Exhibit 10.1
June 14, 2010
Quiksilver, Inc.
Quiksilver Americas, Inc.
Mountain & Wave S.à r.l.
c/o Quiksilver, Inc.
15202 Graham St.
Huntington Beach, CA 92649
Re: Exchange of Existing Debt for Common Stock
     Reference is made to the $125,000,000 Senior Secured Term Loan Facility
entered into as of July 31, 2009 among Rhône Group L.L.C., as Administrative
Agent (“Rhône”), Romolo Holdings C.V., Triton SPV L.P., Triton Onshore SPV L.P.,
Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P. (collectively, the
“Lenders”), Quiksilver, Inc. (“QS”) and Quiksilver Americas, Inc. (the “US
Borrower”) and the €20,000,000 Senior Secured Term Loan Facility entered into as
of July 31, 2009 among Rhône, the Lenders, QS and Mountain & Wave S.à r.l. (the
“European Borrower” and, together with the US Borrower, the “Borrowers”).
     Rhône, the Lenders, QS and the Borrowers (collectively, the “Parties”)
hereby agree to undertake the Exchanges (as defined in Annex A hereto) and
related transactions set forth in Annex A hereto on the terms, and subject to
the conditions, set forth in Annex A (the “Term Sheet”).
     The Parties shall promptly following the date hereof negotiate in good
faith the definitive Exchange Agreement and Stockholders Agreement (each as
defined in Annex A hereto), consistent with the Term Sheet.
Expenses and Indemnification
     QS and the Borrowers shall, jointly and severally, reimburse Rhône from
time to time following written demand promptly, and in any event within 10
business days following written demand, for all reasonable out-of-pocket and
documented fees and expenses previously and hereafter incurred in connection
with this Letter Agreement and the transactions contemplated herein (including
without limitation reasonable fees and expenses of counsel (it being understood
that QS shall not be liable for the fees and expenses of more than one
counsel)), whether or not the Exchanges are consummated or definitive agreements
are executed, and including all costs and expenses that Rhône incurs in
connection with the enforcement of any rights and remedies under this Letter
Agreement and the transactions contemplated hereby.
     QS and the Borrowers shall, jointly and severally, indemnify and hold
harmless Rhône, the Lenders, and each of their respective agents, attorneys,
accountants, advisors, consultants,

 

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directors, officers, employees, partners, affiliates and other representatives
(each, an “Indemnified Party”) from and against any and all actions, suits,
proceedings (including any investigations or inquiries), claims, damages,
losses, costs, liabilities and expenses of any kind or nature whatsoever that
may be incurred by or asserted or awarded against any Indemnified Party as a
result of or arising out of or in connection with or by reason of any matters
contemplated by this Letter Agreement or any related transaction.
Notwithstanding the foregoing, QS’s and each Borrower’s obligation to indemnify
any Indemnified Person hereunder does not extend to any loss, claim, damage,
expense or liability found in a final, nonappealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s gross
negligence, willful misconduct or bad faith. QS and each Borrower also agree
that no Indemnified Party shall have any liability (whether direct or indirect,
in contract or tort or otherwise) to such Borrower, or such Borrower’s
subsidiaries or affiliates or to such Borrower’s or their respective equity
holders or creditors arising out of, related to or in connection with any aspect
of the transactions contemplated hereby, except to the extent of direct, as
opposed to special, indirect, consequential or punitive, damages determined in a
final, nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party’s gross negligence, willful misconduct or
bad faith. Rhône and each Lender agree that neither QS nor any Borrower shall
have any liability for any special, indirect, consequential or punitive damages
incurred by any Indemnified Party.
     The expense reimbursement and indemnification provisions contained in this
Letter Agreement shall be superseded by the applicable provisions in the
definitive Exchange Agreement and Stockholders Agreement and shall be of no
further force and effect upon the execution of the definitive documentation.
Miscellaneous
     THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW AND THE NEW YORK CIVIL
PRACTICE LAWS AND RULES 327(B). Each of the Parties hereby irrevocably and
unconditionally submits to the exclusive jurisdiction of any state or Federal
court sitting in the Borough of Manhattan over any suit, action or proceeding
arising out of or relating to the transactions contemplated hereby, the Letter
Agreement or the performance of services hereunder.
     EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY SUCH
SUIT, ACTION, OR PROCEEDING AMONGST OR BETWEEN PARENT OR ANY BORROWER AND RHÔNE
OR ANY LENDER.
     This Letter Agreement may not be amended or any provision hereof waived or
modified except by an instrument in writing signed by the Parties. This Letter
Agreement is intended to bind and inure to the benefit of the Parties. This
Letter Agreement is solely for the benefit of the Parties and is not intended to
confer any benefits upon, or create any rights in favor of, any person other
than the Parties, their affiliates to the extent expressly provided in this
Letter Agreement and the Indemnified Persons.

 

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     This Letter Agreement (including the Term Sheet) sets forth the entire
agreement between the Parties with respect to the matters addressed herein and
supersedes all prior communications, written or oral, with respect hereto. If
any provision of this Letter Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions of this Letter Agreement will not in
any way be affected or impaired thereby.
     If the foregoing is in accordance with QS’s and the Borrowers’
understanding of the Parties’ agreement, please sign this Letter Agreement in
the space indicated below and return it to Rhône at the address set forth below.
Either Party may terminate the rights and obligations of the Parties under each
of the second and third paragraphs of this Letter Agreement in the event the
Parties fail to execute the Exchange Agreement prior to 5:00 p.m., New York
time, on June 30, 2010, provided that no Party may terminate such rights and
obligations of the Parties if such Party is in breach of this Letter Agreement.
This Letter Agreement may be executed in any number of counterparts, each of
which, when so executed, shall be deemed to be an original and all of which,
taken together, shall constitute one and the same Letter Agreement. Delivery of
an executed counterpart of a signature page to this Letter Agreement by
electronic transmission shall be as effective as delivery of an original
executed counterpart of this Letter Agreement.
[Remainder of page intentionally left blank]

 

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

      RHÔNE Group L.L.C.
 
   
By:
  /s/ M. Allison Steiner
 
    Name: M. Allison Steiner Title: CAO & General Counsel

     
To:
  Rhône Group L.L.C.
630 Fifth Avenue, 27th Floor
New York, NY 10111

      ROMOLO HOLDINGS C.V.
 
   
By:
  /s/ Baudoin Lorans
 
    Name: Baudoin Lorans Title: Authorized Signatory
 
    TRITON SPV L.P.
 
   
By:
  Triton GP SPV LLC, as General Partner

     
By:
  /s/ Baudoin Lorans
 
    Name: Baudoin Lorans Title: Authorized Signatory

      TRITON ONSHORE SPV L.P.
 
   
By:
  Triton GP SPV LLC, as General Partner

     
By:
  /s/ Baudoin Lorans
 
    Name: Baudoin Lorans Title: Authorized Signatory

 

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      TRITON OFFSHORE SPV L.P.
 
   
By:
  Triton GP SPV LLC, as General Partner

     
By:
  /s/ Baudoin Lorans
 
    Name: Baudoin Lorans Title: Authorized Signatory

      TRITON COINVESTMENT SPV L.P.
 
   
By:
  Triton GP SPV LLC, as General Partner

     
By:
  /s/ Baudoin Lorans
 
    Name: Baudoin Lorans Title: Authorized Signatory

 

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      The foregoing is agreed to and accepted
this            day of June, 2010
 
    QUIKSILVER, INC.
 
   
By:
  /s/ Charles S. Exon
 
    Name: Charles S. Exon Title: Chief Administrative Officer
 
    QUIKSILVER AMERICAS, INC.
 
   
By:
  /s/ Charles S. Exon
 
    Name: Charles S. Exon Title:
 
    MOUNTAIN & WAVE S.À R.L.
 
   
By:
  /s/ Charles S. Exon
 
    Name: Charles S. Exon Title: Type A Manager

 

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Annex A
QUIKSILVER, INC.
COMMON STOCK EXCHANGE TERM SHEET

     
Parties:
  Rhône Group L.L.C. (“Rhône”); Romolo Holdings C.V., Triton SPV L.P., Triton
Onshore SPV L.P., Triton Offshore SPV L.P. and Triton Coinvestment SPV L.P.
(collectively, the “Lenders”); Quiksilver, Inc. (“QS”); Quiksilver Americas,
Inc. (the “US Borrower”); and Mountain & Wave S.à r.l. (the “European Borrower”
and, together with the US Borrower, the “Borrowers”).
 
   
Proposed Transactions:
  Exchange (the “First Exchange”) of $75,000,000 of the principal amount of the
$125,000,000 Senior Secured Term Loan Facility entered into as of July 31, 2009
among Rhône, the Lenders, QS and the US Borrower (the “US Term Loan”) and the
€20,000,000 Senior Secured Term Loan Facility entered into as of July 31, 2009
among Rhône, as Administrative Agent, the Lenders, QS and the European Borrower
(the “European Term Loan” and, together with the US Term Loan, the “Term
Loans”), such First Exchange to be applied on a pro rata basis with respect to
the principal amounts outstanding under the US Term Loan and European Term Loan,
for a number of shares of common stock, par value $0.01 per share, of QS (the
“Common Stock”) based on the ratio set forth under “Exchange Ratio”. In
addition, the Borrowers will have the option, exercisable for a period of
60 days from the date the parties enter into the agreement (the “Exchange
Agreement”) to effect the First Exchange, to require the Lenders to exchange all
or a portion (as specified by the Borrowers) of the remaining principal amount
of the Term Loans for Common Stock at the Exchange Ratio (such second exchange
is referred to as the “Standby Exchange” and the Standby Exchange and the First
Exchange are referred to as the “Exchanges”), provided that the number of shares
of Common Stock issuable upon exercise of the Standby Exchange shall not result
in a change of control under the debt agreements. For the avoidance of doubt,
references to principal amount in this Term Sheet shall include all accrued
payment-in-kind interest on the Term Loans.
 
   
 
  In the event that immediately following the closing of the Exchanges,
$30,000,000 or less in aggregate principal amount of the Term Loans remains
outstanding, Rhône, the Lenders and the Borrowers agree to modify
Section 7.14(a) of each of the credit agreements governing the Term Loans

 

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  so as to replace the tables therein with the following:

          Measurement Period   Americas Consolidated Ending   EBITDA
January 31, 2010
  $ 20,000,000  
April 30, 2010
  $ 20,000,000  
July 31, 2010
  $ 18,000,000  
October 31, 2010
  $ 24,000,000  
January 31, 2011
  $ 27,000,000  
April 30, 2011
  $ 30,000,000  
July 31, 2011
  $ 33,000,000  
October 31, 2011
  $ 39,000,000  
January 31, 2012
  $ 42,000,000  
April 30, 2012
  $ 45,000,000  
July 31, 2012
  $ 48,000,000  
October 31, 2012 and the last day
  $ 51,000,000  
of each Fiscal Quarter thereafter
       

     
Exchange Ratio:
  $4.50 per share (the “Exchange Ratio”).
 
   
Closing Date of Exchanges:
  With respect to the First Exchange, the later of (i) August 1, 2010 and
(ii) two business days following satisfaction of the conditions to closing the
First Exchange set forth under “Closing Conditions”. With respect to the Standby
Exchange, the latest of (i) August 1, 2010, (ii) two business days following
satisfaction of the conditions to closing the Standby Exchange set forth under
“Closing Conditions” and (iii) five business days following notice by the
Borrowers to the Lenders that they are exercising their option with respect to
the Standby Exchange.
 
   
Closing Conditions:
  With respect to each of the Exchanges:
 
   
 
 
•     Receipt within 90 days of the date of the Exchange Agreement of the
approvals to effect each of the First Exchange and the Standby Exchange by QS’s
stockholders, as required pursuant to Section 312.03 of the New York Stock
Exchange Listed Company Manual.
 
   
 
 
•     Expiration or termination of the waiting period and any extension of such
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the “HSR Act”),
applicable to the

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      Exchanges.
 
   
 
 
•     Negotiation, execution and delivery of the Exchange Agreement and the
Stockholders Agreement (as set forth under “Registration Rights”) by QS and
Rhône, and the Lenders consistent with this Term Sheet and customary for a
transaction of this type.
 
   
 
 
•     Other customary closing conditions, including, without limitation,
delivery of the Common Stock being issued to the Lenders in such Exchange;
delivery to the Lenders of a customary legal opinion of QS’s outside legal
counsel (which opinion shall be subject to customary limitations, exceptions,
assumptions and qualifications and shall be limited to the following matters:
the due authorization, execution and delivery of each of the Exchange Agreement
and the Stockholders Agreement; enforceability of each of the Exchange Agreement
and the Stockholders Agreement; the valid issuance of the Common Stock; the
valid existence and good standing of QS; and execution and delivery of the
Exchange Agreement and the Stockholders Agreement and the consummation of the
transactions contemplated thereby do not (i) constitute a violation of, or a
default under, the material contracts filed as Exhibits 4.1, 10.11, 10.12, 10.13
and 10.16 to QS’s Form 10-K for the fiscal year ended October 31, 2009,
(ii) result in a change of control under the material contracts filed as
Exhibits 4.1 and 10.13 to such Form 10-K (subject to (A) the accuracy of the
representation and warranty made by Rhone and the Lenders in the Exchange
Agreement as to the number of shares of Common Stock that Rhone and its
affiliates (including the Lenders) collectively beneficially own or have the
right to acquire and (B) an officer’s certificate from QS as to the beneficial
ownership of Rhone and its affiliates (including the Lenders) (expressed as a
percentage) based on the information provided in clause (A) and in the case of
Exhibit 4.1, the number of outstanding shares of Voting Stock (as

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      determined in accordance with and as defined in the Indenture (defined
below)) of QS and in the case of Exhibit 10.13, based on the number of
outstanding equity interests of QS entitled to vote for members of the Board on
a fully-diluted basis (as determined in accordance with and as defined in the
agreement filed as Exhibit 10.13), in each case, such outstanding number to be
provided by QS, or (iii) violate or conflict with or result in any contravention
of the DGCL, the laws of the State of New York or the laws of the State of
California); delivery of officers’ certificates (including attestation as to all
customary representations and warranties in the Exchange Agreement as of closing
of the First Exchange and the Standby Exchange, as applicable); payment of all
amounts set forth under “Fees and Expenses” due at the time of closing of such
Exchange; and such other customary matters reasonably requested by the Lenders.
 
  With respect to the Standby Exchange, receipt by Rhône within 60 days of the
date of the Exchange Agreement of an irrevocable, written notice from QS
indicating that QS has elected to undertake the Standby Exchange.
 
   
Termination Fee:
  In the event the First Exchange fails to close due to (i) the failure to
obtain stockholder approval of the First Exchange and QS prepays any portion of
the outstanding principal amount of the Term Loans within 6 months from the
failure to obtain such stockholder approval, (ii) the Board changes its
recommendation to the stockholders with respect to the Exchanges, or (iii) a
material breach by QS of its obligations under the Exchange Agreement as set
forth under “QS’s Obligations under the Exchange Agreement”, QS shall pay a
termination fee to Rhône, as agent for the Lenders, in an aggregate amount equal
to $10.0 million. Rhône, as agent for the Lenders, will not be entitled to
receive a termination fee under any other circumstances and the termination fee
shall be the exclusive remedy of Rhône, as agent for the Lenders, as a result of
a termination of the Exchange Agreement by QS or Rhône and the Lenders.
 
   
QS’s Obligations under the Exchange Agreement:
  QS’s obligations under the Exchange Agreement will include, without
limitation, using its reasonable best efforts to:
 
   
 
 
•     promptly prepare and file with the SEC a proxy statement seeking
stockholder approval of the Exchanges;
 
   
 
 
•     respond as promptly as reasonably practicable to any comments of the SEC
with respect to the proxy statement and to cause the definitive proxy

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      statement to be filed with the SEC and mailed to QS’s stockholders as
promptly as reasonably practicable;
 
   
 
 
•     hold a special meeting of QS’s stockholders for the purpose of obtaining
stockholder approval of the Exchanges no later than 90 days after the date of
the Exchange Agreement;
 
   
 
 
•     solicit from QS’s stockholders proxies in favor of the approval of the
Exchanges, including the unanimous recommendation by the Board (other than the
Rhône directors, who will abstain from all discussion and voting with respect to
the Exchanges) to the stockholders to vote in favor of the Exchanges;
 
   
 
 
•     take all other actions reasonably necessary or advisable to secure the
affirmative vote of QS’s stockholders required by the DGCL, the bylaws or
certificate of incorporation of QS, the Exchange Agreement or the Stockholders
Agreement, and the rules and regulations of the NYSE, to obtain the approval of
the Exchanges; and
 
   
 
 
•     subject to satisfaction of the conditions to closing, consummate the First
Exchange.
 
   
Limitations on Transfer:
  No transfers of the Common Stock acquired in the Exchanges without the prior
written consent of QS, other than Permitted Transfers.
 
   
 
  “Permitted Transfer” shall mean any transfer (i) to an affiliate of Rhône
(which shall include any Rhône-controlled entity) or in a pro rata distribution
to the partners of a Rhône-controlled fund, (ii) in an underwritten public
offering, other broad distribution sale (including Rule 144) or open-market
transaction, (iii) to any person in connection with an offer by such person to
purchase 100% of the Common Stock then outstanding or (iv) to any person of a
number of shares of Common Stock issued pursuant to the Exchanges representing
no greater than 15% of the then-outstanding Common Stock.
 
   
Registration Rights:
  At the closing of the First Exchange, QS and the Lenders to enter into a
stockholders agreement (the “Stockholders Agreement”) providing (i) that the
Warrant and Registration

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  Rights Agreement, dated July 31, 2009, among QS, the Lenders as the Initial
Warrant Holders and Rhône Capital III L.P. (the “Warrant Agreement”), is amended
such that (x) any shares of Common Stock issuable pursuant to the Exchanges and
any shares of Common Stock or options exercisable for shares of Common Stock
issued to any Rhône-designated directors shall be considered Registrable
Securities (as defined in the Warrant Agreement) and (y) Section 4.1(b) shall
provide for five Demand Registrations (as defined in the Warrant Agreement) and
(ii) for supplemental demand registrations specified under “Board
Representation” that shall provide for registration rights in respect of the
Common Stock being issued in the Exchanges on the same basis as set forth in the
Warrant Agreement.
 
   
Standstill Agreement:
  Stockholders Agreement to provide that, until the date on which Rhône and its
affiliates cease to beneficially own, or have the right to acquire,
collectively, 20% of the Common Stock on a fully-diluted basis, Rhône and its
affiliates will not, directly or indirectly (other than with the prior approval
of the independent directors of the Board of Directors of QS (the “Board”) or
pursuant to a Permitted Transaction), (i) effect or seek, offer or propose
(whether publicly or otherwise) to effect, or announce any intention to effect
or cause or participate in, (x) any acquisition of additional shares of Common
Stock (or beneficial ownership thereof) or securities that are, on their terms,
convertible or exchangeable for shares of Common Stock or options, rights or
warrants to acquire shares of Common Stock (or beneficial ownership thereof) if,
as a result of any such acquisition, Rhône and its affiliates (including the
Lenders) would “beneficially own” more than 34.99% of the “total voting power”
of the “Voting Stock” (such terms to be defined in a manner consistent with the
Indenture dated July 22, 2005 in respect of the 6 7/8% Senior Notes due 2015
(the “Indenture”)); (y) any tender or exchange offer or merger involving QS; or
(z) any “solicitation” of “proxies” (as such terms are used in the proxy rules
of the Securities and Exchange Commission) or written consents with respect to
any voting securities of QS, in each case in order to elect directors to the
Board (other than any solicitation of proxies to elect any director that Rhône
is entitled to designate as set forth under “Board Representation”, but who has
not been nominated by the Board and/or elected by the stockholders); or
 
   
 
  (ii) join, form or participate in any “group” within the

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  meaning of Section 13(d), if such group would, as a result, own more than
34.99% of the Common Stock (calculated as set forth in clause (i)(x) above);
provided that such standstill agreement shall terminate in its entirety upon the
occurrence of a change of control under the Indenture or any other material debt
agreement with a change of control trigger (other than as a result of Rhône
breaching its obligations under the standstill agreement).

“Permitted Transaction” shall mean (i) any acquisition by Rhône or any affiliate
of Rhône (including, for this purpose, any partner or employee of Rhône then
serving on the Board) directly from QS and (ii) any acquisition made pursuant to
a tender or exchange offer made to all of QS’s stockholders.
 
   
Preemptive Rights:
  So long as the Lenders continue to own at least 50% of the shares of Common
Stock issued to the Lenders on the closing of the First Exchange, the
Stockholders Agreement shall provide the Lenders with preemptive rights, subject
to customary exceptions, allowing them to maintain their proportionate ownership
interest in QS based on the number of shares of Common Stock outstanding
immediately prior to such issuance, without giving effect to any Warrants held
by the Lenders. The Lenders shall waive their respective preemptive rights under
Section 5.6 of the Warrant Agreement with respect to the first underwritten
public offering of Common Stock, if any, occurring prior to September 30, 2010
with gross proceeds of no more than $115 million, and the shares of Common Stock
issuable in the Exchanges. For the avoidance of doubt, the preemptive rights set
forth in Section 5.6 of the Warrant Agreement shall otherwise remain in effect.
 
   
Additional Rights:
  So long as the Lenders’ continue to own at least 50% of the shares of Common
Stock issued on the closing of the First Exchange, Stockholders Agreement shall
provide for (i) the same information rights as set forth in Sections 6.01(a)
through 6.01(d) of the credit agreement governing the US Term Loan,
(ii) provisions equivalent to Sections 4.11 (Rule 144 reporting) and 5.8
(Issuances to affiliates) of the Warrant Agreement and (iii) subject to
exceptions for bona fide underwritten public offerings and issuances of Excluded
Securities (as defined in the Warrant Agreement), consent rights with respect to
any issuance of Common Stock by QS at a price less than the lower of (A) the
Exchange Ratio and (B) the fair market value of the

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  Common Stock. None of the rights or obligations under the Stockholders
Agreement shall apply to any transferee (other than an affiliate of Rhône or the
Lenders) to whom shares of Common Stock are transferred by the Lenders.
 
   
Board Representation:
  Rhône shall be entitled to designate two directors who shall be appointed to
the Board, provided that (i) as of the date on which the holders of the Common
Stock received in the Exchanges have sold 33 1/3% of such Common Stock to any
persons other than affiliates, then Rhône shall be entitled to designate one
director who shall be appointed to the Board, and (ii) as of the date on which
the holders of the Common Stock received in the Exchanges have sold 66 2/3% of
such Common Stock to any persons other than affiliates, then the right of Rhône
to designate directors shall terminate. Notwithstanding the above, for so long
as any directors have been appointed to, and sit on, the Board pursuant to the
Warrant Agreement, then such directors shall be counted as directors designated
by Rhône in satisfaction of its rights hereunder.

If QS fails to nominate or vote its proxies in favor of, or QS’s stockholders
fail to elect, any director proposed by Rhône pursuant to the rights set forth
in the immediately preceding paragraph, then the standstill rights set forth
above under “Standstill Agreement” shall terminate and Rhône shall be entitled
to two supplemental demand registrations.
 
   
Fees and Expenses:
  QS will pay all reasonable and documented out-of-pocket costs and expenses
associated with the Exchanges (including, without limitation, the filing fees in
connection with all necessary notifications and other filings under the HSR
Act). Any other expenses for which reimbursement is sought (except for expenses
subject to reimbursement under the credit agreements governing the Term Loans)
shall be subject to the approval of the Board. For the avoidance of doubt,
nothing under “Fees and Expenses” shall amend the obligations of QS under the
credit agreements governing the Term Loans.
 
   
 
  In addition, upon the closing of each of the First Exchange and the Standby
Exchange, QS shall pay Rhône, as agent for the Lenders, an exchange fee equal to
4.75% of the principal amount of the Term Loans subject to such Exchange.
 
   
 
  Upon the closing of each of the First Exchange and the

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  Standby Exchange, QS shall pay the Lenders all accrued interest on the
principal amount of the Term Loans subject to such Exchange through the date of
such Exchange and all other fees then due under Sections 2.05(a), 2.09(a) and
2.09(b) of the credit agreement governing the US Term Loan.
 
   
Governing Law:
  New York.

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