: (i) dividends or other distributions payable (A) from any Loan Party to another Loan Party, (B) from any Foreign Subsidiary to anyLoan Party or any of its Subsidiaries and (C) from any Subsidiary of a Loan Party to any Loan Party; (ii) any purchase, redemption or retirement in connection with a transaction permitted by Section 8.2.6 [Liquidations, Mergers,Consolidations, Acquisitions]; (iii) purchases, redemptions or retirements of equity interests of any Borrower (A) during the period from January 1, 2014 throughDecember 31, 2014 in the amount not exceeding $146,000,000; (B) during the period from July 1, 2015 through September 30, 2015, in the amount notexceeding $40,000,000 and (C) during the period from October 1, 2015 through December 31, 2015, in an amount not to exceed $15,000,000 so long as(I) no Potential Default or Event of Default has occurred and is continuing or would occur, and (II) such purchases, redemptions or retirements are made solelywith Borrowers’ unrestricted cash on hand and not with proceeds of Revolving Credit Loans; and (D) at all times thereafter, so long as (1) the aggregateamount of all such purchases, redemptions or retirements does not exceed (x) $350,000,000 in the aggregate since January 1, 2014 and (y) $200,000,000 inthe aggregate in any fiscal year, (2) at the time of and after giving pro forma effect to such purchases, redemptions or retirements, (I) no Potential Default orEvent of Default has occurred and is continuing or would occur, and (II) Revolver Availability is not less than $25,000,000, and (3) Administrative Agentand Lenders shall have received the quarterly financial statements required under Section 8.3.1 hereof for the fiscal quarter ending December 31, 2015together with a Compliance Certificate evidencing that the Fixed Charge Coverage Ratio for such fiscal quarter is not less than 1.00 to 1.00 (notwithstandingthe minimum required Fixed Charge Coverage Ratio set forth in Section 8.2.14 for such fiscal quarter); provided, that, if Borrowers do not have a FixedCharge Coverage Ratio of at least 1.00 to 1.00 for the fiscal quarter ending December 31, 2015, Borrowers shall be permitted to make such purchases,redemptions or retirements of equity (40) 2 Amendment 68nd interests of any Borrower upon (X) satisfaction of the conditions set forth in clauses (I) and (II) of this Section (D), and (Y) delivery to Administrative Agentand Lenders of the quarterly financial statements required under Section 8.3.1 hereof for any subsequent fiscal quarter together with a Compliance Certificateevidencing that the Fixed Charge Coverage Ratio for such fiscal quarter is not less than the ratio then required under Section 8.2.14 for such fiscal quarter;(41) (iv) [reserved]; and(42) (v) (i) regularly scheduled quarterly dividends to the holders of the preferred stock issued pursuant to the Preferred Stock Issuance insubstantially the form of the Certificate of Designations of Series A Convertible Preferred Stock delivered to Agent on the Third Amendment Date, in anamount not to exceed 6% per annum, and (ii) in the event Borrowers fail to pay the regularly scheduled quarterly dividends referenced in clause (v)(i) above,regularly scheduled quarterly dividends to the holders of the preferred stock issued pursuant to the Preferred Stock Issuance in substantially the form of theCertificate of Designations of Series A Convertible Preferred Stock delivered to Agent on the Third Amendment Date, at a default or penalty rate in anamount not to exceed 8% per annum, so long as, in each case, at the time of and after giving Pro Forma effect to the making of such dividend no PotentialDefault or Event of Default has occurred and is continuing or would occur.(43) 8.2.6 Liquidations, Mergers, Consolidations, Acquisitions. Each of the Loan Parties shall not, and shall not permit any of itsSubsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or otherwise all orsubstantially all of the assets or capital stock of any other Person except (i) any Borrower may merge or consolidate with or into another Borrower, (ii) anyBorrower may acquire all of the assets or equity interests of another Borrower, (iii) Permitted Acquisitions, and (iv) repurchases of franchisee-owned retailstores for cash consideration not to exceed, together with outstanding loans, advances and other investments in such franchisees permitted underSection 8.2.4(vi) [Loans and Investments] and guarantees permitted under Section 8.2.3(vi) [Guaranties], $5,000,000 in the aggregate.(44) 8.2.7 Dispositions of Assets or Subsidiaries. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, sell,convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible(including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles with or withoutrecourse or of capital stock, shares of beneficial interest, partnership interests or limited liability company interests of a Subsidiary of such Loan Party),except: (i) transactions involving the sale of inventory in the ordinary course of business; (41) 9 Amendment(42) 6 Amendment(43) 3 Amendment(44) 2 Amendment 69ththrdnd (ii) the licensing of the Borrower’s intellectual property in the ordinary course of business; (iii) the donation of inventory to charity during any fiscal year in an aggregate not to exceed $3,000,000 in any fiscal year;(45) (iv) the disposition or transfer of obsolete and worn-out equipment in the ordinary course of business during any fiscal year having anaggregate fair market value of not more than $1,000,000 and only to the extent that (i) the proceeds of any such disposition are used to acquire replacementequipment which is subject to Administrative Agent’s Prior Security Interest or (ii) the proceeds of which are applied as a mandatory prepayment of the Loansin accordance with the provisions of Section 5.7.1 [Sale of Assets] above; (v) sales or dispositions of assets or Subsidiaries not to exceed $10,000,000 in any fiscal year and only so long as the net proceeds ofsuch sales or disposition are applied as a mandatory prepayment of the Loans in accordance with the provisions of Section 5.7.1 [Sale of Assets] above; (vi) any sale, transfer or lease of assets by any Loan Party or any of its Subsidiaries to another Loan Party; (vii) any sale, transfer or lease of assets, other than those specifically excepted pursuant to clauses (i) through (v) above, which isapproved by the Required Lenders so long as the after-tax proceeds (as reasonably estimated by the Borrower) are applied as a mandatory prepayment of theLoans in accordance with the provisions of Section 5.7.1 [Sale of Assets] above; or (viii) a transfer of the Panama IP by Crocs to Colorado Footwear C.V., a company organized under the laws of The Netherlands; locatedat Cumberland House, 1 Victoria Street, 9FL, Hamilton HM 11, Bermuda, so long as Administrative Agent receives, concurrent with such transfer, a fullyexecuted copy of the IP Transfer Agreement.(46) 8.2.8 Affiliate Transactions. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, directly or indirectly,purchase, acquire or lease any property from, or sell, transfer or lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except(w) as permitted by Sections 8.2.1 [Indebtedness], 8.2.4 [Loans and Investments], 8.2.5 [Dividends and Related Distributions], 8.2.6 [Liquidations, Mergers,Consolidations, Acquisitions] and 8.2.7 [Dispositions of Assets and Subsidiaries], (x) transactions between or among a Loan Party or any of its Subsidiariesand another Loan Party or any of its Subsidiaries, (y) employment, equity compensation and related agreements among Loan Parties and any officers,directors and employees of Loan Parties and payment of fees to and reimbursement of expenses of members of the Board of Directors in the ordinary course ofbusiness of the Loan Parties, and (z) transactions disclosed to the Administrative Agent, which are in the ordinary course of business, on an arm’s-length basison terms and conditions no less (45) 1 Amendment(46) 7 Amendment 70stth favorable than terms and conditions which would have been obtainable from a Person other than an Affiliate. 8.2.9 Subsidiaries, Partnerships and Joint Ventures. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries toown or create directly or indirectly any Subsidiaries other than (i) any Subsidiary existing as of the Closing Date, and (ii) any Subsidiary formed after theClosing Date (A) the outstanding equity interests (except with respect to a Foreign Subsidiary, no more than 65% of its outstanding equity interests shall berequired to be pledged as collateral) of which are pledged as collateral under the Security Agreement to secure the Obligations, and (B) which becomes aGuarantor by delivering to the Administrative Agent (I) a signed Guaranty and Suretyship Agreement in form and substance satisfactory to AdministrativeAgent in its Permitted Discretion; (II) documents in the forms described in Section 7.1 [First Loans and Letters of Credit] modified as appropriate; and(III) documents necessary to grant and perfect Prior Security Interests to the Administrative Agent for the benefit of the Lenders in the equity interests of, andCollateral held by, such Subsidiary; provided, however, that Foreign Subsidiaries shall not be required to become Guarantors. No Loan Party shall become oragree to become a party to a Joint Venture. 8.2.10 Continuation of or Change in Business. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, engagein any business other than other than designing, manufacturing, distributing and marketing footwear for men, women and children, apparel, accessories, bagsand backpacks, and other products utilizing Croslite, and activities necessary to conduct the foregoing, substantially as conducted and operated by suchLoan Party or Subsidiary during the present fiscal year, and such Loan Party or Subsidiary shall not permit any material change in such business. 8.2.11 Fiscal Year. The Borrower shall not, and shall not permit any Subsidiary of the Borrower to, change its fiscal year from thetwelve-month period beginning January 1 and ending December 31. 8.2.12 Changes in Organizational Documents. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, amendin any respect its certificate of incorporation (including any provisions or resolutions relating to capital stock), by-laws, certificate of limited partnership,partnership agreement, certificate of formation, limited liability company agreement or other organizational documents without providing at least twenty(20) calendar days’ prior written notice to the Administrative Agent and the Lenders and, in the event such change would be adverse to the Lenders asdetermined by the Administrative Agent in its sole discretion, obtaining the prior written consent of the Required Lenders. 8.2.13 Capital Expenditures and Leases. Each of the Loan Parties shall not, and shall not permit any of their Subsidiaries to, contractfor, purchase or make any expenditure or commitments for Capital Expenditures in an aggregate amount for all Loan Parties in excess of $75,000,000 perfiscal year (excluding Capital Expenditures made in connection with the 71 implementation of a new enterprise resource planning and accounting system in an amount up to $60,000,000).(47) 8.2.14 Minimum Fixed Charge Coverage Ratio. When measured for the four fiscal quarter period ending on each measurement dateset forth below, the Loan Parties shall maintain a Fixed Charge Coverage Ratio of not less than the ratio set forth below opposite thereto:(48) Measurement Date Minimum Fixed ChargeCoverage Ratio March 31, 20151.00 to 1.00June 30, 20151.00 to 1.00September 30, 20150.95 to 1.00December 31, 20151.00 to 1.00March 31, 20161.15 to 1.00June 30, 2016 and the last day of eachfiscal quarter thereafter1.25 to 1.00 Notwithstanding anything to the contrary, for purposes of calculating the Fixed Charge Coverage Ratio for any applicable testing period, any costsincurred in fiscal year 2014 by the Loan Parties in connection with the implementation of a SAP software system, in an aggregate amount not toexceed $30,000,000 shall not be deemed to be Unfunded Capital Expenditures or included in Fixed Charges. 8.2.15 Maximum Leverage Ratio. When measured for the four fiscal quarter period ending on each measurement date set forthbelow, the Loan Parties shall maintain a Leverage Ratio of not more than the ratio set forth below opposite thereto:(49) Measurement Date Maximum Leverage Ratio March 31, 20154.00 to 1.00June 30, 20154.00 to 1.00September 30, 20154.00 to 1.00December 31, 20154.00 to 1.00March 31, 20164.00 to 1.00June 30, 2016 and the last day of eachfiscal quarter thereafter3.75 to 1.00 8.2.16 Global Cash. The Loan Parties shall at all times maintain Global Cash of not less than $50,000,000, measured as of the last dayof each fiscal quarter.(50) (47) 1 Amendment(48) 8 Amendment(49) 6 Amendment(50) 6 Amendment 72 8.3 Reporting Requirements. The Loan Parties will furnish or cause to be furnished to the Administrative Agent and each of the Lenders: 8.3.1 Quarterly Financial Statements. Within forty five (45) days after the end of each fiscal quarter (other than the fiscal quarterending December 31 for which Borrower shall have sixty (60) days after such fiscal quarter end), an unaudited balance sheet of Borrowers on a consolidatedand consolidating basis and unaudited statements of income and stockholders’ equity and cash flow of Borrowers on a consolidated and consolidating basisreflecting results of operations from the beginning of the fiscal year to the end of such quarter and for such quarter, prepared on a basis consistent with priorpractices and complete and correct in all material respects, subject to normal and recurring year end adjustments and the absence of footnotes thatindividually and in the aggregate are not material to Borrowers’ business; provided however that if Crocs files its quarterly report on Form 10-Q for theapplicable fiscal quarter and such quarterly report contains the financial statements and reports described above, in a format acceptable to AdministrativeAgent in its Permitted Discretion, then Borrowers may satisfy the requirements of this Section 8.3.1 by delivering a copy of such quarterly report to theAdministrative Agent and each Lender. The reports shall be accompanied by a Compliance Certificate and a Net Mark to Market Exposure statement for eachLender (other than Administrative Agent). 8.3.2 Annual Financial Statements. Within ninety (90) days after the end of each fiscal year of Borrowers, financial statements ofBorrowers on a consolidating and consolidated basis including, but not limited to, statements of income and stockholders’ equity and cash flow from thebeginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the end of such fiscal year, all prepared in accordance with GAAPapplied on a basis consistent with prior practices, and in reasonable detail and reported upon without qualification by an independent certified publicaccounting firm selected by Borrowers and satisfactory to Administrative Agent(the “Accountants”); provided however that if Crocs files its annual report onForm 10-K for the applicable fiscal year and such annual report contains the financial statements and reports described above, in a format acceptable toAdministrative Agent in its Permitted Discretion, then Borrowers may satisfy the requirements of this Section 8.3.2 by delivering a copy of such annual reportto the Administrative Agent and each Lender. The report of the Accountants shall be accompanied by a statement of the Accountants certifying that (i) theyhave caused this Agreement to be reviewed, (ii) in making the examination upon which such report was based either no information came to their attentionwhich to their knowledge constituted an Event of Default or a Potential Default under this Agreement or any related agreement or, if such information cameto their attention, specifying any such Potential Default or Event of Default, its nature, when it occurred and whether it is continuing, and such report shallcontain or have appended thereto calculations which set forth Borrowers’ compliance with the requirements or restrictions imposed by Sections 8.2.1[Indebtedness], 8.2.4 [Loans and Investments], 8.2.5 [Dividends and Related Distributions], 8.2.14 [Capital Expenditures and Leases], 8.2.15 [MinimumFixed Charge Coverage Ratio] and 8.2.16 [Maximum Leverage Ratio] hereof. In addition, the reports shall be accompanied by a Compliance Certificate. 8.3.3 Certificate of the Borrower. Concurrently with the financial statements of the Borrower furnished to the Administrative Agentand to the Lenders pursuant to Sections 8.3.1 [Quarterly Financial Statements] and 8.3.2 [Annual Financial Statements], a stththth73 certificate (each a “Compliance Certificate”) of the Borrower signed by the Chief Executive Officer, President or Chief Financial Officer of the Borrower, inthe form of Exhibit 8.3.3. 8.3.4 Notices. The Borrower shall furnish or cause to be furnished written notice to the Administrative Agent and each of the Lenders: 8.3.4.1 Default. Promptly after any officer of any Loan Party has learned of the occurrence of an Event of Default or PotentialDefault, a certificate signed by an Authorized Officer setting forth the details of such Event of Default or Potential Default and the action which such LoanParty proposes to take with respect thereto. 8.3.4.2 Litigation. Promptly after the commencement thereof, notice of all actions, suits, proceedings or investigations beforeor by any Official Body or any other Person against any Loan Party or Subsidiary of any Loan Party which if adversely determined would constitute aMaterial Adverse Change. 8.3.4.3 Organizational Documents. Within the time limits set forth in Section 8.2.12 [Changes in Organizational Documents],any amendment to the organizational documents of any Loan Party. 8.3.4.4 Erroneous Financial Information. Promptly in the event that the Borrower or the Accountants conclude or advise thatany previously issued financial statement, audit report or interim review should no longer be relied upon or that disclosure should be made or action shouldbe taken to prevent future reliance. 8.3.4.5 ERISA Event. Promptly after (i) Borrower or any ERISA Affiliate knows or has reason to know of the occurrence ofany ERISA Event together with a written statement describing such ERISA Event and the action, if any, which Borrower or any ERISA Affiliate has taken, istaking, or proposes to take with respect thereto and, when known, any action taken or threatened by the IRS, Department of Labor or PBGC with respectthereto, (ii) Borrower or any ERISA Affiliate knows or has reason to know that a non-exempt prohibited transaction (as defined in Section 406 of ERISA or4975 of the Code) has occurred with respect to any Pension Plan, (iii) a funding waiver request has been filed with respect to any Pension Plan together withall communications received by Borrower or any ERISA Affiliate with respect to such request, (iv) any material increase in the benefits of any existingPension Plan or the establishment of any new Pension Plan or the commencement of contributions to any Plan to which Borrower or any ERISA Affiliate wasnot previously contributing shall occur, (v) Borrower or any ERISA Affiliate shall receive any unfavorable determination letter from the Internal RevenueService regarding the qualification of a Pension Plan under Section 401(a) of the Code, together with copies of each such letter, (vi) Borrower or any ERISAAffiliate shall fail to make a required installment or any other required payment under the Code or ERISA with respect to a Pension Plan or MultiemployerPlan on or before the due date for such installment or payment, or (vii) Borrower or any ERISA Affiliate knows that a Multiemployer Plan is subject toSection 432 of the Code or Section 305 of ERISA; if individually or together with other events described above would result in a Material Adverse Change. 74 8.3.4.6 Other Reports. Promptly upon their becoming available to the Borrower: (i) Annual Budget. The annual budget and any forecasts or projections of the Borrower, to be supplied not later than thirty (30) daysafter the commencement of the fiscal year to which any of the foregoing may be applicable, (ii) Management Letters. Any reports including management letters submitted to the Borrower by independent accountants inconnection with any annual, interim or special audit, (iii) SEC Reports; Shareholder Communications. Reports, including Forms 10-K, 10-Q and 8-K, registration statements andprospectuses and other shareholder communications, filed by the Borrower with the Securities and Exchange Commission; provided that the documentsrequired to be delivered pursuant to this Section 8.3.4.6(iii) may be delivered electronically and if so delivered, shall be deemed to have been delivered onthe date on which such documents are filed for public availability on the Securities and Exchange Commission’s Electronic Data Gathering and RetrievalSystem. (iv) Other Information. Such other reports and information as any of the Lenders may from time to time reasonably request. 9. DEFAULT 9.1 Events of Default. An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions(whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law): 9.1.1 Payments Under Loan Documents. The Borrower shall fail to pay when due any principal of any Loan (including scheduledinstallments, mandatory prepayments or the payment due at maturity), Reimbursement Obligation or Letter of Credit or Obligation or any interest on anyLoan, Reimbursement Obligation or Letter of Credit Obligation or any other amount owing hereunder or under the other Loan Documents on the date onwhich such principal, interest or other amount becomes due in accordance with the terms hereof or thereof; 9.1.2 Breach of Warranty. Any representation or warranty made at any time by any of the Loan Parties herein or by any of the LoanParties in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove tohave been false or misleading in any material respect as of the time it was made or furnished; 9.1.3 Breach of Negative Covenants or Visitation Rights. Any of the Loan Parties shall default in the observance or performance ofany covenant contained in Section 8.1.5 [Visitation Rights] or Section 8.2 [Negative Covenants]; 9.1.4 Breach of Other Covenants. Any of the Loan Parties shall default in the observance or performance of any other covenant,condition or provision hereof or of any other 75 Loan Document and such default shall continue unremedied for a period of the earlier of ten (10) Business Days from notice from Agent or knowledge ofBorrower; 9.1.5 Defaults in Other Agreements. A default in respect to any other obligation of the Borrower under any other agreement to which itis a party (other than the Loan Documents) which causes a Material Adverse Change and which such default is not cured within any applicable grace period; 9.1.6 Final Judgments or Orders. Any judgment or judgments are rendered against any Borrower in an aggregate amount in excess of$1,000,000 or against all Borrowers in an aggregate amount in excess of $2,000,000 and (i) enforcement proceedings shall have been commenced by acreditor upon such judgment, (ii) there shall be any period of thirty (30) consecutive days during which the same shall remain undischarged and a stay ofenforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in effect, or (iii) any such judgment results in the creation of a Lienupon any of the Collateral (other than a Permitted Encumbrance); 9.1.7 Loan Document Unenforceable. Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceableagainst the party executing the same or such party’s successors and assigns (as permitted under the Loan Documents) in accordance with the respective termsthereof or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way bechallenged or contested or cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended tobe created thereby; 9.1.8 Uninsured Losses; Proceedings Against Assets. There shall occur any material uninsured damage to or loss, theft or destructionof any of the Collateral in excess of $1,000,000 or the Collateral or any other of the Loan Parties’ or any of their Subsidiaries’ assets are attached, seized,levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver, trustee, custodian or assignee for the benefit ofcreditors and the same is not cured within thirty (30) days thereafter; 9.1.9 Events Relating to Plans. An event or condition specified in Section 8.3.4.5 shall occur with respect to any Plan and, as a resultof such event or condition, together with all other such events or conditions, Borrower or any ERISA Affiliate shall incur a liability to a Plan or the PBGC (orboth) which would result in a Material Adverse Change; 9.1.10 Change of Control. Any Change of Control shall occur; 9.1.11 Relief Proceedings. (i) A Relief Proceeding shall have been instituted against any Loan Party or Subsidiary of a Loan Party andsuch Relief Proceeding shall remain undismissed or unstayed and in effect for a period of thirty (30) consecutive days or such court shall enter a decree ororder granting any of the relief sought in such Relief Proceeding, (ii) any Loan Party or Subsidiary of a Loan Party institutes, or takes any action infurtherance of, a Relief Proceeding, or (iii) any Loan Party or any Subsidiary of a Loan Party ceases to be Solvent or admits in writing its inability to pay itsdebts as they mature; or 76 9.1.12 IP Transfer Agreement. Any breach of the IP Transfer Agreement, or if any Person attempts to terminate, or challenges thevalidity of or its liability under, the IP Transfer Agreement.(51) 9.2 Consequences of Event of Default. 9.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings. If an Event of Default specified underSections 9.1.1 through 9.1.10 shall occur and be continuing, the Lenders and the Administrative Agent shall be under no further obligation to make Loansand the Issuing Lender shall be under no obligation to issue Letters of Credit and the Administrative Agent may, and upon the request of the RequiredLenders, shall (i) by written notice to the Borrower, declare the unpaid principal amount of the Notes then outstanding and all interest accrued thereon, anyunpaid fees and all other Indebtedness of the Borrower to the Lenders hereunder and thereunder to be forthwith due and payable, and the same shallthereupon become and be immediately due and payable to the Administrative Agent for the benefit of each Lender without presentment, demand, protest orany other notice of any kind, all of which are hereby expressly waived, and (ii) require the Borrower to, and the Borrower shall thereupon, deposit in a non-interest-bearing account with the Administrative Agent, as cash collateral for its Obligations under the Loan Documents, an amount equal to the maximumamount currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrower hereby pledges to the AdministrativeAgent and the Lenders, and grants to the Administrative Agent and the Lenders a security interest in, all such cash as security for such Obligations; and 9.2.2 Bankruptcy, Insolvency or Reorganization Proceedings. If an Event of Default specified under Section 9.1.11 [ReliefProceedings] shall occur, the Lenders shall be under no further obligations to make Loans hereunder and the Issuing Lender shall be under no obligation toissue Letters of Credit and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all otherIndebtedness of the Borrower to the Lenders hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or noticeof any kind, all of which are hereby expressly waived; and 9.2.3 Set-off. If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Lender, and each of theirrespective Affiliates and any participant of such Lender or Affiliate which has agreed in writing to be bound by the provisions of Section 5.3 [Sharing ofPayments by Lenders] is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any andall deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) atany time owing by such Lender, the Issuing Lender or any such Affiliate or participant to or for the credit or the account of any Loan Party against any and allof the Obligations of such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, the Issuing Lender,Affiliate or participant, irrespective of whether or not such Lender, Issuing Lender, Affiliate or participant shall have made any demand under this Agreementor any other Loan Document and although such Obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch oroffice (51) 7 Amendment 77th of such Lender or the Issuing Lender different from the branch or office holding such deposit or obligated on such Indebtedness. The rights of each Lender,the Issuing Lender and their respective Affiliates and participants under this Section are in addition to other rights and remedies (including other rights ofsetoff) that such Lender, the Issuing Lender or their respective Affiliates and participants may have. Each Lender and the Issuing Lender agrees to notify theBorrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect thevalidity of such setoff and application; and 9.2.4 Application of Proceeds. From and after the date on which the Administrative Agent has taken any action pursuant to thisSection 9.2 and until all Obligations of the Loan Parties have been paid in full, any and all proceeds received by the Administrative Agent from any sale orother disposition of the Collateral, or any part thereof, or the exercise of any other remedy by the Administrative Agent, shall be applied as follows: (i) first, to reimburse the Administrative Agent and the Lenders for out-of-pocket costs, expenses and disbursements, includingreasonable attorneys’ and paralegals’ fees and legal expenses, incurred by the Administrative Agent or the Lenders in connection with realizing on theCollateral or collection of any Obligations of any of the Loan Parties under any of the Loan Documents, including advances made by the Lenders or any oneof them or the Administrative Agent for the reasonable maintenance, preservation, protection or enforcement of, or realization upon, the Collateral, includingadvances for taxes, insurance, repairs and the like and reasonable expenses incurred to sell or otherwise realize on, or prepare for sale or other realization on,any of the Collateral; (ii) second, to the repayment of all Obligations then due and unpaid of the Loan Parties to the Lenders or their Affiliates incurredunder this Agreement or the Loan Documents (other than under any Lender Provided Hedge or Other Lender Provided Financial Services Product), whether ofprincipal, interest, fees, expenses or otherwise and to cash collateralize the Letter of Credit Obligations; (iii) third, to the repayment of all Obligations then due and unpaid of the Loan Parties to the Lenders or their Affiliates incurred underany Lender Provided Hedge or Other Lender Provided Financial Services Product; and (iv) fourth, the balance, if any, as required by Law. 10. THE ADMINISTRATIVE AGENT 10.1 Appointment and Authority. Each of the Lenders and the Issuing Lender hereby irrevocably appoints PNC to act on its behalf as theAdministrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and toexercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonablyincidental thereto. The provisions of this Section 10 are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lender, and neitherthe Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. 78 10.2 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as aLender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unlessotherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individualcapacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for andgenerally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agenthereunder and without any duty to account therefor to the Lenders. 10.3 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and inthe 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 Potential Default or Event of Default hasoccurred and is continuing; (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights andpowers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by theRequired Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); providedthat the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agentto 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 liablefor the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as theAdministrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the RequiredLenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall benecessary, under the circumstances as provided in Sections 11.2 [Modifications, Amendments or Waivers] and 9.2 [Consequences of Event of Default]) or(ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any PotentialDefault or Event of Default unless and until notice describing such Potential Default or Event of Default is given to the Administrative Agent by theBorrower, a Lender or the Issuing Lender. The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty orrepresentation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other documentdelivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or otherterms or conditions set forth herein or therein or the occurrence of any Potential Default or Event of 79 Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument ordocument or (v) the satisfaction of any condition set forth in Section 7 [Conditions of Lending and Issuance of Letters of Credit] or elsewhere herein, otherthan to confirm receipt of items expressly required to be delivered to the Administrative Agent. 10.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relyingupon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranetwebsite posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. TheAdministrative 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, andshall 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 Letterof Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Administrative Agent may presume that such condition issatisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the IssuingLender prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may becounsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it inaccordance with the advice of any such counsel, accountants or experts. 10.5 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or underany 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 ofthis Section 10 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 theirrespective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. 10.6 Resignation of Administrative Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided in thisSection 10.6, the Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Lender and the Borrower. Upon receipt ofany such notice of resignation, the Required Lenders shall have the right, with approval from the Borrower (so long as no Event of Default has occurred and iscontinuing), to appoint a successor, such approval not to be unreasonably withheld or delayed. If no such successor shall have been so appointed by theRequired 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 and the Issuing Lender, appoint a successor Administrative Agent; provided that if theAdministrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shallnonetheless become effective in accordance with such notice and (i) the retiring Administrative Agent shall be discharged from its duties and obligationshereunder and under the other Loan Documents (except that in the case of any 80 collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Lender under any of the Loan Documents, the retiringAdministrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) 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 and theIssuing Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section 10.6. Uponthe 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 dutiesand obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable bythe Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower andsuch successor. After the retiring Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Section 10 andSection 11.4 [Expenses; Indemnity; Damage Waiver] shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and theirrespective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting asAdministrative Agent. If PNC resigns as Administrative Agent under this Section 10.6, PNC shall also resign as an Issuing Lender. Upon the appointment of a successorAdministrative Agent hereunder, such successor shall (i) succeed to all of the rights, powers, privileges and duties of PNC as the retiring Issuing Lender andAdministrative Agent and PNC shall be discharged from all of its respective duties and obligations as Issuing Lender and Administrative Agent under theLoan Documents, and (ii) issue letters of credit in substitution for the Letters of Credit issued by PNC, if any, outstanding at the time of such succession ormake other arrangement satisfactory to PNC to effectively assume the obligations of PNC with respect to such Letters of Credit. 10.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the Issuing Lender acknowledges that it has, independentlyand without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as ithas deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Lender also acknowledges thatit will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documentsand 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 thisAgreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. 10.8 No Other Duties, etc. Anything herein to the contrary notwithstanding, none of the Lenders listed on the cover page hereof shall have anypowers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the AdministrativeAgent, a Lender or the Issuing Lender hereunder. 10.9 Administrative Agent’s Fee. The Borrower shall pay to the Administrative Agent a nonrefundable fee (the “Administrative Agent’s Fee”)under the terms of a letter (the 81 “Administrative Agent’s Letter”) between the Borrower and Administrative Agent, as amended from time to time. 10.10 Authorization to Release Collateral and Guarantors. The Lenders and Issuing Lenders authorize the Administrative Agent to release (i) anyCollateral consisting of assets or equity interests sold or otherwise disposed of in a sale or other disposition or transfer permitted under Section 8.2.7[Disposition of Assets or Subsidiaries] or 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], and (ii) any Guarantor from its obligations under theGuaranty Agreement if the ownership interests in such Guarantor are sold or otherwise disposed of or transferred to persons other than Loan Parties orSubsidiaries of the Loan Parties in a transaction permitted under Section 8.2.7 [Disposition of Assets or Subsidiaries] or 8.2.6 [Liquidations, Mergers,Consolidations, Acquisitions]. Upon the occurrence of the events set forth in clauses (i) and (ii) above, and upon request by the Borrower to theAdministrative Agent, the Administrative Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessaryto evidence the release of the Collateral and the Liens on such Collateral granted to the Administrative Agent for the benefit of the Lenders. 10.11 No Reliance on Administrative Agent’s Customer Identification Program. Each Lender acknowledges and agrees that neither such Lender,nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or assignee’scustomer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, includingthe regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including anyprograms involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documentsor the transactions hereunder or contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with government lists,(iv) customer notices or (v) other procedures required under the CIP Regulations or such other Laws. 11. MISCELLANEOUS 11.1 Joint and Several Obligations. 11.1.1 The handling of this credit facility as a co-borrowing facility in the manner set forth in this Agreement is solely as anaccommodation to Borrowers and at their request. Neither Administrative Agent nor any Lender shall incur liability to Borrowers as a result thereof. Toinduce Administrative Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies Administrative Agent and each Lenderand holds Administrative Agent and each Lender harmless from and against any and all liabilities, expenses, losses, damages and claims of damage or injuryasserted against Administrative Agent or any Lender by any Person arising from or incurred by reason of the handling of the financing arrangements ofBorrowers as provided herein, reliance by Administrative Agent or any Lender on any request or instruction from any Borrower or any other action taken byAdministrative Agent or any Lender with respect to this Section 11.1 except due to willful misconduct or gross (not mere) negligence by the indemnifiedparty (as determined by a court of competent jurisdiction in a final and non-appealable judgment). 82 11.1.2 All Obligations shall be joint and several, and each Borrower shall make payment upon the maturity of the Obligations byacceleration or otherwise, and such obligation and liability on the part of each Borrower shall in no way be affected by any extensions, renewals andforbearance granted by Administrative Agent or any Lender to any Borrower, failure of Administrative Agent or any Lender to give any Borrower notice ofborrowing or any other notice, any failure of Administrative Agent or any Lender to pursue or preserve its rights against any Borrower, the release byAdministrative Agent or any Lender of any Collateral now or thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon anynotice issued pursuant thereto is unconditional and unaffected by prior recourse by Administrative Agent or any Lender to the other Borrowers or anyCollateral for such Borrower’s Obligations or the lack thereof. Each Borrower waives all suretyship defenses. 11.1.3 Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution of anyother claim which such Borrower may now or hereafter have against the other Borrowers or other Person directly or contingently liable for the Obligationshereunder, or against or with respect to the other Borrowers’ property (including, without limitation, any property which is Collateral for the Obligations),arising from the existence or performance of this Agreement, until termination of this Agreement and Payment in Full of the Obligations. 11.2 Modifications, Amendments or Waivers. With the written consent of the Required Lenders, the Administrative Agent, acting on behalf ofall the Lenders, and the Borrower, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision ofthis Agreement or any other Loan Document or the rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant written waivers or consentshereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the LoanParties; provided, that no such agreement, waiver or consent may be made which will: 11.2.1 Increase of Commitment. Increase the amount of the Revolving Credit Commitment of any Lender hereunder without theconsent of such Lender; 11.2.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment. Whether or not any Loans areoutstanding, extend the Expiration Date or the time for payment of principal or interest of any Loan (excluding the due date of any mandatory prepayment ofa Loan), the Commitment Fee or any other fee payable to any Lender, or reduce the principal amount of or the rate of interest borne by any Loan or reduce theCommitment Fee or any other fee payable to any Lender, without the consent of each Lender directly affected thereby; 11.2.3 Release of Collateral or Guarantor. Except for (i) the release of Collateral and Guarantors as provided in Section 10.10[Authorization to Release Collateral and Guarantors], (ii) sales of assets permitted by Section 8.2.7 [Disposition of Assets or Subsidiaries] or 8.2.6[Liquidations, Mergers, Consolidations, Acquisitions] and (iii) the release of any Guarantor from its obligations under the Guaranty Agreement if theownership interests in such Guarantor are sold or otherwise disposed of or transferred to persons other than Loan Parties or Subsidiaries of the Loan Parties ina transaction permitted under Section 8.2.7 [Disposition of 83 Assets or Subsidiaries] or 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], release all or substantially all of the Collateral or any Guarantor fromits Obligations under the Guaranty Agreement without the consent of all Lenders (other than Defaulting Lenders); or 11.2.4 Miscellaneous. Amend Section 5.2 [Pro Rata Treatment of Lenders], 10.3 [Exculpatory Provisions] or 5.3 [Sharing of Paymentsby Lenders] or this Section 11.2, alter any provision regarding the pro rata treatment of the Lenders or requiring all Lenders to authorize the taking of anyaction or reduce any percentage specified in the definition of Required Lenders, in each case without the consent of all of the Lenders (other than DefaultingLenders); provided that no agreement, waiver or consent which would modify the interests, rights or obligations of the Administrative Agent or the Issuing Lender maybe made without the written consent of such Administrative Agent or Issuing Lender, as applicable, and provided, further that, if in connection with anyproposed waiver, amendment or modification referred to in Sections 11.2.1 through 11.2.4 above, the consent of the Required Lenders is obtained but theconsent of one or more of such other Lenders whose consent is required is not obtained (each a “Non-Consenting Lender”), then the Borrower shall have theright to replace any such Non-Consenting Lender with one or more replacement Lenders pursuant to Section 5.6.2 [Replacement of a Lender]; or 11.2.5 Foreign Borrower. Join as a Borrower any Person that is organized or incorporated in any jurisdiction other than the UnitedStates or any State or territory thereof without the consent of all Lenders. 11.3 No Implied Waivers; Cumulative Remedies. No course of dealing and no delay or failure of the Administrative Agent or any Lender inexercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operateas a waiver thereof, nor shall any single or partial exercise thereof preclude any further exercise thereof or of any other right, power, remedy or privilege. Therights and remedies of the Administrative Agent and the Lenders under this Agreement and any other Loan Documents are cumulative and not exclusive ofany rights or remedies which they would otherwise have. 11.4 Expenses; Indemnity; Damage Waiver. 11.4.1 Costs and Expenses. The Borrower shall pay (i) all reasonable and documented out-of-pocket expenses incurred by theAdministrative Agent and its Affiliates (including the reasonable and documented fees, charges and disbursements of counsel for the Administrative Agent),and shall pay all reasonable and documented fees and time charges and disbursements for attorneys who may be employees of the Administrative Agent, inconnection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of thisAgreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactionscontemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the Issuing Lender inconnection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment 84 thereunder, (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Lender (includingthe fees, charges and disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Lender), and shall pay all fees and time charges forattorneys who may be employees of the Administrative Agent, any Lender or the Issuing Lender, in connection with the enforcement or protection of itsrights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans madeor Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or similar negotiations in respectof such Loans or Letters of Credit, and (iv) all reasonable and documented out-of-pocket expenses of the Administrative Agent’s regular employees andagents engaged periodically to perform audits of the Loan Parties’ books, records and business properties; provided however that, absent the occurrence andduring the continuance of an Event of Default, the Borrower shall not be obligated to pay the costs, expenses or fees of more than two (2) such audits perfiscal year. 11.4.2 Indemnification by the Borrower. The Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), eachLender and the Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and holdeach Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of anycounsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who maybe employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other LoanParty 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 orinstrument contemplated hereby or thereby, the performance or nonperformance by the parties hereto of their respective obligations hereunder or thereunderor the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom(including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with suchdemand do not strictly comply with the terms of such Letter of Credit), (iii) breach of representations, warranties or covenants of the Borrower under the LoanDocuments, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or lossesrelating to or arising under Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any other theory, whether broughtby a third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shallnot, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court ofcompetent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) resultfrom a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder orunder any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim asdetermined by a court of competent jurisdiction. This Section 11.4.2 [Indemnification by the Borrower] shall not apply with respect to Taxes other than anyTaxes that represent losses, claims, damages, etc. arising from any non-Tax claim. 85 11.4.3 Reimbursement by Lenders. To the extent that the Borrower for any reason fails to indefeasibly pay any amount required underSections 11.4.1 [Costs and Expenses] or 11.4.2 [Indemnification by the Borrower] to be paid by it to the Administrative Agent (or any sub-agent thereof), theIssuing Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), theIssuing Lender or such Related Party, as the case may be, such Lender’s Ratable Share (determined as of the time that the applicable unreimbursed expense orindemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or relatedexpense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Lender in its capacity assuch, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or Issuing Lender in connection withsuch capacity. 11.4.4 Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, the Borrower shall not assert, andhereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct oractual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplatedhereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to inSection 11.4.2 [Indemnification by Borrower] shall be liable for any damages arising from the use by unintended recipients of any information or othermaterials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the otherLoan Documents or the transactions contemplated hereby or thereby. 11.4.5 Payments. All amounts due under this Section shall be payable not later than ten (10) days after demand therefor. 11.5 Holidays. Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such paymentshall be due on the next Business Day (except as provided in Section 4.2 [Interest Periods]) and such extension of time shall be included in computinginterest and fees, except that the Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a BusinessDay, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computinginterest or fees, if any, in connection with such payment or action. 11.6 Notices; Effectiveness; Electronic Communication. 11.6.1 Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (andexcept as provided in Section 11.6.2 [Electronic Communications]), all notices and other communications provided for herein shall be in writing and shall bedelivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier (i) if to a Lender, to it at its address set forth in itsadministrative questionnaire, or (ii) if to any other Person, to it at its address set forth on Schedule 1.1(B). 86 Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given whenreceived; 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 electroniccommunications to the extent provided in Section 11.6.2 [Electronic Communications], shall be effective as provided in such Section. 11.6.2 Electronic Communications. Notices and other communications to the Lenders and the Issuing Lender hereunder may bedelivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by theAdministrative Agent; provided that the foregoing shall not apply to notices to any Lender or the Issuing Lender if such Lender or the Issuing Lender, asapplicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. TheAdministrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communicationspursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless theAdministrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receiptof an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other writtenacknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice orcommunication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communicationsposted 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 theforegoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. 11.6.3 Change of Address, Etc. Any party hereto may change its address, e-mail address or telecopier number for notices and othercommunications hereunder by notice to the other parties hereto. 11.7 Severability. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid orunenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity orunenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in anyjurisdiction. 11.8 Duration; Survival. All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survivethe execution and delivery of this Agreement. All covenants and agreements of the Borrower contained herein relating to the payment of principal, interest,premiums, additional compensation or expenses and indemnification, including those set forth in the Notes, Section 5 [Payments] and Section 11.4[Expenses; Indemnity; Damage Waiver], shall survive Payment In Full. All other covenants and agreements of the Loan Parties shall continue in full forceand effect from and after the date hereof and until Payment In Full. 87 11.9 Successors and Assigns. 11.9.1 Successors and Assigns Generally. The provisions of this Agreement shall be binding upon, and inure to the benefit of, theparties hereto and their respective successors and assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or otherwisetransfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign orotherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 11.9.2 [Assignments byLenders], (ii) by way of participation in accordance with the provisions of Section 11.9.4 [Participations], or (iii) by way of pledge or assignment of a securityinterest subject to the restrictions of Section 11.8.6 [Certain Pledges; Successors and Assigns Generally] (and any other attempted assignment or transfer byany party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than theparties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 11.9.4 [Participations] and, to theextent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claimunder or by reason of this Agreement. 11.9.2 Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights andobligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignmentshall 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 thetime owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and (B) in any case not described in clause (i)(A) of this Section 11.9.2, the aggregate amount of the Commitment (which for thispurpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of theassigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption Agreement with respect to such assignment isdelivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be lessthan $5,000,000, in the case of any assignment in respect of the Revolving Credit Commitment unless each of the Administrative Agent and, so long as noEvent of Default has occurred and is continuing, 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 assigningLender’s rights and obligations under this Agreement with respect to the Loan or the Commitment assigned. 88 (iii) Required Consents. No consent shall be required for any assignment except for the consent of the Administrative Agent (whichshall not be unreasonably withheld or delayed) and: (A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) anEvent of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an ApprovedFund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to theAdministrative Agent within five (5) Business Days after having received notice thereof; and (B) the consent of the Issuing Lender (such consent not to be unreasonably withheld or delayed) shall be required for anyassignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding). (iv) Assignment and Assumption Agreement. The parties to each assignment shall execute and deliver to the Administrative Agent anAssignment and Assumption Agreement, together with a processing and recordation fee of $3,500, and the assignee, if it is not a Lender, shall deliver to theAdministrative Agent an administrative questionnaire provided by the Administrative Agent. (v) No Assignment to Borrower. No such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries. (vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person. Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 11.9.3 [Register], from and after the effective date specified ineach Assignment and Assumption Agreement, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by suchAssignment and Assumption Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to theextent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of anAssignment and Assumption Agreement covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be aparty hereto) but shall continue to be entitled to the benefits of Sections 4.4 [LIBOR Rate Unascertainable; Etc.], 5.8 [Increased Costs], and 11.4[Expenses, Indemnity; Damage Waiver] with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment ortransfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 11.9.2 shall be treated for purposes of thisAgreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 11.9.4 [Participations]. 11.9.3 Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain a record of thenames and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the 89 terms hereof from time to time. Such register shall be conclusive, and the Borrower, the Administrative Agent and the Lenders may treat each Person whosename is in such register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. Suchregister shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice. 11.9.4 Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sellparticipations to any Person (other than a natural person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or aportion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the 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 partieshereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent, the Lenders, and the Issuing Lender shall continue to dealsolely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole rightto enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement orinstrument may provide that such Lender will not, without the consent of the Participant, agree (other than as is already provided for herein) to anyamendment, modification or waiver with respect to Sections 11.1.1 [Increase of Commitment], 11.2.2 [Extension of Payment, Etc.], or 11.2.3 [Release ofCollateral or Guarantor]) that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 4.4 [Libor RateUnascertainable, Etc.], 5.8 [Increased Costs], 5.10 [Indemnity] and 5.9 [Taxes] (subject to the requirements and limitations therein, including the requirementsunder Section 5.9.7 [Status of Lenders] (it being understood that the documentation required under Section 5.9.7 [Status of Lenders] shall be delivered to theparticipating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 11.8.2 [Assignments byLenders]; provided that such Participant (A) agrees to be subject to the provisions of Section 5.6.2 [Replacement of a Lender] as if it were an assignee underSection 11.8.2 [Assignments by Lenders]; and (B) shall not be entitled to receive any greater payment under Sections 5.8 [Increased Costs] or 5.9 [Taxes],with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greaterpayment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells participation agrees, atthe Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 5.6.2 [Replacement of aLender] with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.2.3 [Set-off] asthough it were a Lender; provided that such Participant agrees to be subject to Section 5.3 [Sharing of Payments by Lenders] as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name andaddress of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the LoanDocuments (the “Participant Register”); provided that no Lender shall have any obligation 90 to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in anycommitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary toestablish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States TreasuryRegulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recordedin the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For theavoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. 11.9.5 Certain Pledges; Successors and Assigns Generally. Any Lender may at any time pledge or assign a security interest in all or anyportion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal ReserveBank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assigneefor such Lender as a party hereto. 11.10 Confidentiality. 11.10.1 General. Each of the Administrative Agent, the Lenders and the Issuing Lender agrees to maintain the confidentiality of theInformation, except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees,agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential natureof such Information and instructed to keep such Information confidential), (ii) to the extent requested by any regulatory authority purporting to havejurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required byapplicable Laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) in connection with the exercise of any remedieshereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement ofrights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of orParticipant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any actual or prospectivecounterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (vii) with the consent of the Borrower or(viii) to the extent such Information (Y) becomes publicly available other than as a result of a breach of this Section or (Z) becomes available to theAdministrative Agent, any Lender, the Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower orthe other Loan Parties. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have compliedwith 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 wouldaccord to its own confidential information. 11.10.2 Sharing Information With Affiliates of the Lenders. Each Loan Party acknowledges that from time to time financial advisory,investment banking and other services 91 may be offered or provided to the Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or moreSubsidiaries or Affiliates of such Lender and each of the Loan Parties hereby authorizes each Lender to share any information delivered to such Lender bysuch Loan Party and its Subsidiaries pursuant to this Agreement to any such Subsidiary or Affiliate subject to the provisions of Section 11.10.1 [General]. 11.11 Counterparts; Integration; Effectiveness. 11.11.1 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto indifferent counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement andthe other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract amongthe parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subjectmatter hereof including any prior confidentiality agreements and commitments. Except as provided in Section 7 [Conditions Of Lending And Issuance OfLetters Of Credit], this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agentshall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpartof a signature page of this Agreement by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement. 11.12 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL. 11.12.1 Governing Law. This Agreement shall be deemed to be a contract under the Laws of the State of New York without regard to itsconflict of laws principles. Each standby Letter of Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and Practicefor Documentary Credits, as most recently published by the International Chamber of Commerce (the “ICC”) at the time of issuance (“UCP”) or the rules ofthe International Standby Practices (ICC Publication Number 590) (“ISP98”), as determined by the Issuing Lender, and each trade Letter of Credit shall besubject to UCP, and in each case to the extent not inconsistent therewith, the Laws of the State of New York without regard to is conflict of laws principles. 11.12.2 SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY ANDUNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OFNEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, ANDANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT ORANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETOIRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARDAND DETERMINED IN SUCH NEW YORK 92 STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETOAGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHERJURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANYOTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING LENDERMAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTAGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION. 11.12.3 WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLYWAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THELAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOANDOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION 11.12. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THEFULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTIONOR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE. 11.12.4 SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THEMANNER PROVIDED FOR NOTICES IN SECTION 11.6 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION]. NOTHING IN THISAGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLELAW. 11.12.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENTPERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLYARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBYOR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NOREPRESENTATIVE, ADMINISTRATIVE AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THATSUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGESTHAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTSBY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 11.13 USA Patriot Act Notice. Each Lender that is subject to the USA Patriot Act and the Administrative Agent (for itself and not on behalf of anyLender) hereby notifies Loan 93 Parties that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Loan Parties, whichinformation includes the name and address of Loan Parties and other information that will allow such Lender or Administrative Agent, as applicable, toidentify the Loan Parties in accordance with the USA Patriot Act. 94 IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year firstabove written. ATTEST:CROCS, INC. By:Name:Title: CROCS RETAIL, INC. By:Name:Title: OCEAN MINDED, INC. By:Name:Title: JIBBITZ LLC By:Name:Title: [SIGNTURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT]  BITE, INC. By:Name:Title: [SIGNTURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT]  PNC BANK, NATIONAL ASSOCIATION, as a Lender and as AdministrativeAgent By: Name: Title: JPMORGAN CHASE BANK, as Lender By: Name: Title: HSBC BANK USA, N.A., as Lender(52) By: Name: Title: (52) 5 Amendment [SIGNTURE PAGE TO AMENDED AND RESTATED CREDIT AGREEMENT] th SCHEDULE 1.1(A)(53) PRICING GRID–VARIABLE PRICING AND FEES BASED ON LEVERAGE RATIO Level [Leverage Ratio] Letter ofCredit Fee Revolving Credit BaseRate Spread Revolving CreditLIBOR Rate Spread ILess than 1.0 to 1.01.25%0.25%1.25%IIGreater than or equal to 1.0 to 1.0 but less than 1.50to 1.01.50%0.50%1.50%IIIGreater than or equal to 1.50 to 1.0 but less than2.00 to 1.01.75%0.75%1.75%IVGreater than or equal to 2.0 to 1.02.00%1.00%2.00% For purposes of determining the Applicable Margin and the Applicable Letter of Credit Fee Rate: (a) The Applicable Margin and the Applicable Letter of Credit Fee Rate shall be recomputed as of the end of each fiscal quarter based on theLeverage Ratio as of such quarter end. Any increase or decrease in the Applicable Margin or the Applicable Letter of Credit Fee Rate computed asof a quarter end shall be effective on the date on which the Compliance Certificate evidencing such computation is due to be delivered underSection 8.3.3 [Certificate of Borrower]. If a Compliance Certificate is not delivered when due in accordance with such Section 8.3.3, then the ratesin Level IV shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered andshall remain in effect until the date on which such Compliance Certificate is delivered. (b) If, as a result of any restatement of or other adjustment to the financial statements of the Borrower or for any other reason, the Borrower orthe Lenders determine that (i) the Leverage Ratio as calculated by the Borrower as of any applicable date was inaccurate and (ii) a proper calculationof the Leverage Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay tothe Administrative Agent for the account of the applicable Lenders, promptly on demand by the Administrative Agent (or, after the occurrence of anactual or (53) 1 Amendment SCHEDULE 1.1(A) - 1st deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, automatically and without further action bythe Administrative Agent, any Lender or the Issuing Lender), an amount equal to the excess of the amount of interest and fees that should have been paid forsuch period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent, anyLender or the Issuing Lender, as the case may be, under Section 2.8 [Letter of Credit Subfacility] or 4.3 [Interest After Default] or 9 [Default]. The Borrower’sobligations under this paragraph shall survive the termination of the Commitments and the repayment of all other Obligations hereunder. APPLICABLE COMMITMENT FEE BASED ON REVOLVING FACILITY USAGE Revolving FacilityUsage > 50% ofaggregate RevolvingCredit Commitments Revolving FacilityUsage < 50% ofaggregate RevolvingCreditCommitments Applicable Commitment Fee Rate.25%.375% For purposes of determining the Applicable Commitment Fee Rate: The Applicable Commitment Fee Rate shall be computed as of the end of each fiscal quarter based on the average Revolving Facility Usage for such fiscalquarter. Any increase or decrease in the Applicable Commitment Fee Rate computed as of a quarter end shall be effective on such date. SCHEDULE 1.1(A) - 2 SCHEDULE 1.1(B) COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES(54) Page 1 of 2 Part 1 - Commitments of Lenders and Addresses for Notices to Lenders LenderAmount ofCommitmentfor RevolvingCredit LoansCommitment Ratable Share PNC Bank, National Association2 North Lake Avenue, Suite 440Pasadena, CA 91101Attention: Steve RobertsTelephone: 626-432-6128Telecopy: 626-432-4589$50,000,000$50,000,00050% HSBC Bank USA, N.A.660 S. Figueroa Street., Suite 800Los Angeles, CA 90017Attn: Hans LinFax 213-553-8056(55)$25,000,000$25,000,00025% JPMorgan Chase Bank1125 17 Street, 3 FloorDenver, CO 80202Attention: Monica PopowczakTelephone: 303-244-3238Telecopy: 303-244-3105$25,000,000$25,000,00025% Total$100,000,000$100,000,000100% (54) 1 Amendment(55) 5 Amendment SCHEDULE 1.1(B) - 1thrdstth SCHEDULE 1.1(B) COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES Page 2 of 2Part 2 - Addresses for Notices to Administrative Agent, Borrower and Guarantors: ADMINISTRATIVE AGENT PNC Bank, National Association2 North Lake Avenue, Suite 440Pasadena, CA 91101Attention: Steve RobertsTelephone: 626-432-6128Telecopy: 626-432-4589 With a Copy To:Agency Services, PNC Bank, National AssociationMail Stop: P7-PFSC-04-IAddress: 500 First AvenuePittsburgh, PA 15219Attention: Agency ServicesTelephone: 412-762-6442Telecopy: 412-762-8672 BORROWER: Crocs, Inc.7477 East Dry Creek ParkwayNiwot, CO 80503Attention: Mario PasqualeTelephone: 303-848-7576Telecopy: 303-848-7010 With a copy to: Perkins Coie LLP1900 Sixteenth Street, Suite 1400Denver, CO 80202Attention: Jason DayTelephone: (303) 291-2362Facsimile: (303) 291-2400 SCHEDULE 1.1(B) - 2 SCHEDULE 6.1.5 LITIGATION The Borrowers are subject to litigation from time to time in the ordinary course of business, including employment, intellectual property andproduct liability claims. The Borrowers are not currently party to pending legal proceedings that the Company believes, if adversely determine, could resultin a material Adverse Change, with the following possible exceptions. 1. The Company is currently subject to an audit by U.S. Customs & Border Protection (“CBP”) in respect of the period from 2006 to 2010. InOctober 2013, CBP issued the final audit report. In that report CBP projects that unpaid duties totaling approximately $12.4 million are due for theperiod under review and recommends collection of the duties due. The Company responded that these projections are erroneous and providedarguments that demonstrate the amount due in connection with this matter is considerably less than the projection. Additionally, on December 12,2014, the Company made an offer to settle CBP’s potential claims and tendered $3.5 million. At this time, it is not possible to determine how long itwill take CBP to evaluate the Company’s offer or to predict whether our offer will be accepted. Likewise, if a settlement cannot be reached, it is notpossible to predict with any certainty whether CBP will seek to assert a claim for penalties in addition to any unpaid duties, but such an assertion is apossibility. 2. The Company is currently subject to an audit by the Brazilian Federal Tax Authorities related to imports of footwear from China between 2010-2014. On January 13, 2015, the Company was notified about the issuance of assessments totaling roughly $5.25 million for the period January 2010through May 2011. The Company has disputed these assessments and asserted defenses to the claims. On February 25, 2015, the Company receivedadditional assessments totaling roughly $11.54 million related to the remainder of the audit period. The Company has filed defenses and an appealto these claims as well. It is not possible at this time to predict the outcome of this matter. SCHEDULE 8.1.3 INSURANCE REQUIREMENTS RELATING TO THE COLLATERAL COVENANTS: At the request of the Administrative Agent, the Loan Parties shall deliver to the Administrative Agent and each of the Lenders (x) on the Closing Date andannually thereafter an original certificate of insurance signed by the Loan Parties’ independent insurance broker describing and certifying as to the existenceof the insurance on the Collateral required to be maintained by this Agreement and the other Loan Documents, together with a copy of the endorsementdescribed in the next sentence attached to such certificate, and (y) from time to time a summary schedule indicating all insurance then in force with respect toeach of the Loan Parties. Such policies of insurance shall contain special endorsements which include the provisions set forth below or are otherwise in formacceptable to the Administrative Agent in its reasonable discretion. The applicable Loan Parties shall notify the Administrative Agent promptly of anyoccurrence causing a material loss or decline in value of the Collateral and the estimated (or actual, if available) amount of such loss or decline. Any moniesreceived by the Administrative Agent constituting insurance proceeds may, at the option of the Administrative Agent, (i) in the case of property insuranceproceeds received during the existence of an Event of Default, be applied by the Administrative Agent to the payment of the Obligations in accordance withthe terms of the Credit Agreement, (ii) for losses of less than $5,000,000 received at such time as no Event of Default or Potential Default exists, be disbursedby the Administrative Agent to the applicable Loan Parties, and (iii) for losses equal to or greater than $5,000,000 received at such time as no Event ofDefault or Potential Default exists, be disbursed by the Administrative Agent to the applicable Loan Parties on such terms as are deemed appropriate by theAdministrative Agent for the repair, restoration and/or replacement of Collateral and other property in respect of which such proceeds were received. ENDORSEMENT: (i) specify the Administrative Agent as an additional insured, mortgagee and lender loss payee as its interests may appear, (ii) with respect to all property insurance policies, provide that the interest of the Lenders shall be insured regardless of any breach or violation by theapplicable Loan Parties of any warranties, declarations or conditions contained in such policies or any action or inaction of the applicable Loan Parties orothers insured under such policies, except that the insurer shall not be obligated to maintain the insurance if the breach consists of non-payment of premiumswhich continues for 30 days after written notice to Administrative Agent, (iii) provide a waiver of any right of the insurers to set off or counterclaim or any other deduction, whether by attachment or otherwise, (iv) provide that any and all rights of subrogation which the insurers may have or acquire against the Loan Parties shall be, at all times and in all respects,junior and subordinate to the prior  Payment In Full of the Indebtedness hereunder and that no insurer shall exercise or assert any right of subrogation until such time as the Indebtednesshereunder has been paid in full and the Commitments have terminated, (v) provide that no cancellation of such policies for any reason (including non-payment of premium) nor any change therein shall be effective until at leastthirty (30) days after receipt by the Administrative Agent of written notice of such cancellation or change, (vi) be primary without right of contribution of any other insurance carried by or on behalf of any additional insureds with respect to their respective interestsin the Collateral, and (vii) provide that inasmuch as the policy covers more than one insured, all terms, conditions, insuring agreements and endorsements (except limits ofliability) shall operate as if there were a separate policy covering each insured.  EXHIBIT 5.9.7(A) [FORM OF] U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of [ ] (as amended, supplemented or otherwise modified from time to time, the“Credit Agreement”), among [ ], and each lender from time to time party thereto. Pursuant to the provisions of Section 5.9 [Taxes] of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record andbeneficial owner of the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) it is not a bank withinthe meaning of Section 881(c)(3)(A) of the Code, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of theCode and (iv) it is not a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code. The undersigned has furnished the Administrative Agent and the Borrower with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executing this certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptlyso inform the Borrower and the Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agentwith a properly completed and currently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in eitherof the two calendar years preceding such payments. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the CreditAgreement. [NAME OF LENDER] By:Name:Title: Date: , 20[ ]  EXHIBIT 5.9.7(B) [FORM OF] U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of [ ] (as amended, supplemented or otherwise modified from time to time, the“Credit Agreement”), among [ ], and each lender from time to time party thereto. Pursuant to the provisions of Section 5.9 [Taxes] of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record andbeneficial owner of the participation in respect of which it is providing this certificate, (ii) it is not a bank within the meaning of Section 881(c)(3)(A) of theCode, (iii) it is not a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code, and (iv) it is not a controlled foreigncorporation related to the Borrower as described in Section 881(c)(3)(C) of the Code]. The undersigned has furnished its participating Lender with a certificate of its non-U.S. Person status on IRS Form W-8BEN. By executingthis certificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lenderin writing, and (2) the undersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either thecalendar year in which each payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the CreditAgreement. [NAME OF PARTICIPANT] By:Name:Title: Date: , 20[ ]  EXHIBIT 5.9.7(C) [FORM OF] U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of [ ] (as amended, supplemented or otherwise modified from time to time, the“Credit Agreement”), among [ ], and each lender from time to time party thereto. Pursuant to the provisions of Section 5.9 [Taxes] of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record ownerof the participation in respect of which it is providing this certificate, (ii) its direct or indirect partners/members are the sole beneficial owners of suchparticipation, (iii) with respect such participation, neither the undersigned nor any of its direct or indirect partners/members is a bank extending creditpursuant to a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none ofits direct or indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of itsdirect or indirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code. The undersigned has furnished its participating Lender with IRS Form W-8IMY accompanied by one of the following forms from each of itspartners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing this certificate, theundersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (2) theundersigned shall have at all times furnished such Lender with a properly completed and currently effective certificate in either the calendar year in whicheach payment is to be made to the undersigned, or in either of the two calendar years preceding such payments. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the CreditAgreement. [NAME OF PARTICIPANT] By:Name:Title: Date: , 20[ ]  EXHIBIT 5.9.7(D) [FORM OF] U.S. TAX COMPLIANCE CERTIFICATE(For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) Reference is hereby made to the Credit Agreement dated as of [ ] (as amended, supplemented or otherwise modified from time to time, the“Credit Agreement”), among [ ], and each lender from time to time party thereto. Pursuant to the provisions of Section 5.9 [Taxes] of the Credit Agreement, the undersigned hereby certifies that (i) it is the sole record ownerof the Loan(s) (as well as any Note(s) evidencing such Loan(s)) in respect of which it is providing this certificate, (ii) its direct or indirect partners/membersare the sole beneficial owners of such Loan(s) (as well as any Note(s) evidencing such Loan(s)), (iii) with respect to the extension of credit pursuant to thisCredit Agreement or any other Loan Document, neither the undersigned nor any of its direct or indirect partners/members is a bank extending credit pursuantto a loan agreement entered into in the ordinary course of its trade or business within the meaning of Section 881(c)(3)(A) of the Code, (iv) none of its director indirect partners/members is a ten percent shareholder of the Borrower within the meaning of Section 871(h)(3)(B) of the Code and (v) none of its direct orindirect partners/members is a controlled foreign corporation related to the Borrower as described in Section 881(c)(3)(C) of the Code. The undersigned has furnished the Administrative Agent and the Borrower with IRS Form W-8IMY accompanied by one of the followingforms from each of its partners/members that is claiming the portfolio interest exemption: (i) an IRS Form W-8BEN or (ii) an IRS Form W-8IMY accompaniedby an IRS Form W-8BEN from each of such partner’s/member’s beneficial owners that is claiming the portfolio interest exemption. By executing thiscertificate, the undersigned agrees that (1) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower andthe Administrative Agent, and (2) the undersigned shall have at all times furnished the Borrower and the Administrative Agent with a properly completed andcurrently effective certificate in either the calendar year in which each payment is to be made to the undersigned, or in either of the two calendar yearspreceding such payments. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the CreditAgreement. [NAME OF LENDER] By:Name:Title: Date: , 20[ ]  EXHIBIT 8.3.3COMPLIANCE CERTIFICATE(56) PNC Bank, National Association2 North Lake Avenue, Suite 440Pasadena, CA 91101Attention: Steve Roberts The undersigned, the [Chief Executive Officer / President / Chief Financial Officer / Treasurer / Director of Treasury] of CROCS, INC., a Delawarecorporation (“Crocs”), delivers this certificate to PNC BANK, NATIONAL ASSOCIATION (“Administrative Agent”), in accordance with the requirementsof Section 8.3.3 of that certain Amended and Restated Credit Agreement dated December 16, 2011 (as may be supplemented, restated, superseded, amendedor replaced from time to time, the “Credit Agreement”) among Crocs, CROCS RETAIL, INC., a corporation organized under the laws of the State ofColorado (“Retail”), OCEAN MINDED, INC., a corporation organized under the laws of the State of Colorado (“Ocean”), JIBBITZ, LLC, a limited liabilitycompany organized under the laws of the State of Colorado (“Jibbitz”), and BITE, INC., a corporation organized under the laws of the State of Colorado(“Bite”, together with Crocs, Retail, Ocean, Jibbitz and each other Person joined as a borrower from time to time to the Credit Agreement, collectively the“Borrowers” and each a “Borrower”), Administrative Agent and certain financial institutions party thereto as lenders from time to time (the “Lenders”). Capitalized terms used in this Compliance Certificate, unless otherwise defined herein, shall have the meanings ascribed to them in the Credit Agreement. 1. Based upon my review of the consolidated balance sheets and statements of income of Borrowers for the fiscal period ending ,201 , copies of which are attached hereto, I hereby certify, in my capacity as an officer of Crocs and not in my individual capacity, that: (a) the Fixed Charge Coverage Ratio was to 1.0 (minimum required to 1.0); (b) Borrowers Leverage Ratio was to 1.0 (maximum permitted to 1.0); (c) Borrowers had Global Cash of $ (minimum required $50,000,000); and (d) Borrowers were in compliance with the requirements of Sections 8.2.1, 8.2.3, 8.2.4 and 8.2.5 of the Credit Agreement. Attached as Schedule “A” are the details underlying such financial covenant calculations. (56) 6 Amendment th 2. No Potential Default exists on the date hereof, other than: [if none, so state, if a Potential Default exists, state steps beingtaken with respect to such Potential Default]; and 3. No Event of Default exists on the date hereof, other than: [if none, so state, if an Event of Default exists, state steps being takenwith respect to such Event of Default]. Very truly yours, By: , as of Crocs EXHIBIT B SCHEDULES  SCHEDULE 6.1.5 LITIGATION The Borrowers are subject to litigation from time to time in the ordinary course of business, including employment, intellectual property andproduct liability claims. The Borrowers are not currently party to pending legal proceedings that the Company believes, if adversely determine, could resultin a material Adverse Change, with the following possible exceptions. 1. The Company is currently subject to an audit by U.S. Customs & Border Protection (“CBP”) in respect of the period from 2006 to 2010. InOctober 2013, CBP issued the final audit report. In that report CBP projects that unpaid duties totaling approximately $12.4 million are due for theperiod under review and recommends collection of the duties due. The Company responded that these projections are erroneous and providedarguments that demonstrate the amount due in connection with this matter is considerably less than the projection. Additionally, on December 12,2014, the Company made an offer to settle CBP’s potential claims and tendered $3.5 million. At this time, it is not possible to determine how long itwill take CBP to evaluate the Company’s offer or to predict whether our offer will be accepted. Likewise, if a settlement cannot be reached, it is notpossible to predict with any certainty whether CBP will seek to assert a claim for penalties in addition to any unpaid duties, but such an assertion is apossibility. 2. The Company is currently subject to an audit by the Brazilian Federal Tax Authorities related to imports of footwear from China between 2010-2014. On January 13, 2015, the Company was notified about the issuance of assessments totaling roughly $5.25 million for the period January 2010through May 2011. The Company has disputed these assessments and asserted defenses to the claims. On February 25, 2015, the Company receivedadditional assessments totaling roughly $11.54 million related to the remainder of the audit period. The Company has filed defenses and an appealto these claims as well. It is not possible at this time to predict the outcome of this matter. ASSIGNMENT AND ASSUMPTION AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of February 18, 2016, by HSBC BANK USA, N.A. (the “Transferor Lender”), PNCBANK, NATIONAL ASSOCIATION, (the “Purchasing Lender”), and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders underthe Amended and Restated Credit Agreement described below (in such capacity, the “Administrative Agent”). W I T N E S S E T H WHEREAS, this Assignment and Assumption Agreement is being executed and delivered in accordance with Section 11.9.2 of that certain Amendedand Restated Credit Agreement dated as of December 16, 2011 (as may be amended, supplemented or otherwise modified from time to time in accordancewith the terms thereof, the “Credit Agreement”) by and among CROCS, INC., CROCS RETAIL, LLC, OCEAN MINDED, INC., JIBBITZ, LLC,BITE, INC. (collectively with any other Person joined as a borrower thereto from time to time, the “Borrowers” and each a “Borrower”), the financialinstitutions which are now or which hereafter become a party thereto (collectively, the “Lenders”) and the Administrative Agent. WHEREAS, Purchasing Lender wishes to purchase Transferor Lender’s rights, obligations and commitments under the Credit Agreement; and WHEREAS, the Transferor Lender is selling and assigning to Purchasing Lender rights, obligations and commitments under the Credit Agreement; NOW, THEREFORE, the parties hereto hereby agree as follows: All capitalized terms used herein which are not defined shall have the meanings given to them in the Credit Agreement. 1. Upon receipt by the Administrative Agent of four (4) counterparts of this Assignment and Assumption Agreement, to each of which isattached a fully completed Schedule I, and each of which has been executed by the Transferor Lender, the Purchasing Lender and Administrative Agent,Administrative Agent will transmit to Transferor Lender and Purchasing Lender a Transfer Effective Notice, substantially in the form of Schedule II to thisAssignment and Assumption Agreement (a “Transfer Effective Notice”). Such Transfer Effective Notice shall set forth, inter alia, the date on which thetransfer effected by this Assignment and Assumption Agreement shall become effective (the “Transfer Effective Date”), which date unless otherwise notedtherein, shall not be earlier than the first Business Day following the date such Transfer Effective Notice is received. From and after the Transfer EffectiveDate, Purchasing Lender shall be a Lender party to the Credit Agreement for all purposes thereof.  2. At or before 12:00 Noon (New York time) on the Transfer Effective Date, Purchasing Lender shall pay to Transferor Lender, in immediatelyavailable funds, an amount equal to the purchase price, as agreed between Transferor Lender and such Purchasing Lender (the “Purchase Price”), of theportion of the Loans being purchased by such Purchasing Lender (such Purchasing Lender’s “Purchased Percentage”) of the outstanding Loans and otheramounts (including any amounts related to letters of credit, guarantees or swingline loans) owing to the Transferor Lender under the Credit Agreement andthe Note(s) of Transferor Lender, as set forth in Schedule I hereto. Effective upon receipt by Transferor Lender of the Purchase Price from a PurchasingLender, Transferor Lender hereby irrevocably sells, assigns and transfers to such Purchasing Lender, without recourse, representation or warranty, andPurchasing Lender hereby irrevocably purchases, takes and assumes from Transferor Lender, such Purchasing Lender’s Purchased Percentage of the Loans andother amounts (including any amounts related to letters of credit, guarantees or swingline loans) owing to the Transferor Lender under the Credit Agreementand such Note(s) together with all instruments, documents and collateral security pertaining thereto. 3. Transferor Lender has made arrangements with Purchasing Lender with respect to (i) the portion, if any, to be paid, and the date or dates forpayment, by Transferor Lender to such Purchasing Lender of any fees heretofore received by Transferor Lender pursuant to the Credit Agreement prior to theTransfer Effective Date and (ii) the portion, if any, to be paid, and the date or dates of payment, by such Purchasing Lender to Transferor Lender of fees orinterest received by such Purchasing Lender pursuant to the Credit Agreement from and after the Transfer Effective Date. 4. All principal payments that would otherwise be payable from and after the Transfer Effective Date to or for the account of Transferor Lenderpursuant to the Credit Agreement and the Note(s) of Transferor Lender shall, instead, be payable to or for the account of Transferor Lender and PurchasingLender, as the case may be, in accordance with their respective interests as reflected in Schedule I of this Assignment and Assumption Agreement. 5. All interest, fees and other amounts that would otherwise accrue for the account of Transferor Lender from and after the Transfer EffectiveDate pursuant to the Credit Agreement and the Note(s) of Transferor Lender shall, instead, accrue for the account of, and be payable to, Transferor Lender andPurchasing Lender, as the case may be, in accordance with their respective interests as reflected in Schedule I of this Assignment and Assumption Agreement. In the event that any amount of interest, fees or other amounts accruing prior to the Transfer Effective Date was included in the Purchase Price paid by anyPurchasing Lender and is received by Transferor Lender, Transferor Lender and Purchasing Lender will make appropriate arrangements for payment byTransferor Lender to such Purchasing Lender of such amount upon receipt thereof by Transferor Lender from the Borrowers. 6. [Intentionally omitted.] 7. Each of the parties to this Assignment and Assumption Agreement agrees that at any time and from time to time upon the written request ofany other party, it will execute and deliver such further documents and do such further acts and things as such other party may 2 reasonably request in order to effect the purposes of this Assignment and Assumption Agreement. 8. By executing and delivering this Assignment and Assumption Agreement, Transferor Lender and Purchasing Lender confirm to and agreewith each other and Administrative Agent and Lenders as follows: (i) other than the representation and warranty that it is the legal and beneficial owner ofthe interest being assigned hereby free and clear of any adverse claim, Transferor Lender makes no representation or warranty and assumes no responsibilitywith respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity,enforceability, genuineness, sufficiency or value of the Credit Agreement, the Note(s) of Transferor Lender or any other instrument or document furnishedpursuant thereto; (ii) Transferor Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition ofBorrowers or the performance or observance by Borrowers of any of the Obligations under the Credit Agreement, the Note(s) or any other instrument ordocument furnished pursuant hereto; (iii) Purchasing Lender confirms that it has received a copy of the Credit Agreement, together with copies of suchfinancial statements and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into thisAssignment and Assumption Agreement; (iv) Purchasing Lender will, independently and without reliance upon Administrative Agent, Transferor Lender orany other Lenders and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in takingor not taking action under the Credit Agreement; (v) Purchasing Lender appoints and authorizes Administrative Agent on its behalf to take such action asagent and to exercise such powers under the Credit Agreement and Loan Documents as are delegated to the Administrative Agent by the terms thereof; (vi) Purchasing Lender agrees that it will perform all of its respective obligations as set forth in the Credit Agreement and Loan Documents to be performedby each as a Lender; and (vii) Purchasing Lender represents and warrants to Transferor Lender, Lenders, Administrative Agent and the Borrowers that it iseither (x) entitled to the benefits of an income tax treaty with the United States of America that provides for an exemption from the United States withholdingtax on interest and other payments made by the Borrowers under the Credit Agreement and Loan Documents or (y) is engaged in trade or business within theUnited States of America. 9. Schedule I hereto sets forth the revised Commitments of Transferor Lender and the Commitments of Purchasing Lender as well asadministrative information with respect to Purchasing Lender. 10. This Assignment and Assumption Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. [SIGNATURE PAGE FOLLOWS] 3 IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Assumption Agreement to be executed by their respective dulyauthorized officers on the date set forth above. HSBC BANK USA, N.A.as Transferor Lender By:Name:Title: PNC BANK, NATIONAL ASSOCIATIONas Purchasing Lender By:Name:Steve C. RobertsTitle:Vice President PNC BANK, NATIONAL ASSOCIATIONas Administrative Agent By:Name:Steve C. RobertsTitle:Vice President [Signature Page To Assignment and Assumption Agreement (Crocs)]  Acknowledged and agreed: CROCS, INC.OCEAN MINDED, INC.BITE, INC. By:Name:Carrie W. TeffnerTitle:Chief Financial Officer CROCS RETAIL, LLCJIBBITZ, LLC By:Name:Carrie W. TeffnerTitle:Manager [Signature Page To Assignment and Assumption Agreement (Crocs)]  SCHEDULE I TO ASSIGNMENT AND ASSUMPTION AGREEMENTLIST OF OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AMOUNTS HSBC BANK USA, N.A.(“Transferor Lender”) Pre-Transfer Effective Date Revolving Credit Commitment ofTransferor Lender$25,000,000 Pre-Transfer Effective Date Revolving Credit Commitment ofTransferor Lender as a percentage of all Revolving CreditCommitments25% Pre-Transfer Effective Date Outstanding Revolving Credit Loans andParticipation Advances of Transferor Lender$0.00 Post-Transfer Effective Date Revolving Credit Commitment ofTransferor Lender$0.00 Post-Transfer Effective Date Revolving Commitment Percentage ofTransferor Lender0.00% Post-Transfer Effective Date Outstanding Revolving Credit Loansand Participation Advances of Transferor Lender$0.00 PNC BANK, NATIONAL ASSOCIATION(“Purchasing Lender”) Pre-Transfer Effective Date Revolving Credit Commitment ofPurchasing Lender$75,000,000 Pre-Transfer Effective Date Revolving Credit Commitment ofPurchasing Lender as a percentage of all Revolving CreditCommitments75% Pre-Transfer Effective Date Outstanding Revolving Credit Loans andParticipation Advances of Purchasing Lender$0.00 Post-Transfer Effective Date Revolving Credit Commitment ofPurchasing Lender$100,000,000 Post-Transfer Effective Date Revolving Commitment Percentage ofTransferor Lender100% Post-Transfer Effective Date Outstanding Revolving Credit Loansand Participation Advances of Transferor Lender$0.00 [Assignment and Assumption Agreement (Crocs)]  SCHEDULE II TO ASSIGNMENT AND ASSUMPTION AGREEMENT To: HSBC BANK USA, N.A., as Transferor Lender and PNC BANK, NATIONAL ASSOCIATION, as Purchasing Lender: The undersigned, as Administrative Agent under the Amended and Restated Credit Agreement dated as of December 16, 2011, as has been amended,supplemented or otherwise modified from time to time in accordance with the terms thereof, among CROCS, INC., CROCS RETAIL, LLC, OCEANMINDED, INC., JIBBITZ, LLC, BITE, INC., PNC BANK, NATIONAL ASSOCIATION (“PNC”), each of the financial institutions party thereto from time totime as lenders (PNC and such other financial institutions, the “Lenders”), and PNC as administrative agent for the Lenders, acknowledges receipt of four(4) executed counterparts of a completed Assignment and Assumption Agreement in the form attached hereto. Terms defined in such Assignment andAssumption Agreement are used herein as therein defined. Pursuant to such Assignment and Assumption Agreement, you are advised that the Transfer Effective Date will be February 18, 2016. PNC BANK, NATIONAL ASSOCIATION,as Administrative Agent By:Name:Steve C. RobertsTitle:Vice President ACCEPTED FOR RECORDATIONIN REGISTER: [Assignment and Assumption Agreement (Crocs)] Exhibit 21 List of Subsidiaries Subsidiary JurisdictionWestern Brands Holding Company, LLCColoradoCrocs Retail, LLCColoradoWestern Brands Netherlands Holding C.V.NetherlandsCrocs Puerto Rico, Inc.Puerto RicoCrocs Marine Ltd.Cayman Islands4246519 Canada Inc.CanadaOcean Minded, Inc.ColoradoJibbitz LLCColoradoBite, Inc.ColoradoCrocs General Partner LLCDelawareColorado Footwear C.V.NetherlandsCrocs Canada Inc.CanadaExo Italia S.R.L.ItalyCrocs Europe B.V.NetherlandsCrocs Brazil Comercio de Calcados LtdaBrazilCrocs US Latin American Holdings, LLCDelawareCrocs Italy S.r.l.ItalyCrocs Europe Stores S.L.SpainCrocs Stores Ireland LimitedIrelandCrocs Belgium NVBelgiumCrocs Portugal, Lda.PortugalCrocs Stores B.V.NetherlandsCrocs Germany GmbHGermanyCrocs UK LimitedUnited KingdomCrocs France S.A.R.L.FranceCrocs Nordic OYFinlandCrocs BH LLCBosnia-HerzgovinaCrocs Distribution FZEDubaiLLC Crocs CISRussiaPanama Footwear Distribution S. De R.L.PanamaCrocs Stores OYFinlandCrocs Stores ABSwedenCrocs Mexico TradingMexicoCrocs Mexico SRL de CVMexicoCrocs Servicios SRL de CVMexicoCrocs S.R.L.ArgentinaCrocs Chile Ltda.ChileCrocs Asia Pte Ltd.SingaporeCrocs Asia Pte Ltd.JapanCrocs Korea Pte Ltd.South KoreaCrocs Hong Kong Ltd.Hong KongCrocs Malaysia Sdn BhdMalaysiaCrocs Japan GKJapan  Crocs Footwear and Accessories (FICE2)ChinaCrocs Trading (Shanghai) Co. Ltd.ChinaCrocs Japan GKTaiwanCrocs Industrial (Hong Kong) Co. Ltd.Hong KongCrocs Singapore Pte Ltd.SingaporeCrocs India Private LimitedIndiaCrocs NZ LimitedNew ZealandCrocs Australia Pty Ltd.AustraliaCrocs South Africa (Proprietary) LimitedSouth AfricaCrocs Industrial (Shenzhen) Co. Ltd.ChinaCrocs Middle EastUAECrocs Gulf JVUAECrocs Vietnam, Ltd.Vietnam Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in Registration Statement Nos. 333-132312, 333-144705, 333-176696, and 333-204841 on Form S-8 of ourreports relating to the consolidated financial statements of Crocs, Inc. and subsidiaries (which report expresses an unqualified opinion and includes anexplanatory paragraph relating to a change in the method of accounting for income taxes as of December 31, 2015 due to the adoption of AccountingStandards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes) and the effectiveness of Crocs, Inc.’s internal control over financialreporting (which report expresses an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of materialweaknesses) dated February 29, 2016, appearing in the Annual Report on Form 10-K of Crocs, Inc. and subsidiaries for the year ended December 31, 2015. /s/ DELOITTE & TOUCHE LLP Denver, ColoradoFebruary 29, 2016 EXHIBIT 31.1 SECTION 302 CERTIFICATION I, Gregg S. Ribatt, certify that: 1. I have reviewed this annual report on Form 10-K of Crocs, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 29, 2016/s/ Gregg S. RibattGregg S. RibattChief Executive Officer EXHIBIT 31.2 SECTION 302 CERTIFICATION I, Carrie W. Teffner, certify that: 1. I have reviewed this annual report on Form 10-K of Crocs, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 29, 2016/s/ Carrie W. TeffnerCarrie W. TeffnerExecutive Vice President and Chief Financial Officer EXHIBIT 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, Chief Executive Officer and Chief Financial Officer of Crocs, Inc. (the “Company”), hereby certify, pursuant to 18 U.S.C. §1350, as adoptedpursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of their knowledge: (1) The Annual Report on Form 10-K of the Company for the year ended December 31, 2015 (“Form 10-K”) fully complies with the requirements ofSection 13(a) or section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), and (2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company forthe period covered by this Form 10-K. Date: February 29, 2016/s/Gregg S. RibattGregg S. RibattChief Executive Officer /s/ Carrie W. TeffnerCarrie W. TeffnerExecutive Vice President and Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to Crocs, Inc. and will be retained by Crocs, Inc. and furnished to theSecurities and Exchange Commission or its staff upon request. 

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