Document:

Exhibit 10.20

 

EXHIBIT 10.20

MARVELL TECHNOLOGY GROUP LTD.

AMENDED AND RESTATED

1995 STOCK OPTION PLAN

(As amended through May 7, 2003)

     1.     Purpose. This Plan is intended to attract and retain the best
available individuals as Employees, Consultants and Outside Directors of the
Company and its Subsidiaries, to provide additional incentives to those
Employees, Consultants and Outside Directors, and to promote the success of the
Company’s business.

     2.     Defined Terms. The meanings of defined terms (generally, capitalized
terms) in this Plan are provided in Section 21 (“Glossary”).

     3.     Shares Reserved. Subject to Section 14, Shares that may be issued
with respect to Awards granted under the Plan shall not exceed an aggregate of
60,260,394 Shares of Common Stock; provided however, that on the first business
day of each fiscal year starting January 31, 2004 or after, and continuing
until the earlier of January 31, 2013 or termination of the Plan, there shall
be added to this Plan the lesser of an additional (i) 10,000,000 shares of
Common Stock, or (ii) 5.0% of the outstanding shares of capital stock on such
date. The Shares may be authorized, but unissued, or reacquired Common Stock.
If an Award under the Plan expires or becomes unexercisable for any reason, the
Shares subject to such Award which have not been issued shall be available for
future issuance under this Plan. Shares retained to satisfy tax withholding
obligations do not reduce the number authorized for issuance.

     4.     Administration.

     (a)  In General. This Plan shall be administered by the Board or a
Committee appointed by the Board. Once appointed, a Committee shall
serve until otherwise directed by the Board. From time to time, the
Board may increase the size of the Committee and appoint additional
members, remove members (with or without cause) and appoint new members
in their stead, fill vacancies however caused, and terminate the
Committee and thereafter directly administer this Plan.

     (b)  Committee Composition. The Board may provide for administration of
this Plan with respect to Officers and directors of the Company by a Committee
constituted so as to satisfy:

		
	 	     (i) such requirements as the Securities and Exchange
Commission may establish for administrators acting under plans
intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act; and
	 
	 	     (ii) such requirements as the Internal Revenue Service may establish
for Outside Directors acting under plans intended to qualify for
exemption under Section 162(m)(4)(C) of the Code.

 

 

     A Committee appointed under this Section 4(b) may be separate from any
Committee appointed to administer this Plan with respect to Employees who are
neither Officers nor directors. Within the limitations of this Section 4(b),
any reference in the Plan to the Committee shall include such committee or
committees appointed pursuant to this Section 4.

     (c)  Powers of the Administrator. Subject to the provisions of this Plan
and in the case of a Committee, subject to the specific duties delegated by the
Board, the Administrator shall have the authority, in its sole and absolute
discretion:

		
	 	     (i) to determine the Fair Market Value of the Common Stock;

		
	 	     (ii) to grant Awards to such Consultants, Outside Directors
and Employees as it selects; provided, however, that
notwithstanding any other provision of the Plan, grants of Awards
to Outside Directors shall be limited to grants of Options upon
initial appointment to the Board, and such Awards shall be subject
to ratification by the Board;

		
	 	     (iii) to determine the terms and conditions of each Award
granted, including without limitation the number of Shares subject
to each Award, the exercise price per Share of Optioned Stock, and
whether an Option is to be granted as an ISO or a NSO;

		
	 	     (iv) to approve forms of agreement for use under this Plan;

		
	 	     (v) to determine whether and under what circumstances to
offer to buy out an Option for cash or Shares under Section 12;

		
	 	     (vi) to modify grants of Awards to participants who are
foreign nationals or employed outside of the United States in
order to recognize differences in local law, tax policies, or
customs; and

		
	 	     (vii) to construe and interpret the terms of this Plan and of
each Award granted pursuant to this Plan.

     (d)  Administrator’s Decisions Binding. All decisions, determinations, and
interpretations of the Administrator shall be final and binding on all Grantees
and any other holders of any Awards, and no member of the Administrator shall
be liable for any such determination, decision, or interpretation made in good
faith.

     5.     Eligibility.

     (a)  General. Nonstatutory Stock Options may be granted to Employees,
Consultants and Outside Directors. Incentive Stock Options may be granted only
to Employees. Other Awards
may be granted to Employees and Consultants. An Employee or Consultant
who has been granted an Award may, if otherwise eligible, be granted additional
Awards.

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     (b)  Limitations.

		
	 	     (i) While the Company or a successor has outstanding any class of
equity securities required to be registered under Section 12 of the
Exchange Act, the following limitations shall apply to grants of Awards
to Employees:

		
	 	     (ii) No Employee shall be granted, in any fiscal year of the
Company, Awards with respect to more than 1,000,000 Shares, in the
aggregate, adjusted proportionately in connection with any change in the
Company’s capitalization as described in Section 14. If an Award is
granted but canceled in the same fiscal year, it shall nonetheless count
against the foregoing limit. Reduction of an Option’s exercise price is
treated as a cancellation of the Option and the grant of a new Option.

     6.     Term of Options. The term of each Option shall be determined by the
Administrator at the time of grant but shall not exceed ten years. In the case
of an ISO granted to an Optionee who, at the time of grant, owns stock
representing more than ten percent of the voting power of all classes of stock
of the Company or any Parent or Subsidiary, the Option term shall not exceed
five years.

     7.     Date of Option Grant. Unless otherwise determined by the
Administrator, the date of grant of an Option shall be the date on which the
Administrator completes the actions necessary to grant the Option. Notice of
the grant shall be given to the Optionee within a reasonable time after the
date of the grant.

     8.     Option Exercise Price and Form of Consideration.

     (a)  Price. The per-Share exercise price of an Option shall be determined
by the Administrator at the time of grant, but:

		
	 	     (i) In the case of an ISO:

		
	 	     (A) granted to an Employee who, at the time of grant, owns stock
representing more than ten percent of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the per-Share exercise
price shall be at least 110% of the Fair Market Value on the date of
grant; or

		
	 	     (B) granted to any other Employee, the per-Share exercise price
shall be at least the Fair Market Value on the date of grant.

		
	 	     (ii) In the case of a NSO, the per-Share exercise price shall be at
least the Fair Market Value on the date of grant.

     (b)  Form of Payment. Payment for Shares upon exercise of an Option shall
be made in any lawful consideration approved by the Administrator and may,
without limitation, consist of
(1) cash, (2) check, (3) other Shares that have a Fair Market Value on the
date of payment equal to the aggregate exercise price of the Shares as to which
Option is exercised; provided, however, that the Optionee shall not surrender,
or attest to the ownership of, Shares in payment of the

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Exercise Price if such
action would cause the Company to recognize compensation expense (or additional
compensation expense) with respect to the Option for financial reporting
purposes, (4) delivery by a broker or brokerage firm approved by the
Administrator of a properly executed exercise notice together with payment of
the exercise price and such other documentation as the Administrator shall
require, or (5) any combination of the foregoing. Notwithstanding the
foregoing, a form of payment shall not be available if the Administrator
determines, in its sole and absolute discretion, that such form of payment
could violate any law or regulation.

     9.     Option Exercise.

     (a)  Exercisability. Each Option shall be exercisable at such times and
under such conditions as determined by the Administrator at the time of grant.

     (b)  Vesting. Each Option and the corresponding Optioned Stock shall vest
at such times and under such conditions as determined by the Administrator at
the time of grant, and as are otherwise permissible under the terms of this
Plan, including without limitation, performance criteria with respect to the
Company and/or the Optionee.

     (c)  Fractional Shares. An Option may not be exercised for a fraction of a
Share.

     (d)  Manner of Exercise; Rights as a Shareholder. Unless otherwise allowed
by the Administrator, an Option shall be exercised by delivery to the Company
of all of the following: (i) written notice of exercise by the Optionee, in a
form approved by the Administrator and in accordance with the terms of the
Option, (ii) full payment for the Shares with respect to which the Option is
exercised, and (iii) payment (or provision for payment) of withholding taxes
pursuant to Subsection (g), below. Delivery of any of the foregoing may be by
electronic means approved by the Administrator. The Optionee shall be treated
as a shareholder of the Company with respect to the purchased Shares upon
completion of exercise of the Option.

     (e)  Optionee Representations. If Shares purchasable pursuant to the
exercise of an Option have not been registered under the Securities Act of
1933, as amended, at the time the Option is exercised, the Optionee shall, if
required by the Administrator, as a condition to exercise of all or any portion
of the Option, deliver to the Company an investment representation statement in
a form approved by the Administrator.

     (f)  Termination of Employment or Consulting Relationship. If an
Optionee’s Continuous Service terminates, the Optionee (or the Optionee’s
estate or heirs, if termination is due to death or the Optionee dies during the
post-termination exercise period of the Option) may exercise the Option, (i)
only within such period of time as is determined by the Administrator (but no
later than the expiration date for the Option determined by the Administrator
at the time of grant) and the Option shall terminate at the end of that period,
and (ii) unless otherwise determined by the Administrator, only to the extent
that the Optionee was entitled to exercise it at the date of termination.

     (g)  Tax Withholding. The Company’s obligation to deliver Shares upon
exercise of an Option is subject to payment (or provision for payment
satisfactory to the Administrator) by the

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Optionee of all federal, state, and
local income and employment taxes that the Administrator determines in its
discretion to be due as a result of the exercise of the Option or sale of the
Shares.

     10.     Rule 16b-3. Except to the extent determined by the Administrator,
Awards granted to persons subject to Section 16(b) of the Exchange Act shall
comply with Rule 16b-3 and shall contain such terms as may be required or
desirable to qualify Plan transactions for the maximum exemption from Section
16 of the Exchange Act.

     11.     Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

     12.     Buyout of Options. The Administrator may at any time offer to buy out
an Option for a payment in cash or Shares, based on such terms and conditions
as the Administrator shall establish and communicate to the Optionee at the
time of the offer.

     13.     Other Awards. The Administrator may from time to time grant other
stock-based awards to eligible Employees and Consultants in such amounts, on
such terms and conditions, and for such consideration, including no
consideration or such minimum consideration as may be required by law, as it
shall determine and set forth in the applicable Grant Agreement, including
without limitation the following:

     (a)  Stock Appreciation Rights. The Administrator may from time to time
grant Awards of stock appreciation rights (“SAR”). An SAR entitles the Grantee
to receive, subject to the provisions of the Plan and the Grant Agreement, a
payment having an aggregate value equal to the product of (i) the excess of (A)
the Fair Market Value on the exercise date of one share of Common Stock over
(B) the base price per share specified in the Grant Agreement, times (ii) the
number of shares specified by the SAR, or portion thereof, which is exercised.
Payment by the Company of the amount receivable upon any exercise of an SAR may
be made by the delivery of Common Stock or cash, or any combination of Common
Stock and cash, as determined in the sole discretion of the Administrator. If
upon settlement of the exercise of an SAR a Grantee is to receive a portion of
such payment in shares of Common Stock, the number of shares shall be
determined by dividing such portion by the Fair Market Value of a share of
Common Stock on the exercise date. No fractional shares shall be used for such
payment and the Administrator shall determine whether cash shall be given in
lieu of such fractional shares or whether such fractional shares shall be
eliminated.

     (b)  Stock Awards. The Administrator may from time to time grant
restricted or unrestricted Awards of Common Stock in such amounts, on such
terms and conditions, and for such consideration, including no consideration or
such minimum consideration as may be required by law, as it shall determine.

     (c)  Stock Units. The Administrator may from time to time grant Awards
denominated in stock-equivalent units (“stock units”) in such amounts and on
such terms and conditions as it

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shall determine. Stock units shall be credited
to a bookkeeping reserve account solely for accounting purposes and shall not
require a segregation of any of the Company’s assets. An Award of stock units
may be settled in Common Stock, in cash, or in a combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. Except as
otherwise provided in the applicable Grant Agreement, the Grantee shall not
have the rights of a stockholder with respect to any shares of Common Stock
represented by a stock unit solely as a result of the grant of a stock unit to
the Grantee.

     (d)  Performance Awards. The Administrator may, in its discretion, grant
performance awards which become payable on account of attainment of one or more
performance goals established by the Administrator. Performance awards may be
paid by the delivery of Common Stock or cash, or any combination of Common
Stock and cash, as determined in the sole discretion of the Administrator.
Performance goals established by the Administrator may be based on one or more
business criteria selected by the Administrator that apply to an individual or
group of individuals, a business unit, or the Company as a whole, over such
performance period as the Administrator may designate.

     (e)  Other Stock-Based Awards. The Administrator may grant other
stock-based awards may be denominated in cash, in Common Stock or other
securities, in stock-equivalent units, in stock appreciation units, in
securities or debentures convertible into Common Stock, or in any combination
of the foregoing and may be paid in Common Stock or other securities, in cash,
or in a combination of Common Stock or other securities and cash, all as
determined in the sole discretion of the Administrator.

     (f)  Deferral of Awards.

     The Administrator (in its sole discretion) may provide that Shares or cash
that otherwise would be delivered to a Grantee as a result of the exercise of
an Option or other settlement of an Award may be converted into amounts
credited to a deferred compensation account established for such Grantee by the
Administrator as an entry on the Company’s books. A deferred compensation
account established under this Section 13(f) may be credited with interest or
other forms of investment return, as determined by the Administrator. A
Grantee for whom such an account is established shall have no rights other than
those of a general creditor of the Company. Such an account shall represent an
unfunded and unsecured obligation of the Company and shall be subject to the
terms and conditions of the applicable Grant Agreement between such Participant
and the Company. The Administrator (in its sole discretion) shall establish
Grant rules, procedures and forms pertaining to any deferral of Awards pursuant
to this Section 13(f).

     14.     Changes in Capitalization or Control.

     (a)  Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of Shares of Optioned Stock or of other
Shares subject to an outstanding Award, and the number of Shares that have been
authorized for issuance under this Plan but as to
which no Options or other Awards have then been granted (including the
number of shares automatically added to the Plan on an annual basis as provided
for in Section 3(i) and (ii)), or that

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have been returned to this Plan upon
cancellation or expiration of an Option or an Award, as well as the price per
Share of Optioned Stock or of other Shares subject to an outstanding Award,
shall be proportionately adjusted for any change in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other change in the number of
issued Shares effected without receipt of consideration by the Company (not
counting Shares issued upon conversion of convertible securities of the Company
as “effected without receipt of consideration”). Such adjustment shall be made
by the Board and shall be final, binding, and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
consequent adjustment shall be made with respect to, the number or price of
Shares subject to this Plan.

     (b)  Change in Control. The Administrator may, in its discretion,
determine at any time from and after the grant of an Award the effect that a
Change in Control shall have upon the Award; provided, however, that a Change
in Control shall not have the effect of impairing the rights of any Grantee
under any then-outstanding Award without his or her prior written consent.
Without limiting the foregoing sentence, the Administrator may determine that
upon a Change in Control, an Option:

		
	 	     (i) shall become fully vested and exercisable either for a
limited period following the Change in Control or for the
remainder of the Option’s term;

		
	 	     (ii) shall terminate upon or after a specified period
following the Change in Control;

		
	 	     (iii) shall be cancelled in exchange for cash in the amount
of the excess of the fair market value of the Optioned Shares over
the exercise price upon termination; or

		
	 	     (iv) shall be treated as provided under a combination of
clauses (i) through (iii), or shall be so treated only if not
adequately assumed (or substituted for) by a surviving or
successor person or entity in the transactions or events that give
rise to the Change in Control.

For purposes of this Section 14(b), (A) the occurrence of any of the foregoing
clauses (i), (ii), (iii) or (iv) shall not constitute an impairment of the
rights of any Optionee and (B) the “Administrator” shall be the Administrator
as constituted before the Change in Control occurs.

     15.     Amendments; Termination. The Board may at any time amend, alter,
suspend, discontinue or terminate this Plan, but no such action shall impair
the rights of any Grantee under any then-outstanding Award without his or her
prior written consent.

     16.     Securities Regulation Requirements.

     (a)  Compliance with Rule. In general, Shares shall not be issued pursuant
to the exercise of an Option or pursuant to any other Award unless the exercise
of the Option or other Award

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and issuance of the Shares comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, the requirements of any stock
exchange or national market system upon which the Shares may then be listed,
and the requirements of any regulatory body having jurisdiction.

     (b)  Optionee Investment Representation. As a condition to the exercise of
an Option, the Company may require the person exercising the Option to
represent and warrant that the Shares are being purchased only for investment
and without any present intention to sell or distribute the Shares if, in the
opinion of counsel for the Company, such a representation is required by law.

     17.     Written Agreements. Awards shall be evidenced by written agreements
in a form the Administrator approves from time to time. The written agreement
shall designate an Option as either an Incentive Stock Option or a Nonstatutory
Stock Option. Delay in executing a written agreement shall not affect the date
of grant of an Option; however, an Option may not be exercised until a written
agreement has been executed by the Company and the Optionee.

     18.     Shareholder Approval. This Plan is subject to approval by the
shareholders of the Company within 12 months after the Board initially adopts
this Plan. Shareholder approval shall be obtained in the degree and manner
required under applicable state and federal law and the rules of any stock
exchange or national market system upon which the Common Stock is listed.

     19.     No Employment Rights. This Plan does not confer upon any Grantee any
right with respect to continuation of employment or consulting relationship
with the Company, nor shall it interfere in any way with the Company’s right to
terminate his or her employment or consulting relationship at any time, with or
without cause.

     20.     Term of Plan. This Plan shall become effective upon the earlier to
occur of the initial adoption by the Board or initial approval by the
shareholders of the Company, as described in Section 18. It shall continue in
effect until terminated by the Board pursuant to Section 15, except that no
ISOs shall be granted on or after the 10th anniversary of the later of (a) the
date when the Board adopted the Plan or (b) the date when the Board adopted the
most recent increase in the number of Shares available under Section 3 that was
approved by the shareholders of the Company.

     21.     Glossary. The following definitions apply for purposes of this Plan:

     (a)  “Administrator” means the Board or a committee appointed by the Board
under Section 4.

     (b)  “Award” means any stock option, stock appreciation right, stock award,
stock units award, performance award, or other stock-based award granted under
the Plan.

     (c)  “Board” means the Board of Directors of the Company.

     (d)  “Change in Control” means a change in ownership or control of the
Company by any of:

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	 	     (i) a merger or consolidation in which the holders of stock
possessing a majority of the voting power in the surviving entity
(or a parent of the surviving entity) did not own a majority of
the Common Stock immediately before the transaction;

		
	 	     (ii) the sale of all or substantially all of the Company’s
assets to any other person or entity (other than a Subsidiary);

		
	 	     (iii) the liquidation or dissolution of the Company;

		
	 	     (iv) the direct or indirect acquisition by any person or
related group of persons of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than 50% of the total combined voting power of the
Company’s outstanding securities pursuant to a tender or exchange
offer made directly to the Company’s shareholders that the Board
does not recommend that the shareholders accept, or

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

     (e)  “Code” means the Internal Revenue Code of 1986, as amended.

     (f)  “Committee” means the committee designated by the Board of Directors,
which is authorized to administer the Plan, as described in Section 4 hereof.

     (g)  “Common Stock” means the common stock of the Company.

     (h)  “Company” means Marvell Technology Group Ltd., a Bermuda corporation.

     (i)  “Consultant” means any person, other than an Employee, who is engaged
by the Company or any Parent or Subsidiary to perform consulting or advisory
services.

     (j)  “Continuous Service” means that an Optionee’s employment and/or
consulting relationship with the Company or a Parent or Subsidiary or service
as an Outside Director is not interrupted or terminated. Continuous Service is
not interrupted by (i) any leave of absence approved by the Company, (ii)
transfers between locations of the Company or between the
Company, a Parent, a Subsidiary, or any successor, or (iii) changes in
status from Employee to Consultant or Outside Director or from Consultant or
Outside Director to Employee

     (k)  “Outside Director” means a member of the Board who is not a common law
employee of the Company or a Parent or Subsidiary.

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     (l)  “Employee” means any person employed by the Company or any Parent or
Subsidiary of the Company.

     (m)  “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (n)  “Fair Market Value” means, as of any date, the value of common Stock
determined as follows:

		
	 	     (i) If the Common Stock is quoted on an established stock
exchange or national market system, including without limitation
the National Association of Securities Dealers, Inc. Automated
Quotation (“NASDAQ”) National Market System, Fair Market Value
shall be the closing sales price (or the closing bid, if no sales
are reported) as quoted on that exchange or system for the day of
the determination, as reported in The Wall Street Journal or an
equivalent source, or if the determination date is not a trading
day, then on the most recent preceding trading day;

		
	 	     (ii) If the Common Stock is quoted on NASDAQ (but not on the
National Market System) or regularly quoted by a recognized
securities dealer but selling prices are not reported, Fair Market
Value shall be the mean between the high bid and low asked prices
for the Common Stock on the day of the determination, or on the
most recent preceding trading day if the determination date is not
a trading day; or

		
	 	     (iii) In the absence of an established market for the Common
Stock, Fair Market Value shall be determined by the Administrator.

     (o)  “Grant Agreement” means a written document memorializing the terms and
conditions of an Award granted pursuant to the Plan and shall incorporate the
terms of the Plan.

     (p)  “Grantee” means the Employee, Consultant or Outside Director who
receives an Award.

     (q)  “Incentive Stock Option” or “ISO” means an Option intended to qualify
as an “incentive stock option” within the meaning of, and to the extent
otherwise permitted by, Section 422 of the Code.

     (r)  “Nonstatutory Stock Option” or “NSO” means an Option not intended to
qualify as an ISO.

     (s)  “Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

     (t)  “Option” means a stock option granted pursuant to this Plan.

     (u)  “Optioned Stock” means the Common Stock subject to an Option.

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     (v)  “Optionee” means the Employee, Consultant or Outside Director who
receives an Option and includes any person who owns all or any part of an
Option, or who is entitled to exercise an Option, after the death or disability
of an Optionee.

     (w)  “Parent” means a “parent corporation,” present or future, as defined
in Section 424(e) of the Code.

     (x)  “Plan” means this Amended and Restated 1995 Marvell Technology Group
Ltd. Stock Option Plan.

     (y)  “Share” means a share of the Common Stock, as adjusted in accordance
with Section 14(a).

     (z)  “Subsidiary” means a “subsidiary corporation,” present or future, as
defined in Section 424(f) of the Code.

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APPENDIX TO THE AMENDED AND

RESTATED 1995 STOCK OPTION PLAN

Of MARVELL TECHNOLOGY GROUP LTD.

IN RESPECT OF ISRAELI EMPLOYEES

	1.	 	Purpose
	 
	 	 	The purpose of this appendix is to modify, to the extent set forth
herein, the Amended and Restated 1995 Marvell Technology Group Ltd. Stock
Option Plan (the “Plan”) in respect of the Israeli employees of Marvell
Technology Group Ltd. and its affiliates and subsidiaries who are
eligible to participate in the Plan in accordance with its terms, in
order to reflect the specific requirements of the Israeli law.
	 
	2.	 	Defined Terms

	 	(a)	 	Capitalized terms used but not defined herein shall have the
meanings provided in Section 21 of the Plan.
	 
	 	(b)	 	In addition, in this Appendix, the following terms shall have
the meanings set forth beside them:

	 	 	 
	“102 Provisions”	 	
The provisions of section 102 of the Ordinance and
of the Income Tax Rules (Tax Relief in Allocating
Shares to Employees), 5749-1989, as they shall
apply from time to time on shares and options
issued hereunder, including the Special Conditions;
	 	 	 
	“Effective Date”	 	
The latest of the date the Options were issued or
the date of the Income Tax Commissioner approval
that the Plan satisfies the Special Conditions;
	 	 	 
	“Employer”	 	
The Company, any of its Subsidiaries or its Parent
employing Israeli Employees;
	 	 	 
	“Israeli Employees”	 	
Employees subject to taxation in Israel;
	 	 	 
	“Trustee”	 	
Galileo Technology Ltd., or in the alternate, the
Trust Company of Investek Bank, or any other
trustee who shall replace same by the Board for the
purposes of this Plan;
	 	 	 
	“Ordinance”	 	
The Income Tax Ordinance (New Version), 5721-1961;
	 	 	 
	“Special Conditions”	 	
Special conditions set by the Israeli Income Tax
Commissioner in connection with the issuance of the
Options hereunder, by the power vested in him/her
under section 102 of the Ordinance, if

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and to the extent the Commissioner shall so set;
	 	 	 
	“Tax Lockup Period”	 	
Two years following the Effective Date or such
other period of time in accordance with the 102
Provisions, as they shall be amended from time to
time.

	 	(c)	 	The Israeli Employees shall be entitled to exercise their
options in accordance with the terms of the Plan, subject to the
terms of this Appendix. In the event of any contradiction between
any term of this Appendix and any term of the Plan, the provisions
of this Appendix shall override with respect to the Israeli
Employees, in respect of whom this Appendix shall constitute an
integral part of the Plan and references to the Plan in respect of
the Israeli Employees shall be interpreted accordingly.

	3.	 	Special Conditions

	 	(a)	 	The Company shall apply to the Income Tax Commissioner to
approve the Trustee and the Plan under the 102 Provisions. Subject
to the approval of this Plan by the Israeli Income Tax Commissioner,
the Special Conditions shall apply to the plan and to this Appendix.
	 
	 	(b)	 	The Administrator shall exercise its discretion under the
Plan in accordance with the terms of this Appendix.

	4.	 	Eligibility
	 
	 	 	Options shall not be granted to any Israeli Employee who is, or on giving
effect to such grant, will become, the holder of a controlling interest
(‘baal shlita’) in the Company, as defined in section 32(9) of the
Ordinance.
	 
	5.	 	Trust

	 	(a)	 	The Options and the Shares shall be issued directly in the
name of the Trustee and shall be held in escrow by the Trustee for
the Israeli Employees’ benefit, for no less then the Tax Lockup
Period, all according to the terms of this Appendix.
	 
	 	(b)	 	In the event that bonus shares shall be issued on account of
the Shares, such bonus shares shall be issued by the Company to the
Trustee. The 102 Provisions shall apply to such bonus shares for all
purposes.
	 
	 	(c)	 	The Trustee shall be entitled to set additional exercise
procedures to those described in the Plan, as the Trustee shall see
fit, provided that the Trustee has given the Company prior written
notice of any such procedures.

13

 

	6.	 	Taxes

	 	(a)	 	The Israeli Employees shall be taxed in respect of the
Options in accordance with the provisions of the Ordinance,
including the 102 Provisions. The Israeli Employee will not be
entitled to the exemption from tax contained in sections 95 or 97(a)
of the Ordinance.
	 
	 	(b)	 	Without derogating from section 9(g) of the Plan, any tax
imposed in respect of the Options and/or the Shares and/or the sale
and/or the transfer of the Options and/or the Shares shall be borne
solely by the Israeli Employee, and in the event of the death of the
Israeli Employee, by the Israeli Employee’s heirs or successors. The
Employer, shall not bear the aforementioned taxes, directly or
indirectly, nor shall the Employer be required to gross such tax up
in the Israeli Employee’s salaries or remuneration. The imposed tax
shall be paid by the Israeli Employee or deducted, on the date such
tax is payable, from the sale consideration paid to the Trustee by
the Israeli Employee, as applicable.
	 
	 	(c)	 	At the end of the Tax Lockup Period, the Israeli Employee (or
the Israeli Employee’s heirs or successors) shall be entitled at any
time to instruct the Trustee to transfer the Options or the Shares
to which such Israeli Employee is entitled to the Israeli Employee
or its nominees, or, if appropriate, to sell the Shares and pay the
consideration received to the Israeli Employee.
	 
	 	 	 	Subject to the 102 Provisions, the Trustee shall not transfer
the Options and/or the Shares to the Israeli Employee’s name, and
shall not transfer the consideration received from the sale of the
Shares to the Israeli Employee, unless one of the following
conditions shall be fulfilled:

	 	(i)	 	The Israeli Employee has provided the Trustee
with certification from the assessing officer that the tax has
been paid; or
	 
	 	(ii)	 	The Israeli Employee has paid the Trustee an
amount equal to 30% of the ‘consideration’, as defined in
section 102 of the Ordinance (the “Taxable Consideration”) for
such sale, and the Trustee has reviewed the manner of
calculating the payable amount and is fully satisfied that the
calculation was performed lawfully; or
	 
	 	(iii)	 	The Trustee has deducted an amount equal to 30%
of the Taxable Consideration from the consideration received
from the sale of the Shares.

	 	(d)	 	The effects of any future amendment to the tax arrangements
which apply to the issuance of securities to the Israeli Employees,
shall apply to the Israeli Employees in accordance with such
provisions of law, and the Israeli Employees shall bear the full
cost thereof, unless the modified arrangement expressly provides
otherwise.

14

 

	 	(e)	 	Each Israeli Employee shall indemnify the Employer and/or the
Trustee, immediately upon receipt of notice from the Employer and/or
the Trustee, for any amount (including interest and/or fines of any
type and/or linkage differentials in respect of tax and/or withheld
tax) payable by such Israeli Employee under law (including under the
102 Provisions), and which has been paid by the Employer or the
Trustee or which the Employer or the Trustee are required to pay by
the tax authorities.
	 
	 	(f)	 	Should the Israeli Amendment of Tax Law Bill 2000 (or any
other substantially similar draft legislation) (the “New Law”) enter
into effect, the Board shall be entitled, at its absolute
discretion, to order the Trustee to make an application to the
Israeli Tax Commission in order to request that the provisions set
out in the New Law, which replace the 102 Provisions, shall apply to
the Israeli Employees, regarding either existing or future
allotments, as shall be determined in the New Law.

	7.	 	Miscellaneous

	 	(a)	 	The Israeli Employees shall sign any document required by the
Trustee or the Income Tax Commission to give effect to the
provisions of this Appendix.
	 
	 	(b)	 	Without derogating section 19 of the Plan, it is hereby
acknowledged that the Options and/or the Exercise Shares are
extraordinary, one-off benefits granted to the Offerees, and are not
and shall not be deemed a salary component for any purpose
whatsoever, including in connection with calculating severance
compensation under the Severance Pay Law, 5723-1963 and the
regulations promulgated thereunder.
	 
	 	(c)	 	The grant of Options to each Israeli Employee shall be made
in consideration of a waiver on the part of such Israeli Employee of
a portion of the Israeli Employee’s salary in the amount of NIS 1.
	 
	 	(d)	 	In the event of a change in control of the Company is
proposed during the Tax Lock Up Period, the consummation which will
cause the breach of the terms of the 102 Provisions, the Company
will use its best efforts to apply to the Israeli Tax Authorities to
obtain a pre-ruling to regulate the tax treatment applicable to the
Options in the context of the proposed transaction.
	 
	 	(e)	 	Except as expressly provided in this Appendix, the provisions
of this Appendix do not supercede any provisions of the Plan, and
the provisions of the Plan shall govern all Options granted to
Israeli Employees.

15<PAGE>

                                                                    EXHIBIT 10.1
                                                                [EXECUTION COPY]

================================================================================

                                 [JPMORGAN LOGO]

                                CREDIT AGREEMENT

                                   dated as of

                                  June 27, 2003

                                      among

                                QUIKSILVER, INC.
                                 NA PALI, S.A.S.
                              QUIKSILVER JAPAN K.K.
                          UG MANUFACTURING CO. PTY LTD.
                                  as Borrowers,

                            The Lenders Party Hereto

                                       and

                              JPMORGAN CHASE BANK,
                             as Administrative Agent

                         UNION BANK OF CALIFORNIA, N.A.,
                  as Syndication Agent and Joint Lead Arranger

                               FLEET NATIONAL BANK
                              BANK OF AMERICA, N.A.
                              as Syndication Agents

                         U.S. BANK NATIONAL ASSOCIATION
                             as Documentation Agent

                          J.P. MORGAN SECURITIES INC.,
                   as Sole Bookrunner and Joint Lead Arranger

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        Page
<S>                                                                                     <C>
ARTICLE 1.

DEFINITIONS.........................................................................      1
   1.1   Defined Terms..............................................................      1
   1.2   Other Definitional Provisions..............................................     18

ARTICLE 2.

AMOUNT AND TERMS OF LOANS AND LETTERS OF CREDIT; COMMITMENT AMOUNTS.................     19
   2.1A  Revolving Loans and Letters of Credit; Loan Commitment Amounts.............     19
   2.1B  Swing Line Loans; Swing Line Commitment....................................     23
   2.2   Letters of Credit..........................................................     25
   2.3   Optional Prepayments; Optional Commitment Reductions.......................     30
   2.4   Mandatory Prepayments......................................................     31
   2.5   Conversion and Continuation Options........................................     31
   2.6   Minimum Amounts of Tranches................................................     32
   2.7   Interest Rates and Payment Dates...........................................     32
   2.8   Computation of Interest and Fees...........................................     33
   2.9   Inability to Determine Interest Rate.......................................     34
   2.10  Pro Rata Treatment and Payments............................................     34
   2.11  Illegality.................................................................     34
   2.12  Increased Costs............................................................     35
   2.13  Taxes......................................................................     36
   2.14  Indemnity..................................................................     37
   2.15  Unused-Commitment Fees.....................................................     37
   2.16  Mitigation of Costs........................................................     38
   2.17  Quiksilver Europa Equity Pledge............................................     38
   2.18  Determination of US Dollar Equivalent......................................     39
   2.19  Break Funding Payments.....................................................     39

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES......................................................     39
   3.1   Organization and Good Standing.............................................     39
   3.2   Power and Authority........................................................     40
   3.3   Validity and Legal Effect..................................................     40
   3.4   No Violation of Laws or Agreements.........................................     40
   3.5   Title to Assets; Existing Encumbrances.....................................     40
   3.6   Taxes and Assessments......................................................     40
   3.7   Litigation and Legal Proceedings...........................................     41
   3.8   Accuracy of Financial Information..........................................     41
   3.9   Accuracy of Other Information..............................................     41
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                      <C>
   3.10  Compliance with Laws Generally.............................................     41
   3.11  ERISA Compliance...........................................................     42
   3.12  Environmental Compliance...................................................     42
   3.13  Federal Regulations........................................................     43
   3.14  Fees and Commissions.......................................................     43
   3.15  Solvency...................................................................     43
   3.16  Investment Company Act; Other Regulations..................................     43
   3.17  Nature of Business.........................................................     44
   3.18  Ranking of Loans...........................................................     44
   3.19  Subsidiaries...............................................................     44

ARTICLE 4.

CONDITIONS PRECEDENT................................................................     44
   4.1   Conditions to Closing......................................................     44
   4.2   Conditions to Each Loan or Letter of Credit................................     45
   4.3   Conditions Susequent.......................................................     46

ARTICLE 5.

AFFIRMATIVE COVENANTS...............................................................     47
   5.1   Financial Statements.......................................................     47
   5.2   Certificates; Other Information............................................     48
   5.3   Payment of Obligations.....................................................     49
   5.4   Conduct of Business; Maintenance of Existence and Licenses; Contractual
           Obligations..............................................................     49
   5.5   Maintenance of Property; Insurance.........................................     49
   5.6   Inspection of Property; Books and Records; Discussions.....................     50
   5.7   Environmental Laws.........................................................     50
   5.8   Use of Proceeds............................................................     51
   5.9   Compliance with Laws, Etc..................................................     51
   5.10  Guarantees, Etc............................................................     51

ARTICLE 6.

NEGATIVE COVENANTS..................................................................     52
   6.1   Financial Condition Covenants..............................................     52
   6.2   Limitation on Indebtedness.................................................     52
   6.3   Limitation on Liens........................................................     53
   6.4   Limitation on Fundamental Changes..........................................     54
   6.5   Limitation on Sale of Assets...............................................     55
   6.6   Limitation on Dividends....................................................     55
   6.7   Limitation on Investments, Loans and Advances..............................     55
   6.8   Transactions with Affiliates...............................................     56
   6.9   Fiscal Year................................................................     56
   6.10  Sale-Leaseback Transactions................................................     56
   6.11  Unfunded Liabilities.......................................................     56
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                      <C>
   6.12  Hedging Obligations........................................................     57

ARTICLE 7.

EVENTS OF DEFAULT...................................................................     57

ARTICLE 8.

THE AGENT...........................................................................     60
   8.1   Appointment................................................................     60
   8.2   Delegations of Duties......................................................     60
   8.3   Exculpatory Provisions.....................................................     60
   8.4   Reliance by the Agent......................................................     60
   8.5   Notice of Default..........................................................     61
   8.6   Non-Reliance on the Agent and Other Lenders................................     61
   8.7   Indemnification............................................................     62
   8.8   The Agent in Its Individual Capacity.......................................     62
   8.9   Successor Agent............................................................     62
   8.10  Any Syndication Agent and the Documentation Agent..........................     63

ARTICLE 9.

MISCELLANEOUS.......................................................................     63
   9.1   Amendments and Waivers.....................................................     63
   9.2   Notices....................................................................     64
   9.3   No Waiver; Cumulative Remedies.............................................     64
   9.4   Survival of Representations and Warranties.................................     64
   9.5   Payment of Expenses and Taxes..............................................     65
   9.6   Successors and Assigns; Participations; Purchasing Lenders.................     65
   9.7   Adjustments; Setoff........................................................     68
   9.8   Counterparts...............................................................     69
   9.9   Severability...............................................................     69
   9.10  Integration................................................................     69
   9.11  GOVERNING LAW..............................................................     69
   9.12  WAIVER OF JURY TRIAL.......................................................     69
   9.13  Acknowledgements...........................................................     70
   9.14  Intercreditor Agreement....................................................     70
   9.15  Headings...................................................................     70
   9.16  Copies of Certificates, Etc................................................     70
   9.17  Confidentiality............................................................     70
</TABLE>

                                      iii

<PAGE>

Exhibits

<TABLE>
<S>      <C>
A-1      Revolving Note
A-2      Swing Line Note
B        Assignment and Assumption
C        No Default/Representation Certificate
D-1      Form of New Lender Supplement
D-2      Form of Commitment Increase Supplement
E        Covenant Compliance Certificate
F        Continuation Notice
G        Revolving Loan Borrowing Notice
H-1      Swing Line Borrowing Notice
H-2      Swing Line Loan Participation Certificate
I        Intercreditor Agreement
J        Security Agreement
K        Guarantee
L        Guarantor Security Agreement
</TABLE>

Schedules

<TABLE>
<S>      <C>
2.2      Letters of Credit Deemed to be Letters of Credit Issued on the Closing Date
3.1      Jurisdictions of Organization or Qualification to Conduct Business
3.5A     Liens Against Assets of Quiksilver and Each Subsidiary
3.5B     Operating Names/Trade Names
3.7      Litigation
3.19     Subsidiaries
6.2      Existing Indebtedness and Other Credit Facilities
6.7      Existing Investments
</TABLE>

                                       iv

<PAGE>

         THIS CREDIT AGREEMENT, dated as of June 27, 2003, among (1) QUIKSILVER,
INC., a Delaware corporation ("Quiksilver"), NA PALI, S.A.S., QUIKSILVER JAPAN
K.K., and UG MANUFACTURING CO. PTY LTD (individually, a "Borrower" and
collectively, the "Borrowers"), (2) the several banks and other financial
institutions from time to time parties to this Agreement (the "Lenders"), (3)
JPMORGAN CHASE BANK, as administrative agent for the Lenders hereunder (in such
capacity, the "Agent"), (4) UNION BANK OF CALIFORNIA, N.A., as Syndication Agent
and Joint Lead Arranger, (5) BANK OF AMERICA, N.A. and FLEET NATIONAL BANK, as
Syndication Agents, (6) U.S. BANK NATIONAL ASSOCIATION, as Documentation Agent,
and (7) J.P. MORGAN EUROPE LIMITED, as Multicurrency Agent.

         The parties hereto hereby agree as follows:

                                   ARTICLE 1.

                                   DEFINITIONS

         1.1      Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:

         "ABR" and "Alternate Base Rate": the highest of (i) the rate of
interest publicly announced by the Agent as its prime rate in effect at its
principal office in New York City (the "Prime Rate"), (ii) the secondary market
rate for three-month certificates of deposit (adjusted for statutory reserve
requirements) plus 1% and (iii) the Federal Funds Effective Rate from time to
time plus 0.5%.

         "ABR Loans": the loans (or any portions thereof) at such time as they
(or such portions) are made and/or being maintained at a rate of interest based
upon the Alternate Base Rate.

         "Accountants": Deloitte & Touche, LLP, or such other firm of
independent certified public accountants of recognized national standing as
shall be selected by the Borrower and satisfactory to the Agent and the Majority
Lenders.

         "Accounts": the unpaid portion of any and all obligations owing to a
Grantor payable in US Dollars, arising out of the sale of Inventory by such
Grantor.

         "Acquisition": any transaction, or any series of transactions,
consummated after the Closing Date, in which Quiksilver or any Subsidiary (in
one transaction or in a series of transactions) (a) acquires any business or all
or substantially all of the assets of any Person or any division or business
unit thereof, whether through purchase of assets, merger or otherwise, (b)
directly or indirectly acquires control of at least a majority (in number of
votes) of the securities of a corporation which have ordinary voting power for
the election of directors or (c) directly or indirectly acquires control of a
majority ownership in any partnership or joint venture.

         "Adjusted LIBO Rate": The LIBO Rate as adjusted for statutory reserve
requirements for eurocurrency liabilities.

<PAGE>

                                                                               2

         "Administrative Questionnaire": an Administrative Questionnaire in a
form supplied by the Agent.

         "Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, either to (a)
vote securities having 5% or more of the ordinary voting power for the election
of directors (or the equivalent) of such Person or (b) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.

         "Agent": as defined in the preamble hereto.

         "Aggregate Credit Exposure": the sum of (i) the aggregate amount of all
Loans outstanding, (ii) the aggregate Letter of Credit Amount of all Letters of
Credit outstanding and (iii) the aggregate amount of unreimbursed drawings under
all Letters of Credit.

         "Aggregate Revolving Loan Commitment": the sum of the Revolving Loan
Commitments set forth on the signature pages hereto, or in the Assignment and
Assumption pursuant to which a Lender becomes a party hereto, as the same may be
adjusted from time to time pursuant to the provisions hereof. The aggregate
amount of the Revolving Loan Commitments as of the Closing Date is
US$170,000,000.

         "Agreement": this Credit Agreement, as amended, waived, supplemented or
otherwise modified from time to time.

         "Alternate Currency": any Approved Currency other than US Dollars.

         "Alternate Currency Equivalent": with respect to any Alternate
Currency, on any date of determination thereof, the amount of such Alternate
Currency which could be purchased with the amount of US Dollars involved in such
computation at the spot rate at which such Alternate Currency may be exchanged
into US Dollars as set forth on such date on (i) the applicable Reuters pages,
or (ii), if such rate is not set forth on such Reuters pages, on the applicable
Telerate Service pages, or (iii) if such rate does not appear on such Reuters or
Telerate Service pages, at the spot exchange rate therefor as determined by the
Agent, in each case as of 11:00 a.m. (London time or such other local time as
the Agent shall deem appropriate) on such date of determination thereof.

         "Alternate Currency Letter of Credit": any Letter of Credit denominated
in an Alternate Currency.

         "Alternate Currency Letter of Credit Amount": the Letter of Credit
Amount denominated in Alternate Currencies.

         "Alternate Currency Loan": any Revolving Loan denominated in an
Alternate Currency.

         "Alternate Currency Sublimit": as defined in Section 2.1A(a).

<PAGE>

                                                                               3

         "Applicable Margin": a percentage determined in accordance with the
pricing grid set forth below:

<TABLE>
<CAPTION>
     Loan
Leverage Level            Leverage Ratio            Applicable Margin
--------------            --------------            -----------------
<S>               <C>                               <C>
      1           (<  or = 1.00)                     1.125% per annum
      2           (>       1.00 < or = 1.25)         1.250% per annum
      3           (>       1.25 < or = 1.50)         1.375% per annum
      4           (>       1.50)                     1.500% per annum
</TABLE>

         "Applicable Commercial Letter of Credit Rate":

<TABLE>
<CAPTION>
     Loan                                           Applicable Commercial
Leverage Level            Leverage Ratio                   L/C Rate
--------------            --------------            ---------------------
<S>               <C>                               <C>
      1           (< or = 1.00)                       .28125% per annum
      2           (>      1.00 < or = 1.25)           .31250% per annum
      3           (>      1.25 < or = 1.50)           .37812% per annum
      4           (>      1.50)                       .45000% per annum
</TABLE>

         "Approved Currencies": US Dollars, Euros, Japanese Yen, Australian
Dollars and Pounds Sterling (each, an "Approved Currency"), and such other
currencies as shall be requested by Quiksilver to be an Approved Currency
hereunder subject to the approval of the Agent in its sole and absolute
discretion, in each case constituting freely transferable lawful money of the
country of issuance and in the case of each such currency (other than US
Dollars) is readily transferable and convertible into US Dollars in the London
interbank market.

         "Approved Fund": any Person (other than a natural person) that is
engaged in making, purchasing, holding or investing in bank loans and similar
extensions of credit in the ordinary course of its business and that is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an
entity or an Affiliate of an entity that administers or manages a Lender.

         "Approved Lending Office": for any Lender, its offices for LIBOR Loans,
ABR Loans and participations in Letters of Credit, specified below its signature
on the signature pages hereof or in the Assignment and Assumption pursuant to
which it became a party hereto, any of which offices may, upon 10 days' prior
written notice to the Agent and Quiksilver, be changed by such Lender.

         "Asset Disposition": the sale, sale and leaseback, transfer,
conveyance, exchange, long-term lease accorded sales treatment under GAAP or
similar disposition (including by means of a merger, consideration,
amalgamation, joint venture or other substantive combination) of any of the
Properties, business or assets (other than marketable securities, including
"margin stock" within the meaning of Regulation U, liquid investments and other
financial instruments but, including the assignment of any lease, license or
permit relating to the Properties) of the Borrower or any of its Subsidiaries to
any Person or Persons other than to the Borrower or any of

<PAGE>

                                                                               4

its Subsidiaries; provided that Asset Dispositions shall not include the sale of
Inventory in the ordinary course of business.

         "Assignment and Assumption": as assignment and assumption entered into
by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.6), and accepted by the Agent, in the form of Exhibit B or
any other form approved by the Agent.

         "Australian Dollars": freely transferable lawful money of Australia.

         "Availability Period": the period from and including the Closing Date
to but excluding the Revolving Loan Commitment Expiration Date.

         "Available Loan Commitments": the Aggregate Revolving Loan Commitment
minus the aggregate amount of all Loans and Letters of Credit outstanding.

         "Borrowing Date": (i) in respect of Revolving Loans, any Business Day
on which the Lenders shall make Revolving Loans to a Borrower pursuant to a
Borrowing Notice, and (ii) in respect of Letters of Credit, any Business Day on
which the Issuing Bank issues a Letter of Credit to a Borrower pursuant to a
Letter of Credit Request.

         "Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in the State of New York are authorized or required by
law to close and which, in the case of a LIBOR Loan, is a Eurodollar Business
Day.

         "Capital Expenditures": for any period, collectively, for any Person,
the aggregate of all expenditures which are made during such period (whether
paid in cash or accrued as liabilities), and all contractual commitments for
such expenditures which are entered into during such period (provided that if
any such commitment is included in one fiscal year, the actual payment in a
later fiscal year shall not be included in such later fiscal year), by such
Person, for property, plant or equipment and which would be reflected as
additions to property, plant or equipment on a balance sheet of such Person
prepared in accordance with GAAP (including all Capitalized Lease Obligations).

         "Capitalized Lease Obligations": obligations for the payment of rent
for any real or personal property under leases or agreements to lease that, in
accordance with GAAP, have been or should be capitalized on the books of the
lessee and, for purposes hereof, the amount of any such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.

         "Capital Stock": any and all shares, interests, Participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation), any and
all warrants, options or rights to purchase, or any other securities convertible
into, any of the foregoing.

         "Closing Date": June 27, 2003, provided that the conditions precedent
set forth in Section 4.1 have been satisfied.

         "Code": the Internal Revenue Code of 1986, as amended from time to
time.

<PAGE>

                                                                               5

         "Collateral": all of the property (tangible or intangible, but
excluding trademarks, trade names and other intellectual property rights) to be
subject to the lien or security interest to be created by any security
agreement, pledge agreement, assignment, mortgage, deed of trust, or other
security document heretofore or hereafter executed by the Borrower as security
for all or part of the Obligations.

         "Collateral Documents": the Security Agreement, the Quiksilver Europa
Equity Pledge, the QAPL Share Mortgage, all control agreements executed pursuant
to the Security Agreement, all Form UCC-1 Financing Statements and amendments
thereto filed in respect of the Collateral and all other documents encumbering
the Collateral or evidencing or perfecting a security interest therein that are
executed or filed in favor of the Agent for the benefit of the Lenders.

         "Commonly Controlled Entity": as to any Person, an entity, whether or
not incorporated, which is under common control with such Person within the
meaning of Section 4001 of ERISA or is part of a group which includes such
Person and which is treated as a single employer under Section 414 of the Code.

         "Consideration": with respect to any Acquisition, the aggregate
consideration, in whatever form (including cash payments, the principal amount
of promissory notes and Indebtedness assumed, and the fair market value of other
property delivered) paid, delivered or assumed by Quiksilver or any Subsidiary
for such Acquisition and the expenses associated therewith, including all
brokerage commissions, legal fees and similar expenses.

         "Continuation Notice": a request for continuation or conversion of a
Loan as set forth in Section 2.5, substantially in the form of Exhibit F hereto.

         "Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement or other undertaking to which
such Person is a party or by which it or any of its property is bound.

         "Covenant Compliance Certificate": a certificate of the Chief Financial
Officer of Quiksilver substantially in the form of Exhibit E hereto.

         "Credit Exposure": with respect to any Lender at any time, the sum of
the outstanding aggregate principal amount of such Lender's Loans and Letter of
Credit Exposure.

         "Currency": any Approved Currency.

         "Debt Offering": the issuance or sale of any debt securities by any
Borrower or any of its Subsidiaries.

         "Default": any of the events specified in Article 7, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

         "Domestic Subsidiary": each Subsidiary organized under the laws of the
United States or any state thereof.

<PAGE>

                                                                               6

         "EBITDA": for Quiksilver and its Subsidiaries on a consolidated basis,
for the fiscal quarter most recently ended and the immediately preceding three
fiscal quarters, Net Income after eliminating extraordinary gains and losses,
plus (a) provisions for income taxes, (b) depreciation and amortization and (c)
Interest Expense.

         "EMU Legislation": Legislative measures of the European Union for the
introduction of, changeover to or operation of the Euro in one or more member
states.

         "Environmental Control Statutes": as defined in Section 3.12(a).

         "Equity Offering": the sale or issuance (or reissuance) by a Borrower
or any Subsidiary of any equity interests or beneficial interests (common stock,
preferred stock, partnership interests, member interests or otherwise) or any
options, warrants, convertible securities or other rights to purchase such
equity interests or beneficial interests; provided, however, that the term
"Equity Offering" shall not include any such sale or issuance (or reissuance)
solely to officers, employees, directors and/or consultants of a Borrower and/or
any Subsidiary pursuant to one or more employee stock option or stock purchase
plans.

         "ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.

         "ERISA Affiliate": as to any Person, each trade or business including
such Person, whether or not incorporated, which together with such Person would
be treated as a single employer under Section 4001(a)(14) of ERISA.

         "Euro": The single currency of the European Union as constituted by the
Treaty on European Union and as referred to in EMU Legislation.

         "Eurodollar Business Day": a day (other than a Saturday or a Sunday) on
which banks are open for general business in London and New York; and if, on
that day, a payment in or a purchase of an Alternate Currency (other than Euro)
is to be made, the principal financial center of the home country for that
currency; and if, on that day, a payment in or a purchase of Euro is to be made,
the day is also a TARGET Day.

         "Event of Default": any of the events specified in Article 7, provided
that any requirement for the giving of notice, the lapse of time, or both, or
any other condition, has been satisfied.

         "Excluded Taxes": all taxes imposed on or by reference to the net
income of the Agent or any Lender or its Applicable Lending Office by any
Governmental Authority and all franchise taxes, taxes on doing business or taxes
measured by capital or net worth imposed on the Agent or on any Lender or its
Applicable Lending Office by any Governmental Authority.

         "Federal Funds Effective Rate": means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if

<PAGE>

                                                                               7

necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.

         "Fixed Charge Coverage Ratio": for Quiksilver and its Subsidiaries on a
consolidated basis for the fiscal quarter most recently ended and the
immediately preceding three fiscal quarters, the ratio of (a) EBITDA minus (i)
income taxes paid, minus (ii) Capital Expenditures to (b) Fixed Charges for such
period.

         "Fixed Charges": for Quiksilver and its Subsidiaries on a consolidated
basis, the sum of (i) Interest Expense and (ii) regularly scheduled principal
payments due within the immediately succeeding twelve months on Funded Debt
(excluding optional and mandatory prepayments due under Sections 2.3 and 2.4
hereof and the installment payable in 2005 of the deferred purchase price
payable by QAPL to the former shareholders of QIPL for the acquisition of the
stock of QIPL by QAPL), including the principal component of Capitalized Lease
Obligations.

         "Foreign Subsidiary": each Subsidiary other than a Domestic Subsidiary.

         "Funded Debt": the sum of the outstanding principal balance of all
Indebtedness of Quiksilver and its Subsidiaries described in clauses (i), (ii),
(iii) and (iv) of the definition of "Indebtedness" set forth herein.
Notwithstanding the foregoing, Funded Debt shall not include trade payables and
accrued expenses incurred by Quiksilver and its Subsidiaries in accordance with
customary practices and in the ordinary course of business of Quiksilver and its
Subsidiaries.

         "GAAP": generally accepted accounting principles in the United States
in effect from time to time. If, at any time, GAAP changes in a manner which
will materially affect the calculations determining compliance by Quiksilver
with any of the covenants in Section 6.1, such covenants shall continue to be
calculated in accordance with GAAP in effect prior to such changes in GAAP.

         "Governmental Authority": any nation or government, any federal, state
or other political subdivision thereof and any federal, state or local entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

         "Grantor": any Obligor that has granted liens and/or security interests
in its assets to secure the Obligations.

         "Guarantee": each guarantee made by a Guarantor in favor of the Agent
for the benefit of the Lenders, in the form of Exhibit K hereto, as the same may
be amended, modified or restated from time to time in accordance with the terms
hereof.

         "Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person (including
any bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counter-indemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such

<PAGE>

                                                                               8

primary obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds for the purchase or payment of any
such primary obligation or to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lesser of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by Quiksilver in good faith in a manner and with a
result reasonably satisfactory to the Majority Lenders.

         "Guarantor Collateral": all of the property (tangible or intangible) to
be subject to the lien or security interest to be created by any security
agreement, pledge agreement, assignment, mortgage, deed of trust or other
security document heretofore or hereafter executed by any Guarantor as security
for all or part of the Obligations or the Guarantees.

         "Guarantor Collateral Documents": the Guarantor Security Agreements,
all control agreements executed pursuant to the Guarantor Security Agreements,
all Form UCC-1 Financing Statements and amendments thereto filed in respect of
the Guarantor Collateral and all other documents encumbering the Guarantor
Collateral or evidencing or perfecting a security interest therein that are
executed or filed in favor of the Agent for the benefit of the Lenders.

         "Guarantors": each Subsidiary which executes a Guarantee in favor of
the Agent.

         "Guarantor Security Agreement": each security agreement made by a
Subsidiary in favor of the Agent for the benefit of the Lenders, in the form of
Exhibit L hereto, as the same may be amended, modified or restated from time to
time in accordance with the terms hereof.

         "Hedging Agreements": as defined in the definition of "Hedging
Obligations" in this Section 1.1.

         "Hedging Obligations": of any Person, any and all obligations of such
Person, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (i) any and all
agreements, devices or arrangements designed to protect at least one of the
parties thereto from the fluctuations of interest rates, commodity prices,
exchange rates or forward rates applicable to such party's assets, liabilities
or exchange transactions, including dollar- denominated or cross-currency
interest rate exchange agreements, forward currency exchange agreements,
interest rate cap or collar protection agreements, forward rate currency or
interest

<PAGE>

                                                                               9

rate options, puts and warrants or any similar derivative transactions ("Hedging
Agreements"), and (ii) any and all cancellations, buy-backs, reversals,
terminations or assignments of any of the foregoing.

         "Indebtedness": of any Person, (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property or services
(including, in the case of Quiksilver and its Subsidiaries, the deferred
purchase price payable by QAPL to the former shareholders of QIPL for the
acquisition of the stock of QIPL by QAPL), (ii) all obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments, (iii) all
indebtedness created or arising under any conditional-sale or other
title-retention agreement with respect to property acquired by such Person, (iv)
all Capitalized Lease Obligations of such Person, (v) all Hedging Obligations of
such Person, (vi) all obligations, contingent or otherwise, of such Person under
acceptance, letter of credit, airway release, steamship guaranty or similar
facilities, (vii) all Guarantee Obligations of such Person in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to secure a credit against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (i), (ii), (iii),
(iv), (v) or (vi) above, and (viii) all liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA.

         "Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.

         "Insolvent": pertaining to a condition of Insolvency.

         "Intercreditor Agreement": the Intercreditor Agreement dated as of June
27, 2003 between the Agent, on behalf of the Lenders, on the one hand, and the
Leasehold Improvement Lender, on the other hand, substantially in the form of
Exhibit I hereto, as it may be amended, modified or restated from time to time.

         "Interest Expense": as of any date, for the fiscal quarter most
recently ended and the immediately preceding three fiscal quarters, the
difference between (a) the sum of (i) the amount of all interest on Funded Debt
which was paid, payable and/or accrued for such period and (ii) all commitment,
standby letter of credit, commercial letter of credit or line of credit fees
paid, payable and/or accrued for such period to any lender in exchange for such
lender's commitment to lend and (b) the amount of all noncash interest expense
incurred by Quiksilver and its Subsidiaries in connection with Quiksilver's
acquisition of QIPL through QAPL.

         "Interest Payment Date": (a) as to any ABR Loan, the last day of each
January, April, July and October to occur while any such Loan is outstanding,
(b) as to any LIBOR Loan having an Interest Period of three months or less, the
last day of such interest Period, (c) as to any LIBOR Loan having an Interest
Period longer than three months, each day which is at the end of each three
month-period within such Interest Period after the first day of such Interest
Period and the last day of such Interest Period, and (d) for each of (a), (b)
and (c) above, the day on which any such Loan becomes due and payable in full or
is paid or prepaid in full.

         "Interest Period": with respect to any LIBOR Loan:

<PAGE>

                                                                              10

                  (a)      initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such LIBOR Loan and ending
one, two, three or six months thereafter, as selected by Quiksilver in its
Borrowing Notice or Continuation Notice, as the case may be, given with respect
thereto; and

                  (b)      thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Approved Currency Loan and
ending one, two, three or six months thereafter, as selected by Quiksilver by
irrevocable notice to the Agent not less than three Eurodollar Business Days
prior to the last day of the then current Interest Period with respect thereto;
provided, however, that, all of the foregoing provisions relating to Interest
Periods are subject to the following:

                           (i)      if any Interest Period pertaining to a LIBOR
         Loan would otherwise end on a day that is not a Business Day, such
         Interest Period shall be extended to the next succeeding Business Day
         unless the result of such extension would be to carry such Interest
         Period into another calendar month, in which event such Interest Period
         shall end on the immediately preceding Business Day;

                           (ii)     any Interest Period for any Loan that would
         otherwise extend beyond the date final payment is due on such Loan
         shall end on the date of such final payment; and

                           (iii)    any Interest Period pertaining to a LIBOR
         Loan that begins on the last Business Day of a calendar month (or on a
         day for which there is no numerically corresponding day in the calendar
         month at the end of such Interest Period) shall end on the last
         Business Day of a calendar month.

         "Inventory": that portion of any and all inventory of a Grantor that is
finished goods, raw materials or work in process.

         "Issuing Bank": as the context may require, (a) JPMorgan Chase Bank,
with respect to Letters of Credit issued by it or (b) any other Lender that
becomes an Issuing Bank pursuant to Section 2.2, with respect to Letters of
Credit issued by it, and in each case its successors in such capacity.

         "Japanese Yen": freely transferable lawful money of Japan.

         "Lease Expense": for any period, the aggregate minimum rental
obligations payable in respect of such period under leases of real and/or
personal property (net of income from subleases thereof), whether or not such
obligations are reflected as liabilities or commitments on a consolidated
balance sheet or in the notes thereto.

         "Leasehold Improvement Lender": Union Bank of California, N.A., in its
individual capacity, as lender of the Leasehold Improvement Loan, and any
successor or assigns thereof.

         "Leasehold Improvement Loan": the term loan in the original principal
amount of $12,300,000 made by the Leasehold Improvement Lender to Quiksilver and
referred to in the Intercreditor Agreement.

<PAGE>

                                                                              11

         "Lender" or "Lenders": as defined in the preamble hereto and in Section
8.8. Each such term shall include any Lender in its capacity as an Issuing Bank.

         "Letter of Credit": as defined in Section 2.1A(a).

         "Letter of Credit Amount": the stated maximum amount available to be
drawn under a particular Letter of Credit, airway release or steamship guaranty,
as such amount may be reduced or reinstated from time to time in accordance with
the terms of such Letter of Credit.

         "Letter of Credit Disbursement": a payment made by the applicable
Issuing Bank pursuant to a Letter of Credit.

         "Letter of Credit Exposure": at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time, and (b) the
aggregate amount of all Letter of Credit Disbursements under Letters of Credit
that have not yet been reimbursed by or on behalf of the Borrowers at such time.
The Letter of Credit Exposure of any Lender at any time shall be its Loan
Commitment Percentage of the total Letter of Credit Exposure.

         "Letter of Credit Request": a request by a Borrower for the issuance of
a Letter of Credit, on an Issuing Bank's standard form of standby or commercial
letter of credit application and agreement, as applicable, and containing terms
and conditions satisfactory to such Issuing Bank in its sole discretion.

         "LIBO Rate": means, (a) with respect to any eurodollar borrowing in
Pounds Sterling or US Dollars for any Interest Period, the rate appearing on
Page 3740 or Page 3750, as the case may be, of the Dow Jones Market Service (or
on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to Pounds Sterling or US Dollar deposits (as
applicable) in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period (or in
the case of Pounds Sterling, on the first day of such Interest Period), as the
rate for Pounds Sterling or US Dollar deposits (as applicable) with a maturity
comparable to such Interest Period and (b) with respect to any eurodollar
borrowing in Euros for any Interest Period, the rate appearing on Page 248 of
the Dow Jones Market Service (it being understood that this rate is the Euro
interbank offered rate (known as the "EURIBOR Rate") sponsored by the Banking
Federation of the European Union (known as "FBE") and the Financial Markets
Association (known as "ACI")) at approximately 10:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period, as the rate for
deposits in Euro with a maturity comparable to such Interest Period. In the
event that such rate is not available at such time for any reason, then the
"LIBO Rate" with respect to such eurodollar borrowing for such Interest Period
shall be the rate at which US Dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal London office of
the Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period (or in the case of Pounds Sterling, on the
first day of such Interest Period).

<PAGE>

                                                                              12

         "LIBOR Loan": any Loan bearing interest based upon the Adjusted LIBO
Rate.

         "LIBOR Reserve Requirements": for any day as applied to a LIBOR Loan,
the aggregate (without duplication) of the maximum rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of the
Federal Reserve System.

         "Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement,
any Capitalized Lease Obligation having substantially the same economic effect
as any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction in respect of any
of the foregoing).

         "Loan": any loan made by the Lenders to the Borrowers pursuant to this
Agreement.

         "Loan Commitment Increase Supplement": a supplement to this Agreement
in the form of Exhibit D-2 hereto.

         "Loan Documents": this Agreement, the Notes, any Letter of Credit
Requests that are executed by the Borrower, the Letters of Credit, the
Collateral Documents, the Guarantor Collateral Documents, the Guarantees, the
Intercreditor Agreement, any Hedging Agreements and any other agreement executed
by an Obligor in connection herewith or therewith, including UCC-1 Financing
Statements and any fee letters, as such agreements and documents may be amended,
supplemented and otherwise modified from time to time in accordance with the
terms hereof.

         "Majority Lenders": Lenders with outstanding Loans and/or
participations in outstanding Letters of Credit and/or unreimbursed drawings
under Letters of Credit having an unpaid principal balance equal to or more than
51% of the sum of (i) the unpaid principal balance of all Loans outstanding and
(ii) the Letter of Credit Exposure, excluding from such calculation Lenders
which have failed or refused to fund a Loan or a Letter of Credit drawing (and
as to which such failure or refusal is continuing) when required to do so;
provided, however, that, if no such Loans, Letters of Credit or drawings are
outstanding, then "Majority Lenders" shall mean Lenders having Loan Commitments
equal to or more than 51% of the Aggregate Loan Commitment, excluding from such
calculation Lenders which have failed or refused to fund a Loan or a Letter of
Credit drawing (and as to which such failure or refusal is continuing) when
required to do so.

         "Margin Stock": as defined in Regulation U.

         "Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition or prospects (financial or otherwise)
of Quiksilver and its Subsidiaries taken

<PAGE>

                                                                              13

as a whole, (b) the ability of Quiksilver, any Material Domestic Subsidiary or
any Material Foreign Subsidiary to perform its respective obligations under the
Loan Documents or (c) the validity or enforceability of the Loan Documents or
the rights or remedies of the Agent and the Lenders hereunder or thereunder.

         "Material Domestic Subsidiary": as of any date, a Domestic Subsidiary
that (a) has a net worth (excluding in the determination thereof any
Indebtedness of such Domestic Subsidiary to Quiksilver or another Subsidiary) of
at least 5% of Quiksilver's consolidated net worth as of the last day of the
most recently ended fiscal quarter of Quiksilver, (b) has annual revenue (or
annualized revenue in the case of any Person that has not been a Subsidiary for
a full year) of at least 5% of Quiksilver's consolidated revenue for the
12-month period ended as of the most recently ended fiscal quarter of Quiksilver
or (c) has annual net income (or annualized net income in the case of any Person
that has not been a Subsidiary for a full year) of at least 5% of Quiksilver's
consolidated net income for the 12-month period ended as of the most recently
ended fiscal quarter of Quiksilver.

         "Material Foreign Subsidiary": a Foreign Subsidiary having at any time
a net worth equal to 10% or more of Quiksilver's consolidated net worth.

         "Maturity Date": the Revolving Loan Commitment Expiration Date.

         "Maximum Leverage Ratio": for Quiksilver and its Subsidiaries on a
consolidated basis, the ratio of Funded Debt to EBITDA.

         "Multicurrency Agent": J.P. Morgan Europe Limited.

         "Multiemployer Plan": a plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.

         "Na Pali": Na Pali, S.A.S., a French corporation and a Subsidiary of
Quiksilver.

         "Net Income": for Quiksilver and its Subsidiaries on a consolidated
basis, net income as determined in accordance with GAAP.

         "Net Proceeds": With respect to any Equity Offering or Debt Offering by
a Borrower or any Subsidiary, the net amount equal to the aggregate amount
received in cash (including any cash received by way of deferred payment
pursuant to a note receivable, other noncash consideration or otherwise, but
only as and when such cash is so received) in connection with such Equity
Offering or Debt Offering, minus the reasonable fees, commissions and other
out-of-pocket expenses incurred by such Borrower or such Subsidiary, as
applicable, in connection with such Equity Offering or Debt Offering (other than
amounts payable to Affiliates of the Person making such Equity Offering or Debt
Offering).

         "New Lender": as defined in Section 2.1A(b)(2).

         "New Lender Supplement": as defined in Section 2.1A(b)(2).

<PAGE>

                                                                              14

         "Note": a Revolving Note or the Swing Line Note, as the case may be,
and "Notes" shall mean the Revolving Notes and the Swing Line Note.

         "Notification Instruction": as defined in Section 2.2(b).

         "Obligations": the unpaid principal of and interest on (including
interest accruing after the maturity of the Revolving Loans and the Swing Line
Loans, and interest accruing on or after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrowers, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and whether or not at a
default rate) the Notes, the obligation to reimburse drawings under Letters of
Credit (including the contingent obligation to reimburse any drawings under
outstanding Letters of Credit), and all other obligations and liabilities of the
Borrowers to the Agent and the Lenders, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, this Agreement, the Notes, the
Letters of Credit, any other Loan Document and any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including all reasonable fees and disbursements of counsel, and the
allocated reasonable cost of internal counsel, to the Agent or the Lenders that
are required to be paid by the Borrowers pursuant to the terms of this
Agreement) or otherwise.

         "Obligor": the Borrowers, each Guarantor and any other Person (other
than a Lender) obligated under any Loan Document.

         "Organic Documents": relative to any entity, its certificate of
incorporation, articles of incorporation, certificate of formation, certificate
of organization or partnership agreement, and its by-laws, operating agreement
or limited liability company agreement, or the equivalent documents of any
entity.

         "Participating Member State": any member state of the EMU which has the
Euro as its lawful currency.

         "Participants": as defined in Section 9.6(b).

         "PBGC": the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor thereto.

         "Permitted Borrowers": with respect to any Loan in the Approved
Currencies: (a) in the case of US Dollars: Quiksilver, (b) in the case of Euros:
Quiksilver and Na Pali, (c) in the case of Japanese Yen: Quiksilver and
Quiksilver Japan K.K., (d) in the case of Pounds Sterling: Quiksilver and Na
Pali, and (e) in the case of Australian Dollars: Quiksilver and Ug.

         "Person": any individual, firm, partnership, joint venture,
corporation, association, limited liability company, business enterprise trust,
unincorporated organization, government or department or agency thereof or other
entity, whether acting in an individual, fiduciary or other capacity.

<PAGE>

                                                                              15

         "Plan": as to any Person, any plan (other than a Multiemployer Plan)
subject to Title IV of ERISA maintained for employees of such Person or any
ERISA Affiliate of such Person (and any such plan no longer maintained by such
Person or any of such Person's ERISA Affiliates to which such Person or any of
such Person's ERISA Affiliates has made or was required to make any
contributions within any of the five preceding years).

         "Pounds Sterling": freely transferable lawful money of the United
Kingdom.

         "Prohibited Transaction": with respect to any Plan, a prohibited
transaction (as defined in Section 406 of ERISA) with respect to such Plan.

         "Properties": the collective reference to the real and personal
property owned, leased, used, occupied or operated by the Borrower and its
Subsidiaries.

         "Purchasing Lenders": as defined in Section 9.6(c).

         "QAPL": Quiksilver Australia Pty Ltd, a corporation organized under the
laws of the State of Victoria, Australia.

         "QAPL Share Mortgage": the Equitable Mortgage of Shares dated June 27,
2003 between the Borrower and the Agent.

         "QIPL": Quiksilver International Pty Ltd, a corporation organized under
the laws of the State of Victoria, Australia.

         "Quiksilver Europa": Quiksilver Europa, S.L., a Spanish corporation and
a Subsidiary of Quiksilver.

         "Quiksilver Europa Equity Pledge": the Public Deed of Pledge of Shares
dated June 27, 2003 between Quiksilver, on the one hand, and the Agent and each
of the Lenders, on the other hand.

         "Quiksilver Japan K.K.": Quiksilver Japan K.K., a Japanese corporation
and a Subsidiary of Quiksilver.

         "Refunded Swing Line Loans": as defined in Section 2.1B(d).

         "Register": as defined in Section 9.6(d).

         "Regulation D": Regulation D of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.

         "Regulation U": Regulation U of the Board of Governors of the Federal
Reserve System, as the same is from time to time in effect, and all official
rulings and interpretations thereunder or thereof and any successor regulation
thereto.

<PAGE>

                                                                              16

         "Related Parties": with respect to any specified Person, such Person's
Affiliates and the respective directors, officers, employees, agents and
advisors of such Person and such Person's Affiliates.

         "Reorganization": with respect to any Multiemployer Plan, the condition
that such plan is in reorganization within the meaning of Section 4241 of ERISA.

         "Reportable Event": any of the events set forth in Section 4043(b) of
ERISA, other than those events as to which the thirty day notice period is
waived under PBGC regulations.

         "Requirement of Law": as to any Person, the Organic Documents of such
Person, and any law, treaty, rule or regulation, determination or policy
statement or interpretation of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject.

         "Responsible Officer": with respect to any Person, the chief executive
officer, the president, the managing member or members (as applicable, with
respect to any limited liability company), any executive vice president, any
senior vice president or any vice president or, with respect to financial
matters, the chief financial officer, the vice president of finance, treasurer
or controller.

         "Restricted Payments": as defined in Section 6.6.

         "Revolving Note": a promissory note in the form of Exhibit A-1 hereto.

         "Revolving Loan Borrowing Notice": a notice from a Borrower to the
Agent requesting a borrowing of Revolving Loans, substantially in the form of
Exhibit G hereto.

         "Revolving Loan Commitment": with respect to each Lender, its
commitment, if any, listed as its "Revolving Loan Commitment" on the signature
pages hereto, or in the Assignment and Assumption pursuant to which a Lender
becomes a party hereto, to make Revolving Loans and participate in Letters of
Credit hereunder through its Approved Lending Office(s), as the same shall be
adjusted from time to time pursuant to this Agreement.

         "Revolving Loan Commitment Expiration Date": June 26, 2006 or such
earlier date as the Aggregate Revolving Loan Commitment shall expire (whether by
acceleration, reduction to zero or otherwise).

         "Revolving Loan Commitment Percentage": with respect to each Lender,
the percentage equivalent of the ratio which such Lender's Revolving Loan
Commitment bears to the Aggregate Revolving Loan Commitment, as such Lender's
Revolving Loan Commitment and the Aggregate Revolving Loan Commitment may be
adjusted from time to time pursuant to the terms hereof.

         "Revolving Loan Leverage Level": if the Maximum Leverage Ratio shall be
less than or equal to 1.00:1, the Revolving Loan Leverage Level shall be 1; if
the Maximum Leverage Ratio shall be greater than 1.00:1 and less than or equal
to 1.25:1, the Revolving Loan Leverage Level shall be 2; if the Maximum Leverage
Ratio shall be greater than 1.25:1 and less than or equal to

<PAGE>

                                                                              17

1.50:1, the Revolving Loan Leverage Level shall be 3; if the Maximum Leverage
Ratio shall be greater than 1.50:1, the Revolving Loan Leverage Level shall be
4.

         "Security Agreement": the Security Agreement, in the form of Exhibit J
hereto, made by Quiksilver in favor of the Agent, for the benefit of the
Lenders, in respect of the tangible and intangible personal property of
Quiksilver described therein, as the same may be amended, restated or otherwise
modified from time to time.

         "Single Employer Plan": any Plan which is covered by Title IV of ERISA,
but which is not a Multiemployer Plan.

         "Solvent": when used with respect to any Person, that:

                  (a)      the present fair salable value of such Person's
assets is in excess of the total amount of the probable liability on such
Person's liabilities;

                  (b)      such Person is able to pay its debts as they become
due; and

                  (c)      such Person does not have unreasonably small capital
to carry on such Person's business as theretofore operated and all businesses in
which such Person is about to engage.

         "Subsidiary": as to any Person at any time of determination, a
corporation, partnership or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries or Subsidiaries, or both, by such Person. Unless
otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries,' in
this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

         "Swing Line Borrowing Notice": a notice from Quiksilver to the Agent
requesting a borrowing of Swing Line Loans, substantially in the form of Exhibit
H-1 hereto.

         "Swing Line Commitment": as defined in Section 2.1B(a).

         "Swing Line Lender": means JPMorgan Chase Bank.

         "Swing Line Loan Participation Certificate": a certificate executed by
the Swing Line Lender substantially in the form of Exhibit H-2.

         "Swing Line Loans": has the meaning assigned to that term in Section
2.1B(a).

         "Swing Line Note": a promissory note in the form of Exhibit A-2 hereto.

         "Target Day": a day on which the Trans-European Automated Real-time
Gross Settlement Express Transfer payment system is open for the settlement of
payments in Euro.

<PAGE>

                                                                              18

         "Taxes": as defined in Section 2.13(a).

         "Termination Event": (i) a Reportable Event, (ii) the institution of
proceedings to terminate a Single Employer Plan by the PBGC under Section 4042
of ERISA, (iii) the appointment by the PBGC of a trustee to administer any
Single Employer Plan or (iv) the existence of any other event or condition that
would reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment by the PBGC of a trustee to
administer, any Single Employer Plan.

         "Tranche": the collective reference to LIBOR Loans the Interest Periods
with respect to all of which begin on the same date and end on the same later
date (whether or not such LIBOR Loans shall originally have been made on the
same day).

         "Transferee": as defined in Section 9.6(f).

         "Ug": Ug Manufacturing Co. Pty Ltd, a corporation organized under the
laws of the State of Victoria, Australia.

         "United States": the United States of America (including the States
thereof and the District of Columbia).

         "US Dollar Equivalent": with respect to any Alternate Currency, on the
date of determination thereof, the amount of US Dollars which could be purchased
with the amount of such Alternate Currency involved in such computation at the
spot rate at which such Alternate Currency may be exchanged into US Dollars as
set forth on such date on (i) the applicable Reuters pages, or (ii), if such
rate is not set forth on such Reuters pages, on the applicable Telerate Service
pages, or (iii) if such rate does not appear on such Reuters or Telerate Service
pages, at the spot exchange rate therefor as determined by the Agent, in each
case as of 11:00 A.M. (London time or such other local time as the Agent shall
deem appropriate) on such date of determination thereof.

         "US Dollars": and "US$": dollars in lawful currency of the United
States.

         1.2      Other Definitional Provisions.

                  (a)      Unless otherwise specified therein, all terms defined
in this Agreement shall have the defined meanings when used in the Notes, any
other Loan Document or any certificate or other document made or delivered
pursuant hereto or thereto.

                  (b)      As used herein, in the Notes, in any other Loan
Document, and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in Section 1.1 and accounting
terms partly defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.

                  (c)      The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
Section, subsection, Schedule and Exhibit references

<PAGE>

                                                                              19

are to this Agreement unless otherwise specified. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation".

                  (d)      The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.

                                   ARTICLE 2.

                          AMOUNT AND TERMS OF LOANS AND
                      LETTERS OF CREDIT; COMMITMENT AMOUNTS

         2.1A     Revolving Loans and Letters of Credit; Revolving Loan
Commitment Amounts.

                  (a)      Subject to the limits of the Revolving Loan
Commitments and to the other terms and conditions hereof, each Lender severally
agrees to (i) make loans on a revolving credit basis through its Applicable
Lending Office to one or more Permitted Borrowers, in the respective applicable
Approved Currencies, from time to time from and including the Closing Date to
but excluding the Revolving Loan Commitment Expiration Date (each a "Revolving
Loan" and, collectively, the "Revolving Loans") in accordance with the
provisions of this Agreement, and (ii) participate through its Applicable
Lending Office in letters of credit, airway releases and steamship guarantees
issued for the account of Quiksilver and the other Borrowers pursuant to Section
2.2 from time to time from and including the Closing Date to but excluding the
Revolving Loan Commitment Expiration Date (each a "Letter of Credit" and,
collectively, the "Letters of Credit"); provided, however, that (A) the sum of
(1) the aggregate principal amount of all Loans outstanding, (2) the aggregate
Letter of Credit Amount of all Letters of Credit outstanding and (3) the
aggregate amount of unreimbursed drawings under all Letters of Credit shall not
exceed the Aggregate Revolving Loan Commitment at any time, (B) the sum of (1)
the aggregate Letter of Credit Amount of all Letters of Credit outstanding and
(2) the aggregate amount of unreimbursed drawings under all Letters of Credit
shall not exceed US $95,000,000 at any time, (C) the sum of (1) the aggregate
Letter of Credit Amount of all standby Letters of Credit outstanding and (2) the
aggregate amount of unreimbursed drawings under all standby Letters of Credit
shall not exceed US $20,000,000 at any time, (D) the sum of (1) the aggregate
Letter of Credit Amount of all commercial Letters of Credit outstanding and (2)
the aggregate amount of unreimbursed drawings under all commercial Letters of
Credit shall not exceed US$75,000,000 at any time, and (E) the sum of (1) the
aggregate principal amount of all Alternate Currency Loans outstanding, (2) the
aggregate Letter of Credit Amount of all outstanding Alternate Currency Letters
of Credit and (3) the aggregate amount of unreimbursed drawings under all
Alternate Currency Letters of Credit shall not exceed the Alternate Currency
Equivalent of US$35,000,000 (such sum, the "Alternate Currency Sublimit").

                  (b)      Within the limits of each Lender's Revolving Loan
Commitment, Quiksilver and the other Borrowers may borrow, have Letters of
Credit issued for their account, prepay Revolving Loans, reborrow Revolving
Loans, and have additional Letters of Credit issued for their account. The
Revolving Loans, together with all accrued and unpaid interest thereon, shall
mature and be due and payable in the applicable Currencies on the Maturity Date.

<PAGE>

                                                                              20

         The principal amount of each (A) Revolving Loan of a Lender and (B)
participation of a Lender in a Letter of Credit shall be in an amount equal to
the product of (i) such Lender's Revolving Loan Commitment Percentage (expressed
as a fraction) and (ii) the total amount of the Revolving Loan or the Letter of
Credit requested by the Borrowers in each instance; provided, however, that in
no event shall any Lender be obligated to make a requested Revolving Loan or
participate in a requested Letter of Credit if after giving effect to such
Revolving Loan or such participation, the sum of such Lender's (x) Revolving
Loans outstanding, (y) Revolving Loan Commitment Percentage of the aggregate
Letter of Credit Amount of all Letters of Credit outstanding and (z) Revolving
Loan Commitment Percentage of the aggregate amount of unreimbursed drawings
under all Letters of Credit would exceed its Revolving Loan Commitment, or if
the amount of such requested Revolving Loan or such Lender's Revolving Loan
Commitment Percentage of such requested Letter of Credit is in excess of such
Lender's available Revolving Loan Commitment.

                  (1)      Quiksilver and any one or more Lenders (including New
Lenders) may from time to time after the Effective Date agree that such Lender
or Lenders shall establish a new Revolving Loan Commitment or Revolving Loan
Commitments or increase the amount of its or their Revolving Loan Commitment or
Revolving Loan Commitments by executing and delivering to the Agent, in the case
of each New Lender, a New Lender Supplement meeting the requirements of Section
2.1A(b)(2) or, in the case of each Lender which is not a New Lender, a Loan
Commitment Increase Supplement meeting the requirements of Section 2.1A(b)(3).
Notwithstanding the foregoing, (x) without the consent of all Lenders, the
aggregate amount of incremental Revolving Loan Commitments established or
increased after the Effective Date pursuant to this paragraph shall not exceed
US$30,000,000, and (y) unless otherwise agreed to by the Agent, each increase in
the aggregate Revolving Loan Commitments effected pursuant to this paragraph
shall be in a minimum aggregate amount of at least $15,000,000 and (z) unless
otherwise agreed by the Agent, increases in Revolving Loan Commitments may be
effected on no more than two occasions pursuant to this paragraph. No Lender
shall have any obligation to participate in any increase described in this
paragraph unless it agrees to do so in its sole discretion. Upon the occurrence
and continuance of an Event of Default, the amount of the Revolving Loan
Commitments may not be increased.

                  (2)      Any additional bank, financial institution or other
entity which, with the consent of Quiksilver and the Agent (which consents shall
not be unreasonably withheld), elects to become a "Lender" under this Agreement
in connection with any transaction described in Section 2.1A(b)(1) shall execute
a New Lender Supplement (each, a "New Lender Supplement"), substantially in the
form of Exhibit D-1, whereupon such bank, financial institution or other entity
(a "New Lender") shall become a Lender, with a Revolving Loan Commitment in the
amount set forth therein that is effective on the date specified therein, for
all purposes and to the same extent as if originally a party hereto and shall be
bound by and entitled to the benefits of this Agreement.

                  (3)      Any Lender, which, with the consent of Quiksilver and
the Agent, elects to increase its Loan Commitment under this Agreement shall
execute and deliver to Quiksilver and the Agent a Loan Commitment Increase
Supplement specifying (i) the amount of each Revolving Loan Commitment increase,
(ii) the amount of such Lender's total Revolving Loan

<PAGE>

                                                                              21

Commitment after giving effect to such Revolving Loan Commitment increase, and
(iii) the date upon which such Revolving Loan Commitment increase shall become
effective.

                  (4)      Unless otherwise agreed by the Agent, on each date
upon which the Revolving Loan Commitments shall be increased pursuant to this
Section, the Borrowers shall prepay all then outstanding Loans, which prepayment
shall be accompanied by payment of all accrued interest on the amount prepaid
and any amounts necessary to compensate the Lenders for any loss, cost or
expense attributable to such prepayment, in accordance with Section 2.19 hereof,
and, to the extent it determines to do so, reborrow Loans from all the Lenders
(after giving effect to the new and/or increased Loan Commitments becoming
effective on such date). Any prepayment and reborrowing pursuant to the
preceding sentence shall be effected, to the maximum extent practicable, through
the netting of amounts payable between the Borrowers and the respective Lenders.

                  (c)      Subject to Sections 2.9 and 2.11, the Revolving Loans
may from time to time be (i) LIBOR Loans, (ii) ABR Loans (solely with respect to
Revolving Loans in US Dollars) or (iii) a combination thereof, as determined by
Quiksilver and notified to the Agent in accordance with either Section 2.1A(e)
or 2.5 hereof. Each Lender may make or maintain its Revolving Loans or
participate in Letters of Credit to or for the account of the Borrowers by or
through any Applicable Lending Office.

                  (d)      The Revolving Loans made by each Lender to the
Borrowers shall be evidenced by a Revolving Note, with appropriate insertions
therein as to payee, date and principal amount, payable to the order of such
Lender and representing the obligation of the Borrowers to pay the aggregate
unpaid principal amount of all Revolving Loans made by such Lender to the
Borrowers pursuant to Section 2.1A(a), with interest thereon as prescribed in
Sections 2.7 and 2.8. Each Lender is hereby authorized (but not required) to
record the date and amount of each payment or prepayment of principal of its
Revolving Loans made to the Borrowers, each continuation thereof, and, in the
case of LIBOR Loans, the length of each Interest Period with respect thereto, in
the books and records of such Lender, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded. The failure
of any Lender to make any such recordation or notation in the books and records
of the Lender (or any error in such recordation or notation) shall not affect
the obligations of the Borrowers hereunder or under the Revolving Notes. Each
Revolving Note shall (i) be dated the effective date thereof, (ii) provide for
the payment of interest in accordance with Sections 2.7 and 2.8 and (iii) be
stated to be payable on the Revolving Loan Commitment Expiration Date.

                  (e)      Quiksilver shall give the Agent irrevocable written
notice (which notice must be received by the Agent prior to 11:00 a.m., New York
City time, one (1) Business Day prior to the Borrowing Date of each ABR Loan and
three (3) Business Days prior to the Borrowing Date of each LIBOR Loan
denominated in US Dollars or, if all or any part of the Revolving Loans are
requested to be made as LIBOR Loans in an Alternate Currency, notice to be
received by the Multicurrency Agent three Eurodollar Business Days prior to each
proposed Borrowing Date) requesting that the Lenders make the Loans on the
proposed Borrowing Date and specifying (i) the aggregate amount of Revolving
Loans requested to be made, (ii) subject to Sections 2.11 and 2.13, whether the
Revolving Loans are to be LIBOR Loans, ABR Loans or a combination thereof and
(iii) if the Revolving Loans are to be entirely or partly LIBOR Loans,

<PAGE>

                                                                              22

the length of the initial Interest Period therefor, which shall be a period
contemplated by the definition of the term "Interest Period". Each such
Borrowing Notice or written confirmation of telephonic notice shall be
irrevocable, and shall be appropriately completed to specify the name of the
applicable Borrower, the date of such borrowing, the applicable currency for
such Revolving Loans, the aggregate principal amount of the Revolving Loans to
be made (stated in the applicable Currencies), in the case of Loans denominated
in US Dollars, whether such Revolving Loans are to be initially maintained as
ABR Loans or LIBOR Loans and, in the case of the LIBOR Loans, the initial
interest period applicable thereto.

                  On receipt of such notice, the Agent shall promptly notify
each Lender thereof, of such Lender's proportionate share thereof and of the
other matters specified in the Borrowing Notice. Not later than 12:00 noon
(local time in the city in which proceeds of the Loans are to be made available
in accordance with the terms hereof) on the Borrowing Date specified in the
Borrowing Notice (and no later than 12:00 noon, New York City time, on the date
specified for the borrowing of Loans in US Dollars), each Lender shall make
available to the Agent at the Applicable Payment Office of the Agent, the amount
of such Lender's pro rata share of the aggregate borrowing amount (as determined
in accordance with the second paragraph of Section 2.1A(b)) in the applicable
Currency in immediately available funds. The Agent will then make available to
the applicable Borrower at such Applicable Payment Office, in the applicable
Currencies, and in immediately available funds, the aggregate of the amounts so
made available by the Lenders prior to 2:30pm (local time in the city in which
proceeds of such loans are to be made available in accordance with the terms
hereof) on such day (or 5:00pm (New York City time) on such day for loans in US
Dollars).

                  The Agent may, in the absence of notification from any Lender
that such Lender has not made its pro rata share available to the Agent on such
date, credit the account of Quiksilver on the books of such office of the Agent
with the aggregate amount of Revolving Loans requested. If any Lender does not
make available to the Agent the amount required pursuant to this Section
2.1A(e), the Agent shall promptly notify the Borrowers and shall be entitled to
recover such amount on demand from the Lender, together with interest thereon
for each day from the date of non-payment until such amount is paid in full at
the Alternate Base Rate (or in the case of the Alternate Currency Loans, at a
rate equal to the all-in cost of funds of the Agent for the applicable
Currency). Nothing in this Section shall be deemed to relieve any Lender from
its obligation to make Revolving Loans hereunder.

                  (f)      Neither the Agent nor any Lender shall be responsible
for the obligation or Revolving Loan Commitment of any other Lender hereunder,
nor will the failure of any Lender to comply with the terms of this Agreement
relieve any other Lender or any Borrower of its obligations under this Agreement
and the Notes.

                  (g)      Subject to Section 2.2(c), the Revolving Loan
Commitment of each Lender and the Aggregate Revolving Loan Commitment shall
terminate on the Revolving Loan Commitment Expiration Date. All outstanding
Revolving Loans shall be due and payable, to the extent not previously paid in
accordance with the terms hereof, on the Revolving Loan Commitment Expiration
Date.

<PAGE>

                                                                              23

                  (h)      Alternate Currencies. The principal of and interest
on each Alternate Currency Loan shall be paid in the applicable Currency for
such Alternate Currency Loan.

         2.1B     Swing Line Loans; Swing Line Commitment.

                  (a)      Subject to the terms and conditions hereof, the Swing
Line Lender agrees to make loans through its Applicable Lending Office to
Quiksilver from time to time from and including the Closing Date to but
excluding the date which is five Business Days prior to the Revolving Loan
Commitment Expiration Date (each a "Swing Line Loan" and, collectively, the
"Swing Line Loans") in an aggregate principal amount not to exceed at any time
outstanding the lesser of (i) US$5,000,000 and (ii) the unused portion of the
Revolving Loan Commitment of the Swing Line Lender (the "Swing Line
Commitment"). Within the limits of the Swing Line Commitment, Quiksilver may
borrow Swing Line Loans, prepay Swing Line Loans and reborrow Swing Line Loans.
All outstanding Swing Line Loans shall be due and payable, to the extent not
previously paid in accordance with the terms hereof, on the Revolving Loan
Commitment Expiration Date.

                  (b)      The Swing Line Loans shall be evidenced by the Swing
Line Note, with appropriate insertions therein as to payee, date and principal
amount, payable to the order of the Swing Line Lender and representing the
obligation of the Borrowers to pay the aggregate unpaid principal amount of the
Swing Line Loans, with interest thereon as prescribed in Sections 2.7 and 2.8.
The Swing Line Lender is hereby authorized (but not required) to record the
borrowing date of each Swing Line Loan, the amount thereof and the date and
amount of each payment or prepayment of principal thereof, in the books and
records of the Swing Line Lender, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded. The failure
of the Swing Line Lender to make any such recordation or notation (or any error
in such recordation or notation) shall not affect the obligations of the
Borrowers hereunder or under the Swing Line Note. The Swing Line Note shall (x)
be dated the effective date thereof, (y) be stated to mature on the Revolving
Loan Commitment Expiration Date and (z) provide for the payment of interest in
accordance with Sections 2.7 and 2.8.

                  (c)      Quiksilver shall give the Agent irrevocable notice
(which notice may be telephonic, to be confirmed promptly in writing), which
notice must be received by the Agent prior to 12:00 noon, New York City time, on
the requested borrowing date (which shall be a Business Day) specifying the
amount of the requested Swing Line Loan, which shall be in a minimum amount of
$100,000. Written notice of borrowing shall be given by submitting a Notice of
Swing Line Borrowing to the Agent. On receipt of such notice, the Agent shall
promptly notify the Swing Line Lender thereof. The proceeds of each Swing Line
Loan will then be made available to Quiksilver by the Swing Line Lender by
crediting the account of Quiksilver on the books of the Agent at its office
specified in Section 9.2.

                  (d)      The Swing Line Lender, at any time in its sole and
absolute discretion, may on behalf of the Borrowers (which hereby irrevocably
direct the Swing Line Lender to so act on their behalf) request each Lender to
make a Revolving Loan in an amount equal to such Lender's Revolving Loan
Commitment Percentage of the principal amount of the Swing Line Loans (the
"Refunded Swing Line Loans") outstanding on the date such notice is given.
Unless any of the events described in Section 7(g) shall have occurred (in which
event the procedures of

<PAGE>

                                                                              24

Section 2.1B(e) shall apply) and regardless of whether the conditions precedent
set forth in this Agreement to the making of a Revolving Loan are then
satisfied, each Lender shall make the proceeds of its Revolving Loan available
to the Swing Line Lender at its office specified in Section 9.2, not later than
12:00 noon, New York City time. The proceeds of such Revolving Loans shall be
immediately applied to repay the Refunded Swing Line Loans.

                  (e)      If, prior to refunding a Swing Line Loan with a
Revolving Loan pursuant to Section 2.1B(d), one of the events described in
Section 7(g) shall have occurred, then, subject to the provisions of Section
2.1B(f), each Lender will, on the date such Revolving Loan was to have been
made, purchase from the Swing Line Lender an undivided participation interest in
the Swing Line Loan in an amount equal to its Revolving Loan Commitment
Percentage of such Swing Line Loan. Upon request, each Lender will promptly
transfer to the Swing Line Lender, in immediately available funds, the amount of
its participation, and upon receipt thereof the Swing Line Lender will deliver
to such Lender a Swing Line Loan Participation Certificate dated the date of
receipt of such funds and in such amount.

                  (f)      Each Lender's obligation to make Revolving Loans in
accordance with Section 2.1B(d) and to purchase participating interests in
accordance with Section 2.1B(e) shall be absolute and unconditional and shall
not be affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender, the Borrowers or any other Person for any reason whatsoever, (B)
the occurrence or continuance of any Event of Default; (C) any adverse change in
the condition (financial or otherwise) of the Borrowers or any other Person; (D)
any breach of this Agreement by the Borrowers or any other Person; (E) any
inability of the Borrowers to satisfy the conditions precedent to borrowing set
forth in this Agreement on the date upon which such participating interest is to
be purchased or (F) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing. If any Lender does not make
available to the Swing Line Lender the amount required pursuant to Section
2.1B(d) or (e), as the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Lender, together with interest thereon
for each day from the date of non-payment until such amount is paid in full at
the Alternate Base Rate. Notwithstanding the foregoing provisions of this
Section 2.1B(f), no Lender shall he required to make a Revolving Loan to the
Borrower for the purpose of refunding a Swing Line Loan pursuant to Section
2.1B(d) or to purchase a participating interest in a Swing Line Loan pursuant to
Section 2.1B(e) if an Event of Default has occurred and is continuing and, prior
to the making by the Swing Line Lender of such Swing Line Loan, the Swing Line
Lender has received written notice from such Lender specifying that such Event
of Default has occurred and is continuing, describing the nature thereof and
stating that, as a result thereof, such Lender shall cease to make such Refunded
Swing Line Loans and purchase such participating interests, as the case may be;
provided, however, that the obligation of such Lender to make such Refunded
Swing Line Loans and to purchase such participating interests shall be
reinstated upon the earlier to occur of (y) the date upon which such Lender
notifies the Swing Line Lender that its prior notice has been withdrawn and (z)
the date upon which the Event of Default specified in such notice no longer is
continuing.

                  (g)      The Swing Line Commitment of the Swing Line Lender
shall terminate on the Revolving Loan Commitment Expiration Date.

<PAGE>

                                                                              25

         2.2      Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Borrowers may request the issuance of Letters
of Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit) in the form of commercial Letters of Credit or standby Letters of Credit
for their own account or the account of their Subsidiaries, in a form reasonably
acceptable to the applicable Issuing Bank (provided that each Letter of Credit
shall provide for payment against sight drafts drawn thereunder), at any time
and from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by a Borrower to, or entered into by a Borrower with, the applicable
Issuing Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control. The letters of credit identified on Schedule 2.2 shall
be deemed to be "Letters of Credit" issued on the Closing Date for all purposes
of the Loan Documents.

                  (b)      Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. To request the issuance of a Letter of Credit (or the
amendment, renewal or extension of an outstanding Letter of Credit), the
relevant Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the applicable
Issuing Bank) to the applicable Issuing Bank and, in the case of a commercial
Letter of Credit if the Agent shall have so requested and in the case of all
standby Letters of Credit, the Agent (in each case, reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a notice requesting
the issuance of a Letter of Credit, or identifying the Letter of Credit to be
amended, renewed or extended, and specifying the date of issuance, amendment,
renewal or extension, the currency in which such Letter of Credit is to be
denominated (which shall be an Approved Currency, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit, provided that in no event shall
any Issuing Bank other than JPMorgan Chase Bank or one other Issuing Bank
designated from time to time by the Borrower and reasonably acceptable to the
Agent issue any Alternate Currency Letter of Credit hereunder. If requested by
the applicable Issuing Bank, the relevant Borrower also shall submit a letter of
credit application on such Issuing Bank's standard form in connection with any
request for a Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrowers shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i)
the Letter of Credit Exposure shall not exceed (x) US$20,000,000, in the case of
standby Letters of Credit, or (y) US$75,000,000, in the case of commercial
Letters of Credit, (ii) the Alternate Currency Letter of Credit Exposure with
respect to Letters of Credit denominated in an Alternate Currency shall not
exceed the Alternate Currency Equivalent of US$35,000,000, and (iii) the total
Credit Exposure shall not exceed the Aggregate Loan Commitment. Subsequent to
the receipt by any Issuing Bank of a Notification Instruction (as defined below)
from the Agent which shall not have been withdrawn, such Issuing Bank will
contact the Agent prior to the issuance or increase in any Letter of Credit to
determine whether or not such issuance or increase would result in any of the
limitations set forth in the preceding sentence being exceeded. For purposes of
this Section 2.2(b), a "Notification Instruction" shall (i) mean any instruction
from the Agent requiring that an Issuing Bank make the contacts described in the
preceding sentence, which instruction the Agent (a) may deliver at any time when
it determines that the percentage which the aggregate Credit Exposure
constitutes of the Aggregate Loan Commitment then in effect is greater than 80%
and (b) will withdraw when it determines that such percentage is less than 80%,

<PAGE>

                                                                              26

and (ii) include the name and telephone or facsimile number of the individual or
individuals required to be contacted in accordance with the immediately
preceding sentence. For purposes of calculating currency amounts in the third
preceding sentence, the amount of any Alternate Currency Letter of Credit shall
be the US Dollar Equivalent thereof calculated on the basis of the applicable
rate of exchange determined in accordance with Section 2.18.

                  (c)      Expiration Date. Each Letter of Credit shall expire
at or prior to the close of business on the earlier of (i) the date one year
after the date of the issuance of such Letter of Credit (or, in the case of any
renewal or extension thereof, one year after such renewal or extension) and (ii)
the date that is one Business Day prior to the Maturity Date.

                  (d)      Participations. By the issuance of a Letter of Credit
(or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the applicable Issuing Bank or the
Lenders, such Issuing Bank hereby grants to each Lender, and each Lender hereby
acquires from such Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Revolving Loan Commitment Percentage of the Letter of Credit
Amount. In consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Agent in US Dollars, for the
account of such Issuing Bank, such Lender's Revolving Loan Commitment Percentage
of (i) each Letter of Credit Disbursement made by such Issuing Bank in US
Dollars and (ii) the US Dollar Equivalent, calculated at the time such payment
is made, of each Letter of Credit Disbursement made by such Issuing Bank in an
Alternate Currency and, in each case, not reimbursed by the Borrowers on the
date due as required in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrowers for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Revolving Loan
Commitment, and that each such payment shall be made without any offset,
abatement, withholding or reduction whatsoever.

                  (e)      Reimbursement. If any Issuing Bank shall make any
Letter of Credit Disbursement in respect of a Letter of Credit, the Borrowers
shall reimburse such Letter of Credit Disbursement by paying to such Issuing
Bank an amount equal to such Letter of Credit Disbursement in US Dollars, on the
date that such Letter of Credit Disbursement is made (or, if such date is not a
Business Day, on or before the next Business Day); provided that, if such Letter
of Credit Disbursement is made under an Alternate Currency Letter of Credit, the
Borrowers shall reimburse such Letter of Credit Disbursement by paying to such
Issuing Bank an amount equal to such Letter of Credit Disbursement in the
Currency in which such Alternate Currency Letter of Credit was issued, and
provided, further, that, in the case of any such reimbursement obligation which
is in an amount of not less than US$500,000 or the Alternate Currency Equivalent
thereof, the Borrowers may, subject to the conditions to borrowing set forth
herein, request that such payment be financed either in (i) US Dollars with an
ABR Loan in an equivalent amount or (ii) the Alternate Currency in which the
Alternate Currency Letter of Credit being reimbursed was denominated, with an
Alternate Currency Loan, and, to the extent so financed, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting ABR Loan or Alternate Currency Loan, as the case may be. If the
Borrowers fail to make when due any reimbursement payment required pursuant to
this paragraph, the applicable

<PAGE>

                                                                              27

Issuing Bank shall immediately notify the Agent, which shall promptly notify
each Lender of the applicable Letter of Credit Disbursement, the US Dollar
Equivalent thereof calculated in accordance with the preceding sentence (if such
Letter of Credit Disbursement related to an Alternate Currency Letter of
Credit), the reimbursement payment then due from the Borrowers in respect
thereof and such Lender's Revolving Loan Commitment Percentage thereof. Promptly
following receipt of such notice, each Lender (other than such Issuing Bank)
shall pay to the Agent in US Dollars its Revolving Loan Commitment Percentage of
the reimbursement payment then due from the Borrowers, and the Agent shall
promptly pay to such Issuing Bank in US Dollars the amounts so received by it
from the Lenders. Promptly following receipt by the Agent of any payment from
the Borrowers pursuant to this paragraph, including the Borrowers' payment of
the Alternate Currency Equivalent of any US Dollar reimbursements paid to the
Issuing Bank by the Lenders in connection with a Letter of Credit Disbursement
under an Alternate Currency Letter of Credit, the Agent shall distribute such
payment to the applicable Issuing Bank or, to the extent that Lenders have made
payments pursuant to this paragraph to reimburse such Issuing Bank, then to such
Lenders and such Issuing Bank as their interests may appear. Any payment made by
a Lender pursuant to this paragraph to reimburse an Issuing Bank for any Letter
of Credit Disbursement (other than the funding of ABR Loans as contemplated
above) shall not constitute a Loan and shall not relieve the Borrowers of their
obligation to reimburse such Letter of Credit Disbursement.

                  (f)      Letter of Credit Fees.

                           (i)      Commercial Letter of Credit Fee. The
         Borrowers shall pay a commission on commercial Letters of Credit based
         upon the average outstandings of commercial Letters of Credit for the
         quarter, in an amount equal to the Applicable Commercial Letter of
         Credit Rate multiplied by the US Dollar Equivalent of such average
         outstandings, divided by 4. Such commission shall be payable quarterly
         in arrears on July 31, 2003 for the period commencing on the Closing
         Date and ending on July 31, 2003, and on the last Business Days of
         October, January, April and July thereafter through the Maturity Date
         of this Agreement. The Agent will promptly pay to the Issuing Banks and
         the other Lenders their pro rata shares of any amounts received from
         the Borrowers in respect of any such fees.

                           (ii)     Standby Letter of Credit Fees. The Borrower
         agrees to pay to the Agent, for the account of the applicable Issuing
         Bank and the Lenders, a standby Letter of Credit fee calculated at the
         rate per annum equal to the Applicable Margin from time to time in
         effect on the aggregate average daily amount available to be drawn
         (calculated in the case of any Alternate Currency Letter of Credit, on
         the basis of the US Dollar Equivalent calculated as of the date payment
         of such fee is due) under each standby Letter of Credit issued
         hereunder and other customary fees and expenses, including Issuing Bank
         fees. Standby Letter of Credit Fees shall be payable in advance on the
         first Business Days of April and October, commencing on the first such
         date to occur after the date hereof, and on the Closing Date for the
         period beginning on the Closing Date and ending on September 30, 2003.
         The Agent will promptly pay to the Issuing Banks and the Lenders their
         pro rata shares of any amounts received from the Borrowers in respect
         of any such fees. Standby Letter of Credit fees shall be computed on
         the basis of a year

<PAGE>

                                                                              28

         of 360 days and shall be payable for the actual number of days elapsed
         (including the first day but excluding the last day).

                  (g)      Obligations Absolute. The Borrowers' obligation to
reimburse Letter of Credit Disbursements as provided in paragraph (e) of this
Section shall be absolute, unconditional and irrevocable, and shall be performed
strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit, any application for the issuance of a
Letter of Credit or this Agreement, or any term or provision therein or herein,
(ii) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the applicable Issuing
Bank under a Letter of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit, or (iv) any other
event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharged of, or provide a right of setoff against, the
Borrowers' obligations hereunder. Neither the Agent, the Lenders nor any Issuing
Bank, nor any of their Related Parties, shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing hereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the applicable Issuing Bank; provided that the
foregoing shall not be construed to excuse such Issuing Bank from liability to
the Borrowers to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrowers to the
extent permitted by applicable law) suffered by the Borrowers that are caused by
such Issuing Bank's failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or willful misconduct on the part of an Issuing Bank (as finally
determined by a court of competent jurisdiction), such Issuing Bank shall be
deemed to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, an Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

                  (h)      Disbursement Procedures. The applicable Issuing Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. Such Issuing Bank
shall promptly notify the Agent and the Borrower by telephone (confirmed by
telecopy) of such demand for payment and whether such Issuing Bank has made or
will make a Letter of Credit Disbursement thereunder; provided that any failure
to give or delay in giving such notice shall not relieve the Borrowers of their
obligation to reimburse such Issuing Bank and the Lenders with respect to any
such Letter of

<PAGE>

                                                                              29

Credit Disbursement. Such notification requirements shall only apply to demands
and payments related to standby Letters of Credit.

                  (i)      Interim Interest. If an Issuing Bank shall make any
Letter of Credit Disbursement, then, unless the Borrowers shall reimburse such
Letter of Credit Disbursement in full on the date such Letter of Credit
Disbursement is made (or, if such date is not a Business Day, on or prior to the
next Business Day), the unreimbursed amount thereof shall bear interest, for
each day from and including the date such Letter of Credit Disbursement is made
to but excluding the date that the Borrowers reimburse such Letter of Credit
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the Borrowers fail to reimburse such Letter of Credit Disbursement when due
pursuant to paragraph (e) of this Section, then the interest rate described in
Section 2.7(c) shall apply; and provided, further, that, in the case of a Letter
of Credit Disbursement made under an Alternate Currency Letter of Credit, the
amount of interest due with respect thereto shall accrue on the US Dollar
Equivalent of such Letter of Credit Disbursement and be calculated as of the
time such Letter of Credit Disbursement was made. Interest accrued pursuant to
this paragraph shall be for the account of the applicable Issuing Bank, except
that interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse such Issuing Bank shall be for the
account of such Lender to the extent of such payment.

                  (j)      Replacement of any Issuing Bank. Any Issuing Bank may
be replaced at any time by written agreement among the Borrowers, the Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Agent shall notify the
Lenders of any such replacement of such Issuing Bank. At the time any such
replacement shall become effective, the Borrowers shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank. From and after the
effective date of any such replacement, (i) the successor Issuing Bank shall
have all the rights and obligations of such Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references
herein to the term "Issuing Bank" shall be deemed to include a reference to such
successor or to any previous Issuing Bank, or to such successor and all previous
Issuing Banks, as the context shall require. After the replacement of an Issuing
Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this
Agreement with respect to Letters of Credit issued by it prior to such
replacement, but shall not be required to issue additional Letters of Credit.

                  (k)      Cash Collateralization. If any Event of Default shall
occur and be continuing, on the Business Day that the Borrowers receive notice
from the Agent or the Majority Lenders demanding the deposit of cash collateral
pursuant to this paragraph, the Borrowers shall deposit in an account with the
Agent, in the name of the Agent and for the benefit of the Lenders, an amount in
US Dollars and in cash equal to 105% of the Letter of Credit Exposure as of such
date plus any accrued and unpaid interest thereon; provided that (i) the
portions of such amount attributable to undrawn Alternate Currency Letters of
Credit shall be deposited in the applicable Alternate Currencies in the amount
of 105% of the actual amounts of such undrawn Letters of Credit and (ii) the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to the Borrower described in paragraph (g) of Article 7. Each deposit
pursuant to this paragraph shall be held by the Agent as

<PAGE>

                                                                              30

collateral for the payment and performance of the obligations of the Borrowers
under this Agreement. The Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Agent and at the Borrower's risk
and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account
shall be applied by the Agent to reimburse the Issuing Banks for Letter of
Credit Disbursements for which they have not been reimbursed (to be applied
ratably among them according to the respective aggregate amounts of the then
unreimbursed Letter of Credit Disbursements) and, to the extent not so applied,
shall be held for the satisfaction of the reimbursement obligations of the
Borrowers for the Letter of Credit Exposure at such time or, if the maturity of
the Loans has been accelerated, be applied to satisfy other obligations of the
Borrowers under this Agreement. If the Borrowers are required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Business Days after all Events of Default have been
cured or waived.

                  (l)      Additional Issuing Banks. The Borrowers may, at any
time and from time to time with the consent of the Agent (which consent shall
not be unreasonably withheld) and such Lender, and subject to the limitation set
forth in the proviso in Section 2.2(b), designate one or more additional Lenders
to act as an issuing bank under the terms of this Agreement. Any Lender
designated as an Issuing Bank pursuant to this paragraph (1) shall be deemed to
be an "Issuing Bank" for the purposes of this Agreement (in addition to being a
Lender) with respect to Letters of Credit issued by such Lender.

                  (m)      Reporting. Unless the Agent otherwise agrees, each
Issuing Bank will report in writing to the Agent (i) on the first Business Day
of each week and on the second Business Day to occur after the last day of each
March, June, September and December, and on such other dates as the Agent may
reasonably request, the daily activity during the preceding week, calendar
quarter or other period, as the case may be, with respect to Letters of Credit
issued by it, including the aggregate outstanding Letter of Credit Exposure with
respect to such Letters of Credit on each day during such week, quarter or other
period, in such form and detail as shall be satisfactory to the Agent, (ii) on
any Business Day on which the Borrowers fail to reimburse a Letter of Credit
Disbursement required to be reimbursed to such Issuing Bank on such day, the
date of such failure and the amount of such Letter of Credit Disbursement, and
(iii) such other information with respect to Letters of Credit issued by such
Issuing Bank as the Agent may reasonably request.

         2.3      Optional Prepayments; Optional Commitment Reductions.

                  The respective Borrower may, on the last day of any Interest
Period with respect thereto in the case of any Revolving Loans that are
maintained as LIBOR Loans, or at any time and from time to time in the case of
any Revolving Loans that are maintained as ABR Loans, prepay such Revolving
Loans and/or permanently reduce the Aggregate Revolving Loan Commitment, in
whole or in part, without premium or penalty, upon at least three Business Days'
irrevocable written notice in the case of LIBOR Loans and upon at least one
Business Day's irrevocable written notice in the case of ABR Loans, from such
Borrower to the Agent,

<PAGE>

                                                                              31

specifying the date and amount of prepayment and/or commitment reduction, and
whether, if a prepayment, the prepayment is of LIBOR Loans, ABR Loans or a
combination thereof and, if of a combination thereof, the amount allocable to
each. Upon receipt of any such notice from such Borrower, the Agent shall
promptly notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable by the respective Borrower on
the date specified therein, together with accrued interest to such date on the
amount prepaid. Partial prepayments of Revolving Loans shall be in the aggregate
principal amount of $500,000 or an integral multiple of $300,000 in excess
thereof.

         2.4      Mandatory Prepayments.

                  (a)      If at any time, including without limitation, any
date on which the US Dollar Equivalent is required to be calculated pursuant to
Section 2.18, the Aggregate Credit Exposure exceeds the Aggregate Revolving Loan
Commitment, then the Borrowers, jointly and severally, shall immediately,
without notice or request by the Agent, prepay the Loans in an aggregate
principal amount such that the Aggregate Credit Exposure does not exceed the
Aggregate Revolving Loan Commitments after such prepayment is applied.

                  (b)      On the day of receipt by a Borrower or any of its
Subsidiaries of any Net Proceeds with respect to an Equity Offering, the
Borrowers shall prepay the Loans and the Leasehold Improvement Loan pro rata in
the aggregate amount equal to 100% of such Net Proceeds, provided that the
Borrowers may withhold from such prepayment an amount not to exceed
US$40,000,000 to cover the Borrowers' loss, cost and/or expense that may arise
in connection with their interest rate swap exposures, all of which shall have
been disclosed to the Lenders in a level of detail satisfactory to the Majority
Lenders. On or prior to the date of any such Equity Offering, Quiksilver will
provide to the Agent the calculations used by Quiksilver in determining the
amount of any prepayment under this Section 2.4(b).

                  (c)      On the day of receipt by a Borrower or any of its
Subsidiaries of any Net Proceeds with respect to a Debt Offering (which Debt
Offering must be permitted by Section 6.2 or otherwise consented to by the
Majority Lenders in their sole discretion), the Borrowers shall prepay the Loans
and the Leasehold Improvement Loan pro rata in the aggregate amount equal to
100% of such Net Proceeds. On or prior to the date of any such Debt Offering,
Quiksilver will provide to the Agent the calculations used by Quiksilver in
determining the amount of any such prepayment under this Section 2.4(c).

                  (d)      If any prepayment is made in respect to any LIBOR
Loan, in whole or in part, prior to the last day of the Interest Period
applicable thereto, the applicable Borrower agrees to indemnify the Lenders in
accordance with Section 2.14.

                  (e)      Each prepayment pursuant to this Section 2.4 shall be
accompanied by payment in full of all accrued interest thereon to and including
the date of such prepayment, together with any additional amounts owing pursuant
to Section 2.14.

         2.5      Conversion and Continuation Options.

                  (a)      Any Borrower may elect from time to time to convert
LIBOR Loans to ABR Loans, by such Borrower giving the Agent at least two
Business Days' prior irrevocable

<PAGE>

                                                                              32

written notice of such election pursuant to a Continuation Notice, provided that
any such conversion of LIBOR Loans may only be made on the last day of an
Interest Period with respect thereto. Quiksilver may elect from time to time to
convert ABR Loans to LIBOR Loans by giving the Agent at least three Eurodollar
Business Days' prior irrevocable written notice of such election pursuant to a
Continuation Notice. Any such notice of conversion to LIBOR Loans shall specify
the length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Agent shall promptly notify each Lender thereof.
All or any part of outstanding LIBOR Loans and ABR Loans may be converted as
provided herein, provided that (i) any such conversion may only be made if,
after giving effect thereto, Section 2.6 shall not have been contravened, (ii)
no Loan may be converted into a LIBOR Loan after the date that is one month
prior to the Revolving Loan Commitment Expiration Date and (iii) the Borrowers
shall not have the right to elect to convert to a LIBOR Loan if a Default shall
have occurred and be continuing.

                  (b)      Any LIBOR Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by
Quiksilver giving notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in Section 1.1, of the length
of the next Interest Period to be applicable to such LIBOR Loan; provided,
however, that no LIBOR Loan may be continued as such (i) if, after giving effect
thereto, Section 2.6 would be contravened, (ii) after the date that is one month
prior to the Revolving Loan Commitment Expiration Date or (iii) if a Default
shall have occurred and be continuing; and further, provided, however, that, if
Quiksilver shall fail to give any required notice as described above in this
Section or if such continuation is not permitted pursuant to the preceding
proviso, such LIBOR Loan shall be automatically converted to an ABR Loan on the
last day of such then expiring Interest Period.

         2.6      Minimum Amounts of Tranches. All borrowings, conversions and
continuations of LIBOR Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the LIBOR
Loans comprising each Tranche shall be equal to $1,000,000 or a whole multiple
of $100,000 in excess thereof (or an amount in the applicable Alternate Currency
having a US Dollar Equivalent of approximately $1,000,000 or an integral
multiple of $100,000 in excess thereof in the case of a borrowing of a LIBOR
Loan denominated in an Alternate Currency) and, in any case, there shall not be
more than 8 Tranches. All ABR Loans shall be in an aggregate amount of at least
$500,000.

         2.7      Interest Rates and Payment Dates.

                  (a)      Each Loan maintained as a LIBOR Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the LIBO Rate plus the Applicable Margin.

                  (b)      Each Loan maintained as an ABR Loan shall bear
interest at a rate per annum equal to the Alternate Base Rate.

                  (c)      If any Event of Default shall have occurred and be
continuing, all amounts outstanding hereunder shall bear interest at a rate per
annum which is the sum of the rate otherwise applicable pursuant to Section
2.7(a) or (b) plus 2% per annum, from the date of the

<PAGE>

                                                                              33

occurrence of such Event of Default until such Event of Default is no longer
continuing (after as well as before judgment).

                  (d)      Interest shall be payable in arrears on each Interest
Payment Date; provided, however, that interest accruing pursuant to paragraph
(c) of this Section shall be payable on demand.

                  (e)      For purposes of determining (i) the Applicable Margin
for Loans, (ii) the Applicable Margin for the standby letter of credit fees
referred to in Section 2.2(e)(iii), and (iii) the Maximum Leverage Ratio for the
unused-commitment fees referred to in Section 2.15, interest rates on the Loans
and such fees shall be calculated on the basis of the Maximum Leverage Ratio set
forth in the most recent Covenant Compliance Certificate received by the Agent
in accordance with Section 5.1(a) or (b) hereof. For accrued and unpaid interest
and fees only (no changes being made for interest or fee payments previously
made), changes in interest rates on the Loans or in such letter of credit fees
attributable to changes in the Applicable Margin (with respect to Loans and
letter of credit fees), and changes in the Maximum Leverage Ratio (with respect
to unused-commitment fees) caused by changes in the Maximum Leverage Ratio shall
be calculated upon the delivery of a Covenant Compliance Certificate, and such
change shall be effective on ABR Loans, LIBOR Loans and such fees from the day
which is five days after receipt by the Agent of such Covenant Compliance
Certificate. If, for any reason, Quiksilver shall fail to deliver a Covenant
Compliance Certificate when due in accordance with Section 5.1 (a) or (b), and
such failure shall continue for a period of ten days, the Loan Leverage Level
shall be deemed to be Loan Leverage Level 4 (for purposes of determining the
Applicable Loan Margin on Loans and Letter of Credit fees), and the applicable
rate under Section 2.15 shall be deemed to be the highest rate set forth in
Section 2.15 (for purposes of determining unused-commitment fees), as
applicable, retroactive to the date on which Quiksilver should have delivered
such Covenant Compliance Certificate, and shall continue until a Covenant
Compliance Certificate indicating a different Loan Leverage Level is delivered
to the Agent.

         2.8      Computation of Interest and Fees.

                  (a)      Interest on Loans, unused-commitment fees and all
other Obligations of the Borrowers shall be calculated on the basis of a 360-day
year for the actual days elapsed, provided, however, that interest on
obligations denominated in Pounds Sterling shall be calculated on the basis of a
365-day year. The Agent shall as soon as practicable notify the Borrowers and
the Lenders of each determination of a LIBO Rate. Any change in the interest
rate on a Revolving Loan resulting from a change in the Alternate Base Rate or
the LIBOR Reserve Requirements shall become effective as of the opening of
business on the day on which such change in the Alternate Base Rate is announced
or such change in the LIBOR Reserve Requirements becomes effective, as the case
may be. The Agent shall as soon as practicable notify the Borrowers and the
Lenders of the effective date and the amount of each such change in interest
rate.

                  (b)      Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrowers and the Lenders in the absence of manifest error.

<PAGE>

                                                                              34

         2.9      Inability to Determine Interest Rate. In the event that, prior
to the first day of any Interest Period, (a) the Agent shall have determined
(which determination shall be conclusive and binding upon the Borrowers absent
manifest error) that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the LIBO Rate for
such Interest Period or (b) the Agent shall have received notice from the
Majority Lenders acting in good faith that the LIBO Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect the
cost to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Revolving Loans during such Interest Period, the
Agent shall give telecopy or telephonic notice thereof to the related Borrowers
and the Lenders as soon as practicable thereafter. If such notice is given, (i)
any LIBOR Loans requested to be made on the first day of such Interest Period
shall accrue interest at the Alternate Base Rate, (ii) Revolving Loans that were
to have been converted on the first day of such Interest Period to LIBOR Loans
shall be continued as ABR Loans and (iii) any outstanding LIBOR Loans shall be
converted, on the first day of such Interest Period, to ABR Loans. Until such
notice has been withdrawn by the Agent, no further LIBOR Loans shall be made or
continued as such, nor shall the Borrower have the right to convert ABR Loans to
LIBOR Loans.

         2.10     Pro Rata Treatment and Payments. Each borrowing by the
Borrowers from the Lenders hereunder, and any reduction of the Aggregate
Revolving Loan Commitment, shall be made pro rata according to the respective
Revolving Loan Commitment Percentages of the Lenders. Each payment (including
each prepayment) by the Borrowers on account of principal of and interest on the
Loans shall be made pro rata according to the respective outstanding principal
and interest amounts of the Revolving Loans then held by the Lenders. All
payments (including prepayments) to be made by the Borrowers hereunder and under
the Notes, whether on account of principal, interest, fees or otherwise, shall
be made without setoff, deduction or counterclaim and shall be made prior to
11:00 a.m., New York City time, on the due date thereof to the Agent, for the
account of the applicable Lenders, at the Agent's office specified in Section
9.2, in US Dollars and in immediately available funds. The Agent shall
distribute such payments to the applicable Lenders promptly upon receipt in like
funds as received. If any payment hereunder (other than payments on the LIBOR
Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day, and, with respect to
payments of principal, interest thereon shall be payable at the then applicable
rate during such extension. If any payment on a LIBOR Loan becomes due and
payable on a day other than a Eurodollar Business Day, the maturity thereof
shall be extended to the next succeeding Eurodollar Business Day (and interest
shall continue to accrue thereon at the applicable rate) unless the result of
such extension would be to extend such payment into another calendar month, in
which event such payment shall be made on the immediately preceding Eurodollar
Business Day.

         2.11     Illegality. Notwithstanding any other provision herein, if any
change after the Closing Date in any Requirement of Law or in the interpretation
or application thereof shall make it unlawful for any Lender or Applicable
Lending Office to make or maintain LIBOR Loans as contemplated by this
Agreement, (a) the commitment of such Lender hereunder to make LIBOR Loans,
continue LIBOR Loans as such and convert ABR Loans to LIBOR Loans shall
forthwith be suspended during such period of illegality and (b) the Loans of
such Lender or Applicable Lending Office then outstanding as LIBOR Loans, if
any, shall be converted automatically to ABR Loans on the respective last days
of the then current Interest Periods with

<PAGE>

                                                                              35

respect to such Loans or within such earlier period as required by law. If any
such conversion of a LIBOR Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrowers shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 2.14.
To the extent that a Lender's LIBOR Loans have been converted to ABR Loans
pursuant to this Section 2.11, all payments and prepayments of principal that
otherwise would be applied to such Lender's LIBOR Loans shall be applied instead
to its ABR Loans.

         2.12     Increased Costs.

                  (a)      In the event that any change after the Closing Date
in any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law but, if not having the force of law, generally applicable to
and complied with by banks and financial institutions of the same general type
as such Lender in the relevant jurisdiction) from any central bank or other
Governmental Authority made subsequent to the Closing Date:

                           (i)      shall impose, modify or hold applicable any
         reserve, special deposit, compulsory loan or similar requirement
         against assets held by, letters of credit or guarantees issued by,
         deposits or other liabilities in or for the account of, advances, loans
         or other extensions of credit by, or any other acquisition of funds by,
         any office of such Lender or Applicable Lending Office which is not
         otherwise included in the determination of the LIBO Rate hereunder; or

                           (ii)     shall impose on such Lender or Applicable
         Lending Office any other condition;

and the result of any of the foregoing is to increase the cost to any Issuing
Bank of issuing or maintaining any Letter of Credit by an amount which such
Issuing Bank deems to be material, or to such Lender or Applicable Lending
Office by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining LIBOR Loans, or purchasing or
maintaining any participation in a Letter of Credit, or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrowers
shall immediately pay to the Agent, for the account of such Issuing Bank, such
Lender or such Applicable Lending Office, as applicable, at the request of such
Issuing Bank or such Lender, as applicable, any additional amounts necessary to
compensate such Issuing Bank or such Lender, as applicable, for such increased
cost or reduced amount receivable. If any Issuing Bank, any Lender or any
Applicable Lending Office becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify the Borrowers, through the
Agent, of the event by reason of which it has become so entitled. A certificate
as to any additional amounts payable pursuant to this Section submitted by such
Issuing Bank, such Lender or such Applicable Lending Office, through the Agent,
to Quiksilver shall be conclusive evidence of the accuracy of the information so
recorded, absent manifest error. This covenant shall survive the termination of
this Agreement, the expiration of the Letters of Credit and the payment of the
Notes and all other amounts payable hereunder.

                  (b)      If, after the Closing Date, the introduction of or
any change in any applicable law, rule, regulation or guideline regarding
capital adequacy, or any change in the

<PAGE>

                                                                              36

interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof, affects the amount of capital
required or expected to be maintained by any Lender or any corporation
controlling any Lender, and such Lender (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy) determines that
the amount of capital maintained by such Lender or such corporation which is
attributable to or based upon the Revolving Loans, the Letters of Credit, the
Revolving Loan Commitments or this Agreement must be increased as a consequence
of such introduction or change by an amount deemed by such Lender to be
material, then, upon demand of the Agent at the request of such Lender, the
Borrowers shall immediately pay to the Agent for the account of such Lender,
additional amounts sufficient to compensate such Lender or such corporation for
the increased costs to such Lender or corporation of such increased capital. Any
such demand shall be accompanied by a certificate of such Lender setting forth
in reasonable detail the computation of any such increased costs, which
certificate shall be conclusive, absent manifest error. This covenant shall
survive the termination of this Agreement, expiration of the Letters of Credit
and the payment of the Notes and all other amounts payable hereunder.

         2.13     Taxes.

                  (a)      All payments made by the Borrowers in respect of the
Obligations shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority or any political subdivision or taxing authority thereof
or therein, other than Excluded Taxes (all such non-Excluded Taxes being
hereinafter called "Taxes"). If any Taxes are required to be withheld from any
amounts payable to the Agent or any Lender in respect of the Obligations, the
amounts so payable to the Agent or such Lender shall be increased to the extent
necessary to yield to the Agent or such Lender (after payment of all Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the Notes. The Agent or a Lender, as the
case may be, shall deliver to the Borrowers a certificate in good faith setting
forth the amount of such Taxes, the calculation of such Taxes and an explanation
of the requirement therefor, all in reasonable detail, and such certificate
shall be conclusive, absent manifest error. Whenever any Taxes are payable by
the Borrowers, as promptly as possible thereafter, Quiksilver shall send to the
Agent, for its own account or for the account of such Lender, as the case may
be, a copy of an original official receipt received by the Borrowers showing
payment thereof or such other evidence of payment reasonably satisfactory to the
Agent. If any Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other required
documentary evidence, such Borrower shall indemnify the Agent and the Lenders
for any incremental taxes, interest or penalties (and related reasonable fees
and expenses of counsel) that may become payable by the Agent or any Lender as a
result of any such failure. The agreements in this Section shall survive the
termination of this Agreement, the expiration of the Letters of Credit and the
payment of the Notes and all other amounts payable hereunder.

                  (b)      Each Lender that is not organized under the laws of
the United States of America or a state thereof agrees that it will deliver to
the Borrowers and the Agent (i) two duly completed copies of United States
Internal Revenue Service Form W-9, W-8BEN or W-8ECI (as applicable to it). Each
such Lender also agrees to deliver to the Borrowers and the Agent two

<PAGE>

                                                                              37

further copies of the said Form W-9, W-8BEN or W-8ECI (as applicable to it), or
successor applicable forms or other manner of certification, as the case may be,
on or before the date that any such form expires or becomes obsolete or after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrowers and the Agent, and such extensions
or renewals thereof as may reasonably be requested by the Borrowers or the
Agent, unless in any such case an event beyond the control of such Lender
(including any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it, and such Lender so advised the
Borrowers and the Agent. Each such Lender shall certify, pursuant to such Forms,
that it is entitled to receive payments under this Agreement and the Notes
without deduction or withholding of any United States federal income taxes.

         2.14     Indemnity. Each Borrower agrees to indemnify each Lender
against, to hold each Lender harmless from, and to pay each Lender within 5
Business Days of such Lender's demand the amount of, any liability, loss or
expense arising from the reemployment of funds obtained by it or from fees
payable to terminate the deposits from which such funds were obtained (including
reasonable fees and expenses of counsel) which such Lender may sustain or incur
as a consequence of (a) default by such Borrower in payment when due of the
principal amount of or interest on any LIBOR Loan, (b) default by such Borrower
in making a borrowing of, conversion into or continuation of the LIBOR Loans
after Quiksilver has given a notice requesting the same in accordance with the
provisions of this Agreement, (c) default by such Borrower in making any
prepayment after Quiksilver has given a notice thereof in accordance with the
provisions of this Agreement or (d) the making by such Borrower of a prepayment
or conversion of LIBOR Loans on a day which is not the last day of an Interest
Period with respect thereto (including any prepayment required as a result of
acceleration of the Loans under Article 7) as further described in Section 2.19.
A Lender's certificate as to such liability, loss or expense shall be deemed
conclusive, absent manifest error. This covenant shall survive the termination
of this Agreement, the expiration of the Letters of Credit and the payment of
the Notes and all other amounts payable hereunder.

         2.15     Unused-Commitment Fees. The Borrowers, jointly and severally,
agree to pay to the Lenders an unused-commitment fee to be shared pro rata among
the Lenders with respect to the Loan Commitments for the period from and
including the Closing Date to but excluding the Revolving Loan Commitment
Expiration Date, based on the daily aggregate Available Loan Commitments from
time to time in effect and computed at the applicable per annum rate set forth
below.

<TABLE>
<CAPTION>
     Loan                      Loan
Leverage Level            Leverage Level               Fee Rate
--------------            --------------               --------
<S>               <C>                               <C>
      1           (< or = 1.00)                     0.225% per annum
      2           (>      1.00 < or = 1.25)         0.250% per annum
      3           (>      1.25 < or = 1.50)         0.275% per annum
      4           (>      1.50)                     0.300% per annum
</TABLE>

<PAGE>

                                                                              38

Such fee shall be payable quarterly in arrears on the last day of each January,
April, July and October and on the Revolving Loan Commitment Expiration Date,
commencing on the first such date to occur after the Closing Date.

         2.16     Mitigation of Costs. If any Lender, by changing its Applicable
Lending Office or taking any other reasonable action, so long as making such
change or taking such other action is not disadvantageous to it in any
financial, regulatory or other respect, can mitigate any adverse effect on the
Borrowers under Section 2.9, 2.11, 2.12 or 2.13, such Lender shall take such
action.

         2.17     Quiksilver Europa Equity Pledge. With respect to any
foreclosure of the Quiksilver Europa Equity Pledge, the Borrowers, the Lenders
and the Agent agree as set forth below.

                  (a)      The Agent shall maintain in accordance with its usual
practice an account reflecting (i) the amount of principal lent by each Lender
hereunder (including participations in outstanding Letters of Credit), together
with any interest, commissions, fees or other sums due or to become due to such
Lender, and (ii) the amount of any sum received or recovered by such Lender.

                  (b)      The Agent shall calculate the amounts due under the
accounts referred to above. It is expressly agreed that, for purposes of
enforcement of the Quiksilver Europa Equity Pledge, either judicially or
extrajudicially, the amount resulting from the calculations referred to above
shall be considered due, liquidated and payable by the Borrowers, as such
amounts are reflected in a certificate issued by the Agent.

                  (c)      The Agent shall notify the Borrowers of the amount
due and payable resulting from the calculations described in Section 2.17(b).

                  (d)      For purposes of undertaking the ordinary executive
proceeding (procedimiento executivo ordinario) contemplated by Article 517 et
seq. of the Spanish Civil Procedure Law, the Borrowers, the Lenders and the
Agent expressly agree, for purposes of Article 571 et seq. of such law, that the
calculation to determine the amount that may be claimed under such proceeding
shall be made by the Agent. Consequently, in order to initiate the ordinary
executive proceeding, the following documents shall be sufficient: (i) either an
authorized copy (copia autentica) of the notarial deed of pledge (escritura
p?blica) or, alternatively, the original of the notarial deed (poliza) together
with a certificate issued by the notary public who intervened in the notarial
deed (poliza) attesting that the notarial deed (poliza) coincides with the
entries in his or her official registry book and with the dates of such entries;
(ii) notarized minutes (acta notarial) attaching the certificate of evidence of
debt issued by the Agent, accompanied by debit and credit entries, including
interest, showing the specific balance claimed under the enforcement proceeding,
and also attesting that the calculation of the debt has been made in the form
agreed to by the Borrowers, the Lenders and the Agent and that the balance due
coincides with that appearing on the account; and (iii) notarized minutes (acta
notarial) evidencing that the Borrowers have been notified of the due and
payable amount resulting from the calculations and liquidation of the account.

<PAGE>

                                                                              39

         2.18     Determination of US Dollar Equivalent. For purposes of the
Loan Documents, the US Dollar Equivalent of each Alternate Currency Loan and
each Letter of Credit denominated in an Alternate Currency shall be recalculated
(i) on each Borrowing Date, (ii) on the date that the Aggregate Revolving Loan
Commitment is reduced, (iii) on the last Business Day of each month unless the
US Dollar Equivalent was recalculated pursuant to clause (i) or (ii) during such
month, and (iv) from time to time, in the Agent's discretion. The US Dollar
Equivalent for each Alternate Currency Loan and each Letter of Credit
denominated in an Alternate Currency shall remain in effect until the same is
recalculated by the Agent as provided above and notice of such recalculation is
received by Quiksilver, it being understood that until such notice is received,
the US Dollar Equivalent shall be that US Dollar Equivalent. The Agent shall
promptly notify Quiksilver, the Issuing Bank and the Lenders of each such
determination of the US Dollar Equivalent for each Alternate Currency Loan and
each Letter of Credit denominated in an Alternate Currency.

         2.19     Break Funding Payments. In the event of (a) the payment of any
principal of any LIBOR Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
conversion of any LIBOR Loan other than on the last day of the Interest Period
applicable thereto, or (c) the failure to borrow, convert, continue or prepay
any LIBOR Loan on the date specified in any notice delivered pursuant hereto,
then, in any such event, the Borrowers shall compensate each Lender for the
loss, cost and expense attributable to such event. In the case of a LIBOR Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for US Dollar deposits
of a comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof. No Lender or Issuing Bank shall be entitled to the benefits of
this Section 2.19 unless such Lender or Issuing Bank shall have complied with
the requirements of this Section 2.19.

                                   ARTICLE 3.

                         REPRESENTATIONS AND WARRANTIES

         To induce the Lenders and the Agent to enter into this Agreement, to
induce the Lenders to make the Loans and participate in the Letters of Credit
and to induce the Issuing Banks to issue the Letters of Credit, the Borrowers
hereby severally represent and warrant to the Agent and each Lender that:

         3.1      Organization and Good Standing. Each Borrower and each
Subsidiary (a) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization,

<PAGE>

                                                                              40

(b) has all requisite power and authority (corporate, partnership, limited
liability company and otherwise) to own its properties and to conduct its
business as now conducted and as currently proposed to be conducted and (c)
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect, is duly qualified
to conduct business in, and is currently in good standing in, every jurisdiction
where such qualification is required. Each jurisdiction in which each Borrower
and each Subsidiary is organized or is qualified to conduct business is listed
on Schedule 3.1.

         3.2      Power and Authority. Each Borrower has all requisite power and
authority under applicable Requirements of Law to borrow hereunder. Each
Borrower and each Subsidiary has all requisite power and authority under
applicable Requirements of Law to execute, deliver and perform the obligations
under the Loan Documents to which it is a party. All actions, waivers and
consents (corporate, regulatory and otherwise) necessary for each Borrower to
execute, deliver and perform the Loan Documents to which it is a party have been
taken and/or received.

         3.3      Validity and Legal Effect. This Agreement constitutes, and the
other Loan Documents to which Quiksilver or any Subsidiary is a party constitute
(or will constitute when executed and delivered), the legal, valid and binding
obligations of each Borrower enforceable against it in accordance with the terms
thereof, except as enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights
generally or by equitable principles relating to enforceability.

         3.4      No Violation of Laws or Agreements. The execution, delivery
and performance of the Loan Documents (a) will not violate or contravene any
material Requirement of Law, (b) will not result in any material breach or
violation of, or constitute a material default under, any agreement or
instrument by which any Borrower or any of its respective property may be bound,
and (c) will not result in or require the creation of any Lien (other than
pursuant to the Loan Documents) upon or with respect to any properties of any
Borrower, whether such properties are now owned or hereafter acquired.

         3.5      Title to Assets; Existing Encumbrances. Each Borrower has good
and marketable title to all Properties purported to be owned thereby, free and
clear of any Liens, except (i) the Liens granted to the Agent for the benefit of
the Lenders under the Loan Documents and (ii) the other Liens against the assets
of each Borrower and each Subsidiary set forth on Schedule 3.5A. The property
and assets of each Borrower and its Subsidiaries are in good order and repair
(ordinary wear and tear excepted) and are fully covered by the insurance
required under the Loan Documents. No Borrower nor any Subsidiary has used (or
permitted the filing of any financing statement under) any legal or operating
name at any time during the twelve consecutive calendar months immediately
preceding the execution of this Agreement, except as identified on Schedule
3.5B.

         3.6      Taxes and Assessments. Each Borrower and its Subsidiaries has
timely filed all required tax returns and reports (federal, state and local) or
has properly filed for extensions of the time for the filing thereof. No
Borrower has knowledge of any deficiency, penalty or additional assessment due
or appropriate in connection with any such taxes. All taxes (federal, state and
local) imposed upon any Borrower or any Subsidiary or any of its properties,
operations or income have been paid and discharged prior to the date when any
interest or penalty would
<PAGE>

                                                                              41

accrue for the nonpayment thereof, except for (a) those taxes being contested in
good faith by appropriate proceedings diligently prosecuted and with adequate
reserves reflected on the financial statements in accordance with GAAP or (b) to
the extent that the failure to do so could not reasonably be expected to result
in a Material Adverse Effect. There are no taxes imposed on any Borrower or its
Subsidiaries by any political subdivision or taxing authority due or payable
either on or by virtue of the execution and delivery by the Borrowers, the
Agent, or the Lenders of this Agreement or any other Loan Document to which the
Borrowers are party, or on any payment to be made by the Borrowers pursuant
hereto or thereto.

         3.7      Litigation and Legal Proceedings. Except as disclosed on
Schedule 3.7, there is no litigation, claim, investigation, administrative
proceeding, labor controversy or similar action that is pending or, to the best
of any Borrower's knowledge, threatened (i) with respect to any Loan Document or
the transactions contemplated thereby or (ii) against any Borrower or any
Subsidiary that, if adversely resolved, could reasonably be expected to have a
Material Adverse Effect.

         3.8      Accuracy of Financial Information.

                  (a)      All information previously furnished to the Agent and
the Lenders that was prepared by or on behalf of the Borrowers concerning the
financial condition and operations of Quiksilver and its Subsidiaries, including
the audited consolidated financial statements of Quiksilver as of October 31,
2002 for the fiscal year then ended and the unaudited consolidated financial
statements of Quiksilver as of April 30, 2003 for the 6-month fiscal period then
ended, (A) has been prepared in accordance with GAAP consistently applied, (B)
is true, accurate and complete in all material respects, (C) fairly presents the
financial condition of the organizations covered thereby as of the dates and for
the periods covered thereby and (D) discloses all material liabilities
(contingent and otherwise) of Quiksilver and its Subsidiaries.

                  (b)      Since October 31, 2002 there has been no event or
condition resulting in a Material Adverse Effect.

         3.9      Accuracy of Other Information. All information contained in
any material application, schedule, report, certificate, or any other document
given to the Agent or any Lender by Quiksilver or any other Person in connection
with the Loan Documents is in all material respects true, accurate and complete,
and no such Person has omitted to state therein (or failed to include in any
such document) any material fact or any fact necessary to make such information
not misleading. All projections given to the Agent or any Lender by Quiksilver
or any other Person on behalf of Quiksilver have been prepared with a reasonable
basis and in good faith making use of such information as was available at the
date such projection was made. The projections and pro forma financial
information contained in such materials are based upon good faith estimates and
assumptions believed by Quiksilver to be reasonable at the time made and as of
the Closing Date, it being recognized that such projections as to future events
are not to be viewed as facts and that actual results during the period or
periods covered by any such projections may differ from the projected results.

         3.10     Compliance with Laws Generally. Each Borrower is in compliance
in all material respects with all Requirements of Law applicable to it, its
operations and its properties.

<PAGE>

                                                                              42

         3.11     ERISA Compliance.

                  (a)      Each Borrower is in compliance in all material
respects with all applicable provisions of ERISA, and all rules, regulations and
orders implementing ERISA.

                  (b)      No Borrower or any Subsidiary or any ERISA Affiliate
thereof, maintains or contributes to (or has maintained or contributed to) any
Multiemployer Plan under which any Borrower or any ERISA Affiliate thereof could
have any withdrawal liability.

                  (c)      No Borrower or any Subsidiary or any ERISA Affiliate
thereof sponsors or maintains any defined benefit pension plan under which there
is an accumulated funding deficiency within the meaning of Section 412 of the
Code, whether or not waived.

                  (d)      The liability for accrued benefits under each defined
benefit pension plan that will be sponsored or maintained by any Borrower, any
Subsidiary or any ERISA Affiliate thereof (determined on the basis of the
actuarial assumptions utilized by the PBGC) does not exceed the aggregate fair
market value of the assets under each such defined benefit pension plan.

                  (e)      The aggregate liability of each Borrower, each
Subsidiary and each ERISA Affiliate thereof arising out of or relating to a
failure of any employee benefit plan within the meaning of Section 3(2) of ERISA
to comply with provisions of ERISA or the Code will not have a Material Adverse
Effect.

                  (f)      There does not exist any unfunded liability
(determined on the basis of actuarial assumptions utilized by the actuary for
the Plan in preparing the most recent annual report) of each Borrower, any
Subsidiary or any ERISA Affiliate thereof under any Plan, program or arrangement
providing post-retirement, life or health benefits.

                  (g)      No Reportable Event and no Prohibited Transaction (as
defined in ERISA) has occurred or is occurring with respect to any Plan with
which Quiksilver or any Subsidiary is associated.

                  (h)      To the extent that any Borrower is subject to the
pension law of any jurisdiction other than the United States, each of the
representations contained in sections 3.11(a) through (g) would be true and
correct if (i) a reference to the corresponding provisions of such foreign
pension law were substituted for any reference to "ERISA" and the "Code" therein
or in the definition of any defined term used therein; (ii) any reference to an
"ERISA Affiliate" were deemed to be a reference to any person or entity with
respect to which the Borrower or any Subsidiary would have secondary or joint
and several liability under such foreign pension law; and (iii) to the extent
the foreign jurisdiction has a pension benefit insurance agency comparable to
the PBGC, a reference to such agency were substituted for each reference to the
PBGC therein.

         3.12     Environmental Compliance.

                  (a)      Each Borrower has received all permits and filed all
notifications necessary under and is otherwise in compliance in all material
respects with all national, federal, state and local laws, rules and
regulations, whether domestic or foreign, governing the control, removal,
storage, transportation, spill, release or discharge of hazardous or toxic
wastes,

<PAGE>

                                                                              43

substances and petroleum products, including as provided in the provisions of
and the regulations under (i) the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendment
and Reauthorization Act of 1986, (ii) the Solid Waste Disposal Act, (iii) the
Clean Water Act and the Clean Air Act, (iv) the Hazardous Materials
Transportation Act, (v) the Resource Conservation and Recovery Act of 1976 and
(vi) the Federal Water Pollution Control Act Amendments of 1972 (all of the
foregoing enumerated and non-enumerated statutes, including any applicable state
or local statutes, all as amended, collectively, the "Environmental Control
Statutes").

                  (b)      No Borrower has given any written or oral notice to
the Environmental Protection Agency ("EPA") or any state or local agency with
regard to any actual or imminently threatened removal, storage, transportation,
spill, release or discharge of hazardous or toxic wastes, substances or
petroleum products either (i) on properties owned or leased by Quiksilver or
such Subsidiary or (ii) otherwise in connection with the conduct of its business
and operations.

                  (c)      No Borrower has received notice that it is
potentially responsible for costs of clean-up of any actual or imminently
threatened spill, release or discharge of hazardous or toxic wastes or
substances or petroleum products pursuant to any Environmental Control Statute.

                  (d)      No judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of any Borrower,
threatened, under any Environmental Control Statute to which any Borrower is
named as a party with respect to the Properties or the business conducted at the
Properties, nor are there any consent decrees or ether decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Control Statute with respect to
the Properties or such business.

         3.13     Federal Regulations. No Letter of Credit and no part of the
proceeds of any Loans are intended to be or will be used, directly or indirectly
for any purpose which violates the provisions of the Regulations of the Board of
Governors of the Federal Reserve System. If requested by any Lender or the
Agent, each Borrower will furnish to the Agent and each Lender a statement to
the foregoing effect in conformity with the requirements of Form U-1 referred to
in Regulation U.

         3.14     Fees and Commissions. Except as required by Section 2.15 or
the letter referred to in Section 4.1(f), neither Quiksilver nor any Subsidiary
owes or will owe any fees or commissions of any kind in connection with this
Agreement or the transactions contemplated hereby, and Quiksilver does not know
of any claim (or any basis for any claim) for any fees or commissions in
connection with this Agreement or such transactions.

         3.15     Solvency. Immediately prior to, upon and immediately following
the execution of this Agreement and the funding of the Loans and the issuance of
any Letters of Credit to be funded or issued on the Closing Date, Quiksilver,
both individually and together with its Subsidiaries, was, is and will be
Solvent.

         3.16     Investment Company Act; Other Regulations. Neither Quiksilver
nor any Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.

<PAGE>

                                                                              44

         3.17     Nature of Business. Neither Quiksilver nor any Subsidiary is
engaged in any business other than the ownership and operation of retail apparel
stores, the design, sourcing, manufacture and distribution of consumer products
and services, primarily apparel and accessories, and the marketing, advertising
and promotion of those products and services, and the lifestyle associated with
such products and services.

         3.18     Ranking of Loans. This Agreement and the other Loan Documents
to which Quiksilver is a party, when executed, and the Loans, when borrowed are
and will be the direct and general obligations of Quiksilver. Quiksilver's
obligations hereunder and thereunder rank and will rank at least pari passu in
priority of payment to all other senior Indebtedness of Quiksilver.

         3.19     Subsidiaries. Quiksilver has no Subsidiaries other than those
listed on Schedule 3.1. As of the date of this Agreement, Quiksilver has the
Material Domestic Subsidiaries and Material Foreign Subsidiaries listed on
Schedule 3.19.

                                   ARTICLE 4.

                             CONDITIONS TO BORROWING

         4.1      Conditions to Closing. This Agreement shall become effective
on the Closing Date when, on or before the Closing Date, the following
conditions precedent have been satisfied, in form and substance satisfactory to
the Agent:

                  (a)      Credit Agreement. The Agent shall have received this
Agreement, duly executed and delivered by all parties.

                  (b)      Other Loan Documents. The Agent shall have received
(i) the Notes, (ii) the Security Agreement, (iii) the Guarantees made by all
Material Domestic Subsidiaries, (iv) the Guarantor Security Agreements made by
all Material Domestic Subsidiaries, (v) the Quiksilver Europa Equity Pledge and
related agreements and other documents, (vi) the QAPL Mortgage and related
agreements and other documents, (vii) all other agreements or instruments
required to create or perfect a security interest in the Collateral and/or the
Guarantor Collateral, in each case executed and delivered by officers of the
Borrowers and the Guarantors, as applicable, (viii) the Intercreditor Agreement,
and (ix) an amendment to the Leasehold Improvement Loan agreement consistent
with the prepayment carveout described in Section 2.4(b).

                  (c)      Incumbency Certificates. The Agent shall have
received incumbency certificates for each of the Borrowers and each Guarantor,
in each case dated as of the Closing Date and executed by such Obligor's
Secretary or Assistant Secretary.

                  (d)      Corporate Proceedings. The Agent shall have received
a copy of the resolutions of the Board of Directors of each of the Borrowers and
the Guarantors, authorizing (i) the execution, delivery and performance of the
Loan Documents to which such Obligor is or will be a party and (ii) in the case
of the Borrowers, the borrowings contemplated hereunder, in each case certified
by the Secretary or an Assistant Secretary of each Borrower and Guarantor, as
applicable, as of the Closing Date, which certificate states that such
resolutions thereby certified have not been amended, modified, revoked or
rescinded and are in full force and effect.

<PAGE>

                                                                              45

                  (e)      Organic Documents. The Agent shall have received
copies of the Organic Documents of each of the Borrowers and the Guarantors,
certified as of the Closing Date as complete and correct copies thereof by the
Secretary or an Assistant Secretary of each Borrower and each Guarantor, as
applicable.

                  (f)      Fees and Costs. The Agent shall have received payment
of all fees, costs and expenses, including legal fees and the fees set forth in
the fee side letter executed by Quiksilver and the Agent in connection herewith,
accrued and unpaid and otherwise due and payable on or before the Closing Date
by Quiksilver in connection with this Agreement.

                  (g)      Legal Opinions. The Agent shall have received the
executed legal opinion(s) of counsel to the Borrowers, each Guarantor, and each
pledgor, and Spanish counsel to the Lenders, in form and substance satisfactory
to the Agent.

                  (h)      Lien Searches. The Agent shall have received such UCC
and other Lien searches as it shall deem necessary.

                  (i)      Good-Standing Certificates. With respect to the
Borrowers (except as set forth in Section 4.3) and the Guarantors, the Agent
shall have received a certificate, dated a recent date, of the Secretary of
State of the state of formation of such Obligor and each other jurisdiction
where such Obligor is required to be qualified to do business under such
jurisdiction's law, certifying as to the existence and good standing of, and the
payment of taxes by, each Obligor in such state.

                  (j)      No Default / Representations. No Default shall have
occurred and be continuing on the Closing Date or would occur after giving
effect to the Loans requested to be made, or Letters of Credit requested to be
issued, on the Closing Date, and the representations and warranties contained in
this Agreement and each other Loan Document and certificate or other writing
delivered to the Lenders in satisfaction of the conditions set forth in this
Section 4.1 prior to or on the Closing Date shall be correct in all material
respects on and as of the Closing Date, and the Agent shall have received a
certificate of Quiksilver to such effect in the form of Exhibit C, dated as of
the Closing Date and executed by a Responsible Officer of Quiksilver.

                  (k)      Financial Information. The Agent shall have received
a Covenant Compliance Certificate as of April 30, 2003.

                  (l)      Additional Proceedings. The Agent shall have received
such other approvals, opinions and documents as any Lender, through the Agent,
may reasonably request, and all legal matters incidental to the making of such
Loans and issuance of such Letters of Credit shall be satisfactory to the Agent.

         4.2      Conditions to Each Loan or Letter of Credit. The agreement of
each Lender to make each Loan, and the agreement of each Issuing Bank to issue
each Letter of Credit, requested to be made or issued by it is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan
or the issuance of such Letter of Credit, of the following conditions precedent:

<PAGE>

                                                                              46

                  (a)      Representations and Warranties; No Default. The
following statements shall be true, and each Borrower's acceptance of the
proceeds of such Revolving Loan or its delivery of an executed Letter of Credit
Request shall be deemed to be a representation and warranty of the Borrowers on
the date of such Loan or as of the date of issuance of such Letter of Credit, as
applicable, that:

                           (i)      The representations and warranties contained
         in this Agreement and in each other Loan Document and certificate or
         other writing delivered to the Lenders prior to, on or after the
         Closing Date pursuant hereto and on or prior to the date for such Loan
         or the issuance of such Letter of Credit are correct on and as of such
         date in all material respects as though made on and as of such date
         except to the extent that such representations and warranties expressly
         relate to an earlier date; and

                           (ii)     No Default has occurred and is continuing or
         would result from the making of the Loan to be made on such date or the
         issuance of such Letter of Credit as of such date.

                  (b)      Legality. The making of such Loan or the issuance of
such Letter of Credit, as applicable, shall not contravene any law, rule or
regulation applicable to any Lender or the Borrowers or any other Obligor.

                  (c)      Borrowing Notice, Letter of Credit Request. The Agent
shall have received a Revolving Loan Borrowing Notice, a Swing Line Borrowing
Notice, and/or a Letter of Credit Request, as applicable, pursuant to the
provisions of this Agreement from the applicable Borrower.

                  (d)      First Advance. The Agent shall have received a copy
of a payoff and release letter from Union Bank of California, N.A., as
Administrative Agent, to Quiksilver upon payment to it, as agent, with proceeds
of the first advance made under this Agreement, of all amounts due to the
Lenders party to that certain Amended and Restated Revolving Credit and Term
Loan Agreement dated June 28, 2002, as amended, between Quiksilver and such
lenders (other than the obligations that expressly survive the termination
thereof, including obligations in relation to the letters of credit identified
in Schedule 2.2 hereof), and termination of all commitments of the lenders
thereunder to extend credit.

         4.3      Condition Subsequent. Within (a) 30 days after the Closing
Date, the Agent shall have received from the Borrowers (i) evidence,
satisfactory to the Agent, of cancellation of the deed of pledge of shares of
Quiksilver Europa S.L. granted on March 21, 2002 and (ii) evidence, satisfactory
to the Agent, of the creation of a pledge of the shares of Quiksilver Europa
S.L. in favor of the Agent and (b) a reasonably practicable time after the
Closing Date, the Agent shall have received from Na Pali, S.A.S. and Quiksilver
Japan K.K., a certificate or other evidence satisfactory to the Agent, dated a
recent date, from the state or jurisdiction of formation of such Borrower and
each other jurisdiction where such Borrower is required to be qualified to do
business under such jurisdiction's law, certifying as to the existence and good
standing of such Borrower in such state.

<PAGE>

                                                                              47

                                   ARTICLE 5.

                              AFFIRMATIVE COVENANTS

         The Borrowers hereby agree that from and after the Closing Date, so
long as any Revolving Loan Commitment remains in effect, any Note remains
outstanding and unpaid, any other amount is owing to any Lender or the Agent
hereunder or any Letter of Credit remains outstanding:

         5.1      Financial Statements.

                  (a)      Within 105 days after the end of each fiscal year,
Quiksilver shall deliver to the Lenders a complete set of audited annual
consolidated financial statements of Quiksilver, and unaudited consolidating
financial statements with respect to Quiksilver, each Domestic Subsidiary (to
the extent included in Quiksilver's consolidating financial statements
immediately before the date hereof), each Material Domestic Subsidiary, QAPL, Na
Pali, Quiksilver Europa, Quiksilver Japan K.K., Ug, and each other Material
Foreign Subsidiary, including a balance sheet, an income statement and a cash
flow statement (with accompanying notes and schedules) and a capital expenditure
schedule for such fiscal year segmented by domestic and foreign operations. Such
financial statements (i) must be prepared in accordance with GAAP consistently
applied and (ii) must be certified without qualification or exception by the
Accountants. Together with the audited financial statements, the Agent must also
receive (A) a copy of the opinion of the Accountants (without a "going concern"
or like qualification or exception, and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated financial
statements present fairly the financial condition and results of operations of
Quiksilver and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, (B) a certificate executed by the
Chief Financial Officer of Quiksilver certifying that the financial statements
fairly present the financial condition of Quiksilver and its Subsidiaries as of
the date thereof and for the period covered thereby and that as of the date of
such certificate such officer has obtained no knowledge of any Default except as
specified in such certificate, and (C) a Covenant Compliance Certificate.

                  (b)      Within 60 days after the end of each of Quiksilver's
first three fiscal quarters, Quiksilver shall deliver to the Lenders the
unaudited quarterly consolidated financial statements of Quiksilver and
unaudited consolidating financial statements with respect to Quiksilver, each
Domestic Subsidiary (to the extent included in Quiksilver's consolidating
financial statements immediately before the date hereof), each Material Domestic
Subsidiary, QAPL, Na Pali, Quiksilver Europa, Quiksilver Japan K.K., Ug and each
other Material Foreign Subsidiary, including a balance sheet, an income
statement and a cash flow statement (with accompanying notes and schedules).
Such financial statements shall be prepared in accordance with GAAP consistently
applied. Together with the quarterly financial statements, the Lenders must also
receive (i) a certificate executed by the Chief Financial Officer of Quiksilver
(A) stating that the financial statements fairly present the financial condition
of Quiksilver and its Subsidiaries as of the date thereof and for the period
covered thereby and (B) certifying that as of the date of such certificate such
officer has obtained no knowledge of any Default except as specified in such
certificate and (ii) a Covenant Compliance Certificate.

<PAGE>

                                                                              48

                  (c)      Within 105 days after the end of each fiscal year,
Quiksilver shall deliver to the Lenders its projections with respect to the
financial performance of Quiksilver and its Subsidiaries for the fiscal year
commencing on the immediately preceding November 1. Such projections shall
include quarterly cash-flow forecasts, quarterly consolidating balance sheets
and quarterly consolidating income statements and shall otherwise be in form and
scope reasonably satisfactory to the Agent.

         5.2      Certificates; Other Information. Quiksilver shall furnish to
the Agent, for distribution to the Lenders:

                  (a)      within 10 days after the same are filed, copies of
all financial statements and reports which Quiksilver or any Subsidiary may make
to, or file with, the Securities and Exchange Commission or any successor
Governmental Authority;

                  (b)      promptly but, in any event, within 10 days after
receipt thereof, copies of all financial reports (including management letters),
if any, submitted to Quiksilver or any Subsidiary by the Accountants in
connection with any annual or interim audit of the books thereof;

                  (c)      as soon as possible and in any event within five
Business Days after the occurrence of a Default or, in the good faith
determination of a Responsible Officer of Quiksilver, a Material Adverse Effect,
the written statement by a Responsible Officer of Quiksilver, setting forth the
details of such Default or Material Adverse Effect and the action which
Quiksilver proposes to take with respect thereto;

                  (d)      (A) as soon as possible and in any event within 30
days after Quiksilver knows or has reason to know that any Termination Event
with respect to any Plan has occurred, a statement of a Responsible Officer of
Quiksilver describing such Termination Event and the action, if any, which
Quiksilver proposes to take with respect thereto, (B) promptly and in any event
within ten days after receipt thereof by Quiksilver or any ERISA Affiliate of
Quiksilver from the PBGC, copies of each notice received by Quiksilver or such
ERISA Affiliate of the PBGC's intention to terminate any Plan or to have a
trustee appointed to administer any Plan, (C) promptly and in any event within
30 days after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
with respect to each Single Employer Plan maintained for or covering employees
of Quiksilver or any Subsidiary if the present value of the accrued benefits
under the Plan exceeds its assets by an amount in excess of $500,000, (D)
promptly and in any event within ten days after receipt thereof by Quiksilver or
any ERISA Affiliate of Quiksilver from a sponsor of a Multiemployer Plan or from
the PBGC, a copy of each notice received by Quiksilver or such ERISA Affiliate
concerning the imposition or amount of withdrawal liability under Section 4202
of ERISA or indicating that such Multiemployer Plan may enter reorganization
status under Section 4241 of ERISA, and (E) the information that would be
required under clauses (A) through (D) if the corresponding provisions of the
pension law of any foreign jurisdiction under which Quiksilver or any Subsidiary
may have liability were substituted for each reference to ERISA and the Code
therein and in the definition of any defined term used therein;

<PAGE>

                                                                              49

                  (e)      promptly after the commencement thereof, but in any
event not later than 10 days after service of process with respect thereto on,
or the obtaining of knowledge by, Quiksilver or any Subsidiary, notice of (i)
each material action, suit or proceeding before any Governmental Authority and
(ii) any claim under any Environmental Control Statute;

                  (f)      promptly upon any Subsidiary's becoming a Material
Domestic Subsidiary or a Material Foreign Subsidiary, or upon Quiksilver's
direct or indirect creation or acquisition of a Material Domestic Subsidiary or
a Material Foreign Subsidiary, notice of the same; and

                  (g)      promptly, such additional financial information as
any Lender, through the Agent, may from time to time reasonably request.

         5.3      Payment of Obligations. Quiksilver shall, and shall cause each
of its Subsidiaries to, pay, discharge or otherwise satisfy at or before
maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature (including all taxes, assessments, governmental
charges and levies), except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP with respect thereto have been provided on the books of
Quiksilver or such Subsidiaries, as the case may be.

         5.4      Conduct of Business; Maintenance of Existence and Licenses;
Contractual Obligations. Each Borrower shall, and shall cause each of its
Subsidiaries to, (a) continue to engage in business of the same general type as
conducted by Quiksilver and such Subsidiaries as of the date hereof, (b)
preserve, renew and keep in full force and effect its corporate or other legal
existence, unless the Board of Directors of any Subsidiary other than a Material
Domestic Subsidiary or a Material Foreign Subsidiary determines that the
preservation of its corporate or other legal existence is no longer desirable,
and the loss thereof could not reasonably be expected to have a Material Adverse
Effect, (c) maintain all rights, registrations, licenses, privileges and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to so maintain would not have a Material Adverse
Effect, and (iv) comply with all Contractual Obligations except to the extent
that failure to comply therewith would not have a Material Adverse Effect.

         5.5      Maintenance of Property; Insurance. Each Borrower shall, and
shall cause each of its Subsidiaries to, keep all property useful or necessary
in its business in good working order and condition (ordinary wear and tear
excepted); maintain with financially sound and reputable insurance companies or
associations insurance on such of its property in at least such amounts and
against such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to the Agent
evidence of the continued effectiveness of such insurance at all times (but with
respect to Foreign Subsidiaries, only upon request by the Agent). All such
policies of insurance on the property of Quiksilver and the Domestic
Subsidiaries shall contain an endorsement, in form and substance satisfactory to
the Agent, (a) showing the Agent, for the benefit of the Lenders, as additional
insured or loss payee, as appropriate, and (b) providing that the insurance
companies will give the Agent at least 20 days' prior written notice before any
such policy or policies of insurance shall be materially altered or canceled.
All policies of insurance required to be maintained under this Agreement shall
be in customary form and with insurers reasonably acceptable to the Agent and
all such

<PAGE>

                                                                              50

policies shall be in such amounts as shall be customary for similar companies in
the same or similar business in the same geographical area. Quiksilver shall
deliver to the Agent insurance certificates certified by Quiksilver's insurance
brokers, as to the existence and effectiveness of each policy of insurance and
evidence of payment of all premiums then due and payable therefor. In addition,
Quiksilver shall notify the Agent promptly of any occurrence causing a material
loss of any insured Property and the estimated (or actual, if available) amount
of such loss. In addition, Quiksilver shall cause the insurance policies
maintained by it and the Domestic Subsidiaries to be in conformity with the
following:

                           (i)      Each policy for liability insurance shall
         provide for all losses to be payable to the Agent and Quiksilver or a
         Domestic Subsidiary (as the case may be), as their respective interests
         may appear, and each policy for property damage insurance shall, to the
         extent applicable to equipment and inventory, provide for all losses
         (except for losses of less than US$1,000,000 per occurrence, which may
         be paid directly to Quiksilver or such Domestic Subsidiary, as
         applicable) to be paid directly to the Agent.

                           (ii)     Reimbursement under any liability insurance
         maintained by Quiksilver or its Subsidiaries pursuant to this Section
         5.5 may be paid directly to the Person who shall have incurred
         liability covered by such insurance. In the case of any loss involving
         damage to equipment or inventory as to which clause (iii) of this
         Section 5.5 is not applicable, Quiksilver will make or cause to be made
         the necessary repairs to or replacements of such equipment or
         inventory, and any proceeds of insurance maintained by Quiksilver or
         its Domestic Subsidiaries pursuant to this Section 5.5 shall be paid by
         the insurer or the Agent, as applicable, to Quiksilver or the
         applicable Domestic Subsidiary, upon presentation of invoices and other
         evidence of obligations, as reimbursement for the costs of such repairs
         or replacements. Any such payment by the Agent shall not be
         unreasonably withheld or delayed.

                           (iii)    Upon the occurrence and during the
         continuance of a Default, all insurance proceeds in respect of any
         equipment or inventory shall be paid to the Agent and applied in
         repayment of the Loans in such order as the Agent may reasonably
         determine, but in any event pro rata among the Lenders.

         5.6      Inspection of Property; Books and Records; Discussions. Each
Borrower shall, and shall cause each of its Subsidiaries to, (a) keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all material Requirements of Law shall be made of all
material dealings and transactions in relation to its business and activities
and (b) upon reasonable notice and at such reasonable times during usual
business hours, permit representatives of any Lender to visit and inspect any of
its properties and examine and make abstracts from any of its books and records
at any reasonable time and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of
Quiksilver and its Subsidiaries with officers and employees of Quiksilver and
its Subsidiaries and with its Accountants.

         5.7      Environmental Laws. Each Borrower shall, and shall cause each
of its Subsidiaries to:

<PAGE>

                                                                              51

                  (a)      Comply in all material respects with, and ensure
compliance by all tenants and subtenants, if any, with, all applicable
Environmental Control Statutes and obtain and comply in all material respects
with any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Control Statutes;

                  (b)      Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required under
Environmental Control Statutes and promptly comply in all material respects with
all lawful orders and directives of all Governmental Authorities regarding
Environmental Control Statutes except to the extent that the same are being
contested in good faith by appropriate proceedings; and

                  (c)      Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective employees, agents, officers and directors, from
and against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Control
Statutes applicable to the operations of Quiksilver or any of its Subsidiaries,
or Quiksilver's or any of its Subsidiaries' interest in Properties, or any
orders, requirements or demands of Governmental Authorities related thereto,
including attorneys' and consultants' fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing arise out of the gross negligence or willful misconduct of
the party seeking indemnification therefor. This indemnity shall continue in
full force and effect regardless of the termination of this Agreement, the
expiration of the Letter of Credit and the payment of the Notes and all other
amounts payable hereunder.

         5.8      Use of Proceeds. The Borrowers will use the proceeds of the
Revolving Loans solely to provide funds for working capital, capital
expenditures, acquisitions permitted by Section 6.7(d), the indebtedness
described in Section 4.2(d) and general corporate purposes of the Borrowers.
Commercial Letters of Credit shall be used only for the purpose of supporting
purchases of inventory by the Borrowers. Standby Letters of Credit shall be used
only to provide support for direct business activities of the Borrowers as
agreed to by the Agent. Notwithstanding anything herein to the contrary, no Loan
or Letter of Credit shall be used for the purchasing or carrying of any Margin
Stock.

         5.9      Compliance with Laws, Etc. Each Borrower shall comply, and
shall cause each of its Subsidiaries to comply, in all material respects with
all applicable Requirements of Law.

         5.10     Guarantees, Etc.

                  (a)      Quiksilver will cause each of its Material Domestic
Subsidiaries to execute and deliver to the Agent, promptly upon request thereby,
(i) a Guarantee guaranteeing the Obligations, (ii) a Guarantor Security
Agreement granting to the Agent, for the benefit of the Lenders, a security
interest in the tangible and intangible personal property (excluding trademarks,
trade names and other intellectual-property rights) of such Domestic Subsidiary,
together with appropriate Lien searches requested by the Agent indicating the
Lenders' first- priority Lien on such personal property and (iii) UCC-1
Financing Statements, duly executed by such Subsidiary, in form and substance
satisfactory to the Agent and, in connection with such

<PAGE>

                                                                              52

deliveries, cause to be delivered to the Agent (A) a favorable written opinion
of counsel satisfactory to the Agent as to such matters relating thereto as any
Lender through the Agent may reasonably request, in form and substance
satisfactory to the Agent, (B) such other agreements, instruments, approvals or
other documents as any Lender through the Agent may reasonably request, and (C)
copies of the organizational documents, resolutions and incumbency certificates
of such Domestic Subsidiary.

                  (b)      Quiksilver will, and will cause each Material Foreign
Subsidiary and each Subsidiary holding any equity interest in a Material Foreign
Subsidiary to, deliver to the Agent, promptly upon request thereby, (i) a pledge
of 65% of the equity interests in such Foreign Subsidiary (or such greater
amount of such equity interests as shall not cause Quiksilver to incur material
adverse tax consequences under United States tax law), (ii) such agreements,
certificates, filings, notices, consents and other actions as the Agent may
request to evidence and perfect such pledge and (iii) an executed legal opinion
of local counsel to Quiksilver, such Foreign Subsidiary and such Subsidiary in
form and substance, and from a firm of attorneys, reasonably acceptable to the
Agent; provided, however, that no such deliveries shall be required with respect
to any Material Foreign Subsidiary which is wholly-owned by a Foreign Subsidiary
with respect to which the Borrower has complied with this Section 5.10(b).

                                   ARTICLE 6.

                               NEGATIVE COVENANTS

         The Borrowers hereby agree that from and after the Closing Date, so
long as any Revolving Loan Commitment remains in effect, any Note remains
outstanding and unpaid, any other amount is owing to any Lender or the Agent
hereunder or any Letter of Credit remains outstanding:

         6.1      Financial Condition Covenants. The Borrowers shall not:

                  (a)      Maximum Leverage Ratio. Permit the Maximum Leverage
Ratio of Quiksilver and its Subsidiaries on a consolidated basis, as of the end
of any fiscal quarter of Quiksilver, to exceed 2.00:1.

                  (b)      Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio of Quiksilver and its Subsidiaries on a consolidated basis, as of
the end of any fiscal quarter of Quiksilver, to be less than 1.25:1.

                  (c)      Minimum Profitability. Permit, with respect to
Quiksilver and its Subsidiaries on a consolidated basis, a net loss to exist on
a rolling four-quarter basis.

         6.2      Limitation on Indebtedness. The Borrowers shall not create,
incur, assume or suffer to exist any Indebtedness, and shall not permit any of
their Subsidiaries, to create, incur, assume or suffer to exist any
Indebtedness, except for:

                  (a)      Indebtedness created hereunder and under the other
Loan Documents;

<PAGE>

                                                                              53

                  (b)      Indebtedness of the Borrowers and Guarantors, and
their Subsidiaries outstanding on the date hereof and listed, together with all
lines of credit and other credit facilities to which they are a party, including
any renewals and/or replacements thereof on Schedule 6.2;

                  (c)      Indebtedness (i) evidenced by performance bonds
issued in the ordinary course of business or reimbursement obligations in
respect thereof, provided that such Indebtedness, when combined with
Indebtedness permitted by Section 6.2(i), does not exceed US$20,000,000 in
aggregate principal amount at any time outstanding, (ii) evidenced by a letter
of credit facility related to insurance associated with claims for work-related
injuries or (iii) for bank overdrafts incurred in the ordinary course of
business that are promptly repaid;

                  (d)      trade credit incurred to acquire goods, supplies and
services incurred in the ordinary and normal course of business;

                  (e)      Lease Expenses;

                  (f)      Indebtedness of the Borrowers with respect to the
Leasehold Improvement Loan together with up to US$25,000,000 of additional
leasehold improvement financing described in Section 6.3(h);

                  (g)      Indebtedness of QAPL to the former shareholders of
QIPL for the deferred purchase price for the acquisition of the shares of QIPL
by QAPL, and Indebtedness of Quiksilver in respect of its guaranty of such
Indebtedness of QAPL;

                  (h)      Indebtedness of Quiksilver Japan K.K. under a line of
credit for working capital purposes in an amount not exceeding the Alternate
Currency Equivalent of US$10,000,000 in aggregate principal amount at any time
outstanding; and

                  (i)      Indebtedness of the Borrowers in addition to the
foregoing, provided that such Indebtedness, when combined with Indebtedness
permitted by Section 6.2(c)(i), does not exceed US$20,000,000 in aggregate
principal amount at any time outstanding.

         6.3      Limitation on Liens. The Borrowers shall not, and shall not
permit any of their Subsidiaries to, create, incur, assume or suffer to exist
any Lien upon any of their property, assets or revenues (including trademarks,
copyrights and other intellectual-property rights), whether now owned or
hereafter acquired, except for:

                  (a)      Liens created hereunder or under any of the other
Loan Documents;

                  (b)      Liens existing on any Property (other than
trademarks, copyrights and other intellectual-property rights) at the time of
its acquisition and not created in anticipation of such acquisition;

                  (c)      Liens for taxes not yet due or that are being
contested in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the relevant
Borrower or any relevant Subsidiary, as the case may be, in conformity

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                                                                              54

with GAAP or accounting principles generally accepted in Spain, Japan or
Australia, as applicable;

                  (d)      Liens created by operation of law not securing the
payment of Indebtedness for money borrowed or guaranteed, including carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are not overdue for a period of
more than 45 days or which are being contested in good faith by appropriate
proceedings;

                  (e)      pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under insurance or
self-insurance arrangements;

                  (f)      deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;

                  (g)      easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, would not cause a Material Adverse Effect;

                  (h)      Liens in favor of (i) the Leasehold Improvement
Lender securing the Leasehold Improvement Loan and (ii) other leasehold
improvement lenders who have become parties to an intercreditor agreement
acceptable to the Agent, to secure an aggregate amount of up to US$ 25,000,000
of additional financing for the build-out of retail stores expected to be opened
and/or existing stores which may be expanded, which Liens are subject to the
terms of the Intercreditor Agreement;

                  (i)      any Lien on assets (other than trademarks, copyrights
and other intellectual-property rights) of Quiksilver Japan K.K. securing
Indebtedness of such Person permitted under Section 6.2(h); and

                  (j)      Liens securing Indebtedness incurred after the date
hereof to purchase, or to finance the purchase of, fixed assets, provided that
(i) any such Lien is limited to the fixed asset or assets acquired or financed,
and any subsequent improvements thereto, and (ii) such Indebtedness is otherwise
permitted under Section 6.2(i); and a Lien on QIPL's trademark rights to the
Quiksilver name, logo and related intellectual property in the territories of
Australia and New Zealand, in favor of the former shareholders of QIPL, to
secure the obligation of QAPL to pay the final installment of the purchase price
for the acquisition of the shares of QIPL by QAPL.

         6.4      Limitation on Fundamental Changes. Quiksilver shall not, and
shall not permit any of its Subsidiaries to, enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), except as permitted by Section 5.4, or
create or acquire any Subsidiary, or convey, sell, lease, assign, transfer or
otherwise dispose of all or substantially all of its property, business or
assets, except that Quiksilver may consummate Acquisitions permitted by Section
6.7.

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                                                                              55

         6.5      Limitation on Sale of Assets. Quiksilver shall not, and shall
not permit any of its Subsidiaries to, make any Asset Disposition unless (i)
such Asset Disposition is for fair market value, (ii) the consideration for such
Asset Disposition is all cash, (iii) no Default has occurred and is continuing
or would result from such Asset Disposition and (iv) the consideration for such
Asset Disposition, when aggregated with the consideration for all previous Asset
Dispositions during the same calendar year, does not exceed US$10,000,000.

         6.6      Limitation on Dividends. Quiksilver shall not, and shall not
permit any of its Subsidiaries to, (a) if a corporation, declare or pay any
dividend (other than dividends payable solely in common stock of Quiksilver or
its Subsidiaries) on, or make any payment on account of, or set apart assets for
a sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any shares of any class of Capital Stock of
Quiksilver or its Subsidiaries or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, and (b) if a partnership or
a limited liability company, make any distribution with respect to the ownership
interests therein, or, in either case, any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of Quiksilver or any Subsidiary (such declarations, payments,
setting apart, purchases, redemptions, defeasance, retirements, acquisitions and
distributions being herein called "Restricted Payments") provided, however, that
(i) from and including November 1, 2003 to but excluding the Revolving Loan
Commitment Expiration Date, Quiksilver shall be permitted to make payments on
account of, and set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of any shares
of its common stock, or any warrants or options to purchase its common stock,
not exceeding US$20,000,000 in the aggregate, so long as no Default has occurred
and is continuing or would be caused by any of the foregoing, (ii) Quiksilver
and its Subsidiaries shall be permitted to make other Restricted Payments so
long as no Default has occurred and is continuing or would be caused thereby and
(iii) the Subsidiaries shall in any case be permitted to pay cash dividends and
other distributions, directly or indirectly, to Quiksilver.

         6.7      Limitation on Investments, Loans and Advances. Quiksilver
shall not, and shall not permit any of its Subsidiaries to, make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in (any of the foregoing, an
"investment"), any Person, or otherwise make any Acquisition, except for:

                  (a)      Quiksilver's ownership interests in its current
Subsidiaries;

                  (b)      investments in marketable securities, liquid
investments and other financial instruments that are acquired for investment
purposes and may be readily sold or otherwise liquidated, that have a value
which may be readily established and which are investment grade;

                  (c)      extensions of trade credit in the ordinary course of
business;

                  (d)      Acquisitions of Persons or businesses in the same
line of business as that described in Section 3.17, provided that (i) no Default
has occurred and is continuing or would result from the consummation of such
Acquisition (and Quiksilver shall have delivered to the

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                                                                              56

Agent a Covenant Compliance Certificate showing pro forma calculations, as of
the most recent quarter-end for which a Covenant Compliance Certificate has been
provided by Quiksilver and as of each additional quarter-end through the
Revolving Loan Commitment Expiration Date, assuming such Acquisition had been
consummated), (ii) the aggregate Consideration therefor shall not exceed
US$25,000,000, annually, and US$50,000,000 in the aggregate between the Closing
Date and the Maturity Date, (iii) the Agent shall have received, reviewed and
approved all documents requested by the Agent to insure that the Lenders have a
first-priority security interest in, and assignment of, all personal property
assets and interests acquired (excluding intellectual property), to the extent
that a security interest in such assets and interests is required by the terms
of this Agreement, including consents of third parties if reasonably requested,
and (iv) such Acquisition is not opposed by the Person to be, or whose business
is to be, acquired;

                  (e)      investments existing on the date hereof and listed on
Schedule 6.7;

                  (f)      loans and advances to officers and employees of
Quiksilver or any Subsidiary, provided that such loans and advances do not
exceed US$5,000,000 in aggregate principal amount at any time outstanding;
provided, however, that an individual's use of a cashless exercise procedure to
pay the exercise price and required tax withholding (or either of them) in
connection with his exercise of a compensatory option to purchase stock issued
by any Borrower shall not give rise to a loan or advance for the purposes of
this Section 6.7(f) to the extent that all funds representing full payment of
such option exercise price and required tax withholding are actually remitted to
such Borrower before the close of business on either (i) the date of exercise of
the stock option or (ii) the date of issuance of the stock pursuant to the
option exercise; and

                  (g)      other loans and/or advances not to exceed
US$5,000,000.

         6.8      Transactions with Affiliates. Quiksilver shall not, and shall
not permit any of its Subsidiaries to, enter into any transaction, including any
purchase, sale, lease or exchange of property or the rendering of any service,
with any Affiliate or with any Subsidiary that has not executed a Guarantee and
Guarantor Collateral Documents, unless such transaction is in the ordinary
course of Quiksilver's or such Subsidiary's business and is upon terms no less
favorable to Quiksilver or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person not an Affiliate
or a Subsidiary.

         6.9      Fiscal Year. Quiksilver shall not permit its fiscal year or
the fiscal year of any of its Subsidiaries (other than Foreign Subsidiaries) to
end on a day other than October 31.

         6.10     Sale-Leaseback Transactions. Quiksilver shall not, and shall
not permit any of its Subsidiaries to, sell, assign or otherwise transfer any of
its Properties, rights or assets (whether now owned or hereafter acquired) to
any Person and thereafter directly or indirectly lease back the same or similar
property for consideration exceeding US$5,000,000 in the aggregate in any
calendar year.

         6.11     Unfunded Liabilities. Quiksilver shall not permit unfunded
liabilities for any and all Plans maintained for or covering employees of
Quiksilver or any Subsidiary to exceed US$500,000 in the aggregate at any time.

<PAGE>

                                                                              57

         6.12     Hedging Obligations. Quiksilver shall not, and shall not
permit any of its Subsidiaries to, enter into any Hedging Arrangement, except
that Quiksilver or any Subsidiary may enter into any Hedging Arrangement that
(a) is of a non-speculative nature, (b) is for the purpose of hedging
Quiksilver's or such Subsidiary's reasonably estimated interest rate, foreign
currency or commodity exposure and (c) in the case of Quiksilver or any Domestic
Subsidiary, is with a Lender.

                                   ARTICLE 7.

                                EVENTS OF DEFAULT

          If any of the following events shall occur and be continuing:

                  (a)      The Borrowers shall fail to pay any principal on any
Note when due, or the Borrowers shall fail to pay any interest on any Note, any
fee referred to in this Agreement or the letter referred to in Section 4.1(f) or
any other amount payable hereunder when due; or

                  (b)      Any representation or warranty made or deemed made by
any Obligor herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or any other Loan Document shall
prove to have been incorrect in any material respect when made or deemed made;
or

                  (c)      The Borrowers shall default in the observance or
performance of any agreement contained in Sections 4.3, 5.2(c), 5.5 (limited to
the second clause of the first sentence thereof), 5.6, 5.8 or 5.10 or in any
provision of Article 6; or

                  (d)      Any Obligor shall default in the observance or
performance of any other material agreement contained in this Agreement or the
other Loan Documents (other than as provided in paragraphs (a) through (c) of
this Section), and such default shall continue unremedied for a period of 30
days after the earlier of (i) notice thereof from the Agent to Quiksilver and
(ii) actual knowledge thereof by a Responsible Officer of such Obligor; or

                  (e)      Any material provision of any Loan Document shall at
any time for any reason be declared null and void, or the validity or
enforceability of any Loan Document shall at any time be contested by any
Obligor, or a proceeding shall be commenced by any Obligor, or by any
Governmental Authority or other Person having jurisdiction over any Obligor,
seeking to establish the invalidity or unenforceability thereof, or any Obligor
shall deny that it has any liability or obligation purported to be created under
any Loan Document; or

                  (f)      Any Obligor shall (i) default in any payment of
principal or interest, regardless of the amount, due in respect of any (A)
Indebtedness (other than the Notes), issued under the same indenture or other
agreement, if the original principal amount of Indebtedness covered by such
indenture or agreement is US$750,000 or greater or (B) Guarantee Obligation with
respect to an amount of US$750,000 or greater, in either case beyond the period
of grace, if any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created, whether or not such default
has been waived by the holders of such Indebtedness or Guarantee Obligation; or
(ii) default in the observance or performance of any

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                                                                              58

other material agreement or condition relating to any such Indebtedness or
Guarantee Obligation or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or such Guarantee Obligation to become payable or such
Indebtedness to be required to be defeased or purchased; or any "Event of
Default" under the Term Loan Agreement (as defined in the Intercreditor
Agreement) shall occur; provided, however, that any default by an Obligor under
a Guarantee Obligation with respect to a real property lease shall not
constitute a Default under this Section 7(f) if such Obligor is contesting the
validity of such default in good faith by appropriate proceedings, such Obligor
is maintaining reserves in conformity with GAAP with respect thereto and such
default could not reasonably be expected to have a Material Adverse Effect; or

                  (g)      (i) Any Obligor shall commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets, or any Obligor shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Obligor any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains undismissed,
undischarged, unstayed or unbonded for a period of 60 days; or (iii) there shall
be commenced against any Obligor any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof, or (iv)
any Obligor shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), or (iii) above; or (v) any Obligor shall generally not, or shall be unable
to, or shall admit in writing its inability to, pay its debts as they become due
or there shall be a general assignment for the benefit of creditors; or

                  (h)      (i) Any Person shall engage in any non-exempt
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall be
appointed, to administer or to terminate any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee
would reasonably be expected to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA (other than a standard termination), (v)
Quiksilver or any Commonly Controlled Entity would reasonably be expected to
incur any liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan, or (vi) any of clauses (i) through (v)
would be true if a reference under the laws of any

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                                                                              59

foreign jurisdiction having a pension law similar to ERISA if a reference to the
corresponding provisions of such law were substituted for each reference to
ERISA and the Code therein and in the definition of any defined term used
therein and in each case regarding clauses (i) through (vi) herein, such event
or condition, together with all other such events or conditions, if any, would
reasonably be expected to subject any Obligor to any tax, penalty or other
liabilities in the aggregate to exceed US$500,000; or

                  (i)      One or more judgments or decrees shall be entered
against any Obligor involving in the aggregate a liability (not paid or fully
covered by insurance) of US$250,000 or more, and all such judgments or decrees
shall not have been vacated, discharged, stayed or bonded pending appeal within
60 days from the entry thereof or in any event five days before the date of any
sale pursuant to such judgment or decree; or any non-monetary judgment or order
shall be entered against any Obligor that is reasonably likely to have a
Material Adverse Effect and either (i) enforcement proceedings shall have been
commenced by any Person upon such judgment which have not been stayed pending
appeal or (ii) there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or

                  (j)      Any material provision of any Loan Document, after
delivery thereof pursuant to the provisions hereof, shall, for any reason, cease
to be valid or enforceable in accordance with its terms, or any security
interest created under any Loan Document shall, for any reason, cease to be a
valid and perfected first-priority Lien (except as permitted by Section 6.3) in
any material portion of the Collateral, the Guarantor Collateral or the property
purported to be covered thereby; or

                  (k)      Any event or condition shall occur which the Majority
Lenders reasonably believe could have a Material Adverse Effect;

then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (g) above, automatically the Revolving Loan Commitments and the
commitment to issue Letters of Credit shall immediately terminate and the Loans
made to the Borrowers hereunder (with accrued interest thereon) and all other
Obligations shall immediately become due and payable and, to the extent any
Letters of Credit are then outstanding, Quiksilver shall make a cash collateral
deposit, to be held by the Agent as collateral under the Security Agreement, in
the amount equal to 105% of the aggregate Letter of Credit Amount of such
Letters of Credit and (B) if such event is any other Event of Default, with the
consent of the Majority Lenders the Agent may, or upon the request of the
Majority Lenders the Agent shall, take any or all of the following actions: (i)
by notice to Quiksilver declare the Revolving Loan Commitments and the
commitment to issue Letters of Credit to be terminated forthwith, whereupon the
Revolving Loan Commitments and the commitment to issue Letters of Credit shall
immediately terminate; and (ii) by notice to Quiksilver, declare the Loans (with
accrued interest thereon) and all other Obligations under this Agreement and the
Notes to be due and payable forthwith, whereupon (x) the same shall immediately
become due and payable and (y) to the extent any Letters of Credit are then
outstanding, Quiksilver shall make a cash collateral deposit, to be held by the
Agent as collateral under the Security Agreement, in an amount equal to 105% of
the aggregate Letter of Credit Amount of the Letters of Credit outstanding. In
all cases, with the consent of the Majority Lenders, the Agent may enforce any
or all of the Liens and security interests and other rights and

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                                                                              60

remedies created pursuant to any Loan Document or available at law or in equity.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived by Quiksilver.

                                    ARTICLE 8.

                                    THE AGENT

         8.1      Appointment. Each Lender hereby irrevocably designates and
appoints JPMorgan Chase Bank as Agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes JPMorgan
Chase Bank, as the Agent for such Lender, to take such action on its behalf
under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.

         8.2      Delegations of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

         8.3      Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this agreement or any other Loan Document
(except for its or such Person's own gross negligence or willful misconduct) or
(ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by Quiksilver, any Subsidiary or
any other Obligor or any officer thereof contained in this Agreement or any
other Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the Notes or any other Loan Document or for any failure of Quiksilver, any
Subsidiary or any other Obligor to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of Quiksilver, any
Subsidiary or any other Obligor.

         8.4      Reliance by the Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel

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                                                                              61

(including counsel to the Borrowers), the Accountants and independent
accountants and other experts selected by the Agent. The Agent may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Agent. The Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of the Majority Lenders or all
Lenders, as it deems appropriate, or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense (except to
the extent incurred as a result of the Agent's gross negligence or willful
misconduct) which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the Notes and the other
Loan Documents in accordance with a request of the Majority Lenders or all
Lenders, as may be required, and such request and any action taken or failure to
act pursuant thereto shall be binding upon all the Lenders and all future
holders of the Notes.

         8.5      Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default hereunder unless the Agent
has received notice from a Lender or Quiksilver referring to this Agreement,
describing such Default and stating that such notice is a "notice of default".
In the event that the Agent receives such a notice, the Agent shall use its best
efforts to give prompt notice thereof to the Lenders; provided, however, that no
failure or delay by the Agent in giving such notice shall relieve any Lender of
any obligation hereunder or give rise to any liability of the Agent. The Agent
shall take such action with respect to such Default as shall be reasonably
directed by the Majority Lenders or all Lenders as appropriate; provided,
however that unless and until the Agent shall have received such directions, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interests of the Lenders or as the Agent shall believe necessary to
protect the Lenders' interests in the Collateral or the Guarantor Collateral.

         8.6      Non-Reliance on the Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including any review of the affairs of Quiksilver, any Subsidiary or any
other Obligor, shall be deemed to constitute any representation or warranty by
the Agent to any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of Quiksilver, each
Subsidiary and the other Obligors and made its own decision to make its Loans,
and participate in Letters of Credit, hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance
upon the Agent or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it
deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of Quiksilver, its
Subsidiaries and the other Obligors. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other

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                                                                              62

information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of Quiksilver, any Subsidiary or
any other Obligor which may come into the possession of the Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates.

         8.7      Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by Quiksilver, its
Subsidiaries or the other Obligors and without limiting the obligation of such
Persons to do so), ratably according to the respective aggregate amounts of
their Revolving Loan Commitments from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs
(including the allocated cost of internal counsel), expenses or disbursements of
any kind whatsoever which may at any time (including at any time following the
payment of the Notes) be imposed on, incurred by or asserted against the Agent,
in its capacity as Agent, but not as a Lender hereunder, in any way relating to
or arising out of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the Agent under
or in connection with any of the foregoing; provided, however, that no Lender
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements to the extent resulting from the Agent's gross negligence or
willful misconduct. The agreements in this Section shall survive the payment of
the Notes and all other amounts payable hereunder and the expiration of the
Letters of Credit.

         8.8      The Agent in Its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with Quiksilver, any Subsidiary and the other Obligors as
though the Agent were not the Agent hereunder and under the other Loan
Documents. With respect to the Agent, the Loans made or renewed and the Letters
of Credit issued or participated in by the Agent, and any Note issued to the
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any Lender and the Agent may exercise the same as though it
were not the Agent, and the terms "Lender" and "Lenders" shall include the Agent
in its individual capacity.

         8.9      Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Lenders. If the Agent shall resign as Agent under this Agreement
and the other Loan Documents, then the Majority Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
approved by Quiksilver (which consent shall not be unreasonably withheld),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Agent and the term "Agent" shall mean such successor agent, effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be terminated, without any other or further act or deed on the part of such
former Agent or any of the parties to this Agreement or any holders of the
Notes. After any retiring Agent's resignation as Agent, the provisions of this
Section shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement and the other Loan
Documents. In addition, after the replacement of an Agent hereunder, the
retiring Agent shall remain a party hereto and shall continue to have all the
rights and obligations of an Agent under this Agreement with respect to Letters
of Credit issued by it prior to such replacement, but shall not be required to
issue additional Letters of Credit.

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                                                                              63

         8.10     Any Syndication Agent and the Documentation Agent. Neither the
Syndication Agents, in their capacity as such, nor the Documentation Agent, in
its capacity as such, shall have any rights, powers, duties or obligations under
this Agreement or any of the other Loan Documents.

                                    ARTICLE 9.

                                  MISCELLANEOUS

         9.1      Amendments and Waivers. Neither this Agreement, any Note, any
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. With the prior written consent of the Majority Lenders and Quiksilver
(and, in the case of any Loan Document other than this Agreement, the relevant
Obligor), Quiksilver may, from time to time, enter into written amendments,
supplements or modifications hereto and to the Notes and the other Loan
Documents for the purposes of adding any provisions to this Agreement or the
Notes or the other Loan Documents or changing in any manner the rights of the
Lenders, the Borrowers or any other Obligor hereunder or thereunder or waiving,
on such terms and conditions as may be specified in such instrument, any of the
requirements of this Agreement or the Notes or the other Loan Documents or any
Default and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (i) (a) reduce the amount or extend
the maturity of any Note or any installment due thereon, or reduce the rate or
extend the time of payment of interest thereon, or reduce the amount or extend
the time of payment of any fee, indemnity or reimbursement payable to any Lender
hereunder, or change the amount of any Lender's Loan Commitment, or amend,
modify or waive any provision of Section 2.3 or 2.4, in each case without the
written consent of each Lender affected thereby; or (b) amend, modify or waive
any provision of this Section 9.1 or reduce the percentage specified in or
otherwise modify the definition of "Majority Lenders," without the written
consent of all of the Lenders, or consent to the assignment or transfer by any
Obligor of any of its rights and obligations under this Agreement and the other
Loan Documents (except as permitted under Section 6.4); or (c) release any
Obligor from any liability under its respective Loan Documents; or (d) release
any material portion of the Collateral or any material portion of the Guarantor
Collateral, except for any Asset Disposition permitted by this Agreement or any
other Loan Document; or (e) amend, modify or waive, directly or indirectly, any
of the provisions of Section 2.1A(f), 2.10, 2.11 or 7(g); or (f) amend, modify
or waive any provision of this Agreement requiring the consent or approval of
all Lenders, in each case set forth in clauses (i)(b) through (i)(f) above
without the written consent of all the Lenders; or (ii) amend, modify or waive
any provision of Section 4.2 with respect to the making of a Loan or the
issuance of a Letter of Credit without the written consent of the Majority
Lenders; or (iii) amend, modify or waive any provision of Article 8 without the
written consent of the then Agent, or any provision affecting the rights and
duties of any Issuing Bank as the issuer of Letters of Credit without the
consent of such Issuing Bank. Any such waiver and any such amendment, supplement
or modification shall apply equally to each of the Lenders and shall be binding
upon Quiksilver, the other Obligors, the Lenders, the Agent and all future
holders of the Notes. In the case of any waiver, Quiksilver, the other Obligors,
the Lenders and the Agent shall be restored to their former position and rights
hereunder and under the outstanding Notes and any other Loan Documents, and any
Default waived shall be deemed to be

<PAGE>

                                                                              64

cured and not continuing; but no such waiver shall extend to any subsequent or
other Default, or impair any right consequent thereon.

         9.2      Notices. All notices, requests and demands or other
communications to or upon the respective parties hereto to be effective shall be
in writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or 3 days after being deposited in the United States mail, certified and postage
prepaid and return receipt requested, or, in the case of telecopy notice, when
received, in each case addressed as follows in the case of the Borrowers and the
Agent, and as set forth on the signature page hereto, or in the Assignment and
Assumption pursuant to which a Person becomes a party hereto, in the case of the
Lenders, or to such other address as may be hereafter notified by the respective
parties hereto and any future holders of the Notes:

The Borrowers:             c/o Quiksilver, Inc.
                           15202 Graham Street
                           Huntington Beach, California 92649
                           Attention: Steven L. Brink
                           Telecopy: (714) 889-2322

The Agent:                 JPMorgan Loan and Agency
                           1111 Fannin, 10th Floor
                           Houston, Texas 77002
                           Attention: Debbie Meche
                           Telecopy: (713) 750-2938

with a copy to:            JPMorgan Chase Bank
                           1411 Broadway, 5th Floor
                           New York, New York 10018
                           Attention: Paul J. O'Neill
                           Telecopy: (212) 391-7118

provided, however, that any notice, request or demand to or upon the Agent or
the Lenders pursuant to Section 2.1A, 2.1B, 2.2, 2.3 or 2.5 shall not be
effective until received.

         9.3      No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.

         9.4      Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Notes.

<PAGE>

                                                                              65

         9.5      Payment of Expenses and Taxes. Quiksilver agrees (a) to pay or
reimburse the Agent for all its reasonable costs and out-of-pocket expenses
(including travel and other expenses incurred by it or its agents in connection
with performing due diligence with regard hereto) incurred in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the Notes and the other Loan Documents and
any other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including syndication efforts in connection with this Agreement and,
the reasonable fees and disbursements of counsel to the Agent (including the
allocated costs of internal counsel to the Agent), (b) to pay or reimburse the
Agent and each Lender for all its reasonable costs and out-of-pocket expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the Notes, the other Loan Documents and any such other documents
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out" or any
insolvency or bankruptcy proceeding, including reasonable fees and disbursements
of legal counsel and financial advisors to the Agent and each Lender (including
the allocated costs of internal counsel to the Agent), (c) to pay, indemnify and
hold harmless each Lender and the Agent from any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in
paying, stamp, excise and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the Notes, the other Loan Documents and any such
other documents and (d) to pay, and indemnify and hold harmless each Lender and
the Agent from and against, any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs (including the allocated
cost of internal counsel and the reasonable legal fees and disbursements of
outside counsel to the Lenders and the Agent), expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the Notes and the other Loan
Documents, the Acquisitions or the use of the proceeds of the Loans or the
Letters of Credit and any such other documents (all the foregoing, collectively,
the "indemnified liabilities"), provided, however, that Quiksilver shall have no
obligation hereunder to the Agent or any Lender with respect to indemnified
liabilities arising from the gross negligence or willful misconduct of the Agent
or such Lender. The agreements in this Section shall survive repayment of the
Notes and all other amounts payable hereunder. The Agent and the Lenders agree
to provide reasonable details and supporting information concerning any costs
and expenses required to be paid by the Borrower pursuant to the terms hereof.

         9.6      Successors and Assigns; Participations; Purchasing Lenders.

                  (a)      This Agreement shall be binding upon and inure to the
benefit of the Borrowers, the Lenders, the Agent, all future holders of the
Notes and their respective successors and assigns, except that the Borrowers may
not assign, transfer or delegate any of their rights or obligations under this
Agreement without the prior written consent of each Lender.

                  (b)      Any Lender may, in the ordinary course of its
commercial banking or finance business and in accordance with applicable law, at
any time sell to one or more lenders or financial institutions ("Participants")
participating interests in any Loan owing to such Lender,

<PAGE>

                                                                              66

any Letter of Credit participated in by such Lender, any Note held by such
Lender, any Loan Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents; provided, however, that the holder
of any such participation, other than an Affiliate of such Lender, shall not be
entitled to require such Lender to take or omit to take any action hereunder
except action directly affecting the extension of the maturity of any portion of
the principal amount of a Loan or Loan Commitment, the expiration of a Letter of
Credit or any portion of interest or fees related thereto allocated to such
participation or a reduction of the principal amount or principal payment amount
of or the rate of interest payable on the Loans or any fees related thereto or
reduction of the amount to be reimbursed under any Letter of Credit, or a
release of any Obligor or any substantial portion of the Collateral or the
Guarantor Collateral or any increase in participation amounts. In the event of
any such sale by a Lender of participating interests to a Participant, such
Lender's obligations under this Agreement to the other parties to this Agreement
shall remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note and
the participant in any such Letter of Credit for all purposes under this
Agreement and the other Loan Documents, and the Borrowers and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents. The Borrowers agree that if amounts outstanding under this Agreement
and the Notes are due or unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement and any Note to the
same extent as if the amount continuing of its participating interest were owing
directly to it as a Lender under this Agreement or any Note; provided, however,
that such Participant shall only be entitled to such right of setoff if it shall
have agreed in the agreement pursuant to which it shall have acquired its
participating interest to share with the Lenders the proceeds thereof as
provided in Section 9.7. The Borrower also agrees that each Participant shall be
entitled to the benefits of Sections 2.12, 2.13 and 2.14 with respect to its
participation in the Revolving Loan Commitments and the Loans and the Letters of
Credit outstanding from time to time; provided, however, that no Participant
shall be entitled to receive any greater amount pursuant to such Sections than
the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred.

                  (c)      Any Lender may, in the ordinary course of its
commercial banking or finance business and in accordance with applicable law, at
any time sell to any of its Affiliates, to any Lender or any Affiliate thereof
or to an Approved Fund, or to one or more additional lenders or financial
institutions, which additional lenders or financial institutions shall be
subject to the consent of Quiksilver (such consent not to be unreasonably
withheld and not to be required if a Default has occurred and is continuing) and
the Agent (such consent not to be unreasonably withheld) ("Purchasing Lenders"),
all or any part of its rights and obligations under this Agreement, the Notes
and the other Loan Documents pursuant to an Assignment and Assumption, executed
by such Purchasing Lender and such transferor Lender and delivered to the Agent
for its Assumption and recording in the Register (as defined in (d) below);
provided, however, that any such sale must be in an amount not less than
US$2,000,000 and must result in the Purchasing Lender having at least
US$5,000,000 in aggregate amount of Revolving Loans and/or Revolving Loan
Commitment (or, in each case, if less, the entire remaining amount of the
selling Lender's obligations) under this Agreement, the Notes and the other Loan
Documents,

<PAGE>

                                                                              67

and provided further that the Purchasing Lender, if it shall not be a Lender,
shall deliver to the Agent an Administrative Questionnaire. Upon such execution,
delivery, assumption and recording, from and after the transfer effective date
determined pursuant to such Assignment and Assumption, (x) the Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Assumption, have the rights and obligations of a Lender hereunder
with a Revolving Loan Commitment as set forth therein, and (y) the transferor
Lender thereunder shall, to the extent of such assigned portion and as provided
in such Assignment and Assumption, be released from its obligations under this
Agreement and the other Loan Documents (and, in the case of an Assignment and
Assumption covering all or the remaining portion of a transferor Lender's rights
and obligations under this Agreement, such transferor Lender shall cease to be a
party hereto). Such Assignment and Assumption shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the
addition of such Purchasing Lender and the resulting adjustment of Revolving
Loan Commitment Percentages arising from the purchase by such Purchasing Lender
of all or a portion of the rights and obligations of such transferor Lender
under this Agreement, the Revolving Notes and the other Loan Documents. On or
prior to the transfer effective date determined pursuant to such Assignment and
Assumption, Quiksilver, at its own expense, shall execute and deliver to the
Agent in exchange for the surrendered Revolving Note or Revolving Notes a new
Revolving Note or Revolving Notes to the order of such Purchasing Lender in an
amount equal to the Revolving Loan Commitments assumed by it pursuant to such
Assignment and Assumption, and if the transferor Lender has retained a Revolving
Loan Commitment hereunder, new Revolving Notes to the order of the transferor
Lender in an amount equal to the Revolving Loan Commitments retained by it
hereunder. Such new Revolving Notes shall be dated the Closing Date and shall
otherwise be in the form of the Revolving Notes replaced thereby. The Revolving
Notes surrendered by the transferor Lender shall be returned by the Agent to
Quiksilver marked "canceled."

                  (d)      The Agent shall maintain at its address referred to
in Section 9.2 a copy of each Assignment and Assumption delivered to it and a
register (the "Register") for the recordation of the names and addresses of the
Lenders and the Revolving Loan Commitments of, and principal amount of the
Revolving Loans owing to, and, if applicable, the Letters of Credit participated
in by, each Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and Quiksilver, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as the
owner of the Revolving Loans and the participant in the Letters of Credit, if
applicable, recorded therein for all purposes of this Agreement. The Register
shall be available for inspection by Quiksilver or any Lender at any reasonable
time and from time to time upon reasonable prior notice.

                  (e)      Upon its receipt of an Assignment and Assumption
executed by a transferor Lender and Purchasing Lender (and, in the case of a
Purchasing Lender that is not then a Lender or an Affiliate thereof, by
Quiksilver and the Agent) together with payment to the Agent (except in the case
of a Lender assigning to its Affiliate) of a registration and processing fee of
$3,500, the Agent shall (i) promptly accept such Assignment and Assumption and
(ii) on the effective date determined pursuant thereto record the information
contained therein in the Register and give notice of such Assumption and
recordation to the Lenders and Quiksilver.

<PAGE>

                                                                              68

                  (f)      Quiksilver authorizes each Lender to disclose to any
Participant or Purchasing Lender (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning Quiksilver and its Subsidiaries and Affiliates which has been
delivered to such Lender by or on behalf of Quiksilver pursuant to this
Agreement or any other Loan Document or which has been delivered to such Lender
by or on behalf of Quiksilver in connection with such Lender's credit evaluation
of Quiksilver and its Subsidiaries and Affiliates prior to becoming a party to
this Agreement.

                  (g)      If, pursuant to this Section, any interest in this
Agreement, any Letter of Credit or any Note is transferred to any Transferee
which is organized under the laws of any jurisdiction other than the United
States or any state thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, (i) to represent to the
transferor Lender and the Agent (for the benefit of the transferor Lender, the
Agent and Quiksilver) that under applicable law and treaties no taxes will be
required to be withheld by the Agent, Quiksilver or the transferor Lender with
respect to any payments to be made to such Transferee in respect of the Loans or
the Letters of Credit, (ii) to furnish to the transferor Lender, the Agent and
Quiksilver U.S. Internal Revenue Service Form W-9, W-8BEN or W-8ECI (as
applicable to it) (wherein such Transferee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments hereunder)
and (iii) to agree (for the benefit of the transferor Lender, the Agent and
Quiksilver) to provide the transferor Lender, the Agent and Quiksilver a new
Form W-9, W-8BEN or W-8ECI (as applicable to it) upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such Transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.

                  (h)      Nothing herein shall prohibit any Lender from
pledging or assigning any of its rights under its Notes, or, if applicable, its
participation in any Letter of Credit, to any Federal Reserve Bank in accordance
with applicable law.

         9.7      Adjustments; Setoff.

                  (a)      If any Lender (a "benefited Lender") shall at any
time receive any payment of all or part of its Loans, its participations in
Letters of Credit, or interest thereon, or fees, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by setoff, pursuant to
events or proceedings of the nature referred to in Section 7(g), or otherwise),
in a greater proportion than any such payment to or collateral received by any
other applicable Lender, if any, in respect of such other Lender's Loans, its
participations in Letters of Credit, or interest thereon, or fees, such
benefited Lender shall purchase for cash from such other Lenders such portion of
each such other Lender's Loans, participations in Letters of Credit, or fees, or
shall provide such other Lender with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such benefited Lender to share
the excess payment or benefits of such collateral or proceeds ratably with each
of such other Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. Quiksilver agrees that
each Lender so purchasing a portion of another Lender's Loans or its
participations in Letters of Credit may exercise all rights

<PAGE>

                                                                              69

of payment (including rights of setoff) with respect to such portion as fully as
if such Lender were the direct holder of such portion.

                  (b)      In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, exercisable upon the
occurrence and during the continuance of an Event of Default, without prior
notice to the Borrowers, any such notice being expressly waived by the Borrowers
to the extent permitted by applicable law, to set off and appropriate and apply
against the Obligations any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims in any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured, at any time held or owing by such
Lender or any branch or agency thereof or bank controlling such Lender to or for
the credit or the account of Quiksilver. Each Lender agrees promptly to notify
Quiksilver after any such setoff and application made by such Lender; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application.

         9.8      Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

         9.9      Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         9.10     Integration. This Agreement represents the entire agreement of
the Borrowers, the Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties
by the Agent or any Lender relative to the subject matter hereof not expressly
set forth or referred to herein or in the other Loan Documents.

         9.11     GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF OTHER
THAN NEW YORK GENERAL OBLIGATIONS LAW SECTIONS 5-1401 AND 5-1402.

         9.12     WAIVER OF JURY TRIAL. IN CONNECTION WITH ANY ACTION OR
PROCEEDING, WHETHER BROUGHT IN STATE OR FEDERAL COURT, THE BORROWER, THE LENDERS
AND THE AGENT HEREBY EXPRESSLY, INTENTIONALLY AND IRREVOCABLY WAIVE ANY RIGHT
THEY MAY OTHERWISE HAVE TO TRIAL BY JURY OF ANY CLAIM, CAUSE OF ACTION, ACTION,
DISPUTE OR CONTROVERSY BETWEEN OR AMONG ANY OF THEM, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, THAT ARISES OUT OF OR RELATES TO (a) ANY OF THE
LOAN DOCUMENTS, (b) ANY

<PAGE>

                                                                              70

NEGOTIATIONS OR COMMUNICATIONS RELATING TO ANY OF THE LOAN DOCUMENTS, WHETHER OR
NOT INCORPORATED INTO THE LOAN DOCUMENTS OR ANY INDEBTEDNESS EVIDENCED THEREBY,
OR (c) ANY ALLEGED AGREEMENTS, PROMISES, REPRESENTATIONS OR TRANSACTIONS IN
CONNECTION THEREWITH.

         9.13     Acknowledgements. Each of the Borrowers hereby acknowledges
that:

                  (a)      it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the Notes and the other Loan
Documents;

                  (b)      neither the Agent nor any Lender has any fiduciary
relationship to Quiksilver solely by virtue of any of the Loan Documents, and
the relationship pursuant to the Loan Documents between the Agent and the
Lenders, on one hand, and the Borrowers on the other hand, is solely that of
creditor and debtor; and

                  (c)      no joint venture exists among the Lenders or among
the Borrowers, on one hand and the Lenders, on the other hand.

         9.14     Intercreditor Agreement. By executing this Agreement as a
Lender, or by becoming a Lender hereunder pursuant to an Assignment and
Assumption, each Lender hereby agrees to the terms of the Intercreditor
Agreement, acknowledges that certain of its rights hereunder shall be subject
thereto, and consents to the execution thereof by the Agent on behalf of such
Lender.

         9.15     Headings. Section headings are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose.

         9.16     Copies of Certificates, Etc. Whenever the Borrowers are
required to deliver notices, certificates, opinions, statements or other
information hereunder to the Agent for delivery to any Lender (including under
Article 4), they shall do so in such number of copies as the Agent shall
reasonably specify.

         9.17     Confidentiality. The Agent and the Lenders shall take normal
and reasonable precautions to maintain the confidentiality of all non-public
information obtained pursuant to the requirements of this Agreement which has
been identified as such by Quiksilver, but may, in any event, make disclosures
(i) reasonably required by any bona fide transferee, assignee or participant in
connection with the contemplated transfer or assignment of any Revolving Loan
Commitments or Loans or participations therein or participations in Letters of
Credit or (ii) as required or requested by any governmental agency or
representative thereof or as required pursuant to legal process or (iii) to its
attorneys and accountants or (iv) as required by law or (v) in connection with
litigation involving any Lender, or (vi) to any and all persons, without
limitation of any kind, of the tax treatment and tax structure of the
transaction and all materials of any kind (including opinions and other tax
analyses, if any) that are provided to the taxpayer relating to such tax
treatment and tax structure, provided that (a) such transferee, assignee or
participant agrees to comply with the provisions of this Section 9.17 unless
specifically prohibited by applicable law or court order and (b) in no event
shall any Lender be obligated or required to return any materials furnished by
Quiksilver or the Subsidiary.

<PAGE>

                                                                              71

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

                                  BORROWERS

                                  QUIKSILVER, INC.

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  NA PALI, S.A.S.

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  QUIKSILVER JAPAN K.K.

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  UG MANUFACTURING CO PTY LTD.

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

<PAGE>

                                                                              72

                                  MULTICURRENCY AGENT

                                  J.P. MORGAN EUROPE LIMITED, as
                                  Multicurrency Agent

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

<PAGE>

                                                                              73

                                  LENDERS
                                  JPMORGAN CHASE BANK, as a Lender

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  Loan Commitment:             $22,500,000

                                  Address for Notices

                                  (a) For Credit

                                  1411 Broadway, 5th Floor
                                  New York, New York 10018
                                  Attention: Paul J. O'Neill
                                  Telephone: (212) 391-7157
                                  Facsimile: (212) 391-7118

                                  (b) For Operations (Other Than Letters of
                                  Credit)

                                  1411 Broadway, 5th Floor
                                  New York, New York 10018
                                  Attention: Millie Nogueras
                                  Telephone: (212) 391-6079
                                  Facsimile: (212) 391-7283

                                  (c) For Letters of Credit

                                  Global Trade Services
                                  10420 Highland Manor Drive
                                  Building No. 2, 4th Floor
                                  Tampa, Florida 33610
                                  Attention: Mildred Bowens
                                  Telephone: (813) 432-6347
                                  Facsimile: (813) 432-5162

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  1411 Broadway, 5th Floor
                                  New York, New York 10018

                                  Applicable Lending Office for LIBOR Loans:
                                  1411 Broadway, 5th Floor
                                  New York, New York 10018

<PAGE>

                                                                              74

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  Global Trade Services
                                  10420 Highland Manor Drive
                                  Building No. 2, 4th Floor
                                  Tampa, Florida 33610

<PAGE>

                                                                              75

                                  UNION BANK OF CALIFORNIA, N.A.,
                                  as a Lender

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  Loan Commitment:                   $22,500,000

                                  Address for Notices

                                  (a) For Credit

                                  18300 Von Karman Avenue, Suite 310
                                  Irvine, California 92612
                                  Attention: Margaret Furbank
                                  Telephone: (949) 553-6853
                                  Facsimile: (949) 553-7122

                                  (b) For Operations

                                  601 Potrero Grande Drive
                                  Monterey Park, California 91754
                                  Attention: Shirley Davis
                                  Telephone: (323) 720-2870
                                  Facsimile: (323) 724-6198

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  18300 Von Karman Avenue, Suite 310
                                  Irvine, California 92612

                                  Applicable Lending Office for LIBOR Loans:
                                  18300 Von Karman Avenue, Suite 310
                                  Irvine, California 92612

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  1980 Saturn Street
                                  Monterey Park, California 91755

<PAGE>

                                                                              76

                                  FLEET NATIONAL BANK, as a Lender

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  Loan Commitment:                   $20,000,000

                                  Address for Notices

                                  (a) For Credit

                                  40 Broad Street
                                  Boston, Massachusetts 02115
                                  Attention: Stephen J. Garvin
                                  Telephone: (617) 434-9399
                                  Facsimile: (617) 434-6685

                                  (b) For Operations

                                  100 Federal Street
                                  Boston, Massachusetts 02110
                                  Attention: Michelle Mogan
                                  Telephone: (617) 434-4187
                                  Facsimile: (617) 434-9933

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  100 Federal Street
                                  Boston, Massachusetts 02110

                                  Applicable Lending Office for LIBOR Loans:
                                  100 Federal Street
                                  Boston, Massachusetts 02110

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  100 Federal Street
                                  Boston, Massachusetts 02110

<PAGE>

                                                                              77

                                  BANK OF AMERICA, N.A., as a Lender

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  Loan Commitment:                   $20,000,000

                                  Address for Notices

                                  (a) For Credit

                                  675 Anton Boulevard, 2nd Floor
                                  Costa Mesa, California 92626
                                  Attention: Cynthia K. Goodfellow
                                  Telephone: (714) 850-6547
                                  Facsimile: (714) 850-6586

                                  (b) For Operations

                                  333 Beaudry Street; Suite 1100
                                  Los Angeles, California 90017
                                  Attention: Maria Castro
                                  Telephone: (714) 850-6504
                                  Facsimile: (714) 850-6586

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  675 Anton Boulevard, 2nd Floor
                                  Costa Mesa, California 92626

                                  Applicable Lending Office for LIBOR Loans:
                                  1455 Market Street, 5th Floor
                                  San Francisco, California 94103

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  675 Anton Boulevard, 2nd Floor
                                  Costa Mesa, California 92626

<PAGE>

                                                                              78

                                  U.S. BANK, as a Lender

                                  By: ____________________________________
                                  Name: Brian Halle
                                  Title: Senior Vice President

                                  Loan Commitment:                   $20,000,000

                                  Address for Notices

                                  (a) For Credit

                                  4100 Newport Place, Suite 120
                                  Newport Beach, California 92660
                                  Attention: Mami Lombardo
                                  Telephone: (949) 863-2365
                                  Facsimile: (949) 863-2335

                                  (b) For Operations

                                  4100 Newport Place
                                  Newport Beach, California 92660
                                  Attention: Patti Brant
                                  Telephone: (949) 863-2470
                                  Facsimile: (949) 863-2335

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  4100 Newport Place, Suite 120
                                  Newport Beach, California 92660

                                  Applicable Lending Office for LIBOR Loans:
                                  4100 Newport Place, Suite 120
                                  Newport Beach, California 92660

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  4100 Newport Place, Suite 120
                                  Newport Beach, California 92660

<PAGE>

                                                                              79

                                  COMERICA BANK, as a Lender

                                  By: ____________________________________
                                  Name: Deborah Jenkins
                                  Title: Vice President

                                  Loan Commitment:                   $10,000,000

                                  Address for Notices

                                  (a) For Credit

                                  201 North Figueroa Street, Suite 1425
                                  Los Angeles, California 90012
                                  Attention: Deborah Jenkins
                                  Telephone: (213) 484-3729
                                  Facsimile: (213) 484-3775

                                  (b) For Operations

                                  201 North Figueroa Street, Suite 1425
                                  Los Angeles, California 90012
                                  Attention: Margarita Quiteno
                                  Telephone: (213) 484-3722
                                  Facsimile: (213) 484-3775

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  333 West Santa Clara Street
                                  San Jose, California 95113

                                  Applicable Lending Office for LIBOR Loans:
                                  333 West Santa Clara Street
                                  San Jose, California 95113

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  333 West Santa Clara Street
                                  San Jose, California 95113

<PAGE>

                                                                              80

                                  HSBC BANK USA, as a Lender

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  Loan Commitment:                   $15,000,000

                                  Address for Notices

                                  (a) For Credit

                                  452 Fifth Avenue, 4th Floor
                                  New York, New York 10018
                                  Attention: Michael Behunick/George Ahlmeyer
                                  Telephone: (212) 525-6589
                                  Facsimile: (212) 525-6905

                                  (b) For Operations

                                  1 HSBC Center, 26th Floor
                                  Buffalo, New York 14203
                                  Attention: Donna L. Riley
                                  Telephone: (716) 841-4178
                                  Facsimile: (716) 841-0269

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  452 Fifth Avenue, 4th Floor
                                  New York, New York 10018

                                  Applicable Lending Office for LIBOR Loans:
                                  452 Fifth Avenue, 4th Floor
                                  New York, New York 10018

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  452 Fifth Avenue, 4th Floor
                                  New York, New York 10018

<PAGE>

                                                                              81

                                  BANK ONE, N.A., as a Lender

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  Loan Commitment:                   $15,000,000

                                  Address for Notices

                                  (a) For Credit

                                  1 Bank One Plaza, Suite IL 1-0086
                                  Chicago, Illinois 60670
                                  Attention: Vincent Henchek
                                  Telephone: (312) 732-9772
                                  Facsimile: (312) 336-4380

                                  (b) For Operations

                                  1 Bank One Plaza, Suite IL 1-0088
                                  Chicago, Illinois 60670
                                  Attention: Saul Gierstikas
                                  Telephone: (312) 732-1794
                                  Facsimile: (312) 732-4303

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  Bank One Plaza, Suite IL 1-0086
                                  Chicago, Illinois 60670

                                  Applicable Lending Office for LIBOR Loans:
                                  Bank One Plaza, Suite IL 1-0086
                                  Chicago, Illinois 60670

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  Bank One Plaza, Suite IL 1-0086
                                  Chicago, Illinois 60670

<PAGE>

                                                                              82

                                  BANK LEUMI USA, as a Lender

                                  By: ____________________________________
                                  Name: Jacques V. Delvoye
                                  Title: Vice President

                                  Loan Commitment:                   $10,000,000

                                  Address for Notices

                                  (a) Bank Leumi USA

                                  8383 Wilshire Boulevard, #400
                                  Beverly Hills, California 90211
                                  Attention: Jacques Delvoye
                                  Telephone: (323) 966-4727
                                  Facsimile: (323) 966-4248

                                  (b) For Operations

                                  Bank Leumi USA
                                  8383 Wilshire Boulevard, #400
                                  Beverly Hills, California 90211
                                  Attention: Jacques Delvoye
                                  Telephone: (323) 966-4727
                                  Facsimile: (323) 966-4248

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  Bank Leumi USA
                                  8383 Wilshire Boulevard, #400
                                  Beverly Hills, California 90211

                                  Applicable Lending Office for LIBOR Loans:
                                  Bank Leumi USA
                                  8383 Wilshire Boulevard, #400
                                  Beverly Hills, California 90211

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  Bank Leumi USA
                                  8383 Wilshire Boulevard, #400
                                  Beverly Hills, California 90211

<PAGE>

                                                                              83

                                  ISRAEL DISCOUNT BANK OF NEW YORK , as a Lender

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

                                  Loan Commitment:                   $15,000,000

                                  Address for Notices

                                  (a) For Credit

                                  511 Fifth Avenue
                                  New York, New York 10017
                                  Attention: Alan Lefkowitz
                                  Telephone: (212) 551-8288
                                  Facsimile: (212) 551-8720

                                  (b) For Operations

                                  511 Fifth Avenue
                                  New York, New York 10017
                                  Attention: Alan Lefkowitz
                                  Telephone: (212) 551-8288
                                  Facsimile: (212) 551-8720

                                  Approved Lending Offices

                                  Applicable Lending Office for Base Rate Loans:
                                  511 Fifth Avenue
                                  New York, New York 10017

                                  Applicable Lending Office for LIBOR Loans:
                                  511 Fifth Avenue
                                  New York, New York 10017

                                  Applicable Lending Office for Participations
                                  in Letters of Credit:
                                  511 Fifth Avenue
                                  New York, New York 10017

<PAGE>

                                                                              84

                                  ADMINISTRATIVE AGENT

                                  JPMORGAN CHASE BANK, as Administrative Agent

                                  By: ____________________________________
                                  Name: __________________________________
                                  Title: _________________________________

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