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                                                                  EXHIBIT 10.1






























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                                   VANS, INC.


                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

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                               TABLE OF CONTENTS
                                                                    Page
                                                                    ----
1.       DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . . . .   1
         1.1     Definitions  . . . . . . . . . . . . . . . . . . .   1
         1.2     Accounting Terms . . . . . . . . . . . . . . . . .  14

2.       LOAN, LETTERS OF CREDIT AND TERMS OF PAYMENT . . . . . . .  14
         2.1     Advances . . . . . . . . . . . . . . . . . . . . .  14
         2.2     Letters of Credit  . . . . . . . . . . . . . . . .  15
         2.3     Repayment of Overadvance . . . . . . . . . . . . .  16
         2.4     Interest Rates, Payments, and Calculations . . . .  16
         2.5     LIBOR Advance Termination  . . . . . . . . . . . .  17
         2.6     Crediting Payments . . . . . . . . . . . . . . . .  18
         2.7     Depository Account . . . . . . . . . . . . . . . .  18
         2.8     Application of Principal Payments  . . . . . . . .  18
         2.9     Fees . . . . . . . . . . . . . . . . . . . . . . .  18
         2.10    Additional Costs . . . . . . . . . . . . . . . . .  19
         2.11    LIBOR Indemnity  . . . . . . . . . . . . . . . . .  20
         2.12    Term . . . . . . . . . . . . . . . . . . . . . . .  20
         2.13    Termination  . . . . . . . . . . . . . . . . . . .  20

3.       CONDITIONS OF LOANS  . . . . . . . . . . . . . . . . . . .  21

4.       CREATION OF SECURITY INTEREST  . . . . . . . . . . . . . .  21
         4.1     Grant of Security Interest . . . . . . . . . . . .  21
         4.2     Delivery of Additional Documentation Required  . .  21
         4.3     Right to Inspect . . . . . . . . . . . . . . . . .  21
         4.4     Negative Pledge  . . . . . . . . . . . . . . . . .  21

5.       REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . .  22
         5.1     Due Organization and Qualification . . . . . . . .  22
         5.2     Due Authorization; No Conflict . . . . . . . . . .  22
         5.3     No Prior Encumbrances  . . . . . . . . . . . . . .  22
         5.4     Bona Fide Eligible Accounts  . . . . . . . . . . .  22
         5.5     Merchantable Inventory . . . . . . . . . . . . . .  22
         5.6     Name; Location of Chief Executive Office . . . . .  22
         5.7     Litigation . . . . . . . . . . . . . . . . . . . .  23
         5.8     No Material Adverse Change in Financial Statements  23
         5.9     Solvency . . . . . . . . . . . . . . . . . . . . .  23
         5.10    Regulatory Compliance  . . . . . . . . . . . . . .  23
         5.11    Environmental Condition  . . . . . . . . . . . . .  23
         5.12    Taxes  . . . . . . . . . . . . . . . . . . . . . .  24
         5.13    Permitted Investments  . . . . . . . . . . . . . .  24
         5.14    Government Consents  . . . . . . . . . . . . . . .  24
         5.15    Full Disclosure  . . . . . . . . . . . . . . . . .  24

6.       AFFIRMATIVE COVENANTS  . . . . . . . . . . . . . . . . . .  24
         6.1     Good Standing  . . . . . . . . . . . . . . . . . .  24
         6.2     Government Compliance  . . . . . . . . . . . . . .  24
         6.3     Financial Statements, Reports, Certificates  . . .  25
         6.4     Inventory  . . . . . . . . . . . . . . . . . . . .  26
         6.6     Insurance  . . . . . . . . . . . . . . . . . . . .  26
         6.7     Further Assurances . . . . . . . . . . . . . . . .  26






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7.       NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . .  26
         7.1     Change in Business . . . . . . . . . . . . . . . .  27
         7.2     Mergers or Acquisitions  . . . . . . . . . . . . .  27
         7.3     Indebtedness . . . . . . . . . . . . . . . . . . .  27
         7.4     Encumbrances . . . . . . . . . . . . . . . . . . .  27
         7.5     Distributions  . . . . . . . . . . . . . . . . . .  27
         7.6     Current Ratio  . . . . . . . . . . . . . . . . . .  27
         7.7     Quick Ratio  . . . . . . . . . . . . . . . . . . .  27
         7.8     Interest Coverage Ratio  . . . . . . . . . . . . .  27
         7.9     Adjusted Consolidated Tangible Net Worth . . . . .  27
         7.10    Working Capital  . . . . . . . . . . . . . . . . .  28
         7.11    Leverage Ratio . . . . . . . . . . . . . . . . . .  28
         7.12    Quarterly Losses . . . . . . . . . . . . . . . . .  28
         7.13    Investments  . . . . . . . . . . . . . . . . . . .  28
         7.14    Transactions with Affiliates . . . . . . . . . . .  28
         7.15    Inventory  . . . . . . . . . . . . . . . . . . . .  28
         7.16    Subordinated Debt  . . . . . . . . . . . . . . . .  28
         7.17    Compliance . . . . . . . . . . . . . . . . . . . .  29

8.       EVENTS OF DEFAULT  . . . . . . . . . . . . . . . . . . . .  29
         8.1     Payment Default  . . . . . . . . . . . . . . . . .  29
         8.2     Covenant Default . . . . . . . . . . . . . . . . .  29
         8.3     Material Adverse Effect  . . . . . . . . . . . . .  29
         8.4     Attachment . . . . . . . . . . . . . . . . . . . .  29
         8.5     Insolvency . . . . . . . . . . . . . . . . . . . .  30
         8.6     Other Agreements . . . . . . . . . . . . . . . . .  30
         8.7     Judgments  . . . . . . . . . . . . . . . . . . . .  30
         8.8     Misrepresentations . . . . . . . . . . . . . . . .  30

9.       BANK'S RIGHTS AND REMEDIES . . . . . . . . . . . . . . . .  30
         9.1     Rights and Remedies  . . . . . . . . . . . . . . .  30
         9.2     Power of Attorney  . . . . . . . . . . . . . . . .  31
         9.3     Accounts Collection. . . . . . . . . . . . . . . .  32
         9.4     Bank Expenses  . . . . . . . . . . . . . . . . . .  32
         9.5     Bank's Liability for Collateral  . . . . . . . . .  32
         9.6     Remedies Cumulative  . . . . . . . . . . . . . . .  33
         9.7     Demand; Protest; Application . . . . . . . . . . .  33

10.      NOTICES  . . . . . . . . . . . . . . . . . . . . . . . . .  33

11.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER . . . . . . . .  34

12.      GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . .  34
         12.1    Successors and Assigns . . . . . . . . . . . . . .  34
         12.2    Indemnification  . . . . . . . . . . . . . . . . .  34
         12.3    Time of Essence  . . . . . . . . . . . . . . . . .  34
         12.4    Severability of Provisions; Headings . . . . . . .  34
         12.5    Amendments; Integration  . . . . . . . . . . . . .  35
         12.6    Counterparts . . . . . . . . . . . . . . . . . . .  35
         12.7    Survival . . . . . . . . . . . . . . . . . . . . .  35
         12.8    Confidentiality  . . . . . . . . . . . . . . . . .  35
         12.9    No Novation  . . . . . . . . . . . . . . . . . . .  35
         12.10   Amendments Upon Termination of Snowboard Boot 
                 Financing  . . . . . . . . . . . . . . . . . . . .  35
         12.11   Power of Attorney  . . . . . . . . . . . . . . . .  36









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         THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the
"Agreement") is entered into as of December 2, 1996, by and between BANK OF
THE WEST ("Bank") and VANS, INC. ("Borrower"), and amends and restates the
Existing Loan Agreement (hereinafter defined).

                                    RECITALS

         WHEREAS, Bank and Borrower wish to amend and restate the Loan and
Security Agreement, dated as of July 1, 1995, by and between Borrower and Bank,
as amended by the First Amendment to Loan and Security Agreement, dated as of
August 25, 1995, by and between Borrower and Bank, by the Second Amendment to
Loan and Security Agreement, dated as of November 9, 1995, by and between
Borrower and Bank, by the Third Amendment to Loan and Security Agreement, dated
as of March 29, 1996, by and between Borrower and Bank, by the Fourth Amendment
to Loan and Security Agreement, dated as of April 11, 1996, by and between
Borrower and Bank, and by the Fifth Amendment to Loan and Security Agreement,
dated as of July 16, 1996, by and between Borrower and Bank (the "Existing Loan
Agreement"); and

         WHEREAS, Borrower has requested certain changes to the credit facility
extended under the Existing Loan Agreement and Bank has agreed to such
requests, to the extent and manner set forth herein;

         NOW, THEREFORE, IT IS AGREED THAT:

         1.      DEFINITIONS AND CONSTRUCTION

                 1.1      Definitions.  As used herein, the following terms
shall have the following definitions:

                          "Account Debtor" means the Person who is obligated on
or under an Account.

                          "Accounts" means all presently existing and hereafter
arising accounts, contract rights, and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods or the rendering of services
by Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor.

                          "Adjusted Committed Line" means, at any date, the
Committed Line, less (i) the sum of the aggregate undrawn face amount of the
Letters of Credit outstanding and the aggregate drawn but unreimbursed Letters
of Credit on such date and (ii) the sum of the Reserves on such date.

                          "Adjusted Consolidated Tangible Net Worth" means at
any date as of which the amount thereof shall be determined, the consolidated
total assets of





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Borrower and the Subsidiaries minus, without duplication, (i) the sum of any
amounts attributable to (a) goodwill, (b) intangible items such as unamortized
debt discount and expense, patents, trade and service marks and names,
copyrights and research and development expenses except prepaid expenses, and
(c) all reserves not already deducted from assets, and (ii) Total Liabilities.

                          "Advance" or "Advances" means an advance under the
Revolving Facility.

                          "Affiliate" means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person, any Person
that controls or is controlled by or is under common control with such Person,
and each of such Person's senior executive officers, directors, and partners.

                          "Bank Expenses" means all:  reasonable costs or
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the preparation, negotiation, administration, and enforcement
of the Loan Documents; and Bank's reasonable attorneys' fees and expenses
incurred in amending, enforcing or defending the Loan Documents, whether or not
suit is brought.

                          "Borrower's Books" means all of Borrower's books and
records regarding Accounts, including:  ledgers and records concerning the
Collateral (other than Borrower's Books) and all computer programs, or tape
files, and the related equipment containing such information and, in any event,
related solely to the Collateral.

                          "Borrowing Base" means as of any date the sum of (i)
eighty percent (80%) of the aggregate face amount of Eligible Accounts as of
such date; provided that if Dilution equals or exceeds seven and one-half
percent (7.5%) at any time, Bank may, in its discretion, implement appropriate
Reserves to reflect such increased Dilution, and (ii) the lesser of (A) forty
percent (40%) of the value of Eligible Inventory at such time (valued at the
lower of cost or fair market value, on a FIFO basis, in accordance with GAAP),
and (B) Seven Million Dollars ($7,000,000).

                          "Business Day" means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California are authorized
or required to close.

                          "Cash Equivalents" means as of any date the net
current cash value of obligations issued or guaranteed by the United States of
America then held by Borrower.

                          "Closing Date" means July 1, 1995.

                          "Code" means the California Uniform Commercial Code.





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                          "Collateral" means (i) the Accounts, other than the
Snowboard Boot Accounts, (ii) the Depository Account, as defined in Section 2.7
hereof, (iii) the Negotiable Collateral, (iv) the Inventory, other than the
Snowboard Boots, (v) Borrower's Books, and (vi) all claims, rights and
interests in any of the foregoing and all proceeds thereof.

                          "Committed Line" means Twenty Million Dollars
($20,000,000).

                          "Consolidated Current Assets" means, as of any
applicable date, all amounts that should, in accordance with GAAP, be included
as current assets on the consolidated balance sheet of Borrower and the
Subsidiaries as at such date.

                          "Consolidated Current Liabilities" means, as of any
applicable date, all amounts that should, in accordance with GAAP, be included
as current liabilities on the consolidated balance sheet of Borrower and the
Subsidiaries, as at such date, plus, to the extent not already included
therein, all outstanding Advances made under this Agreement, including all
Indebtedness that is payable upon demand or within one year from the date of
determination thereof unless such Indebtedness is renewable or extendable at
the option of Borrower or any Subsidiary to a date more than one year from the
date of determination.

                          "Consolidated Interest Charges" means, for any
period, the aggregate amount accrued (determined in accordance with GAAP on a
consolidated basis after eliminating inter-company items) of all interest
(whether or not actually paid) during such period in respect of Indebtedness of
Borrower and the Subsidiaries, including, without limitation, (a) all fees paid
during such period for the purchase of interest rate protection products,
amortized appropriately over the terms of the applicable Indebtedness, (b)
amortized discount in respect of Indebtedness issued at a discount, and (c)
imputed interest on capital lease obligations.

                          "Consolidated Net Income" means, for any period, the
net income (or deficit) of Borrower and the Subsidiaries for such period (taken
as a cumulative whole) after deducting, without duplication, operating
expenses, provisions for all taxes and reserves (including reserves for
deferred income taxes) and all other proper deductions, all determined in
accordance with GAAP on a consolidated basis, after eliminating all
inter-company items in accordance with GAAP and after deducting portions of
income properly attributable to outside minority interests, if any, in the
stock and surplus of any Subsidiary; provided, however, that there shall be
excluded from Consolidated Net Income: (i) the income (or deficit) of any
Person, other than a Subsidiary, in which Borrower or any Subsidiary has an
ownership interest, except to the extent that any such income has been actually
received by Borrower or such Subsidiary in the form of cash dividends or
similar distributions, (ii) any aggregate net gain or losses during such period
arising from the sale, exchange or other disposition of capital assets (such
term to include all fixed assets, whether tangible or intangible, and all
securities), (iii) any portion of the net income of a Subsidiary





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which is unavailable (whether by law, agreement or otherwise) for the payment
of dividends to Borrower or another Subsidiary, (iv) the income (or deficit) of
any other Person accrued prior to the date it becomes a Subsidiary or is merged
or consolidated with a Subsidiary, (v) any write up (less any non-cash write
down) of any asset, other than Inventory adjustments made in accordance with
GAAP, (vi) any net gain from the collection of the proceeds of life insurance
policies, (vii) any gain or loss, or the extinguishment under GAAP of any
Indebtedness of Borrower or any Subsidiary arising from the acquisition of any
securities of Borrower or any Subsidiary, (viii) any deferred credit
representing the excess of equity in any Subsidiary at the date of acquisition
over the cost of the Investment in such Subsidiary, (ix) in the case of any
merger or consolidation of Borrower into another Person, other than a
Subsidiary, any earnings of such Person prior to the consummation of such
merger or consolidation, (x) any portion of the net earnings of Borrower or any
Subsidiary which cannot be freely converted into United States dollars, and
(xi) any portion of net earnings (or loss) of Borrower or any Subsidiary which
results from foreign currency translation as determined in accordance with
GAAP.

                          "Consolidated Quick Assets"  means as of any date the
sum of (i) Borrower's cash as of such date, (ii) Cash Equivalents as of such
date, and (iii) Borrower's accounts receivable as of such date, all as
determined in accordance with GAAP.

                          "Contingent Obligation" means, as applied to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to (i) any indebtedness, lease, dividend, letter of credit
or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (ii) any obligations with respect to
undrawn letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices;
provided, however, that the term "Contingent Obligation" shall not include
endorsements for collection or deposit in the ordinary course of business.  The
amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determined amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
such Person in good faith; provided, however, that such amount shall not in any
event exceed the maximum amount of the obligations under the guarantee or other
support arrangement.

                          "Daily Balance" means the amount of the Obligations
owed at the end of a given day.





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                          "Debt/EBITDA Ratio" means with respect to the last
day of any fiscal quarter of Borrower the ratio of (i) all Obligations
outstanding as of such day, to (ii) aggregate EBITDA for the four (4) fiscal
quarters ending as of such day.

                          "Dilution" means, with respect to any period, the
percentage obtained by dividing (a) the sum of non-cash credits against
Accounts, other than Snowboard Boot Accounts, for such period, plus pending or
probable, but not yet applied, non-cash credits against Accounts, other than
Snowboard Boot Accounts, for such period, as reasonably determined by Bank, by
(b) gross invoiced sales of Borrower, other than sales which gave rise to
Snowboard Boot Accounts, for such period.

                          "EBIT" means, with respect to any fiscal quarter of
Borrower, Consolidated Net Income for such fiscal quarter plus taxes and
interest expense deducted in determining Consolidated Net Income for such
fiscal quarter, plus the pre-tax increase in LIFO reserves or minus the pre-tax
decrease in LIFO reserves, and minus dividends paid or accrued and withdrawals
paid or accrued to shareholders or other Affiliates not deducted in determining
Consolidated Net Income for such fiscal quarter.

                          "EBITDA" means, with respect to any fiscal quarter of
Borrower, Consolidated Net Income for such fiscal quarter plus interest
expense, taxes, depreciation and amortization deducted in determining
Consolidated Net Income for such fiscal quarter, plus the pre- tax increase in
LIFO reserves or minus the pre-tax decrease in LIFO reserves, and minus
dividends paid or accrued and withdrawals paid or accrued to shareholders or
other Affiliates not deducted in determining Consolidated Net Income for such
fiscal quarter.

                          "Eligible Accounts" means those Accounts (i) which
are due and payable within ninety (90) days from the original date of invoice,
(ii) which are not Snowboard Boot Accounts, and (iii) have been validly
assigned to Bank and comply in all material respects with all of the terms,
conditions, warranties and representations made to Bank hereunder and the other
Loan Documents; but Eligible Accounts shall not include the following:

                          (a) Accounts with respect to which the Account Debtor
                 is an officer, director, employee, or agent of Borrower or an
                 Affiliate of Borrower;

                          (b) Accounts with respect to which goods are placed
                 on consignment, guaranteed sale, bill-and-hold, repurchase or
                 return, or other terms by reason of which the payment of the
                 Account Debtor may be conditional;





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<PAGE>   9
                          (c) Accounts arising from progress billings, invoices
                 for deposits, and rebills of amounts previously credited to
                 the extent of credits issued more than fifteen (15) days prior
                 to such rebill;

                          (d) Accounts with respect to which the Account Debtor
                 is not domiciled in the United States of America or Canada
                 (unless such Account is fully secured by an irrevocable letter
                 of credit acceptable to Bank and assigned to Bank or fully
                 insured for commercial and political risks under insurance
                 policies acceptable to Bank and for which Bank has been
                 designated loss payee);

                          (e) Accounts with respect to which the sale is on an
                 installment sale, lease or other extended payment basis,
                 except for Accounts for which Sports Odyssee, Famous Footwear,
                 Genesco, Track n' Trail and Gadzooks are] the Account Debtors,
                 which may be due and payable within one hundred twenty (120)
                 days from the original date of invoice;

                          (f) Accounts with respect to which the Account Debtor
                 is a governmental agency or authority unless such agency or
                 authority is the United States of America or any department,
                 agency or instrumentality of the United States, and Borrower
                 complies with the Assignment of Claims Act of 1940, as amended
                 (31 U.S.C. Section 203 et seq.);

                          (g) All Accounts owing by any Account Debtor if fifty
                 percent (50%) or more of the Accounts due from such Account
                 Debtor are deemed not to be Eligible Accounts hereunder;

                          (h) Accounts with respect to which the Account Debtor
                 is an Affiliate of, or has common officers or directors with,
                 Borrower;

                          (i) Accounts with respect to which Bank does not for 
                 any reason have a perfected first priority Lien;

                          (j) Accounts with respect to which Borrower is or may
                 become liable to the Account Debtor for goods sold or services
                 rendered by the Account Debtor to Borrower, to the extent of
                 Borrower's existing or potential liability to such Account
                 Debtor;

                          (k) Accounts with respect to which the Account Debtor
                 has disputed any liability, or the Account Debtor has made any
                 claim with respect to any other Account due, or the Account is
                 otherwise subject to any right of setoff, deduction, breach of
                 warranty or other defense, dispute or counterclaim by the
                 Account Debtor;

                          (l) that portion of the Accounts owed by any single
                 Account Debtor which exceeds ten percent (10%) of all of the
                 Accounts





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<PAGE>   10
                 (excluding for purposes of this clause, the Snowboard Boot
                 Accounts), except that with respect to Famous Footwear, J.C.
                 Penney Co., Inc. or Kinney Shoe Corp., the ineligible portion
                 of the Accounts of either such Account Debtor shall be that
                 portion which exceeds fifteen percent (15%) of all the
                 Accounts (excluding for purposes of this clause, the Snowboard
                 Boot Accounts);

                          (m) that portion of any Accounts representing late
                 fees, service charges or interest, but only to the extent of
                 such portion;

                          (n) Accounts of an Account Debtor where the Account
                 Debtor is located in New Jersey or Minnesota unless Borrower
                 (1) with respect to such state, has received a Certificate of
                 Authority to do business and is in good standing in such
                 state, or (2) has filed a Notice of Business Activities Report
                 with the New Jersey Division of Taxation or the Minnesota
                 Department of Revenue, as applicable, for the then current
                 year;

                          (o) Accounts owed by any Account Debtor which is
                 insolvent or is the subject of an Insolvency Proceeding;

                          (q) that portion of any Accounts represented by
                 contract rights, documents, instruments, chattel paper or
                 general intangibles; and

                          (r) all Accounts of an Account Debtor whose
                 creditworthiness is not satisfactory to Bank in its reasonable
                 credit judgment due to Bank's reasonable belief of jeopardy of
                 insolvency of such Account Debtor or impairment of such
                 Account Debtor's ability to timely pay its Accounts, based on
                 information available to Bank.  References to percentages of
                 all Accounts are based on dollar amount of Accounts and not
                 number of Accounts.

                          "Eligible Inventory" means that portion of Inventory,
other than Snowboard Boots, consisting of raw materials normally and currently
used in Borrower's business, and finished goods held for sale by Borrower,
normally and currently saleable in the ordinary course of Borrower's business,
and which at all times pertinent hereto is of good and merchantable quality,
free from material defects, as to which Bank has a perfected first priority
Lien, and which is located at the locations described in Section 7.15 hereof.

                          "ERISA" means the Employment Retirement Income
Security Act of 1974, as amended, and the regulations thereunder.

                          "Eurodollar Banking Day" means any Business Day on
which commercial banks are open for international business (including dealing
in dollar deposits) in London, England and New York, New York.





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<PAGE>   11
                          "GAAP" means generally accepted accounting principles
as from time to time set forth in the opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and in
statements by the Financial Accounting Standards Board or in such opinions and
statements of such other entities as shall be approved by a significant segment
of the accounting profession in the United States.

                          "Indebtedness" means (a) all indebtedness for
borrowed money or the deferred purchase price of property or services,
including without limitation reimbursement and other obligations with respect
to surety bonds and letters of credit, (b) all obligations evidenced by notes,
bonds, debentures or similar instruments, (c) all capital lease obligations and
(d) all Contingent Obligations.

                          "Insolvency Proceeding" means any proceeding
commenced by or against any person or entity under any provision of the United
States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.

                          "Intercreditor Agreement" means the Intercreditor
Agreement, dated as of March 29, 1996, by and among Bank, Teachers Insurance
and Annuity Association of America, Connecticut General Life Insurance Company,
for itself and on behalf of one or more separate accounts, Life Insurance
Company of North America, Ssangyong (U.S.A.), Inc. and Borrower.

                          "Inventory" means all present and future inventory in
which Borrower has any interest, including any returns upon any accounts or
other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing and any documents of title representing any
of the above, and Borrower's Books relating to any of the foregoing.

                          "Investment" means any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.

                          "IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.

                          "Letter of Credit" has the meaning specified in
Section 2.2(a) hereof.

                          "LIBOR Advance" has the meaning specified in Section
2.4(a)(ii) hereof.





                                       8
<PAGE>   12
                          "LIBOR Interbank Offered Rate" means with respect to
any LIBOR Period the rate per annum (rounded upward, if necessary, to the next
higher 1/100th of 1%) at which the Bank's New York branch, which for purposes
hereof shall be deemed the New York branch of Banque Nationale de Paris, would
offer a deposit in Dollars to major banks in the New York interbank Eurodollar
market at approximately 11:00 a.m., New York time, two (2) Eurodollar Banking
Days prior to the commencement of such LIBOR Period and in an amount
substantially equal to the aggregate amount of the LIBOR Advance scheduled to
be outstanding during such LIBOR Period.

                          "LIBOR Margin" means as of any date (i) if the
Debt/EBITDA Ratio as of the last day of fiscal quarter ended immediately prior
to such date was equal to or less than 1.00 to 1.00, 1.875%, (ii) if the
Debt/EBITDA Ratio as of the last day of fiscal quarter ended immediately prior
to such date was greater than 1.00 to 1.00 but equal to or less than 1.50 to
2.00, 2.00%, (iii) if the Debt/EBITDA Ratio as of the last day of fiscal
quarter ended immediately prior to such date was greater than 2.00 to 1.00 but
equal to or less than 2.50 to 1.00, 2.25%, (iv) if the Debt/EBITDA Ratio as of
the last day of fiscal quarter ended immediately prior to such date was greater
than 2.50 to 1.00 but equal to or less than 3.00 to 1.00, 2.50%, or (v) if the
Debt/EBITDA Ratio as of the last day of fiscal quarter ended immediately prior
to such date was greater than 3.00 to 1.00, 2.75%.

                          "LIBOR Period" has the meaning specified in Section
2.4(a)(ii) hereof.

                          "LIBOR Rate" means with respect to any LIBOR Advance
the rate per annum (rounded upwards, if necessary, to the next higher 1/100th
of 1%) determined by Bank to be equal to (A) the quotient of (1) the London
Interbank Offered Rate for such LIBOR Advance for the LIBOR Period with respect
thereto divided by (2) one minus the Reserve Requirement for such LIBOR Period,
plus (B) the LIBOR Margin as of the first day of the LIBOR Period for such
LIBOR Advance.

                          "Lien" means any mortgage, lien, deed of trust,
security interest or other encumbrance.

                          "Loan Documents" means, collectively, this Agreement,
any note or notes executed by Borrower, and any other agreement entered into
between Borrower and Bank in connection with this Agreement, all as amended or
extended from time to time.

                          "Material Adverse Effect" means a material adverse
effect on (i) the business operations or condition of Borrower and the
Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents,
(iii) the validity or enforceability of the Loan Documents, or (iv) the rights
and remedies of Bank under the Loan Documents.





                                       9
<PAGE>   13
                          "Maturity Date" means November 1, 1997.

                          "Negotiable Collateral" means all of Borrower's
present and future letters of credit of which it is a beneficiary, notes,
drafts, instruments, securities, documents of title, and chattel paper, which
relate to any of the Accounts described in clause (i) of the definition of
Collateral.

                          "Obligations" means all debt, principal, interest,
Bank Expenses and other amounts owed to the Bank by Borrower pursuant to this
Agreement or any other agreement, whether absolute or contingent, due or to
become due, now existing or hereafter arising (including all interest accruing
after the commencement of an Insolvency Proceeding).

                          "Periodic Payments" means all installments or similar
recurring payments that Borrower may now or hereafter become obligated to pay
to Bank pursuant to the terms and provisions of any instrument, or agreement
now or hereafter in existence between Borrower and Bank.

                          "Permitted Indebtedness" means:

                          (a)     Indebtedness of Borrower in favor of Bank
arising hereunder or any other Loan Document;

                          (b)     Subordinated Debt;

                          (c)     Indebtedness of Borrower in favor of
Ssangyong (U.S.A.), Inc. under the Snowboard Boot Financing Agreement providing
financing for the Snowboard Boots, and secured by the Ssangyong Collateral, as
defined in the Intercreditor Agreement, to the extent that the principal amount
of such Indebtedness does not exceed Seven Million Dollars ($7,000,000);

                          (d)     unsecured Indebtedness of Borrower in favor
of Ssangyong Corporation, a South Korean corporation, to the extent that the
principal amount of such Indebtedness does not exceed Six Million Dollars
($6,000,000);

                          (e)     Indebtedness of Borrower incurred after the
date hereof, to the extent that such Indebtedness is not described in any other
clause of this definition and to the extent that the aggregate principal amount
of such Indebtedness does not exceed Two Million Dollars ($2,000,000);

                          (f)     Indebtedness of Borrower to trade creditors
incurred in the ordinary course of business; and

                          (g)     Indebtedness that is secured by Liens
described in clause (c) of the definition of Permitted Liens.





                                       10
<PAGE>   14
                          "Permitted Investments" means investments satisfying
the investment objectives and investment criteria set forth in Borrower's
Investment Policy, as in effect on the date hereof and attached hereto as
Exhibit B.

                          "Permitted Liens" means the following:

                          (a)     Any Liens arising hereunder or the other Loan
Documents;

                          (b)     Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in
good faith by appropriate proceedings, provided the same have no priority over
any of Bank's security interests;

                          (c)     Liens (i) upon or in any equipment acquired
or held by Borrower or any of the Subsidiaries to secure the purchase price of
such equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time
of its acquisition, provided that the Lien is confined solely to the property
so acquired and improvements thereon, and the proceeds of such equipment;

                          (d)     Liens consisting of leases or subleases and
licenses and sublicenses granted to others in the ordinary course of Borrower's
or a Subsidiary's business not interfering in any material respect with the
business of Borrower or such Subsidiary and any interest or title of a lessor
or licensor under any lease or license, as applicable;

                          (e)     Liens securing claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons imposed without action of such parties, provided that the payment
thereof is not yet required;

                          (f)     Liens incurred or deposits made in the
ordinary course of Borrower's or a Subsidiary's business in connection with
worker's compensation, unemployment insurance, social security and other like
laws;

                          (g)     Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of Default;

                          (h)     Easements, reservations, rights-of-way,
restrictions, minor defects or irregularities in title and other similar
charges or encumbrances affecting real property not interfering in any material
respect with the ordinary conduct of Borrower's or a Subsidiary's business;

                          (i)     Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of customs duties in
connection with the importation of goods;





                                       11
<PAGE>   15
                          (j)     Liens that are not prior to Bank's security
interest which constitute rights of set-off of a customary nature;

                          (k)     Liens in favor of Ssangyong (U.S.A.), Inc.
described in the Intercreditor Agreement;

                          (l)     Liens securing Indebtedness of Borrower
described in clause (e) of the definition of Permitted Indebtedness, to the
extent that such Liens are not against any of the Collateral; and

                          (m)     Liens incurred in connection with the
extension, renewal or refinancing of the indebtedness secured by Liens of the
type described in clauses (a) through (l) above, provided that any extension,
renewal or replacement Lien shall be limited to the property encumbered by the
existing Lien and the principal amount of the indebtedness being extended,
renewed or refinanced does not increase.

                          "Person" means any individual, sole proprietorship,
limited liability company, partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, firm, joint stock company, estate, entity or governmental agency.

                          "Potential Default" means any event which through the
passage of time, service of notice or both, would mature into an Event of
Default.

                          "Prime Interest Rate" means as of any date the sum of
(i) the Prime Rate as of such date and (ii) the Prime Rate Margin as of such
date.

                          "Prime Rate" means the variable rate of interest, per
annum, most recently announced by Bank, as its "prime rate," whether or not
such announced rate is the lowest rate available from Bank.

                          "Prime Rate Margin" means as of any date (i) if the
Debt/EBITDA Ratio as of the last day of fiscal quarter ended immediately prior
to such date was equal to or less than 2.00 to 1.00, 0%, (ii) if the
Debt/EBITDA Ratio as of the last day of fiscal quarter ended immediately prior
to such date was greater than 2.00 to 1.00 but equal to or less than 2.50 to
1.00, .25%, (iii) if the Debt/EBITDA Ratio as of the last day of fiscal quarter
ended immediately prior to such date was greater than 2.50 to 1.00 but equal to
or less than 3.00 to 1.00, .50%, or (iv) if the Debt/EBITDA Ratio as of the
last day of fiscal quarter ended immediately prior to such date was greater
than 3.00 to 1.00, .75%.

                          "Reserve Requirement" means for any LIBOR Advance and
any related LIBOR Period the rate on the day of pricing at which reserves
(including any marginal, supplemental or emergency reserves) are required to be
maintained during such LIBOR Period under Regulation D by Bank against
"Eurocurrency Liabilities" (as such term is used in Regulation D), but without
the benefit or credit of proration,





                                       12
<PAGE>   16
exemptions, or offsets that might otherwise be available to Bank from time to
time under Regulation D.  Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by Bank by reason of any Regulatory Change against (a) any category of
liabilities which includes deposits by reference to which the LIBOR Rate is to
be determined hereunder or (b) any category of extensions of credit or other
assets that include any LIBOR Advance.

                          "Reserves" means the reserves consistent with the
definition of Eligible Accounts and the definition of Eligible Inventory, the
Currency Reserve, as defined in Section 2.2(d) hereof, and such other reserves,
deductions or adjustments Bank, in its reasonable credit judgment, deems
necessary to reflect items reimbursable to Bank hereunder which have been
incurred or are anticipated but not yet paid, any breaches of the warranties,
representations or covenants of Borrower hereunder, or any Events of Default or
Potential Defaults; provided that Bank shall retain all of its other rights and
remedies hereunder, the other Loan Documents and by law.

                          "Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be amended or
supplemented from time to time.

                          "Regulatory Change" means, as to Bank, any change
after the Closing Date in United States federal, state or foreign laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests applying to a class of banks
including Bank of or under any United States federal, state, or foreign laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.

                          "Responsible Officer" means any of the Chief
Executive Officer, the Chief Financial Officer or the Corporate Controller of
Borrower.

                          "Revolving Facility" means the facility under which
Borrower may request Bank to issue cash advances, as specified in Section 2.1
hereof.

                          "Snowboard Boot Accounts" has the meaning given that
term in the Intercreditor Agreement.

                          "Snowboard Boot Financing Agreement" means the
Financing Agreement, as defined in the Intercreditor Agreement.

                          "Snowboard Boots" has the meaning given that term in
the Intercreditor Agreement.





                                       13
<PAGE>   17
                          "Subordinated Debt" means any debt incurred by
Borrower that is subordinated to the Obligations on terms reasonably acceptable
to Bank.

                          "Subsidiary" means any corporation or partnership in
which (i) any general partnership interest or (ii) more than fifty percent
(50%) of the stock of which by the terms thereof ordinary voting power to elect
the Board of Directors, managers or trustees of the entity shall, at the time
as of which any determination is being made, be owned by Borrower, either
directly or through an Affiliate.

                          "Total Liabilities" means at any date as of which the
amount thereof shall be determined, all obligations that should, in accordance
with GAAP be classified as liabilities on the consolidated balance sheet of
Borrower, including in any event all Indebtedness.

                          "Working Capital" means as of any date Consolidated
Current Assets as of such date less Consolidated Current Liabilities as of such
date.

                 1.2      Accounting Terms.  All accounting terms not
specifically defined herein shall be construed in accordance with GAAP and all
calculations made hereunder shall be made in accordance with GAAP.  When used
herein, the terms "financial statements" shall include the notes and schedules
thereto.

         2.      LOAN, LETTERS OF CREDIT AND TERMS OF PAYMENT

                 2.1      Advances.  Subject to the terms and provisions
hereof, including, without limitation, that no Event of Default or Potential
Default has occurred and is continuing, upon Borrower's request, made at any
time and from time to time during the term hereof, Bank shall make Advances up
to the Adjusted Committed Line, so long as the Borrowing Base formula is not in
effect.  While the Borrowing Base formula is in effect, Bank shall make
Advances up to (A) the lesser of (i) the Borrowing Base and (ii) the Committed
Line, minus (B) the sum of (i) the sum of the aggregate undrawn face amount of
the Letters of Credit outstanding and the aggregate drawn but unreimbursed
Letters of Credit and (ii) the sum of the Reserves; provided, however, that in
no event shall Advances based on Eligible Inventory exceed fifty percent (50%)
of the aggregate dollar amount of the Advances outstanding.  Availability under
the immediately preceding sentence during a calendar month shall be determined
based on Eligible Accounts and Eligible Inventory as of the last day of the
immediately preceding calendar month.

                 The Borrowing Base formula shall be in effect commencing on
each and every date on which Borrower delivers to Bank financial statements
that show that as of the last day of the most recently completed fiscal quarter
of Borrower the Debt/EBITDA Ratio exceeded 2.00 to 1.00 and shall cease to be
in effect on the first date thereafter that Borrower delivers to Bank financial
statements that show that as of the last day of the most recently completed
fiscal quarter of Borrower the Debt/EBITDA Ratio did not exceed 2.00 to 1.00.





                                       14
<PAGE>   18
                 Whenever Borrower desires an Advance, it shall notify Bank by
facsimile transmission or telephone no later than 3:00 p.m.  California time,
on the Business Day that the Advance is to be made.  Each such notification
shall be promptly confirmed by a Payment/Advance Form in substantially the form
of Exhibit A hereto.  Bank is authorized to make Advances hereunder, based upon
instructions received from a Responsible Officer, or without instructions if in
Bank's discretion such Advances are necessary to meet Obligations which have
become due and remain unpaid.  Bank shall be entitled to rely on any telephonic
notice given by a person who Bank reasonably believes to be a Responsible
Officer, and Borrower shall indemnify and hold Bank harmless for any damages or
loss suffered by Bank as a result of such reliance.  Bank shall credit the
amount of Advances made under this Section 2.1 to Borrower's deposit account.

         The Revolving Facility shall terminate on the Maturity Date, at which
time all Advances under this Section 2.1 and other amounts due hereunder shall
be immediately due and payable.

                 2.2      Letters of Credit.

                          (a)     Issuance.  Subject to the terms and
conditions hereof, Bank agrees to issue or cause to be issued for Borrower's
account (A) sight documentary letters of credit, (B) usance documentary letters
of credit with a final maturity or payment date of not more than one hundred
twenty (120) days from acceptance date and (C) standby letters of credit (the
"Letters of Credit") in an aggregate face amount not to exceed (i) the Adjusted
Committed Line minus (ii) the then outstanding principal balance of the
Advances provided that (x) the face amount of outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) shall not in any case
exceed Twenty Million Dollars ($20,000,000), and (y) the face amount of
outstanding standby letters of credit (including drawn but unreimbursed standby
letters of credit) shall not in any case exceed Five Million Dollars
($5,000,000), unless the Borrowing Base formula is in effect, in which case the
aggregate face amount of the Letters of Credit may not exceed (i) the lesser of
the Committed Line or the Borrowing Base, minus (ii) the then outstanding
principal balance of the Advances and the Reserves.  Each such sight Letter of
Credit shall have an expiry date no later than one hundred twenty (120) days
after the Maturity Date.  Each such usance Letter of Credit shall have a final
maturity or payment date no later than one hundred twenty (120) days after the
Maturity Date.  All such Letters of Credit shall be, in form and substance,
acceptable to Bank in its sole discretion and shall be subject to the terms and
conditions of Bank's form of application and letter of credit agreement.

                          (b)     Expenses.  Borrower shall pay Bank for all of
Bank's handling fees, as set forth in Exhibit C hereto, for each Letter of
Credit issued, including, but not limited to, issuance, negotiation and
amendment fees.





                                       15
<PAGE>   19
                          (c)     Indemnity.  Borrower shall indemnify, defend
and hold Bank harmless from any loss, cost, expense or liability, including,
without limitation, reasonable attorneys' fees, arising out of or in connection
with any Letters of Credit.

                          (d)     Reimbursement; Currency Reserve.

                                  (i)      Borrower may request that Bank issue
a Letter of Credit payable in a currency other than United States Dollars.  If
demand for payment is made under any such Letter of Credit, Bank shall treat
such demand as an Advance of the equivalent of the amount thereof (plus cable
charges) in United States currency at the then prevailing rate of exchange in
San Francisco, California, for sales of such other currency for cable transfer
to the country of which it is the currency.

                                  (ii)     Upon the issuance of any Letter of
Credit payable in a currency other than United States Dollars, Bank shall
create a reserve against fluctuations in currency exchange rates (the "Currency
Reserve"), in an amount equal to ten percent (10%) of the face amount of such
Letter of Credit.  The amount of the Currency Reserve may be amended by Bank
from time to time to account for fluctuations in the exchange rate.  The
Currency Reserve for a Letter of Credit shall remain in effect so long as such
Letter of Credit remains outstanding or reimbursement due with respect thereto.

                 2.3      Repayment of Overadvance.  If, at any time while the
Borrowing Base formula is in effect and for any reason, the outstanding
Advances plus (i) the sum of the aggregate undrawn face amount of the Letters
of Credit and (ii) the drawn but unreimbursed Letters of Credit exceed the
Borrowing Base, less the sum of the Reserves, Borrower shall, upon telephonic
or other notice from Bank, pay to Bank, in cash, the amount of such excess
(such amount the "Overadvance"), and prior to such repayment such Overadvance
shall bear interest at the per annum rate of the Prime Interest Rate plus two
percent (2%); provided, however, that if the Overadvance exists as of the date
that the Borrowing Base formula is imposed as a result of the Debt/EBITDA Ratio
exceeding 2.00 to 1.00, Borrower shall have thirty (30) days from the date that
the Borrowing Base formula is imposed to pay the full amount of such
Overadvance.

                 2.4      Interest Rates, Payments, and Calculations.

                          (a)     Interest Rate.

                                  (i)      Prime Interest Rate.  Except as set
forth in Section 2.4(a)(ii) and Section 2.4(b), all Advances shall bear
interest, on the average Daily Balance, at a rate equal to the Prime Interest
Rate.

                                  (ii)     LIBOR Rate.  At any time during the
term hereof, and from time to time during the term hereof, Borrower may elect
to have all or a





                                       16

<PAGE>   20

portion of the Advances (such portion of the Advances a "LIBOR Advance") bear
interest, on the average Daily Balances owing, at a rate per annum equal to the
LIBOR Rate.  The LIBOR Rate may take effect only on the first Eurodollar
Banking Day of a calendar month and shall end on the numerically corresponding
day in the first, third, sixth, or twelfth calendar month thereafter (the
"LIBOR Period").  The election shall be effected by Borrower giving Bank
irrevocable written notice not less than three (3) Business Days prior to the
first day of the calendar month for which the election is made and shall be
with respect to the portion of the Advances principal outstanding equal to an
integral multiple of One Hundred Thousand Dollars ($100,000) and shall not be
less than Five Hundred Thousand Dollars ($500,000).  In the notice, Borrower
shall indicate whether the LIBOR Period is to be one (1) month, three (3)
months, six (6) months, or twelve (12) months.  Borrower may not elect a LIBOR
Period that would expire after the Maturity Date.

                          (b)     Default Rate.  All Obligations shall bear
interest, from and after the occurrence of an Event of Default, at a rate equal
to two (2) percentage points above the interest rate applicable thereto
immediately prior to the occurrence of the Event of Default.

                          (c)     Payments.  Interest hereunder shall be due
and payable in arrears on the last calendar day of each month during the term
hereof.  Bank may, at its option, charge such interest, all Bank Expenses, and
all Periodic Payments against any of Borrower's deposit accounts or against the
Committed Line, in which case those amounts shall thereafter accrue interest at
the Prime Interest Rate then applicable hereunder.  Any interest not paid when
due shall be compounded by becoming a part of the Obligations, and such
interest shall thereafter accrue interest at the Prime Interest Rate then
applicable hereunder.

                          (d)     Computation.  If the Prime Rate or the Prime
Rate Margin is changed from time to time hereafter, the Prime Interest Rate
hereunder with respect to Advances outstanding which do not constitute LIBOR
Advances shall be increased or decreased effective as of 12:01 a.m. on the day
the Prime Rate or the Prime Rate Margin, as applicable, is changed, by an
amount equal to such change in the Prime Rate or the Prime Rate Margin, as
applicable.  All interest chargeable under the Loan Documents shall be computed
on the basis of a three hundred sixty (360) day year for the actual number of
days elapsed.

                 2.5      LIBOR Advance Termination.  If any Regulatory Change
or other circumstances relating to the interbank Eurodollar markets shall, at
any time, in Bank's reasonable determination (which determination shall be
conclusive), make it unlawful or impractical for Bank to fund or maintain,
during any LIBOR Period, the portion of the Advances which have been designated
a LIBOR Advance for that LIBOR Period, or to continue such funding or to
determine or charge interest rates based upon LIBOR, Bank shall give Borrower
notice of such circumstances and:





                                       17
<PAGE>   21
         (i)     In the case of a LIBOR Period in progress, Borrower shall, if
                 requested by Bank, promptly pay any interest which had accrued
                 prior to such request and the date of such request shall be
                 deemed to be the last day of the term of the LIBOR Period; and

         (ii)    No LIBOR Period may be designated thereafter until Bank
                 determines that such would be practical.

                 2.6      Crediting Payments.  Bank's receipt of any wire
transfer of funds, check, or other item of payment shall be immediately applied
to conditionally reduce Obligations, but shall not be considered a payment on
account until (A) the date that such payment constitutes immediately available
federal funds and is made to the appropriate deposit account of Bank or (B) the
date that such check or other item of payment is honored when presented for
payment.  Notwithstanding anything to the contrary contained herein, any wire
transfer or payment received by Bank after 2:00 p.m. California time shall be
deemed to have been received by Bank as of the opening of business on the
immediately following Business Day.  Whenever any payment to Bank under the
Loan Documents would otherwise be due (except by reason of acceleration) on a
date that is not a Business Day, such payment shall instead be due on the next
Business Day, and additional fees or interest, as the case may be, shall accrue
and be payable for the period of such extension.

                 2.7      Depository Account.  If the Debt/EBITDA Ratio as of
the last day of any fiscal quarter was greater than 2.00 to 1.00, then, during
the period commencing thirty (30) days after such date and terminating as of
the date that the Debt/EBITDA Ratio as of the last day of a subsequent fiscal
quarter was less than 2.00 to 1.00, Borrower shall maintain a depository
account ("Depository Account") with Bank.  If Borrower receives any payments
from any Account Debtor, other than an Account Debtor with respect to a
Snowboard Boot Account, while the Depository Account requirement is in effect
under this section, it agrees that all such payments shall be the Bank's sole
and exclusive property and that it shall hold such payments in trust as Bank's
trustee and immediately deliver them to the Depository Account.

                 2.8      Application of Principal Payments.  If on the date a
principal payment is made with respect to the Advances, interest is calculated
both on the basis of the Prime Interest Rate and the LIBOR Rate, then such
payment shall be applied first to the Advances principal for which interest is
calculated on the basis of the Prime Interest Rate (the "Prime Interest Rate
Principal").  Only when the Prime Interest Rate Principal is fully paid shall
the principal payment be applied to the LIBOR Advance(s) principal.  If more
than one LIBOR Advance is outstanding, the principal amount shall be applied to
the LIBOR Advances in the order of maturity, with the LIBOR Advances with the
shortest time to maturity paid first.

                 2.9      Fees.  Borrower shall pay to Bank the following:





                                       18
<PAGE>   22
                          (a)     Unused Facility Fee.  An unused facility fee
(the "Unused Facility Fee") on the first day of each calendar month equal to
the quotient of the Unused Facility Fee Percentage and the amount by which the
Committed Line exceeds the sum of (i) the average daily balance of the Advances
for the immediately preceding calendar month and (ii) the aggregate average
daily undrawn face amount of the Letters of Credit outstanding and the
aggregate average daily unreimbursed amount of the Letters of Credit for the
immediately preceding calendar month.  The Unused Facility Fee Percentage on an
Unused Facility Fee payment date shall be (i) one-eighth of one percent (.125%)
per annum (computed on the basis of a year of three hundred sixty (360) days
for the actual number of days elapsed) if the Debt/EBITDA Ratio as shown on the
most recent financial statements delivered by Borrower to Bank was equal to or
less than 1.50 to 1.00, (ii) one-quarter of one percent (.25%) per annum
(computed on the basis of a year of three hundred sixty (360) days for the
actual number of days elapsed) if the Debt/EBITDA Ratio as shown on the most
recent financial statements delivered by Borrower to Bank was greater than 1.50
to 1.00 but equal to less than 2.50 to 1.00, and (iii) three-eighths of one
percent (.375%) per annum (computed on the basis of a year of three hundred
sixty (360) days for the actual number of days elapsed) if the Debt/EBITDA
Ratio as shown on the most recent financial statements delivered by Borrower to
Bank was greater than 2.50 to 1.00;

                          (b)     Financial Examination and Appraisal Fees.
Bank's customary fees and reasonable out-of-pocket expenses for Bank's audits
of Accounts, and for each appraisal of Collateral and financial analysis and
examination of Borrower performed from time to time by Bank or its agents; and

                          (c)     Bank Expenses.  Upon the date hereof, all
Bank Expenses incurred through the date hereof, including reasonable attorneys'
fees and expenses.

                 2.10     Additional Costs.  If any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):

                          (a)     subjects Bank to any tax with respect to
payments of principal or interest or any other amounts payable hereunder by
Borrower or otherwise with respect to the transactions contemplated hereby
(except for taxes on Bank's overall net income imposed by the United States of
America or any political subdivision thereof);

                          (b)     imposes, modifies or deems applicable any
deposit insurance, reserve, special deposit or similar requirement against
assets held by, or deposits in or for the account of, or loans by, Bank; or





                                       19
<PAGE>   23

                          (c)     imposes upon Bank any other condition with 
respect to its performance hereunder,

and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans hereunder, Bank shall notify Borrower thereof.  Borrower agrees to
pay to Bank the amount of such increase in cost, reduction in income or
additional expense as and when such cost, reduction or expense is incurred or
determined, upon Bank's presentation of a statement of the amount and setting
forth Bank's calculation thereof, all in reasonable detail, which statement
shall be deemed true and correct absent manifest error.

                 2.11     LIBOR Indemnity.  Borrower shall indemnify Bank and
hold Bank harmless from, and reimburse Bank on demand for, all losses and
expenses which Bank sustains or incurs as a result of (i) any payment of a
LIBOR Advance prior to the last day of the LIBOR Period therefor for any
reason, including termination hereof, whether pursuant to Section 2.13 hereof
or the occurrence of an Event of Default for any reason, (ii) any termination
of a LIBOR Period in accordance with Section 2.5 hereof, or (iii) any failure
by Borrower, for any reason, to borrow any portion of a LIBOR Advance.  This
indemnification and hold harmless requirement shall include, without
limitation, all losses and expenses arising from interest and fees that Bank
pays to lenders of funds it obtained in order to fund the Advances on the basis
of the LIBOR Rate(s) and all losses incurred in liquidating or re-deploying
deposits from which such funds were obtained and loss of profit for the period
after termination.  A written statement by Bank to Borrower of such losses and
expenses shall be conclusive and binding, absent manifest error, for all
purposes.  This covenant shall survive the expiration or termination hereof.

                 2.12     Term.  This Agreement shall become effective upon the
Closing Date and shall continue in full force and effect for a term ending on
the date that all Obligations have been satisfied.  Notwithstanding the
foregoing, Bank shall have the right to terminate its obligation to make
Advances and to issue Letters of Credit hereunder immediately and without
notice upon the occurrence and during the continuance of an Event of Default.
On the date of termination, all Obligations shall become immediately due and
payable in cash or by wire transfer.  Notwithstanding termination, until all
Obligations have been satisfied, Bank shall retain its Lien on the Collateral
to secure satisfaction of such Obligations.

                 2.13     Termination.  Subject to the terms of this section,
Borrower may, at any time, on ten (10) days' written notice prior to the end of
any month, and without payment of any premium or penalty, prepay in full the
Advances and terminate this Agreement by paying to Bank, in cash or by a wire
transfer of immediately available funds, the Obligations.  If any Letters of
Credit are outstanding on the effective date of termination, Borrower shall
deliver to Bank cash collateral in an amount equal to the aggregate undrawn
face amount of such Letters of Credit plus the projected amount of all fees
associated therewith.





                                       20
<PAGE>   24
         3.      CONDITIONS OF LOANS  Bank's obligation to make each Advance
and to issue each Letter of Credit is subject to the following conditions:

                          (a)     timely receipt by Bank of the Borrowing
Certificate as provided in Section 2.1; and

                          (b)     the representations and warranties contained
in Section 5 shall be true and correct in all material respects on and as of
the date of such Borrowing Certificate and on the effective date of each
Advance or Letter of Credit issuance, as applicable, as though made at and as
of each such date, Bank shall have timely received the statements, reports and
certificates specified in Section 6.3, and no Event of Default or Potential
Default shall have occurred and be continuing, or would exist immediately after
giving effect to such Advance or Letter of Credit issuance, as applicable.  The
making of each Advance and the issuance of each Letter of Credit shall be
deemed to be a representation and warranty by Borrower on the date of such
Advance or Letter of Credit issuance as to the accuracy of the facts referred
to in this Section 3(b).

         4.      CREATION OF SECURITY INTEREST

                 4.1      Grant of Security Interest.  Borrower grants to Bank
a continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents.  Such security interest
constitutes a valid, first priority security interest in the presently existing
Collateral, and will constitute a valid, first priority security interest in
Collateral acquired after the Closing Date.

                 4.2      Delivery of Additional Documentation Required.
Borrower shall from time to time execute and deliver to Bank, at Bank's
request, all Negotiable Collateral, all financing statements and other
documents that Bank may reasonably request, in form satisfactory to Bank, to
perfect and continue perfected Bank's Liens in the Collateral and in order to
fully consummate all of the transactions contemplated under the Loan Documents.

                 4.3      Right to Inspect.  Bank (through any of its officers,
employees, or agents) shall have the right from time to time to inspect
Borrower's Books and to make copies thereof and to check, test, and appraise
the Collateral in order to verify Borrower's financial condition or the amount,
condition of, or any other matter relating to, the Collateral.

                 4.4      Negative Pledge.  Borrower acknowledges that under
Section 7.4 hereof it is prohibited from granting, or suffering to exist, any
Lien, other than  Permitted Lien, against any of its general intangibles,
including its intellectual property rights.  In furtherance of such
prohibition, Borrower hereby agrees that it will not grant, or suffer to exist,
any Lien with respect to any of its general





                                       21
<PAGE>   25
intangibles without obtaining the Bank's prior written consent, given in its
sole discretion, to such Lien, and that the Bank may take, and the Borrower
will cooperate in, such actions as the Bank deems necessary to give notice to
other Persons of this Lien prohibition with respect to Borrower's general
intangibles.

         5.      REPRESENTATIONS AND WARRANTIES

                 Borrower represents and warrants as follows:

                 5.1      Due Organization and Qualification.  Each of Borrower
and each Subsidiary is a corporation duly existing and in good standing under
the laws of its state of incorporation and qualified and licensed to do
business in, and is in good standing in, any state in which the conduct of its
business or its ownership of property requires that it be so qualified.

                 5.2      Due Authorization; No Conflict.  The execution,
delivery, and performance of the Loan Documents are within Borrower's powers,
have been duly authorized, and are not in conflict with nor constitute a breach
of any provision contained in Borrower's Restated Certificate of Incorporation
or Restated Bylaws, nor, to the best of Borrower's knowledge, will they
constitute an event of default under any material agreement to which Borrower
is a party or by which Borrower is bound.  Borrower is not in default under any
agreement to which it is a party or by which it is bound, which default could
have a Material Adverse Effect.

                 5.3      No Prior Encumbrances.  Borrower has good and
indefeasible title to the Collateral, free and clear of Liens, except for
Permitted Liens.

                 5.4      Bona Fide Eligible Accounts.  The Accounts are bona
fide existing obligations of Borrower's Account Debtors, created by the sale or
lease of goods, the licensing of rights, or the rendition of services to
Account Debtors in the ordinary course of Borrower's business, and
unconditionally owed to Borrower.  The property giving rise to such Accounts
has been delivered to the Account Debtor or to the Account Debtor's agent for
immediate shipment to and unconditional acceptance by the Account Debtor.

                 5.5      Merchantable Inventory.  Substantially all Inventory
is in all material respects of good quality, free from all material defects,
and salable, either as current merchandise or close-out items.

                 5.6      Name; Location of Chief Executive Office.  During the
five (5) year period ending on the Closing Date, Borrower has not done business
under any name other than that specified on the signature page hereof and the
names MDV Holdings, Inc. and Van Doren Rubber Company, Inc.  As of the date
hereof, Borrower's chief executive office is located at the address indicated
in Section 10 hereof.





                                       22
<PAGE>   26
                 5.7      Litigation.  There are no actions or proceedings
pending by or against Borrower or any Subsidiary before any court or
administrative agency in which an adverse decision could have a Material
Adverse Effect or a material adverse effect on Borrower's interest or Bank's
Lien in the Collateral.  Borrower does not have knowledge of any such pending
or threatened actions or proceedings.

                 5.8      No Material Adverse Change in Financial Statements.
All consolidated financial statements related to Borrower that Borrower has
delivered to Bank fairly present in all material respects Borrower's
consolidated financial condition as of the date thereof and Borrower's
consolidated results of operations for the period then ended.  There has not
been a material adverse change in the consolidated financial condition of
Borrower since the date of the most recent of such financial statements
submitted to Bank.

                 5.9      Solvency.  Borrower is solvent and able to pay its
debts (including trade debts) as they mature.

                 5.10     Regulatory Compliance.  Borrower and each Subsidiary
has met ERISA's minimum funding requirements with respect to any employee
benefit plans subject to ERISA.  No event has occurred resulting from
Borrower's failure to comply with ERISA that is reasonably likely to result in
Borrower's incurring any liability that could have a Material Adverse Effect.
Neither Borrower nor any Subsidiary has withdrawn from, and no termination or
partial termination has occurred with respect to, any deferred compensation
plan, and neither Borrower nor any Subsidiary has withdrawn from any
multi-employer plan under ERISA.  Borrower is not an "investment company" or a
company "controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940.  Borrower is not engaged principally, or as one
of the important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations G, T and U of the Board of Governors of the Federal Reserve
System).  Borrower has complied with all the provisions of the Federal Fair
Labor Standards Act to the extent that non-compliance with such provisions
could have a Material Adverse Effect or a material adverse effect on the
Collateral or the priority of the Bank's Lien on the Collateral.  Borrower has
complied with all statutes, laws, ordinances, and government rules and
regulations to which it is subject, non-compliance with which could have a
Material Adverse Effect or a material adverse effect on the Collateral or the
priority of Bank's Lien on the Collateral.

                 5.11     Environmental Condition.  None of Borrower's or any
Subsidiary's properties or assets has ever been used by Borrower or any
Subsidiary or, to the best of Borrower's knowledge, by previous owners or
operators, in the disposal of, or to produce, store, handle, treat, release, or
transport, any hazardous waste or hazardous substance other than in accordance
with applicable law; to the best of Borrower's knowledge, none of Borrower's
properties or assets has ever been designated or identified in any manner
pursuant to any environmental protection statute as a hazardous waste or
hazardous substance disposal site, or a candidate for





                                       23
<PAGE>   27
closure pursuant to any environmental protection statute; no Lien arising under
any environmental protection statute has attached to any revenues or to any
real or personal property owned by Borrower or any Subsidiary; and neither
Borrower nor any Subsidiary has received a summons, citation, notice, or
directive from the Environmental Protection Agency or any other federal or
state governmental agency concerning any action or omission by Borrower or any
Subsidiary relating to the release or disposal of hazardous waste or hazardous
substances.

                 5.12     Taxes.  Borrower and each Subsidiary has filed or
caused to be filed all tax returns required to be filed, and has paid, or has
made adequate provision for the payment of, all taxes reflected therein.

                 5.13     Permitted Investments.  Borrower does not have any
Investment other than (i) Permitted Investments and (ii) stock, partnership
interest and other equity securities of each Subsidiary disclosed to and
approved by Bank as of the date hereof.

                 5.14     Government Consents.  Borrower and each Subsidiary
has obtained all consents, approvals and authorizations of, made all
declarations or filings with, and given all notices to, all governmental
authorities that are necessary for the continued operation of Borrower's
business as currently conducted.

                 5.15     Full Disclosure.  No representation, warranty or
other statement made by Borrower in any certificate or written statement
furnished to Bank contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained in
such certificates or statements not misleading.

         6.      AFFIRMATIVE COVENANTS

                 Borrower covenants and agrees that, until payment in full of
all Obligations, and for so long as Bank is committed to make an Advance or
issue a Letter of Credit hereunder, Borrower shall do all of the following:

                 6.1      Good Standing.  Borrower shall maintain its and each
of the Subsidiaries' corporate existence and good standing in its jurisdiction
of incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could have a Material Adverse Effect.  Borrower shall
maintain, and shall cause each of the Subsidiaries to maintain, to the extent
consistent with prudent management of Borrower's business, in force all
licenses, approvals and agreements, the loss of which could have a Material
Adverse Effect.

                 6.2      Government Compliance.  Borrower shall meet, and
shall cause each Subsidiary to meet, ERISA's minimum funding requirements with
respect to any employee benefit plans subject to ERISA.  Borrower shall comply,
and shall cause each Subsidiary to comply, with all statutes, laws, ordinances
and government rules





                                       24
<PAGE>   28
and regulations to which it is subject, noncompliance with which could have a
Material Adverse Effect or a material adverse effect on the Collateral or the
priority of Bank's Lien on the Collateral.

                 6.3      Financial Statements, Reports, Certificates.
Borrower shall maintain a standard system of accounting in accordance with
GAAP.  Borrower shall deliver to Bank:  (a) within five (5) days upon becoming
available, but in any event within fifty (50) days after the end of Borrower's
fiscal quarter, the report on Form 10-Q filed or required to be filed with the
Securities and Exchange Commission and a Compliance Certificate signed by a
Responsible Officer in form and substance acceptable to Bank; (b) within five
(5) days upon becoming available, but in any event within ninety-five (95) days
after the end of Borrower's fiscal year, the report on Form 10-K filed or
required to be filed with the Securities and Exchange Commission; (c) promptly
upon receipt of notice thereof, a report of any legal actions pending or
threatened against Borrower or any Subsidiary that could result in damages or
costs to Borrower or any Subsidiary of Five Hundred Thousand Dollars ($500,000)
or more; (d) promptly upon their becoming available (and in any event within
five (5) Business Days thereafter), copies of (i) all financial statements,
reports, notices, proxy statements and other information that Borrower sends or
generally makes available to any class of its security holders or that any
Subsidiary sends or generally makes available to any class of its security
holders, (ii) all regular and periodic reports and all registration statements,
forms and prospectuses that Borrower or any Subsidiary files with any
securities exchange or with the Securities and Exchange Commission, to the
extent that such documents are not already required to be delivered under
clauses (a) and (b) of this Section 6.3, and (iii) all press releases and other
statements that Borrower or any Subsidiary makes generally available to the
public concerning material developments in the business of Borrower or any
Subsidiary; (e) within fifteen (15) days after the end of each calendar month
after the Closing Date during which the Borrowing Base formula is in effect,
(i) a detailed aged trial balance of the Accounts, in form and substance
satisfactory to Bank, in its sole discretion, including, without limitation,
the names and addresses of all Account Debtors, (ii) a detailed accounts
payable aging, in form and substance satisfactory to Bank, in its sole
discretion, (iii) an inventory report, in form and substance satisfactory to
Bank, in its sole discretion, and (iv) a backlog report, in form and substance
satisfactory to Bank, in its sole discretion; and (f) such budgets, sales
projections, operating plans or other financial information as Bank may
reasonably request from time to time.

         Bank shall have a right from time to time hereafter to conduct a field
exam and to audit Accounts and Inventory at Borrower's expense, provided that
such audits will be conducted no more often than once every six (6) months,
unless an Event of Default has occurred and is continuing, in which case Bank
may conduct such audits, at Borrower's expense, as frequently as Bank deems
appropriate.

         Bank may destroy or otherwise dispose of any documents delivered to
Bank six (6) months after Bank's receipt thereof.





                                       25
<PAGE>   29
                 6.4      Inventory.  Borrower shall keep all Inventory in good
and marketable condition, free from all material defects.  Returns and
allowances, if any, as between Borrower and its Account Debtors, other than
Account Debtors with respect to Snowboard Boot Accounts, shall be on the same
basis and in accordance with the usual customary practices of Borrower, as they
exist at the time of the Closing Date.  Borrower shall promptly notify Bank of
all returns and recoveries and of all disputes and claims, except those
relating to Snowboard Boot Accounts, where the return, recovery, dispute or
claim involves more than One Hundred Thousand Dollars ($100,000).

                 6.5      Taxes.  Borrower shall make, and shall cause each
Subsidiary to make, due and timely payment or deposit of all material federal,
state, and local taxes, assessments, or contributions required of it by law,
and shall execute and deliver to Bank, on demand, appropriate certificates
attesting to the payment or deposit thereof; and Borrower shall make, and shall
cause each Subsidiary to make, timely payment or deposit of all material tax
payments and withholding taxes required of it by applicable laws, including,
but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability,
and local, state, and federal income taxes, and will, upon request, furnish
Bank with proof satisfactory to Bank indicating that Borrower or a Subsidiary
has made such payments or deposits; provided that Borrower or a Subsidiary need
not make any payment if the amount or validity of such payment is contested in
good faith by appropriate proceedings and is reserved against (to the extent
required by GAAP).

                 6.6      Insurance.   Borrower, at its expense and with such
companies as are reasonably acceptable to Bank, shall maintain business
interruption and liability insurance and fire, theft and other hazard insurance
which covers the Collateral, which insurance shall be in such amounts as are
ordinarily carried by other owners in similar businesses conducted in the
locations where Borrower's business is conducted on the date hereof.  All such
liability insurance policies shall show Bank as an additional insured or loss
payee, as applicable, and shall specify that the insurer must give at least
twenty (20) days' notice to Bank before canceling its policy for any reason.
Borrower shall deliver to Bank certified copies of such policies of insurance
and evidence of the payments of all premiums therefor.

                 6.7      Further Assurances.  At any time and from time to
time Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Bank to effect the purposes
hereof.

         7.      NEGATIVE COVENANTS

                 Borrower covenants and agrees that, until payment in full of
all Obligations, and for so long as Bank is committed to make an Advance or
issue a Letter of Credit hereunder, Borrower will not do any of the following:





                                       26
<PAGE>   30
                 7.1      Change in Business.  Suspend or go out of business,
engage in any business, or permit any of the Subsidiaries to engage in any
business, other than the businesses currently engaged in by Borrower and any
business substantially similar or related thereto (or incidental thereto).
Borrower will not, without thirty (30) days' prior written notification to
Bank, relocate its chief executive office.

                 7.2      Mergers or Acquisitions.  Merge or consolidate, or
permit any of the Subsidiaries to merge or consolidate, with or into any other
business organization, or acquire, or permit any of the Subsidiaries to
acquire, all or a substantial portion of the capital stock or property of
another Person or sell or otherwise dispose of all or substantially all of its
assets; provided, however, that Borrower may, upon prior notice to Bank, but
without obtaining Bank's consent, merge or consolidate with or into another
business organization if no Event of Default then exists and no Event of
Default would exist upon the closing of merger or consolidation.

                 7.3      Indebtedness.  Create, incur, assume or be or remain
liable with respect to any Indebtedness, or permit any Subsidiary so to do,
other than Permitted Indebtedness.

                 7.4      Encumbrances.  Create, incur, assume or suffer to
exist any Lien with respect to any of its property, or assign or otherwise
convey any right to receive income, including the sale of any Accounts, or
permit any of the Subsidiaries so to do, except for Permitted Liens.

                 7.5      Distributions.  Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock other than the purchase of Borrower's stock from former
employees, consultants or agents of Borrower.

                 7.6      Current Ratio.  Permit the ratio of Consolidated
Current Assets to Consolidated Current Liabilities to be less than 2.50 to 1.00
as of the last day of any fiscal quarter of Borrower.

                 7.7      Quick Ratio.  Permit the ratio of Consolidated Quick
Assets to Consolidated Current Liabilities to be less than 1.50 to 1.00 on the
last day of any fiscal quarter of Borrower.

                 7.8      Interest Coverage Ratio.  Permit the ratio of EBIT to
Consolidated Interest Charges to be less than 3.00 to 1.00, on the last day of
any fiscal quarter, with the ratio for each such date determined for the period
of the four (4) fiscal quarters of Borrower ended on such date.

                 7.9      Adjusted Consolidated Tangible Net Worth.  Permit, on
the last day of any fiscal quarter of Borrower, Adjusted Consolidated Tangible
Net Worth to be less than the Minimum Amount for such fiscal quarter.  For
purposes of this





                                       27
<PAGE>   31
Section 7.9, the "Minimum Amount" shall be (i) for the fiscal quarter ending
December 31, 1996, Fifty Million Dollars ($50,000,000), and (ii) for each
fiscal quarter thereafter, the sum of the Minimum Amount for the immediately
preceding fiscal quarter plus seventy-five percent (75%) (zero percent (0%), in
the case of a deficit) of Consolidated Net Income for such immediately
preceding fiscal quarter.

                 7.10     Working Capital.  Permit, on the last day of any
fiscal quarter of Borrower, Working Capital to be less than Thirty Million
Dollars ($30,000,000).

                 7.11     Leverage Ratio.  Permit, on the last day of any
fiscal quarter of Borrower, the ratio of Total Liabilities to Adjusted
Consolidated Tangible Net Worth to be more than .50 to 1.00.

                 7.12     Quarterly Losses.  Permit Consolidated Net Income in
any fiscal quarter of Borrower to be less than zero.

                 7.13     Investments.  Directly or indirectly acquire or own,
or make any Investment in or to any Person, or permit any of the Subsidiaries
so to do, other than Permitted Investments.

                 7.14     Transactions with Affiliates.  Directly or indirectly
enter into or permit to exist any material transaction with any Affiliate of
Borrower except for (i) transactions that are in the ordinary course of
Borrower's business, upon fair and reasonable terms that are no less favorable
to Borrower than would be obtained in an arm's length transaction with a
nonaffiliated Person, and (ii) payment to MDC Management Company of
compensation in connection with the rendering by MDC Management Company to
Borrower of consulting and financial services, provided that the compensation
paid by Borrower to MDC Management Company in respect thereof does not exceed
Three Hundred Fifty Thousand Dollars ($350,000) for any fiscal year of
Borrower.

                 7.15     Inventory.  Store the Inventory, other than Snowboard
Boots, with a bailee, warehouseman, or similar party unless Bank has received a
pledge of the warehouse receipt covering such Inventory.  Except for Inventory
sold in the ordinary course of business and except for such other locations as
Bank may approve in writing, which approval shall not be unreasonably withheld,
conditioned or delayed, Borrower shall keep the Inventory, other than Snowboard
Boots, only at the location set forth in Section 10 hereof, Borrower's City of
Industry distribution center and Borrower's Vista plant, and such other
locations of which Borrower gives Bank prior written notice and as to which
Borrower signs and files a financing statement where needed to perfect Bank's
security interest.

                 7.16     Subordinated Debt.  Make any payment in respect of
any Subordinated Debt, or permit any of the Subsidiaries to make any such
payment, except in compliance with any applicable subordination agreement or
with the terms of such Subordinated Debt, or amend any provision contained in
any documentation





                                       28
<PAGE>   32
relating to the Subordinated Debt without Bank's prior written consent, which
approval shall not be unreasonably withheld, conditioned or delayed.

                 7.17     Compliance.  Become an "investment company" or
controlled by an "investment company," within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Advance for
such purpose.  Fail to meet ERISA's minimum funding requirements, permit a
Reportable Event or Prohibited Transaction, as such terms are defined in ERISA,
to occur, permit any condition to exist that would entitle any Person to obtain
a decree adjudicating that any plan under ERISA must be terminated, fail to
comply with the Federal Fair Labor Standards Act in any way which could have a
Material Adverse Effect or violate any law or regulation, which violation could
have a Material Adverse Effect or a material adverse effect on the Collateral
or the priority of Bank's Lien on the Collateral, or permit any of the
Subsidiaries to do any of the foregoing.

         8.      EVENTS OF DEFAULT

                 Any one or more of the following events shall constitute an
Event of Default hereunder:

                 8.1      Payment Default.  If Borrower fails to pay (i) any
interest or principal Obligations when due and payable or (ii) any Obligations,
other than interest and principal Obligations, within five (5) days of the date
due and payable;

                 8.2      Covenant Default.  If Borrower fails or neglects to
perform, keep, or observe any other term, provision, condition, covenant, or
agreement contained herein, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Bank;

                 8.3      Material Adverse Effect.  If there occurs an event
that has a Material Adverse Effect or a material impairment of the value or
priority of Bank's Lien against the Collateral;

                 8.4      Attachment.  If all or any portion of Borrower's
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any trustee, receiver or person
acting in a similar capacity and such attachment, seizure, writ or distress
warrant or levy has not been removed, discharged or rescinded within thirty
(30) days, or if Borrower is enjoined, restrained, or in any way prevented by
court order from continuing to conduct all or any part of its business affairs,
or if a judgment or other claim becomes a Lien upon any portion of Borrower's
assets, or if a notice of Lien, levy, or assessment is filed of record with
respect to any of Borrower's assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10)
days





                                       29
<PAGE>   33
after Borrower receives notice thereof; provided that Bank shall not be
required to make any Advances or issue any Letters of Credit during such cure
period;

                 8.5      Insolvency.  If an Insolvency Proceeding is commenced
by Borrower, or if an Insolvency Proceeding is commenced against Borrower and
is not dismissed or stayed within sixty (60) days; provided that Bank shall not
be required to make any Advances or issue any Letters of Credit prior to the
dismissal of such Insolvency Proceeding;

                 8.6      Other Agreements.  If there is a default in any
agreement to which Borrower is a party with a third party or parties resulting
in a right by such third party or parties, whether or not exercised, to
accelerate the maturity of any Indebtedness if such default could have a
Material Adverse Effect;

                 8.7      Judgments.  If a judgment or judgments for the
payment of money in an amount, individually or in the aggregate, which could
have a Material Adverse Effect shall be rendered against Borrower and shall
remain unsatisfied and unstayed for a period of thirty (30) days (provided that
no Advances will be made prior to the satisfaction or stay of such judgment);
or

                 8.8      Misrepresentations.  If a material misrepresentation
or misstatement exists now or hereafter in any warranty or representation set
forth herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or
any other Loan Document.

         9.      BANK'S RIGHTS AND REMEDIES

                 9.1      Rights and Remedies.  Upon the occurrence and during
the continuance of an Event of Default, Bank may, at its election, without
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:

                          (a)     Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable (provided that upon the occurrence of an Event of Default
described in Section 8.5 all Obligations shall become immediately due and
payable without any action by Bank);

                          (b)     Cease making Advances, issuing Letters of
Credit or otherwise extending credit to or for the benefit of Borrower
hereunder or under any other agreement between Borrower and Bank;

                          (c)     Settle or adjust disputes and claims directly
with Account Debtors, other than Account Debtors with respect to Snowboard Boot
Accounts, for





                                       30
<PAGE>   34
amounts, upon terms and in whatever order that Bank reasonably considers
advisable;

                          (d)     Make such payments and do such acts as Bank
considers necessary or reasonable to protect its Lien on the Collateral.
Borrower agrees to make the Collateral available to Bank as Bank designates.
Borrower authorizes Bank to enter the premises where the Collateral is located,
to take and maintain possession of the Collateral, or any part of it, and to
pay, purchase, contest, or compromise any Lien which in Bank's determination
appears to be prior or superior to its Lien and to pay all expenses incurred in
connection therewith.  With respect to any of Borrower's owned premises,
Borrower hereby grants Bank a license to enter into possession of such premises
and to occupy the same, without charge, for up to one hundred twenty (120) days
in order to exercise any of Bank's rights or remedies provided herein, at law,
in equity, or otherwise;

                          (e)     Without notice to Borrower set off and apply
to the Obligations any and all (i) balances and deposits of Borrower held by
Bank, or (ii) indebtedness at any time owing to or for the credit or the
account of Borrower held by Bank;

                          (f)     Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell (in the manner
provided for herein) the Collateral.  Bank is hereby granted a license or other
right, solely pursuant to the provisions of this Section 9.1, to use, without
charge, Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks, service marks, and advertising matter,
or any property of a similar nature, as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank's exercise of its rights under this Section 9.1,
Borrower's rights under all licenses and all franchise agreements shall inure
to Bank's benefit, and Bank shall not be obligated to pay any compensation to
Borrower or any other Person in connection with the exercise of such rights;

                          (g)     Sell the Collateral at either a public or
private sale, or both, by way of one or more contracts or transactions, for
cash or on terms, in such manner and at such places (including, without
limitation, Bank's or Borrower's premises) as Bank determines is reasonable;

                          (h)     Bank may credit bid and purchase at any 
public sale; and

                          (i)     Any deficiency that exists after disposition
of the Collateral as provided above shall be paid immediately by Borrower.

                 9.2      Power of Attorney.  Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, employees or agents) as
Borrower's true and lawful attorney to:  (a) send requests for verification of
Accounts, other than Snowboard Boot Accounts, or notify Account Debtors, other
than with respect to





                                       31
<PAGE>   35
Snowboard Boot Accounts, of Bank's Lien against the Accounts, provided that at
the time of the verification request or notification an Event of Default has
occurred and is continuing; (b) endorse Borrower's name on any checks or other
forms of payment or security that may come into Bank's possession which
constitute proceeds of any of the Collateral; (c) sign Borrower's name on any
invoice or bill of lading relating to any Account, other than a Snowboard Boot
Account, drafts against Account Debtors, other than Account Debtors with
respect to Snowboard Boot Accounts, schedules and assignments of Accounts,
other than Snowboard Boot Accounts, verifications of Accounts, other than
Snowboard Boot Accounts, and notices to Account Debtors, other than Account
Debtors with respect to Snowboard Boot Accounts; and (d) during the continuance
of an Event of Default, settle and adjust disputes and claims respecting the
accounts directly with Account Debtors, other than with respect to Snowboard
Boot Accounts, for amounts and upon terms which Bank determines to be
reasonable; provided Bank may exercise such power of attorney to sign the name
of Borrower on any of the documents described in Section 4.2 regardless of
whether an Event of Default is continuing.  The Bank's appointment as
Borrower's attorney in fact, and each and every one of Bank's rights and
powers, being coupled with an interest, is irrevocable until all of the
Obligations are fully satisfied and Bank's obligation to make Advances and
issue Letters of Credit hereunder is terminated or expires.

                 9.3      Accounts Collection.  At any time during the
continuance of an Event of Default, Bank may notify any Person owing funds to
Borrower which constitute part of the Collateral of Bank's Lien against such
funds.  Borrower shall collect all amounts owing to Borrower which constitute
part of the Collateral for Bank, receive in trust all payments as Bank's
trustee, and immediately deliver such payments to Bank in their original form
as received from the Account Debtor, with proper endorsements for deposit.

                 9.4      Bank Expenses.  If Borrower fails to pay any amounts
or furnish any required proof of payment due to third persons or entities, as
required under the terms hereof, then Bank may do any or all of the following:
(a) make payment of the same or any part thereof; (b) set up such Reserves as
Bank deems necessary to protect it from the exposure created by such failure;
or (c) obtain and maintain insurance policies of the type described in Section
6.6 hereof, and take any action with respect to such policies as Bank deems
prudent.  Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
Prime Interest Rate then in effect.  Any payments made by Bank shall not
constitute an agreement by Bank to make similar payments in the future or a
waiver by Bank of any Event of Default.

                 9.5      Bank's Liability for Collateral.  So long as Bank
complies with reasonable banking practices, Bank shall not in any way or manner
be liable or responsible for any diminution in the value of any Collateral.





                                       32
<PAGE>   36
                 9.6      Remedies Cumulative.  Bank's rights and remedies
hereunder, the other Loan Documents, and by law shall be cumulative.  Bank
shall have all other rights and remedies not inconsistent herewith as provided
under the Code, by law, or in equity.  No exercise by Bank of one right or
remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver.  No delay by
Bank shall constitute a waiver, election, or acquiescence by it.  No waiver by
Bank shall be effective unless in writing.

                 9.7      Demand; Protest; Application.  Borrower waives
demand, protest, notice of protest, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Bank on which
Borrower may in any way be liable.  Borrower waives any right to direct the
application of any amount received by Bank.

         10.     NOTICES

                 Unless otherwise provided herein, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents,
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by a recognized, overnight delivery service or by certified
mail, postage prepaid, return receipt requested, or by facsimile to Borrower or
Bank, as the case may be, at its address set forth below:

         If to Borrower:  Prior to March 1, 1997:
                          Vans, Inc.
                          2095 Batavia Street
                          Orange, CA  92665-3101
                          Attn:  Craig E. Gosselin, Esq.,
                                 Vice President and General Counsel
                          FAX:   (714) 974-4481

                          On or after March 1, 1997
                          Vans, Inc.
                          15700 "A" Shoemaker Avenue
                          Sante Fe Springs, CA  _________
                          Attn:  Craig E. Gosselin, Esq.,
                                 Vice President and General Counsel
                          FAX:   N/A

         If to Bank:      Bank of the West
                          1450 Treat Blvd.
                          Walnut Creek, CA  94596
                          Attn:  Mr. Dale J. Kobsar
                          FAX:   (510) 930-5635





                                       33
<PAGE>   37
Either party may change its address for notices by written notice given in the
foregoing manner to the other.

         11.     CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

                 This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard
to conflicts of law principles.  Each of Borrower and Bank hereby submits to
the exclusive jurisdiction of the state and Federal courts located in the
County of San Francisco, State of California.  BORROWER AND BANK EACH HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH
PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT.  EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

         12.     GENERAL PROVISIONS

                 12.1     Successors and Assigns.  This Agreement shall bind
and inure to the benefit of the respective successors and permitted assigns of
each of the parties; provided, however, that neither this Agreement nor any
rights hereunder may be assigned by Borrower without Bank's prior written
consent, which may be granted or withheld in Bank's sole discretion.  Bank
shall have the right without the consent of or notice to Borrower to sell,
transfer, negotiate, or grant participations in all or any part of, or any
interest in, Bank's obligations, rights and benefits hereunder.

                 12.2     Indemnification.  Borrower shall defend, indemnify
and hold harmless Bank and its officers, employees, and agents against:  (a)
all obligations, demands, claims, and liabilities claimed or asserted by any
other party in connection with the transactions contemplated by this Agreement;
and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by
Bank as a result of or in any way arising out of, following, or consequential
to transactions between Bank and Borrower whether hereunder, or otherwise
(including without limitation reasonable attorneys fees and expenses), except
for losses caused by Bank's gross negligence or willful misconduct.

                 12.3     Time of Essence.  Time is of the essence for the
performance of all obligations set forth herein.

                 12.4     Severability of Provisions; Headings.  Each provision
of this Agreement shall be severable from every other provision of this
Agreement for the





                                       34
<PAGE>   38
purpose of determining the legal enforceability of any specific provision.
Headings are set forth herein for convenience only.

                 12.5     Amendments; Integration.  This Agreement cannot be
changed or terminated orally.  All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter hereof, if any, are merged into this Agreement
and the Loan Documents.

                 12.6     Counterparts.  This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.

                 12.7     Survival.  All covenants, representations and
warranties made herein shall continue in full force and effect so long as any
Obligations remain outstanding.  Borrower's obligations to indemnify Bank with
respect to the expenses, damages, losses, costs and liabilities described in
Section 12.2 shall survive until all applicable statute of limitations periods
with respect to actions that may be brought against Bank have run.

                 12.8     Confidentiality.  Bank shall not disclose to any
third party any Confidential Information disclosed to Bank pursuant to the Loan
Documents, except that (i) the Bank may disclose Confidential Information to a
third party to the extent compelled by law, subpoena, civil investigative
demand, interrogatories or similar legal process, and (ii) Bank may disclose
Confidential Information to a potential transferee of or participant in the
Loan Documents, provided that the potential transferee or participant agrees to
be bound by the same confidentiality obligations as Bank under this section.
For purposes hereof, Confidential Information is information disclosed by
Borrower to Bank pursuant to the Loan Documents that is not information which
(i) becomes generally available to the public, other than as a result of
disclosure by Bank, (ii) was available on a non-confidential basis prior to its
disclosure to Bank by Borrower, or (iii) becomes available to Bank on a
non-confidential basis from a source other than Borrower.

                 12.9     No Novation.  This Amended and Restated Loan and
Security Agreement is not intended to be, and shall not be construed to create,
a novation or accord and satisfaction, and, except as otherwise provided
herein, the Loan and Security Agreement, as executed and delivered on July 1,
1995, and amended prior to the execution hereof, shall remain in full force and
effect.

                 12.10    Amendments Upon Termination of Snowboard Boot
Financing.  Upon (i) the expiration or termination, for any reason, of the
Snowboard Boot Financing Agreement, and (ii) the filing of all UCC Financing
Statement Amendments and other appropriate documents to enable the Bank to have
a perfected first priority Lien against the Snowboard Boot located in the
United States and the Snowboard Boot Accounts, and the Bank's reasonable
determination that it





                                       35
<PAGE>   39
holds such Lien against such assets, this Agreement shall be automatically
amended as follows, without any further action by the parties hereto:

                          (a)     the phrases "other than the Snowboard Boot
Accounts" and "other than the Snowboard Boots" shall be deleted from the
definition of "Collateral";

                          (b)     the phrases "other than the Snowboard Boot
Accounts" and "other than the Snowboard Boot Accounts" shall be deleted from
the definition of "Dilution";

                          (c)     clause (ii) of the definition of "Eligible
Accounts" shall be deleted and clause (iii) shall be redesignated as clause
(ii);

                          (d)     the phrases "(excluding for purposes of this
clause, the Snowboard Boot Accounts)" and "(excluding for purposes of this
clause, the Snowboard Boot Accounts)" shall be deleted from clause (l) of the
definition of "Eligible Accounts";

                          (e)     the phrase "other than Snowboard Boots" shall
be deleted from the definition of "Eligible Inventory";

                          (f)     the definitions of "Snowboard Boot Accounts" 
and "Snowboard Boots" shall be deleted;

                          (g)     the phrase "other than an Account Debtor with
respect to a Snowboard Boot Account" shall be deleted from the second sentence
of Section 2.7;

                          (h)     the phrase "other than Account Debtors with
respect to a Snowboard Boot Accounts" shall be deleted from the first sentence
of Section 6.4;

                          (i)     the phrase "except those relating to
Snowboard Boot Accounts" shall be deleted from the second sentence of Section
6.4;

                          (j)     the phrase ", other than Snowboard Boots," 
shall be deleted from the first sentence of Section 7.15;

                          (k)     the phrase ", other than Snowboard Boots," 
shall be deleted from the second sentence of Section 7.15;

                          (l)     the phrase ", other than Account Debtors with
respect to Snowboard Boot Accounts," shall be deleted from Section 9.1(c);

                          (m)     Section 9.2 shall be amended to read as
follows:

                 12.11    Power of Attorney.  Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, employees or agents) as
Borrower's true and





                                       36
<PAGE>   40
lawful attorney to:  (a) send requests for verification of Accounts or notify
Account Debtors of Bank's Lien against the Accounts, provided that at the time
of the verification request or notification an Event of Default has occurred
and is continuing; (b) endorse Borrower's name on any checks or other forms of
payment or security that may come into Bank's possession which constitute
proceeds of any of the Collateral; (c) sign Borrower's name on any invoice or
bill of lading relating to any Account, drafts against Account Debtors,
schedules and assignments of Accounts, verifications of Accounts and notices to
Account Debtors; and (d) during the continuance of an Event of Default, settle
and adjust disputes and claims respecting the accounts directly with Account
Debtors for amounts and upon terms which Bank determines to be reasonable;
provided Bank may exercise such power of attorney to sign the name of Borrower
on any of the documents described in Section 4.2 regardless of whether an Event
of Default is continuing.  The Bank's appointment as Borrower's attorney in
fact, and each and every one of Bank's rights and powers, being coupled with an
interest, is irrevocable until all of the Obligations are fully satisfied and
Bank's obligation to make Advances and issue Letters of Credit hereunder is
terminated or expires.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.



                                                 VANS, INC.

                                                 By:___________________________

                                                 Title:________________________



                                                 By:___________________________

                                                 Title:________________________


                                                 BANK OF THE WEST


                                                 By:___________________________
                                                    Dale J. Kobsar
                                                    Regional Vice President





                                       37
<PAGE>   41
                                   EXHIBIT A

                  LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

         DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., CALIFORNIA TIME


TO:  CENTRAL CLIENT SERVICE DIVISION                  DATE: 
                                                           -------------------
FAX #:                                                TIME:
      --------------------                                 -------------------


------------------------------------------------------------------------------
FROM:
     --------------------------------------------------------------------
                           CLIENT NAME (BORROWER) 
REQUESTED BY: 
             ------------------------------------------------------------
                           AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:
                     ----------------------------------------------------
PHONE NUMBER:
             ------------------------------------------------------------

FROM ACCOUNT #                           TO ACCOUNT #
              -------------------------              --------------------

REQUESTED TRANSACTION TYPE                 REQUESTED DOLLAR AMOUNT
--------------------------                 -----------------------

PRINCIPAL INCREASE (ADVANCE)      $
                                   --------------------------------------
PRINCIPAL PAYMENT (ONLY)              $
                                       ----------------------------------
INTEREST PAYMENT (ONLY)               $
                                       ----------------------------------
PRINCIPAL AND INTEREST (PAYMENT)  $
                                   --------------------------------------

OTHER INSTRUCTIONS:
                   ------------------------------------------------------

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

        All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete as of the date of the telephone
request for an Advance confirmed by this Borrowing Certificate; provided,
however, that those representations and warranties expressly referring to
another date shall be true, correct and complete in all material respects 
as of such date.

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



<PAGE>   42

------------------------------------------------------------------------------
                                 BANK USE ONLY


TELEPHONE REQUEST:
-----------------

The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.



----------------------------------      ----------------------------------
       Authorized Officer                             Phone #



----------------------------------      ----------------------------------
       Received By (Bank)                             Phone #

             
                       -------------------------------
                         Authorized Signature (Bank)

------------------------------------------------------------------------------
<PAGE>   43
                                   EXHIBIT B

                             VANS INVESTMENT POLICY

I.      Purpose

        To specify guidelines, responsibility, and authority for the short-term
        investment of cash reserves by the Company and its subsidiaries.

II.     Investment Objectives

        The primary objectives of Vans' investments are liquidity and minimum
        risk. Consistent with these primary objectives, investments will be made
        to achieve a reasonable rate of return to the Company.

III.    Investment Criteria

        Investments will be made in accordance with the following criteria:

        A.      Eligible Investments

                1.      United States Government Obligations and its Agencies.

                2.      Money Market Instruments, including - Bankers
                        Acceptances, Commercial Paper, Certificates of Deposit,
                        Repurchase Agreements, and Money Market Mutual Funds,
                        all with such institutions which meet the Investment
                        Quality Standards noted in III-B.

                3.      Short-term tax-exempt securities including highest
                        quality Municipal Notes and Municipal Bonds as noted in
                        III-B-3, as well as prerefunded Municipal Bonds escrowed
                        to maturity and backed by U.S. Treasury Securities.

        B.      Investment Quality

                1.      Issuer or guarantor must have no less than "A" rating by
                        Standard & Poors or Moody's Investor Services on its
                        long-term debt.

                2.      Issuer or guarantor must have no less than "A-1"
                        (Standard & Poors) or "P-1" (Moody's Investor Services
                        on its commercial paper).

                3.      Municipal Bonds whose issuer must have no less than a
                        "AAA" rating by Standard & Poors, or "Aaa" by Moody's
                        Investor Services on its long-term debt.
<PAGE>   44
        C.      Term or Maturity

                1.      Appropriate to Company cash management and expansion
                        requirements with no more than 25% with maturities over
                        6 months. Portfolio emphasis will focus on short-term
                        maturities of 6 months or less.

        D.      Portfolio Diversification

                1.      Holdings of the securities of any one issuer are limited
                        to the higher of $1 million or 10% of the market value
                        of the portfolio so long as the portfolio exceeds $5
                        million. If portfolio is less than $5 million, holdings
                        may be no more than 20% in any one issuer's securities.

                2.      There is no limit on the holding of securities of the
                        U.S. Government or its agencies and instruments which
                        have the full faith and credit guarantees of the U.S.
                        Government.

        E.      Liquidity

                1.      There must be an active secondary market in the
                        instrument or confidence that a market maker would
                        make such a market.

IV.     Investment Management
        
        A.      The Company shall appoint an Investment Policy Committee, which
                shall be the Audit Committee of the Board of Directors. Such
                committee shall propose the investment policy of the Company,
                and such policy shall be approved by the Board of Directors.
                This policy will be reviewed by the Committee periodically to
                ensure it meets the needs and objectives of the Company.

        B.      The Company shall appoint an Investment Committee comprised of
                the President, Chief Operating Officer, General Counsel, Chief
                Financial Officer, and Controller.

        C.      The Chief Financial Officer has the authority and responsibility
                for implementing this policy and for overseeing the management
                of the investment portfolio and the preparation and issuance of
                reports and the decisions as to allocation of investment funds.
<PAGE>   45
        D.      The resolution of the Board of Directors covering investments
                and marketable securities states that any two of the President,
                Chief Operating Officer, General Counsel, Chief Financial
                Officer, or Controller are authorized to purchase, transfer,
                negotiate, pledge, sell or otherwise dispose of securities on
                behalf of the Company in such manner, at such times, and upon
                such terms as they may deem wise and advantageous to the
                Company, subject to all of the above.

V.      Restrictions

        In addition to the restrictions inherent in the above guidelines, the
        Company and the Investment Committee may not:

        A.      Invest in the marketable securities and other short-term assets
                as defined above of any issuers which have less than three years
                of continuous operation.

        B.      Purchase securities on margin, sell securities short, or invest
                in real estate unrelated to the operations of the Company.

        C.      Invest in commodities of any kind in any form.

        D.      Invest in pooled investments, the portfolios of which consist of
                assets not listed above.

        E.      Invest or purchase derivatives, puts, calls, or other such
                synthetic financial instruments.
<PAGE>   46
                                   EXHIBIT C

                            LETTER OF CREDIT CHARGES

================================================================================
         Import Letters of Credit               Export Letters of Credit
--------------------------------------------------------------------------------
      Issuance          1/20 of 1.0%          Advice            $25.00/Each
--------------------------------------------------------------------------------
     Amendment          1/20 of 1.0%         Amendment          $25.00/Each
--------------------------------------------------------------------------------
    Negotiation         $25.00/Set          Negotiation         $45.00/Each
--------------------------------------------------------------------------------
    Discrepancy         $10.00/Set          Discrepancy         $10.00/Set
--------------------------------------------------------------------------------
      Courier           Actual Cost           Courier           Actual Cost
================================================================================