<PAGE>

                       [QUIKSILVER LOGO]


                                                  , 2002
                              --------------------

PERSONAL AND CONFIDENTIAL

Robert McKnight, Jr.
Quiksilver, Inc.
15202 Graham Street
Huntington Beach, CA  92649

Re:   Employment at Quiksilver

Dear Bob:

      This letter ("Agreement") will confirm our understanding and agreement
regarding your continued employment at Quiksilver, Inc. ("Quiksilver" or the
"Company"), and completely supersedes and replaces any existing or previous oral
or written understandings or agreements, express or implied, we have had. The
terms contained in this letter are effective on and after November 1, 2001.

            1.    The Company hereby agrees to employ you as its Chief Executive
                  Officer for a term commencing November 1, 2001 and ending on
                  the third anniversary of such date, unless sooner terminated
                  in accordance with Paragraph 8.

            2.    Your base salary while employed hereunder, retroactive to
                  January 1, 2002, will be $62,500 per month, less applicable
                  withholdings and deductions, paid on the Company's regular
                  payroll dates. Your salary will be reviewed at the time
                  management salaries are reviewed periodically and may be
                  adjusted (but not below $62,500 per month) at the Company's
                  discretion in light of the Company's performance, your
                  performance, market conditions and other factors deemed
                  relevant by the Company.

            3.    For the fiscal year ending October 31, 2002 and each fiscal
                  year thereafter, you shall be eligible to receive a bonus
                  under the Company's stockholder approved Executive Officer
                  Bonus Plan based on the criteria set forth on Addendum "A"
                  attached hereto. In addition, you shall also be eligible to
                  receive an annual bonus of up to 25% of your base salary based
                  on the achievement of other goals or objectives established by
                  the Compensation Committee for each fiscal year that you are
                  employed hereunder. Any bonus earned pursuant to this
                  Paragraph 3 shall be paid within ten (10) days following the
                  date the Company publicly releases its annual audited
                  financial statements (the "Bonus Payment Date"). Any bonus
                  payment shall be less applicable withholdings and deductions.
                  In the event that your employment with the Company is
                  terminated prior to the


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Robert McKnight
June __, 2002

                  end of any fiscal year (for any reason), you shall be entitled
                  to receive a pro rata portion of the bonus otherwise payable
                  to you based upon the actual number of days which you were
                  employed by the Company during the applicable fiscal year,
                  which shall be paid on the Bonus Payment Date.

            4.    Since Quiksilver does not have a vacation policy for
                  executives of your level, no vacation days will be treated as
                  earned or accrued.

            5.    While you are employed hereunder, Quiksilver will pay the
                  premium on a term life insurance policy on your life with a
                  company of our choice in the face amount determined by the
                  Company of not less than $2,000,000 payable to the beneficiary
                  or beneficiaries of your choice. Quiksilver's obligation to
                  obtain and maintain this insurance is contingent upon your
                  establishing and maintaining insurability, and it is not
                  required to pay premiums for such a policy in excess of $5,000
                  annually.

            6.    Provided you are then serving as the Company's Chief Executive
                  Officer hereunder and that a sufficient number of authorized
                  but unissued shares are available under the Company's
                  stockholder approved plan, the Company will grant you options
                  to acquire 100,000 shares of the Company's Common Stock
                  (subject to appropriate adjustment for any stock split, stock
                  dividend, recapitalization, combination of shares, exchange of
                  shares or other change effecting the outstanding Common Stock
                  as a class without the Company's receipt of consideration)
                  annually on the date the Company grants options to its
                  employees generally. The options shall be granted pursuant to
                  the Company's stock incentive plan with an exercise price
                  equal to the fair market value on the date of grant, a maximum
                  term of 10 years and vesting in equal annual installments over
                  three years. The remaining terms of such options shall be
                  consistent with those of options generally granted to other
                  employees and shall be set forth in separate agreements.

            7.    (a) Notwithstanding anything to the contrary in this Agreement
                  or in your prior employment relationship with the Company,
                  express or implied, either you or Quiksilver may terminate
                  your employment at will and with or without Cause (as defined
                  below) at any time for any reason. This aspect of your
                  employment relationship can only be changed by an
                  individualized written agreement signed by both you and the
                  Company.


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Robert McKnight
June __, 2002

                  (b) The Company may terminate your employment immediately,
                  without notice, for Cause, which shall be defined as (i) your
                  death, (ii) your permanent disability which renders you unable
                  to perform your duties and responsibilities for a period in
                  excess of three consecutive months, (iii) willful misconduct
                  in the performance of your duties, (iv) violation of law, (v)
                  self-dealing, (vi) willful breach of duty, or (vii) habitual
                  neglect of duty, (viii) a material breach by you of your
                  obligations under Paragraphs 8 or 10 of this Agreement. If the
                  Company terminates your employment for Cause, or you terminate
                  your employment other than for Good Reason (as defined below),
                  you (or your estate or beneficiaries in the case of your
                  death) shall receive your base salary and other benefits
                  earned and accrued prior to the termination of your employment
                  as well as a pro rata portion of your bonus, if any, as
                  provided in Paragraph 3 for the fiscal year in which such
                  termination occurs, and you shall have no further rights to
                  any other compensation or benefits hereunder on or after the
                  termination of your employment.

                  (c) The Company may terminate your employment without Cause
                  and you may terminate your employment with the Company for
                  Good Reason, upon thirty (30) days' advance written notice.

                  If Quiksilver elects to terminate your employment without
                  Cause, or if you terminate your employment with the Company
                  for Good Reason within six (6) months of the action
                  constituting Good Reason, the Company will (i) continue to pay
                  your base salary (but not any employment benefits) on its
                  regular payroll dates for a period equal to the greater of
                  eighteen (18) months or the remaining term of this Agreement,
                  and (ii) pay you a pro rata portion of your bonus, if any, as
                  provided by Paragraph 3 for the year in which such termination
                  occurs, less applicable withholdings and deductions.
                  Notwithstanding the foregoing, if such termination without
                  Cause or for Good Reason occurs within six (6) months
                  immediately following a Change of Control (as defined in
                  Addendum "B") the Company will instead (i) continue to pay
                  your base salary (but not any employment benefits) on it's
                  regular payroll date for a period of thirty-six (36) months,
                  (ii) pay you a pro rata portion of your bonus, if any, as
                  provided by Paragraph 3 for the year in which such termination
                  occurs, and (iii) pay you an amount equal to three (3) times
                  the average annual bonus earned by you pursuant to Paragraph 3
                  during the two (2) most recently completed fiscal years of the
                  Company (or such shorter period that this Agreement has been
                  in effect) payable over a three year period following
                  termination in equal installments on the Company's regular
                  payroll dates, less applicable withholdings and deductions. In
                  order for you to be eligible to receive the benefits specified
                  in this Paragraph 7(c), you must execute a general release of
                  claims in a form reasonably acceptable to the Company. You
                  shall have no further rights to any other compensation or
                  benefits hereunder on or after the termination of your


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Robert McKnight
June __, 2002

                  employment. You shall not have a duty to seek substitute
                  employment and the Company shall not have the right to offset
                  any compensation due you against any compensation or income
                  received by you after the date of such termination.

                  "Good Reason" for you to terminate employment means a
                  voluntary termination as a result of (i) the assignment to you
                  of duties materially inconsistent with your position as set
                  forth above without your consent, (ii) a material change in
                  your reporting level from that set forth in this Agreement
                  without your consent, (iii) a material diminution of your
                  authority without your consent, (iv) a material breach by the
                  Company of its obligations under this agreement, (v) a failure
                  by the Company to obtain from any successor, before the
                  succession takes place, an agreement to assume and perform the
                  obligations contained in this Agreement, or (vi) the Company
                  requiring you to be based (other than temporarily) at any
                  office or location outside the Orange County, California area.
                  Notwithstanding the foregoing, Good Reason shall not exist
                  unless you provide the Company notice of termination on
                  account thereof and, if such event or condition is curable,
                  the Company fails to cure such event or condition within
                  thirty (30) days of such notice.

                  (d) In the event that any payment or benefit received or to be
                  received by you (collectively, the "Payments") would
                  constitute a parachute payment within the meaning of Section
                  280G of the Internal Revenue Code of 1986, as amended (the
                  "Code"), then the following limitation shall apply:

                  The aggregate present value of those Payments shall be limited
                  in amount to the greater of the following dollar amounts (the
                  "Benefit Limit"):

                  (i) 2.99 times your Average Compensation (as defined below),
                  or

                  (ii) the amount which yields you the greatest after-tax amount
                  of Payments under this Agreement after taking into account any
                  excise tax imposed under Code Section 4999 on those Payments.

                  The present value of the Payments will be measured as of the
                  date of the Change in Control and determined in accordance
                  with the provisions of Code Section 280G(d)(4).

                  Average Compensation means the average of your W-2 wages from
                  the Company for the five (5) calendar years completed
                  immediately prior to the calendar year in which the Change in
                  Control is effected. Any W-2 wages for a partial year of
                  employment will be annualized, in accordance with the
                  frequency which such wages are paid during such partial year,
                  before inclusion in Average Compensation.


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Robert McKnight
June __, 2002

            8.    Quiksilver owns certain trade secrets and other confidential
                  and/or proprietary information which constitute valuable
                  property rights, which it has developed through a substantial
                  expenditure of time and money, which are and will continue to
                  be utilized in the Company's business and which are not
                  generally known in the trade. This proprietary information
                  includes the list of names of the customers and suppliers of
                  Quiksilver, and other particularized information concerning
                  the products, finances, processes, material preferences,
                  fabrics, designs, material sources, pricing information,
                  production schedules, marketing strategies, merchandising
                  strategies, order forms and other types of proprietary
                  information relating to our products, customers and suppliers.
                  You agree that you will not disclose and will keep strictly
                  secret and confidential all trade secrets and proprietary
                  information of Quiksilver, including, but not limited to,
                  those items specifically mentioned above.

            9.    The Company will reimburse you for documented reasonable and
                  necessary business expenses incurred by you while engaged in
                  business activities for the Company's benefit on such terms
                  and conditions as shall be generally available to other
                  executives of the Company.

            10.   You will be required to observe the Company's personnel and
                  business policies and procedures as they are in effect from
                  time to time. In the event of any conflicts, the terms of this
                  Agreement will control.

            11.   This Agreement, its addenda, and any stock option agreements
                  Quiksilver may enter into with you contain the entire
                  integrated agreement between us regarding these issues, and no
                  modification to this letter will be valid unless set forth in
                  writing and signed by both you and the Company. To the fullest
                  extent allowed by law, any dispute, controversy or claim
                  arising out of or relating to this Agreement, the breach
                  thereof, or any aspect of your employment or the cessation
                  thereof must be settled exclusively by final and binding
                  arbitration before a single arbitrator administered by
                  JAMS/Endispute in Orange County, California, whose fees and
                  costs shall be evenly divided by the parties. Judgment upon
                  the award rendered by the arbitrator may be entered in any
                  court having jurisdiction thereof. The Company reserves the
                  right, however, to seek judicial provisional remedies and
                  equitable relief regarding any breach or threatened breach of
                  your obligations regarding trade secrets and proprietary
                  information.

            12.   This Agreement will be assignable by the Company to any
                  successor or to any other company owned or controlled by the
                  Company, and will be binding upon any successor to the
                  business of the Company, whether direct or indirect, by
                  purchase of securities, merger, consolidation, purchase of all
                  or substantially all of the assets of the Company or
                  otherwise.


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Robert McKnight
June __, 2002


      Please sign, date and return the enclosed copy of this letter to me for
our files to acknowledge your agreement with the above.

                                                     Very truly yours,

                                                     ---------------------------
                                                     ---------------------------




Enclosures

ACKNOWLEDGED AND AGREED:


-------------------------------
Robert McKnight, Jr.
Date Effective:               , 2003
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                                   ADDENDUM A

                          EXECUTIVE OFFICER BONUS PLAN

      In the event that the Company achieves percentage growth in its "Earnings
Before Taxes" (as defined below) in the amounts set forth in the table below,
then each participant in the Executive Officer Bonus Plan (the "Plan") shall be
entitled to receive a cash bonus in an amount equal to 75% of the percentage of
such participant's base salary earned during the applicable fiscal year set
forth in the table below opposite the respective Earnings Before Taxes Growth
percentage.

<TABLE>
<CAPTION>
            Earnings Before Taxes Growth         Percentage of Base Salary
            ----------------------------         -------------------------
<S>                                              <C>
            Below       10%                                  0%
                        10%                                 25%
                        12%                                 75%
                        16%                                100%
                        20%                                150%
                        24%                                200%
                        28%                                250%
                        32% or more                        300%
</TABLE>

      In the event that Earnings Before Taxes Growth is in an amount between any
of the benchmarks set forth above (but above ten percent (10 %)), then the
amount of any bonus payable to a participant shall be calculated on the basis of
a straight line interpolation between the two closest points.


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<PAGE>
      For purposes of the foregoing table, "Earnings Before Taxes" shall mean
the Company's income before provision for income taxes for each fiscal year of
the Company as reflected in the Company's audited financial statements for such
fiscal year determined in accordance with generally accepted accounting
principles consistently applied. In addition, income before income taxes shall
exclude all non-recurring or extraordinary items (whether constituting loss or
gain) which, in the sole and absolute discretion of the Board of Directors or
the Compensation Committee of the Company, did not arise in the ordinary course
of business. The computation of income before income taxes and of the dollar
amount of the bonus, if any, payable to any participant under this Plan shall be
approved by the Company's Compensation Committee and shall be final and
conclusive on the Company and each participant.


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                                   ADDENDUM B

                         DEFINITION OF CHANGE IN CONTROL

      "Change in Control" means the occurrence of one or more of the following
events: (i) any corporation, partnership, person, other entity, or group (as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
(collectively, a "Person") acquires shares of capital stock of the Company
representing more than 50% of the total number of shares of capital stock that
may be voted for the election of directors of the Company, (ii) a merger,
consolidation, or other business combination of the Company with or into another
Person is consummated, or all or substantially all of the assets of the Company
are acquired by another Person, as a result of which the stockholders of the
Company immediately prior to the consummation of such transaction own,
immediately after consummation of such transaction equity securities possessing
less than 50% of the voting power of the surviving or acquiring Person (or any
Person in control of the surviving or acquiring Person, the equity securities of
which are issued or transferred in such transaction), or (iii) the stockholders
of the Company approve a plan of complete liquidation, dissolution or winding up
of the Company.



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