Document:

exv10w2

 

GUARANTEE

     FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in connection with
that certain funding agreement (the “Funding Agreement”), entered into by and between Principal
Life Insurance Company, an Iowa insurance company (“Principal Life”), and Principal Life Income
Fundings Trust 2006-68, a New York common law trust (the “Trust”), relating to the notes (the
“Notes”) issued by the Trust, Principal Financial Group, Inc., a Delaware corporation and the
indirect parent company of Principal Life (the “Guarantor”), hereby furnishes to the Trust its full
and unconditional guarantee of the Guaranteed Amounts (as hereinafter defined) as follows:

     1. Guarantee.

          (a) The Guarantor hereby fully, irrevocably, absolutely and unconditionally guarantees, as a
guarantee of payment and not merely as a guarantee of collection, immediate payment when due to the
Trust any payments required to be made by Principal Life to the Trust under the Funding Agreement
which shall become due and payable regardless of whether such payment is due at maturity, on an
interest payment date or as a result of redemption or otherwise (the “Scheduled Payments”) but
shall be unpaid by Principal Life (the “Guaranteed Amounts”). Notwithstanding anything to the
contrary contained herein, in no event shall the Guaranteed Amounts exceed the Deposit (as defined
in the Funding Agreement) of the Funding Agreement, plus accrued but unpaid interest and any other
amounts due and owing under the Funding Agreement, less any amounts paid by Principal Life to the
Trust.

          (b) In the event that Principal Life fails to make a Scheduled Payment in full when due (the
“Payment Notice Date”), then the Trust or Citibank, N.A., as indenture trustee for the benefit of
the holders of the Notes (the “Indenture Trustee”), pursuant to the indenture (the “Indenture”)
between the Trust and the Indenture Trustee, may present the Guarantor with notice (each, a
“Payment Notice”) of such failure in writing on or after the Payment Notice Date. The Payment
Notice shall identify (1) the Funding Agreement, (2) the Trust, (3) the Payment Notice Date and (4)
the amount of the Scheduled Payments not paid by Principal Life to the Trust as of the Payment
Notice Date. Upon receipt of such Payment Notice, the Guarantor will immediately pay the
Guaranteed Amounts pursuant to Section 7.

          (c) In the event that, after receipt of a Payment Notice from the Trust, the Guarantor fails
to make immediate payment to the Trust or the Indenture Trustee of the Guaranteed Amounts, then
the Trust and the Indenture Trustee may enforce the obligations of the Guarantor under this
Guarantee, including by immediately bringing suit directly against the Guarantor (without first
bringing suit against Principal Life) for the Guaranteed Amounts not paid to the Trust as of the
Payment Notice Date.

          (d) This Guarantee is an unsecured, unsubordinated and contingent obligation of the Guarantor
and ranks equally with all other unsecured and unsubordinated obligations of the Guarantor.

1

 

     2. Termination. This Guarantee is a continuing and irrevocable guarantee of the
Guaranteed Amounts now or hereafter existing and shall terminate and be of no further force and
effect with respect to the Funding Agreement and the Notes upon the full payment of the Scheduled
Payments or upon the earlier extinguishment of the obligations of Principal Life under the Funding
Agreement.

     3. Amendments. Subject to the trust agreement relating to the Trust and the Indenture, no
provision of this Guarantee may be waived, amended, supplemented or modified, except by a written
instrument executed by the Trust and the Guarantor.

     4. Assignment; Governing Law. This Guarantee shall inure to the benefit of the Trust and its
successors, assigns and pledgees. This Guarantee shall be governed by, and construed in accordance
with, the laws of the State of New York without regard to conflict of law principles.

     5. Notices. All notices given pursuant to this Guarantee shall be in writing, and shall
either be delivered, mailed or telecopied to the locations listed below or at such other address or
to the attention of such other persons as such party shall have designated for such purpose in a
written notice complying as to delivery with the terms of this Section 5. Each such notice shall
be effective (i) if given by telecopy, when transmitted to the applicable number so specified in
this Section 5 (such notice shall also be sent by mail, with first class postage prepaid), (ii) if
given by mail, three days after deposit in the mails with first class postage prepaid, or (iii) if
given by any other means, when actually delivered at such address.

If to the Guarantor:

Principal Financial Group, Inc.

711 High Street

Des Moines, Iowa 50392

Attention: General Counsel

Telephone: (515) 247-5111

Facsimile: (515) 248-3011

With a copy to:

Principal Life Insurance Company

711 High Street

Des Moines, Iowa 50392

Attention: Jim Fifield

Telephone: (515) 248-9196

Facsimile: (866) 496-6527

If to the Trust:

Principal Life Income Fundings Trust (followed by the number of the Trust specified in this Guarantee)

2

 

c/o U.S. Bank Trust National Association

100 Wall Street, 16th Floor

New York, New York 10005

Attention: Thomas E. Tabor

Telephone: (212) 361-6184

Facsimile: (212) 809-5459

With a copy to:

Citibank, N.A.

Citibank Agency and Trust

388 Greenwich Street, 14th Floor

New York, New York 10013

Attention: Nancy Forte

Telephone: (212) 816-5685

Facsimile: (212) 816-5527

     6. Representations and Warranties. The Guarantor represents and warrants that: (i) it is duly
organized and in good standing under the laws of the jurisdiction of its organization and has full
capacity and right to make and perform this Guarantee, and all necessary authority has been
obtained; (ii) this Guarantee constitutes a legal, valid and binding obligation of the Guarantor
enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors’ rights and general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law; (iii) the making and performance of this
Guarantee does not and will not violate the provisions of any applicable law, regulation or order,
and does not and will not result in the breach of, or constitute a default under, any material
agreement, instrument or document to which it is a party or by which it or any of its property may
be bound or affected, except to the extent disclosed in the registration statement registering the
issuance of this Guarantee and the Funding Agreement, as amended, supplemented or modified from
time to time (the “Registration Statement”), and to the extent that any such violation, breach or
default does not result in a material adverse effect on the Guarantor; and (iv) all consents,
approvals, licenses and authorizations of, and filings and registrations with, any governmental
authority required under applicable law and regulations for the making and performance of this
Guarantee have been obtained or made and are in full force and effect, except to the extent
disclosed in the Registration Statement and to the extent that the failure to acquire any such
consent, approval, license, authorization, filing or registration does not result in a material
adverse effect on the Guarantor.

     7. Notice of, and Consent to, Security Interest. The Trust hereby notifies the Guarantor that
it has granted to the Indenture Trustee, on behalf of the holders of the Notes, a security interest
in the Collateral (as defined in the Indenture), including, but not limited to, any and all payment
to be made by the Guarantor to the Trust under this Guarantee. The Trust hereby notifies the
Guarantor that it has collaterally assigned to the Indenture Trustee, for the benefit of the
holders of the Notes, this Guarantee. The Guarantor, by executing this Guarantee, hereby (i)
affirms that it has made or simultaneously will make changes to its books and records to reflect
such security interest and collateral assignment, (ii) consents to the security interest

3

 

granted, and collateral assignment made, by the Trust to the Indenture Trustee of this
Guarantee, (iii) agrees to make all payments due under this Guarantee to the Collection Account (as
defined in the Indenture) or any other account designated in writing to the Guarantor by the
Indenture Trustee and (iv) agrees to comply with all orders of the Indenture Trustee with respect
to this Guarantee without any further consent from the Trust.

     8. WAIVER OF JURY TRIAL; FINAL AGREEMENT. TO THE EXTENT ALLOWED BY APPLICABLE LAW, THE
GUARANTOR WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING ON OR ARISING
OUT OF THIS GUARANTEE. THIS GUARANTEE REPRESENTS THE FINAL AGREEMENT BETWEEN THE GUARANTOR AND THE
TRUST AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS AMONG SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

	 	 	 	 	 
	 	 	PRINCIPAL FINANCIAL GROUP, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Elizabeth D. Swanson
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Name:
	 	Elizabeth D. Swanson
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	Counsel
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Date:
	 	The Effective Date (as defined in the Funding Agreement)

Acknowledged and Agreed:

THE PRINCIPAL LIFE INCOME FUNDINGS

TRUST DESIGNATED IN THIS GUARANTEE

	 	 	 	 	 
	By:	 	U.S. Bank Trust National Association,
	 	 	not in its individual capacity, but solely in its
	 	 	capacity as trustee
	 
	 	 	 	 
	By:	 	Bankers Trust Company, N.A.,
	 	 	under Limited Power of Attorney, dated February 16, 2006
	 
	 	 	 	 
	By:

	 	/s/ Diana L. Cook
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:

	 	Diana L. Cook	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:

	 	Vice President	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:

	 	The Effective Date (as defined in the Funding Agreement)	 	 

4Exhibti 10.1

 

EXHIBIT 10.1

QUIKSILVER, INC.

2006 RESTRICTED STOCK PLAN

FORM OF

RESTRICTED STOCK ISSUANCE AGREEMENT

	 	 	 	 
	Participant:
	 	 
	 

	 	 
	Grant Date:
	 	 
	 

	 	 
	Number of Shares of
	 	 
	Restricted Stock Granted:
	 	 
	 

	 	 

     THIS RESTRICTED STOCK ISSUANCE AGREEMENT (this “Agreement”) dated as of [                    ],
2006 (the “Grant Date”) is entered into by and between Quiksilver, Inc., a Delaware corporation
(the “Corporation”), and the Participant specified above, pursuant to the Quiksilver, Inc. 2006
Restricted Stock Plan (the “Plan”). Capitalized terms used herein and not otherwise defined in the
attached Appendix or elsewhere herein shall have the meaning assigned to such terms in the Plan.

     NOW, THEREFORE, in consideration of services rendered and to be rendered by the Participant,
and the mutual promises made herein and the mutual benefits to be derived therefrom, the parties
agree as follows:

     1. Grant; Payment of Par Value. Subject to the terms of this Agreement, the
Corporation hereby grants to the Participant an aggregate of [                    ] restricted shares of
Common Stock of the Corporation (the “Restricted Stock”). Within ten (10) days following the Grant
Date, Participant shall be required to pay to the Corporation an amount (the “Par Price”) equal to
the product of (i) the number of shares of Restricted Stock granted (excluding any treasury shares
granted) and (ii) the par value of each share of Restricted Stock to be acquired. Payment of the
Par Price shall be made in cash (including check, bank draft, money order or wire transfer of
immediately available funds).

     2. Vesting.

          (a) Time Vesting. Subject to Section 7 below, the Restricted Stock shall vest, and
restrictions shall lapse, as follows:

	 	 	 	 	 
	Date	 	Number of Shares
	 

	 	 	 	 

          (b) Acceleration of Vesting Upon Corporate Transaction. Unless the rights and
obligations of the Corporation with respect to this Agreement are to be assigned to the successor
corporation (or Parent thereof) in connection with a Corporate Transaction, all of the Restricted
Stock shall accelerate and vest and all restrictions shall lapse, upon the consummation of a
Corporate Transaction. If the rights and obligations of the Corporation with respect to this

 

 

Agreement are assigned to a successor corporation (or Parent thereof) in connection with a
Corporate Transaction and the successor corporation (or Parent thereof) terminates Participant as
an employee, other than for Misconduct, all of the Restricted Stock shall accelerate and vest and
all restrictions shall lapse immediately prior to such termination of Participant as an employee of
the successor corporation (or Parent thereof).

          (c) Acceleration of Vesting Upon Termination Following Change in Control. In the
event that the Corporation terminates Participant as an Employee following a Change in Control,
other than for Misconduct, all of the Restricted Stock shall accelerate and vest and all
restrictions shall lapse immediately prior to such termination of Participant as an Employee.

          (d) Acceleration of Vesting Upon Death or Permanent Disability. In the event of the
death or Permanent Disability of Participant, all of the Restricted Stock shall accelerate and vest
and all restrictions shall lapse immediately prior to such death or Permanent Disability.

     3. Continuance of Employment. Vesting of the Restricted Stock requires continued
Service of the Participant from the Grant Date through the vesting date as a condition to the
vesting of the Restricted Stock and the rights and benefits under this Agreement. Nothing
contained in this Agreement or the Plan constitutes an employment or service commitment by the
Corporation, affects the Participant’s status as an employee at will who is subject to termination
without cause, confers upon the Participant any right to remain employed by or in service to the
Corporation (or any Parent or Subsidiary), interferes in any way with the right of the Corporation
(or any Parent or Subsidiary) at any time to terminate such employment or services, or affects the
right of the Corporation (or any Parent or Subsidiary) to increase or decrease the Participant’s
other compensation or benefits. Nothing in this section, however, is intended to adversely affect
any independent contractual right of the Participant without his or her consent thereto.

     4. Dividend and Voting Rights. After the Grant Date, the Participant shall be
entitled to cash dividends and voting rights with respect to the shares of Restricted Stock even
though such shares are not vested, provided that such rights shall terminate immediately as to any
shares of Restricted Stock that are forfeited pursuant to Section 7 below.

     5. Restrictions on Transfer. Prior to the time that they have become vested, neither
shares of the Restricted Stock, nor any interest therein, amount payable in respect thereof, or
Restricted Property (as defined in Section 8 hereof) may be sold, assigned, transferred, pledged or
otherwise disposed of, alienated or encumbered (collectively, a “Transfer”), either voluntarily or
involuntarily. The Transfer restrictions in the preceding sentence shall not apply to (i)
transfers to the Corporation, or (ii) transfers by will or the laws of descent and distribution.
After any shares of Restricted Stock have vested, the Participant shall be permitted to Transfer
such shares of Restricted Stock, subject to applicable securities law requirements, the
Corporation’s insider trading policies, and other applicable laws and regulations.

 

 

     6. Stock Certificates.

          (a) Book Entry Form. The Corporation shall issue the shares of Restricted Stock
either: (i) in certificate form as provided in Section 6(b) below; or (ii) in book entry form,
registered in the name of the Participant with notations regarding the applicable restrictions on
transfer imposed under this Agreement.

          (b) Certificates to be Held by Corporation; Legend. Any certificates representing
shares of Restricted Stock that may be delivered to the Participant by the Corporation prior to
vesting shall be redelivered to the Corporation to be held by the Corporation until the
restrictions on such shares shall have lapsed and the shares shall thereby have become vested or
the shares represented thereby have been forfeited hereunder. Such certificates shall bear the
following legend:

“The ownership of this certificate and the shares of stock evidenced
hereby and any interest therein are subject to substantial
restrictions on transfer under an Agreement entered into between the
registered owner and Quiksilver, Inc. A copy of such Agreement is
on file in the office of the Secretary of Quiksilver, Inc.”

          (c) Delivery of Certificates Upon Vesting. Promptly after the vesting of any shares
of Restricted Stock, the Corporation shall, as applicable, either remove the notations on any
shares of Restricted Stock issued in book entry form which have vested or deliver to the
Participant a certificate or certificates evidencing the number of shares of Restricted Stock which
have vested (or, in either case, such lesser number of shares as may be permitted pursuant to
Section 9). The Participant (or the beneficiary or personal representative of the Participant in
the event of the Participant’s death or Permanent Disability, as the case may be) shall deliver to
the Corporation any representations or other documents or assurances as the Committee may deem
desirable to assure compliance with all applicable legal and accounting requirements. The shares
so delivered shall no longer be Restricted Stock hereunder.

          (d) Stock Power; Power of Attorney. Concurrently with the execution and delivery of
this Agreement, the Participant shall deliver to the Corporation an executed stock power in the
form attached hereto as Exhibit A, in blank, with respect to such shares. The Participant,
by acceptance of the Restricted Stock, shall be deemed to appoint, and does so appoint by execution
of this Agreement, the Corporation and each of its authorized representatives as the Participant’s
attorney(s)-in-fact to effect any transfer of unvested forfeited shares of Restricted Stock (or
shares otherwise reacquired by the Corporation hereunder) to the Corporation as may be required
pursuant to the Plan or this Agreement and to execute such documents as the Corporation or such
representatives deem necessary or advisable in connection with any such transfer.

     7. Effect of Termination of Service. Subject to earlier vesting as provided in
Section 2 hereof, if the Participant ceases to provide Service to the Corporation (or a Parent or
Subsidiary), the Participant’s shares of Restricted Stock (and related Restricted Property as
defined in Section 8 hereof) shall be forfeited to the Corporation to the extent such shares have

 

 

not become vested pursuant to Section 2 upon the date the Participant’s Service terminates
(the “Severance Date”), regardless of the reason for such termination (whether with or without
cause, voluntarily or involuntarily). Upon the occurrence of any forfeiture of shares of
Restricted Stock hereunder, such unvested, forfeited shares and related Restricted Property shall
be automatically transferred to the Corporation, without any other action by the Participant and
the Corporation shall refund the Par Price for such forfeited shares, if any, to the Participant.
No additional consideration shall be paid by the Corporation with respect to such transfer. No
interest shall be credited with respect to, nor shall any other adjustments be made to, the Par
Price for fluctuations in the fair market value of the Common Stock either before or after the
transfer date (except for customary adjustments to reflect stock splits, reverse stock splits, and
stock dividends). The Corporation may exercise its powers under Section 6(d) hereof and take any
other action necessary or advisable to evidence such transfer. The Participant shall deliver any
additional documents of transfer that the Corporation may request to confirm the transfer of such
unvested, forfeited shares and related Restricted Property to the Corporation.

     8. Adjustments Upon Specified Events. If any change is made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of
shares, Corporate Transaction (not resulting in acceleration of vesting pursuant to Section 2(b))
or other change affecting the outstanding Common Stock as a class, appropriate adjustment shall be
made by the Committee to the number and/or class of securities in effect under this Agreement.
Such adjustments to the outstanding Restricted Stock are to be effected in a manner which shall
preclude the enlargement or dilution of rights and benefits under this Agreement. The adjustments
determined by the Committee shall be final, binding and conclusive. If any adjustment shall be
made pursuant to the foregoing or any dividend other than a regular cash dividend is declared and
the shares of Restricted Stock are not fully vested upon such event or prior thereto, the
restrictions applicable to such shares of Restricted Stock shall continue in effect with respect to
any consideration or other securities (the “Restricted Property” and, for the purposes of this
Agreement, “Restricted Stock” shall include “Restricted Property,” unless the context otherwise
requires) received in respect of such Restricted Stock. Such Restricted Property shall vest at
such times and in such proportion as the shares of Restricted Stock to which the Restricted
Property is attributable vest, or would have vested pursuant to the terms hereof if such shares of
Restricted Stock had remained outstanding.

     9. Taxes.

          (a) Tax Withholding. The Corporation (or any Parent or Subsidiary last employing the
Participant) shall be entitled to require a cash payment by or on behalf of the Participant and/or
to deduct from other compensation payable to the Participant any sums required with respect to
Withholding Taxes. Alternatively, the Participant or other person in whom the Restricted Stock
vests may irrevocably elect, in such manner and at such time or times prior to any applicable tax
date as may be permitted or required under rules established by the Committee, to have the
Corporation withhold and reacquire shares of Restricted Stock at their Fair Market Value at the
time of vesting to satisfy all or part of the minimum Withholding Taxes of the Corporation (or any
Parent or Subsidiary) with respect to such vesting. Any election to have shares so held back and
reacquired shall be subject to such rules and procedures, which may include prior approval of the
Committee, as the Committee may impose, and shall not be
available if the Participant makes or has made an election pursuant to Section 83(b) of the
Code with respect to such Restricted Stock.

 

 

          (b) Tax Consequences to Participant. Participant acknowledges that the issuance and
the vesting of the Restricted Stock may have significant and adverse tax consequences for
Participant and that Participant has been advised by the Corporation to review the Questions and
Answers on Federal Income Tax Consequences portion of the Corporation’s Stock Plan Summary and
Prospectus and to consult Participant’s personal tax advisor regarding the consequences of the
issuance and vesting of the Restricted Stock to Participant.

     10. Notices. Any notice to be given under the terms of this Agreement shall be in
writing and addressed to the Corporation at its principal office to the attention of the Secretary,
and to the Participant at the Participant’s last address reflected on the Corporation’s payroll
records. Any notice shall be delivered in person or shall be enclosed in a properly sealed
envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch office regularly maintained by the United
States Government. Any such notice shall be given only when received, but if the Participant is no
longer an Employee shall be deemed to have been duly given five business days after the date mailed
in accordance with the foregoing provisions of this Section 10.

     11. Plan. The Restricted Stock and all rights of the Participant under this Agreement
are subject to the terms and conditions of the provisions of the Plan, incorporated herein by
reference. The Participant agrees to be bound by the terms of the Plan and this Agreement. The
Participant acknowledges having read and understanding the Plan, the Plan Summary and Prospectus
for the Plan, and this Agreement. Unless otherwise expressly provided in other sections of this
Agreement, provisions of the Plan that confer discretionary authority on the Board or the Committee
do not (and shall not be deemed to) create any rights in the Participant unless such rights are
expressly set forth herein or are otherwise in the sole discretion of the Board or the Committee so
conferred by appropriate action of the Board or the Committee under the Plan after the date
hereof.

     12. Entire Agreement. This Agreement and the Plan together constitute the entire
agreement and supersede all prior understandings and agreements, written or oral, of the parties
hereto with respect to the subject matter hereof. The Plan and this Agreement may be amended
pursuant to Section 3.3 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision hereof in writing to
the extent such waiver does not adversely affect the interests of the Participant hereunder, but no
such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a
waiver of any other provision hereof.

     13. Counterparts. This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which together shall constitute
one and the same instrument.

     14. Section Headings. The section headings of this Agreement are for convenience of
reference only and shall not be deemed to alter or affect any provision hereof.

 

 

     15. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without regard to conflict of law principles
thereunder.

     IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed on its behalf by
a duly authorized officer and the Participant has hereunto set his or her hand as of the date and
year first above written.

	 	 	 	 	 
	 	QUIKSILVER, INC., a Delaware corporation

 	 
	 	By:  	 	 
	 
	 	Print Name:	 	 
	 
	 	Its:	 	 

	 	 	 	 
	 

	 	PARTICIPANT
	 
	 	 
	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 
	 

	 	 
	 

	 	Print Name

 

 

APPENDIX

     The following definitions shall be in effect under the Agreement:

          A. “Board” shall mean the Corporation’s Board of Directors.

          B. “Change in Control” shall mean a change in ownership of control of the Corporation effected
through either of the following transactions.

               (i) the acquisition, directly or indirectly, by any person or related group of persons (other
than the Corporation or a person that directly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power
of the Corporation’s outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation’s stockholders, or

               (ii) a change in the composition of the Board over a period of thirty-six (36) consecutive
months or less such that a majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (b) have been elected or nominated for
election as Board members during such period by at least a majority of the Board members described
in clause (A) who were still in office at the time the Board approved such election or nomination.

          C. “Committee” shall mean the Compensation Committee of the Board of Directors.

          D. “Common Stock” shall mean the Corporation’s common stock.

          E. “Corporate Transaction” shall mean either of the following stockholder-approved
transactions to which the Corporation is a party:

               (i) a merger or consolidation in which securities possessing more than fifty percent (50%) of
the total combined voting power of the Corporation’s outstanding securities are transferred to a
person or persons different from the persons holding those securities immediately prior to such
transaction, or

               (ii) the sale, transfer or other disposition of all or substantially all of the Corporation’s
assets in complete liquidation or dissolution of the Corporation.

          F. “Employee” shall mean an individual who is in the employ of the Corporation (or any Parent
or Subsidiary), subject to the control and direction of the employer entity as to both the work to
be performed and the manner and method of performance.

          G. “Fair Market Value” per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:

 

 

               (i) If the Common Stock is at the time traded on the Nasdaq National Market (prior to becoming
a national securities exchange), then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as such price is reported by the National
Association of Securities Dealers in the Nasdaq National Market. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.

               (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Committee to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on such exchange. If there is no
closing selling price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such quotation exists.

          H. “Misconduct” shall mean the commission of any act of fraud, embezzlement or dishonesty by
the Participant, any unauthorized use or disclosure by such person of confidential information or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as
grounds for the dismissal or discharge of any Participant or other person in the Service of the
Corporation (or any Parent or Subsidiary).

          I. “Parent” shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.

          J. “Permanent Disability” shall mean the inability of the Participant to engage in any
substantial gainful activity by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12) months or more.

          K. “Service” shall mean the performance of services for the Corporation (or any Parent or
Subsidiary) by a person in the capacity of an Employee.

          L. “Stock Exchange” shall mean the American Stock Exchange, the New York Stock Exchange or the
Nasdaq Stock Market (upon becoming a national securities exchange).

          M. “Subsidiary” shall mean any corporation (other than the Corporation) in an unbroken chain
of corporations beginning with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the

 

 

determination, stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

          N. “Withholding Taxes” shall mean the Federal, state and local income and employment
withholding taxes to which the Participant may become subject in connection with the issuance or
vesting of shares of Restricted Stock or upon the disposition of shares acquired pursuant to this
Agreement.

 

 

CONSENT OF SPOUSE

     In consideration of the execution of the foregoing Restricted Stock Issuance Agreement by
Quiksilver, Inc., I,                                         , the spouse of the Participant therein named, do
hereby join with my spouse in executing the foregoing Restricted Stock Issuance Agreement and do
hereby agree to be bound by all of the terms and provisions thereof and of the Plan.

Dated:                     , 2006

	 	 	 	 
	 

	 	 
	 

	 	Signature of Spouse
	 
	 	 
	 

	 	 
	 

	 	Print Name

 

 

STOCK POWER

     FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Issuance Agreement between
Quiksilver, Inc., a Delaware corporation (the “Corporation”), and the individual named below (the
“Individual”) dated as of                     , 2006, the Individual, hereby sells, assigns and transfers
to the Corporation, an aggregate                                 shares of Common Stock of the Corporation, standing in
the Individual’s name on the books of the Corporation and represented by stock certificate
number(s)                      to which this instrument is attached, and hereby irrevocably constitutes and
appoints                                          as his or her attorney in fact and agent to transfer such shares
on the books of the Corporation, with full power of substitution in the premises.

Dated                     ,                     

	 	 	 	 
	 

	 	 
	 

	 	Signature
	 
	 	 
	 
	 

	 	 
	 

	 	Print Name

(Instruction: Please do not fill in any blanks other than the signature line. The purpose of the
assignment is to enable the Corporation to exercise its sale/purchase option set forth in the
Restricted Stock Issuance Agreement without requiring additional signatures on the part of the
Individual.)

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