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EXHIBIT 99.3
QUIKSILVER/HAWK DESIGNS, INC. STOCK OPTION PLAN
General Nature and Purpose
The Quiksilver/Hawk Designs, Inc. Plan provides for the granting of
nonstatutory options to certain former employees of Hawk Designs, Inc. ("HDI")
in connection with the acquisition (the "Acquisition") by Quiksilver, Inc. (the
"Company") of HDI. The purpose of the Plan is to advance the interests of the
Company by enhancing its ability to employ certain qualified former employees of
HDI following the Acquisition by providing them with the opportunity to become
owners of the Company by the grant of options to purchase Common Stock of the
Company. No shareholder approval was sought or received with respect to this
Plan.
Securities Subject to the Plan
The aggregate number of shares of the Company's Common Stock which may
be issued upon exercise of options granted under the Plan will not exceed
70,000. There are no remaining shares available for grant under the Plan. The
Plan provides for appropriate adjustment in the number and/or kind of shares
subject to options previously granted in the event of a stock split, stock
dividend, reorganization or other change in the capitalization of the Company.
Eligibility to Receive Options Under the Plan
Only designated employees of HDI at the time of the Acquisition received
options under the Plan.
Administration and Duration of the Plan
The Plan is and will be administered by the Board of Directors (the
"Board"); provided, however, that the Board may delegate administration to a
Committee composed of not less than two directors appointed by the Board. The
Board has full power to interpret the Plan and the options and to adopt such
rules for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. Members
of the Board of Directors are elected at each annual meeting of stockholders for
one year and hold office until their successors are elected and qualified.
The Company's Board of Directors has the power to amend the Plan at any
time, although no amendment may alter or impair any rights or obligations under
a previously issued option without the consent of the holder of the option
(except for adjustments resulting from stock splits, recapitalization, etc.).
Stockholder approval of the Plan is not required. The Plan expires on March 1,
2010.
Terms of Options
Each selected former employee of HDI on March 1, 2000 was granted on
such date an option to purchase that number of shares of the Company's Common
Stock set forth in their respective option agreement at an exercise price per
share equal to the fair market value of the stock on such date. For purposes of
the Plan, fair market value of a share of the Company's Common Stock on any date
is considered to be (i) the closing price of a share of the Company's Common
Stock on the principal exchange on which shares of the Company's Common Stock
are then trading on the day previous to that date, (ii) if the Common Stock is
not traded on an exchange, (a) the last sales price (if the stock is then listed
as a National Market Issue under the NASD National Market System) or (b) the
mean between the closing representative bid and asked prices, for the stock on
the day previous to that date as reported by the National Association of
Securities Dealers, Inc. through NASDAQ or a successor quotation system, (iii)
if the Common Stock is not traded on an exchange and prices are not provided
through NASDAQ or a successor quotation system, the mean between the closing bid
and asked prices for the stock on the day previous to that date as determined in
good faith by the Board, or (iv) if the Company's Common Stock is not publicly
traded, the fair market value established by the Board acting in good faith for
purposes of granting options under the Plan.
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Options granted pursuant to the Plan become exercisable with respect to
one-third of the number of shares covered by such options on October 31, 2003,
October 31, 2004, and October 31, 2005, so that such options shall be fully
exercisable beginning on October 31, 2005. All options granted pursuant to the
Plan shall expire ten years after the date of grant.
Under the Plan, the right to exercise any option generally expires three
months after an optionee's termination of employment; provided, however, that
the option shall expire immediately if the optionee's termination is for
misconduct or for making any unauthorized use or disclosure of confidential
information or trade secrets of the Company. If the optionee dies or becomes
disabled (within the meaning of Section 22(e)(3) of the Code) while employed by
or consulting for the Company, any outstanding option will generally expire one
year from the date of the optionee's death or termination due to the disability.
Options may be exercised by a written notice of exercise signed by the
optionee or other person then entitled to exercise such option or portion and
delivered to the Company's President, Chief Financial Officer or Secretary or
his office. Common Stock purchased upon the exercise of options may be paid for
by the option holder either (i) in cash or cash equivalents, (ii) with the
consent of the Committee, with shares of the Company's Common Stock held by the
option holder for the requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes valued at fair market value
on the date of delivery equal to the aggregate purchase price of the shares with
respect to which the option or portion is thereby exercised, (iii) with the
consent of the Committee, any combination of the consideration described in the
foregoing clauses (i) and (ii), (iv) with the consent of the Committee, through
a broker-dealer sale and remittance procedure or (v) any other legal
consideration that may be acceptable to the Committee.
Upon the occurrence of certain transactions such as a merger,
consolidation, acquisition, liquidation or dissolution of the Company, any
outstanding options terminate unless (i) a written provision is made in
connection with such transaction for the assumption of the options, or the
substitution of the options with new options covering the securities of the
successor corporation, with appropriate adjustment in the number, type and
exercise price of such securities, in which event the related options shall
continue or be replaced, as the case may be, or (ii) the Committee provides in
writing for adjustments it deems appropriate in the terms and conditions of the
options, including the acceleration of vesting and/or providing for the
cancellation of options and their automatic conversion into the right to receive
the securities or other properties which a holder of the shares into which such
options are convertible would have been entitled to receive upon such
transaction. If the options terminate by reason of the occurrence of such
transaction without provision for any of the action(s) described in (i) or (ii)
above, then any optionee holding an outstanding option shall have the right, at
such time and prior to the consummation of the transaction as the Committee
shall designate, to exercise his or her options to the full extent not
previously exercised, including any portion which has not yet become
exercisable.
Each option is further subject to the restriction that no shares will be
issued or delivered upon exercise of an option unless and until there has been
compliance with all applicable requirements of the Securities Act of 1933, as
amended, and any other requirement of law or of any regulatory body having
jurisdiction over such issuance and delivery. The inability of the Company to
obtain any required permits, authorizations or approvals necessary for the
lawful issuance and sale of any shares under the Plan on terms deemed reasonable
by the Committee shall relive the Company, the Board, and any Committee thereof
of any liability in respect to the non-issuance or sale of such shares as to
which such requisite permits, authorizations or approvals shall not have been
obtained.
Other than the option agreements executed in connection with each option
granted, optionees are not provided with any periodic or other report concerning
the status of their individual options. However, the Company will supply
information in response to inquiries.
Adjustments in Outstanding Options
If the outstanding shares of Common Stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind of shares of
the Company through reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, upon authorization by the
Committee an appropriate and proportionate adjustment shall be made in the
number or kind of shares, and the per share option
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price thereof, which may be issued in the aggregate and to any individual
optionees under the Plan upon exercise of options; provided, however, that no
such adjustment need be made if such adjustment may result in the receipt of
federal taxable income to the holders of options or the holders of other
securities of the Company.
Rights as a Stockholder
No option holder will have any rights as a stockholder as to shares
covered by an option until certificates representing such shares are issued and
delivered to the option holder.
Options Not Transferable
No option shall be transferable otherwise than by will or the laws of
descent and distribution, and an option shall be exercisable during the option
holder's lifetime only by the option holder.
Restrictions on Resale
The Committee, in its absolute discretion, may impose such restrictions
on the transferability of the shares purchasable upon the exercise of an option
as it deems appropriate. The Committee may require any officer or other option
holder to give the Company prompt notice of any disposition of shares of stock
acquired by exercise of an incentive stock option within two years from the date
of the grant of such option or one year after the transfer of such shares to
such option holder. In addition, employees and officers who are "affiliates" of
the Company within the meaning of the rules and regulations under the Securities
Act may not offer or sell the shares of Common Stock they acquire upon exercise
of options unless such offers and sales are made pursuant to an effective
Registration Statement under the Securities Act (including the Registration
Statement on Form S-8 to which this Prospectus relates, if a prospectus on Form
S-3 or any successor form has been filed, is current and effective and includes
the shares to be sold) or pursuant to an appropriate exemption from the
registration requirements of the Securities Act or, if available to the selling
stockholder, within the limitations and subject to conditions set forth in Rule
144 promulgated under the Securities Act. Upon such offers and sales, any of
such persons may be deemed to be an "underwriter" as that term is defined in
Section 2(11) of the Securities Act. Persons through whom any of such persons
may sell may also be deemed to be underwriters.
ERISA
The Plan is not an "employee benefit plan" subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended, and is not a
qualified pension, profit sharing or stock bonus plan under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code").
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