Document:

ex10-3.htm

Exhbit 10.3

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”), dated as of September 9, 2015 (the “Effective Date”), is made by and between True Drinks Inc., a Delaware corporation, located at 18552 MacArthur Blvd., Irvine, California 92612 (the “Company”), and Robert Van Boerum, whose address is Rancho Santa Margarita, CA. (“Employee”), based upon the following:

 

RECITALS 

 

WHEREAS, the Company wishes to retain the services of Employee, and Employee wishes to render services to the Company, as its Chief Operating Officer; and

 

WHEREAS, the Company and Employee wish to set forth in this Agreement the duties and responsibilities that Employee has agreed to undertake on behalf of the Company.

 

THEREFORE, in consideration of the foregoing and of the mutual promises contained in this Agreement, the Company and Employee (who are sometimes individually referred to as a “party” and collectively referred to as the “Parties”) agree as follows:

 

AGREEMENT

 

1. TERM.

 

The term of Employee’s employment under this Agreement shall commence effective as of the Effective Date and shall continue for a period of two years (the “Term”), unless earlier terminated as herein provided or by operation of law. Thereafter, this Agreement and the Term shall be extended automatically for successive one year periods unless terminated in accordance with the terms hereof or unless either party hereto, not less than one month before the commencement of any such one year extension period, provides notice of such termination to the other party hereto. For all purposes of this Agreement, the Term shall include and be deemed to include all extensions of this Agreement. This Agreement may be terminated prior to the expiration of the Term by either party, without limitation, by the provision of notice of termination of this Agreement to the other party thirty (30) days in advance, except as permitted upon termination for “Cause” as set forth in Section 8. The notice period does not commence until actually received by the other party.

 

2. GENERAL DUTIES.

 

Employee shall report to the Company’s Chief Executive Officer or as otherwise instructed by the Company’s board of directors (the “Board”) and shall render his services and assert his best efforts on behalf of the Company, devoting full time in the performance of his duties consistent with the needs of the Company and the practices of the industry. Employee shall perform his duties diligently and competently. The Company recognizes that the Employee has positions on other Community based Advisory Boards and on occasion may be contracted as a Consultant by other third parties. The Company accepts this as a reality and, provided the Employee renders his service on a full time basis to Company, the Company accepts this on a “time to time” basis during the period of this Agreement. Employee shall be primarily responsible for the duties set forth on Exhibit A attached hereto. Employee shall do and perform all services, acts, or things necessary or advisable to discharge his duties under this Agreement, and such other duties as are commonly performed by an employee of his rank or which may, from time to time, be prescribed by the Company through its managers, the Board, and/or the Company’s executives. Furthermore, Employee agrees to cooperate with and work to the best of his ability with the Company’s management team, the officers and other employees, to continually improve the Company’s reputation in its industry for quality products and performance.

 

  

-1-

  

 

3. COMPENSATION.

 

(a) Base Salary. So long as Employee’s employment continues hereunder, the Company shall pay to Employee a monthly base salary in the amounts set forth below (the “Base Salary”). The Base Salary shall be $14,583.33 per month. At the beginning of each successive 12 month period over the term of this Agreement thereafter, this annual salary shall be increased over the next 12 months by a sum equal to or greater than 7.5% of the annual salary for the preceding 12 month period, provided that the Board of Directors approves such increase. Compensation reviews for Employee will be at least annually.

 

The Base Salary shall be paid to Employee in accordance with the periodic payroll practices of the Company for employees.

 

(b) Bonus Plan. Employee shall be eligible for a bonus equal of up to 30% of the Employee’s Base Salary, in the sole discretion of the Compensation Committee of the Board.  Such bonus shall be based on the performance of Employee, as determined by the Chief Executive Officer, and the achievement of certain operating and other objectives established by the Compensation Committee. Any annual bonus payable hereunder shall be paid within 45 days after the end of the calendar year in which the bonus is earned, or as soon thereafter as reasonably practicable.

 

                                (c) Stock Compensation. The Employee shall be eligible to receive equity incentive awards, in the form of stock options, restricted stock or such other form of equity or equity-based incentive compensation as determined by the Compensation Committee, which shall be determined in good faith by the Compensation Committee in its sole discretion consistent with the Company’s equity incentive plan(s) then in effect.   All equity incentive grants shall be subject to the vesting schedule as defined within the Company’s equity incentive plan(s) in effect.  Notwithstanding the foregoing, any unvested equity incentive awards shall vest immediately upon a change of control of the Company.  For the purposes of this Agreement, a “change in control” shall mean the acquisition by any individual, entity, or group of beneficial ownership of 50% or more of the combined voting power of the then outstanding voting securities of the Company, or any parent of the Company; provided, however, a change in control shall not occur in the event the change in control results from the acquisition of control by an existing shareholder of the Company.

 

                                (e) Indemnification Insurance; Indemnification. If during any period of the Term, Employee is a director or officer of the Company, the Company shall provide Employee with director’s and officer’s liability insurance to the extent that such insurance is provided to other directors and officers of the Company and is available at commercially reasonable premiums. Such insurance shall be in such form, and shall provide for such coverage and deductibles, as shall be commercially reasonable and standard for companies in businesses and circumstances similar to those of the Company.

 

(f) Participation In Employee Benefit Plans. Employee shall have the same rights, privileges, benefits and opportunities to participate in any of the Company’s employee benefit plans (health, dental and vision) which may now or hereafter be in effect on a general basis for executive officers or employees of the Company. The Company may discontinue any benefit plans and otherwise amend and change the type and quantity of benefits it provides in its sole discretion, provided that the Company continues to provide to Employee any benefits specifically set forth herein. In the event Employee receives payments from a disability plan maintained by the Company, the Company shall have the right to offset such payments against Employee’s Base Salary and any bonuses otherwise payable to Employee during the period for which payments are made by such disability plan.

 

4. REIMBURSEMENT OF BUSINESS EXPENSES.

 

The Company shall promptly reimburse Employee for all reasonable business expenses incurred by Employee in connection with the business of the Company. However, each such expenditure shall be reimbursable only if Employee furnishes to the Company adequate records and other documentary evidence required by federal and state statutes and regulations issued by the appropriate taxing authorities for the substantiation of each such expenditure as an income tax deduction.

 

  

-2-

  

 

5. ANNUAL VACATION. Employee shall be entitled to 15 days vacation time for each calendar year during the Term of this Agreement. 

 

6. INDEMNIFICATION OF LOSSES.

 

The Company shall indemnify and hold harmless Employee from any and all liability arising from Employee’s actions taken on the Company’s behalf and within Employee’s scope of duties and authority, so long as such actions were taken by Employee in good faith and in furtherance of the Company’s business. The Company shall indemnify and hold Employee harmless to the full extent of the law from any and all claims, losses and expenses sustained by Employee as a result of any action taken by him to discharge his duties under this Agreement, and the Company shall defend Employee, at the Company’s expense, in connection with any and all claims by shareholders or third parties which are based upon actions taken by Employee to discharge his duties under this Agreement.

 

7. PERSONAL CONDUCT.

 

Employee agrees to promptly and faithfully comply with all present and future policies, requirements, directions, and reasonable requests of Company executives and/or management and any rules, regulations, or other policies of the Company in connection with the Company’s business and Employee’s duties hereunder.

 

8. TERMINATION BY THE COMPANY.

 

Notwithstanding any provision hereunder, the Company may terminate Employee’s employment immediately if such termination is for “Cause.” For purposes of this Agreement, “Cause” shall mean:

 

(a) Employee is convicted of any fraud or embezzlement against the Company; or

 

(b) After written notice and an opportunity to cure, Employee willfully breaches or habitually neglects the duties and responsibilities which he is required to perform under the terms of this Agreement; or

 

(c) Employee commits such acts of dishonesty, fraud, misrepresentation, gross negligence or willful misconduct which results in material harm to the Company or its business; or

 

(d) Employee violates any law, rule or regulation applicable to the Company or Employee relating to the business operations of the Company that may have a material adverse effect upon the Company’s business, operations or condition (financial or otherwise).

 

The Company may terminate this Agreement for Cause immediately upon written notice of termination to Employee; provided, however, if the Company terminates this Agreement due to Employee’s willful breach or habitual neglect of the duties he is required to perform, Employee shall be entitled to a period of thirty (30) days from the date of the initial written notice of termination to cure said breach. Except as otherwise set forth in this Section 8, upon any termination for “Cause,” the obligations of Employee and the Company under this Agreement shall immediately cease. Such termination shall be without prejudice to any other remedy to which the Company may be entitled either at law, in equity, or under this Agreement.

 

9. COMPENSATION UPON TERMINATION

 

(a) Upon Termination For Cause. In the event the Company terminates Employee’s employment for Cause in accordance with Section 8, Employee shall receive any payments of Base Salary earned through and including the date of termination (the “For Cause Payment”).

  

-3-

  

 

The For Cause Payment shall constitute Employee’s sole right and exclusive remedy in the event of such termination of Employee’s employment, and upon payment by the Company of the For Cause Payment, all other rights or remedies otherwise available shall cease immediately, and the Company shall have no further obligations to Employee under this Agreement, except that Employee shall have the right to exercise all benefits that have vested as of the date of termination to which Employee is entitled under any compensation or employee benefit plan of the Company in accordance with the terms and provisions of such compensation or employee benefit plan, all other documents and agreements that give rise to or otherwise govern such vested benefits and all applicable laws and regulations. Employee shall be entitled to receive such For Cause Payment only after Employee executes a waiver and general release in favor of the Company (but not Employee).

 

(b) Upon Termination Other Than For Cause. In the event Employee’s employment is terminated other than pursuant to Section 8, in exchange for execution of a general release and California Civil Code Section 1542 waiver (a copy of which is attached hereto as Exhibit B), the Company shall pay Employee an amount equal to six months of Employee’s Base Salary in effect on the date of termination, the “Without Cause Severance Payment”), plus reimbursement for business expenses incurred by Employee up to the date of termination. The Without Cause Severance Payment will be paid within sixty (60) days after the Company’s receipt of the executed general release and California Civil Code Section 1542 waiver. The Without Cause Severance Payment is in addition to payment of Base Salary earned and payment of any unused and accrued vacation through and including the date of termination. In addition, in the event Employee’s employment is terminated other than pursuant to Section 8, all equity incentive awards held by Employee that are subject to vesting shall automatically upon such termination be fully vested and shall remain exercisable, in the case of stock options, in accordance with their terms for a period of twelve (12) months following the date of such termination (notwithstanding any term or provision of any document (e.g., a stock option agreement) to the contrary).

 

The Without Cause Severance Payment shall constitute Employee’s sole right and exclusive remedy in the event of such termination of Employee’s employment, and upon payment by the Company of the Without Cause Severance Payment, all other rights or remedies otherwise available shall cease immediately, and the Company shall have no further obligations to Employee under this Agreement, except that Employee shall have the right to exercise all benefits that have vested as of the date of termination to which Employee is entitled under any compensation or employee benefit plan of the Company in accordance with the terms and provisions of such compensation or employee benefit plan, all other documents and agreements that give rise to or otherwise govern such vested benefits and all applicable laws and regulations.

 

(c) Exclusivity of Payments. Upon termination of Employee’s employment under this Agreement, Employee shall not be entitled to any severance payment or severance benefit from the Company other than the payments and benefits provided in this Section 9.

 

(d) Withholding of Taxes; Tax Reporting. The Company may withhold from any amount payable under this Agreement all such federal, state, city and other taxes and may file with appropriate governmental authorities all such information, returns or other reports with respect to the tax consequences of any amount payable under this Agreement as may in the Company’s reasonable judgment be required.

 

  

-4-

  

10. PROPRIETARY INFORMATION.

 

(a) Company Information. Employee agrees at all times during the period of his employment with the Company and thereafter, to hold in strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person, firm, corporation or other entity without written authorization of the Board, any Proprietary Information (as defined herein) of the Company which Employee obtains, creates, or otherwise accesses in any way. Employee further agrees not to make copies of such Proprietary Information except as authorized by the Company. Employee understands that “Proprietary Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services, suppliers, customer lists and customers (including, but not limited to, customers of the Company on whom Employee called or with whom Employee became acquainted during the employment), prices and costs, markets, software, developments, inventions, formulas, technology, designs, drawings, marketing, licenses, finances, budgets or other business information disclosed to Employee by the Company either directly or indirectly in writing, orally or by drawings or observation of parts or equipment or created by Employee during the period of employment, whether or not during working hours. Employee understands that Proprietary Information also includes, but is not limited to, information pertaining to any aspects of the Company’s business which is either information not known by actual or potential competitors of the Company or is proprietary information of the Company or its customers or suppliers, whether of a technical nature or otherwise. Employee further understands that Proprietary Information does not include any of the foregoing items which has become publicly and widely known and made generally available through no wrongful act of Employee or of others who were under confidentiality obligations as to the item or items involved.

 

(b) Former Employer Information. Employee represents that his performance of all terms of this Agreement as an employee of the Company have not breached and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Employee in confidence or trust prior or subsequent to the commencement of employment with the Company, and Employee will not disclose to the Company, or induce the Company to use, any inventions, confidential or proprietary information or material belonging to any previous employer or any other party.

 

11. INVENTIONS.

 

(a) Inventions Retained and Licensed. Exhibit B attached hereto contains a full and exhaustive list describing with particularity all inventions, original works of authorship, developments, improvements, and trade secrets which were made or otherwise created by Employee prior to the commencement of Employee’s employment hereunder (collectively “Prior Inventions”). Such Prior Inventions belong solely to Employee or belong to Employee jointly with another as listed therein, which relate in any way to any of the Company’s proposed businesses, products or research and development, and which are not assigned to the Company hereunder; or, if no such list is attached, Employee represents that there are no such Prior Inventions. If, in the course of employment with the Company, Employee incorporates into a Company product or service a Prior Invention owned by Employee or in which Employee has an interest, the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, worldwide license (with the right to sublicense) to make, have made, copy, modify, make derivative works of, use, sell and otherwise distribute such Prior Invention as part of or in connection with such product, process or machine.

 

(b) Assignment of Inventions. Employee agrees that Employee will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assign to the Company, or its designee, all his right, title and interest throughout the world in and to any and all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets, whether or not patentable or registrable under copyright or similar laws, which Employee may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of time in which Employee is employed by the Company (collectively referred to as “Inventions”), except as provided in Section 10(e) below. Employee further acknowledges that all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets which are made by Employee (solely or jointly with others) within the scope of and during the period of employment with the Company are “works made for hire” (to the greatest extent permitted by applicable law) and are compensated by the compensation provided to Employee pursuant to this Agreement, unless regulated otherwise by the mandatory law of the state of California.

 

  

-5-

  

 

(c) Maintenance of Records. Employee agrees to keep and maintain adequate and current written records of all Inventions made by Employee (solely or jointly with others) during the period of employment with the Company. Such records may be in the form of notes, drawings, flow charts, electronic data or recordings, laboratory notebooks, and any other format and shall be made available to and remain the sole property of the Company at all times. Employee agrees not to remove such records from the Company’s place of business except as expressly permitted by Company policy which may, from time to time, be revised at the sole election of the Company.

 

(d) Assistance and Power of Attorney. Employee agrees to assist the Company, or its designee, at the Company’s expense, in every way to secure the Company’s rights in the Inventions and any copyrights, patents, trademarks, mask work rights, moral rights, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments, recordations, and all other instruments which the Company shall deem necessary in order to apply for, obtain, maintain and transfer such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents or other intellectual property rights relating thereto. Employee further agrees that it is and shall remain Employee’s obligation to execute or cause to be executed, when it is in Employee’s power to do so, any such instrument or papers as required by the Company after the termination of this Agreement until the expiration of the last such intellectual property right to expire in any country of the world. In the event the Company is unable because of any mental or physical incapacity or unavailability or for any other reason to secure Employee’s signature to apply for or to pursue any application for any United States or foreign patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as above, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and on Employee’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters patent or copyright registrations thereon with the same legal force and effect as if originally executed by Employee. Employee hereby waives and irrevocably quitclaims to the Company any and all claims, of any nature whatsoever, which Employee now or hereafter has for infringement of any and all proprietary rights assigned to the Company.

 

(e) Exception to Assignments. Employee understands that the provisions of this Agreement requiring assignment of Inventions to the Company do not apply to any invention which qualifies fully under the provisions of California Labor Code Section 2870 (attached hereto as Exhibit C). Employee shall advise the Company promptly in writing of any inventions that Employee believe meet such provisions and are not otherwise disclosed on Exhibit B.

 

12. RETURNING COMPANY DOCUMENTS.

 

At the time of the termination of Employee’s employment with the Company, Employee shall deliver to the Company (and will not keep in his possession, recreate or deliver to anyone else) any and all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks, materials, flow charts, equipment, other documents or property, or reproductions of any aforementioned items developed by Employee pursuant to Employee’s employment with the Company or otherwise belonging to the Company, its successors or assigns. Employee further agrees any property situated on the Company’s premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice. In the event of the termination of Employee’s employment hereunder, Employee agrees to sign and deliver a “Termination Certification” is a form reasonably requested by the Company.

 

13. NOTIFICATION TO OTHER PARTIES.

 

In the event that Employee leaves the employ of the Company, Employee hereby consents to notification by the Company to his new employer about Employee’s rights and obligations under this Agreement.

 

  

-6-

  

 

14. SOLICITATION OF EMPLOYEES, CONSULTANTS AND OTHER PARTIES.

 

During the period of Employee’s employment with the Company, and for a period of twenty-four (24) months immediately following the termination of Employee’s employment with the Company for any reason, Employee shall not either directly or indirectly solicit, induce, recruit or encourage any of the Company’s employees or consultants to terminate their relationship with the Company, or take away such employees or consultants, or attempt to solicit, induce, recruit, encourage or take away employees or consultants of the Company, either for himself or for any other person or entity. Further, for a period of twenty-four (24) months following termination of Employee’s employment with the Company for any reason, with or without cause, Employee shall not solicit any investor in, licensor to, or customer of the Company or licensee of the Company’s products, with respect to any business, products or services who are competitive to the products or services offered by the Company or under development as of the date of termination of Employee’s employment with the Company. Employee further agrees that, during the Term and for a period of five years following the termination of this Agreement, Employee will not engage in any conduct that is injurious to the reputation(s) and interest(s) of the Company and/or the Company’s past or present directors, officers, agents, fiduciaries, trustees, administrators, employees or assigns, including but not limited to disparaging (or inducing or encouraging others to disparage) the Company and/or any of the foregoing individuals. For purposes of this Agreement, the term “disparage” includes without limitation, making any statement that would adversely affect in any manner the conduct of the Company’s businesses, the business reputation of the Company and/or any of the foregoing individuals, and/or the personal reputation of any of the foregoing individuals.

 

If any of the foregoing provisions of this Section 14 is found by any court, agency or arbitrator of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend over the maximum period of time, range of activities or geographic area as to which it may be enforceable.

 

15. MISCELLANEOUS

 

(a) Preparation of Agreement. It is acknowledged by each party that such party either had separate and independent advice of counsel or the opportunity to avail itself or himself of the same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement.

 

(b) Cooperation. Each party agrees, without further consideration, to cooperate and diligently perform any further acts, deeds and things and to execute and deliver any documents that may from time to time be reasonably necessary or otherwise reasonably required to consummate, evidence, confirm and/or carry out the intent and provisions of this Agreement, all without undue delay or expense.

 

(c) Interpretation.

 

i. Entire Agreement/No Collateral Representations. Each party expressly acknowledges and agrees that this Agreement, including all exhibits attached hereto: (1) is the final, complete and exclusive statement of the agreement of the parties with respect to the subject matter hereof; (2) supersedes any prior or contemporaneous agreements, promises, assurances, guarantees, representations, understandings, conduct, proposals, conditions, commitments, acts, courses of dealing, warranties, interpretations or terms of any kind, oral or written (collectively and severally, “Prior Agreements”), and that any such Prior Agreements are of no force or effect except as expressly set forth herein; and (3) may not be varied, supplemented or contradicted by evidence of any Prior Agreement, or by evidence of subsequent oral agreements. Any agreement hereafter made shall be ineffective to modify, supplement or discharge the terms of this Agreement, in whole or in part, unless such agreement is in writing and signed by the party against whom enforcement of the modification or supplement is sought.

 

  

-7-

  

 

ii. Waiver. No breach of any agreement or provision herein contained, or of any obligation under this Agreement, may be waived, nor shall any extension of time for performance of any obligations or acts be deemed an extension of time for performance of any other obligations or acts contained herein, except by written instrument signed by the party to be charged or as otherwise expressly authorized herein. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or a waiver or relinquishment of any other agreement or provision or right or power herein contained.

 

iii. Remedies Cumulative. The remedies of each party under this Agreement are cumulative and shall not exclude any other remedies to which such party may be lawfully entitled.

 

iv. Severability. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be determined to be invalid, illegal, or unenforceable under present or future laws effective during the period of this Agreement, then and, in that event: (A) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated into this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and legal, valid and enforceable, and (B) the remaining part of this Agreement (including the application of the offending term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable) shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law.

 

v. No Third Party Beneficiary. Notwithstanding anything else herein to the contrary, the parties specifically disavow any desire or intention to create any third party beneficiary obligations, and specifically declare that no person or entity, other than as set forth in this Agreement, shall have any rights hereunder or any right of enforcement hereof, except the heirs and personal representatives of Employee in the event of Employee’s death or disability.

 

vi. Heading; References; Incorporation; Gender. The headings used in this Agreement are for convenience and reference purposes only, and shall not be used in construing or interpreting the scope or intent of this Agreement or any provision hereof. References to this Agreement shall include all amendments or renewals thereof. Any pronoun referenced in this Agreement shall be deemed to include the other gender, including neutral genders or genders appropriate for entities, if applicable, and the singular shall be deemed to include the plural, and vice versa, as the context requires.

 

(d) Enforcement.

 

(i) Applicable Law. This Agreement and the rights and remedies of each party arising out of or relating to this Agreement (including, without limitation, equitable remedies) shall be solely governed by, interpreted under, and construed and enforced in accordance with the laws (without regard to the conflicts of law principles thereof) of the State of California, as if this agreement were made, and as if its obligations are to be performed, wholly within the State of California.

 

(ii) Consent to Jurisdiction; Service of Process. Any action or proceeding arising out of or relating to this Agreement shall be filed in and heard and litigated solely before the state courts of California located within the County of Orange.

 

(e) rights and benefits under this Agreement are personal to him and therefore (i) no such right

 

No Assignment of Rights or Delegation of Duties by Employee. Employee’s or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer; and (ii) Employee may not delegate his duties or obligations hereunder.

 

  

-8-

  

 

(f) Notices. Unless otherwise specifically provided in this Agreement, all notices, demands, requests, consents, approvals or other communications (collectively and severally called “Notices”) required or permitted to be given hereunder, or which are given with respect to this Agreement, shall be in writing, and shall be given by: (A) personal delivery (which form of Notice shall be deemed to have been given upon delivery), (B) by telegraph or by private airborne/overnight delivery service (which forms of Notice shall be deemed to have been given upon confirmed delivery by the delivery agency), (C) by electronic or facsimile or telephonic transmission, provided the receiving party has a compatible device or confirms receipt thereof (which forms of Notice shall be deemed delivered upon confirmed transmission or confirmation of receipt), or (D) by mailing in the United States mail by registered or certified mail, return receipt requested, postage prepaid (which forms of Notice shall be deemed to have been given upon the fifth business day following the date mailed). Each party, and their respective counsel, hereby agrees that if Notice is to be given hereunder by such party’s counsel, such counsel may communicate directly with all principals, as required to comply with the foregoing notice provisions. Notices shall be addressed to the address hereinabove set forth in the introductory paragraph of this Agreement, or to such other address as the receiving party shall have specified most recently by like Notice, with a copy to the other parties hereto. Any Notice given to the estate of a party shall be sufficient if addressed to the party as provided in this subparagraph.

 

(g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument, binding on all parties hereto. Any signature page of this Agreement may be detached from any form hereto by having attached to it one or more additional signature pages.

 

(h) Execution by All Parties Required to be Binding; Electronically Transmitted Documents. This Agreement shall not be construed to be an offer and shall have no force and effect until this Agreement is fully executed by all parties hereto. If a copy or counterpart of this Agreement is originally executed and such copy or counterpart is thereafter transmitted electronically by facsimile or similar device, such facsimile document shall for all purposes be treated as if manually signed by the party whose facsimile signature appears.

 

IN THE WITNESS HEREOF, the parties execute this employment agreement as of the date written above:

 

	
TRUE DRINKS INC. 

 

 

/s/ Lance Leonard

Lance Leonard, CEO  

	
EMPLOYEE

 

 

/s/ Robert Van Boerum

Robert Van Boerum

 

  

-9-

  

Schedule A

	
  

	
Responsibilities:

Planning/Management

	
·

	
Responsible for all product quality and costing from the formulation development, sourcing, to the end user package.

 

	
·

	
Develop, implement, and manage a strategy for contract manufacturing short term and long term.

 

	
·

	
Source, hire, direct and manage all contract manufacturing and the related raw material, components for the end user packages.

 

	
·

	
Review and development of ongoing testing practices to insure certification, FDA, US, and International requirements are met.  This includes other organizational certifications specific to the benefit of the brand.

 

	
·

	
Direct and coordinate company’s domestic and international inventory and transportation functions.

 

	
·

	
Research and develop strategies and plans, which identify improved efficiencies in manufacturing, effective delivery of product to customers domestically and international.

 

	
·

	
Work directly with brand management to consistently deliver the highest quality formulations and products.

 

	
·

	
Consistently understand and evaluate the changes in economy and world events that may effect raw material costs and fuel costs.  Make recommendations and decisions that effectively manage these costs.

 

	
·

	
Develop and oversee all budgets for operations and logistics activities annually and report budgets to expenses.

 

	
·

	
Coordinate with sales and marketing to develop forecasting and package change strategies.

 

	
·

	
Make appropriate recommendations in package changes that may better the organization’s effectiveness.

 

	
·

	
Establish and implement short- and long-range goals, objectives, policies, and operating procedures.

 

	
·

	
Implement tracking tools that will enable the ability to analyze and evaluate effectiveness of plans.

 

	
·

	
Keep up to date on technology.

 

Operations/Logistics

	
·

	
Insure that appropriate efficiencies are implemented in the transportation process to include time, inventory, space, errors, and distance.

 

	
·

	
On an on-going basis, evaluate ports of entry, storage locations, and effective inventory management.

 

	
·

	
Source and implement software systems that will approve efficiency.

 

	
·

	
Participate and approve all fulfillment operations, warehouse selection, and management of transportation.

 

	
·

	
Manage and track all raw materials; constantly review suppliers and costs changes.

 

	
·

	
Understand plant operations; make periodic visits to the plant/source and review job cost, productivity reports and overall cost of goods analysis.

 

	
·

	
Understand international dynamics for distribution and supply chain and consistently evaluate efficiencies.

 

	
·

	
Participate and approve all major asset acquisitions, i.e. factory equipment, computers, etc.

-10-EX-10.1

 Exhibit 10.1 

EXECUTION VERSION 

PLAN SPONSOR AGREEMENT 

This PLAN SPONSOR AGREEMENT (this “Agreement”) is made and entered into as of September 8, 2015, by and among
(i) Quiksilver Inc., on behalf of the Quiksilver Entities1 and (ii) certain funds managed by affiliates of Oaktree Capital Management, L.P., which funds are signatory hereto
(the “Plan Sponsor”). Each of the Quiksilver Entities and the Plan Sponsor shall be referred to as a “Party” and, collectively, as the “Parties.” 

Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to such terms in the Plan Sponsor Term Sheet attached
hereto as Exhibit A, the DIP Agreement attached hereto as Exhibit B, or the Backstop Term Sheet attached hereto as Exhibit C, which term sheets and all annexes thereto are expressly incorporated by reference herein and made a
part of this Agreement as if fully set forth herein (as such term sheets, including all exhibits and annexes thereto, may be amended or modified in accordance with Section 6 hereof, collectively the “Term Sheets”). 

RECITALS 
 WHEREAS,
the Parties have engaged in arm’s length good faith discussions regarding a restructuring of the Debtors’ capital structure on the terms set forth in the Plan Sponsor Term Sheet attached hereto as Exhibit A (the
“Restructuring”), including the Debtors’ indebtedness and obligations under: (i) that certain Amended and Restated Credit Agreement, dated as of May 24, 2013 as further amended, modified, waived, or supplemented
through the date hereof (as amended, the “ABL Credit Facility”), by and among certain of the Debtors as borrowers or guarantors, Bank of America, N.A. as administrative agent (the “ABL Agent”), and the various
lenders from time to time party thereto; (ii) that certain Indenture, dated as of July 16, 2013, providing for the issuance of 7.875% Senior Secured Notes due 2018 (as further amended, modified, waived, or supplemented through the date
hereof, the “Secured Notes Indenture,” such notes issued under such Secured Notes Indenture, the “Secured Notes,” and such holders of such Secured Notes, the “Secured Noteholders”), by and among
certain of the Debtors as issuers or guarantors and Wells Fargo Bank, N.A. as trustee and collateral agent for the Secured Notes Indenture (the “Secured Notes Agent”); (iii) that certain Indenture, dated as of July 16,
2013, providing for the issuance of 10.00% Senior Notes due 2020 (as further amended, modified, waived, or supplemented through the date hereof, the “Unsecured Notes Indenture,” such notes issued under such Unsecured Notes
Indenture, the “Unsecured Notes,” and such holders of such Unsecured Notes, the “Unsecured Noteholders”), by and among certain of the Debtors as issuers or guarantors and Wells Fargo Bank, N.A. as trustee; and
(iv) that certain Indenture, dated as of December 10, 2010, providing for the issuance of 8.875% Senior Notes due 2017 (as further amended, modified, waived, or supplemented through the date hereof, the “Euro Notes
Indenture,” such notes issued under such Euro Notes Indenture, the “Euro Notes,” and such 
  

 

	1 	 The “Debtors” are Quiksilver, Inc. (“Quiksilver Parent”), and each of its domestic direct and indirect subsidiaries,
including QS Wholesale, Inc., QS Optics, Inc., Quiksilver Wetsuits, Inc., Mt. Waimea, Inc., Quiksilver Entertainment, Inc., DC Shoes, Inc., DC Direct, Inc., Fidra, Inc., Hawk Designs, Inc., QS Retail, Inc. For the avoidance of doubt, all direct and
indirect foreign subsidiaries of Quiksilver Parent (collectively, the “Non-Debtor Foreign Subsidiaries”) shall not be debtors in the Chapter 11 Cases. The Debtors and the Non-Debtor Foreign Subsidiaries shall be referred to herein
collectively as the “Quiksilver Entities.” 

 
holders of such Euro Notes, the “Euro Noteholders”), by and among Boardriders, S.A. as issuer, certain of the Quiksilver Entities as guarantors, Deutsche Trustee Company Limited
as trustee, Deutsche Bank Luxembourg S.A. as register and transfer agent, and Deutsche Bank AG, London Branch as principal paying agent and common depository. 

WHEREAS, each Party desires that the Restructuring be implemented through a joint chapter 11 plan of reorganization for the Debtors on
the terms and conditions set forth in the Plan Sponsor Term Sheet attached hereto as Exhibit A (the “Plan Sponsor Term Sheet”), consistent with this Agreement (the “Agreed Restructuring Plan”), and in form
and substance acceptable to the Plan Sponsor; 
 WHEREAS, to effectuate the Restructuring, the Debtors propose to commence voluntary
reorganization cases (collectively, the “Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the
“Bankruptcy Court”); 
 WHEREAS, to ensure an orderly confirmation process in connection with the Chapter 11 Cases,
the Debtors are prepared to perform their obligations hereunder subject to the terms and conditions of this Agreement, including, among other things, to file the Agreed Restructuring Plan and the disclosure statement describing the Agreed
Restructuring Plan (as may be amended from time to time, the “Disclosure Statement”), and to use commercially reasonable efforts to have the Disclosure Statement approved and the Agreed Restructuring Plan confirmed by the
Bankruptcy Court; 
 WHEREAS, the Plan Sponsor has agreed to provide a debtor-in-possession financing facility (the “DIP
Facility”) pursuant to the terms set forth in the credit agreement attached hereto as Exhibit B (the “DIP Agreement”); 

WHEREAS, subject to the terms and conditions contained in the backstop term sheet attached hereto as Exhibit C (the
“Backstop Term Sheet”), the Plan Sponsor has committed to backstop the Exit Rights Offering and the Euro Notes Rights Offering (each as defined in the Backstop Term Sheet); 

WHEREAS, subject to the execution of definitive documentation and appropriate approvals by the Bankruptcy Court, the following sets
forth the agreement among the Parties concerning their respective obligations; and 
 WHEREAS, each Party has reviewed or has had the
opportunity to review the Agreed Plan and the Term Sheets, and each Party has agreed to the terms of the Restructuring on the terms set forth therein. 

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, and for other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Party, intending to be legally bound hereby, agrees as follows: 

  
 2 

 AGREEMENT 
  

	Section 1.	Agreement Effective Date; Conditions to Effectiveness. 

 This Agreement shall become
effective and binding upon each of the Parties immediately following the execution by each of the Quiksilver Entities and the Plan Sponsor (the “Effective Date”). Upon the Effective Date, this Agreement shall be deemed effective,
and thereafter the terms and conditions therein may only be amended, modified, waived, or otherwise supplemented as set forth in Section 6 herein. 
  

	Section 2.	Agreed Restructuring Plan and Term Sheets. 

 The Term Sheets are expressly incorporated
herein and are made part of this Agreement. The general terms and conditions of the Restructuring are set forth in the Term Sheets; provided, however, the Term Sheets are supplemented by the terms and conditions of this Agreement. In
the event of any inconsistencies between the terms of this Agreement and the Term Sheets, the conflicting term of this Agreement shall control and govern. 
  

	Section 3.	Commitments Regarding the Restructuring Transactions. 

 3.01. Agreement to
Support. Subject to the terms and conditions hereof and for so long as this Agreement has not been terminated in accordance with the terms hereof, each of the Parties, as applicable, agrees to comply with the following covenants: 

(a) Consummation of the Transaction. 

(i) Each of the Parties hereby covenants and agrees to support consummation of the Restructuring, including the solicitation,
confirmation, and consummation of the Agreed Restructuring Plan pursuant to the terms set forth in this Agreement and the Term Sheets; 

(ii) Except as otherwise expressly permitted by this Agreement, each of the Parties hereby covenants and agrees not to,
directly or indirectly, in its capacity as a Party or otherwise, in any material respect, (A) object to, delay, impede, or take any other action to interfere with the Restructuring, (B) propose, file, support, seek, solicit, encourage, or
vote (or to cause any of the foregoing to occur) for any restructuring, chapter 11 plan, proposal, offer, dissolution, winding up, liquidation, reorganization, merger, consolidation, business combination, joint venture, partnership, or sale of
assets (including an asset sale under section 363 of the Bankruptcy Code) for any of the Debtors other than the Agreed Restructuring Plan, or (C) take any other action that is inconsistent with or that would delay or obstruct the proposal,
solicitation, confirmation, or consummation of the Agreed Restructuring Plan; 
 (iii) The Plan Sponsor hereby covenants and
agrees to, so long as its vote has been properly solicited pursuant to sections 1125 and 1126 of the Bankruptcy Code, including its receipt of a Bankruptcy Court-approved Disclosure Statement, (A) vote or cause to be voted all principal amount
of the outstanding obligations under the Secured Notes Indenture that it holds, controls, 

  
 3 

 
or has the ability to control to accept (the “Secured Notes Claims”), the Agreed Restructuring Plan by delivering its duly executed and timely completed ballot or ballots
accepting the Agreed Restructuring Plan following commencement of the solicitation of acceptances of the Agreed Restructuring Plan in accordance with sections 1125 and 1126 of the Bankruptcy Code, and (A) not change or withdraw such vote (or
cause or direct such vote to be changed or withdrawn); provided, however, that such vote shall be immediately revoked and deemed void ab initio upon termination of this Agreement pursuant to the terms hereof; 

(iv) The Plan Sponsor hereby covenants and agrees not to object to, or vote or cause to be voted any of its Secured Notes
Claims or other claims under its control to reject, the Agreed Restructuring Plan, or otherwise commence any proceeding to oppose the Agreed Restructuring Plan, the Disclosure Statement, or any other pleadings or reorganization documents filed by
any of the Debtors in connection with the Agreed Restructuring Plan; and 
 (v) Each of the Parties hereby covenants and
agrees to not object, on any grounds, to the terms, conditions, nature, or amounts set forth in the DIP Agreement, except to the extent that such terms, conditions, nature, or amounts are not acceptable in form or substance to the Plan Sponsor; 

provided, however, that except as otherwise expressly set forth in this Agreement, the foregoing provisions of this
Section 3.01(a) will not: (i) prohibit instruction to the Secured Notes Agent to take or not to take any action relating to the maintenance, protection, and preservation of the collateral under the Secured Notes Indenture;
(ii) prohibit the Plan Sponsor from objecting to any motion or pleading filed with the Bankruptcy Court seeking approval to use DIP Facility funds in a manner inconsistent with the DIP Agreement; (iii) limit the rights of the Parties under
the Secured Notes Indenture and/or applicable law to appear and participate as a party in interest in any matter to be adjudicated in any case under the Bankruptcy Code (or otherwise) concerning the Debtors, so long as such appearance and the
positions advocated in connection therewith are not inconsistent with this Agreement or the terms of the proposed Restructuring, and do not hinder, delay, or prevent consummation of the proposed Restructuring; or (iv) prohibit the Plan Sponsor
from appearing in proceedings for the purpose of contesting whether any matter or fact is or results in a breach of, or is inconsistent with, this Agreement; provided, however, that the Debtors hereby reserve their rights to oppose
such relief; provided further that except as expressly provided herein, this Agreement and all communications and negotiations among the Parties with respect hereto or any of the transactions contemplated hereunder are without waiver
or prejudice to the Parties’ rights and remedies and the Parties hereby reserve all claims, defenses and positions that they may have with respect to each other; provided further that nothing in this Agreement shall be deemed to
limit or restrict any action by any Party to enforce any right, remedy, condition, consent, or approval requirement under the Definitive Documents (as defined below). 

Notwithstanding the foregoing, nothing in this Agreement shall prevent any of the Debtors from taking any action that it is
obligated to take (or failing to take any action 

  
 4 

 
that it is obligated to fail to take) in the performance of any fiduciary duty or as otherwise required by applicable law that such Debtor owes to any other person or entity under applicable law;
provided, that it is agreed that any such action that results in a Termination Event (as defined below) shall be subject to the provisions set forth in Section 5 hereto. Each of the Debtors represent to the Plan Sponsor that as of the
Effective Date, based on the facts and circumstances actually known by the Debtors as of the Effective Date, the Debtors’ entry into this Agreement is consistent with each of the Debtors’ fiduciary duties. 

(b) Definitive Documents. Each Party hereby covenants and agrees to: (i) negotiate in good faith each of the documents
implementing, achieving and relating to the Restructuring, including without limitation, all definitive documents necessary for the Agreed Restructuring Plan, including, without limitation, (A) all first-day motions, applications, and proposed
orders, including those relating to paying general unsecured claims, paying utility providers, paying critical vendors, continuing customer programs, paying employee wages, paying insurance providers, and maintaining the Debtors’ existing cash
management system, (B) the Agreed Restructuring Plan, (C) the Disclosure Statement, ballots, and other solicitation materials in respect of the Agreed Restructuring Plan (collectively, the “Plan Solicitation
Materials”) and the related proposed order approving the Plan Solicitation Materials (the “Disclosure Statement Order”), (D) the motion(s) to approve the Disclosure Statement and seeking confirmation of the Agreed
Restructuring Plan, (E) the proposed order confirming the Agreed Restructuring Plan (the “Confirmation Order”), which must be in form and substance acceptable to the Plan Sponsor in its sole discretion (F) the motion
to approve the DIP Facility and contemplated orders approving the DIP Facility, (G) the motions and orders regarding the Plan Sponsor protections and the backup agreement contemplated in Section 3.02(b)(i), (H) any document or
agreement referenced in the Term Sheets; and (I) the plan supplement (the “Plan Supplement,” and Subsections (A) through (I), collectively, the “Definitive Documents”); and (ii) execute (to the
extent such Party is a party thereto) and otherwise support the Definitive Documents. The Definitive Documents shall contain terms and conditions consistent in all respects with the Term Sheets, and shall only contain terms and conditions acceptable
to the Plan Sponsor. 
 (c) Fees. Subject to the provisions of any order of the Bankruptcy Court approving this Agreement, the
Debtors shall pay, when due and payable, all reasonable and documented outstanding prepetition and postpetition fees and expenses incurred by the Plan Sponsor and its advisors, including, without limitation, the fees and expenses incurred by
Kirkland & Ellis LLP as counsel to the Plan Sponsor and Houlihan Lokey Capital, Inc. as financial advisor to the Plan Sponsor. If this Agreement is terminated in accordance with its terms, any unpaid fees and expenses shall be paid in full
within 3 business days of such termination. The fees and expenses owed under this section shall be entitled to administrative expense priority status. 

(d) Superior Proposal; Breakup Fee. The parties acknowledge that the Plan Sponsor would not have agreed to enter into this Agreement,
the DIP Agreement and the Definitive Documents, but for the provisions of this Section 3.01(d) of this Agreement. From the Petition Date until the entry of an order approving the Disclosure Statement describing the Agreed Plan, the Debtors and
their respective representatives shall have the right to solicit any 

  
 5 

 
offer, proposal or inquiry relating to, or any third party indication of interest in, any transaction as an alternative to the Agreed Plan. In the event that, during such period, the Quiksilver
Parent receives a proposal that, in the good faith determination of the board of directors of Quiksilver Parent is a Superior Proposal (as defined below), and, the board of directors of Quiksilver Parent determines in good faith, after consultation
with outside legal counsel, that failure to accept the Superior Proposal would be inconsistent with the fiduciary obligations of the board of directors under applicable law, the Debtors shall have the right to terminate the Plan Sponsor Agreement. A
“Superior Proposal” means a bona fide written proposal that is more favorable, from a financial point of view, to the Debtors’ stakeholders than the transactions contemplated by the Agreed Plan, and is reasonably likely to be
consummated on a timely basis, taking into account all legal, financial, regulatory, and other aspects of the proposal (including break-up fees and conditions to consummation). In the event Debtors consummate any transaction other than as
contemplated by the Restructuring and the Agreed Restructuring Plan (including, without limitation, a Superior Proposal, an alternative restructuring of the Debtors’ capital structure, whether pursuant to a chapter 7 or chapter 11 case, through
an out-of-court restructuring, or otherwise, or a sale of a material portion of the Debtors’ assets or equity interests, whether by sale, merger, consolidation, reorganization, or otherwise) within a year following the termination of this
Agreement, the Debtors shall pay the Plan Sponsor a $20 million cash breakup fee (the “Breakup Fee”), which shall be entitled to administrative expense priority status and required to be paid from the proceeds of any such
transaction at the closing of such transaction; provided, that any payment of a Termination Fee (as defined in the DIP Agreement) shall be credited on a dollar-for-dollar basis towards the Breakup Fee. The obligation of the Debtors shall
survive any termination of this Agreement other than a termination of this Agreement under Section 5.02(a) of this Agreement. 
 3.02.
Obligations of the Quiksilver Entities. 
 (a) Each of the Quiksilver Entities hereby covenants and agrees, subject to entry into
appropriate confidentiality agreements with the Debtors, to permit and facilitate any and all due diligence necessary to consummate the Restructuring, including, but not limited to: (i) cooperating fully with the Plan Sponsor and its officers,
directors, employees, and advisors, in furnishing information, as and when requested, including with respect to the Debtors’ financial affairs, finances, financial condition, and business operations; (ii) authorizing the Plan Sponsor to
meet and/or have discussions with any of its officers, directors, employees, and advisors from time to time as reasonably requested by the Plan Sponsor to discuss any matters regarding the Debtors’ financial affairs, finances, financial
condition, business and operations; and (iii) directing and authorizing all such persons and entities to fully disclose to the Plan Sponsor all information requested by the Plan Sponsor regarding the foregoing; 

(b) Each of the Debtors hereby covenants and agrees to: 

(i) commence their chapter 11 cases not later than September 9, 2015 (such commencement date, the “Petition
Date”); 
 (ii) (A) file a motion on the Petition Date seeking assumption of this Agreement, including the expense
reimbursement provisions contained in Section 3.01(c) and the Breakup Fee (collectively, the “Plan Sponsor Protections”), 

  
 6 

 
(B) file a motion on within 30 days of the Petition Date seeking approval of the backstop agreement (the “Backstop Agreement”) as contemplated by the Backstop Term
Sheet, and (C) obtain an order approving the assumption of this Agreement, including the Plan Sponsor Protections, within 30 days of the Petition Date, in each case in form and substance acceptable to the Plan Sponsor in its sole discretion;

 (iii) obtain the Boardriders Waiver (as defined in the DIP Agreement) in form and substance acceptable to the Plan Sponsor
in its sole discretion; 
 (iv) obtain entry of orders, in each case in form and substance acceptable to the Plan Sponsor in
its sole discretion, approving on (A) an interim basis the DIP Facility within 2 business days of the Petition Date, and (B) a final basis the DIP Facility within 30 days of the Petition Date; 

(v) file the Agreed Restructuring Plan, the Disclosure Statement, the Plan Solicitation Materials, and the motion to approve
the Disclosure Statement, in each case in form and substance acceptable to the Plan Sponsor in its sole discretion, on or before 30 days following the Petition Date; 

(vi) obtain entry of orders, in form and substance acceptable to the Plan Sponsor in its sole discretion, approving the
Disclosure Statement and the Backstop Agreement within 75 days of the Petition Date; 
 (vii) obtain entry of the
Confirmation Order, in form and substance acceptable to the Plan Sponsor in its sole discretion, with all exhibits, appendices, Plan Supplement documents, and any related documents within 115 days of the Petition Date; and 

(viii) cause the effective date of the Agreed Restructuring Plan (the “Plan Effective Date”) to occur
within 120 days of the Petition Date; 
 (c) Each of the Debtors hereby covenants and agrees to distribute draft copies of all motions,
applications, proposed orders, pleadings, and other related documents that the Debtors intend to file with the Bankruptcy Court to the Plan Sponsor and counsel to the Plan Sponsor, Kirkland & Ellis LLP, at least 3 days prior to the date
when the Debtors intend to file such document; provided, however, that with respect to any such document that is or relates to a Definitive Document, such document shall be provided at least 5 days prior to the date when the Debtors
intend to file such Definitive Document or document related thereto, and prior to any such filing shall consult in good faith with the Plan Sponsor, Kirkland & Ellis LLP and Houlihan Lokey Capital, Inc. regarding the form and substance of
any such proposed filing; and provided, further, however, that in the event of exigent circumstances, each of the Debtors will use its best efforts to distribute such draft copies at the earliest practicable time; 

(d) Each of the Quiksilver Entities hereby covenants and agrees to (A) operate its business in the ordinary course, including, but not
limited to, maintaining its accounting methods, using commercially reasonable efforts to preserve its assets and business relationships, continuing its billing and collection procedures, using commercially reasonable efforts to retain

  
 7 

 
key employees, and maintaining its business records in accordance with its past practices and (B) not sell, transfer, or otherwise dispose of any material portion of its assets, other than
inventory sales in the ordinary course of business and other than as permitted in the DIP Agreement; 
 (e) Each of the Debtors hereby
covenants and agrees to timely file a formal objection to any motion filed with the Bankruptcy Court by a third party seeking the entry of an order (A) directing the appointment of a trustee or an examiner with the authority to operate the
Debtors’ businesses pursuant to section 1104 of the Bankruptcy Code, (B) converting the Chapter 11 Cases to cases under chapter 7 of the Bankruptcy Code, or (C) dismissing the Chapter 11 Cases; provided that, for the avoidance
of doubt, nothing in this Agreement shall prohibit or restrict the right of the Plan Sponsor to seek an order for the appointment of an examiner for limited purposes, as provided herein; provided further, that the Debtors hereby
reserve their rights to oppose such relief; 
 (f) Each of the Debtors hereby covenants and agrees to timely file a formal objection to any
motion filed with the Bankruptcy Court by a third party seeking the entry of an order modifying or terminating the Debtors’ exclusive right to file and/or solicit acceptances of a chapter 11 plan; provided that nothing in this Agreement
shall prohibit or restrict the rights of the Plan Sponsor to seek to have the Agreed Restructuring Plan confirmed; 
 (g) Each of the
Debtors hereby covenants and agrees to, if the Debtors know or should know of a breach by such Debtor with regard to any of the obligations, representations, warranties, or covenants set forth in this Agreement, to furnish prompt written notice (and
in any event within 3 business days of such actual knowledge) to the Plan Sponsor and its counsel, Kirkland & Ellis LLP; and 
 (h)
Each of the Quiksilver Entities hereby covenants and agrees to not enter into a new employment agreement or amend, restate, or otherwise change the compensation for any member of management prior to the consummation of the Restructuring without the
prior written consent of the Plan Sponsor; provided further, that each of the Quiksilver Entities hereby covenants and agrees not to reject executory contracts without the Plan Sponsor’s consent. 

 

	Section 4.	Representations and Warranties. 

 4.01. Representations of the Quiksilver
Entities. Notwithstanding any other provision herein or any subsequent termination of this Agreement, the Quiksilver Entities hereby irrevocably acknowledge, confirm, and agree that as of the date hereof: 

(a) that entering into this Agreement and the consummation of the transactions contemplated hereby (including the receipt by the Plan Sponsor
of all or substantially all of the equity in the reorganized Parent) will not, with regard to any material contract or license to which any Quiksilver Entities is a party to, or by which any of their respective assets and properties are bound,
(i) conflict with or result in a violation or breach thereof, (ii) constitute (with or without notice or lapse of time or both) a default thereunder, (iii) require any Quiksilver Entities to obtain consent, approval, or action of any
person, or make a filing with or give notice to any person as a result or under the terms thereof, (iv) result in or 

  
 8 

 
give to any person any right of termination, cancellation, acceleration, or modification with respect thereto, (v) result in or give to any person any additional rights or entitlement to
increased, additional, accelerated, or guaranteed payments thereunder other than with respect to the subject matter of the Boardriders Waiver, or (vi) result in the creation or imposition of any lien upon the Quiksilver Entities or any of its
subsidiaries or any of their respective assets and properties thereunder. 
 4.02. Mutual Representations and Warranties. Each of the
Parties, severally and not jointly, represents, warrants, and covenants to each other Party, as of the date of this Agreement, as follows (each of which is a continuing representation, warranty, and covenant): 

(a) It is validly existing and in good standing under the laws of the state of its organization, and this Agreement is a legal, valid, and
binding obligation of such Party, enforceable against it in accordance with its terms, except as enforcement may be limited by applicable laws; 

(b) Except as expressly provided in this Agreement, it has all requisite direct or indirect power and authority to enter into this Agreement
and to carry out the Restructuring contemplated by, and perform its respective obligations under, this Agreement; 
 (c) The execution and
delivery of this Agreement and the performance of its obligations hereunder have been duly authorized by all necessary action on its part and no consent, approval or action of, filing with or notice to any governmental or regulatory authority is
required in connection with the execution, delivery and performance of this Agreement; and 
 (d) It has been represented by legal counsel
of its choosing in connection with this Agreement and the transactions contemplated by this Agreement, has had the opportunity to review this Agreement with its legal counsel and has not relied on any statements made by any other Party or its legal
counsel as to the meaning of any term or condition contained herein or in deciding whether to enter into this Agreement or the transactions contemplated hereof. 

4.03. Representations of the Plan Sponsor. Subject to Section 3.01(d) hereof, the Plan Sponsor represents and warrants that, as of
the Effective Date: 
 (a) it is the sole beneficial owner of the face amount of the Secured Notes Claims, or is the nominee, investment
manager, advisor for the beneficial holders or otherwise has the ability to vote or cause to be voted the Secured Notes Claims; and 
 (b)
has the direct or indirect authority to act on behalf of, cause to be voted or vote and consent to matters concerning the Secured Notes Claims and to dispose of, exchange, assign and transfer such rights with respect to the Secured Notes Claims.

  

	Section 5.	Termination Events. 

 5.01. Plan Sponsor Termination Events. This Agreement shall
be automatically terminated as to all Parties upon the occurrence and continuation of any of the following events (each, a “Plan Sponsor Termination Event”), unless the Plan Sponsor waives such Plan Sponsor Termination Event in
writing within 3 business days of the Plan Sponsor’s actual knowledge of the occurrence of such Plan Sponsor Termination Event: 

  
 9 

 (a) Plan Sponsor Termination Events: 

(i) any of the events listed in Section 3.02(b) do not occur by the date required by Section 3.02(b); 

(ii) a Termination Date (as defined in the DIP Agreement) occurs; 

(iii) the exercise of any rights or remedies by the Euro Noteholders, the trustee (or other agent) under the Euro Notes
Indenture, or such parties’ agents or representatives under the Euro Notes Indenture (excluding the appearance, participation or filing of motions, objections or other pleadings by any such parties or their respective agents or representatives
in the Bankruptcy Court in the Chapter 11 Cases); 
 (iv) any event or occurrence that has the effect of causing the
Boardriders Waiver to cease to be in full force and effect other than in accordance with the terms of the Boardriders Waiver; 

(v) the breach in any respect by the Quiksilver Entities of (or failure to satisfy) any of the obligations, representations,
warranties, or covenants set forth in this Agreement (excluding those set forth in Section 3.02(b) hereof) and failure to cure such breach within 5 business days of the Debtors receiving written notice in accordance with Section 8.10
hereof from the Plan Sponsor of such breach; 
 (vi) the Debtors file any motion, pleading, or related document with the
Bankruptcy Court in a manner that is inconsistent in any respect with this Agreement or Term Sheets, and such motion, pleading, or related document has not been withdrawn after 3 business days of the Debtors receiving written notice in accordance
with Section 8.10 hereof from the Plan Sponsor that such motion, pleading, or related document violates this Section 5.01(a)(iii); 

(vii) the Bankruptcy Court enters an order approving debtor-in-possession financing or exit financing (unless described in the
DIP Agreement or otherwise agreed to by the Plan Sponsor); 
 (viii) any of the Definitive Documents or any order entered by
the Bankruptcy Court related thereto shall have been modified, abrogated, terminated, or otherwise are not in full force and effect, in each case without the consent of the Plan Sponsor; 

(ix) the issuance by any governmental authority, including any regulatory authority or court of competent jurisdiction, of any
ruling or order enjoining the consummation of the Restructuring in a way that cannot be reasonably remedied by the Debtors in a manner that is satisfactory to the Plan Sponsor; 

  
 10 

 (x) the Bankruptcy Court enters an order (i) directing the appointment of an
examiner with expanded powers to operate the Debtors’ businesses pursuant to section 1104 of the Bankruptcy Code or a trustee in any of the Chapter 11 Cases, (ii) converting any of the Chapter 11 Cases to cases under chapter 7 of the
Bankruptcy Code, or (iii) dismissing any of the Chapter 11 Cases; 
 (xi) the Bankruptcy Court enters an order
terminating the Debtors’ exclusive right to file a chapter 11 plan pursuant to section 1121 of the Bankruptcy Code; and 

(xii) the Debtors exercise their “fiduciary out” as a debtor-in-possession as provided for in Section 3.01 of
this Agreement, including, without limitation, by filing a motion or other document in the Bankruptcy Court seeking approval of a Superior Proposal. 

(b) Plan Sponsor Termination Event Resulting in Automatic Termination. Notwithstanding anything to the contrary herein, if the
Restructuring, as contemplated pursuant to this Agreement, does not occur within 120 days of the Petition Date, the Plan Sponsor may terminate its obligations under this Agreement after providing written notice to the Debtors in accordance with
Section 8.10 hereof. 
 (c) No Violation of Automatic Stay. The Plan Sponsor is authorized to take any steps necessary to
effectuate the termination of this Agreement, as applicable, including sending any applicable notices to the Quiksilver Entities, notwithstanding section 362 of the Bankruptcy Code or any other applicable law, which provides that no cure period
contained in this Agreement or the DIP Agreement shall be extended pursuant to sections 108 or 365 of the Bankruptcy Code, or any other applicable law, without the prior written consent of the Plan Sponsor. 

5.02. Debtor Termination Events. The Debtors may terminate their obligations and liabilities under this Agreement upon 3 business
days’ prior written notice delivered in accordance with Section 8.10 hereof, upon the occurrence of any of the following events (each, a “Parent Termination Event” and together with the Plan Sponsor Termination
Events, the “Termination Events”): (a) the material breach by the Plan Sponsor of any of its representations, warranties, or covenants set forth in this Agreement that would have a material adverse impact on the
consummation of the Restructuring (taken as a whole) that remains uncured for a period of 5 business days after it receives written notice of such breach from the Debtors; (b) the issuance by any governmental authority, including any regulatory
authority or court of competent jurisdiction, of any final, non-appealable ruling or order that would have a material adverse impact on the consummation of the Restructuring (taken as a whole); or (c) if the Debtors determine that proceeding
with the transactions contemplated by this Agreement would be inconsistent with the continued exercise of their fiduciary duties, including, without limitation, in light of a Superior Proposal. 

5.03. Unclean Hands. Notwithstanding any provision in this Agreement to the contrary, no Party shall terminate this Agreement if such
Party is in breach of any provision hereof; provided, however, that the Debtors may terminate this Agreement under Section 5.02(c) notwithstanding any existing breach by the Debtors. 

  
 11 

 5.04. Mutual Termination. The Debtors and Plan Sponsor may terminate this Agreement, and
the obligations hereunder, by mutual, written agreement. 
 5.05. Effect of Termination. Upon the termination of this Agreement under
Section 5.01(a) or 5.02, (i) except with respect to the continuing obligations relating to the fees and expenses specified in Section 3.01(c) hereof and the Breakup Fee specified in Section 3.01(d) hereof, this Agreement shall be
of no further force and effect and each Party hereto shall be released from its commitments, undertakings, and agreements under or related to this Agreement and shall have the rights and remedies that it would have had it not entered into this
Agreement, and shall be entitled to take all actions, whether with respect to the Restructuring or otherwise, that it would have been entitled to take had it not entered into this Agreement, and (ii) any and all consents tendered by the Plan
Sponsor prior to such termination shall be deemed, for all purposes, to be null and void ab initio, shall not be considered or otherwise used in any manner by the Parties in connection with the Restructuring and this Agreement or otherwise,
and such consents may be changed or resubmitted regardless of whether the applicable voting deadline has passed (without the need to seek an order from the Bankruptcy Court or consent from the Debtors allowing such change or resubmission).
Notwithstanding the foregoing, other than in the case of mutual termination under Section 5.04 hereof, any claim for breach of this Agreement that accrued prior to the date of a Party’s termination or termination of this Agreement (as the
case may be) and all other rights and remedies of the Parties hereto shall not be prejudiced as a result of termination. 
 5.06.
Termination Upon Consummation of the Restructuring. This Agreement shall terminate automatically without any further required action or notice on, as applicable, the Plan Effective Date. 

 

	Section 6.	Amendments. 

 Except as otherwise provided herein, this Agreement, the Agreed
Restructuring Plan, and the Term Sheets, including any annexes thereto, may not be modified, amended, or supplemented without prior written agreement signed by the Quicksilver Entities and the Plan Sponsor. 

 

	Section 7.	No Solicitation. 

 Notwithstanding anything to the contrary, this Agreement is not and
shall not be deemed to be (a) a solicitation of consents to the Agreed Restructuring Plan, or any other chapter 11 plan, or (b) an offer for the issuance, purchase, sale, exchange, hypothecation, or other transfer of securities or a
solicitation of an offer to purchase or otherwise acquire securities for purposes of the Securities Act and the Securities Exchange Act of 1934, as amended. The acceptance of the Plan Sponsor of the Agreed Restructuring Plan, or any other chapter 11
plan, will not be solicited until the Plan Sponsor has received the Disclosure Statement and related ballot, as approved by the Bankruptcy Court. 

  
 12 

	Section 8.	Miscellaneous. 

 8.01. 

8.01. Further Assurances. Subject to the other terms of this Agreement, the Parties agree to execute and deliver such other instruments
and perform such acts, in addition to the matters herein specified, as may be reasonably appropriate or necessary, from time to time, to effectuate the Restructuring in a manner materially consistent with the terms set forth in the Restructuring
Documents and Term Sheets, as applicable. 
 8.02. Complete Agreement. This Agreement, exhibits and the annexes hereto represent the
entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, oral or written, between the Parties with respect thereto. No claim of waiver, modification, consent, or acquiescence with respect to
any provision of this Agreement shall be made against any Party, except on the basis of a written instrument executed by or on behalf of such Party. 

8.03. Parties. This Agreement shall be binding upon, and inure to the benefit of, the Parties. No rights or obligations of any Party
under this Agreement may be assigned or transferred to any other person or entity. Nothing in this Agreement, express or implied, shall give to any person or entity, other than the Parties, any benefit or any legal or equitable right, remedy, or
claim under this Agreement. 
 8.04. Headings. The headings of all Sections of this Agreement are inserted solely for the convenience
of reference and are not a part of and are not intended to govern, limit, or aid in the construction or interpretation of any term or provision hereof. 

8.05. Governing Law; Submission to Jurisdiction; Selection of Forum; Waiver of Trial by Jury. THIS AGREEMENT IS TO BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. Each Party hereto agrees that it shall bring any action
or proceeding in respect of any claim arising out of or related to this Agreement, to the extent possible, in either the United States District Court for the District of Delaware, any Delaware State court, or following the Petition Date, the
Bankruptcy Court (collectively, the “Chosen Courts”); provided that following the Petition Date, the Bankruptcy Court shall be the Chosen Court. Solely in connection with claims arising under this Agreement, each Party
(a) irrevocably submits to the exclusive jurisdiction of the Chosen Courts, (b) waives any objection to laying venue in any such action or proceeding in the Chosen Courts, and (c) waives any objection that the Chosen Courts are an
inconvenient forum or do not have jurisdiction over any Party hereto. Each Party hereto irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated
hereunder. 

  
 13 

 8.06. Execution of Agreement. This Agreement may be executed and delivered (by facsimile,
electronic mail, or otherwise) in any number of counterparts, each of which, when executed and delivered, shall be deemed an original, and all of which together shall constitute the same agreement. 

8.07. Interpretation. This Agreement is the product of negotiations between the Parties, and in the enforcement or interpretation
hereof, is to be interpreted in a neutral manner, and any presumption with regard to interpretation for or against any Party by reason of that Party having drafted or caused to be drafted this Agreement, or any portion hereof, shall not be effective
in regard to the interpretation hereof. 
 8.08. Successors and Assigns. This Agreement is intended to bind and inure to the benefit
of the Parties and their respective successors, assigns, heirs, executors, administrators, and representatives, other than a trustee or similar representative appointed in a bankruptcy case. 

8.09. Acknowledgements. Notwithstanding anything herein to the contrary, (a) this Agreement shall not be construed to limit the
Debtors or any member of the Debtors’ boards of director’s exercise (in their sole discretion) of its fiduciary duties to any person, including, but not limited to, those arising from Quiksilver Parent’s status as a debtor or debtor
in possession under the Bankruptcy Code or under other applicable law, and any such exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement; and (b) if the Plan Sponsor is appointed to and
serves on an official committee in the Chapter 11 Cases, the terms of this Agreement shall not be construed so as to limit the Plan Sponsor’s exercise (in its sole discretion) of its fiduciary duties to any person arising from its service on
such committee, and any such exercise of such fiduciary duties shall not be deemed to constitute a breach of the terms of this Agreement; provided, however, that nothing in this Agreement shall be construed as requiring the Plan
Sponsor to serve on any official committee in the Chapter 11 Cases. Nothing in this Agreement shall limit in any way the right of the Plan Sponsor to participate in the Chapter 11 Cases; provided that such participation does not violate and
is not inconsistent with the terms of this Agreement, the Agreed Restructuring Plan, and the Term Sheets. 
 8.10. Notices. All
notices hereunder shall be deemed given if in writing and delivered, if sent by electronic mail, courier, or registered or certified mail (return receipt requested) to the following addresses (or at such other addresses as shall be specified by like
notice): 
  

	 	(a)	if to the Debtors, to: 

 Quiksilver, Inc. 

15202 Graham Street 
 Huntington
Beach, California 92649 
 Attention: General Counsel 

with copies (which shall not constitute notice) to: 

Skadden, Arps, Slate, Meagher & Flom LLP 

300 South Grand Avenue 

  
 14 

 Suite 3400 

Los Angeles, California 90071 

Attention: Brian McCarthy 

                          
                    Van C. Durrer, II 

E-mail addresses: brian.mccarthy@skadden.com 

                       
      van.durrer@skadden.com 
  

	 	(b)	if to the Plan Sponsor, to: 

 Oaktree Capital Management, L.P. 

333 South Grand Avenue 28th Floor 

Los Angeles, California 90071 

Attention: Thomas Casarella RE: Quiksilver 

Email addresses: tcasarella@oaktreecapital.com 

with copies (which shall not constitute notice) to: 

Kirkland & Ellis LLP 

300 North LaSalle Street 

Chicago, Illinois, 60654 

Attention: Patrick J. Nash, Jr. 

                 Ross M. Kwasteniet 

                 William A. Guerrieri 

                 Christopher J. Greeno 

E-mail addresses: patrick.nash@kirkland.com 

                       
      rkwasteniet@kirkland.com 

                       
      wguerrieri@kirkland.com 

                       
      christopher.greeno@kirkland.com 
 Morris, Nichols, Arsht & Tunnell LLP 

1201 North Market Street, 16th Floor 

Wilmington, Delaware 19899 

Attention: Robert J. Dehney 

                 Andrew R. Remming 

Email addresses: RDehney@MNAT.com 

                       
     ARemming@MNAT.com 
 Any notice given by hand delivery, electronic mail, mail, or courier shall be effective when received.

 8.11. Access. The Quiksilver Entities will afford the Plan Sponsor and its respective attorneys, consultants, accountants, and
other authorized representatives reasonable access, upon reasonable notice during normal business hours, to all properties, books, contracts, commitments, records, management personnel, lenders, and advisors of the Quiksilver Entities. 

  
 15 

 8.12. Waiver. Except as expressly provided in this Agreement, nothing herein is intended
to, or does, in any manner waive, limit, impair, or restrict any right of the Plan Sponsor or the ability of the Plan Sponsor to protect and preserve its rights, remedies, and interests, including, without limitation, its claims against or interests
in the Quiksilver Entities, including under the Secured Notes Indenture and applicable law. If the Restructuring is not consummated, or if this Agreement is terminated for any reason (other than Section 5.03 hereof), the Plan Sponsor fully
reserves any and all of its rights. 
 8.13. Several, Not Joint, Obligations. The agreements, representations, and obligations of the
Parties under this Agreement are, in all respects, several and not joint. It is understood and agreed that the Plan Sponsor may trade in its Secured Notes Claims, or other debt or equity securities of the Quiksilver Entities, without the consent of
the Debtors, subject to applicable laws, if any, and the Secured Notes Indenture. 
 8.14. Remedies Cumulative. All rights, powers,
and remedies provided under this Agreement, or otherwise available in respect hereof at law or in equity, shall be cumulative and not alternative, and the exercise of any such right, power, or remedy by any Party shall not preclude the simultaneous
or later exercise of any other such right, power, or remedy by such Party. 
 8.15. No Third-Party Beneficiaries. Unless expressly
stated herein, this Agreement shall be solely for the benefit of the Parties, and no other person or entity shall be a third-party beneficiary hereof. 

8.16. Automatic Stay. The Parties acknowledge that the giving of notice or the termination by any Party pursuant to this Agreement
shall not be a violation of the automatic stay under section 362 of the Bankruptcy Code. 
 8.17. Survival of Agreement. The Parties
acknowledge and agree that this Agreement is being executed in connection with negotiations concerning a possible financial restructuring of the Debtors and in contemplation of possible chapter 11 filings by the Debtors, and (a) the rights
granted in this Agreement are enforceable by each signatory hereto without approval of the Bankruptcy Court, and (b) the Debtors waive any rights to assert that the exercise of such rights violate the automatic stay or any other provisions of
the Bankruptcy Code. 
 8.18. Settlement Discussions. This Agreement, the Agreed Restructuring Plan, and the Term Sheets are part of
a proposed settlement of matters that could otherwise be the subject of litigation among the Parties hereto. Nothing herein shall be deemed an admission of any kind. Pursuant to Federal Rule of Evidence 408 and any other applicable rules of
evidence, this Agreement and all negotiations relating thereto shall not be admissible into evidence in any proceeding, other than a proceeding to enforce the terms of this Agreement. 

8.19. Consideration. The Parties hereby acknowledge that no consideration, other than that specifically described in this Agreement,
the Agreed Restructuring Plan, and the Term Sheet, shall be due or paid to any Party for its agreement to vote to accept the Agreed Restructuring Plan in accordance with the terms and conditions of this Agreement. 

  
 16 

	Section 9.	Disclosure. 

 Prior to any disclosure, the Quiksilver Entities shall submit to
Kirkland & Ellis LLP, counsel for the Plan Sponsor, all press releases, announcements, and public documents that constitute the initial disclosure of the existence or terms of this Agreement or any amendment to the terms of this Agreement.
Except as required by law (as determined by outside counsel to the Quiksilver Entities, and with reasonable prior notice to the Plan Sponsor), the Quiksilver Entities shall not use the name of the Plan Sponsor in any public manner without prior
written consent. 
 [Signatures on Following Pages] 

  
 17 

 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their
respective duly authorized officers or other agents, solely in their respective capacity as officers or other agents of the undersigned and not in any other capacity, as of the date first set forth above. 

 

			
	QUIKSILVER, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	General Counsel and Secretary
	
	QS WHOLESALE, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary
	
	DC DIRECT, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary
	
	DC SHOES, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary
	
	FIDRA, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary

  
 [Signature
Pages to Plan Sponsor Agreement] 

			
	HAWK DESIGNS, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary
	
	MT. WAIMEA, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary
	
	Q. S. OPTICS, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary
	
	QS RETAIL, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary
	
	QUIKSILVER ENTERTAINMENT, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary
	
	QUIKSILVER WETSUITS, INC.,
		
	By:	 	  

	Name:	 	Linnsey Caya
	Title:	 	President and Secretary

  
 [Signature
Pages to Plan Sponsor Agreement] 

			
	SECOND STREET HOLDINGS 9, L.P.
	SECOND STREET HOLDINGS 11, L.P.
	SECOND STREET HOLDINGS 12, L.P.
	SECOND STREET HOLDINGS 13, L.P.
	SECOND STREET HOLDINGS 14, L.P.
	SECOND STREET HOLDINGS 15, L.P.
		
	By:	 	PF5 GP, LLC
	Its:	 	General Partner
		
	By:	 	Oaktree Capital Management, L.P.
	Its:	 	Managing Member
		
	By:	 	  

	Name:	 	Matthew C. Wilson
	Title:	 	Managing Director and Co-Portfolio Manager
		
	By:	 	  

	Name:	 	Thomas A. Casarella
	Title:	 	Senior Vice President
	
	SIXTH STREET HOLDINGS 1, L.P.
	SIXTH STREET HOLDINGS 2, L.P.
	SIXTH STREET HOLDINGS 3, L.P.
	SIXTH STREET HOLDINGS 4, L.P.
	SIXTH STREET HOLDINGS 5, L.P.
	SIXTH STREET HOLDINGS 6, L.P.
	SIXTH STREET HOLDINGS 7, L.P.
		
	By:	 	Oaktree Fund GP, LLC
	Its:	 	General Partner
		
	By:	 	Oaktree Fund GP I, L.P.
	Its:	 	Managing Member
		
	By:	 	  

	Name:	 	Matthew C. Wilson
	Title:	 	Authorized Signatory
		
	By:	 	  

	Name:	 	Thomas A. Casarella
	Title:	 	Authorized Signatory

  
 [Signature
Pages to Plan Sponsor Agreement] 

			
	OAKTREE PRINCIPAL FUND VI BLOCKER (CAYMAN), LTD.
		
	By:	 	Oaktree Capital Management, L.P.
	Its:	 	Director
		
	By:	 	  

	Name:	 	Matthew C. Wilson
	Title:	 	Managing Director and Co-Portfolio Manager
		
	By:	 	  

	Name:	 	Thomas A. Casarella
	Title:	 	Senior Vice President
	
	OCM PF SUNSET HOLDINGS, LTD.
		
	By:	 	Oaktree Capital Management, L.P.
	Its:	 	Director
		
	By:	 	  

	Name:	 	Matthew C. Wilson
	Title:	 	Managing Director and Co-Portfolio Manager
		
	By:	 	  

	Name:	 	Thomas A. Casarella
	Title:	 	Senior Vice President
	
	OCM BIG WAVE LLC
		
	By:	 	Oaktree Fund GP, LLC
	Its:	 	Manager
		
	By:	 	Oaktree Fund GP I, L.P.
	Its:	 	Managing Member
		
	By:	 	  

	Name:	 	Matthew C. Wilson
	Title:	 	Authorized Signatory
		
	By:	 	  

	Name:	 	Thomas A. Casarella
	Title:	 	Authorized Signatory

  
 [Signature
Pages to Plan Sponsor Agreement] 

			
	OCM FIE, LLC
		
	By:	 	  

	Name:	 	Matthew C. Wilson
	Title:	 	Authorized Signatory
		
	By:	 	  

	Name:	 	Thomas A. Casarella
	Title:	 	Authorized Signatory

  
 [Signature
Pages to Plan Sponsor Agreement] 

 Exhibit A 

Plan Sponsor Term Sheet 

   

QUIKSILVER, INC., et al., 

PLAN SPONSOR TERM SHEET

SEPTEMBER 8, 2015 
  

 
 THIS TERM SHEET (THIS
“TERM SHEET”) DESCRIBES THE MATERIAL TERMS OF A PROPOSED RESTRUCTURING TRANSACTION (THE “RESTRUCTURING”) PURSUANT TO WHICH QUIKSILVER, INC. AND CERTAIN OF ITS U.S. SUBSIDIARIES (COLLECTIVELY, THE
“DEBTORS”)1 WILL RESTRUCTURE THEIR CAPITAL STRUCTURE THROUGH A JOINT PLAN OF REORGANIZATION FILED IN CONNECTION WITH VOLUNTARY CASES (THE “CHAPTER 11 CASES”)
COMMENCED UNDER CHAPTER 11 OF TITLE 11 OF THE UNITED STATES CODE (THE “BANKRUPTCY CODE”) IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE (THE “BANKRUPTCY COURT”). 

THIS TERM SHEET IS NOT AN OFFER OR A SOLICITATION WITH RESPECT TO ANY SECURITIES OF THE DEBTORS, NOR IS IT A SOLICITATION OF THE ACCEPTANCE OR REJECTION OF
A CHAPTER 11 PLAN FOR PURPOSES OF SECTIONS 1125 AND 1126 OF THE BANKRUPTCY CODE. ANY SUCH OFFER OR SOLICITATION SHALL COMPLY WITH ALL APPLICABLE SECURITIES LAWS AND/OR PROVISIONS OF THE BANKRUPTCY CODE. 

THIS TERM SHEET IS A SETTLEMENT PROPOSAL IN FURTHERANCE OF SETTLEMENT DISCUSSIONS. THIS TERM SHEET IS NOT A COMMITMENT TO LEND OR TO AGREE TO THE TERMS OF
ANY RESTRUCTURING. THIS TERM SHEET IS SUBJECT TO DEFINITIVE DOCUMENTATION ACCEPTABLE TO OAKTREE (AS DEFINED BELOW) IN ITS SOLE DISCRETION. ACCORDINGLY, THIS TERM SHEET IS PROTECTED BY RULE 408 OF THE FEDERAL RULES OF EVIDENCE AND ANY OTHER
APPLICABLE STATUTES OR DOCTRINES PROTECTING THE USE OR DISCLOSURE OF CONFIDENTIAL SETTLEMENT DISCUSSIONS. THIS TERM SHEET IS SUBJECT TO ALL EXISTING CONFIDENTIALITY AGREEMENTS. 

THIS TERM SHEET IS SUBJECT TO ONGOING REVIEW AND APPROVAL BY ALL PARTIES AND IS NOT BINDING, IS SUBJECT TO MATERIAL CHANGE, AND IS BEING DISTRIBUTED FOR
DISCUSSION PURPOSES ONLY. 
  
  

	1 	The “Debtors” are Quiksilver, Inc. (“Quiksilver Parent”), and each of its domestic direct and indirect subsidiaries, including QS Wholesale, Inc., QS Optics, Inc.,
Quiksilver Wetsuits, Inc., Mt. Waimea, Inc., Quiksilver Entertainment, Inc., DC Shoes, Inc., DC Direct, Inc., Fidra, Inc., Hawk Designs, Inc., QS Retail, Inc. For the avoidance of doubt, all direct and indirect foreign subsidiaries of Quiksilver
Parent (collectively, the “Non-Debtor Foreign Subsidiaries”) shall not be debtors in the Chapter 11 Cases. The Debtors and the Non-Debtor Foreign Subsidiaries shall be referred to herein collectively as the
“Quiksilver Entities”. 

			
	OVERVIEW
		
	Restructuring Summary	  	 Prior to the date of commencement of the Chapter 11 Cases (the “Petition Date”), certain funds managed by
affiliates of Oaktree Capital Management, L.P. (collectively, “Oaktree”) and the Quiksilver Entities shall have executed the plan sponsor agreement to which this Term Sheet is attached (the “PSA”)
pursuant to which the Debtors will agree to pursue and implement a restructuring process consistent with this Term Sheet in order to consummate a chapter 11 plan of reorganization (the “Agreed Plan”).

 
 This Term Sheet outlines the terms of a balance-sheet restructuring of the Quiksilver
Entities (each of the Debtors as reorganized, a “Reorganized Debtor” and, collectively, the “Reorganized Debtors”).
  

This Term Sheet does not include a description of all of the terms, conditions, and other provisions that are to be contained in the Agreed Plan and the
related definitive documentation governing the Restructuring identified in the PSA, each of which shall be in form and substance acceptable to Oaktree (the “Definitive Documents”). The Definitive Documents, all motions, and
related orders and the plan solicitation documents shall satisfy the requirements of the Bankruptcy Code and be consistent with the PSA and this Term Sheet.

		
	Debt to be Restructured	  	 Indebtedness that will be treated under the Agreed Plan includes, among other things, the following indebtedness and obligations (which
amounts are not binding):2
  

a.      approximately $70.1 million of obligations outstanding under that certain
Amended and Restated Credit Agreement, dated as of May 24, 2013, by and among QS Wholesale, Inc., as borrower, the guarantors party thereto, Bank of America, N.A., as administrative agent, and the other lenders party thereto (the “ABL
Facility,” the “ABL Credit Agreement” and, together with all related agreements and documents executed by any of the Debtors in connection with the ABL Credit Agreement, the “ABL Facility
Documents”), and such obligations thereunder (the “ABL Facility Claims”);
  

b.      approximately $279.0 million of obligations outstanding under that certain
Indenture, dated July 16, 2013, by and among Quiksilver Parent and QS Wholesale, Inc., as issuers, the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee and collateral agent, providing for the issuance of 7.875% Senior
Secured Notes due 2018 (such notes, the “Senior Secured Notes,” such indenture, the “Secured Notes Indenture,” and, together with all related agreements and documents executed by any of
the

  

	2 	Amounts set forth herein are as of July 31, 2015, and are exclusive of accrued interest, other interest, fees and expenses. 

  
 2 

			
		  	 Debtors in connection with the Secured Notes Indenture, the “Secured Notes Documents”) and
such obligations thereunder, the “Secured Notes Claims”);
  

c.      approximately $222.8 million of obligations outstanding under that certain
Indenture, dated July 16, 2013, by and among Quiksilver Parent and QS Wholesale, Inc., as issuers, the guarantors party thereto, and Wells Fargo Bank, National Association, as trustee, providing for the issuance of 10.000% Senior Notes due 2020
(such indenture, the “Unsecured Notes Indenture,” and such obligations thereunder and under all related agreements and documents executed by any of the Debtors in connection with the Unsecured Notes Indenture, the
“Unsecured Notes Claims”); and
  

d.      all other non-priority general unsecured claims against the Debtors (including
allowed intercompany claims) that are not Euro Notes Claims or Unsecured Notes Claims (the “General Unsecured Claims,” and together with the Euro Notes Claims and Unsecured Notes Claims, the “Unsecured
Claims”).

		
	Treatment of Euro Notes	  	 There are approximately €200.0 million of obligations outstanding under that certain Indenture, dated as of December 10, 2010,
by and among Boardriders, S.A., as issuer, the guarantors party thereto, and Deutsche Trustee Company Limited, as trustee, providing for the issuance of 8.875% Senior Notes due 2017 (such notes, the “Euro Notes,” such
indenture, the “Euro Notes Indenture,” and together with all related agreements and documents executed by any of the Debtors in connection with the Euro Notes Indenture, the “Euro Notes Documents”),
and such obligations thereunder, the “Euro Notes Guaranty Claims”).
  

The Euro Notes shall be treated as follows:
  

a.      beneficial holders of the Euro Notes sufficient to confer an enforceable waiver
of the Euro Notes Indenture shall have executed and delivered to the Debtors waiver and support agreements, in form and substance acceptable to Oaktree, which waive (i) the event of default and the acceleration resulting from the Chapter 11 Cases,
(ii) compliance with provisions of the Euro Notes Indenture regarding “Change of Control” with respect to the Restructuring under the Agreed Plan, and (iii) waive any default or event of default that would arise in connection with the
DIP Facility (as defined below);
  

b.      the Debtors shall obtain an order of the Bankruptcy Court providing for a
temporary restraining order, preliminary injunction or other similar relief that prevents the holders of, or the trustee for, the Euro Notes from exercising any rights or remedies against the Quiksilver Entities with respect to any default or event
of default triggered by any bankruptcy filing by the Debtors (a “Boardriders Bankruptcy Default”) for a period of not less than 180 days, which order shall be acceptable to
Oaktree;

  
 3 

			
		  	 c.      the Agreed Plan shall provide that any and all default(s)
under the Euro Notes Documents (including any change of control provisions) relating to the Chapter 11 Cases or the Restructuring is/are deemed waived and unenforceable by the holders of, or the trustee for, the Euro Notes;

 
 d.      the
applicable Non-Debtor Foreign Subsidiaries shall pay any principal and interest in respect of the Euro Notes as and when due during the Chapter 11 Cases and the Euro Notes Non-Debtor Claims shall be unimpaired by the Chapter 11 Cases; and

 
 e.      the Agreed
Plan shall provide that the Debtors’ obligations under the Euro Notes Documents will be reinstated under section 1124 of the Bankruptcy Code.
  

In addition, the Debtors shall commence an exchange offer in respect of the Euro Notes, on terms acceptable to Oaktree in its sole discretion, whereby the
holders who tender into the exchange and agree to extend the maturity date of their Euro Notes by three years shall receive a paydown equal to up to 25.0% of the face amount of their Euro Notes (the “Euro Notes Exchange
Offer”). Timely commencement of the Euro Notes Exchange Offer, the timing, manner, and terms of which shall each be acceptable to Oaktree in its sole discretion, consistent with a closing of the transaction on the Effective Date shall
be a condition to the Agreed Plan’s effectiveness, but the closing of the Euro Notes Exchange Offer shall not otherwise be a condition to the Agreed Plan’s effectiveness.

 
 •    The Euro Notes
Rights Offering (as defined below) shall fund the Euro Notes Exchange Offer.

		
	Other Debt Obligations of Non-Debtor Foreign Subsidiaries	  	Other credit obligations of Non-Debtor Foreign Subsidiaries, including, without limitation, Na Pali S.A.S’s obligations in respect of the EMEA credit lines, shall be unaffected by the Chapter 11 Cases.
		
	DIP Financing	  	 The Debtors shall seek approval of (a) a revolving debtor-in-possession postpetition financing agreement (together with related loan,
security, collateral, and other documents, the “DIP ABL Facility”) in the aggregate amount of $60.0 million that shall be funded by Bank of America, N.A., which will refinance the ABL Facility, and (b) a
delayed-draw term loan debtor-in-possession postpetition financing agreement (together with related loan, security, collateral, and other documents, the “DIP Term Facility” and, together with the DIP ABL Facility, the
“DIP Facilities”) in the aggregate amount of approximately $115.0 million that shall be funded by Oaktree, in each case to be entered into on the terms set forth in the applicable DIP credit agreements, forms of which
shall be attached as exhibits to the PSA.
  
 The DIP ABL Facility shall have a senior
secured lien on the ABL Priority Collateral and a lien on the Secured Notes Priority Collateral that is junior to the liens under the DIP Term Facility but senior and priming to the
liens

  
 4 

			
		  	 under the Secured Notes Documents on the Secured Notes Priority Collateral. The DIP Term Facility shall have a senior secured priming lien
on the Secured Notes Priority Collateral and a lien on the ABL Priority Collateral that is junior to the liens under the DIP ABL Facility but senior and priming to the liens under the Secured Notes Documents on the ABL Priority Collateral.

 
 •    “ABL
Priority Collateral” means any collateral that secures the ABL Facility Claims on a first priority basis pursuant to the ABL Facility Documents.
  

•    “Secured Notes Priority Collateral” means any collateral that
secures the Secured Notes Claims on a first priority basis pursuant to the Secured Notes Documents.

		
	Exit ABL Facility	  	On the effective date of the Agreed Plan (the “Effective Date”), the Reorganized Debtors will enter into a new revolving credit agreement of $75.0 million to be raised on market terms (the “Exit
ABL Facility”), which new credit agreement and related loan, security, collateral, and other documents shall be acceptable to Oaktree. Other terms of the Exit ABL Facility will be set forth in the Definitive Documents, which shall be in
form and substance acceptable to Oaktree.
		
	Exit Term Loan Facility	  	On the Effective Date, the Reorganized Debtors may enter into a new term loan credit facility in connection with the Exit Rights Offering (as defined below) on terms and conditions that are mutually acceptable to the Debtors and
Oaktree (an “Exit Term Loan Facility”). The terms of any Exit Term Loan Facility will be set forth in the Definitive Documents, which shall be in form and substance acceptable to Oaktree.
		
	Exit Rights Offering	  	 Each holder of Senior Secured Notes will be given the opportunity to participate in an up to $122.5 million rights offering in accordance
with its pro rata share of the Senior Secured Notes to purchase a combination of New Common Stock at a discount to the Offering Value (as defined below) and/or loans under an Exit Term Loan Facility (if any), in each case to be agreed upon by the
Debtors and Oaktree (the “Exit Rights Offering”). Proceeds of the Exit Rights Offering will be used first to satisfy any remaining unpaid balance of the DIP Term Facility outstanding on the Effective Date, second to fund the
Unsecured Creditor Recovery, and third to fund any other payments required on the Effective Date and general corporate purposes.
  

The Exit Rights Offering shall be backstopped by Oaktree.

		
	Euro Notes Rights Offering	  	Each holder of Senior Secured Notes will be given the opportunity to participate in an up to €50.0 million rights offering in accordance with its pro rata share of the Senior Secured Notes to purchase New Common Stock at a
discount to the Offering Value (as defined below) to be agreed upon by the Debtors and Oaktree (the “Euro Notes Rights Offering” and, together with the Exit Rights Offering, the “Rights Offerings”).
Proceeds of the Euro Notes Rights Offering will be used to consummate the Euro Notes Exchange Offer.

  
 5 

			
		  	The Euro Notes Rights Offering shall be backstopped by Oaktree.
		
	Oaktree Backstop	  	Oaktree shall backstop the Unsecured Creditor Recovery (as defined below), the Exit Rights Offering, and the Euro Notes Rights Offering on the terms and conditions (including, without limitation, fees and protections) otherwise
set forth in the “Backstop Term Sheet,” which shall be attached as an exhibit to the PSA (collectively, the “Oaktree Backstop”).
		
	Oaktree Commitments	  	 In order to implement the Agreed Plan, Oaktree has agreed to (a) fund the DIP Term Facility, (b) contribute the cash that Oaktree is
required to provide to fund the Unsecured Creditor Recovery, and (c) backstop the Exit Rights Offering and the Euro Notes Rights Offering pursuant to the terms of the Oaktree Backstop (collectively, the “Oaktree Cash
Contribution”).
  
 In exchange for the Oaktree Cash Contribution and the
New Common Stock that Oaktree is to receive under the Agreed Plan on account of its Secured Notes Claims, Oaktree will receive 100% of the New Common Stock less (a) any New Common Stock received by non-Oaktree holders of Secured Notes Claims,
and (b) any New Common Stock received by non-Oaktree holders under the Exit Rights Offering or Euro Rights Offering.

		
	Offering Value	  	For purposes of allocating the new common stock issued by reorganized Quiksilver Parent under the Agreed Plan (the “New Common Stock”) in connection with the Rights Offerings, the implied value of the New
Common Stock shall be acceptable to the Debtors and Oaktree (the “Offering Value”).
	
	CLASSIFICATION AND TREATMENT OF CLAIMS
		
	DIP ABL Facility Claims	  	 Treatment. On the Effective Date, each holder of an allowed DIP ABL Facility Claim shall receive payment in full in cash or, if
agreed to by the lenders under the DIP ABL Facility, the Debtors, and Oaktree, loans under the Exit ABL Facility in a face amount equal to the amount of such allowed DIP ABL Facility Claim.

 
 •    Cash proceeds of
the Exit ABL Facility shall fund cash distributions on account of allowed DIP ABL Facility Claims.
  

Voting. Not classified; non-voting.

		
	DIP Term Facility Claims	  	 Treatment. On the Effective Date, each holder of an allowed DIP Term Facility Claim shall receive payment in full in cash.

 
 •    Cash proceeds of
the Exit Rights Offering and the remaining portion of the Exit ABL Facility after making the distributions in respect of the DIP ABL Facility Claims shall be used to repay in full the DIP Term
Facility.

  
 6 

			
		  	Voting. Not classified; non-voting.
		
	 Administrative Claims
  

Priority Tax Claims
  

Other Priority Claims
  

Other Secured Claims
	  	 Treatment. Customary treatment provisions for each of these classes in order to render the holders of such claims unimpaired.

 
 Voting. Not classified or unimpaired, as applicable; non-voting.

		
	Secured Notes Claims	  	 Allowance. The Secured Notes Claims shall be allowed in an aggregate amount equal to approximately $279.0 million, plus accrued but
unpaid interest and premiums (if any) as of the Petition Date.
  
 Treatment. On
the Effective Date, except to the extent that a holder of an allowed Secured Notes Claim agrees to less favorable treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for each allowed Secured Notes Claim,
each holder of an allowed Secured Notes Claim shall receive their pro rata share of New Common Stock, subject to dilution on account of the Rights Offerings.
  

Voting. Impaired. Each holder of a Secured Notes Claim will be entitled to vote to accept or reject the Agreed Plan.

		
	Euro Notes Guaranty Claims	  	 Allowance. The Euro Notes Guaranty Claims shall be allowed in an aggregate amount equal to approximately €200.0 million, plus
accrued but unpaid interest as of the Petition Date.
  
 Treatment. On the
Effective Date, except to the extent that a holder of an allowed Euro Notes Guaranty Claim agrees to less favorable treatment, each holder of an allowed Euro Notes Claim shave have its claim reinstated and rendered unimpaired in accordance with
section 1124 of the Bankruptcy Code.
  
 Voting. Unimpaired. Each holder of a Euro
Notes Guaranty Claim will be conclusively deemed to have accepted the Agreed Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, each holder of a Euro Notes Guaranty Claim will not be entitled to vote to accept or reject the Agreed
Plan.

		
	General Unsecured Claims	  	Treatment. On the Effective Date or as soon thereafter as reasonably practicable, except to the extent that a holder of an allowed General Unsecured Claim agrees to less favorable treatment, in full and final satisfaction,
settlement, release, and discharge of and in exchange for each allowed General Unsecured Claim, each holder of a General Unsecured Claim shall receive cash in an amount equal to its pro rata share of the Unsecured Creditor Recovery.
		
		  	 •    The “Unsecured Creditor Recovery” shall be $7.5 million of cash that is (a)
allocated by the Debtors in the Agreed Plan between the

  
 7 

			
		  	 classes of Unsecured Notes Claims and General Unsecured Claims based on, among other things, the assets and
liabilities of the Debtors against whom the claimants in the classes of Unsecured Notes Claims and General Unsecured hold claims, and (b) funded by cash proceeds from the Exit Rights Offering after making the distributions in respect of the DIP Term
Facility Claims. The allocation and distribution of the Unsecured Creditor Recovery shall be in settlement of any intra-unsecured creditor allocation disputes.
  

Voting. Impaired. Each holder of a General Unsecured Claim will be entitled to vote to accept or reject the Agreed Plan.

		
	Unsecured Notes Claims	  	 Allowance. Subject to the resolution of any issues arising under section 502(d) of the Bankruptcy Code, the Unsecured Notes Claims
shall be allowed in an aggregate amount equal to approximately $222.8 million, plus accrued but unpaid interest as of the Petition Date.
  

Treatment. Each holder of an Unsecured Notes Claim shall receive its pro rata share of the Unsecured Creditor Recovery.

 
 Voting. Impaired. Each holder of an Unsecured Notes Claim will be entitled to vote
to accept or reject the Agreed Plan.

		
	Intercompany Claims	  	 Treatment. Claims held by one Debtor against another Debtor (each, an “Intercompany Claim”) may be
reinstated as of the Effective Date or, at the Debtors’ or Reorganized Debtors’ option, and with the consent of Oaktree, be cancelled, and no distribution shall be made on account of such claims.

 
 Voting. Unimpaired. Each holder of an Intercompany Claim will be conclusively
deemed to have accepted the Agreed Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, each holder of an Intercompany Claim will not be entitled to vote to accept or reject the Agreed Plan.

		
	Intercompany Interests	  	 Treatment. Interests in a Debtor held by another Debtor (each, an “Intercompany Interest”) may be
reinstated as of the Effective Date or, at the Debtors’ or Reorganized Debtors’ option, and with the consent of Oaktree, be cancelled, and no distribution shall be made on account of such interests.

 
 Voting. Unimpaired. Each holder of an Intercompany Interest will be conclusively
deemed to have accepted the Agreed Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, each holder of an Intercompany Interest will not be entitled to vote to accept or reject the Agreed Plan.

		
	Section 510(b) Claims	  	 Treatment. On the Effective Date, allowed claims arising under section 510(b) of the Bankruptcy Code (each, a “510(b)
Claim”), if any, shall be cancelled without any distribution, and such holders of 510(b) Claims will receive no recovery.
  

Voting. Impaired. Each holder of a 510(b) Claim will be conclusively deemed to have rejected the Agreed Plan pursuant to section 1126(g) of the
Bankruptcy Code. Therefore, each holder of a 510(b) Claim will not be entitled to vote to accept or reject the Agreed Plan.

  
 8 

			
	Existing Equity Interests	  	 Treatment. On the Effective Date, existing equity interests in, and warrants to purchase common stock of, Quiksilver Parent (each,
an “Existing Equity Interest”) shall be deemed canceled and extinguished, and shall be of no further force and effect, whether surrendered for cancelation or otherwise, and there shall be no distribution to holders of
Existing Equity Interests on account of such Existing Equity Interests.
  

Voting. Impaired. Each holder of an Existing Equity Interest will be conclusively deemed to have rejected the Joint Plan pursuant to
section 1126(g) of the Bankruptcy Code. Therefore, each holder of an Existing Equity Interest will not be entitled to vote to accept or reject the Joint Plan.

	
	OTHER GENERAL PROVISIONS
		
	Management Equity Incentive Plan	  	After the Effective Date, the Reorganized Debtors shall implement a management equity incentive plan on terms approved by Reorganized Quiksilver Parent’s initial board of directors.
		
	Employment Agreements, Other Compensation, & Benefit Plans	  	The Definitive Documents shall include, no later than the filing of a customary plan supplement, details regarding key executive employment agreements and system-wide benefits plans to the extent different from existing compensation
and benefit plans.
		
	Reorganized Debtors’ Initial Boards of Directors and Officers	  	The Agreed Plan shall designate the chief officers and the number of members of the initial board of directors of the Reorganized Debtors, as determined by Oaktree. At a minimum, Reorganized Quiksilver Parent’s initial board of
directors shall consist of Reorganized Quiksilver Parent’s chief executive officer and such other members acceptable to Oaktree.
		
	Cancellation of Instruments, Certificates, and Other Documents	  	On the Effective Date, except to the extent otherwise provided herein, all instruments, certificates, and other documents evidencing debt or equity interests in Quiksilver Parent shall be cancelled, and the obligations of the
Debtors thereunder, or in any way related thereto, shall be discharged.
		
	Issuance of New Common Stock	  	The issuance of the New Common Stock under the Agreed Plan will be exempt from SEC registration under section 1145 of the Bankruptcy Code or section 4(a)(2) of the Securities Exchange Act of 1934, as applicable. The New Common Stock
shall be deemed fully paid and non-assessable.
		
	Executory Contracts and Unexpired Leases	  	The treatment (e.g., assumption, assumption and assignment, and/or rejection) of all executory contracts and unexpired leases to which the Debtors are party shall be acceptable to Oaktree.
		
	Corporate Governance	  	The documentation evidencing the corporate governance for the Reorganized Debtors, including charters, bylaws, operating agreements, shareholder agreements, and/or other organizational documents (“Organizational
Documents”), in each case shall be reasonably acceptable to Oaktree.

  
 9 

			
		  	Without limiting the foregoing, the Organizational Documents shall be amended and restated for the Reorganized Debtors in a manner consistent with section 1123(a)(6) of the Bankruptcy Code.
		
	Avoidance Actions, Commercial Tort Claims	  	Avoidance actions arising under Chapter 5 of the Bankruptcy Code and commercial tort claims against any and all vendors with which the Quiksilver Entities will have an ongoing relationship following emergence from chapter 11 shall
vest in the applicable Reorganized Debtor.
		
	Releases, Exculpations, and Injunctions	  	The Agreed Plan shall provide for customary release, exculpation, and injunction provisions, which shall be acceptable to Oaktree.
		
	Tax Issues	  	The Restructuring shall be structured to preserve favorable tax attributes to the extent practicable, which structure shall be acceptable to Oaktree.
		
	Fees and Expenses	  	The Agreed Plan will provide for payment of all accrued and unpaid professional fees and expenses for the legal and financial advisors of Oaktree in cash on the Effective Date.
		
	Other Plan Terms	  	The Agreed Plan shall contain all other customary terms otherwise reasonably acceptable to Oaktree.

  
 10 

 Exhibit B 

DIP Agreement 

 Exhibit C 

Backstop Term Sheet 

   

QUIKSILVER, INC., et al., 

BACKSTOP TERM SHEET 

SEPTEMBER 8, 2015 
  

 
 This term sheet
(this “Backstop Term Sheet”) summarizes certain material terms and conditions of certain transactions to take place in connection with the proposed restructuring of the capital structure and financial obligations of
Quiksilver, Inc. and certain of its U.S. subsidiaries (collectively, the “Debtors”)1 pursuant and subject to, among other things, the terms and conditions described in
this Backstop Term Sheet, the Plan Sponsor Term Sheet, the DIP Term Sheet, and the Plan Sponsor Support Agreement. This Backstop Term Sheet is intended solely as a basis for further discussion and is not intended to be and does not constitute a
commitment, offer to purchase, or any legally binding obligation. This Backstop Term Sheet does not include all of the conditions, covenants, closing conditions, representations, warranties, or other terms that would be contained in a definitive
backstop commitment letter or agreement or the Agreed Plan (as defined below). 
 This Backstop Term Sheet is a settlement proposal in
furtherance of settlement discussions, and is subject to all existing confidentiality agreements. This Backstop Term Sheet is not a commitment to lend or to agree to the terms of any restructuring. Accordingly, this term sheet is protected by rule
408 of the Federal Rules of Evidence and any other applicable statutes or doctrines protecting the use or disclosure of confidential settlement discussions. This Backstop Term Sheet is subject to ongoing review and approval by all parties and is not
binding, is subject to material change, and is being distributed for discussion purposes only. Furthermore, this Backstop Term Sheet is subject to definitive documentation acceptable to Oaktree (as defined below) in its sole discretion. 

 

			
	OVERVIEW
		
	Restructuring Summary	  	Prior to the commencement date of the chapter 11 cases (the “Petition Date”), certain funds managed by affiliates of Oaktree Capital Management, L.P. (collectively, “Oaktree”) and
the Quiksilver Entities shall have executed the plan sponsor agreement to which this Backstop Term Sheet is attached (the “PSA”) pursuant to which the Debtors will agree to pursue and implement a restructuring process
consistent with this Term Sheet in order to consummate a chapter 11 plan of reorganization (the “Agreed Plan”).

 

	1 	The “Debtors” are Quiksilver, Inc. (“Quiksilver Parent”), and each of its domestic direct and indirect subsidiaries, including QS Wholesale, Inc., QS Optics, Inc.,
Quiksilver Wetsuits, Inc., Mt. Waimea, Inc., Quiksilver Entertainment, Inc., DC Shoes, Inc., DC Direct, Inc., Fidra, Inc., Hawk Designs, Inc., QS Retail, Inc. For the avoidance of doubt, all direct and indirect foreign subsidiaries of Quiksilver
Parent (collectively, the “Non-Debtor Foreign Subsidiaries”) shall not be debtors in the Chapter 11 Cases. The Debtors and the Non-Debtor Foreign Subsidiaries shall be referred to herein collectively as the
“Quiksilver Entities.” 

			
		  	  
 The plan sponsor term sheet (the “PSA Term
Sheet”)2 outlines the terms of a balance-sheet restructuring of the Quiksilver Entities (each of the Debtors as reorganized, a “Reorganized Debtor” and,
collectively, the “Reorganized Debtors”).

		
	Backstop Commitments	  	 Oaktree shall backstop the Exit Rights Offering and the Euro Notes Rights Offering (collectively, the “Backstop
Commitments”) in accordance with a backstop commitment letter to be negotiated between the Quiksilver Entities and Oaktree (the “Backstop Commitment Letter”) that includes the terms and conditions set forth
herein and such other terms that are acceptable to Oaktree and to the Quiksilver Entities in their respective sole discretions.
  

Specifically, in the Backstop Commitment Letter, Oaktree will commit to provide cash up to the following amounts to fund each of the Backstop Commitments:

 
 •    Exit Rights
Offering: up to $122.5 million
  

•    Euro Notes Rights Offering: up to €50.0 million

		
	Commitment Fees	  	 The following commitment fees (collectively, the “Commitment Fees”) for the Backstop Commitments shall be earned
once the Bankruptcy Court has entered orders approving each of (a) the Backstop Commitment Letter (the “Backstop Approval Order”), and such order becomes a Final Order, and (b) the disclosure statement in respect of the
Agreed Plan (the “Disclosure Statement Order”):
  

•    Exit Rights Offering: $6.125 million, which is 5% of the Exit Rights Offering Backstop
Commitment
  
 •    Euro
Notes Rights Offering: €2.5 million, which is 5% of the Euro Notes Rights Offering Backstop Commitment
  

The Commitment Fees shall be payable in New Common Stock on the Effective Date consistent with the Agreed Plan; provided, however, that the
Commitment Fees shall be payable in cash in the event the Agreed Plan is not consummated for any reason within 120 days of the Petition Date.

		
	 Conditions to
 Backstop
Commitment
	  	 The Backstop Commitments will be subject to the following conditions precedent:

 
 •    the Backstop
Approval Order becomes a Final Order;
  

•    the Disclosure Statement Order, which shall be in form and substance acceptable to
Oaktree, has been entered by the Bankruptcy Court;

  

	2 	Capitalized terms used but not defined herein shall have the meanings ascribed to them in the PSA and the PSA Term Sheet, as applicable. 

  
 2 

			
		  	 •    the Commitment Fees shall be earned and payable;

 
 •    a Final Order,
which shall be in form and substance acceptable to Oaktree, confirming the Agreed Plan is entered by the Bankruptcy Court;
  

•    no event of defaults under the DIP ABL Facility or DIP Term Facility have occurred;

 
 •    the PSA shall be
effective;
  
 •    the
Debtors have paid the expense reimbursements outlined in the PSA on a timely basis;
  

•    all documents arising from or related to the Debtors’ Chapter 11 Cases have been
executed, the form of which documents must be reasonably satisfactory to Oaktree; and
  

•    all other conditions as set forth in the Backstop Commitment Letter.

		
	Termination	  	 Oaktree may terminate its obligations or commitments contemplated by the Backstop Commitment Letter by written notice to the Debtors’
counsel upon the earliest occurrence of any of the following termination events:
  

•    the Debtors do not file a motion seeking approval of the Backstop Commitment Letter (the
“Backstop Approval Motion”) within 30 days of the Petition Date;
  

•    the Bankruptcy Court does not enter the Backstop Approval Order within 75 days of the
Petition Date;
  

•    the occurrence of any default or event of default arising under the ABL Facility or the
DIP Term Facility; or
  

•    the occurrence of any Plan Sponsor Termination Event under the PSA.

		
	 Representations,
 Warranties,
Conditions, and Covenants
	  	The Backstop Commitment Letter shall contain customary representations, warranties, conditions, and covenants for transactions of this type, which are mutually acceptable to Oaktree and the Quiksilver Entities.

  
 3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00249-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00249-of-00352.parquet"}]]