Exhibit 10.3

K-SWISS INC.

NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT

Pursuant to the

2009 STOCK INCENTIVE PLAN

This Non-Employee Director Stock Option Agreement (this “Agreement”) is made and
entered into as of the Date of Grant indicated below by and between K-Swiss
Inc., a Delaware corporation (the “Company”), and the person named below as
Grantee.

WHEREAS, Grantee is a non-employee director of the Company (a “Non-Employee
Director”); and

WHEREAS, pursuant to the Company’s 2009 Stock Incentive Plan (the “Plan”), an
option to purchase shares of the Company’s Class A Common Stock, par value $.01
per share (the “Common Stock”) has been granted to Grantee, on the terms and
conditions set forth herein;

NOW, THEREFORE, in consideration of the foregoing recitals and the covenants set
forth herein, the parties hereto hereby agree as follows:

 

  1. Grant of Option; Certain Terms and Conditions.

(a)    The Company hereby grants to Grantee, and Grantee hereby accepts, as of
the Date of Grant, an option to purchase the number of shares of Common Stock
indicated below (the “Option Shares”) at the Exercise Price per share indicated
below, which option shall expire at midnight (prevailing local time at the
Company’s principal offices), on the Expiration Date indicated below and shall
be subject to all of the terms and conditions set forth in this Agreement (the
“Option”).

Grantee:

Date of Grant:

Number of Shares Purchasable:

Exercise Price per share:

Expiration Date:

The Option is not intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code.

(b)    Subject to the provisions for termination and acceleration set forth
herein, the Option shall vest in three equal installments as follows: one-third
of the Option shall vest three years, four years and five years, respectively,
from the Date of Grant (e.g. one-third of the Option granted hereunder shall
vest on each of             ,             ,             ,             and
            ,             ).

 

  2. Duration of Option.

(a)    Termination of Non-Employee Director Status.    If Grantee ceases to be a
Non-Employee Director for any reason, then, except as set forth in Section 2(b)
below, the Option shall terminate on the earlier of the Expiration Date or the
second anniversary of the date upon which Grantee ceases to be a Non-Employee
Director.

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(b)    Death of Grantee.    If Grantee dies while any portion of this Option is
exercisable by Grantee, Grantee’s legal representative, or the person entitled
to do so under Grantee’s last will and testament or under applicable intestate
law, shall have the right to exercise the Option, but only for the number of
shares as to which Grantee was entitled to exercise the Option as of the date of
Grantee’s death, and such right shall expire and the Option shall terminate on
the earlier to occur of (i) the expiration of 18 months from the date of
Grantee’s death and (ii) the Expiration Date.

(c)    Acceleration of Option.    Notwithstanding anything to the contrary in
this Agreement, the Option shall become fully exercisable immediately before the
first to occur of the following:

(i)    the consummation of a reorganization, merger or consolidation of the
Company as a result of which the outstanding securities of any class then
subject to the Option are exchanged for or converted into cash, property and/or
securities not issued by the Company or a company whose common equity holders
immediately after such transaction consist only of persons who are holders of
the common equity of the Company immediately before such transaction;

(ii)    the first date upon which the directors of the Company who were
nominated by the Board of Directors for election as directors shall cease to
constitute a majority of the authorized number of directors of the Company;

(iii)    the dissolution or liquidation of the Company; or

(iv)    a sale of all or substantially all of the property and assets of the
Company.

3.    Adjustments.    In the event that the outstanding securities of the class
then subject to the Option are increased, decreased or exchanged for or
converted into cash, property and/or a different number or kind of shares or
securities, or if cash, property or shares or securities are distributed in
respect of such outstanding securities, in either case as a result of a
reorganization, merger, consolidation, recapitalization, restructuring,
reclassification, dividend (other than a regular, quarterly cash dividend) or
other distribution, stock split, reverse stock split, spin-off or the like, or
if substantially all of the property and assets of the Company are sold, then,
unless the terms of such transaction shall provide otherwise, the Board of
Directors or the Compensation and Stock Option Committee of the Board of
Directors administering the Plan (the “Committee”) may make appropriate and
proportionate adjustments in the number and type of shares or other securities
or cash or other property that may be acquired upon the exercise of the Option
and the exercise price of such Option.

 

  4. Exercise.

(a)    Subject to Section 8, the Option shall be exercisable during Grantee’s
lifetime only by Grantee. Subject to the provisions of Section 4(b) below, the
Option may only be exercised by the delivery to the Company of a written notice
of such exercise (the “Exercise Notice”), which notice shall specify the number
of Option Shares to be purchased (the “Purchased Shares”) and the aggregate
Exercise Price for such shares; provided, however, that payment of such
aggregate Exercise Price may be made, in whole or in part, by one or more of the
following means:

(i)    in full in cash or by check to the order of the Company, at or before the
time the Company delivers the Option Shares;

(ii)    the recipient of the Option irrevocably authorizing a broker approved in
writing by the Company to sell Option Shares to be acquired through exercise of
the Option and remitting to the Company a sufficient portion of the sale
proceeds to pay the entire exercise price and any federal and state withholding
resulting from such exercise (a “Cashless Exercise”); provided, however, that,
notwithstanding anything in this Agreement to the contrary, (A) the Company
shall only deliver such Option Shares at or after the time the Company receives
full payment for such Option Shares, (B) the exercise price for such Option
Shares will be due and payable to the Company no later than one business day
following the date on which the

 

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proceeds from the sale of the underlying Option Shares are received by the
authorized broker, (C) in no event will the Company directly or indirectly
extend or maintain credit, arrange for the extension of credit or renew any
extension of credit, in the form of a personal loan or otherwise, in connection
with a Cashless Exercise and (D) in no event shall the recipient of an Award
enter into any agreement or arrangement with a brokerage or similar firm in
which the proceeds received in connection with a Cashless Exercise will be
received by or advanced to such recipient before the date the shares underlying
the Award are delivered or released by the Company; and/or

(iii)    the delivery to the Company of a certificate or certificates
representing shares of Common Stock, duly endorsed or accompanied by a duly
executed stock power, which delivery effectively transfers to the Company good
and valid title to such shares, free and clear of any pledge, commitment, lien,
claim or other encumbrance (such shares to be valued on the basis of their
aggregate fair market value as of the day immediately preceding the date of
exercise of the Option; provided, however, that such payment in stock instead of
cash shall not be effective and shall be rejected by the Company if (A) the
Company is then prohibited from purchasing or acquiring such shares of Common
Stock or (B) the right or power of the person exercising the Option to deliver
such shares in payment of said purchase price is subject to the prior interests
of any other person (excepting the Company) as indicated by legends upon the
certificate(s) or as known to the Company. If the Company rejects the payment in
stock, the tendered Exercise Notice shall not be effective hereunder unless
promptly after being notified of such rejection, the person exercising the
Option pays the purchase price in a form acceptable hereunder.

(b)    Notwithstanding any provision of this Agreement to the contrary:

(i)    payment of the aggregate Exercise Price for such shares and the Grantee’s
tax withholding obligation, if any, with respect to such shares shall be due the
date the shares of Common Stock underlying the Option are delivered; and

(ii)    in no event shall the Company issue or deliver the Option Shares before
the Company receives payment for the Option Shares pursuant to this Section 4.

 

  5. Payment of Withholding Taxes.

(a)    If the Company becomes obligated to withhold an amount on account of any
tax imposed as a result of the exercise of the Option, including, without
limitation, any federal, state, local or other income tax, or any F.I.C.A.,
state disability insurance tax or other employment tax (the “Withholding
Liability”), then Grantee shall, on the date of exercise and as a condition to
the issuance of the Option Shares, pay the Withholding Liability to the Company
in cash or by check payable to the Company. Grantee hereby consents to the
Company withholding the full amount of the Withholding Liability from any
compensation or other amounts otherwise payable to Grantee if Grantee does not
pay the Withholding Liability to the Company on the date of exercise of the
Option, and Grantee agrees that the withholding and payment of any such amount
by the Company to the relevant taxing authority shall constitute full
satisfaction of the Company’s obligation to pay such compensation or other
amounts to Grantee.

(b)    In lieu of receiving payment of the Withholding Liability in cash or by
check payable to the Company, payment of such amounts may be made with shares of
Common Stock, if the Grantee elects to discharge these obligations in this
manner and if the following additional considerations are satisfied: (i) the
Company is not then prohibited from acquiring or purchasing such shares;
(ii) the right or power of the person exercising the Option to deliver such
shares in payment of such Withholding Liability is not subject to the prior
interests of any other person (except the Company), as indicated by legends upon
the certificate(s) or as known to the Company; (iii) the number of shares
tendered for payment of the Withholding Liability shall have an aggregate fair
market value on the Tax Date (as defined below) which, when added to any cash
payment then also made by Grantee, equals the Withholding Liability. As used
above, the term “Tax Date” means the date as of which Grantee will realize
taxable income from the exercise of this Option.

 

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6.    Notices.    All notices and other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall be deemed
given if delivered personally or five days after mailing by certified or
registered mail, postage prepaid, return receipt requested, to the Company at
31248 Oak Crest Drive, Westlake Village, California 91361, Attention: Chief
Financial Officer, or to Grantee at the address set forth beneath his or her
signature on the signature page hereto, or at such other addresses as they may
designate by written notice in the manner aforesaid.

7.    Stock Exchange or NASDAQ Requirements; Applicable Laws.    Notwithstanding
anything to the contrary in this Agreement, no shares of stock purchased upon
exercise of the Option, and no certificate representing all or any part of such
shares, shall be issued or delivered if (a) such shares have not been admitted
to listing upon official notice of issuance on each stock exchange upon which
shares of that class are then listed or (b) in the opinion of counsel to the
Company, such issuance or delivery would cause the Company to be in violation of
or to incur liability under any federal, state or other securities law, or any
requirement of any stock exchange listing agreement to which the Company is a
party, or any other requirement of law or of any administrative or regulatory
body having jurisdiction over the Company.

8.    Transferability.    The Options may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated other than by will or the laws
of descent and distribution, and the Option shall be exercisable only by the
Grantee during his or her lifetime. Notwithstanding the foregoing, to the extent
permitted by the Administrator, the Grantee may transfer the Option to any
“family member” of the Grantee (as such term is defined in Section 1(a)(5) of
the General Instructions to Form S-8 under the Securities Act of 1933, as
amended (“Form S-8”)), to trusts solely for the benefit of such family members
and to partnerships in which such family members and/or trusts are the only
partners; provided that, (a) as a condition thereof, the transferor and the
transferee must execute a written agreement containing such terms as specified
by the Administrator, and (b) the transfer is pursuant to a gift or a domestic
relations order to the extent permitted under the General Instructions to Form
S-8.

9.    Plan.    The Option is granted pursuant to the Plan, as in effect on the
Date of Grant, and is subject to, and the Company and Grantee agree to be bound
by, all the terms and conditions of the Plan, as the same may be amended from
time to time in accordance with the terms thereof; provided, however, that no
such amendment shall deprive Grantee, without his or her consent, of the Option
or of any of Grantee’s rights under this Agreement. The interpretation and
construction by the Board of Directors or the Committee of the Plan, this
Agreement, the Option and such rules and regulations as may be adopted by the
Board of Directors or the Committee for the purpose of administering the Plan
shall be final and binding upon Grantee. Until the Option shall expire,
terminate or be exercised in full, the Company shall, upon written request
therefor, send a copy of the Plan, in its then-current form, to Grantee or any
other person or entity then entitled to exercise the Option.

10.    Stockholder Rights.    No person or entity shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of any Option Shares
until the Option shall have been duly exercised to purchase such Option Shares
in accordance with the provisions of this Agreement.

11.    Governing Law.    This Agreement and the Option granted hereunder shall
be governed by and construed and enforced in accordance with the laws of the
State of Delaware.

 

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IN WITNESS WHEREOF, the Company and Grantee have duly executed this Agreement as
of the Date of Grant.

 

K-SWISS INC. By:     Title: President

 

GRANTEE:    Signature    Street Address    City, State and Zip Code    Social
Security Number

 

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