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                                                                    EXHIBIT 10.3

                              JEFFERIES GROUP, INC.

                        1999 INCENTIVE COMPENSATION PLAN

                 AS AMENDED AND RESTATED AS OF OCTOBER 22, 2002

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                              JEFFERIES GROUP, INC.

                        1999 INCENTIVE COMPENSATION PLAN

                 AS AMENDED AND RESTATED AS OF OCTOBER 22, 2002

1.    PURPOSE OF THE PLAN

      The purpose of this 1999 Incentive Compensation Plan (the "Plan") is to
advance the interests of the Company and its stockholders by providing a means
to attract, retain, and reward officers, other employees, and persons who
provide services to the Company and its subsidiaries, to link compensation to
measures of the Company's performance in order to provide additional incentives,
including stock-based incentives and cash-based annual incentives, to such
persons for the creation of stockholder value, and to enable such persons to
acquire or increase a proprietary interest in the Company in order to promote a
closer identity of interests between such persons and the Company's
stockholders. The Plan is intended to qualify certain compensation awarded under
the Plan as "performance-based" compensation under Code Section 162(m) to the
extent deemed appropriate by the Committee which administers the Plan.

2.    DEFINITIONS

            The definitions of awards under the Plan, including Options, SARs,
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of other
awards, and Other Stock-Based Awards, are set forth in Section 6, and the
definition of Performance Awards, including Annual Incentive Awards, is set
forth in Section 8. Such awards, together with any other right or interest
granted to a Participant under the Plan, are termed "Awards." In addition to
such terms and the terms defined in Section 1, the following terms shall be
defined as set forth below:

      2.1 "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8.3 to receive a cash payment, Shares or other Awards
based on performance during all or part of a specified fiscal year.

      2.2 "Beneficiary" means the person(s) or trust(s) which have been
designated by a Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon such Participant's death. If, upon a Participant's death, there is no
designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means the person(s) or trust(s) entitled by will or the laws of
descent and distribution to receive such benefits.

      2.3   "Board" means the Board of Directors of the Company.

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      2.4 "Code" means the Internal Revenue Code of 1986, as amended, including
regulations thereunder and successor provisions and regulations thereto.

      2.5 "Committee" means the Compensation Committee of the Board or such
other Board committee or committees, as may be designated by the Board to
administer the Plan, and the term "Committee" shall refer to the full Board in
any case in which it is performing any function of the Committee under the Plan.
In appointing members of the Committee, the Board will consider whether each
member will qualify as a "Non-Employee Director" within the meaning of Rule
16b-3(b)(3) and as an "outside director" within the meaning of Treasury
Regulation 1.162-27(e)(3) under Code Section 162(m), but the members are not
required to so qualify at the time of appointment or during their term of
service on the Committee.

      2.6 "Company" means Jefferies Group, Inc., a Delaware corporation,
formerly named JEF Holding Company, Inc., the common stock of which was
distributed in the Spin-off.

      2.7 "Covered Employee" has the meaning as defined in Section 8.5 of the
Plan.

      2.8 "Effective Date" means the date on which the Plan takes effect, as set
forth in Section 9.13 of the Plan.

      2.9 "Eligible Holder" means each employee of the Company who, at the
Spin-off Date, holds an option or other award relating to stock under a
compensatory plan of Predecessor with respect to which the Company has agreed to
grant, or offer to grant, an Award relating to Shares in substitution for such
person's Predecessor award or to offset any lost value due to the early
termination of such award.

      2.10 "Exchange Act" means the Securities Exchange Act of 1934, as amended,
including rules thereunder and successor provisions and rules thereto.

      2.11 "Fair Market Value," means, with respect to Shares, Awards, or other
property, the fair market value of such Shares, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee. Unless otherwise determined by the Committee, the Fair
Market Value of a Share as of any given date means the average of the closing
sales prices of a Share as reported in the table entitled "New York Stock
Exchange Composite Transactions" contained in The Wall Street Journal (or an
equivalent successor table) for the day as of which the valuation is to be made
or, if that day is not a trading day, the nearest preceding trading day, and the
four trading days immediately prior thereto.

      2.12 "Participant" means an individual who has been granted an Award under
the Plan, for so long as the Company has any obligation under the Plan with
respect to such Award or such Award remains subject to any restriction under the
Plan.

      2.13 "Predecessor" means Jefferies Group, Inc., a Delaware corporation, as
it existed immediately prior to the Spin-off.

      2.14 "Qualified Member" means a member of the Committee who is a
"Non-Employee Director" within the meaning of Rule 16b-3(b)(3) under the
Exchange Act and an "outside director" within the meaning of Regulation 1.162-27
under Code Section 162(m).

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      2.15 "Shares" means shares of common stock, par value $.01 per share, of
the Company and such other securities as may be substituted or resubstituted for
Shares pursuant to Section 5.3.

      2.16 "Spin-off" means the distribution of the Common Stock of the Company
by the Predecessor to the Predecessor's stockholders, which was approved by the
Predecessor's stockholders on April 20, 1999.

      2.17 "Spin-off Date" means the record date for Predecessor's distribution
of Shares in the Spin-off.

3.    ADMINISTRATION

      3.1 Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:

      (a)   to select persons to whom Awards may be granted, including Eligible
            Holders to whom Awards may be granted in substitution for
            Predecessor awards;

      (b)   to determine the type or types of Awards to be granted to each
            Participant;

      (c)   to determine the number of Awards to be granted, the number of
            Shares to which an Award will relate, the cash amount payable in
            settlement of an Annual Incentive Award and the performance
            conditions applicable thereto, all other terms and conditions of any
            Award granted under the Plan (including, but not limited to, any
            exercise price, grant price, or purchase price, any restriction or
            condition, any schedule or performance conditions for the lapse of
            restrictions or conditions relating to transferability, forfeiture,
            exercisability, or settlement of an Award, and accelerations or
            modifications thereof, based in each case on such considerations as
            the Committee shall determine), and all other matters to be
            determined in connection with an Award;

      (d)   to determine whether, to what extent, and under what circumstances
            an Award may be settled, or the exercise price of an Award may be
            paid, in cash, Shares, other Awards, or other property, or an Award
            may be cancelled, forfeited, or surrendered;

      (e)   to determine whether, to what extent, and under what circumstances
            cash, Shares, other Awards, or other property payable with respect
            to an Award will be deferred either automatically, at the election
            of the Committee, or at the election of the Participant;

      (f)   to prescribe the form of each Award agreement, which need not be
            identical for each Participant;

      (g)   to adopt, amend, suspend, and rescind such rules and regulations and
            appoint such agents as the Committee may deem necessary or advisable
            to administer the Plan;

      (h)   to correct any defect or supply any omission or reconcile any
            inconsistency in the Plan and to construe and interpret the Plan and
            any Award, rules and regulations, Award agreement, or other
            instrument hereunder; and

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      (i)   to make all other decisions and determinations as may be required
            under the terms of the Plan or as the Committee may deem necessary
            or advisable for the administration of the Plan.

Other provisions of the Plan notwithstanding, until the effectiveness of the
Spin-Off, in addition to any other required approval under this Plan, all grants
of Awards under the Plan shall be subject to the approval of the Compensation
Committee of the Board of Directors of the Predecessor, in order that such
Awards can qualify as "performance-based compensation" under Section 162(m) of
the Internal Revenue Code; provided, however, that any approval of such
Predecessor Compensation Committee may be given prior to the effectiveness of
this Plan or approval of it by Predecessor stockholders, and any grant or other
transaction so approved may become effective at or following the Spin-Off in
accordance with such terms as may have been approved by such Predecessor
Compensation Committee.

      3.2 Manner of Exercise of Committee Authority. Any action of the Committee
with respect to the Plan shall be final, conclusive, and binding on all persons,
including the Company, subsidiaries of the Company, Participants, any person
claiming any rights under the Plan from or through any Participant, and
stockholders. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. The Committee may delegate to officers or
managers of the Company or any subsidiary of the Company the authority, subject
to such terms as the Committee shall determine, to perform such functions as the
Committee may determine, to the extent that such delegation will not result in
the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to
Participants subject to Section 16 of the Exchange Act in respect of the Company
and will not cause Awards intended to qualify as "performance-based"
compensation under Code Section 162(m) to fail to so qualify, and as otherwise
limited by applicable law. Other provisions of the Plan notwithstanding, the
Board may perform any function of the Committee under the Plan, in order to
ensure that transactions under the Plan are exempt under Rule 16b-3 or for any
other reason; provided, however, that authority specifically reserved to the
Board under the terms of the Plan, the Company's Certificate of Incorporation or
By-Laws, or applicable law shall be exercised by the Board and not by the
Committee.

      3.3 Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him by any officer or other employee of the Company or any
subsidiary, the Company's independent certified public accountants, or any
executive compensation consultant, legal counsel, or other professional retained
by the Company to assist in the administration of the Plan. No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
behalf of the Committee or members thereof shall, to the extent permitted by
law, be fully indemnified and protected by the Company with respect to any such
action, determination, or interpretation.

4.    ELIGIBILITY

      Persons who are eligible to be granted Awards under the Plan include (i)
any executive officer and other officer or employee of the Company or any
subsidiary, including any such person who may also be a director of the Company,
(ii) any other person who provides substantial personal services to the Company
or any subsidiary not solely in the capacity as a director, and (iii) any person
who has agreed to

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become an employee of the Company or a subsidiary provided that no such person
may receive any payment or exercise any right relating to an Award until such
person has commenced employment. In addition, Eligible Holders will be eligible
to be granted Awards in substitution for Predecessor awards outstanding
immediately prior to the Spin-Off, in accordance with agreements entered between
the Company and Predecessor and as approved by the Committee.

5.    LIMITATION ON SHARES SUBJECT TO OUTSTANDING AWARDS; PER-PERSON
      LIMITATIONS; ADJUSTMENTS

      5.1 Aggregate Number of Shares Subject to Outstanding Awards. Awards
relating to Shares may be granted if, at the time of grant of each Award, the
aggregate number of Shares subject to outstanding Awards plus the number of
Shares subject to the Award being granted do not exceed 25% of the number of
Shares issued and outstanding immediately prior to the grant of such Award. For
purposes of this Section 5.1, an Option is "outstanding" until it is exercised
and any other Award is "outstanding" in the calendar year in which it is granted
and for so long thereafter as it remains subject to any vesting condition
requiring continued employment; provided, however, that Awards granted in
substitution for Predecessor awards shall not be considered to be "outstanding"
for purposes of this Section 5.1. The foregoing notwithstanding, the maximum
number of shares that may be subject to ISOs granted under the Plan shall be 1.5
million (subject to adjustment as provided in Section 5.3). The Shares delivered
in connection with Awards may consist, in whole or in part, of authorized and
unissued Shares, treasury Shares or Shares acquired in the market for the
account of a Participant.

      5.2 Annual Per-Person Limitations. In each fiscal year during any part of
which the Plan is in effect, a Participant may be granted (i) Options and SARs
under Sections 6.2 and 6.3 relating to no more than 800,000 Shares, and (ii)
Performance Awards pursuant to Section 8 relating to no more than 500,000
Shares, subject in each case to adjustment as provided in Section 5.3. With
respect to Annual Incentive Awards pursuant to Section 8, the maximum amount
payable to a Participant in settlement of such Awards relating to a given fiscal
year shall be (i), in the case of the Chief Executive Officer or any other
executive officer principally having Company-wide responsibilities, 25% of
Company profits after taxes but before payment of bonuses, and (ii), in the case
of an executive officer or other person principally having responsibilities for
one or more specific business units, the greatest of 30% of the net income of
such business unit(s), 10% of the revenues of such business unit(s), or 25% of
the EVA of such business unit(s). With respect to Performance Awards pursuant to
Section 8 other than Annual Incentive Awards which Performance Awards are not
valued by reference to Common Stock at the date of grant, the maximum amount
that may be earned by any one Participant under the Plan upon achievement of
performance objectives shall be $5 million for each full or partial year in the
period over which performance is measured; for this purpose, the term "earned"
refers to satisfaction of the performance conditions, regardless of any
additional period of deferral or period in which the Award may be forfeitable
upon termination of service by the Participant.

      5.3 Adjustments. In the event of any change in the outstanding Shares
after the Effective Date by reason of any Share dividend or split,
reorganization, recapitalization, merger, consolidation, spin-off, combination
or exchange of Shares, repurchase, liquidation, dissolution or other corporate
exchange, any large, special and non-recurring dividend or distribution to
stockholders, or other similar corporate transaction, the Committee may make
such substitution or adjustment, if any, as it deems to be equitable and in
order to preserve, without enlarging, the rights of Participants, as to (i) the
number and kind of Shares which may be delivered in connection with Awards
granted thereafter, (ii) the number and kind of Shares by which annual
per-person Award limitations are measured under Section 5.2, (iii) the

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number and kind of Shares subject to or deliverable in respect of outstanding
Awards, and (iv) the exercise price, grant price or purchase price relating to
any Award and/or make provision for payment of cash, other Awards or other
property in respect of any outstanding Award. In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including Performance Awards, Annual Incentive Awards, and
the performance goals relating thereto) in recognition of unusual or
nonrecurring events (including events described in the preceding sentence, as
well as acquisitions and dispositions of businesses and assets) affecting the
Company, any subsidiary or any business unit, or the financial statements of the
Company or any subsidiary, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee's assessment of the business strategy of
the Company, any subsidiary or business unit thereof, performance of comparable
organizations, economic and business conditions, personal performance of a
Participant, and any other circumstances deemed relevant; provided that no such
adjustment shall be authorized or made if and to the extent that such authority
or the making of such adjustment would cause Options, SARs, Performance Awards
granted under Section 8.2 hereof, or Annual Incentive Awards granted under
Section 8.3 hereof to Participants designated by the Committee as Covered
Employees and intended to qualify as "performance-based compensation" under Code
Section 162(m) and regulations thereunder to otherwise fail to qualify as
"performance-based compensation" under Code Section 162(m) and regulations
thereunder.

      6.    SPECIFIC TERMS OF AWARDS

      6.1 General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award, at the
date of grant or thereafter (subject to Section 9.5), such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards in the event of
termination of employment or service by the Participant or upon the occurrence
of other events. Except as expressly provided by the Committee (including for
purposes of complying with requirements of the Delaware General Corporation Law
relating to lawful consideration for issuance of shares), no consideration other
than for services will be required for the grant (but not the exercise) of any
Award.

      6.2 Options. The Committee is authorized to grant options to purchase
Shares ("Options") to Participants on the following terms and conditions:

      (a)   Exercise Price. The exercise price per Share purchasable under an
            Option shall be determined by the Committee; provided, however,
            that, except as provided in Section 7.1, such exercise price shall
            be not less than the Fair Market Value of a share on the date of
            grant of such Option.

      (b)   Time and Method of Exercise. The Committee shall determine the time
            or times at which an Option may be exercised in whole or in part,
            the methods by which such exercise price may be paid or deemed to be
            paid, the form of such payment, including cash, Shares, other Awards
            or awards granted under other Company plans, or other property
            (including notes or other contractual obligations of Participants to
            make payment on a deferred basis, or through broker-assisted
            "cashless exercise" arrangements, to the extent permitted by
            applicable law), and the methods by which Shares will be delivered
            or deemed to be delivered to Participants.

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      (c)   Incentive Stock Options. The terms of any incentive stock option
            ("ISO") granted under the Plan shall comply in all respects with the
            provisions of Section 422 of the Code, including but not limited to
            the requirement that no ISO shall be granted more than ten years
            after the Effective Date. Anything in the Plan to the contrary
            notwithstanding, no term of the Plan relating to ISOs shall be
            interpreted, amended, or altered, nor shall any discretion or
            authority granted under the Plan be exercised, so as to disqualify
            either the Plan or any ISO under Section 422 of the Code, unless the
            Participant has first requested such disqualification.

      6.3 Stock Appreciation Rights. The Committee is authorized to grant stock
appreciation rights ("SARs") to Participants on the following terms and
conditions:

      (a)   Right to Payment. An SAR shall confer on the Participant to whom it
            is granted a right to receive, upon exercise thereof, the excess of
            (A) the Fair Market Value of one Share on the date of exercise (or,
            if the Committee shall so determine in the case of any such right
            other than one related to an ISO, the Fair Market Value of one share
            at any time during a specified period before or after the date of
            exercise), over (B) the grant price of the SAR as determined by the
            Committee as of the date of grant of the SAR, which, except as
            provided in Section 7.1, shall be not less than the Fair Market
            Value of one Share on the date of grant.

      (b)   Other Terms. The Committee shall determine the time or times at
            which an SAR may be exercised in whole or in part, the method of
            exercise, method of settlement, form of consideration payable in
            settlement, method by which Shares will be delivered or deemed to be
            delivered to Participants, whether or not an SAR shall be in tandem
            with any other Award, and any other terms and conditions of any SAR.

      6.4 Restricted Stock. The Committee is authorized to grant Awards, in the
form of shares issued at or shortly after grant of the Award subject to
restrictions ("Restricted Stock"), to Participants on the following terms and
conditions:

      (a)   Grant and Restrictions. Restricted Stock shall be subject to such
            restrictions on transferability and other restrictions, if any, as
            the Committee may impose, which restrictions may lapse separately or
            in combination at such times, under such circumstances, in such
            installments, or otherwise as the Committee may determine. Except to
            the extent restricted under the terms of the Plan and any Award
            agreement relating to the Restricted Stock, a Participant granted
            Restricted Stock shall have all of the rights of a stockholder
            including the right to vote Restricted Stock or the right to receive
            dividends thereon.

      (b)   Forfeiture. Except as otherwise determined by the Committee, upon
            termination of employment or service during the applicable
            restriction period, Restricted Stock that is at that time subject to
            restrictions shall be forfeited and reacquired by the Company;
            provided, however, that the Committee may provide, by rule or
            regulation or in any Award agreement, or may determine in any
            individual case, that restrictions or forfeiture conditions relating
            to Restricted Stock will lapse in whole or in part in the event of
            terminations resulting from specified causes.

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      (c)   Certificates for Shares. Restricted Stock granted under the Plan may
            be evidenced in such manner as the Committee shall determine. If
            certificates representing Restricted Stock are registered in the
            name of the Participant, such certificates shall bear an appropriate
            legend referring to the terms, conditions, and restrictions
            applicable to such Restricted Stock, the Company shall retain
            physical possession of the certificate, and the Participant shall
            have delivered a stock power to the Company, endorsed in blank,
            relating to the Restricted Stock.

      (d)   Dividends and Distributions. Dividends paid on Restricted Stock
            shall be either paid at the dividend payment date in cash or in
            Shares of unrestricted Stock having a Fair Market Value equal to the
            amount of such dividends, or the payment of such dividends shall be
            deferred and/or the amount or value thereof automatically reinvested
            in additional Restricted Stock, other Awards, or other investment
            vehicles, as the Committee shall determine or permit the Participant
            to elect. Shares distributed in connection with a stock split or
            Share dividend, and other property distributed as a dividend, shall
            be subject to restrictions and a risk of forfeiture to the same
            extent as the Restricted Stock with respect to which such Shares or
            other property is distributed.

      6.5 Deferred Stock. The Committee is authorized to grant Awards in the
form of Shares to be delivered at a specified future date ("Deferred Stock") to
Participants, subject to the following terms and conditions:

      (a)   Award and Restrictions. Issuance of Shares will occur upon
            expiration of the deferral period specified for an Award of Deferred
            Stock by the Committee (or, if permitted by the Committee, as
            elected by the Participant). In addition, Deferred Stock shall be
            subject to such restrictions as the Committee may impose, if any,
            which restrictions may lapse at the expiration of the deferral
            period or at earlier specified times, separately or in combination,
            under such circumstances, in such installments, or otherwise as the
            Committee may determine.

      (b)   Forfeiture. Except as otherwise determined by the Committee, upon
            termination of employment or service during the applicable deferral
            period or portion thereof to which forfeiture conditions apply (as
            provided in the Award agreement evidencing the Deferred Stock), all
            Deferred Stock that is at that time subject to such risk of
            forfeiture shall be forfeited; provided, however, that the Committee
            may provide, by rule or regulation or in any Award agreement, or may
            determine in any individual case, that restrictions or forfeiture
            conditions relating to Deferred Stock will lapse in whole or in part
            in the event of terminations resulting from specified causes.

      (c)   Dividend Equivalents. The Committee may provide that payments in the
            form of dividend equivalents will be credited in respect of Deferred
            Stock, which amounts may be paid or distributed when accrued or
            deemed reinvested in additional Deferred Stock.

      6.6 Bonus Shares and Awards in Lieu of Cash Obligations. The Committee is
authorized to grant Shares as a bonus, or to grant Shares or other Awards in
lieu of Company obligations to pay cash under other plans or compensatory
arrangements. Shares or Awards granted hereunder shall be subject to such other
terms as shall be determined by the Committee.

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      6.7 Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Shares and factors that may influence
the value of Shares, as deemed by the Committee to be consistent with the
purposes of the Plan, including convertible or exchangeable debt securities,
other rights convertible or exchangeable into Shares, purchase rights for
Shares, Awards with value and payment contingent upon performance of the Company
or any other factors designated by the Committee, and Awards valued by reference
to the book value of Shares or the value of securities of or the performance of
specified subsidiaries. The Committee shall determine the terms and conditions
of such Awards. Shares issued pursuant to an Award in the nature of a purchase
right granted under this Section 6.7 shall be purchased for such consideration,
paid for at such times, by such methods, and in such forms, including cash,
Shares, other Awards, or other property, as the Committee shall determine. Cash
awards, as an element of or supplement to any other Award under the Plan, may be
granted pursuant to this Section 6.7.

7.    CERTAIN PROVISIONS APPLICABLE TO AWARDS

      7.1 Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any subsidiary, or
any business entity to be acquired by the Company or a subsidiary, any other
right of a Participant to receive payment from the Company or any subsidiary,
and, in the case of Eligible Holders, in substitution for awards granted by
Predecessor. Such additional, tandem, and substituted or exchanged Awards may be
granted at any time. If an Award is granted in substitution or exchange for
another Award or award, the Committee shall require the surrender of such other
Award or award in consideration for the grant of the new Award. In addition,
Awards may be granted in lieu of cash compensation, including in lieu of cash
amounts payable under other plans of the Company or any subsidiary, in which the
value of Shares subject to the Award is equivalent in value to the cash
compensation, or in which the value of the cash or other compensation
surrendered is applied to the exercise price, grant price, or purchase price of
the Award.

      7.2 Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee; provided, however, that in no event shall the
term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code).

      7.3 Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by the
Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee shall
determine, including cash, Shares, other Awards, or other property, and may be
made in a single payment or transfer, in installments, or on a deferred basis.
The settlement of any Award may be accelerated, and cash paid in lieu of Shares
in connection with such settlement, in the discretion of the Committee or upon
occurrence of one or more specified events. The foregoing notwithstanding, no
Award specified as settleable in Shares may be settled otherwise than by
delivery of Shares if the Award agreement does not specify such alternative form
of settlement and the authorization of alternative forms of settlement would
preclude fixed accounting for the compensation expense relating to such Award
under APB 25 prior to the determination or event which causes settlement to be
in a form other than Shares. Installment or deferred payments may be required by
the Committee (subject to Section 9.5 of

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the Plan, including the consent provisions thereof in the case of any deferral
of an outstanding Award not provided for in the original Award agreement) or
permitted at the election of the Participant on terms and conditions established
by the Committee. Payments may include provisions for the payment or crediting
of reasonable interest on installment or deferred payments or the grant or
crediting of dividend equivalents or other amounts in respect of installment or
deferred payments denominated in Shares.

      7.4 Cancellation and Rescission of Awards. Unless the Award agreement
specifies otherwise, the Committee may cancel any unexpired, unpaid, or deferred
Awards at any time, and, unless otherwise determined by the Committee, the
Company shall have the additional rights set forth in subsection (d) below, if
the Participant is not in compliance with all applicable material provisions of
the Award agreement and the Plan, including the following conditions:

      (a)   A Participant shall not render services for any organization or
            engage directly or indirectly in any business which, in the judgment
            of the Chief Executive Officer of the Company or other senior
            executive officer designated by the Committee, is or becomes
            competitive with the Company. For Participants whose employment has
            terminated, the judgment of the Chief Executive Officer or other
            senior officer designated by the Committee shall be based on the
            Participant's post-employment responsibilities and position with the
            other organization or business, the extent of past, current and
            potential competition or conflict between the Company and the other
            organization or business, the effect on the Company's stockholders,
            customers, suppliers and competitors of the Participant assuming the
            post-employment responsibilities and such other considerations as
            are deemed relevant given the applicable facts and circumstances. A
            Participant who has terminated employment shall be free, however, to
            purchase as an investment or otherwise, stock or other securities of
            such organization or business so long as they are listed upon a
            recognized securities exchange or traded over-the-counter, and such
            investment does not represent a greater than five percent equity
            interest in the organization or business.

      (b)   A Participant shall not, without prior written authorization from
            the Company, disclose to anyone outside the Company or use in other
            than the Company's business any confidential information or material
            relating to the business of the Company which is acquired by the
            Participant either during or after employment with the Company.

      (c)   A Participant shall disclose promptly and assign to the Company all
            right, title, and interest in any invention or idea, patentable or
            not, made or conceived by the Participant during employment by the
            Company, relating in any manner to the actual or anticipated
            business, research, or development work of the Company and shall do
            anything reasonably necessary to enable the Company to secure a
            patent where appropriate in the United States and in foreign
            countries.

      (d)   Upon exercise, settlement, payment, or delivery pursuant to an
            Award, the Participant shall certify on a form acceptable to the
            Committee that he or she is in compliance with the terms and
            conditions of this Section 7.4. Failure to comply with the
            provisions of this Section 7.4 prior to, or during the six months
            after, any exercise, payment or delivery pursuant to an Award shall
            cause such exercise, payment or delivery to be rescinded. The
            Company shall notify the Participant in writing of any such
            rescission within two years after such exercise, payment, or
            delivery. Within ten days after receiving such a

                                    Page 11
<PAGE>
            notice from the Company, the Participant shall pay to the Company
            the amount of any gain realized or payment received as a result of
            the rescinded exercise, payment, or delivery pursuant to an Award.
            Such payment shall be made either in cash or by returning to the
            Company the number of Shares that the Participant received in
            connection with the rescinded exercise, payment, or delivery, in
            which case the Company shall promptly repay the lesser of the
            exercise price or the then-Fair Market Value of the Shares returned.

The Committee may modify the conditions imposed under this Section 7.4 with
respect to any Award.

      7.5 Loan Provisions. With the consent of the Committee, and subject at all
times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee, or arrange for a
loan or loans to a Participant with respect to the exercise of any Option or
other payment in connection with any Award, including the payment by a
Participant of any or all federal, state, or local income or other taxes due in
connection with any Award. Subject to such limitations, the Committee shall have
full authority to decide whether to make a loan or loans hereunder and to
determine the amount, terms, and provisions of any such loan or loans, including
the interest rate to be charged in respect of any such loan or loans, whether
the loan or loans are to be with or without recourse against the borrower, the
terms on which the loan is to be repaid and conditions, if any, under which the
loan or loans may be forgiven.

8.    PERFORMANCE AND ANNUAL INCENTIVE AWARDS

      8.1 Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee. The
Committee may use such business criteria and measures of performance as it may
deem appropriate in establishing performance conditions, and may exercise its
discretion to reduce or increase the amounts payable under any Award subject to
performance conditions, except as limited under Sections 8.2 and 8.3 hereof in
the case of a Performance Award or Annual Incentive Award intended to qualify
under Code Section 162(m).

      8.2 Performance Awards Granted to Designated Covered Employees. If the
Committee determines that a Performance Award to be granted to an eligible
person who is designated by the Committee as likely to be a Covered Employee
should qualify as "performance-based compensation" for purposes of Code Section
162(m), the grant, exercise, and/or settlement of such Performance Award shall
be contingent upon achievement of preestablished performance goals and other
terms set forth in this Section 8.2.

      (a)   Performance Goals Generally. The performance goals for such
            Performance Awards shall consist of one or more business criteria
            and a targeted level or levels of performance with respect to each
            such criteria, as specified by the Committee consistent with this
            Section 8.2. Performance goals shall be objective and shall
            otherwise meet the requirements of Code Section 162(m) and
            regulations thereunder (including Regulation 1.162-27 and successor
            regulations thereto), including the requirement that the level or
            levels of performance targeted by the Committee result in the
            achievement of performance goals being "substantially uncertain."
            The Committee may determine that such Performance Awards shall be
            granted, exercised, and/or settled upon achievement of any one
            performance goal or that two or more of the performance goals must
            be

                                    Page 12
<PAGE>
            achieved as a condition to grant, exercise, and/or settlement of
            such Performance Awards. Performance goals may differ for
            Performance Awards granted to any one Participant or to different
            Participants.

      (b)   Business Criteria. One or more of the following business criteria
            for the Company, on a consolidated basis, and/or for specified
            subsidiaries, divisions, or other business units of the Company
            (where the criteria are applicable), shall be used by the Committee
            in establishing performance goals for such Performance Awards: (1)
            earnings per share; (2) revenues; (3) cash flow; (4) cash flow
            return on investment; (5) return on net assets, return on assets,
            return on investment, return on capital, return on equity;
            profitability; (6) economic value added ("EVA"); (7) operating
            margins or profit margins; (8) income or earnings before or after
            taxes; pretax earnings; pretax earnings before interest,
            depreciation and amortization; operating earnings; pretax operating
            earnings, before or after interest expense and before or after
            incentives, service fees, and extraordinary or special items; net
            income; (9) total stockholder return or stock price; (10) book value
            per share; (11) expense management; improvements in capital
            structure; working capital; costs; and (12) any of the above goals
            as compared to the performance of a published or special index
            deemed applicable by the Committee including, but not limited to,
            the Standard & Poor's 500 Stock Index or a group of comparator
            companies. EVA means the amount by which a business unit's income
            exceeds the cost of the capital used by the business unit during the
            performance period, as determined by the Committee. Income of a
            business unit may be before payment of bonuses, capital charges,
            non-recurring or extraordinary income or expense, and general and
            administrative expenses for the performance period, if so specified
            by the Committee. One or more of the foregoing business criteria
            shall also be exclusively used in establishing performance goals for
            Annual Incentive Awards granted to a Covered Employee under Section
            8.3 hereof.

      (c)   Performance Period; Timing for Establishing Performance Award Terms.
            Achievement of performance goals in respect of such Performance
            Awards shall be measured over a performance period of up to ten
            years, as specified by the Committee. Performance goals, amounts
            payable upon achievement of such goals, and other material terms of
            Performance Awards shall be established by the Committee (i) while
            the performance outcome for that performance period is substantially
            uncertain and (ii) no more than 90 days after the commencement of
            the performance period to which the performance goal relates or, if
            less, the number of days which is equal to 25 percent of the
            relevant performance period. In all cases, the maximum amount
            payable in respect of a Performance Award to any Participant shall
            be subject to the limitation set forth in Section 5 hereof.

      (d)   Performance Award Pool. The Committee may establish a Performance
            Award pool, which shall be an unfunded pool, for purposes of
            measuring performance of the Company in connection with Performance
            Awards. The amount of such Performance Award pool shall be based
            upon the achievement of a performance goal or goals based on one or
            more of the business criteria set forth in Section 8.2(b) hereof
            during the given performance period, as specified by the Committee
            in accordance with Section 8.2(c) hereof. The Committee may specify
            the amount of the Performance Award pool as a percentage of any of
            such business criteria, a percentage thereof in excess of a
            threshold amount, or as another amount which need not bear a
            strictly mathematical

                                    Page 13
<PAGE>
            relationship to such business criteria. In such case, Performance
            Awards may be granted as rights to payment of a specified portion of
            the Award pool; such grants shall be subject to the requirements of
            Section 8.2(c).

      (e)   Settlement of Performance Awards; Other Terms. Settlement of such
            Performance Awards shall be in cash, Shares, other Awards, or other
            property, in the discretion of the Committee. The Committee may, in
            its discretion, reduce the amount of a settlement otherwise to be
            made in connection with such Performance Awards, but may not
            exercise discretion to increase any such amount payable to a Covered
            Employee in respect of a Performance Award subject to this Section
            8.2. The Committee shall specify the circumstances in which such
            Performance Awards shall be paid or forfeited in the event of
            termination of employment by the Participant prior to the end of a
            performance period or settlement of Performance Awards.

      8.3 Annual Incentive Awards Granted to Designated Covered Employees. If
the Committee determines that an Annual Incentive Award to be granted to an
eligible person who is designated by the Committee as likely to be a Covered
Employee should qualify as "performance-based compensation" for purposes of Code
Section 162(m), the grant, exercise, and/or settlement of such Annual Incentive
Award shall be contingent upon achievement of preestablished performance goals
and other terms set forth in this Section 8.3.

      (a)   Potential Annual Incentive Awards. Not later than the deadline
            specified in Section 8.2(c) above, the Committee shall determine the
            eligible persons who will potentially receive Annual Incentive
            Awards, and the amounts potentially payable thereunder, for that
            fiscal year, either out of an Annual Incentive Award pool
            established by such date under Section 8.3(b) hereof or as
            individual Annual Incentive Awards. In the case of individual Annual
            Incentive Awards intended to qualify under Code Section 162(m), the
            amount potentially payable shall be based upon the achievement of a
            performance goal or goals based on one or more of the business
            criteria set forth in Section 8.2(b) hereof in the given performance
            year, as specified by the Committee; in other cases, such amount
            shall be based on such criteria as shall be established by the
            Committee. In all cases, the maximum Annual Incentive Award of any
            Participant shall be subject to the limitation set forth in Section
            5 hereof.

      (b)   Annual Incentive Award Pool. The Committee may establish an Annual
            Incentive Award pool, which shall be an unfunded pool, for purposes
            of measuring performance of the Company in connection with Annual
            Incentive Awards. The amount of such Annual Incentive Award pool
            shall be based upon the achievement of a performance goal or goals
            based on one or more of the business criteria set forth in Section
            8.2(b) hereof during the given performance period, as specified by
            the Committee in accordance with Section 8.2(c) hereof. The
            Committee may specify the amount of the Annual Incentive Award pool
            as a percentage of any of such business criteria, a percentage
            thereof in excess of a threshold amount, or as another amount which
            need not bear a strictly mathematical relationship to such business
            criteria.

      (c)   Payout of Annual Incentive Awards. After the end of each fiscal
            year, the Committee shall determine the amount, if any, of the
            potential Annual Incentive Award payable to each Participant
            eligible therefor and, if applicable, the amount of any Annual
            Incentive

                                    Page 14
<PAGE>
            Award pool. The Committee may, in its discretion, determine that the
            amount payable to any Participant as a final Annual Incentive Award
            shall be increased or reduced from the amount of his or her
            potential Annual Incentive Award, including a determination to make
            no final Award whatsoever, but may not exercise discretion to
            increase any such amount in the case of an Annual Incentive Award
            intended to qualify under Code Section 162(m). The Committee shall
            specify the circumstances in which an Annual Incentive Award shall
            be paid or forfeited in the event of termination of employment by
            the Participant prior to the end of a fiscal year or prior to
            settlement of such Annual Incentive Award.

      8.4 Written Determinations. Determinations by the Committee as to the
establishment of performance goals, the amount potentially payable in respect of
Performance Awards and Annual Incentive Awards, the achievement of performance
goals relating to Performance Awards and Annual Incentive Awards, and the amount
of any final Performance Award and Annual Incentive Award shall be recorded in
writing, except that the Committee may determine that this requirement shall not
apply in the case of Performance Awards not intended to qualify under Section
162(m). Specifically, the Committee shall certify in writing, in a manner
conforming to applicable regulations under Section 162(m), prior to settlement
of each such Award granted to a Covered Employee, that the performance goals and
other material terms of the Award upon which settlement of the Award was
conditioned have been satisfied. The Committee may not delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards,
and the Board shall not perform such functions at any time that the Committee is
composed solely of Qualified Members.

      8.5 Status of Section 8.2 and Section 8.3 Awards under Code Section
162(m). It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Sections 8.2 and 8.3 hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder (including Regulation 1.162-27
and successor regulations thereto) shall, if so designated by the Committee,
constitute "performance-based compensation" within the meaning of Code Section
162(m) and regulations thereunder. Accordingly, the terms of Sections 8.2, 8.3,
8.4 and 8.5, including the definitions of Covered Employee and other terms used
therein, shall be interpreted in a manner consistent with Code Section 162(m)
and regulations thereunder. The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given Participant will be a Covered
Employee with respect to a fiscal year that has not yet been completed, the term
Covered Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of a Performance Award or Annual Incentive
Award, as likely to be a Covered Employee with respect to a specified fiscal
year. If any provision of the Plan as in effect on the date of adoption of any
agreements relating to Performance Awards or Annual Incentive Awards that are
designated as intended to comply with Code Section 162(m) does not comply or is
inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.

      8.6 Assumption of Certain Annual Incentive Awards of Predecessor. The
Committee may authorize the Company to assume annual incentive awards granted by
Predecessor for performance in the year the Spin-Off becomes effective. Upon
such an assumption, the awards shall be Annual Incentive Awards under the Plan,
the terms of which shall be the identical to the terms of the Predecessor annual
incentive awards, except insofar as adjustment of such terms is necessary and
permitted in accordance with this Plan and the Predecessor plan and would not
otherwise result in such Annual Incentive Awards failing to qualify as
"performance-based compensation" under Section 162(m).

                                    Page 15
<PAGE>
      9.    GENERAL PROVISIONS.

      9.1 Compliance with Laws and Obligations. The Company shall not be
obligated to issue or deliver Shares in connection with any Award or take any
other action under the Plan in a transaction subject to the registration
requirements of the Securities Act of 1933, as amended, or any other federal or
state securities law, any requirement under any listing agreement between the
Company and any national securities exchange or automated quotation system, or
any other law, regulation, or contractual obligation of the Company, until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. Certificates representing Shares issued
under the Plan will be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws, regulations, and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon.

      9.2 Limitations on Transferability. Awards and other rights under the Plan
will not be transferable by a Participant except by will or the laws of descent
and distribution (or to a designated Beneficiary in the event of the
Participant's death), and, if exercisable, shall be exercisable during the
lifetime of a Participant only by such Participant or his guardian or legal
representative; provided, however, that such Awards and other rights (other than
ISOs and SARs in tandem therewith) may be transferred during the lifetime of the
Participant, for purposes of the Participant's estate planning or other purposes
consistent with the purposes of the Plan (as determined by the Committee), and
may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent permitted by the Committee. Awards and other
rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise
encumbered, and shall not be subject to the claims of creditors. A Beneficiary,
transferee, or other person claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of the Plan and any
Award agreement applicable to such Participant, except as otherwise determined
by the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.

      9.3 No Right to Continued Employment; Leaves of Absence. Neither the Plan,
the grant of any Award, nor any other action taken hereunder shall be construed
as giving any employee, consultant, director, or other person the right to be
retained in the employ or service of the Company or any of its subsidiaries, nor
shall it interfere in any way with the right of the Company or any of its
subsidiaries to terminate any person's employment or service at any time. Unless
otherwise specified in the applicable Award agreement, an approved leave of
absence shall not be considered a termination of employment or service for
purposes of an Award under the Plan.

      9.4 Taxes. The Company and any subsidiary is authorized to withhold from
any Award granted or to be settled, any delivery of Shares in connection with an
Award, any other payment relating to an Award, or any payroll or other payment
to a Participant amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take such
other action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Shares or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations.

                                    Page 16
<PAGE>
      9.5 Changes to the Plan and Awards. The Board may amend, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any amendment shall be subject to the approval of the Company's stockholders at
or before the next annual meeting of stockholders for which the record date is
after the date of such Board action if such stockholder approval is required by
any federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Shares may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
amendments to stockholders for approval; provided, however, that, without the
consent of an affected Participant, no such action may materially impair the
rights of such Participant under any Award theretofore granted. The Committee
may amend, suspend, discontinue, or terminate, any Award theretofore granted and
any Award agreement relating thereto; provided, however, that no such amendment
may reduce the exercise price of an outstanding Option (except as authorized
under Section 5.3) or provide for Award terms that the Plan would not then
permit for a newly granted Award; and provided further, that, without the
consent of an affected Participant, no such action may materially impair the
rights of such Participant under such Award.

      9.6 No Rights to Awards; No Stockholder Rights. No Participant or other
person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Participants, employees,
consultants, or directors. No Award shall confer on any Participant any of the
rights of a stockholder of the Company unless and until Shares are duly issued
or transferred and delivered to the Participant in accordance with the terms of
the Award or, in the case of an Option, the Option is duly exercised.

      9.7 International Participants. With respect to Participants who reside or
work outside the United States of America, the Committee may, in its sole
discretion, amend the terms of the Plan with respect to such Participants or
grant Awards not conforming to the terms of the Plan to such Participants in
order that such Awards conform to the requirements of local law and customary
employment practices in such locations and in order that such Awards shall serve
the purposes of the Plan in light of such local laws and customary employment
practices.

      9.8 Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Shares, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.

      9.9 Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of Predecessor or, in the case of
any amendment, submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements as it may deem desirable, including the granting
of awards otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.

      9.10 Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash consideration, the Participant
shall be repaid the amount of such cash consideration. No fractional Shares
shall be issued or delivered pursuant to the Plan or any Award (although
fractional share units may be credited in connection with any Award if so
authorized by the Committee). The Committee shall

                                    Page 17
<PAGE>
determine whether cash, other Awards, or other property shall be issued or paid
in lieu of such fractional Shares or whether such fractional Shares or any
rights thereto shall be forfeited or otherwise eliminated.

      9.11 Successors and Assigns. The Plan shall be binding on all successors
and assigns of the Company and a Participant, including any permitted transferee
of a Participant, the Beneficiary or estate of such Participant and the
executor, administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.

      9.12 Governing Law. The validity, construction, and effect of the Plan,
any rules and regulations under the Plan, and any Award agreement will be
determined in accordance with the Delaware General Corporation Law and other
laws (including those governing contracts) of the State of Delaware, without
giving effect to principles of conflicts of laws, and applicable federal law.

      9.13 Effective Date, Stockholder Approval, and Plan Termination. The Plan
shall become effective on the later of its approval by stockholders of the
Predecessor or the effectiveness of the Company's registration under Section 12
of the Exchange Act. Unless earlier terminated by action of the Board, the Plan
will remain in effect until such time as no Shares remain available for delivery
under the Plan and the Company has no further rights or obligations under the
Plan with respect to outstanding Awards under the Plan. The foregoing
notwithstanding, if the rules of the New York Stock Exchange ("NYSE") are at any
time amended to provide that the automatic operation of the share reservation
formula under Section 5.1 hereof would constitute a material revision of the
Plan subject to stockholder approval, the Plan shall thereafter terminate on the
day before the tenth anniversary of the effectiveness of such NYSE amendment, or
such earlier date as may be required under the NYSE rules, if and so that such
termination provision will cause the automatic operation of Section 5.1 to not
constitute a material revision of the Plan subject to stockholder approval under
the NYSE rules. Upon any resulting termination of the Plan, no new
authorizations of grants of Awards may be made (and such Plan termination shall
in other respects satisfy any requirements of the NYSE necessary to effectuate
the foregoing sentence), but then outstanding Awards shall remain outstanding in
accordance with the terms of the Plan and the terms of such Awards.

                                    Page 18<PAGE>
                                                                    EXHIBIT 10.1

                 AMENDMENT NUMBER ONE TO AMENDED AND RESTATED
                          REVOLVING CREDIT AGREEMENT

      This AMENDMENT NUMBER ONE TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "Amendment"), dated as of April 29, 2003, is entered into among
DECKERS OUTDOOR CORPORATION, a Delaware corporation ("Parent"), and UGG
Holdings, Inc., a California corporation ("UGG")(collectively, referred to
herein as "Borrowers" and individually as a "Borrower"), on the one hand, and
COMERICA BANK-CALIFORNIA, a California banking corporation ("Comerica"), on the
other hand, with reference to the following facts:

      A.    Borrowers and Comerica entered into that certain Amended and
Restated Revolving Credit Agreement, dated as of November 25, 2002 (the
"Agreement");

      B.    Borrowers and Comerica desire to amend the Agreement in
accordance with the terms of this Amendment.

      NOW, THEREFORE, in consideration of the foregoing, the parties hereto
hereby agree as follows:

      1. Defined Terms. All initially capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Agreement.

      2. Amendments to Section 1.1: Definitions.

            (a) The defined term "Consolidated Effective Tangible Net Worth" is
deleted in its entirety and replaced with the following:

                        "Consolidated Effective Tangible Net Worth" means, as of
            the date of determination, the result of (a) the sum of (i)
            Borrowers' and Subsidiaries consolidated total stockholder's equity,
            and (ii) Subordinate Debt, minus (b) the sum of (i) all Intangible
            Assets of Borrowers and Subsidiaries, and (ii) all amounts due to
            Borrowers from Affiliates (other than Subsidiaries).

            (b) The defined term "Revolving Loans Maturity Date" is deleted in
its entirety and replaced with the following:

                        "Revolving Loans Maturity Date" means June 1, 2005.

      3. Conditions Precedent to Effectiveness of Amendment. The effectiveness
of this Amendment is subject to and contingent upon the fulfillment of each and
every one of the following conditions:

                                       1
<PAGE>
            (a) Comerica shall have received this Amendment, duly executed by
the Borrowers and Comerica;

            (b) Comerica shall have received that certain Amendment Number One
to Senior Subordination Agreement, dated as of even date herewith
("Subordination Agreement (Peninsula) Amendment"), duly executed by the
Borrowers, Comerica and The Peninsula Fund III Limited Partnership, a Delaware
limited partnership;

            (c) No Event of Default, Unmatured Event of Default or Material
Adverse Effect shall have occurred and be continuing; and

            (d) All of the representations and warranties set forth herein, in
the Loan Documents and in the Agreement shall be true, complete and accurate in
all respects as of the date hereof (except for representations and warranties
which are expressly stated to be true and correct as of the Closing Date).

      4. Representations and Warranties. In order to induce Comerica to enter
into this Amendment, Borrowers hereby represent and warrant to Comerica that:

            (a) No Event of Default or Unmatured Event of Default is continuing;

            (b) All of the representations and warranties set forth in the
Agreement and the Loan Documents are true, complete and accurate in all respects
(except for representations and warranties which are expressly stated to be true
and correct as of the Closing Date); and

            (c) This Amendment has been duly executed and delivered by the
Borrowers, and after giving effect to this Amendment, the Agreement and the Loan
Documents continue to constitute the legal, valid and binding agreements and
obligations of the Borrowers, enforceable in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency, and similar laws and
equitable principles affecting the enforcement of creditors' rights generally.

      5. Counterparts; Telefacsimile Execution. This Amendment may be executed
in any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Amendment. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of a manually executed
counterpart of this Amendment. Any party delivering an executed counterpart of
this Amendment by telefacsimile also shall deliver a manually executed
counterpart of this Amendment but the failure to deliver a manually executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

      6. Integration. The Agreement as amended by this Amendment constitutes the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and thereof, and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof and thereof.

                                       2
<PAGE>
      7. Reaffirmation of the Agreement. The Agreement as amended hereby and the
other Loan Documents remain in full force and effect.

                 [remainder of page intentionally left blank]

                                       3
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Amendment as of the date first hereinabove written.

                                    DECKERS OUTDOOR CORPORATION,
                                    a Delaware corporation

                                    By:    /s/ M. Scott Ash
                                           -------------------------------------
                                    Name:  M. Scott Ash
                                    Title: Chief Financial Officer

                                    UGG HOLDINGS, INC.,
                                    a California corporation

                                    By:    /s/ M. Scott Ash
                                           -------------------------------------
                                    Name:  M. Scott Ash
                                    Title: Chief Financial Officer

                                    COMERICA BANK - CALIFORNIA,
                                    a California banking corporation

                                    By:    /s/ Jason D. Brown
                                           -------------------------------------
                                    Name:  Jason D. Brown
                                    Title: Vice President

                                       4

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