8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
April 12, 2005

Quiksilver, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation)	0-15131 (Commission File Number)	33-0199426 (IRS Employer Identification Number)
15202 Graham Street, Huntington Beach, CA (Address of principal executive offices)		92649 (Zip Code)

Registrant’s telephone number, including area code:
(714) 889-2200

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 1.01 Entry into a Material Definitive Agreement
	Item 1.02 Termination of a Material Definitive Agreement
	Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
	Item 3.02 Unregistered Sales of Equity Securities
	Item 5.02. Departure of Directors or Principal Officers; Election of Officers; Appointment of Principal Officers.
	Item 9.01 Financial Statements and Exhibits
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3

Item 1.01 Entry into a Material Definitive Agreement

     Acquisition Agreement

     On April 12, 2005 (the “Signing Date”), Quiksilver, Inc., a Delaware corporation (the “Company”), entered into an acquisition agreement (the “Acquisition Agreement”) with Mr. Laurent Boix-Vives, Ms. Jeannine Boix-Vives, Ms. Christine Simon, Ms. Sylvie Bernard (collectively, the “Controlling Shareholders”) and SDI Société de Services et Développement, a Swiss corporation (together with the Controlling Shareholders, the “Sellers”), to purchase from the Sellers a majority holding of Skis Rossignol S.A., a French corporation (société anonyme) (“Skis Rossignol”), with shares listed on the Eurolist of Euronext Paris (SR), directly and through holding companies, in exchange for cash and shares of common stock of the Company, subject to conditions. The Company announced its planned acquisition of Skis Rossignol in a press release issued on March 22, 2005, filed as Exhibit 99.1 to its Form 8-K filed on March 23, 2005.

     Pursuant to the Acquisition Agreement and certain ancillary agreements, on the Signing Date the Company effectively became sole general partner (associé commandité) and manager (gérant) of Ski Expansion, a French general partnership limited with shares (société en commandite par actions) (the “Holding Company”). The Holding Company directly and indirectly owns 4,784,979 common shares of Skis Rossignol, representing 38.43% of the shares and 49.84% of the voting rights of Skis Rossignol as of April 4, 2005. Also on the Signing Date, those Controlling Shareholders who had been general partners and managers of the Holding Company withdrew as general partners and resigned as managers of the Holding Company.

     Also pursuant to the Acquisition Agreement, upon the earlier of (i) the date of settlement-delivery of the tender offer for the publicly held shares of Skis Rossignol contemplated by the Acquisition Agreement, and (ii) July 19, 2005, subject to regulatory approvals (such date, the “Closing Date”):

•   the Company will acquire from the Sellers an aggregate of 361,989 common shares of the Holding Company (the “Initial Holding Company Shares”);

•   Skis Rossignol, which will then be controlled by the Company, will acquire from the Sellers all shares of Skis Rossignol’s subsidiaries held by the Sellers (other than shares of Roger Cleveland Golf Company, Inc., a California corporation (“Roger Cleveland”));

•   the Controlling Shareholders will transfer 749,958 shares of Skis Rossignol (the “Residual Shares”) which they own directly to the Holding Company; and

•   the Holding Company will issue new shares to the Controlling Shareholders, and the Controlling Shareholders will transfer to the Company 76,518 common shares of the Holding Company acquired pursuant to this capital increase.

     As a result of the foregoing transactions, on the Closing Date the Company will own 100% of the common shares of the Holding Company and the Holding Company will own 44.46% of the share capital of Skis Rossignol. The Controlling Shareholders will retain an

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interest in the Holding Company in the form of 146,167 restricted shares representing 25% of the share capital of the Holding Company to secure the payment of the purchase price of the shares of the Holding Company by the Company pursuant to the Acquisition Agreement. The Acquisition Agreement contemplates that the shares in the Holding Company retained by the Controlling Shareholders will be transferred to the Company within five years of the Signing Date through a series of put options held by the Controlling Shareholders and call options held by the Company set forth in a shareholders’ agreement, dated April 12, 2005, between the Company and the Controlling Shareholders (the “Holding Company Shareholders’ Agreement”). The Holding Company shares retained by the Controlling Shareholders will be pledged for the benefit of the Company to secure the call options held by the Company.

     The Company will pay to the Sellers €181.20 per Holding Company common share, subject to adjustment based upon the net cash position of the Holding Company as of the Signing Date, to be paid 70% in cash and 30% in shares of common stock of the Company to be issued by the Company based upon the closing price of $28.99 per share on the New York Stock Exchange on April 12, 2005, which would represent approximately 1,075,000 shares of the Company's common stock. Alternatively, upon agreement of the parties, the 30% of the consideration to be paid in stock may instead be paid in cash, which the Sellers would be obligated to use all or a portion of to purchase shares of the Company’s common stock in open market or privately regulated transactions, in each case in accordance with applicable laws. The Sellers will be prohibited from selling the shares of common stock of the Company that they receive in the transaction for a period of three years from the Closing Date. On the Signing Date, the Sellers deposited into escrow the Initial Holding Company Shares, and the Company paid the Sellers a portion of the purchase price for those shares and deposited into escrow the remainder of the purchase price for those shares; such shares and cash to be released from escrow on the Closing Date.

     Pursuant to the Acquisition Agreement, upon obtaining necessary regulatory approvals in France and the United States the Company will commence a cash tender offer to purchase all the outstanding shares of Skis Rossignol not owned by the Holding Company (the “Tender Offer”). The Company will offer to pay €19 per Skis Rossignol share in the Tender Offer. Assuming all such shares are tendered and all of the transactions contemplated above are consummated, as of the Closing Date, the Company will have paid under the Acquisition Agreement total cash consideration of approximately €187 million and issued the shares of Company common stock discussed above.

     The Acquisition Agreement requires the Sellers to cause Skis Rossignol and its subsidiaries (i) to manage their business in the normal course consistent with past practice between the Signing Date and the Closing Date, and (ii) to refrain from taking a number of corporate acts during that time without the consent of the Company. The Sellers have agreed to indemnify the Company for breaches of representations and warranties in the Acquisition Agreement for a period of three years from the Signing Date. In the event that the Sellers breach their obligations under the Acquisition Agreement by tendering their Residual Shares to a competing bidder for Skis Rossignol shares or by transferring any shares or other rights in Skis Rossignol or the Holding Company to any person other than the Company or the Holding Company, the Sellers are obligated to pay to the Company one-third of the pre-tax capital gains they receive from such sale. The Company has agreed to pay to the Sellers one-third of any pre-tax capital gains it would indirectly receive if it causes the Holding Company to tender the Skis Rossignol shares it owns to a competing bidder.

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     After the Closing Date, Quiksilver, Inc. and Skis Rossignol will carry out their common activities under the name “Quiksilver-Rossignol”.

     In connection with the transactions contemplated by the Acquisition Agreement, the Company’s board of directors will propose to the Company’s shareholders Mr. Laurent Boix-Vives for election as a director of the Company. In addition, pursuant to a consulting agreement dated April 12, 2005 between the Company and Controlling Shareholders, the Controlling Shareholders will provide advisory and consulting services to the Company for a period of five years following the Closing Date, including with respect to the branding and marketing strategy of Skis Rossignol and its subsidiaries, their relations with the press, distributors, customers and local representatives, as well as the organization of the 2006 Winter Olympic Games in Italy and the 100^th anniversary of the Rossignol brand in 2007. The aggregate consideration payable to the Controlling Shareholders for such services over the five year period is approximately €3,900,000.

     The obligations of the parties to proceed with the actions to take place on the Closing Date is contingent upon receipt of all necessary regulatory approvals in France and the United States, including approvals under applicable antitrust laws. The Company and Skis Rossignol intend to make filings under applicable antitrust laws with the United States Department of Justice and Federal Trade Commission, and with the General Directorate for Competition, Consumer Policy and Repression of Fraud of the French Ministry for the Economy. The Company cannot complete the transactions contemplated under the Acquisition Agreement until the applicable waiting periods associated with those filings, including any extension of those waiting periods, have expired or been terminated and applicable clearances have been obtained. No assurances can be given as to all such clearances being obtained in a timely manner, or at all.

     Holding Company Shareholders’ Agreement

     The Holding Company Shareholders’ Agreement sets forth the respective rights of the Company and the Controlling Shareholders in the Holding Company. Pursuant to the Holding Company Shareholders’ Agreement, the Controlling Shareholders agree (i) not to interfere in the management of the Holding Company except through the exercise of the limited voting rights attaching to their shares, (ii) not to vote their shares except in the interest of the Holding Company and after consulting with the Company, and (iii) to vote in favor of resolutions supported by the Company. The Controlling Shareholders are entitled to receive dividends declared by the Holding Company in respect of their shares, in proportion to the percentage of share capital of the Holding Company represented by those shares. The Controlling Shareholders will not be entitled to vote or be consulted in shareholders’ meetings of the Holding Company, except in limited circumstances, including (i) amendments to the bylaws of the Holding Company that adversely affect their rights, (ii) any reduction of their equity interest in the Holding Company to less than 25%, (iii) a transfer of the Holding Company’s corporate seat outside of France, and (iv) the liquidation or dissolution of the Holding Company, all of which require their unanimous consent.

     The Controlling Shareholders are prohibited from transferring their shares of the Holding Company to a third party until April 12, 2015, subject to limited exceptions. The Company is prohibited from transferring its shares of the Holding Company to a third party until April 12, 2010, subject to limited exceptions.

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     The Controlling Shareholders have granted to the Company call options, pursuant to which the Company can require the Controlling Shareholders to sell all (but not less than all) of their shares of the Holding Company to the Company, for a purchase price of €181.20 per share, net of any dividends or other distributions paid by the Holding Company to the Controlling Shareholders, plus interest equal to Euribor 3 months + 2.35 %. The call options may be exercised during the 90-day period commencing April 12, 2010 or at any time when the Controlling Shareholders are in material breach of their obligations under the Holding Company Shareholders’ Agreement or the related pledge agreement and in certain other circumstances.

     The Company has granted to the Controlling Shareholders put options, pursuant to which the Controlling Shareholders can require the Company to purchase all (but not less than all) of their shares of the Holding Company for a consideration equal to the call option price described above, which may be increased by 5% in certain limited instances. The put options may be exercised during the 75-day period commencing April 27, 2010 or at any time when the Company is in material breach of its obligations under the Holding Company Shareholders’ Agreement or the related pledge agreement.

     The Holding Company Shareholders’ Agreement is subject to a condition precedent that all regulatory approvals in France and the United States be obtained prior to December 31, 2005, subject to certain limited exceptions.

     Roger Cleveland Shareholders’ Agreement

     As of the date hereof, Rossignol Skis Company, Inc. (“Rossignol Skis Company”), a Delaware corporation and a wholly-owned subsidiary of Skis Rossignol, owns 52.27% of Roger Cleveland, and Skis Rossignol owns 11.36% of Roger Cleveland with the remaining 36.37% stake held by the Sellers. In connection with the Acquisition Agreement, the Company, Skis Rossignol and Rossignol Skis Company (collectively, the “Quiksilver Associates”) and the Sellers entered into a shareholders’ agreement dated April 12, 2005 with respect to their respective shareholdings in Roger Cleveland (the “Roger Cleveland Shareholders’ Agreement”, and together with the Holding Company Shareholders’ Agreement, the “Agreements”).

     The Roger Cleveland Shareholders’ Agreement requires the Sellers to cause Roger Cleveland (i) to manage its business in the normal course consistent with past practice between the Signing Date and the Closing Date, and (ii) to refrain from taking a number of corporate acts during that time without the consent of the Company. The agreement also provides that Mr. Laurent Boix-Vives shall be appointed the chairman of the board of directors of Roger Cleveland effective on the Closing Date. The Sellers agree not to interfere in the management of Roger Cleveland, other than to exercise their rights as shareholders of Roger Cleveland and for Mr. Boix-Vives to perform his duties as chairman. The Quiksilver Associates are obligated to ensure that Roger Cleveland distributes to shareholders each year at least 20% of its distributable income earned in the prior fiscal year.

     The Sellers are prohibited from transferring their shares in Roger Cleveland to a third party between the Signing Date and October 12, 2009, and Rossignol Skis Company (or any other person designated by the Company) has a preemptive right to purchase any shares

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proposed to be transferred by the Sellers to a third party between October 12, 2009 and April 12, 2012, in each case subject to exceptions. The Quiksilver Associates are prohibited from transferring their shares in Roger Cleveland to a third party until October 12, 2009, and the Sellers have a preemptive right to purchase any shares proposed to be transferred by the Quiksilver Associates to a third party between October 12, 2009 and April 12, 2012, in each case subject to exceptions. In the event that the Quiksilver Associates propose to transfer control of Roger Cleveland to a third party between October 12, 2009 and April 12, 2012, the Sellers have the right to have their shares in Roger Cleveland included in such transfer upon the same terms.

     The Sellers have a put option, pursuant to which the Sellers can require the Quiksilver Associates to purchase all (but not less than all) of the shares they hold in Roger Cleveland between October 12, 2009 and April 12, 2012, or at any time when the Quiksilver Associates are in material breach of their obligations under the Roger Cleveland Shareholders’ Agreement or the related pledge agreement. The Quiksilver Associates have a call option, pursuant to which the Quiksilver Associates can require the Sellers to sell all (but not less than all) of their shares in Roger Cleveland to the Quiksilver Associates at any time after April 12, 2012, or at any time when the Sellers are in material breach of their obligations under the Roger Cleveland Shareholders’ Agreement and in certain other circumstances.

     The put and call option price will be paid exclusively in cash and will be determined by reference to a multiple of (i) the weighted average of Roger Cleveland’s profits before non-recurrent items in the three years preceding the exercise of the put or call option, as the case may be, applying a multiple of 1 for the most remote year, 2 for the second year and 3 for the most recent year before such exercise and (ii) the Company’s price earning ratio based on (a) the daily weighed average price of its common stock during a 60-day trading period on the New York Stock Exchange and (b) the Company’s net earnings per share before non-recurring items, on a non-diluted basis, for the fiscal year preceding the exercise of the put or call option, as the case may be, provided that such price earnings ratio may not be lower than 15 to one or higher than 17 to one.

     As security for the parties’ obligations under the put and call options, all of the shares of Roger Cleveland owned by the Sellers and part of the shares of Roger Cleveland owned by the Quiksilver Associates will be subject to pledge agreements.

     The Roger Cleveland Shareholders’ Agreement is subject to a condition precedent that all regulatory approvals in France and the United States be obtained prior to December 31, 2005, subject to certain limited exceptions.

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     The foregoing descriptions of the agreements referred to therein and the transactions contemplated thereby do not purport to be complete and are qualified in their entirety by reference to such documents. An English translation of the Acquisition Agreement is attached as Exhibit 10.1 to this Current Report on Form 8-K, and each of the Agreements is included as an exhibit to the Acquisition Agreement, and each of these agreements is incorporated herein by reference.

     Revolving Facility

     On the Signing Date, the Company, and its wholly-owned subsidiary, Quiksilver Americas, Inc., as borrower, entered into a Credit Agreement with JPMorgan Chase Bank, N.A. (“JPMorgan”), as administrative agent, and other lenders to become parties thereto (the “Revolving Credit Agreement” or “Revolving Facility”). The Revolving Credit Agreement provides for a secured revolving line of credit of up to $250 million (with a Company option to expand the facility to $350 million on certain conditions), but limited to a borrowing base generally equal to the sum of 85% of the eligible accounts receivable plus 75% of the eligible inventory of certain of the Company’s U.S. subsidiaries. Upon completion of the acquisition of Skis Rossignol, certain U.S. subsidiaries of Skis Rossignol may also contribute to the borrowing base on substantially similar terms. The Revolving Facility also includes a $100 million sublimit for letters of credit.

     As of the Signing Date, approximately $75 million was outstanding under the Revolving Facility. Borrowings under the Revolving Facility are due and payable in full on or before April 12, 2010. The interest rate on borrowings under the Revolving Facility is determined, at the Company’s option, as either: (i) an adjusted London Inter-Bank Offer (LIBO) rate plus a spread of 1.125% to 1.875%; or (ii) the higher of the prime rate or the federal funds effective rate plus 0.5%. The applicable margin with respect to the LIBO Rate is based upon the Company’s fixed charge coverage ratio. Outstanding loans generally may be repaid in whole or in part at any time, without penalty, subject to certain limitations.

     The obligations of the Company and Quiksilver Americas, Inc. under the Revolving Credit Agreement are generally secured by (i) a security interest in the assets of certain of the Company’s U.S. subsidiaries (excluding intellectual property rights), and (ii) a pledge of 65% of the capital stock of the Company’s first-tier foreign subsidiary, QS Holdings, S.A.R.L.

     The Revolving Credit Agreement contains certain restrictive covenants usual for facilities and transactions of this type, including, among others, certain limitations on (i) incurrence of additional debt and guarantees of indebtedness, (ii) creation of liens, (iii) mergers, consolidations or sales of substantially all of the Company’s assets, (iv) sales or other dispositions of assets, (v) distributions or dividends and repurchases of the Company’s common stock, (vi) restricted payments, including without limitation, certain restricted investments, (vii) engaging in transactions with affiliates of the Company and (viii) sale and leaseback transactions.

     Overdue principal, and to the extent permitted by law, overdue interest, on borrowings under the Revolving Facility bear interest at the applicable rate plus 2%. The Revolving Credit Agreement also contains customary default provisions and provides that, upon the occurrence of an event of default relating to the bankruptcy or insolvency of the Company or one of its subsidiaries, the unpaid balance of the principal and accrued interest under the Revolving Facility and all other obligations of the Company under the loan documents will become

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immediately due and payable without any action of the lenders. Upon the occurrence of any other event of default (which would include a default under the Interim Credit Agreement), JPMorgan may, by written notice, declare the unpaid balance of the principal and accrued interest under the Revolving Facility and all other obligations under the loan documents immediately due and payable without any further action.

     The Revolving Credit Agreement is also subject to customary “change of control” provisions including, among other things, (a) the direct or indirect control by any person or group of more than 35% of the voting stock of the Company, (b) occupation of a majority of the seats (other than vacant seats) on the Board of Directors of the Company by persons who were neither nominated by the Board of Directors of the Company or appointed by directors so nominated, (c) the failure by the Company to own, directly or indirectly, beneficially or of record, 100% of the capital stock of Quiksilver Americas, Inc. and (d) a “change of control” under the Interim Credit Agreement described below.

     Some of the lenders, and certain of their affiliates, under the Revolving Facility perform various financial advisory, investment banking and commercial banking services for the Company and its subsidiaries (including Quiksilver Americas, Inc.), for which they receive usual and customary fees.

     The Revolving Credit Agreement is attached as Exhibit 10.2 to this Current Report on Form 8-K. The above description of the Revolving Credit Agreement is not complete and is qualified in its entirety by reference to the exhibit.

     Interim Facility

     In addition to the Revolving Credit Agreement, on the Signing Date the Company also entered into a Credit Agreement with JPMorgan, as administrative agent, and other lenders to become parties thereto (the “Interim Credit Agreement” or “Interim Facility”). Under the Interim Credit Agreement, the Company may borrow, subject to certain conditions, up to an aggregate of $350 million (the “Interim Loans”), including $73,700,000 in dollar-denominated loans and up to the euro-equivalent of $276,300,000 in euro-denominated loans. On the Signing Date, the Company borrowed approximately $140 million on the Interim Facility in connection with the initial cash payments under the Acquisition Agreement and the repayment of the Terminated Facility (as discussed in Item 1.02 below). Any amounts outstanding under the Interim Facility are due and payable in full on or before April 12, 2006 (the “Initial Maturity Date”); provided, however, if the Interim Loans have not been repaid on the Initial Maturity Date, the Interim Loans will convert to term loans (the “Term Loans,” and together with the Interim Loans, the “Loans”) maturing on April 12, 2012. Each lender will have the option on or after the Initial Maturity Date to receive exchange notes (the “Exchange Notes”) in exchange for its Term Loans. The Exchange Notes generally have the same terms as the Term Loans, except the Exchange Notes have registration rights and the Company may be subject to certain penalties if, among other things, the holders of the Exchange Notes are not able to transfer their notes.

     The interest rate on the Interim Loans will be equal to an adjusted LIBO rate plus a spread of 4.25%; provided, however, during the three month period beginning on the third month anniversary of the Signing Date and during each three-month period thereafter the interest rate shall increase by 0.5% until the Initial Maturity Date. The interest rate on the Term Loans will

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be equal to the higher of (i) the interest rate on the Interim Loans immediately prior to the Initial Maturity Date plus 0.5% and (ii) the treasury rate on the Initial Maturity Date plus 5.0%. Notwithstanding the foregoing, the interest rate on the Loans shall not exceed 10.5% per annum but shall not be less than (i) 7.25% for Interim Loans and (ii) 9.25% for Term Loans. The obligations of the Company under the Interim Credit Agreement are unsecured, but are guaranteed by certain U.S. subsidiaries of the Company.

     The Interim Credit Agreement contains certain restrictive covenants usual for facilities and transactions of this type, including, among others, certain limitations on (i) incurrence of additional debt and guarantees of indebtedness, (ii) distributions or dividends and repurchases of the Company’s common stock, (iii) restricted payments, including without limitation, certain restricted investments, (iv) entering into agreements that restrict dividends from the Company’s subsidiaries, (v) sales or other dispositions of assets, including capital stock of the Company’s subsidiaries, (vi) creation of liens, (vii) engaging in transactions with affiliates of the Company, (viii) mergers, consolidations or sales of substantially all of the Company’s assets, (ix) sale and leaseback transactions and (x) entering into new lines of businesses.

     Overdue principal, and to the extent permitted by law, overdue interest, on borrowings under the Interim Facility will bear interest at the applicable rate plus 2%. The Interim Credit Agreement also contains customary default provisions and provides that, upon the occurrence of an event of default relating to the bankruptcy or insolvency of the Company or its subsidiaries, the unpaid balance of the principal and accrued interest under the Interim Facility and all other obligations under the loan documents will become immediately due and payable without any action of the lenders. Upon the occurrence of any other event of default (which would include a default under the Revolving Credit Agreement), JPMorgan may, by written notice, declare the unpaid balance of the principal and accrued interest under the Interim Facility and all other obligations under the loan documents immediately due and payable without any further action.

     The Company may prepay the Interim Loans in whole or in part at any time without premium or penalty, subject to certain conditions. The Company is required to prepay the Interim Loans with the proceeds of, among other things, (a) certain types of indebtedness, (b) the issuance of capital stock of the Company or its subsidiaries and (c) the sale of certain assets.

     The Interim Credit Agreement is also subject to customary “change of control” provisions including, among other things, (a) the sale of all or substantially all of the Company’s assets, (b) the liquidation or dissolution of the Company, (c) the direct or indirect control by any person or group of more than 35% of the voting stock of the Company and (d) a “change of control” under the Revolving Credit Agreement. Upon a change of control, the holders of the Interim Loans will have the right to require that the Company purchase the Interim Loans at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest thereon.

     Some of the lenders, and certain of their affiliates, under the Interim Facility perform various financial advisory, investment banking and commercial banking services for the Company and its subsidiaries (including Quiksilver Americas, Inc.), for which they receive usual and customary fees.

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     The Interim Credit Agreement is attached as Exhibit 10.3 to this Current Report on Form 8-K. The above description of the Interim Credit Agreement is not complete and is qualified in its entirety by reference to the exhibit.

Item 1.02 Termination of a Material Definitive Agreement

     On April 12, 2005, the Company terminated the Credit Agreement, dated as of June 27, 2003, among the Company, certain of its subsidiaries, JPMorgan, as administrative agent, Union Bank of California, N.A., as syndication agent and joint lead arranger, Fleet National Bank and Bank of America, N.A., as syndication agents, U.S. Bank National Association, as documentation agent, and J.P. Morgan Securities, Inc., as sole bookrunner and joint lead arranger (the “Terminated Facility”). This Credit Agreement provided for a $200 million revolving line of credit secured by the Company’s U.S. assets, other than trademarks and other intellectual property, and included a $75 million sublimit for letters of credit. The interest rate on borrowings was determined, at the Company’s option, as either: (i) an adjusted LIBO rate plus a spread of 1.125% to 1.5% or (ii) the higher of the prime rate, the three months certificate of deposit rate plus 1% or the federal funds effective rate plus 0.5%. The margins over the LIBO rates were based upon the Company’s leverage ratio.

     Some of the lenders, and certain of their affiliates, under the Terminated Facility perform various financial advisory, investment banking and commercial banking services for the Company and its subsidiaries (including Quiksilver Americas, Inc.), for which they receive usual and customary fees.

     Simultaneous with the termination of this Credit Agreement, the Company entered into the credit agreements described in Item 1.01 of this Current Report on Form 8-K.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

     The information provided in Item 1.01 of this Current Report on Form 8-K is hereby incorporated into this Item 2.03 by reference.

Item 3.02 Unregistered Sales of Equity Securities

     As disclosed under Item 1.01 above, on April 12, 2005, the Company and the Sellers entered into the Acquisition Agreement pursuant to which the Company agreed to issue approximately 1,075,000 shares of its common stock to the Sellers. The issuance of this stock by the Company will be made in a transaction not involving any public offering pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933 (the “Securities Act”), and pursuant to Regulation S under the Securities Act.

     The issuance of the shares of the Company’s common stock pursuant to Section 4(2) of the Securities Act qualified for that exemption because the issuance of the shares by the Company did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the transaction, the size of the offering, and the manner of the offering. In addition, the Controlling Shareholders had the necessary investment intent as required by Section 4(2) since they are restricted from selling those shares for a period of three years from the date of issuance. This restriction ensures that

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these shares would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on the above factors, this transaction meets the requirements to qualify for exemption under Section 4(2) of the Securities Act.

Item 5.02. Departure of Directors or Principal Officers; Election of Officers; Appointment of Principal Officers.

     On April 13, 2005, Robert G. Kirby, a director of the Company, passed away.

Item 9.01 Financial Statements and Exhibits

     (c) Exhibits

The following exhibits are being furnished herewith:

Exhibit No.	Exhibit Title or Description
10.1	English Translation of the Acquisition Agreement, dated April 12, 2005, between the Company and Mr. Laurent Boix-Vives, Ms. Jeannine Boix-Vives, Ms. Christine Simon, Ms. Sylvie Bernard and SDI Société de Services et Développement
10.2	Credit Agreement, dated as of April 12, 2005, by and among the Company, Quiksilver Americas, Inc., the Lenders named therein, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Securities, Inc., as Sole Bookrunner and Sole Lead Arranger
10.3	Credit Agreement, dated as of April 12, 2005, by and among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Securities, Inc., as Sole Bookrunner and Sole Lead Arranger

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: April 18, 2005	Quiksilver, Inc. (Registrant)
	By:	/s/ Steven L. Brink
		Steven L. Brink
		Chief Financial Officer and Treasurer

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INDEX TO EXHIBITS

Exhibit No.	Exhibit Title or Description
10.1	English Translation of the Acquisition Agreement, dated April 12, 2005, between the Company and Mr. Laurent Boix-Vives, Ms. Jeannine Boix-Vives, Ms. Christine Simon, Ms. Sylvie Bernard and SDI Société de Services et Développement
10.2	Credit Agreement, dated as of April 12, 2005, by and among the Company, Quiksilver Americas, Inc., the Lenders named therein, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Securities, Inc., as Sole Bookrunner and Sole Lead Arranger
10.3	Credit Agreement, dated as of April 12, 2005, by and among the Company, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Securities, Inc., as Sole Bookrunner and Sole Lead Arranger

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EX-10.1

                                                                    Exhibit 10.1

 (This Exhibit 10.1 has been translated into English from the French original)


                              ACQUISITION AGREEMENT

BETWEEN THE UNDERSIGNED:

MR. LAURENT BOIX-VIVES, born on August 30, 1926 in Brides les Bains (73570),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. JEANNINE BOIX-VIVES, born on December 25, 1927 in Montbonnot (38330),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. CHRISTINE SIMON, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. SYLVIE BERNARD, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble, France,

SDI SOCIETE DE SERVICE ET DEVELOPPEMENT, a Swiss societe anonyme (corporation)
with share capital of CHF 500,000, with registered offices at 120 chemin de la
Rueyre, 1020, Renens, Switzerland ("SDI"), represented by Mr. Laurent
Boix-Vives, acting as President (Chairman and CEO),

acting jointly and severally for the purposes of this Agreement,

                                                     (hereinafter referred to as
                                   the "SELLERS" and individually as a "SELLER")

                                                              PARTY OF THE FIRST
                                                                           PART,

AND

QUIKSILVER, INC., a Delaware corporation, with its registered offices at 15202
Graham Street Huntington Beach, California, United States of America,
represented by Mr. Bernard Mariette, acting in the capacity of President,

                                                        (hereinafter referred to
                                             as "QUIKSILVER" or the "PURCHASER")

                                                             PARTY OF THE SECOND
                                                                           PART,

(each of the Sellers and the Purchaser shall be referred to individually as a
"PARTY" and collectively as the "PARTIES").








WHEREAS:

A.   The Sellers together hold, either directly or through Ski Expansion SCA, a
     societe en commandite par actions (partnership limited by shares) with
     share capital of EUR 8,096,624, having its registered office at the place
     called "Le Menon", Voiron (38500), France, registered with the Registry of
     Commerce and Companies of Grenoble under number 070 501 374 (the
     "COMPANY"), 5,534,937 shares in Skis Rossignol SA, a societe anonyme
     (corporation) with share capital of EUR 49,792,256, with registered offices
     located at the place called "Le Menon", Voiron (38500), France, registered
     with the Registry of Commerce and Companies of Grenoble under number 056
     502 958 and the shares of which are listed on Eurolist of Euronext Paris
     under Euroclear France code 12041 ("SKIS ROSSIGNOL"), representing 44.46%
     of the capital and 58.67% of the voting rights of Skis Rossignol.

B.   The Purchaser has expressed an interest in acquiring control of the group
     comprising Skis Rossignol and its Subsidiaries, with a view to further
     transfer its direct and indirect holdings in Skis Rossignol to a French
     vehicle.

C.   The Parties therefore drafted this Agreement for the purpose of setting out
     the terms and conditions of this acquisition.


NOW THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:

ARTICLE 1 - DEFINITIONS

"ACQUISITION" means the acquisition by the Purchaser, directly or indirectly, of
all of the shares of Skis Rossignol and of its Subsidiaries held directly or
indirectly by the Sellers (including (i) the acquisition of the shares of the
Company, to be held by the Sellers following the capital increase provided for
in Article 2.8, in accordance with this Agreement, and (ii) where applicable,
the acquisition of the shares of the Company and the shares of Roger Cleveland
US which are the subject of the put and call options provided for in the RC
Shareholders' Agreement and the SCA Shareholders' Agreement).

"ADDITIONAL COMPANY SHARES" has the meaning given to it under Article 2.8(d).

"ADDITIONAL TRANSFERRED SHARES" has the meaning given to it under Article 2.9.

"AGREEMENT" means this agreement and its exhibits and schedules, including the
Ancillary Agreements.

"ANCILLARY AGREEMENTS" means, collectively, the Escrow Agreement, the Pilot
Expansion Deed of Purchase, the Unlimited Partners Withdrawal Agreement, the
Purchase Agreement for the Remaining Skis Rossignol Shares, the Minority
Holdings Purchase Agreement, the RC Shareholders' Agreement, the SCA
Shareholders' Agreement, and the contract for the provision of services dated as
of the First Closing Date, by and between Quiksilver and Mr. Laurent Boix-Vives.




"ANTITRUST REGULATIONS" means all antitrust laws and regulations, applicable in
France and abroad, with the purpose of or the effect of regulating the mergers
of companies or in more general terms free competition, including Articles L.
430-1 and following of the French Commercial Code and Decree n(degree) 2002-689
of April 30, 2002, Council Regulation n(degree) 4064/89 of December 21, 1989
relating to the control of mergers between companies, as modified, as well as
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 of the United States of
America, as amended.

"BUSINESS DAY" means, with respect to France or the United States, any day other
than a Saturday, a Sunday or a day on which commercial banks or regulated
markets are closed for business during the entire day in Paris or New York,
respectively, it being specified that references herein to a "Business Day"
without reference to France or the United States shall be references to days
which are both French Business Days and US Business Days.

"CAPITAL INCREASE" has the meaning given to it under Article 2.8.

"CASH TENDER OFFER" has the meaning given to it under Article 2.2(a).

"COMPANY" has the meaning given to it in the Preamble of this Agreement.

"COMPANY NET ASSETS" means the difference (positive or negative) between (i) all
of the assets and any cash and short term securities (disponibilites et valeurs
mobilieres de placement) of the Company and SDIF, on a consolidated basis,
including notes due but not paid (effets echus remis a l'encaissement) but
excluding notes for payment and notes for discounting (effets non-echus a
l'encaissement et effets a l'escompte) and any cash deposited by way of security
and, (ii) the amount of all debt and liabilities of the Company (whether on or
off-balance sheet), including bank borrowings and liabilities underwritten or
guaranteed by the Company or SDIF, including bank overdraft and accrued
interest, convertible bonds, debenture bonds, other borrowings and financial
liabilities (including net shareholder debt and net intra-group debt),
agreements for the deferred payment of goods or services, tax debt, payables to
fixed assets suppliers and related accounts (dettes sur immobilisations et
comptes rattaches), obligations the performance of which is guaranteed by a
surety or pledge, capitalized leases (credit-baux), and provisions for financial
risks and costs of the Company and of SDIF, on a consolidated basis.

"CONTROLLING INTEREST" has the meaning given to it under Article 2.3.

"CONTROLLING INTEREST PURCHASE PRICE ADJUSTMENT" has the meaning given to it
under Article 3.1(e)(ii).

"DATE OF THE TRANSFER OF THE REMAINING SKIS ROSSIGNOL SHARES" means either (i)
the Second Closing Date, or (ii) in the event that the Purchaser wishes to
implement the provision of Article 232-4 of the General Regulation of the French
Autorite des marches financiers with respect to the reopening of a public offer,
any other French Business Day notified by the Purchaser to the Sellers with no
less than twenty-four (24) hour prior notice, comprised between the date of the
first publication by Euronext Paris of the interim result of the Cash Tender
Offer and the Second Closing Date.





"DISPUTED PROVISIONS" has the meaning given to it under Article 8.6.

"ESCROW AGENT" means Societe Generale, a bank with registered office at 29,
boulevard Haussmann, 75009 Paris.

"ESCROW AGREEMENT" means the escrow agreement set forth in Exhibit 2.3(b).

"ESTIMATED NET ASSETS" has the meaning given to it under Article 3.1(e).

"ESTIMATED PRICE OF THE CONTROLLING INTEREST" has the meaning given to it under
Article 3.1(b).

"EURIBOR" means the rate equal to the interbank interest rate applicable to
three (3) month deposits in euros, as calculated by the Banking Federation of
the European Union and published for information purposes on the Euribor Page of
the Moneyline Telerate 248 screen (or any other page that is substituted
therefor, or in the lack thereof, on the equivalent pages of Reuters or
Bloomberg).

"EXPERT" has the meaning given to it under Article 3.1(e).

"FIRST CLOSING DATE" has the meaning given to it under Article 2.1 of this
Agreement.

"INDEPENDENT EXPERT" means Detroyat et Associes, represented by Ms. Marie-Ange
Farthouat.

"INTERIM PERIOD" has the meaning given to it under Article 5.1(a) of this
Agreement.

"KNOWLEDGE OF THE SELLERS" means, with respect to any fact or event, the
knowledge of such fact or event by any of the Sellers.

"MINORITY HOLDINGS" means, collectively, (i) 1,231 shares in Skis Dynastar SA,
representing 0.75% of the capital and the voting rights in that company, (ii)
200 shares in Skis Rossignol de Espana SA, representing 3.33% of the capital and
the voting rights in that company, (iii) 1 share in Rossignol Ski Osterreich,
representing 0.25% of the capital and the voting rights in that company, (iv)
96,687 shares in Rossignol Lange SpA, representing 0.55 % of the capital and the
voting rights in that company, (v) 5 shares in Rossignol Ski Poles Vallee
d'Aoste representing 0.01% of the capital and the voting rights in that company,
(vi) 1 share in Rossignol Ski AG, representing 0.02% of the capital and voting
rights and (vii) 1 share in Look Fixations SA, representing 0.0001% of the
capital and the voting rights in that company, in each case held by the Sellers
at the First Closing Date.

"MINORITY HOLDINGS PURCHASE AGREEMENT" means the agreement set forth in Exhibit
2.5.

"MINORITY SHAREHOLDERS" has the meaning given to it under Article 5.2(b).

"NET ASSETS INCREASE" has the meaning given to it under Article 3.1(e)(ii).



"OPACO" has the meaning given to it under Article 2.2(a).

"PILOT EXPANSION" means Pilot Expansion, a societe a responsabilite limitee
(limited liability company) with capital of EUR 16,000, with registered offices
at the place called "Le Menon", Voiron (38500), France, registered with the
Registry of Commerce and Companies of Grenoble under number 431 779 156.

"PILOT EXPANSION DEED OF PURCHASE" means the agreement set forth under Exhibit
8.8.

"PREAMBLE" means (i) the introductory paragraphs A, B and C of this Agreement
and (ii) the designation of the Parties set forth at the top of this Agreement.

"PRE-SIGNING TRANSACTIONS" means the increase in the capital of the Company
performed immediately before the completion of the sale of the Pilot Expansion
Shares pursuant to Article 2.1, by means of a contribution in kind (apport en
nature) by the Sellers in favor of the Company of 1,247,320 shares in Skis
Rossignol, as a result of which the Company's direct and indirect equity
ownership in Skis Rossignol was increased, as of the First Closing Date, from
3,537,659 shares to 4,784,979 shares, representing 38.43% of the capital and
49.84% of the voting rights of Skis Rossignol (based on a number of voting
rights not including additional voting rights resulting from the exercise of
Skis Rossignol stock options since March 29, 2005); as well as the issuance to
the benefit of the Sellers, in consideration for this contribution, of 130,789
newly issued ordinary shares of common stock of the Company, provided that
144,050 ordinary shares of the Company shall have been converted into preferred
shares beforehand.

"PURCHASE AGREEMENT FOR THE REMAINING SKIS ROSSIGNOL SHARES " means the
agreement set forth in EXHIBIT 2.6.

"PURCHASE PRICE OF THE ADDITIONAL TRANSFERRED SHARES" has the meaning given to
it under Article 3.1(c).

"PURCHASE PRICE OF THE CONTROLLING INTEREST" has the meaning given to it under
Article 3.1(b).

"PURCHASE PRICE OF THE PILOT EXPANSION SHARES" has the meaning given to it under
Article 3.1(a).

"RC SHAREHOLDERS' AGREEMENT" means the shareholders' agreement set forth in
Exhibit 2.7.

"REMAINING SKIS ROSSIGNOL SHARES" means seven hundred and forty nine thousand
nine hundred and fifty eight (749,958) shares in Skis Rossignol which remain
held by the Sellers following completion of the Pre-Signing Transactions and
representing 6.02% of the capital and 8.83% of the voting rights in Skis
Rossignol.

"ROGER CLEVELAND US" means Roger Cleveland Golf Company, Inc., a company
governed by the laws of the State of California, United States of America.



"ROSSIGNOL SKI COMPANY, INC." means Rossignol Ski Company, Inc., a company
governed by the laws of the State of Delaware, United States of America.

"SCA SHAREHOLDERS' AGREEMENT" means the shareholders' agreement set forth in
Exhibit 2.4.

"SDIF" means Societe de Developpement Industriel et Financier, a limited
liability company with capital of EUR 762,245.09, with its registered office at
the place called "Le Menon", Voiron (38500), France, registered with the
Registry of Commerce and Companies of Grenoble under number 411 001 209.

"SECOND CLOSING DATE" means either (i) the Settlement-Delivery Date, or (ii) if
the Settlement-Delivery Date has not occurred before July 19, 2005, July 19,
2005 (provided that in the event that the authorizations necessary for the
Purchase under the Antitrust Regulations have not been obtained on or prior to
that date, the Second Closing Date will be the date on which these
authorizations are obtained).

"SELLERS' REPRESENTATIVE" has the meaning given to it under Article 8.3.

"SETTLEMENT-DELIVERY DATE" means the date of the settlement and delivery to the
Purchaser or OPACO of the shares of Skis Rossignol acquired by the Purchaser or
OPACO, as the case may be, in the Cash Tender Offer (not including the shares
that may be acquired by the Purchaser or OPACO in connection with the reopening
of the Cash Tender Offer in accordance with Article 232-4 of the General
Regulation of the French Autorite des marches financiers, and which will be the
subject of a subsequent settlement-delivery).

"SKIS ROSSIGNOL" has the meaning given to it in the Preamble of this Agreement.

"SUBSIDIARY" means, with regard to any legal person, any person or entity
controlled by that legal person according to the meaning provided by Article L.
233-3 of the French Commercial Code, including any joint-venture company
(societe en participation), economic interest groupings (groupements d'interet
economiques) or partnership of which that legal person is a member, provided
that Article L. 233-3 of the French Commercial Code shall be interpreted to
include, mutatis mutandis, entities that are not commercial companies (for
example, non-commercial entities, economic interest groupings or associations).

"SUBSIDIARY SHARES" has the meaning given to it in Article 6.2(d).

"TRANSFER" means any transaction involving a transfer of ownership, including,
without limitation, (i) sales and transfers (with or without consideration,
inter vivos or mortis causa), including any transfer by means of an adjudication
or by virtue of a judgment, (ii) transfers for the payment of goods or services
(dation en paiement), or by means of an exchange, partition, division, loan
(including specifically any loan of securities), sale with right of repurchase
(vente a remere), contribution, business contribution, liquidation, merger or
demerger, spin-off, split-off or any combination of these transactions, (iii)
transfers concerning ownership, usufruct or any other subdivision of ownership
rights or any other right concerning the object of the transfer (and including,
where applicable, any voting right or the right to receive dividends), and to
"TRANSFER" means the right to proceed with any of the foregoing transactions, or
to undertake to proceed with such a transaction.



"UNLIMITED PARTNERS WITHDRAWAL AGREEMENT" means the agreement set forth in
Exhibit 3.2(b).

"UPFRONT PAYMENT" means an amount equal to EUR 6,559,241, representing 10% of
the Estimated Price of the Controlling Interest.

ARTICLE 2 - ACQUISITION TRANSACTIONS

THE PARTIES AGREED TO EXECUTE THE ACQUISITION ACCORDING TO THE FOLLOWING TERMS
AND STEPS:

2.1 TRANSFER OF THE PILOT EXPANSION SHARES

Under the condition subsequent provided by Article 4.1 below, and in accordance
with the other terms and conditions of this agreement, the Sellers transfer to
the Purchaser, and the Purchaser acquires from the Sellers, as of the date of
this Agreement (the "FIRST CLOSING DATE"), one thousand six hundred (1,600)
shares of Pilot Expansion, representing all of the shares of Pilot Expansion
(the "PILOT EXPANSION SHARES"), free of all encumbrances, charge, liens,
security interest or other restrictions, limitations or third party rights
whatsoever, in order to enable Quiksilver to become, indirectly, the sole
unlimited partner of the Company.

2.2 CASH TENDER OFFER

(a) The Purchaser shall file, directly or indirectly through a company in which
it holds all of the capital and voting rights, directly or indirectly
(hereinafter "OPACO"), as soon as possible before or after obtaining the
authorizations necessary for the Acquisition under the Antitrust Regulations, a
cash tender offer for all of the shares of Skis Rossignol (the "CASH TENDER
OFFER").

(b) The Cash Tender Offer price shall be nineteen (19) Euros per share in Skis
Rossignol.

(c) It is agreed between the Parties that the bid document (note d'operation)
filed with, and to be approved by, the French Autorite des marches financiers in
relation to the Cash Tender Offer, shall consist of a joint document (note
conjointe) by the Purchaser and/or OPACO and Skis Rossignol; and the Sellers
shall procure that Skis Rossignol supply all of the information and documents
required for the drafting of this document, including documents to be provided
by the auditors of Skis Rossignol. Following the filing of the bid document with
the French Autorite des marches financiers, the Sellers shall provide their
assistance to the Purchaser in the preparation of the documents relating to the
Cash Tender Offer, and more generally, in all of the steps taken by the
Purchaser in order to ensure the successful outcome of the Cash Tender Offer,
from the First Closing Date until the settlement and delivery of the shares
acquired by the Purchaser, whether in the Cash Tender Offer or, where
applicable, in connection with the buyout offer followed by a squeeze out (as
provided for in paragraph (e) below). Sellers will procure that Skis Rossignol,
for this whole period, provide its assistance to the Purchaser in these steps
and specifically that they (i) promptly supply the Purchaser with all of the
information which the French Autorite des marches financiers considers necessary
for the purposes of their decision on the admissibility of




the Cash Tender Offer and their approval of the bid documentation and (ii)
participate, at the request of the Purchaser, through the relevant members of
its management board and/or supervisory board, in any meetings and conference
calls that may be scheduled with the French Autorite des marches financiers, the
Independent Expert and/or any other authority or person in connection with the
Cash Tender Offer.

(d) The Sellers shall procure that the supervisory board of Skis Rossignol vote
unanimously in favor of a favorable and unconditional recommendation by the
supervisory board on the Cash Tender Offer filed by the Purchaser and/or OPACO.

(e) The Purchaser or OPACO shall file, if it holds directly and/or indirectly,
more than 95% of the capital or voting rights in Skis Rossignol at the end of
the Cash Tender Offer (including following a reopening of such offer pursuant to
Article 232-4 of the General Regulation of the French Autorite des marches
financiers, where applicable), a buyout offer (offre publique de retrait) bid
followed by a squeeze out (retrait obligatoire), in order to acquire from the
public the Skis Rossignol shares which it does not own at this date, and to
proceed, where applicable, with the delisting of the Skis Rossignol shares from
the Eurolist by Euronext, all in accordance with applicable laws and
regulations.

(f) The Sellers consider it to be in the interest of the shareholders of Skis
Rossignol to tender their shares to the Cash Tender Offer; consequently, they
will declare themselves publicly to be in favor of the Cash Tender Offer,
without reserve, and they shall refrain from making any comments or
observations, both in the public and the private domain, or from taking any
steps likely to encourage the shareholders of Skis Rossignol in general or any
one of them not to tender their shares to the Cash Tender Offer (including
shares tendered in connection with the reopening of such offer pursuant to
Article 232-4 of the General Regulation of the French Autorite des marches
financiers, where applicable) or to the buyout offer referred to in paragraph
(e) above.

(g) The Parties agree that (i) the Sellers will not tender the Remaining Skis
Rossignol Shares to the Cash Tender Offer, since these shares shall instead be
transferred to the Company pursuant to the Purchase Agreement for the Remaining
Skis Rossignol Shares provided for herein, and that (ii) the Company shall not
tender its Skis Rossignol shares to the Cash Tender Offer, since these shares
will have been transferred to the Purchaser indirectly by means of transfers of
shares in the Company pursuant to Articles 2.3 and 2.9 of this Agreement and the
SCA Shareholders' Agreement.

2.3 TRANSFER OF THE CONTROLLING INTEREST

(a) Subject to the condition precedent provided in Article 4.2 below, the
Sellers shall transfer to the Purchaser, and the Purchaser shall acquire from
the Sellers, on the Second Closing Date, three hundred and sixty one thousand
nine hundred and eighty nine (361,989) ordinary shares of common stock of the
Company, free of all encumbrances, charge, liens, security interest or other
restrictions, limitations or third party rights whatsoever (the "CONTROLLING
INTEREST"), representing 71.53% of the capital of the Company, being the
entirety of the ordinary shares of the Company (before taking into account the
Additional Company Shares issued in connection with the Capital Increase), it
being specified that the Sellers shall retain the Company's preferred shares
with limited voting rights in accordance with the SCA Shareholders' Agreement.





(b) As a guarantee for their obligation to deliver the Controlling Interest on
the Second Closing Date, the Sellers agree to deposit the Controlling Interest
in escrow, on the First Closing Date, in accordance with the Escrow Agreement
set forth in EXHIBIT 2.3(B); in return, as security for its obligation to pay
the price thereof, the Purchaser shall pay to the Sellers, on the First Closing
Date, an amount equal to the Upfront Payment, and consents to the escrow of an
amount equivalent to 70% of the Estimated Price of the Controlling Interest,
reduced by the Upfront Payment, in accordance with the Escrow Agreement.

2.4 SIGNING OF THE SCA SHAREHOLDERS' AGREEMENT

The Purchaser grants to the Sellers, and the Sellers grant to the Purchaser, an
option to buy and an option to purchase, respectively, the Company shares held
by the Sellers that are not transferred pursuant to Article 2.3 above (including
the preferred shares resulting from the Capital Increase set forth in Article
2.8), and the Parties agree to define certain conditions of their relations in
their capacity as shareholders of the Company and more specifically the terms of
the conversion of the Company into a societe par actions simplifiee (simplified
joint-stock company). For this purpose, the Parties shall, on the First Closing
Date, enter into the SCA Shareholders' Agreement set forth in Exhibit 2.4.

2.5 SIGNING OF THE MINORITY HOLDINGS PURCHASE AGREEMENT

The Parties shall procure the transfer by the Sellers to Skis Rossignol, on the
Second Closing Date, of the Minority Holdings. In order to decide upon the terms
and conditions of this transfer, henceforth, the Sellers shall enter into, and
shall procure that Skis Rossignol enter into, on the First Closing Date, the
Minority Holdings Purchase Agreement contained in EXHIBIT 2.5 providing, under
the terms and conditions set forth therein, for the transfer by the Sellers to
Skis Rossignol, on the Second Closing Date, of the entirety of the holdings held
directly or indirectly by the Sellers in the Subsidiaries of Skis Rossignol
(with the exception of the shares in Roger Cleveland US which are the subject of
put and call options under the RC Shareholders' Agreement).

2.6 SIGNING OF THE PURCHASE AGREEMENT FOR THE REMAINING SKIS ROSSIGNOL SHARES

The Parties shall procure the transfer by the Sellers to the Company, on the
Second Closing Date, of the Remaining Skis Rossignol Shares. In order to decide
upon the modalities of this transfer from this time on, the Sellers undertake to
sign with the Company, and to ensure that the Company signs with them, on the
First Closing Date, the Purchase Agreement for the Remaining Skis Rossignol
Shares set forth in EXHIBIT 2.6 providing, according to the terms and conditions
set forth herein, for the transfer by the Sellers to the Company, on the Date of
the Capital Increase, of the entirety of the shares of Skis Rossignol held
directly or indirectly by the Sellers who will not have transferred them under
the terms of Article 2.3 or contributed them to the Company in the context of
the Pre-Signing Transactions.



2.7 SIGNING OF THE RC SHAREHOLDERS' AGREEMENT

The Parties agree, on the Second Closing Date, to grant the Sellers an option to
sell, and to grant Rossignol Ski Company, Inc. (or any other company designated
by the Purchaser) an option to purchase, the shares in Roger Cleveland US held
directly or indirectly by the Sellers, and to define certain conditions of their
relations in their capacity as shareholders of Roger Cleveland US. For this
purpose, the Parties shall, on the First Closing Date, enter into the RC
Shareholders' Agreement set forth in Exhibit 2.7, it being specified that this
agreement shall not become effective until the Second Closing Date in accordance
with the terms thereof.

2.8 CAPITAL INCREASE OF THE COMPANY

(a) The Parties shall procure that the Company proceed, on the Second Closing
Date, with an increase in the capital of the Company, in cash, for an amount
equal to one million two hundred and fifty eight thousand one hundred and ninety
two (1,258,192) euros, not including the share premium (the "CAPITAL INCREASE").

(b) To this end, the Parties agree to provide their mutual assistance in order
to ensure the successful outcome of the Capital Increase on the scheduled date
and, specifically, to contact the Company's statutory auditor so that he can
deliver the relevant certifications in a timely manner.

(c) The Sellers undertake to subscribe the proposed capital increase in full and
to pay in full the price of the subscription at the date of the Capital Increase
stated above, by way of offset against the debt corresponding to the purchase
price of the Remaining Skis Rossignol Shares. The Parties agree in advance to
the offsetting of the debt to be incurred by the Company in connection with the
acquisition of the Remaining Skis Rossignol Shares, against the debt
corresponding to the subscription price of the shares issued in the Capital
Increase; and they agree that such debts shall become certain, due and payable
(certaines, liquides et exigibles) on the Second Closing Date, as a result of
the completion of the Acquisition transactions set forth in this Agreement, in
such a way that the offsetting shall be effected without the need for any
supplementary deed, agreement or undertaking.

(d) Based on the price of the Remaining Skis Rossignol Shares transferred to the
Company and the valuation retained for the Company for the purposes of the
Transfer of the Controlling Interest (without taking into account any
Controlling Interest Purchase Price Adjustment), the Capital Increase will
result in an issue of 76,518 ordinary shares and 2,119 preferred shares of the
Company (the "ADDITIONAL COMPANY SHARES"). The Parties understand and agree that
the number of Additional Company Shares and the amount of the Capital Increase
results from the price offered by the Purchaser for each share in Skis Rossignol
as part of the Cash Tender Offer, and the values freely negotiated between them,
retained for the other assets and liabilities of the Company. Consequently, the
Parties waive, in advance, any right to recourse that they may have one against
the other or against the Company, due to the fact that the amount of the Capital
Increase may not correspond to the real value of the Remaining Skis Rossignol
Shares.



2.9 TRANSFER OF THE ADDITIONAL TRANSFERRED SHARES

Subject to the condition precedent of the performance of the Capital Increase,
and in accordance with the terms and conditions of this Agreement, the Sellers
shall transfer to the Purchaser, and the Purchaser shall buy from the Sellers,
on the Second Closing Date, seventy six thousand five hundred and eighteen
(76,518) ordinary shares of the Company, issued as part of the Capital Increase
(the "ADDITIONAL TRANSFERRED SHARES"), representing 13.09 % of the capital of
the Company, free of all encumbrances, charge, liens, security interest or other
restrictions, limitations or third party rights whatsoever, according to the
terms and conditions defined by this Agreement.

ARTICLE 3 - PRICE, COMPLETION OF TRANSFERS

3.1 PRICE

(a) The sale and purchase of the Pilot Expansion Shares shall be made for a
total price of ten thousand Euros (E10,000) (the "PURCHASE PRICE OF THE
PILOT EXPANSION SHARES").

(b) The sale and purchase of the Controlling Interest shall be made and accepted
for a price per Company share of one hundred and eighty-one Euros and twenty
cents (E181.20), being a total price of sixty-five million five hundred and
ninety-two thousand four hundred and seven Euros (E65,592,407) (the "ESTIMATED
PRICE OF THE CONTROLLING INTEREST"), reduced or increased by the Controlling
Interest Purchase Price Adjustment, determined in accordance with paragraph (e)
below (the "PURCHASE PRICE OF THE CONTROLLING INTEREST").

(c) The sale and purchase of the Additional Transferred Shares shall be made and
accepted for a price per Company share of one hundred and eighty-one Euros and
twenty cents (E181.20), being a total price of thirteen million eight hundred
and sixty-five thousand and sixty-two Euros (E13,865,062) (the "PURCHASE PRICE
OF THE ADDITIONAL TRANSFERRED SHARES").

(d) Payment of the Purchase Price of the Pilot Expansion Shares shall be made on
the First Closing Date, by wire transfer of an amount equal to the Purchase
Price of the Pilot Expansion Shares to an account indicated by the Sellers'
Representative no later than five (5) days before the First Closing Date.

(e) Payment of the Purchase Price of the Controlling Interest and the Purchase
Price of the Additional Transferred Shares shall be made as follows:

     (i) As security for its obligation to pay the Purchase Price of the
Controlling Interest, (x) the Purchaser shall escrow on the First Closing Date,
in accordance with the Escrow Agreement set forth in EXHIBIT 2.3(B), an amount
corresponding to seventy percent (70%) of the Estimated Price of the Controlling
Interest, reduced by the Upfront Payment, by wire transfer of an amount equal to
39,355,444 Euros, and (y) the Purchaser shall pay the Upfront Payment to the
Sellers, in cash by wire transfer to the account indicated by the Sellers for
the payment of the Purchase Price of the Shares of Pilot Expansion.



     (ii) The Estimated Price of the Controlling Interest has been calculated on
the basis of the Sellers' good faith estimate of the Net Assets of the Company
at the First Closing Date, being a negative amount equal to (1,471,888) Euros
(the "ESTIMATED NET ASSETS"), a detailed statement of which shall have been
given to the Purchaser no later than the fifth (5th) day before the First
Closing Date. The Purchaser shall have a period of twenty (20) days following
the First Closing Date, in which to notify the Sellers of its comments on the
calculation of the Net Assets of the Company at the First Closing Date as
determined by the Sellers. In the absence of any comments passed to the Sellers
within this period, the Net Assets of the Company at the First Closing Date
shall be deemed to be the Estimated Net Assets, and the Controlling Interest
Purchase Price Adjustment shall be equal to zero. However, in the event that the
Purchaser does notify comments to the Sellers, the Sellers shall have a period
of ten (10) days in which to indicate to the Purchaser their agreement or
disagreement with such comments made by the Sellers. In the event of an
agreement of the Sellers, or in the absence of any notification sent to the
Purchaser within the ten (10) day period mentioned above, the Net Assets of the
Company at the First Closing Date shall be deemed to be the amount of the Net
Assets of the Company calculated by the Purchaser. In the event that the Sellers
disagree with the comments made by the Purchaser, the Sellers and the Purchaser
shall have an additional period of ten (10) days in which to reach an agreement
on the amount of the Net Assets of the Company at the First Closing Date. On
expiry of this period, in the absence of an agreement between the Parties, the
Parties shall by common agreement designate an international firm of auditors
(the "EXPERT") which shall be charged with determining the amount of the Net
Assets of the Company at the First Closing Date, if possible within twenty (20)
days from its appointment, expressing an opinion solely on the points of
disagreement existing between the Parties, and using the amounts on which the
Parties are in agreement as a basis for the other elements of the calculation.
In the event that the Parties cannot reach an agreement on which Expert to
appoint, the Expert shall be appointed by the Commercial Court of Paris at the
request of the most diligent party. The amount of the Net Assets of the Company
at the First Closing Date indicated by the opinion of the Expert shall be
binding on the Parties and shall serve as a basis for the calculation of the
Purchase Price of the Controlling Interest. The fees of the Expert shall be
payable by the Sellers or by the Purchaser depending on whether the amount of
the Net Assets of the Company, as determined by the Expert, is nearer to the
estimation of such amount made by the Purchaser or the Sellers respectively, at
the time of recourse to the Expert. The Purchase Price of the Controlling
Interest shall consist of an amount equal to the Estimated Price of the
Controlling Interest, (x) increased by an amount equal to the difference between
the amount of the Net Assets of the Company at the First Closing Date and the
Estimated Amount of the Net Assets (the "INCREASE OF THE NET ASSETS"), if such
difference is positive or (y) reduced by an amount equal to the absolute value
of the Increase of the Net Assets, if the Increase of the Net Assets is negative
(the "CONTROLLING INTEREST PURCHASE PRICE ADJUSTMENT").

     (iii) On the Second Closing Date,

          (1) the Purchaser shall remit to the Sellers share certificates drawn
up in the name of each of the Sellers, allocated amongst them in accordance with
EXHIBIT 3.1(C), representing a total number of shares of the Purchaser's common
stock determined in a way that the value of the common shares of the Purchaser
so remitted shall represent 30% of the amount of the Estimated Price of the
Controlling Interest and of the Purchase Price of the




Additional Transferred Shares, provided that the value of each such share shall
be the closing price of $28.99 on the New York Stock Exchange on April 12, 2005
or, alternatively, upon agreement of the Parties in good faith, such 30%
consideration to be paid in stock may instead be paid in cash, which the Sellers
would be obligated to use all or a portion of to purchase shares of the
Company's common stock in open market or privately regulated transactions, in
each case in accordance with applicable laws.

          (2) either (x) the Escrow Agent will release to the Sellers an amount
equal to 70% of the Estimated Price of the Controlling Interest, less the
Upfront Payment, escrowed pursuant to paragraph (i) above, and the Purchaser
shall pay to the Sellers the Controlling Interest Purchase Price Adjustment, if
the Purchase Price of the Controlling Interest is greater than or equal to the
Estimated Price of the Controlling Interest, or (y) the Escrow Agent will
release to the Sellers an amount equal to 70% of the Estimated Purchase Price of
the Controlling Interest less the Upfront Payment, escrowed pursuant to
paragraph (i) above, reduced by the Controlling Interest Purchase Price
Adjustment, and shall pay to the Purchaser the Controlling Interest Purchase
Price Adjustment, if the Purchase Price of the Controlling Interest is less than
the Estimated Price of the Controlling Interest;

          (3) the Purchaser shall pay to the Sellers 70% of the Purchase Price
of the Additional Transferred Shares, in cash by wire transfer to an account
indicated by the Seller's Representative to the Purchaser no later than five (5)
days before the Second Closing Date (or, if no indication is given, to the
account indicated by the Sellers for receiving the Upfront Payment).

(f) The shares of common stock of the Purchaser remitted to the Sellers pursuant
to paragraph (e) above shall be non-transferable for a period of three years
from the Second Closing Date. Consequently, the Sellers undertake vis-a-vis the
Purchaser, except with the prior written agreement of the Purchaser, for
themselves and on behalf of all the entities that they control or that are under
common control with them, from the date of the delivery of the Quiksilver shares
to them and until the expiry of a period of three years thereafter, not to (x)
offer, loan, assign, sell, issue or otherwise Transfer (including by way of
public offering, private placement with institutional investors or directly
contracted transfer), directly or indirectly (including by means of the use of
any financial instrument, swap or other optional agreement or instrument),
Quiksilver shares or any other instruments giving the right, through conversion,
exchange, redemption, exercise of a warrant or otherwise, to the allocation of
securities (issued or to be issued) representing an equity interest in
Quiksilver, or enter into any agreement that would result in an assignment or
transfer, in full or in part, of the financial consequences of the ownership of
Quiksilver shares; nor to (y) publicly announce its intent to carry out such an
offer, loan, assignment, sale, issue or Transfer; nor to (z) grant or consent to
the grant of a pledge, security interest, lien, charge, encumbrance or other
right relating to the Quiksilver shares or any of the securities mentioned in
paragraph (x) above (provided that pledges of such shares or securities shall be
permitted on the condition that the beneficiary of the pledge agrees to be bound
by this lock-up agreement for the remaining duration of the 3-year period);
provided that each of the Sellers shall at all times be entitled to Transfer its
shares to any other Seller and to any company in which the Sellers together hold
all of the capital and voting rights (except for director's shares transferred
to a director in order for her/him to be able to validly perform her/his
functions), on the condition that, during the entire period in which the
transfer restrictions herein remain in force, (i) the Transferee agrees in
writing, prior to the Transfer, to be bound by the transfer




restrictions herein (provided that Sellers shall be jointly liable in the event
of a breach of such agreement) and (ii) the Sellers continue to hold, together,
the entirety of the capital and voting rights of the transferee (except for
directors' qualifying shares). Each of the Sellers shall be jointly and
severally liable with the other Sellers for purposes of the lock-up agreement
contained herein. Any act or commitment taken or made in breach of the transfer
restrictions herein shall be null and void and shall not be enforceable against
the Purchaser; the Purchaser shall not give effect to any request for transfer
made in breach of these transfer restrictions.

3.2 COMPLETION OF THE FIRST CLOSING

At the First Closing Date,

(a) the Sellers shall remit to the Purchaser the documents listed in Exhibit
3.2(a);

(b) a meeting of the shareholders of Pilot Expansion duly convened by the
Sellers shall be held, for the purpose prior to the transfer of the Pilot
Expansion Shares, of (i) modifying the by-laws of Pilot Expansion, in order to
enable the transfer of the Pilot Expansion Shares to the Purchaser, and (ii)
approving the transfer to the Purchaser of the entirety of the shares in Pilot
Expansion, under the terms of this Agreement, (iii) authorizing the resignation
of the management and the appointment of Mr. Bernard Mariette as the replacement
manager and (iv) of modifying the by-laws of Pilot Expansion accordingly;

(c) concurrently with the meeting held pursuant to paragraph (b) above, a
general meeting of the limited partners of the Company, duly convened by the
Sellers, will be held, for the purpose, prior to the performance of the transfer
of the Shares of Pilot Expansion, of (i) proceeding with the Pre-Signing
Transactions, amending the Company's by-laws to provide for transfer
restrictions applicable to the Company preferred shares and the put and call
options with respect to such preferred shares, (ii) modifying Article 3.1 of
the Company by-laws, in order to enable Pilot Expansion to remain sole unlimited
partner of the Company following the transfer by Mr. Laurent Boix-Vives and Ms.
Jeannine Boix-Vives of their shares in Pilot Expansion, (iii) modifying Article
4.3 of the by-laws, in order that the resignations of the managers of the
Company take effect immediately on the First Closing Date, (iv) agreeing in
advance to the escrow and further transfer of the Controlling Interest of the
limited partners of the Company, subject to the transfer of the Pilot Expansion
Shares and immediately upon such transfer, (v) acknowledging the resignation of
Mr. Laurent Boix-Vives, Ms. Jeannine Boix-Vives, Ms. Sylvie Bernard and Ms.
Christine Simon from their positions as managers of the Company, and appointing
Pilot Expansion to replace them, (vi) acknowledging the withdrawal and
cancellation of the unlimited shares of Mr. Laurent Boix-Vives, Ms. Jeannine
Boix-Vives, Ms. Sylvie Bernard and Ms. Christine Simon pursuant to the Unlimited
Partners Withdrawal Agreement, and then amend the Company's by-laws accordingly,
(vii) authorizing the management to proceed with the Capital Increase, (viii)
authorizing in advance the transfer of the Additional Transferred Shares, and
(ix) authorizing, further to the resignation of the current members of the
Company's Supervisory Board (subject to the transfer of the Controlling
Interest), the appointment of Quiksilver Alps LLC and Quiksilver Links LLC as
new members of the Supervisory Board;

(d) concurrently with the meetings held pursuant to paragraphs (b) and (c)
above, a general meeting of the unlimited partners of the Company will be held,
duly convened by the Sellers, for




the purpose, prior to the completion of the transfer of the Pilot Expansion
Shares, of (i) proceeding with the Pre-Signing Transactions, amending the
Company's by-laws to provide for transfer restrictions applicable to the Company
preferred shares and the put and call options with respect to such preferred
shares, (ii) authorizing the escrow and subsequent transfer to Purchaser of the
Company shares and, subject to the transfer of the Pilot Expansion Shares, (iii)
acknowledging the resignation of the Company's managers and appointing Pilot
Expansion to replace them, (iv) acknowledging the cancellation of the former
managers' unlimited shares, (v) amending the by-laws accordingly, and (v)
approving all of the resolutions passed by the general meeting of limited
partners;

(e) the Sellers in their capacity as limited partners, and the Sellers and the
Purchaser in their capacity as successive partners of Pilot Expansion and
successive unlimited partners of the Company, shall vote in favor of the
resolutions proposed in accordance with paragraphs (b) through (d) above;

(f) the Purchaser shall pay the Sellers the Price of the Pilot Expansion Shares
and the Upfront Payment, and escrow the relevant amounts in accordance Article
3.1 above.

Except by means of the Purchaser's written waiver on the submission of a
document, each and every one of the operations that must be performed on the
First Closing Date shall be deemed effected under the condition precedent of all
such operations being carried out, in such a way that no operation or submission
of documentation shall be deemed definitive for so long as all of the operations
and submissions remain incomplete. The Parties undertake to carry out all of the
formalities and to take all measures that may be necessary for the successful
outcome of the operations that must be completed at the First Closing Date
pursuant to this Agreement.

3.3 COMPLETION OF THE SECOND CLOSING

At the Second Closing Date,

(a) the Controlling Interest shall be transferred to the Purchaser and the price
therefor shall be paid to the Sellers, under the terms provided in this
Agreement and in the Escrow Agreement;

(b) the Minority Holdings shall be transferred to Skis Rossignol under the terms
of the Minority Holdings Purchase Agreement;

(c) the Capital Increase shall be effected under the terms of Article 2.8; the
manager of the Company, on delegation by the general meeting, shall decide on
the Capital Increase and observe the consummation thereof;

(d) the Sellers shall remit to the Purchaser the documents listed in Exhibit
3.3(d);

(e) the Purchaser shall remit to the Sellers the Purchase Price of the
Additional Transferred Shares, under the terms defined in Article 3.1.

Except by means of the Purchaser's written waiver on the submission of a
document, each and every one of the operations that must be performed on the
Second Closing Date shall be deemed




effected under the condition precedent of all such operations being carried out,
in such a way that no operation or submission of documentation shall be deemed
definitive for so long as all of the operations and submissions remain
incomplete. The Parties undertake to carry out all of the formalities and to
take all measures that may be necessary for the successful outcome of the
operations that must be completed at the Second Closing Date pursuant to this
Agreement.

ARTICLE 4 - CONDITION SUBSEQUENT; CONDITION PRECEDENT; COMPETING BIDS

4.1 CONDITION SUBSEQUENT

The transfer of the Pilot Expansion Shares in accordance with Article 2.1 is
subject to the condition subsequent of the failure to obtain the authorizations
necessary for the performance of the Acquisition pursuant to Antitrust
Regulations as of December 31, 2005.

4.2 CONDITION PRECEDENT

Any and all obligations to be performed by the Parties at the Second Closing
Date pursuant to this Agreement (including the Ancillary Agreements) shall be
subject to the condition precedent that the authorizations necessary for
carrying out the Acquisition pursuant to the Antitrust Regulations shall have
been obtained.

4.3 COMPETING BID

(a) In the event that one or more public bids for the shares of Skis Rossignol
are declared admissible by the French Autorite des marches financiers and
compete with the Cash Tender Offer (a "COMPETING BID"), the Sellers shall remain
bound by their obligation to transfer the Remaining Skis Rossignol Shares to the
Company pursuant to the Purchase Agreement for the Remaining Skis Rossignol
Shares. The Parties understand and agree that payment of damages would not
constitute an adequate remedy, in the event of the breach by the Sellers of
their obligation to deliver the Remaining Skis Rossignol Shares; and they hereby
agree that the remedy of specific performance (execution forcee) shall apply in
the event of such a breach, as well as in the event of a failure by the
Purchaser to pay the Price of the Additional Transferred Shares.

(b) In the event that the Sellers, in breach of the obligations set forth in
this Agreement, tender their Remaining Skis Rossignol Shares to a Competing Bid
or Transfer such shares or any other rights they hold in Skis Rossignol to any
person other than the Company or the Purchaser, the Sellers shall pay the
Purchaser, by no later than the date on which the Transfer takes place, a fixed
amount equal to one-third of the pre-tax gain realized by Sellers in connection
with the Transfer. This payment shall become due and payable irrespective of any
recourse or actions taken by the Purchaser in an attempt to obtain the specific
performance of Sellers' obligation to deliver the Remaining Skis Rossignol
Shares; any damages granted to the Purchaser or the Company as a result of
Sellers' breach of this obligation or any other obligation under this Agreement
shall be in addition to, and not in replacement of, this payment.

(c) In the event that the Transfer of the Controlling Interest should take place
on the Second Closing Date while a Competing Bid is underway, if the Purchaser
should derive capital gains from a Transfer of the shares of Skis Rossignol
owned by the Company to the party initiating the




Competing Bid, the Purchaser shall pay the Sellers an amount equal to a third of
these capital gains, provided that such capital gains shall be calculated as the
excess of (i) the sale price of the Skis Rossignol Shares held by the Company,
before taxes, multiplied by the % share held by Quiksilver in the Company's
capital, over (ii) the acquisition cost of the Controlling Interest. This
payment shall become due and payable irrespective of any recourse or actions
taken by the Sellers to obtain the specific performance of Purchaser's
obligations under this Agreement; any damages granted to the Sellers as a result
of Purchaser's breach of its obligations under this Agreement (if any) shall be
in addition to, and not in replacement of, this payment.

4.4 EFFECTS

If the Transfer of Pilot Expansion Shares is cancelled (resolu) pursuant to
Article 4.1 above, (i) the Pilot Expansion Shares shall be returned to the
Sellers, and the Price of the Pilot Expansion Shares shall be returned to the
Purchaser; (ii) the securities and amounts placed in escrow shall be returned to
their original owners pursuant to the Escrow Agreement; (iii) the Sellers shall
return the Upfront Payment to the Purchaser; and (iv) the Parties shall be
released from any obligation to one another under this Agreement and the
Ancillary Agreements, with the exception of (x) obligations of confidentiality
and other obligations that this Agreement or the Ancillary Agreements expressly
state shall continue in effect after the cancellation of the sale of the
Controlling Interest; and (y) remedies available to the Parties as a result of a
breach of or non-compliance with their obligations under the Agreement or the
Ancillary Agreements by one of the parties to the agreements in question;
provided that (i) if the transactions to be performed on the Second Closing Date
do not take place following the Purchaser's failure to comply with an essential
obligation of this Agreement, the Upfront Payment shall remain the property of
the Sellers as compensation; and (ii) if the Sellers (directly or indirectly)
tender their shares of Skis Rossignol to a Competing Bid, the Sellers shall pay
the Purchaser an amount equal to two million euro to cover fees and expenses
incurred by the Purchaser in the preparation and structuring of the Acquisition
(provided, however, that such amount shall be capped at the excess of the sale
price directly obtained by the Sellers for their shares of Skis Rossignol over
the sum of the Estimated Price for the Controlling Interest and the Purchase
Price for Additional Transferred Shares).

4.5 THE PARTIES' COMMITMENTS

(a) The Parties shall endeavor to promptly obtain all authorizations needed to
carry out the Acquisition pursuant to Antitrust Regulations, it being understood
that none of the provisions of this Agreement shall be construed to force the
Purchaser or the Sellers to consent, against their will, to the Transfer of any
business or Subsidiary of Skis Rossignol or the Purchaser in order to obtain
such authorizations.

(b) The Sellers undertake not to solicit from a third party, whether directly or
indirectly, any proposal to transfer shares of Skis Rossignol, and the Sellers
agree not to discuss the possibility of such a transfer with anyone.

ARTICLE 5 - THE PARTIES' COMMITMENTS

5.1 MANAGEMENT OF THE SKIS ROSSIGNOL GROUP BETWEEN THE FIRST CLOSING DATE AND
THE SECOND CLOSING DATE



(a) From the First Closing Date and until the re-formation of the management
bodies of Skis Rossignol set forth in Article 5.2 takes effect (the "INTERIM
PERIOD"), the Sellers shall procure that Skis Rossignol and its Subsidiaries be
managed prudently (en bon pere de famille), carry out activities in the ordinary
course of business and in compliance with past practice, and perform only those
everyday operations falling within their normal scope of activities.

(b) Without prejudice to the foregoing, the Sellers shall procure that Skis
Rossignol and its Subsidiaries neither resolve to nor carry out, during the
Interim Period, unless the Purchaser so agrees, and with the exceptions set
forth in Exhibit 5.1(b), (i) any distribution of profits or reserves, any
amortization or redemption of its capital, any purchase of its own limited or
unlimited shares, or any other distribution to their limited or unlimited
partners; (ii) any merger, contribution, demerger, spin-off, split-off or other
transaction affecting the Company's stock or equity, any issuance of securities
or equity (with the exception of issues of stock resulting from the exercise of
Skis Rossignol stock options that already existed on the First Closing Date), or
any allocation of options to subscribe for or purchase stock; (iii) any change
to their bylaws; (iv) any application for or any early repayment of a loan or
any other type of financial obligation with a total value greater than or equal
to fifty thousand Euros (E50,000); (v) any significant acquisition or sale
of assets; (vi) any acquisition or sale of a significant equity interest (titres
de participation), or the creation or dissolution of any subsidiary or branch;
(viii) any increase in the remuneration packages of their senior executives, or
the replacement of any senior executive; (viii) any material change to their
contractual or business practices; (ix) any termination of or entry into a
significant agreement, including any agreement which term exceeds three years,
any agreement containing an exclusivity or non-competition clause, and any
agreement reasonably likely to involve (through a single agreement or through a
series of related agreements) payment to or by Skis Rossignol and its
Subsidiaries of an amount greater than fifty thousand Euros (E50,000); (x)
the granting of any loan, advance, security, pledge, or guarantee, or the
creation of any Lien, other than loans and advances made by Skis Rossignol in
favor of its Subsidiaries (other than Roger Cleveland US) in the normal course
of business; (xi) any acquisition of its own shares (including indirectly
through a third party), or any steps likely to cause a shareholder to be
deprived of his voting rights or his double voting rights in Skis Rossignol
(other than any steps related to depriving a shareholder of his voting rights if
such shareholder has neglected to file those declarations which are required to
be filed under applicable regulations upon the crossing of certain thresholds in
the share capital or voting rights of Skis Rossignol; and Skis Rossignol shall
take such steps if the Purchaser makes such a request to the Sellers), in such a
way that the Company's share of the voting rights in Skis Rossignol does not
exceed 49.84% at any time during the Interim Period, and (xii) until the
authorizations needed for the Acquisition pursuant to Antitrust Regulations have
been obtained, any general shareholders' meeting of Skis Rossignol, except for
annual meetings that, by law, must be held and to which only those resolutions
mandated by law will be submitted.

(c) The Sellers shall procure that, during the Interim Period, Skis Rossignol
consult the Purchaser prior to making any important decision regarding the
planned restructuring, about which the Purchaser acknowledges that he has been
informed and the cost of which will be reserved against in the accounts as at
March 31, 2005. The Sellers shall procure that any press release or official
communication from Skis Rossignol or any of its representatives about the
restructuring shall be made only with the Purchaser's prior approval.



5.2 RE-FORMATION OF THE MANAGEMENT AND SUPERVISORY BODIES OF SKIS ROSSIGNOL AND
ITS SUBSIDIARIES

(a) The Parties agree that the supervisory bodies of Skis Rossignol will be
re-formed immediately after the Settlement-Delivery Date, in accordance with the
Purchaser's instructions. To this end, the Sellers will procure that a
supervisory board meeting for Skis Rossignol be held on the Second Closing Date,
during which members of the supervisory board shall be replaced by new members
chosen by the Purchaser, by means of successive co-optation, provided that no
fee or compensation shall be charged to Skis Rossignol or any of its
Subsidiaries as a result of these replacements. The Sellers shall procure that
the number of members on the supervisory board on that date shall be sufficient
to allow members to be replaced on a rolling basis.

(b) The Sellers shall procure that the shareholders and holders of an equity
interest in the Subsidiaries of Skis Rossignol, and the holders of securities
giving access to the capital or the voting rights of Subsidiaries of Skis
Rossignol, other than (i) those people explicitly designated by the Purchaser as
being required to keep their equity interest or securities; (ii) the Sellers,
whose securities are transferred pursuant to the Minority Holdings Purchase
Agreement; and (iii) shareholders and holders who are Subsidiaries of Skis
Rossignol, (the "MINORITY SHAREHOLDERS") transfer all of the equity interests or
securities they hold in the Subsidiaries, within ten (10) days following the
Settlement-Delivery Date, free of any Liens, to persons who shall have been
designated by the Purchaser by no later than the Settlement-Delivery Date,
provided that such transfers shall not give rise to any charge whatsoever for
Skis Rossignol or any of its Subsidiaries. Following these transactions, the
persons appointed by the Purchaser shall be valid owners of the equity interests
and securities so transferred by the Minority Shareholders.

5.3 NAME OF THE GROUP

Following the Acquisition, the combined business shall be conducted under the
corporate name (denomination sociale) "Quiksilver-Rossignol."

5.4 COOPERATION

(a) Each of the Parties undertakes to deliver any document to the other Party,
to complete any formalities, and to adopt any resolutions or secure from a third
party the completion of any acts that the other Party may reasonably request as
part of carrying out the Acquisition, with the specification that this provision
cannot be interpreted as compelling the Parties, their officers or their
corporate bodies to contravene any legal or regulatory obligation.

(b) Following the First Closing Date, the Sellers will procure that the
Purchaser and the persons selected by the Purchaser shall benefit from complete
and unlimited access to the premises, personnel, documents (contractual,
accounting, or other), and all of the consultants, co-contractors, and auditors
of Skis Rossignol and its Subsidiaries.

ARTICLE 6 - SELLERS' REPRESENTATIONS

The Sellers represent and warrant the following to the Purchaser:

6.1     OWNERSHIP OF TRANSFERRED SHARES



(a) On the First Closing Date, the Sellers hold all of the rights conferring
full ownership (pleine propriete) over the Pilot Expansion Shares, which are
fully paid and free of any free of all encumbrances, charge, liens, security
interest or other restrictions, limitations or third party rights whatsoever
(hereinafter a "LIEN"). Consequently, (i) the Purchaser shall become the valid
owner of the Pilot Expansion Shares, free of any Lien, as of the First Closing
Date; and (ii) the Pilot Expansion Shares shall be validly sold on this same
date and transferred to the Purchaser, who will then become the owner thereof,
and this transfer shall be enforceable against third parties, subject to the
filing with the clerk of the competent Commercial Court of two original copies
of the deed of purchase set forth in Exhibit 8.8.

(b) From the First Closing Date until the Second Closing Date, the Sellers will
hold all of the rights conferring full ownership (pleine propriete) over the
shares comprising the Controlling Interest, which are fully paid and free of any
Liens, with the exception of Liens created by this Agreement. Consequently, (i)
the Purchaser shall become the valid owner of the Controlling Interest, free of
any Liens, as of the Second Closing Date; and (ii) the Controlling Interest
shall be validly sold on this same date and transferred to the Purchaser, who
will then become the owner thereof, and this transfer shall be enforceable
against third parties.

(c) Other than (i) the Pilot Expansion Shares and the shares transferred in
connection with the transfer of the Controlling Interest; (ii) the Minority
Holdings, which shall be transferred pursuant to the Minority Holdings Purchase
Agreement; (iii) the Remaining Skis Rossignol Shares, which shall be transferred
pursuant to the Purchase Agreement for the Remaining Skis Rossignol Shares; (iv)
the Additional Transferred Shares, which shall be transferred pursuant to
Article 2.9; (v) the shares of the Company, which are the subject of the SCA
Shareholders' Agreement; and (vi) the shares of Roger Cleveland US, which are
the subject of the RC Shareholders' Agreement, the Sellers do not hold on the
First Closing Date, and will not hold on the Second Closing Date, any direct or
indirect equity interest in the Company, Skis Rossignol, or any of their
respective Subsidiaries and, with the exception of rights arising from this
Agreement and the Ancillary Agreements, they have no direct or indirect right
against the Company, Skis Rossignol or any of their Subsidiaries.

6.2 OWNERSHIP OF THE COMPANY'S AND PILOT EXPANSION'S ASSETS; OWNERSHIP OF SHARES
OF SKIS ROSSIGNOL

(a) On the First Closing Date, Pilot Expansion owns ten unlimited shares of the
Company, free of any Liens. With the exception of these unlimited shares, Pilot
Expansion does not own any assets. With the exception of liabilities listed in
Exhibit 6.2(a), it has no debt, liability or obligation whatsoever.

(b) On the First Closing Date, the Company owns, together with SDIF, (i)
4,784,979 shares of Skis Rossignol, representing 38.43% of the capital and
49.84% of the voting rights in Skis Rossignol, free of any Liens; and (ii) those
other equity interests and assets listed in Exhibit 6.2(b), also free of any
Liens. With the exception of these equity interests and assets, neither the
Company nor SDIF owns any assets. Furthermore, neither of them has any debt,
liability or obligation whatsoever, except for debts and obligations listed in
Exhibit 6.2(b).



(c) With the exception of 12,488,064 shares and options to purchase 342,750
shares, Skis Rossignol has not issued any shares or securities or other rights
representing, or giving access to the capital or voting rights of Skis Rossignol
and, except for this Agreement, there are no agreements or commitments which
contemplate the grant or the issue of such securities or rights.

(d) Exhibit 6.2(d) sets forth, as of the First Closing Date and as of the Second
Closing Date, (i) the number of shares and other equity interests, securities
and rights representing or giving access to the capital or voting rights of each
Subsidiary of Skis Rossignol and of the Company (hereinafter the "SUBSIDIARY
SHARES"), and (ii) for each Subsidiary in which Skis Rossignol does not directly
or indirectly hold all of the Subsidiary Shares, the identity of the
shareholders or holders of the Subsidiary Shares and the number of Subsidiary
Shares that they hold as compared to the total number of shares of the
Subsidiary in question. The Subsidiary Shares held by Skis Rossignol or by its
Subsidiaries are free of any Liens. Except for the equity interests in the
Company Subsidiaries mentioned in Exhibit 6.2(d), neither the Company nor Skis
Rossignol directly or indirectly holds any share or equity interest or other
right representing an interest in the capital or the voting rights in any
company or other legal entity (including any interest groupings or joint
venture, any de facto partnership (societe de fait) of other structure involving
partners' liability that is not limited to their contributions). Except for the
securities and rights mentioned in Exhibit 6.2(d), there are no shares, equity,
or other security representing capital or voting rights or entitling one to
capital or voting rights for any Subsidiary of the Company or of Skis Rossignol.

(e) As of March 29, 2005, Skis Rossignol held 383,631 of its own treasury
shares. The supervisory board of Skis Rossignol indicated on March 23, 2005 that
it was asking that (i) Skis Rossignol waive its stock repurchase program for
which a prospectus was filed with the French Autorite des marches financiers on
June 18, 2004 under number 04-609 and which had been authorized by the
shareholders' general meeting on July 20, 2004 and (ii) the management board
take all necessary measures to this effect. The management board committed on
March 24, 2005 to waive the company's stock repurchase program. Consequently,
Skis Rossignol published a press release indicating it had waived its stock
repurchase program. In addition, Skis Rossignol is not a party to an agreement
that would allow a third party to repurchase shares of Skis Rossignol on behalf
of Skis Rossignol, so that it will not repurchase any of its own shares on the
market during the Interim Period.

6.3 PARTNERS OF THE COMPANY AND OF PILOT EXPANSION

(a) With the exception of the shares that were validly transferred to the
Purchaser as part of the transfer of Pilot Expansion Shares, on the First
Closing Date there are no shares or other equity interests or securities
representing or giving immediate or future access to the capital or voting
rights of Pilot Expansion.

(b) On the First Closing Date following the signing of the Unlimited Partners
Withdrawal Agreement and with the exception of (i) shares of the Company that
shall be validly transferred to the Purchaser as part of the transfer of the
Controlling Interest; (ii) the unlimited shares of the Company held by Pilot
Expansion; and (iii) 146,169 preferred shares of the Company that are still held
by the Sellers and which, as from the First Closing Date, are the subject of the
call option granted to the Purchaser pursuant to the SCA Shareholders'
Agreement, there are no




unlimited shares, limited shares or other equity interests or securities
representing or giving immediate or future access to the capital or voting
rights of the Company.

6.4 SELLERS' CAPACITY; CONSENTS

(a) The Sellers have all requisite power to enter into this Agreement and carry
out their obligations hereunder. This Agreement, the Ancillary Agreements and
all of the related documents have been or will be duly signed by each of the
Sellers and they are valid and enforceable in accordance with their terms. Mr.
Laurent Boix-Vives personally represents and warrants to the Parties and the
other signatories that he is duly authorized by the corporate bodies of SDI,
which he represents, for the purpose of signing this Agreement.

(b) Except for any consents, approvals, authorizations and waivers, which this
Agreement explicitly states are to be obtained after the First Closing Date, the
Sellers have obtained all consents, approvals, authorizations and waivers that
are required to be obtained in connection with the signing and the performance
of Sellers' obligations under this Agreement and the Ancillary Agreements. There
is no legal, arbitral or administrative action, claim, proceeding or
investigation which could prevent the Sellers from signing this Agreement or
performing their obligations hereunder currently underway and to the Knowledge
of the Sellers, no such action, claim, proceeding or investigation is
threatened. The signing of this Agreement, the completion of the Acquisition and
the performance by the Sellers of all of their obligations under this Agreement
(i) do not and will not conflict with or violate any of the bylaws of the
Company, Skis Rossignol or any of their Subsidiaries, nor will they require any
approval or consent from a corporate body of any one of these entities, except
for those approvals and consents which are explicitly stated in this Agreement
to be obtained after the First Closing Date; (ii) do not and will not conflict
with or violate any legal or regulatory provision or any administrative, legal
or arbitral decision; (iii) do not and will not conflict with or violate, or
create any rescission, termination or cancellation right under, any permits,
approvals or authorizations which are required for business purposes of the
Company, Skis Rossignol or their Subsidiaries; and (iv) do not and will not
conflict with or violate, or entitle a third party to any rights (including any
acceleration or early termination rights) under, any of the contracts entered
into by the Company, Skis Rossignol or their respective Subsidiaries.

6.5 MANAGEMENT OF THE COMPANY AND ITS SUBSIDIARIES BEFORE THE FIRST CLOSING DATE

The Company, Skis Rossignol, and their Subsidiaries have not undertaken any of
the actions listed in Article 5.1(b) during the sixty days preceding the First
Closing Date.

6.6 MEMBERS OF SKIS ROSSIGNOL'S MANAGEMENT BOARD

Exhibit 6.6 sets forth all employment agreements entered into by members of Skis
Rossignol's management board with Pilot Expansion, the Company, SDIF, Skis
Rossignol and/or its Subsidiaries, as well as all other documents pertaining to
the conditions under which such officers perform their duties. Except for these
agreements and documents, there is no written or oral agreement between the
members of the management board, on the one hand, and Pilot Expansion, the
Company, SDIF, Skis Rossignol and/or its Subsidiaries, on the other hand.



ARTICLE 7 - INDEMNIFICATION

7.1 CAUSES OF ACTION

The Sellers jointly and severally undertake, for themselves and on behalf of
their authorized successors and assigns, to indemnify the Purchaser, the Company
or Skis Rossignol (at the Purchaser's discretion) against any damages (including
reasonable attorney's fees) resulting from any inaccuracy or omission made in
any of the representations and warranties contained in Article 6 of this
Agreement.

7.2 TERM

The Sellers shall only be liable pursuant to Article 7.1 above, for the
consequences of facts or events that will be notified to them within three (3)
years following the First Closing Date.

7.3 PROCEDURE

(a) The Purchaser shall inform the Sellers of the existence of any fact or event
giving rise to indemnification under this Agreement within thirty (30) days
after the date on which the Purchaser becomes aware of said facts or events,
provided that failure to give timely notice shall only reduce Sellers'
indemnification obligation to the extent that additional damages have resulted
from such failure.

(b) In the event that a notice from the Purchaser, dealing with the Sellers'
indemnification obligation under Article 7.1 stems from a written claim by a
third party or proceedings instituted by a third party against the Purchaser,
the Company, Skis Rossignol, or any one of their Subsidiaries, the Purchaser
shall consult with the Sellers regarding the procedure to follow and the
appropriate means of defense and shall keep them informed of the status of the
proceeding. The Purchaser will make available to the Sellers all documents and
information which are reasonably required for purposes of a good faith
discussion between the Parties regarding the reasons for the claim or the
proceeding in question and the best means to handle it. The Sellers will offer
to assist the Purchaser in his defense, and they will advance the fees,
expenses, and attorney's fees borne by the Purchaser or its Subsidiaries in
connection with the defense of the claim, provided that such advances shall be
refunded to the Sellers by the Purchaser if the third party claim or proceeding
finally involves no indemnification obligation for the Sellers, and provided,
further, that the attorney shall be selected by the Sellers with the consent of
the Purchaser (which consent shall not be unreasonably withheld or delayed). If
necessary, the Sellers may join the case and participate directly in the
proceeding.

(c) The Purchaser, for itself and on behalf of the Company and Skis Rossignol,
shall not settle on matters likely to involve Sellers' liability under Article
7.1, without having previously requested and obtained permission from the
Sellers' Representative. Said permission shall be deemed received if the
Sellers' Representative does not express his opposition to the planned
settlement during thirty (30) days after being notified of the Purchaser's
intention to settle. In addition, in the event of an emergency, the Purchaser,
the Company and Skis Rossignol may make any decisions and take all necessary
steps, so long as these are not reasonably likely to increase Sellers'
indemnification obligation pursuant to Article 7.1.



7.4     PAYMENT

Payment of all sums definitively owed by the Sellers pursuant to Article 7.1
shall be executed by means of a cash payment by the Sellers to the Purchaser no
later than five (5) calendar days after the payment request has been made. If no
payment is executed within this period, these sums will bear interest at EURIBOR
plus 0.75%, provided that the provision for such interest rate does not, and
shall not allow deferred payment.

ARTICLE 8 - MISCELLANEOUS PROVISIONS

8.1 FEES AND EXPENSES

Unless otherwise agreed, each of the Parties shall bear the expenses and fees
incurred by it or for it in relation to this Agreement and the transactions
contemplated herein, including the professional fees of its advisors and
brokers.

8.2 NOTICES

(a) Any notices or communications pursuant to this Agreement shall be made by
fax or by registered mail with return receipt requested or by an express courier
service and must be addressed to the persons and addresses indicated below, or
to any other address or fax number indicated in writing, in the same manner, by
one Party to the other:

        To the Purchaser:

Quiksilver, Inc.
15202 Graham Street Huntington Beach,
California (United States of America)
Fax: +1.714.889.4250
To the attention of: Mr. Charlie Exon

With a copy to:

Maitre Pierre Servan-Schreiber
Avocat a la Cour
Skadden, Arps, Slate, Meagher & Flom LLP
68, rue du Faubourg Saint-Honore
75008 Paris, France
Fax: +33.1.55.27.11.99

        To the Sellers:

Mr. Laurent Boix-Vives
1, Boulevard du Marechal Joffre,
38000 Grenoble
Fax: +33.4.76.47.73.31



With a copy to:

Maitre Jean-Philippe Delsol
Avocat a la Cour
Delsol et Associes
12, quai Andre Lassagne
69001 Lyon
Fax: +33.4.72.10.20.31

(b) The date of receipt of the notice shall be deemed to be the date when the
fax or registered letter is received or the delivery date by express courier, as
attested by the relevant delivery form, provided that if the receipt of a notice
takes place on a day that is not a US Business Day (when this pertains to a
notice addressed to the Purchaser) or a French Business Day (when this pertains
to a notice addressed to the Sellers) or takes place outside normal office hours
in the United States or in France, as applicable, then such notice shall be
deemed to have been received on the opening date and time immediately following
receipt of the correspondence. However, Purchaser's notice to the Sellers of the
Date of the Transfer of the Remaining Skis Rossignol Shares pursuant to Article
2.6(a) may be validly made by telephone or by any other means set forth in
paragraph (a) above, at any time and even on a non-Business Day, provided that
it shall be followed by a notice of confirmation sent to the Sellers in the
manner set forth in this Article. Any correspondence addressed to the Sellers at
the address or fax number hereinabove shall be deemed simultaneously received by
each of the Sellers, and the Sellers shall have no recourse against the
Purchaser for sending notices solely to Sellers' Representative.

8.3 SELLERS' REPRESENTATIVE

(a) The Sellers hereby appoint Mr. Laurent Boix-Vives (the "SELLERS'
REPRESENTATIVE") as their representative, and give him all powers, to keep the
original version of this Agreement and the Ancillary Agreements, to receive any
notice hereunder and thereunder, to take any necessary measures in the name of
and on behalf of the Sellers in connection with the execution of this Agreement
and the performance and completion of all of the transactions contemplated
herein and, if necessary, to modify this Agreement and waive any and all
rights under this Agreement. The Purchaser may rely on any action undertaken by
the Sellers' Representative on behalf of the Sellers; it will not entail any
correspondence or notice delivered in connection with this Agreement by any
Seller other than the Sellers' Representative (except as provided in paragraph
(b) below). The representations made, the agreements concluded, and the actions
undertaken by the Sellers' Representative pursuant to this clause shall have
binding force against each of the Sellers, who shall be jointly and severally
liable for any damage caused to the Purchaser for this reason and who shall
assume responsibility for any gain or loss in this regard.

(b) Should Mr. Laurent Boix-Vives be impeded from acting as Sellers'
Representative for any reason whatsoever, the Sellers hereby appoint Ms.
Jeannine Boix-Vives as the replacement for Sellers' Representative. The
appointment of Ms. Jeannine Boix-Vives as the Sellers' Representative shall
become effective as of the date on which the Purchaser is notified of such
appointment by Ms. Jeannine Boix-Vives in the manner set forth in Article 8.2.
Subsequently, should Ms. Jeannine Boix-Vives be impeded from acting for any
reason whatsoever, the Sellers hereby appoint SDI as the Sellers' Representative
(or, should SDI have been dissolved by that




date, Ms. Christine Simon shall be appointed -- and, if Ms. Christine Simon is
impeded, Ms. Sylvie Bernard shall be appointed). The appointment of SDI, of Ms.
Christine Simon, or of Ms. Sylvie Bernard as the Sellers' Representative shall
become effective as of the date on which the Purchaser is notified of such
appointment by SDI's legal representative, by Ms. Christine Simon or by Ms.
Sylvie Bernard, respectively, in each case in the manner set forth in Article
8.2 (provided that, if SDI should issue several contradictory notices in such a
context, only the first notice shall be valid).

8.4 TRANSFER

(a) No Party may assign or transfer, in any way whatsoever, its rights and
obligations under this Agreement without the prior written consent from the
Sellers' Representative (when this pertains to a transfer by the Purchaser) or
from the Purchaser (when this pertains to a transfer by any of the Sellers).

(b) This clause does not prohibit the assignment or transfer of rights and
obligations by any of the Parties to the Ancillary Agreements, provided that the
relevant Ancillary Agreement shall expressly authorize such an assignment or
transfer.

8.5 SUCCESSORS AND BENEFICIARIES

Any and all rights and obligations pursuant to this Agreement are actively and
passively, jointly and severally binding on the Parties' successors, heirs,
beneficiaries, and legal representatives, provided that this Agreement and the
Ancillary Agreements are concluded in consideration of the person of the Sellers
and, consequently, the rights conferred to the Sellers by this Agreement and the
Ancillary Agreements shall not be assigned, transferred or conveyed in any
manner whatsoever, except to another Seller.

8.6 SEVERABILITY

If any of the provisions of this Agreement becomes null, illegal, unenforceable,
or incapable of being performed in any manner whatsoever (hereinafter "DISPUTED
PROVISIONS"):

(a) the validity and enforceability of the other provisions shall not be
affected or compromised in any way; and

(b) the Parties shall negotiate in good faith in order to replace the Disputed
Provisions with valid and enforceable provisions that are as close as possible
to the Parties' common intent or, if such common intent cannot be determined,
the intent of those among the Parties which the Disputed Provision is supposed
to protect.

8.7 ENTIRETY OF THE AGREEMENT

This Agreement sets forth the entire agreement between the Parties with respect
to the subject matters hereof. It replaces and supersedes any prior agreement,
correspondence or e-mail correspondence between the arties with respect hereto.



8.8 PILOT EXPANSION DEED OF PURCHASE

For registration purposes, the Parties agree to enter into the Pilot Expansion
Deed of Purchase set forth in Exhibit 8.8, which shall be delivered by the
Sellers to the Purchaser on the First Closing Date pursuant to Article 3.2(a).
For the avoidance of doubt, the Pilot Expansion Deed of Purchase is signed
merely for the purposes of registering the assignment of the Pilot Expansion
Shares; the transfer of the Pilot Expansion Shares to the Purchaser shall be
valid in accordance with this Agreement irrespective of the signing of the Pilot
Expansion Deed of Purchase.

8.9 MODIFICATIONS AND WAIVERS

(a) This Agreement shall only be modified by a written agreement duly signed by
the Purchaser and the Sellers' Representative.

(b) Any waiver by a Party to one of its rights pursuant to this Agreement shall
only take effect if it was made in writing, and shall be strictly interpreted.

(c) No waiver of any one of the provisions of this agreement shall constitute a
waiver of any other provision of this Agreement other than the provision which
was waived.

8.10 APPLICABLE LAW - COMPETENT COURT

(a) This Agreement and its interpretation are exclusively governed by French
law.

(b) Any dispute arising in connection with this Agreement, including the
validity, the interpretation and the performance hereof, and which cannot be
resolved amicably, shall fall under the exclusive jurisdiction of the courts
within the jurisdiction of the Paris Court of Appeals.

Signed in Lyon, on April 12, 2005,
in five (5) copies.



- -------------------------------
FOR QUIKSILVER:
by Mr. Bernard Mariette



- -------------------------------
FOR SDI SOCIETE DE SERVICES ET
DEVELOPPEMENT:
by Mr. Laurent Boix-Vives



- -------------------------------
MR. LAURENT BOIX-VIVES



- -------------------------------
MS. JEANNINE BOIX-VIVES



- -------------------------------
MS. CHRISTINE SIMON



- -------------------------------
MS. SYLVIE BERNARD







                                LIST OF EXHIBITS


Exhibit 2.3(b)      Escrow Agreement
Exhibit 2.4         Shareholders' Agreement Ski Expansion SCA (Holding Company
                    Shareholder Agreement)
Exhibit 2.5         Minority Holdings Purchase Agreement
Exhibit 2.6         Purchase Agreement for the Residual Skis Rossignol
                    Shares
Exhibit 2.7         Roger Cleveland Shareholders' Agreement
Exhibit 3.1(c)      Allocation of transferred shares among the Sellers
Exhibit 3.2(a)      Documents to be provided by the Sellers on the
                    First Closing Date
Exhibit 3.2(b)      Unlimited Partners Withdrawal Agreement
Exhibit 3.3(d)      Documents to be provided by the Sellers on the
                    Second Closing Date
Exhibit 5.1(b)      Actions planned for the Interim Period
Exhibit 6.2(a)      Pilot Expansion's assets and liabilities
Exhibit 6.2(b)      The Company and SDIF's assets and liabilities
Exhibit 6.2(d)      Shareholders of Skis Rossignol's subsidiaries and
                    of the Company
Exhibit 6.6         Agreements entered into with the members of the
                    management board of Skis Rossignol
Exhibit 8.8         Pilot Expansion Purchase Agreement


                                                                  Exhibit 2.3(b)


                                ESCROW AGREEMENT


BETWEEN THE UNDERSIGNED:

MR. LAURENT BOIX-VIVES, born August 30, 1926 at Brides les Bains (73570),
residing at 1 Boulevard du Marechal Joffre, 38000 Grenoble,

MS. JEANNINE BOIX-VIVES, born on December 25, 1927 in Montbonnot (38330),
residing at 1 Boulevard du Marechal Joffre, 38000 Grenoble,

MS. CHRISTINE SIMON, born January 23, 1964 in Grenoble, residing at 1 Boulevard
du Marechal Joffre, 38000 Grenoble,

MS. SYLVIE BERNARD, born January 23, 1964 in Grenoble, residing at 1 Boulevard
du Marechal Joffre, 38000 Grenoble.

SDI SOCIETE DE SERVICE ET DEVELOPPEMENT, a Swiss societe anonyme (corporation)
with share capital of CHF 500,000, with its registered offices at 120 chemin de
la Rueyre, 1020, Renens, Switzerland ("SDI"), represented by Mr. Laurent
Boix-Vives, acting as President (Chairman and CEO),

acting jointly and severally for the purposes of this Agreement,

                                             (hereinafter referred to jointly as
                                   the "SELLERS" and individually as a "SELLER")

                                                       PARTIES OF THE FIRST PART
AND

QUIKSILVER, INC., a Delaware corporation, with its registered offices at 15202
Graham Street Huntington Beach, California, United States of America,
represented by Mr. Bernard Mariette, acting as President,

                                       (hereinafter referred to as "QUIKSILVER",
                                                              or the "ACQUIRER")

                                                        PARTY OF THE SECOND PART

AND

SOCIETE GENERALE, a societe anonyme (corporation) with capital of 537,712,831.25
euros, having its registered offices at 29 boulevard Haussmann 75009 Paris,
represented by Mrs. Helene Vende Bodin, Assistant Director of the Financing
Department, Private Management, France,


                                       1


                              (hereinafter referred to as the "SOCIETE GENERALE"
                                                          or the "ESCROW AGENT")

                                                         PARTY OF THE THIRD PART

(each of the Sellers, the Acquirer and the Escrow Agent being hereinafter
individually referred to as a "PARTY" and collectively as the "PARTIES").


WHEREAS:

A.       Pursuant to an acquisition agreement dated the date hereof (the
         "ACQUISITION AGREEMENT"), the Sellers agreed to transfer to the
         Acquirer, and the Acquirer agreed to purchase, the Sellers' direct and
         indirect participation in Skis Rossignol SA, a societe anonyme with
         share capital of EUR 49,792,256, with its registered offices at "Le
         Menon", Voiron (38500), registered with the Grenoble Registry of
         Commerce and Companies under number 056 502 958 and whose shares are
         listed on the Eurolist of Euronext Paris under Euroclear France code
         12041 ("SKIS ROSSIGNOL"), representing 44.46% of the capital and 58.67%
         of the voting rights of Skis Rossignol (the "ACQUISITION").

B.       Pursuant to the Acquisition Agreement, the Sellers have agreed in
         particular to transfer to the Acquirer, on the Second Closing Date,
         361,989 ordinary shares of Ski Expansion SCA (the "CONTROLLING
         INTEREST"), a societe en commandite par actions with share capital of
         EUR 8,096,624, with its registered office at "Le Menon", Voiron
         (38500), registered with the Grenoble Registry of Commerce and
         Companies under number 070 501 374 (the "COMPANY").

C.       The Acquirer and the Sellers wish to place under escrow, until the
         Second Closing Date, the Controlling Interest, as well as a part of the
         transfer price of the Controlling Interest.

D.       This Agreement sets forth the conditions and terms of such escrow.


NOW THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:

ARTICLE 1 - DEFINITIONS

"ACQUISITION AGREEMENT" has the meaning given to it in the Preamble to this
Agreement.

"ACQUISITION" has the meaning given to it in the Preamble to this Agreement.


                                       2


"ANTITRUST REGULATIONS" means all antitrust laws and regulations, applicable in
France and abroad, with the purpose or the effect of regulating the mergers of
companies or in more general terms free competition, including Articles L. 430-1
and following of the French Commercial Code and Decree n degrees 2002-689 of
April 30, 2002, Council Regulation n degrees 4064/89 of December 21, 1989
relating to the control of mergers between companies, as modified, as well as
the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

"COMPANY" has the meaning given to it in the Preamble of this Agreement.

"CONTROLLING INTEREST" has the meaning given to it in the Preamble to this
Agreement.

"ESCROWED AMOUNT" has the meaning given to it in Article 2.2.

"ESCROWED ASSETS" has the meaning given to it in Article 3.1.

"NOTIFICATION OF FORGOING THE ACQUISITION" has the meaning given to it in
Article 3.4.

"NOTIFICATION OF RELEASE OF THE ESCROWED ASSETS" has the meaning given to it in
Article 3.1.

"PREAMBLE" designates (i) the introductory paragraphs A, B, C, and D of this
Agreement and (ii) the designation of the Parties set forth at the head of this
Agreement.

"SECOND CLOSING DATE" has the meaning given to it in Article 3.1.

"SELLERS' REPRESENTATIVE" has the meaning given to it in Article 4.5.

"SKIS ROSSIGNOL" has the meaning given to it in the Preamble of this Agreement.


ARTICLE 2 - ESTABLISHMENT OF THE ESCROW AGENT

2.1      DESIGNATION OF THE ESCROW AGENT

The Sellers and the Acquirer declare in joint agreement that they are
establishing Societe Generale in the position of escrow agent of the Controlling
Interest and of the Escrowed Amount, which declares that it accepts this
assignment and has all of the authority for such purpose.

2.2      ESCROW OF THE ESCROWED AMOUNT

The Acquirer has credited by wire transfer on the date of this Agreement, the
amount of 39,355,444 euros (the "ESCROWED AMOUNT") in the account opened in the
name of the Acquirer and the Sellers in the books of the Escrow Agent and
entitled Boix-Vives/Quiksilver, under number 30003 03000 00050240105 Rib key 85.


                                       3


2.3      ESCROW OF THE CONTROLLING INTEREST

(a)      The Sellers have placed the Controlling Interest with the Escrow Agent,
         by (i) delivery to the Escrow Agent of the individual shareholders'
         forms and the register of the movements of the Company's securities as
         of the date hereof and (ii) by delivery to the Escrow Agent of an order
         of transfer of shares constituting the Controlling Interest to the
         Boix-Vives Escrow account as number 30003 03000 00080240105 and CERFA
         forms duly completed and executed in relation to the transfer of the
         Controlling Interest to the Acquirer.

         The Sellers also hereby request from the Escrow Agent the conversion of
         the shares constituting the Controlling Interest, from purely
         registered (nominatif pur) to administered registered (nominatif
         administre), at the price of EUR 181.2035 per share on the Escrow
         account Boix-Vives/Quiksilver no. 30003 03000 0080240105.

(b)      As Escrow Agent of the Controlling Interest, Societe Generale will not
         conduct during the duration of its assignment any action of disposal
         relating to the shares of the Company in respect to anyone and for any
         cause whatsoever. It is the intention of the Sellers and the Acquirer
         to avoid an annual meeting of the Company from being held during the
         period of this Agreement; if, however, such a meeting were to be held,
         and if the Escrow Agent were to receive a notification in that respect,
         the Escrow Agent would not participate in the meeting unless
         instructions were given to it jointly by the Sellers and the Acquirer,
         and it would not give power of attorney in order to represent it or
         would not vote except in the way authorized on joint instruction of the
         Sellers and the Acquirer.

2.4      Payment of the Escrow Agent for its assignment:

The Escrow Agent will receive for this operation a flat commission of EUR 3,000,
which will, in preference, be paid from the Escrowed Amount on the day of
signature of this Agreement and later deducted on the gains and interest of the
escrow account owed to the Acquirer.


ARTICLE 3 - RELEASE OF THE ESCROWED ASSETS

3.1      SECOND CLOSING DATE

The release of the Escrowed Amount and the Controlling Interest (together the
"ESCROWED ASSETS"), which will bring the Escrow Agent's duties to an end, will
take place at the earlier of the following dates:

(a)      the date of the settlement-delivery of the Skis Rossignol shares
         acquired by the Acquirer in the context of its cash tender offer on the
         Skis Rossignol shares (not including the shares that may be acquired by
         the Acquirer in connection with the

                                       4


         reopening of the cash tender offer in accordance with Article 232-4 of
         the General Regulation of the French Autorite des marches financiers,
         which would be subject to a subsequent settlement-delivery);

(b)      July 19, 2005, if the authorizations necessary for the consummation of
         the Acquisition pursuant to the Antitrust Regulations have been
         obtained by that date;

(c)      any date after July 19, 2005, on which the authorizations necessary for
         the consummation of the Acquisition pursuant to the Antitrust
         Regulations have been obtained; or

(d)      any other date on which the Sellers and the Acquirer may give
         instructions to the Escrow Agent, in writing, to release the Escrowed
         Assets;

Provided that, in the cases described in (a), (b) and (c) above, the Sellers'
Representative or the Acquirer may have in advance submitted to the Escrow Agent
and to the other Party a written notification, duly signed, stating the date of
release of the Escrowed Assets (the "SECOND CLOSING DATE"), (i) together with
the notice of the result of the public tender offer referred to in (a) above, or
(ii) together with proof of having obtained the necessary authorizations for the
Acquisition referred to in (c) above, and in any event (iii) stating the amount
of the Controlling Interest Purchase Price Adjustment, as it is defined in the
Acquisition Agreement, if it must be deducted from the amount paid to the
Sellers at the Second Closing in accordance with the Acquisition Agreement (the
"NOTIFICATION OF RELEASE OF THE ESCROWED ASSETS").

As the necessary authorizations referred to in (c) above are obtained and there
is progress of the public tender offer referred to in (a) above, the Parties
agree to keep the Escrow Agent informed of the probable date of the release of
the Escrowed Assets.

3.2      RELEASE OF THE ESCROWED AMOUNT

(a)      On the Second Closing Date, the Escrow Agent will pay to the Sellers,
         by wire transfer on the account referred to in Exhibit 3.2(a) hereto,
         an amount equal to the Escrowed Amount, reduced, if the Notification of
         Release of the Escrowed Assets mentions an amount of Controlling
         Interest Purchase Price Adjustment, of such amount of Controlling
         Interest Purchase Price Adjustment.

(b)      In case the Notification of Release of the Escrowed Assets should
         mention an amount of Controlling Interest Purchase Price Adjustment,
         the Escrow Agent will pay the Acquirer, by wire transfer on the account
         referred to in Exhibit 3.2(b) hereto, an amount equal to the
         Controlling Interest Purchase Price Adjustment.

3.3      RELEASE OF THE CONTROLLING INTEREST

On the Second Closing Date, the Escrow Agent will remit the Controlling Interest
to the Acquirer, by the delivery (i) of the shareholders' individual forms and
the register of the

                                       5


orders of transfer of the Company's securities, (ii) an order of transfer duly
dated and signed by the Escrow Agent, bearing transfer to the Acquirer of the
shares that constitute the Controlling Interest, and all shares or all financial
instruments that have been added or substituted for them during the escrow
period, (iii) the CERFA forms provided to the Escrow Agent in accordance with
Article 2.3(a), (iv) all dividends or any other distributions paid for the
Controlling Interest and (v) all gains or interest produced by the Escrowed
Amount during the escrow period.

3.4      TERMINATION OF THE ACQUISITION

In the event that the Second Closing Date has not taken place by December 31,
2005, or in the event the Escrow Agent is informed by a notification executed by
the Sellers' Representative and by the Acquirer of the forgoing of the
Acquisition (the "NOTIFICATION OF FORGOING THE ACQUISITION"), the Escrow Agent
will (i) deliver the Controlling Interest to the Sellers, by delivery of the
shareholders' individual forms and of the register of transfer of the Company's
securities, as well as an order of transfer bearing transfer of the Controlling
Interest to the Sellers and other securities referred to in Article 3.3(ii)
above and (ii) deliver the Escrowed Amount to the Acquirer, increased by gains
or interest referred to in Article 3.3(iv) above.


ARTICLE 4 - MISCELLANEOUS PROVISIONS

4.1      DURATION

This Agreement will take effect on the date of signature of this Agreement. It
will end on the Release Date.

4.2      INVESTMENT OF THE ESCROWED AMOUNT

The Acquirer requests of the Escrow Agent, who accepts, that during the period
of its assignment, the Escrowed Amount will be devoted by it to the purchase of
monetary capitalization Sicavs. The interest or gains earned on these
investments will be paid to the Acquirer in accordance with Article 3 of this
Agreement.

4.3      LIABILITY OF THE ESCROW AGENT - AUTONOMY OF THIS AGREEMENT

(a)      The Escrow Agent may not in any way be required to release the Escrowed
         Assets if the Escrowed Assets are the subject of a garnishment (saisie
         attribution) or preventive attachment (saisie conservatoire).

(b)      The Escrow Agent will not have any liability or obligation other than
         those expressly specified herein and the Sellers and the Acquirer agree
         jointly and severally to compensate it for all claims, losses, costs
         and damages resulting from a fault of the Escrow Agent. The Escrow
         Agent is not bound by any of the agreements that are at the origin of
         this Agreement, in particular the Acquisition Agreement.

                                       6


(c)      The Escrow Agent will not be required to proceed to the verification of
         the authenticity of the documents transmitted to it in accordance with
         this Agreement.

4.4      NOTIFICATIONS

Any notices or communications pursuant to this Agreement shall be made by fax or
by registered mail with return receipt requested or by an express courier
service and must be addressed to the persons and addresses indicated below, or
to any other address or fax number indicated in writing, in the same manner, by
one Party to the other:

To the Escrow Agent:

Societe Generale
29 Boulevard Haussmann
75002 Paris
Fax: 01.53.43.87.67
To the attention of: Ms. Helene Vende Bodin

To the Acquirer:

Quiksilver, Inc.
15202 Graham Street, Huntington Beach,
California (United States of America)
Fax: +1.714.889.4250
To the attention of: Mr. Charles Exon

With copy to:

Mr. Pierre Servan-Schreiber
Avocat a la Cour
Skadden, Arps, Slate, Meagher and Flom LLP
68 rue du Faubourg St. Honore
75008 Paris, France
Fax: +33.1.55.27.11.99

To the Sellers:

Mr. Laurent Boix-Vives
1 Boulevard du Marechal Joffre
38000 Grenoble
Fax: +33.4.76.47.73.31

With copy to:

Mr. Jean-Philippe Delsol

                                       7


Avocat a la Cour
Delsol et Associes
12 quai Andre Lassagne
69001 Lyon
Fax: +33.4.72.10.20.31

4.5      SELLERS' REPRESENTATIVE

(a)      The Sellers hereby appoint Mr. Laurent Boix-Vives (the "SELLERS'
         REPRESENTATIVE") to receive any notice, to take any necessary measures
         in the name of and on behalf of the Sellers in connection with the
         execution of this Agreement and the performance and completion of all
         of the transactions contemplated herein and, if necessary, to modify
         this Agreement and waiving any and all rights under this Agreement. The
         Acquirer and the Escrow Agent may rely on any action undertaken by the
         Sellers' Representative (except in accordance with paragraph (b)
         below). The representations made, the agreements entered into and the
         actions undertaken by the Sellers' representative pursuant to this
         clause will be binding and enforceable against each of the Sellers.

(b)      Should Mr. Laurent Boix-Vives be impeded from acting as Sellers'
         Representative for any reason whatsoever, the Sellers hereby appoint
         Ms. Jeannine Boix-Vives as the replacement for Sellers' Representative.
         The appointment of Ms. Jeannine Boix-Vives as the Sellers'
         Representative shall become effective as of the date on which the
         Acquirer is notified of such appointment by Ms. Jeannine Boix-Vives in
         the manner set forth in Article 4.4. Subsequently, should Ms. Jeannine
         Boix-Vives be impeded from acting for any reason whatsoever, the
         Sellers hereby appoint SDI as the Sellers' Representative (or, should
         SDI have been dissolved by that date, Ms. Christine Simon shall be
         appointed -- and, if Ms. Christine Simon is impeded, Ms. Sylvie Bernard
         shall be appointed). The appointment of SDI, of Ms. Christine Simon, or
         of Ms. Sylvie Bernard as the Sellers' Representative shall become
         effective as of the date on which the Acquirer is notified of such
         appointment by SDI's legal representative, by Ms. Christine Simon or by
         Ms. Sylvie Bernard, respectively, in each case in the manner set forth
         in Article 4.4 (provided that, should SDI issue several contradictory
         notices in such a context, only the first notice shall be valid).

4.6      TRANSFER

No Party can sell or transfer its rights and obligations in any way whatsoever
by the terms of this Agreement without the prior written consent of the other
Parties.

4.7      SUCCESSORS AND BENEFICIARIES

Any and all rights and obligations pursuant to this Agreement are actively and
passively, jointly and severally binding on the Parties' successors, heirs,
beneficiaries, and legal representatives, provided that this Agreement is
concluded in consideration of the person of the Sellers and, consequently, the
rights conferred to the Sellers by this Agreement

                                       8


shall not be assigned, transferred or conveyed in any manner whatsoever, except
to another Seller.

4.8      DIVISIBILITY

If any of the provisions of this Agreement should become null, illegal, not
binding or incapable of being performed in any manner whatsoever (hereafter
"DISPUTED PROVISIONS"):

(a)      the validity and enforceability of the other provisions shall not be
         affected or compromised in any way; and

(b)      the Parties shall negotiate in good faith in order to replace the
         Disputed Provisions with valid and enforceable provisions that are as
         close as possible to the Parties' common intent or, if such common
         intent cannot be determined, the intent of those among the Parties
         which the Disputed Provision was designed to protect.

4.9      AMENDMENTS AND WAIVERS

(a)      This Agreement shall only be amended by a written agreement duly signed
         by the Acquirer and the Sellers' Representative.

(b)      Any waiver by a Party to one of its rights pursuant to this Agreement
         shall only take effect if it was made in writing, and shall be strictly
         interpreted.

(c)      No waiver of any one of the provisions of this agreement shall
         constitute a waiver of any other provision of this Agreement other than
         the provision which was waived.

4.10     APPLICABLE LAW - JURISDICTION

(a)      This Agreement and its interpretation are exclusively governed by
         French law.

(b)      Any dispute arising in connection with this Agreement, including the
         validity, the interpretation and the performance hereof, and which
         cannot be resolved amicably, shall fall under the exclusive
         jurisdiction of the courts within the jurisdiction of the Paris Court
         of Appeals.


                                       9



Executed in Paris, on April 12, 2005
In nine (9) copies



- -------------------------------
FOR SOCIETE GENERALE:
by Mrs. Helene Vende Bodin



- -------------------------------
FOR QUIKSILVER, INC.
by Mr. Bernard Mariette



- ------------------------------
FOR SDI SOCIETE DE SERVICES
ET DEVELOPPEMENT
by Mr. Laurent Boix-Vives



- -------------------------------
MR. LAURENT BOIX-VIVES



- -------------------------------
MS. JEANNINE BOIX-VIVES



- -------------------------------
MS. CHRISTINE SIMON



- -------------------------------
MS. SYLVIE BERNARD



                                       10

                                                                     EXHIBIT 2.4


                             SHAREHOLDERS' AGREEMENT

                                SKI EXPANSION SCA


BETWEEN THE UNDERSIGNED:

MR. LAURENT BOIX-VIVES, born on August 30, 1926 in Brides les Bains (73570),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. JEANNINE BOIX-VIVES, born on December 25, 1927 in Montbonnot (38330),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. CHRISTINE SIMON, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. SYLVIE BERNARD, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble, France,

acting jointly and severally for the purposes of this Agreement,

                              (hereinafter referred to as the "FAMILY GROUP" and
                                 individually as a "MEMBER OF THE FAMILY GROUP")

                                                                    PARTY OF THE
                                                                     FIRST PART,

AND

QUIKSILVER, INC., a Delaware corporation, with its registered offices at 15202
Graham Street Huntington Beach, California, United States of America,
represented by Mr. Bernard Mariette, acting in the capacity of President,

                     (hereinafter referred to as "QUIKSILVER" and, together with
  the Members of the Family Group, the "SHAREHOLDERS" and each a "SHAREHOLDER"),

                                                                    PARTY OF THE
                                                                    SECOND PART,

IN THE PRESENCE OF:

SKI EXPANSION, a societe en commandite par actions (partnership limited by
shares), with share capital of EUR 8,096,624 , having its registered office at
the place called "Le Menon", Voiron (38500), France, registered with the
Registry of Commerce and Companies of Grenoble under number 070 501 374,
represented by Mr. Laurent Boix-Vives in his capacity as Manager,

                                      (hereinafter referred to as the "COMPANY")




(each of the Members of the Family Group, Quiksilver and the Company being
hereinafter referred to as a "PARTY" and collectively as the "PARTIES").

WHEREAS:

A.   Pursuant to an acquisition agreement dated as of the date hereof (the
     "ACQUISITION AGREEMENT"), Quiksilver and the Family Group have agreed to
     the sale by the Family Group to Quiksilver of its direct and indirect
     interest in Skis Rossignol SA, a societe anonyme (corporation) with share
     capital of EUR 49,792,256, , with registered offices located at the place
     called "Le Menon", Voiron (38500), France, registered with the Registry of
     Commerce and Companies of Grenoble under number 056 502 958 and the shares
     of which are listed on Eurolist of Euronext Paris under Euroclear France
     code 12041 ("SKIS ROSSIGNOL").


B.   The Purchaser has agreed to acquire, on the Second Closing Date, pursuant
     to the Acquisition Agreement, common shares in the Company, representing
     75% of the Company's capital, i.e. all the common shares issued by it.


C.   After the Second Closing Date, the Family Group intends to keep the
     remaining preferred shares representing 25% of the Company's capital, until
     either of the Parties exercises the call and put options granted under this
     Agreement.


D.   Quiksilver and the Family Group therefore wish to agree on certain rules
     relating to the Company's administration, and to create between them
     certain rights and obligations regarding the assignment of their securities
     in the Company, according to the terms defined in this Agreement.


NOW THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:

ARTICLE 1 - DEFINITIONS

"AGREEMENT" means this Shareholders' Agreement.

"BUSINESS DAY" means, with respect to France or the United States, any day other
than a Saturday, a Sunday or a day on which commercial banks or regulated
markets are closed for business during the entire day in Paris or New York,
respectively, it being specified that references herein to a "Business Day"
without reference to France or the United States shall be references to days
which are both French Business Days and US Business Days.

"CALL OPTION" has the meaning given to it under Article 5.3(a).

"COMPANY" has the meaning given to it in the Preamble.

"DISPUTED PROVISIONS" has the meaning given to it under Article 7.9.


                                       2


"ESTIMATED PRICE OF THE CONTROLLING INTEREST" means the price per share of the
Controlling Interest estimated by the Sellers pursuant to the Acquisition
Agreement, a price per share equal to 181.2035 euro.

"EURIBOR" means the rate equal to the interbank interest rate applicable to
three (3) month deposits in euros, as calculated by the Banking Federation of
the European Union and published for information purposes on the Euribor Page of
the Moneyline Telerate 248 screen (or any other page that is substituted
therefor, or in the lack thereof, on the equivalent pages of Reuters or
Bloomberg).

"EXERCISE PRICE OF THE CALL OPTION" means a price per Family Group Share equal
to (i) the Estimated Price of the Controlling Interest, minus the total amount
per share of the Family Group's quota in the dividends and distributions of any
kind (including but not limited to the amounts received as a result of any
decision to amortize, redeem or reduce the Company's share capital) decided in
favor of the Family Group from the date of this Agreement until the date of the
transfer pursuant to the Put Option or the Call Option, whichever is applicable,
(ii) plus annual interest equal to EURIBOR plus 2.35%, counted down from the
signature date of this Agreement until the date of the Notice of Put or the
Notice of Call, whichever is applicable.

"EXERCISE PRICE OF THE PUT OPTION" means a price per Family Group share equal to
the Exercise Price of the Call Option, plus five percent (5%).

"EXISTING FAMILY GROUP SHARES" has the meaning given to it under Article 2.1(a).

"EXISTING QUIKSILVER SHARES" has the meaning given to it under Article 2.1(a).

"FAMILY GROUP SHARES" has the meaning given to it under Article 2.1(c).

"KNOWLEDGE OF THE FAMILY GROUP" means, with respect to any fact or event, the
knowledge of such fact or event by any of the Members of the Family Group.

"LIEN" means any encumbrance, charge, lien, security interest or other
restriction, limitation or third party right whatsoever.

"NEW FAMILY GROUP SHARES" has the meaning given to it under Article 2.1(c).

"NEW QUIKSILVER SHARES" has the meaning given to it under Article 2.1(c).

"NOTICE OF CALL" has the meaning given to it under Article 5.3(d).

"NOTICE OF PUT" has the meaning given to it under Article 5.2(d).

"PLEDGE OF QUIKSILVER SHARES" has the meaning given to it under Article 7.2(a).

"PLEDGE OF THE FAMILY GROUP SHARES" has the meaning given to it under Article
7.2(a).

"PLEDGES" has the meaning given to it under Article 7.2(a) of this Agreement.


                                       3


"PREAMBLE" means (i) introductory paragraphs A, B, C and D of this Agreement and
(ii) the designation of the Parties set forth at the top of this Agreement.

"PUT OPTION" has the meaning given to it under Article 5.2(a).

"QUIKSILVER SHARES" has the meaning given to it under Article 2.1(c).

"SECOND CLOSING DATE" means either (i) the Settlement-Delivery Date, or (ii) if
the Settlement-Delivery Date has not occurred before July 19, 2005, July 19,
2005 (provided that in the event that the authorizations necessary for the
Purchase under the Antitrust Regulations, as defined in the Acquisition
Agreement, have not been obtained on or prior to that date, the Second Closing
Date will be the date on which these authorizations are obtained).

"SETTLEMENT-DELIVERY DATE" means the date of the settlement and delivery of the
shares of Skis Rossignol acquired by Quiksilver in the tender offer initiated by
Quiksilver for the shares of Skis Rossignol pursuant to Article 2.2 of the
Acquisition Agreement (not including the shares that may be acquired by
Quiksilver in connection with the reopening of the tender offer in accordance
with Article 232-4 of the General Regulation of the French Autorite des marches
financiers, and which will be the subject of a subsequent settlement-delivery).

"SKIS ROSSIGNOL" has the meaning given to it in the Preamble.

"SUBSIDIARY" means, with regard to any legal person, any person or entity
controlled by that legal person according to the meaning provided by Article L.
233-3 of the French Commercial Code, including any joint-venture company
(societe en participation), economic interest groupings (groupements d'interet
economiques) or partnership of which that legal person is a member, provided
that Article L. 233-3 of the French Commercial Code shall be interpreted to
include, mutatis mutandis, entities that are not commercial companies (for
example, non-commercial entities, economic interest groupings or associations).

"TAX TREATY" means the Convention Between the Government of the United States of
America and the Government of the French Republic for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
and Capital, and any Protocols thereto, as amended or supplemented from time to
time, and any successor thereto.

"TRANSACTION DOCUMENTS" means this Agreement, the Acquisition Agreement, and to
the extent they relate to the Family Group Shares, the bylaws of the Company.

"TRANSFER" means any transaction involving a transfer of ownership, including,
without limitation, (i) sales and transfers (with or without consideration,
inter vivos or mortis causa), including any transfer by means of an adjudication
or by virtue of a judgment, (ii) transfers for the payment of goods or services
(dation en paiement), or by means of an exchange, partition, division, loan
(including specifically any loan of securities), sale with right of repurchase
(vente a remere), contribution, business contribution, liquidation, merger or
demerger, spin-off, split-off or any combination of these transactions, (iii)
transfers concerning ownership, usufruct or any other


                                       4


subdivision of ownership rights or any other right concerning the object of the
transfer (and including, where applicable, any voting right or the right to
receive dividends), and to "TRANSFER" means the right to proceed with any of the
foregoing transactions, or to undertake to proceed with such a transaction.

ARTICLE 2 - MANAGEMENT OF THE COMPANY

2.1 CAPITAL TRANSACTIONS AND AMENDMENTS TO THE BYLAWS

(a) On the date of this Agreement, the Company validly adopted the bylaws set
forth in APPENDIX 2.1, so that the Family Group holds 144,050 preferred shares
of the Company, representing 28.46% of the Company's share capital (the "FAMILY
GROUP'S EXISTING SHARES") and 361,989 common shares of the Company, representing
71.53% of the Company's share capital, escrowed in accordance with the
Acquisition Agreement (the "EXISTING QUIKSILVER SHARES").

(b) Pursuant to Article 2.3 of the Acquisition Agreement, on the Second Closing
Date, Quiksilver will acquire Existing Quiksilver Shares.

(c) Pursuant to Article 2.8 of the Acquisition Agreement, on the Second Closing
Date the Company's share capital shall be increased, by way of the issuance of
78,637 newly issued shares for the benefit of the Family Group, comprising
76,518 common shares and 2,119 preferred shares. Immediately following this
capital increase (the "CAPITAL INCREASE"), the Family Group shall transfer to
Quiksilver, according to the terms and conditions defined in the Acquisition
Agreement, the ordinary shares issued by the Company as part of the Capital
Increase (the "NEW QUIKSILVER SHARES" and, together with the Existing Quiksilver
Shares, the "QUIKSILVER SHARES"), while the Family Group shall remain the owner
of the 2,119 newly-issued preferred shares (the "NEW FAMILY GROUP SHARES" and,
together with the Existing Family Group Shares, the "FAMILY GROUP SHARES"), so
that, upon the conclusion of these transactions, Quiksilver and the Family Group
will hold 75% and 25% respectively of the Company's capital.

(d) No later than December 31, 2005, the Parties shall arrange for the Company
to be converted into a societe par actions simplifiee (simplified joint-stock
company), and to adopt the bylaws set forth in APPENDIX 3.3; they agree to vote
in favor of the resolutions necessary to that effect.

2.2 MANAGEMENT OF THE COMPANY

The Family Group agrees, for the entire term of the Agreement, not to interfere
in the Company's management, other than for the purposes of exercising the
voting rights attached to the Family Group Shares, defined under Article 3,
which shall be exercised in compliance with the Company's bylaws and the
provisions of this Agreement.

2.3 SHAREHOLDERS' COVENANTS


                                       5


(a) The Family Group agrees not to only use the voting rights attached to the
Family Group Shares under Article 3.3 in accordance with the interest of the
Company, and in prior consultation with Quiksilver; the Members of the Family
Group agree to cast their vote for draft resolutions or decisions supported by
Quiksilver, provided these drafts are not manifestly contrary to the Company's
interest. Except in the cases provided by the Company's bylaws, the Family Group
agrees not to proceed to any resolutions in its capacity as a shareholder of the
Company.

(b) If an increase in the Company's share capital is proposed to its
shareholders, and such a decision leads to a reduction in the Family Group's
share in the Company's capital and voting rights below a threshold of 25%, the
Family Group will not exercise the right of objection to the increase in capital
granted to it by the bylaws unless the increase in capital leads to prejudice
for the Family Group. The Family Group waives in advance its pre-emptive right
(droit preferentiel de souscription) to all shares issued by the Company; it
hereby transfers to Quiksilver, free of charge, any pre-emptive right to the
Company Shares that would be conferred on it by law and which it could not
validly waive under applicable laws and regulations. It agrees not to subscribe
to any capital increase or issuance of securities of any kind made by the
Company during the term of this Agreement.

(c) The Family Group agrees to consult with Quiksilver prior to exercising the
rights that are granted to it pursuant to Article L. 228-19 of the French
Commercial Code

(d) The Family Group, for information purposes, and in order to entitle it to
preserve the rights that result from its ownership of the Family Group Shares,
will be invited to attend general shareholders' meetings of the Company, and
will receive the documents sent by the Company to the Company's shareholders.
Subject to this provision, it undertakes not to request any document or any
information from the Company.

(e) Quiksilver agrees not to make any decision to modify the Company's bylaws
that is likely to adversely affect the voting rights or rights to profits
attached to the Family Group Shares without the prior and unanimous consent of
the holders of the Family Group Shares. Quiksilver warrants to the Members of
the Family Group that the right to profits granted to them by the bylaws shall
be fully respected.

ARTICLE 3 - RIGHTS ATTACHED TO THE FAMILY GROUP SHARES

3.1 The Existing Family Group Shares are, and the New Family Group Shares shall
be, preferred shares as defined in Article L. 228-11 of the French Commercial
Code. The New Family Group Shares shall be of the same category as the Existing
Family Group Shares, such that all Family Group Shares shall be fungible with
each other.

3.2 The Family Group Shares entitle the holders thereof (or will entitle the
holders thereof, in regard to the New Family Group Shares) to a share equal to
the proportion of capital they represent, in all dividends paid by the Company
(if any), and more generally in the Company's corporate assets, profits,
reserves and liquidating dividend.

3.3 Subject to the rights granted to the holders of Family Group Shares under
Article 2.3(d), the Family Group Shares do not and shall not give their holders
the


                                       6


right to vote on decisions that are within the powers of a corporation's
shareholder meeting pursuant to Articles L. 225-96 to L. 225-125 of the French
Commercial Code, nor the right to attend the general meetings of the Company's
shareholders or partners, nor, more generally, the right to be informed of or to
be consulted on these decisions in any way whatsoever; provided, however, that
the holders of Family Group Shares shall be called to vote on the following
decisions, the approval of which will require the unanimous consent of the
holders of the Family Group Shares: (i) any change in the rights conferred on
the holders of the Family Group Shares by the bylaws of the Company (except for
any adjustments that may result from the Company's conversion into a simplified
joint-stock company and the corresponding statutory changes), (ii) any decision
entailing a reduction of their share in the Company's capital below 25%, (iii)
the transfer of the Company's main offices to a place that is not located within
the French Republic, and (iv) any decision entailing the dissolution or
liquidation of the Company (except for any decision on the merger or demerger,
spin-of or split-off of the Company, such decisions to fall within the exclusive
powers of the Company's holders of common shares). Finally, the holders of the
Family Group's shares will have the option to give one of the Company's auditors
the task of drawing up a special report on the Company's compliance with the
particular rights attached to their preferred shares.

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES

4.1 REPRESENTATIONS AND WARRANTIES OF THE FAMILY GROUP

The Members of the Family Group represent and warrant the following to
Quiksilver:

(a) from the date of this Agreement until the Second Closing Date, the Members
of the Family Group together hold and will hold all of the rights conferring
full ownership (pleine propriete) over the Existing Family Group Shares and
Quiksilver's Existing Shares, free of any Liens, subject to Liens created by the
Acquisition Agreement; on the Second Closing Date, the Members of the Family
Group will together hold all the rights conferring full ownership over the
Family Group's New Shares, free of any Liens, subject to the Liens created by
the Acquisition Agreement.

(b) With the exception of the Existing Family Group Shares and the Existing
Quiksilver Shares, the Company has issued no share and no securities or other
rights representing, or giving access to the Company's capital or voting rights,
and except for the Acquisition Agreement, there is no contract or commitment in
view of the grant or the issue of any such securities or rights.

(c) The Members of the Family Group have all requisite power to enter into this
Agreement and carry out their obligations hereunder. This Agreement, the Pledges
and all documents relating hereto and thereto have been or shall be duly signed
by each of the Members of the Family Group, and they constitute valid and
enforceable obligations of each of them (or their successors and assigns
pursuant to Article 7.7 of this Agreement) in accordance with their terms, such
that (i) Quiksilver (or a company designated by Quiksilver for the purposes of
the Put Option or the Call Option pursuant to Articles 5.2, 5.3 or 7.7 of this
Agreement) shall, on the transfer date set out for the completion of the Put
Option or the Call Option, be the valid owner of the Family Group Shares, free
of any Liens, and (ii) the Family Group Shares shall on


                                       7


that same date be validly transferred to Quiksilver (or to any company
designated by it) which will become the owner of them, and this transfer shall
be enforceable against third parties. Mr. Laurent Boix-Vives represents and
warrants personally to the Parties that he has been duly authorized by the
competent company bodies of the Company, which he represents, for the purposes
of signing this Agreement.

(d) The Members of the Family Group have obtained all consents and all
approvals, authorizations and waivers necessary to sign and fully perform their
obligations under this Agreement. No legal, arbitral or administrative action,
claim, lawsuit, or investigation likely to prevent the Members of the Family
Group from signing this Agreement or performing their obligations hereunder is
currently pending, and to the Knowledge of the Members of the Family Group, no
such action, claim, lawsuit or investigation is likely to be brought against any
Member of the Family Group. The signature of this Agreement and the performance
by the Members of the Family Group of their obligations hereunder (i) do not
conflict with or violate any of the bylaws of the Company; (ii) do not conflict
with or violate any legal or regulatory provision or any administrative, legal
or arbitral decision; (iii) do not conflict with or violate, or create any
rescission, termination or cancellation right under, any permits, approvals or
authorizations which are required for business purposes of the Company; and (iv)
do not conflict with or violate, or entitle a third party to any rights
(including any acceleration or early termination rights) under, any of the
contracts entered into by the Company.

(e) Set forth as Appendix 2.1 are true and correct copies of the Company's
updated bylaws, in effect as of the date of this Agreement. With the exception
of the legal provisions and statutory clauses that govern the respective powers
of the unlimited partners and limited partners in the Company, there is no
clause or provision which may prevent Quiksilver from fully enjoying the rights
conferred on it its capacity as owner of Existing Quiksilver Shares, whether in
the Company's bylaws, or in any contract or agreement entered into by the
Company, or under any obligation by which the Company is bound.

4.2 REPRESENTATIONS AND WARRANTIES OF QUIKSILVER

Quiksilver represents and warrants the following to the Members of the Family
Group, on the date of this Agreement:

(a) Quiksilver has all requisite power to enter into this Agreement and carry
out its obligations hereunder. This Agreement, the Pledges and all documents
relating hereto and thereto have been or shall be duly signed by Quiksilver, and
they constitute valid and enforceable obligations of Quiksilver in accordance
with their terms, such that the Put Option effectively entails, on the part of
Quiksilver, an obligation to buy (or to procure the purchase by an entity
designated by pursuant to Articles 5.2, 5.3 and/or 7.7) the Family Group Shares
from the Family Group pursuant to this Agreement. Mr. Bernard Mariette
represents and warrants personally to the Parties that he has been duly
authorized by the competent company bodies of Quiksilver, which he represents,
for the purposes of signing this Agreement.

(b) Quiksilver has obtained all consents and all approvals, authorizations and
waivers necessary to sign and fully perform its obligations under this
Agreement. No legal,


                                       8


arbitral or administrative action, claim, lawsuit, or investigation likely to
prevent Quiksilver from signing the Agreement or performing its obligations
hereunder is currently pending, and to the Knowledge of Quiksilver, no action,
claim, lawsuit or investigation of this nature is likely to be brought against
Quiksilver. The signature of this Agreement and the performance by Quiksilver of
its obligations under this Agreement (i) do not conflict with or violate any of
the bylaws of Quiksilver; (ii) do not conflict with or violate any legal or
regulatory provision or any administrative, legal or arbitral decision; (iii) do
not conflict with or violate, or create any rescission, termination or
cancellation right under, any permits, approvals or authorizations which are
required for business purposes of Quiksilver; and (iv) do not conflict with or
violate, or entitle a third party to any rights (including any acceleration or
early termination rights) under, any of the contracts entered into by
Quiksilver.

ARTICLE 5 - TRANSFER OF THE FAMILY GROUP SHARES

5.1 PRINCIPLE

(a) The Family Group Shares may not be Transferred for a period of ten (10)
years after the date of this Agreement, except for (i) Transfer by inheritance
to a Member of the Family Group who is an individual, provided that the
Transferee shall assume all of the Transferor's obligations under this
Agreement, and (ii) Transfer in accordance with the Call Option or the Put
Option. Any Transfer made prior to such term in breach of this
non-transferability clause shall be null and void and shall be treated as such
by the Company. The Members of the Family Group undertake not to make any
conveyance inter vivos of the Family Group Shares free of charge (transmission a
titre gratuit), nor to bequest any of said Family Group Shares, except to other
Members of the Family Group.

(b) In consideration for the rights granted to the Family Group under this
Agreement, including pursuant to the Put Option, each Member of the Family Group
hereby assigns to Acquirer all present and future rights to receive cash or
other proceeds for the assignment of its Option Shares to a third party by any
means, including by contract or by operation of law. For the avoidance of doubt,
this provision does not apply to the Family Group's right to payment of the
price to be obtained pursuant to Article 5.2 or Article 5.3 below.

(c) The Members of the Family Group warrant to Quiksilver that the Family Group
Shares transferred in accordance with the Put Option or the Call Option shall
constitute all of their rights in the Company, as of the date of transfer. They
warrant and agree that the transfer price to be received by them pursuant to the
Call Option or the Put Option shall be paid in consideration for the full and
final transfer of all of such Family Group's rights. They waive, in advance, any
and all rights or claims which may result from their former capacity as
shareholder of the Company.

(d) As a penalty clause, any Transfer or attempted Transfer of Family Group
Shares made in breach of this Article shall entail payment by the Family Group
to Quicksilver of a penalty equal to three million euro (EUR 3,000,000), in
addition to (and not in replacement of) any damages payable to Quicksilver;
payment of this sum shall not confer any validity whatsoever on the Transfer or
the attempted Transfer.


                                       9


(e) The Shareholders acknowledge and agree that the granting of damages would
not constitute appropriate remedy in the event of a breach by any of the
Shareholders of their obligations to deliver the Family Group Shares and to pay
the price therefore, respectively, under the Put Option or the Call Option set
forth in Articles 5.2 and 5.3 below; the Shareholders hereby agree that the
remedy of specific performance (execution forcee) shall apply in the event of
such a breach

5.2 PUT OPTION

(a) Quiksilver irrevocably promises to the Family Group that it shall buy, at
the Family Group's request, all of the Family Group Shares (the "PUT OPTION"),
in accordance with the terms defined in this Article 5.2.

(b) The Put Option thus granted may be exercised by the Family Group (i) in the
event of a continued failure by Quiksilver to perform any of its obligations
under this Agreement or the Pledge of Quiksilver Shares, and (ii) as of the
expiration date of a period of five (5) years and fifteen (15) days after the
date of this Agreement (the "PUT OPTION EXERCISE DATE" and, together with the
events listed in (i), a "PUT OPTION EVENT").

(c) The Family Group may only exercise the Put Option once and only for all of
the Family Group Shares (and not for a portion of them) at any time during the
period beginning on the occurrence of a Put Option Event and ending on the date
that no Put Option Event is continuing. If the relevant Put Option Event is the
occurrence of the Put Option Exercise Date, the Put Option may be exercised at
any time after the Put Option Exercise Date and no later than seventy-five (75)
days after that date. The Put Option shall become null and void if it has not
been previously exercised, (i) on the date of the Notice of Call, or (ii) at the
end of the seventy-five-day (75-day) period referred to hereinabove.

(d) If the Family Group wishes to exercise the Put Option, it shall notify
Quiksilver of its intent to do so (the "NOTICE OF PUT") during the applicable
exercise period in the form set forth in Article 7.5(a). Quiksilver shall have a
period of fifteen (15) days from receipt of the Notice of Put in order to notify
the Family Group of either (i) the amount of the Exercise Price of the Put
Option, or (ii) of Quiksilver's desire to exercise the Call Option, rather than
to allow the Family Group to exercise the Put Option. The Notice of Put shall
constitute an irrevocable commitment on the part of the Family Group to sell the
Family Group Shares to Quicksilver or to any party designated by Quicksilver,
which Quicksilver accepts.

(e) If, pursuant to section (ii) of paragraph (d) hereinabove, Quiksilver should
exercise the Call Option within fifteen (15) days from the receipt of the Notice
of Put pursuant to paragraph (d) hereinabove, the Family Group shall sell the
Family Group Shares to Quiksilver, who shall acquire them from the Family Group
within thirty (30) days of the Notice of Put, at the Exercise Price of the Call
Option.

(f) If Quiksilver should fail to exercise the Call Option within fifteen (15)
days of the Notice of Put, the Family Group shall sell the Family Group Shares
to Quiksilver, who shall acquire them from the Family Group within thirty (30)
days of the Notice of Put, at the Exercise Price of the Put Option.


                                       10


5.3 CALL OPTION

(a) The Family Group irrevocably promises to Quiksilver that it shall sell, at
Quiksilver's request, all of the Family Group Shares (the "CALL OPTION"), in
accordance with the terms of this Article 5.3.

(b) The Call Option thus granted may be exercised by Quiksilver (i) in the event
of a continued failure by any Member of the Family Group to perform any of
her/his obligations under this Agreement or under the Pledge of the Family Group
Shares; (ii) in the event of the death or the incapacity of all of the
individual Members of the Family Group; (iii) if, as a result of proceedings
initiated by any Member of the Family Group, a tribunal or court of arbitration
questions either the validity of the restrictions imposed on the voting rights
associated with the Family Group Shares or the validity or the enforceability of
the Family Group's obligations under this Agreement; (iv) in the event of a
Notice of Put pursuant to Article 5.2(d); and (v) as of the expiration date of a
five-year (5-year) period starting on the date of this Agreement (the "CALL
OPTION EXERCISE DATE" and, together with events listed in (i), (ii), (iii), and
(iv) hereinabove, a "CALL OPTION EVENT").

(c) Quiksilver may only exercise the Call Option once and only for all of the
Family Group Shares (and not for a portion of them) at any time during the
period beginning on the occurrence of a Call Option Event and ending on the date
that no Call Option Event is continuing. If the relevant Call Option Event is
the occurrence of the Call Option Exercise Date, the Call Option may be
exercised at any time after the Call Option Exercise Date and no later than
ninety (90) days after that date. The Call Option shall become null and void if
it has not been previously exercised, (i) on the date of the Notice of Put, or
(ii) at the end of the ninety-day (90-day) period referred to hereinabove.

(d) If Quiksilver wishes to exercise the Call Option, it shall notify the Family
Group of its intent to do so (the "NOTICE OF CALL") during the applicable
exercise period in the form set forth in Article 7.5(a). The Notice of Call
shall specify the Exercise Price of the Call Option. It shall constitute an
irrevocable commitment on the part of Quiksilver to acquire (or to cause any
entity designated by Quicksilver to acquire) all of the Family Group Shares,
which the Family Group irrevocably undertakes to sell.

(e) In the event of a Notice of Call, the Family Group shall sell the Family
Group Shares to Quiksilver, who shall acquire them from the Family Group, within
thirty (30) days from the receipt of the Notice of Call, at the Exercise Price
of the Call Option.

ARTICLE 6 - TRANSFER OF QUIKSILVER SHARES

6.1 Except following the termination of this Agreement, the Quiksilver Shares
will be locked-up during a five (5) year period from the date of this Agreement,
with the exception of (i) Transfers to a legal entity in which Quiksilver or the
Company owns, directly or indirectly, 100% of the capital and (ii) Transfers of
shares which are transferred for no charge to third parties acting as board
members; provided that the Transferee shall covenant to comply with all of the
obligations of the Transferor under this Agreement. Any Transfer completed
during this lock-up period in breach


                                       11


of this lock-up clause will be null and void, and shall be treated as such by
the Company.

(a) As a penalty clause, any Transfer or attempted Transfer of Quiksilver Shares
made in breach of this Article shall entail payment by Quiksilver to the Family
Group of a penalty equal to three million euro (EUR 3,000,000), in addition to
(and not in replacement of) any damages payable to the Family Group; payment of
this sum shall not confer any validity whatsoever on the Transfer or the
attempted Transfer.

ARTICLE 7 - MISCELLANEOUS PROVISIONS

7.1 TAX TREATMENT OF THE TRANSACTION

(a) Each Member of the Family Group shall fully and accurately complete and
deliver to Quiksilver, a United States Internal Revenue Service Form W-8BEN or
any similar or successor form thereto (collectively, the "FORM W-8BEN")
representing that such Member of the Family Group is a non-U.S. person and
claiming the benefit of the Tax Treaty with respect to any payments received
under the terms of this Agreement, the Acquisition Agreement or the bylaws of
the Company (the "TRANSACTION DOCUMENTS") (including any dividend distribution
received from the Company) (i) on the date hereof, (ii) before any such Form
W-8BEN previously provided expires, (iii) promptly upon learning that any such
Form W-8BEN previously provided has become obsolete or incorrect, and (iv)
promptly upon reasonable demand by Quiksilver. Each Member of the Family Group
shall complete the Form W-8BEN in such a manner as to qualify the payments made
under the Transaction Documents for the lowest rate of U.S. withholding tax
available under the Tax Treaty with respect to such payments. For the avoidance
of doubt, neither the acceptance by Quiksilver of a Form W-8BEN, nor the making
of payments, contemplated by any of the Transaction Documents free from
withholding tax shall be construed as an agreement by Quiksilver that a Member
of the Family Group has satisfied its obligations under this Article 6.1(a) or
as a waiver by Quiksilver of such obligations.

(b) Each Member of the Family Group must immediately notify Quiksilver if he is
notified that he must or may need to file a tax return for United States federal
tax (other than Form W-8BEN) that refers to one of the transactions contemplated
by the Transaction Documents. The Family Group must consult Quiksilver prior to
any of its Members filing such a tax return. Quiksilver shall notify the Family
Group in writing of how it treats such transactions, for United States federal
income tax purposes ("TREATMENT USED BY THE Purchaser"); this information being
communicated to the Family Group on or before the time the Call Option or the
Put Option are exercised. To the extent permitted by law (including but not
limited to regulations), the Parties shall agree to complete any statement
related to U.S. taxation in a manner consistent with the Treatment Used by the
Purchaser, and the Parties shall agree not to otherwise characterize the
transactions for U.S. federal income tax purposes in any correspondence or
communications with a U.S. government authority.

(c) Prior to making any representation or other statement to any governmental
authority concerning the factual assumptions underlying the Treatment Used by
the Purchaser, each Member of the Family Group shall request that Quiksilver
inform the Family Group in writing of the Treatment Used by the Purchaser and of
the factual


                                       12


assumptions underlying the Treatment Used by the Purchaser, and Quiksilver shall
promptly do so unless Quiksilver has already informed the Family Group.

(d) The Members of the Family Group represent that at the time of this
Agreement, they are French tax residents for the purpose of the Tax Treaty, and
that as a consequence of the present situation, the payment that they will
receive under the terms of the Transaction Documents will benefit from the
provisions of the Tax Treaty. They undertake to notify Quiksilver of any change
in their tax residence during the term of this Agreement. For so long as the
Members of the Family Group shall remain French tax residents for the purpose of
the French Code general des impots (which the Members of the Family Group
undertake to prove, upon the Purchaser's request), the Purchaser shall bear any
withholding tax on the distributions made by the Company to the Members of the
Family Group (excluding any taxes and duties levied on such dividend
distribution pursuant to French law, if any).

(e) The Parties agree to notify each other of, and to cooperate in connection
with the prosecution of, any audits or tax contests relating to the transactions
contemplated by the Transaction Documents, and they both undertake to cooperate
with each other within this context, and provided that the Party seeking
cooperation will reimburse the cooperating Party for all out of pocket costs
incurred in connection with such cooperation. Quiksilver shall control any audit
or tax contest resulting from the assertion of any United States tax claim
against Quiksilver or the Company.

7.2 PLEDGES

(a) As security for his obligation to pay the Exercise Price of the Put Option
or the Exercise Price of the Call Option, as the case may be, and as security
for Quiksilver's obligation to pay the exercise prices of the put option and the
call option pursuant to the shareholders' agreement entered into between
Quiksilver and the Family Group with respect to Roger Cleveland Golf Company,
Inc., Quiksilver shall, as of the date hereof, enter into the pledge agreement
in favor of the Family Group, set forth in APPENDIX 7.2(A) of this Agreement
(the "PLEDGE OF QUIKSILVER SHARES"). As security for their obligation to deliver
the Family Group Shares pursuant to the Put Option and the Call Option, and as
security for their commitment not to Transfer pursuant to Article 5.1 of this
Agreement, the Family Group shall, as of the date hereof, enter into the pledge
agreement in favor of Quiksilver set forth in APPENDIX 7.2(B) of this Agreement
(the "PLEDGE OF FAMILY GROUP SHARES" and, together with the Pledge of
Quicksilver Shares, the "PLEDGES").

(b) The Parties undertake to take the necessary measures to release the Pledges
as part of the exercising the Put Option or the Call Option.

7.3 TERM OF THE AGREEMENT

(a) With the exception of the representations made in Article 4, which are made
on the date of this Agreement unless provided otherwise, and with the exception
of the rights and obligations which are expressly scheduled to take effect on
the date of this Agreement pursuant to the terms hereof, this Agreement shall
take effect on the Second Closing Date.


                                       13


(b) With the exception of rights and obligations that this Agreement expressly
states shall continue in effect after the Expiration Date, the Parties'
obligations shall terminate on the date that the Family Group Shares are
transferred pursuant to the Call Option or the Put Option or, if applicable,
upon a cancellation of the transfer of the Controlling Interest, and in any
event no later than the twentieth (20th) anniversary of the date of this
Agreement (the "EXPIRATION DATE").

7.4 EXPENSES AND FEES

Unless otherwise agreed, each of the Parties shall bear the expenses and fees
incurred by it or for it in relation to this Agreement and the transactions
contemplated herein, including the professional fees of its advisors and
brokers.

7.5 NOTICES

(a) Any notices or communications pursuant to this Agreement shall be made by
fax or by registered mail with return receipt requested or by an express courier
service and must be addressed to the persons and addresses indicated below, or
to any other address or fax number indicated in writing, in the same manner, by
one Party to the other:

        To Quiksilver or to the Company:

Quiksilver, Inc.
15202 Graham Street
Huntington Beach, California (United States of America)
Fax: +1.714.889.4250
To the attention of: Charlie Exon


With a copy to:

Mr. Pierre Servan-Schreiber
Avocat a la Cour
Skadden, Arps, Slate, Meagher & Flom LLP
68, rue du Faubourg Saint-Honore
75008 Paris, France
Fax: +33.1.55.27.11.99

        To the Family Group:

Mr. Laurent Boix-Vives
1, Boulevard du Marechal Joffre,
38000 Grenoble
Fax: +33.4.76.47.73.31


With a copy to:

Mr. Jean-Philippe Delsol
 Avocat a la Cour


                                       14


Delsol et Associes
12, quai Andre Lassagne
 69001 Lyon
Fax: +33.4.72.10.20.31

 (b) The date of receipt of the notice shall be deemed to be the date when the
fax or registered letter is received or the delivery date by express courier, as
attested by the relevant delivery form, provided that if the receipt of a notice
takes place on a day that is not a US Business Day (when this pertains to a
notice addressed to Quiksilver) or a French Business Day (when this pertains to
a notice addressed to the Family Group) or takes place outside normal office
hours in the United States or in France, as applicable, then such notice shall
be deemed to have been received on the opening date and time immediately
following receipt of the correspondence. Any correspondence addressed to the
Family Group at the address or fax number hereinabove shall be deemed
simultaneously received by each of the Members of the Family Group, and the
Members of the Family Group shall have no recourse against Quiksilver for
sending notices solely to the Family Group's Representative.

7.6 FAMILY GROUP'S REPRESENTATIVE

(a) The Family Group hereby appoints Mr. Laurent Boix-Vives (the "FAMILY GROUP'S
REPRESENTATIVE") as its representative, and gives him all powers, to receive any
notice hereunder, to take any necessary measures in the name of and on behalf of
the Members of the Family Group in connection with the execution of this
Agreement and the performance and completion of all of the transactions
contemplated herein and, if necessary, to modify this Agreement and waive any
and all rights under this Agreement. Quiksilver may rely on any action
undertaken by the Family Group's Representative on behalf of the Family Group;
it will not entail any correspondence or notice delivered in connection with
this Agreement by any Member of the Family Group other than the Family Group's
Representative (except as provided in paragraph (b) below). The representations
made, the agreements concluded, and the actions undertaken by the Family Group's
Representative pursuant to this clause shall have binding force against each of
the Members of the Family Group.

(b) Should Mr. Laurent Boix-Vives be impeded from acting as Sellers'
Representative for any reason whatsoever, the Sellers hereby appoint Ms.
Jeannine Boix-Vives as the replacement for Family Group's Representative. The
appointment of Ms. Jeannine Boix-Vives as the Family Group's Representative
shall become effective as of the date on which Quiksilver is notified of such
appointment by Ms. Jeannine Boix-Vives in the manner set forth in Article 7.5.
Subsequently, should Ms. Jeannine Boix-Vives be impeded from acting for any
reason whatsoever, the Members of the Family Group hereby appoint SDI as the
Family Group's Representative (or, should SDI have been dissolved by that date,
Ms. Christine Simon shall be appointed -- and, if Ms. Christine Simon is
impeded, Ms. Sylvie Bernard shall be appointed). The appointment of SDI, of Ms.
Christine Simon, or of Ms. Sylvie Bernard as the Family Group's Representative
shall become effective as of the date on which Quiksilver is notified of such
appointment by SDI's legal representative, by Ms. Christine Simon or by Ms.
Sylvie Bernard, respectively, in each case in the manner set forth in Article
7.5 (provided that, if SDI should issue several contradictory notices in such a
context, only the first notice shall be valid).


                                       15


7.7 ASSIGNMENT

(a) No Party may assign or transfer, in any way whatsoever, its rights and
obligations under this Agreement without the prior written consent from the
Family Group's Representative (when this pertains to a transfer by the
Purchaser) or from Quiksilver (when this pertains to a transfer by any of the
Sellers).

(b) As an exception to the foregoing, (i) the rights of Members of the Family
Group may be conveyed pursuant to Article 5.1(a)(i) and paragraph (c) hereunder
(except for the right of representation referred to in Article 7.6), and (ii)
Quiksilver may assign all (and not some only) of its rights and obligations
under this Agreement to any company controlled by Quiksilver within the meaning
of Article L. 233-3 of the Commercial Code.

(c) Quiksilver shall maintain at its office a book entry system to reflect and
record the ownership of the rights of each Member of the Family Group under the
Transaction Documents or any interest therein. No transfer of such rights by a
Member of the Family Group shall be valid, and Quiksilver will not recognize any
party other than such Member of the Family Group as entitled to receive a
payment under the Transaction Documents unless such transfer has been entered in
such book entry system. For the avoidance of doubt, if such a transfer is
otherwise permitted under the Transaction Documents, Quiksilver shall enter such
transfer in such book entry system upon request by the transferor; provided,
however, that Quiksilver shall not enter any transfer of such rights on such
book entry system unless presented with instruments of assignment executed by
the transferor and transferee in favor of the transferee (and not in favor of
bearer or indorsed in blank).

7.8 SUCCESSORS AND BENEFICIARIES

Any and all rights and obligations pursuant to this Agreement are actively and
passively, jointly and severally binding on the Parties' successors, heirs,
beneficiaries, and legal representatives, provided that this Agreement is
concluded in consideration of the person of the Members of the Family Group and,
consequently, the rights conferred to the Members of the Family Group by this
Agreement shall not be assigned, transferred or conveyed in any manner
whatsoever, except to another Member of the Family Group.

7.9 SEVERABILITY

If any of the provisions of this Agreement becomes null, illegal, unenforceable,
or incapable of being performed in any manner whatsoever (hereinafter "DISPUTED
PROVISIONS"):

(a) the validity and enforceability of the other provisions shall not be
affected or compromised in any way; and

(b) the Parties shall negotiate in good faith in order to replace the Disputed
Provisions with valid and enforceable provisions that are as close as possible
to the Parties' common intent or, if such common intent cannot be determined,
the intent of those among the Parties which the Disputed Provision is supposed
to protect.


                                       16


7.10 MODIFICATIONS AND WAIVERS

(a) This Agreement shall only be modified by a written agreement duly signed by
the Purchaser and the Sellers' Representative.

(b) Any waiver by a Party to one of its rights pursuant to this Agreement shall
only take effect if it was made in writing, and shall be strictly interpreted.

(c) No waiver of any one of the provisions of this agreement shall constitute a
waiver of any other provision of this Agreement other than the provision which
was waived.

7.11 APPLICABLE LAW - COMPETENT COURT

(a) This Agreement and its interpretation are exclusively governed by French
law.

(b) Any dispute arising in connection with this Agreement, including the
validity, the interpretation and the performance hereof, and which cannot be
resolved amicably, shall fall under the exclusive jurisdiction of the courts
within the jurisdiction of the Paris Court of Appeals.



Signed in Lyon, on April 12, 2005, in five (5) copies.



- --------------------------------------
FOR QUIKSILVER, INC.
By Mr. Bernard Mariette



- --------------------------------------
FOR SKI EXPANSION SCA
By Mr. Laurent Boix-Vives


- --------------------------------------
MR. LAURENT BOIX-VIVES


- --------------------------------------
MRS. JEANNINE BOIX-VIVES


- --------------------------------------
MRS. CHRISTINE SIMON


- --------------------------------------
MRS. SYLVIE BERNARD


                                       17


                                  Appendix 2.1

                       Amended bylaws of Ski Expansion SCA



                                       18


                                  Appendix 3.3

   Bylaws of Ski Expansion SCA following the change into a societe par actions
                                   simplifiees



                                       19


                                Appendix 7.2 (A)

                           Pledge of Quiksilver Shares



                                       20


                                Appendix 7.2 (B)

                          Pledge of Family Group Shares



                                       21


                                                                     Exhibit 2.5
                                MINORITY HOLDINGS

                               PURCHASE AGREEMENT


BETWEEN THE UNDERSIGNED:

MR. LAURENT BOIX-VIVES, born on August 30, 1926 at Brides les Bains (73570),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble,

MS. JEANNINE BOIX-VIVES, born on December 25, 1927 at Montbonnot (38330),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble,

MS. CHRISTINE SIMON, born on January 23, 1964 at Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble,

MS. SYLVIE BERNARD, born January 23, 1964 at Grenoble, residing at 1, Boulevard
du Marechal Joffre, 38000 Grenoble,

SDI SOCIETE DE SERVICE ET DEVELOPPEMENT, a Swiss societe anonyme (corporation)
with share capital of CHF 500,000, with registered offices at 120 chemin de la
Rueyre, 1020, Renens, Switzerland ("SDI"), represented by Mr. Laurent
Boix-Vives, acting as President (Chairman and CEO),

acting jointly and severally for purposes of this Agreement,


                                             (hereinafter referred to jointly as
                                   the "SELLERS" and individually as a "SELLER")

                                                      PARTIES OF THE FIRST PART,

AND

SKIS ROSSIGNOL SA, a societe anonyme with share capital of EUR 49,792,256, with
its registered offices at "Le Menon", Voiron (38500), registered with the
Grenoble Registry of Commerce and Companies under number 056 502 958,
represented by either Christine Simon or Sylvie Bernard, duly authorized for the
present purposes,

                                 (hereinafter referred to as "SKIS ROSSIGNOL" or
                                                                the "PURCHASER")

                                                        PARTY OF THE OTHER PART,

(each of the Sellers and the Purchaser being hereinafter referred to
individually as a "PARTY" and collectively as the "PARTIES"),





IN THE PRESENCE OF:

QUIKSILVER, INC., a Delaware corporation, with its registered offices at 15202
Graham Street Huntington Beach, California, United States of America,
represented by Mr. Bernard Mariette, acting as President,

                                      (hereinafter referred to as "QUIKSILVER").


WHEREAS:

A.       The Sellers together hold the following minority interests (hereinafter
         referred to as the "MINORITY HOLDINGS") in certain subsidiaries of Skis
         Rossignol (hereinafter referred to as the "IDENTIFIED SUBSIDIARIES"):
         (i) 1,231 shares of Skis Dynastar S.A., representing 0.75% of this
         company's capital and voting rights; (ii) 200 shares of Skis Rossignol
         de Espana S.A., representing 3.33% of this company's capital and voting
         rights; (iii) one share of Rossignol Ski Osterreich, representing 0.25%
         of this company's capital and voting rights; (iv) 96,687 shares of
         Rossignol Lange SpA, representing 0.55% of this company's capital and
         voting rights; (v) 5 shares of Rossignol Ski Poles Vallee d'Aoste SpA,
         representing 0.01% of this company's capital and voting rights; (vi)
         one share of Rossignol Ski AG, representing 0.02% of its capital and
         voting rights, and (vii) one share of Look Fixations SA, representing
         0.0001% of this company's capital and voting rights, held by the
         Sellers as of the signing date of this Agreement (the "SIGNING DATE").
         The Minority Holdings together represent all the interests held
         directly or indirectly by the Sellers in the Subsidiaries of Skis
         Rossignol (other than Roger Cleveland US, as defined in the Acquisition
         Agreement) and are allocated among the Sellers in the manner described
         in Exhibit A hereto.

B.       Pursuant to an Acquisition Agreement dated the date hereof
         ("ACQUISITION AGREEMENT"), the Sellers agree to transfer to Quiksilver
         their direct and indirect interests in Skis Rossignol and its
         Subsidiaries.


C.       Pursuant to the Acquisition Agreement, the Sellers agree to transfer to
         the Purchaser, and the Purchaser agrees to purchase, on the Second
         Closing Date, as defined below, the Minority Holdings.


D.       This purchase agreement (the "AGREEMENT") sets forth the terms and
         conditions of the transfer of the Minority Holdings.


E.       Quiksilver acknowledges the existence of this Agreement.



CONSEQUENTLY, THE FOLLOWING HAS BEEN AGREED TO:

ARTICLE 1 - DEFINITIONS

Unless the context demands otherwise, the following terms and expressions have
the following respective meanings:

"PURCHASER" has the meaning given in the Preamble of this Agreement.

"TRANSFER" means any transaction involving a transfer of ownership, including,
without limitation, (i) sales and transfers (with or without consideration,
inter vivos or mortis causa), including any transfer by means of an adjudication
or by virtue of a judgment, (ii) transfers for the payment of goods or services
(dation en paiement), or by means of an exchange, partition, division, loan
(including specifically any loan of securities), sale with right of repurchase
(vente a remere), contribution, business contribution, liquidation, merger or
demerger, spin-off, split-off or any combination of these transactions, (iii)
transfers concerning ownership, usufruct or any other subdivision of ownership
rights or any other right concerning the object of the transfer (and including,
where applicable, any voting right or the right to receive dividends), and to
"TRANSFER" means the right to proceed with any of the foregoing transactions, or
to undertake to proceed with such a transaction.

"TRANSFER OF THE MINORITY HOLDINGS" means the Transfer by the Sellers and the
purchase by the Purchaser of all the Minority Holdings held by the Sellers.

"LIENS" has the meaning given it in Article 6.1(a).

"KNOWLEDGE OF THE SELLERS" means, with respect to any fact or event, the
knowledge of such fact or event by any of the Sellers.

"ACQUISITION AGREEMENT" has the meaning given it in paragraph B of the Preamble,
and refers to the agreement mentioned therein and its appendices.

"AGREEMENT" means this agreement as well as its appendix.

"SETTLEMENT-DELIVERY DATE" means the date of settlement and delivery of the
shares of Skis Rossignol purchased by Quiksilver within the framework of the
Cash Tender Offer, as defined in the Acquisition Agreement, initiated by
Quiksilver on the shares of Skis Rossignol pursuant to article 2.2 of the
Acquisition Agreement (not including any shares that may be acquired by
Quiksilver with the re-opening of the Cash Tender Offer in accordance with
Article 232-4 of the General Regulation of the French Autorite des marches
financiers, and which will be the subject of a subsequent settlement-delivery).

"SECOND CLOSING DATE" means either (i) the Settlement-Delivery Date, or (ii) if
the Settlement-Delivery Date has not occurred by July 19, 2005, July 19, 2005
(provided the authorizations necessary for the Acquisition under the Antitrust
Regulations, as defined in the Acquisition Agreement, have not been obtained on
or prior to that date, the Second Closing Date will be the date on which these
authorizations are obtained).



"SIGNING DATE" means the signing date of this Agreement.

"DISPUTED PROVISIONS" has the meaning given to it in Article 7.6.

"SUBSIDIARY" means, with regard to any legal person, any person or entity
controlled by that legal person according to the meaning provided by Article L.
233-3 of the French Commercial Code, including any joint-venture company
(societe en participation), economic interest groupings (groupements d'interet
economiques) or partnership of which that legal person is a member, provided
that Article L. 233-3 of the French Commercial Code shall be interpreted to
include, mutatis mutandis, entities that are not commercial companies (for
example, non-commercial entities, economic interest groupings or associations).

"IDENTIFIED SUBSIDIARY" has the meaning given to it in paragraph A of the
Preamble.

"BUSINESS DAY" means, with respect to France or the United States, any day other
than a Saturday, a Sunday or a day on which commercial banks or regulated
markets are closed for business during the entire day in Paris or New York,
respectively; references to a "Business Day" within this Agreement, without
specifying the country to which Business Day applies, are references to days
which are both Business Days in France and Business Days in the United States.

"MINORITY HOLDINGS" has the meaning given to it in paragraph A of the Preamble.

"PARTY" has the meaning given to it in the Preamble.

"INTERIM PERIOD" has the meaning given to it in Article 5.

"PREAMBLE" means (i) the introductory paragraphs A, B, C, D and E of this
Agreement, and (ii) the designation of the Parties and Quiksilver appearing at
the head of this Agreement.

"PURCHASE PRICE" has the meaning given to it in Article 3.1.

"SELLERS' REPRESENTATIVE" has the meaning given to it in Article 7.3(a).

"SKIS ROSSIGNOL" has the meaning given to it in the Preamble.

"SELLERS" has the meaning given to it in the Preamble.

Any term beginning with an upper-case letter and not defined herein has the
meaning given it in the Acquisition Agreement

ARTICLE 2 - TRANSFER OF THE MINORITY HOLDINGS

(a)      Pursuant to the undertakings set forth in article 2.5 of the
Acquisition Agreement, on the Second Closing Date the Sellers shall transfer to
the Purchaser, who shall acquire, the Minority Holdings, free of any privilege,
security interest, encumbrance, or other restriction, limitation or third-party
right whatsoever, under the terms and conditions defined in this Agreement.

(b)      The Parties represent that the Purchase Price results from values
freely negotiated between them. Consequently, the Parties waive in advance any
claim they might have against


one another, or against Quiksilver, in the event that the Purchase Price does
not correspond to the actual value of the Minority Holdings.

ARTICLE 3 - PRICE, COMPLETION OF THE TRANSFERS

3.1      PRICE

The transfer of the Minority Holdings is agreed to for a total price of one
million, two hundred and forty-five thousand (1,245,000) euros (the "PURCHASE
PRICE").

3.2      COMPLETION OF THE TRANSFER

On the Second Closing Date, the Minority Holdings will be transferred to the
Purchaser and the Purchase Price will be paid to the Sellers.

Quiksilver undertakes to pay the Purchase Price on behalf of the Purchaser on
the Second Closing Date. The Purchaser hereby acknowledges that this payment
will give rise to a claim by Quiksilver against the Purchaser in the amount of
the Purchase Price. The Sellers acknowledge having been informed that the
Purchase Price will be paid by Quiksilver and they hereby consent to receive
this payment from Quiksilver. Consequently, they waive in advance any right or
claim against the Purchaser for payment of the Purchase Price.

The Sellers will present to Quiksilver and send to the Purchaser all documents
establishing their property title to the Minority Holdings and furthering the
successful outcome of the Transfer of the Minority Holdings.

Except in the case of a written waiver from Quiksilver upon presentation of a
document or from the Purchaser upon the remittance of a document, any
transactions to be completed by the Second Closing Date will be deemed as taking
place subject to the completion of all of them, such that no transaction or
remittance of documents, and no transfer of ownership nor payment obligation
will be deemed as final until all transactions and remittances are complete.

The Parties undertake to complete all formalities and to take all measures that
might be necessary for the transactions to be successfully completed by the
Second Closing Date under this Agreement, including under Article 5, and to
inform Quiksilver on a regular basis of their progress.

ARTICLE 4 - COMPETING OFFERS

The Sellers undertake not to request directly or indirectly any proposal by
third parties for the Transfer of the Minority Holdings, and not to discuss the
possibility of such a Transfer with any party.

ARTICLE 5 - COMMITMENTS OF THE PARTIES

From the Signing Date to the Second Closing Date (the "INTERIM PERIOD"), the
Parties undertake to sign any document and to undertake any action necessary for
the consummation of the Transfer of the Minority Holdings and to acknowledge
their enforceability against third parties in the concerned jurisdictions.



ARTICLE 6 - SELLERS' REPRESENTATIONS

The Sellers warrant and represent the following to the Purchaser:

6.1      OWNERSHIP OF THE TRANSFERRED RIGHTS

(a)      As of the Signing Date, the Sellers together hold all rights conferring
full ownership (pleine propriete) of the Minority Holdings, which are fully paid
and free of any privilege, lien, encumbrance or other restriction, limitation,
pledge, security interest or right of third parties whatsoever (the "LIENS").

(b)      During the Interim Period, the Sellers together will hold all the
rights conferred by the full ownership of the Minority Holdings, fully paid and
free of any Lien, with the exception of the Liens created by this Agreement.
Consequently, (i) the Purchaser, on the Second Closing Date, will become the
valid owner of the Minority Holdings, free of any Lien, and (ii) the Minority
Holdings will, on this same date, be validly sold and transferred to the
Purchaser, which will become the owner thereof, and this Transfer will be
enforceable against third parties, subject to completion of the necessary
formalities within the concerned jurisdictions.

(c)      With the exception of the Minority Holdings, as of the Signing Date the
Sellers do not hold, and will not hold as of the Second Closing Date, any direct
or indirect interest in the capital of the Identified Subsidiaries, and with the
exception of the rights resulting from this Agreement, they do not directly or
indirectly hold any right to the Identified Subsidiaries.

6.2      CAPACITY OF THE SELLERS; ACQUISITION OF THE NECESSARY AUTHORIZATIONS

(a)      The Sellers have full authority to enter into this Agreement and to
perform their obligations to this end. This Agreement and any documents relating
thereto have been or will be duly signed by each Seller, and constitute against
each of them valid and enforceable obligations in accordance with their terms.
Mr. Laurent Boix-Vives personally guarantees and represents to the Parties and
other signatories that he has been duly authorized by the competent corporate
bodies of SDI, which he represents, to sign this Agreement.

(b)      No judicial, arbitration or administrative action, claim, proceeding or
inquiry of such a nature as to prevent the Sellers from signing the Agreement or
from executing their obligations under it is currently underway, and to the
Knowledge of the Sellers, no action, claim, proceeding or inquiry of such kind
risks being filed against any Seller. The signing of this Agreement, the
consummation of the Transfer of the Minority Holdings and the performance by the
Sellers of all their obligations under this Agreement (i) do not and shall not
conflict with or violate any statutory or regulatory provision nor any
administrative, judiciary or arbitration decision, (ii) do not and shall not
conflict with or violate, nor does it create any right to revoke or cancel, any
permits, approvals or authorizations necessary to the activities of the
Identified Subsidiaries, and (iii) do not and shall not conflict with or violate
any commitment or obligation of the Identified Subsidiaries, of any kind
whatsoever, nor will give any co-contractors of the Identified Subsidiaries any
right under the agreements entered into with them (including any change in the
due date of any obligation whatsoever, and any right of early termination or
specific performance).



ARTICLE 7 - MISCELLANEOUS PROVISIONS

7.1      FEES AND EXPENSES

Unless otherwise agreed, each of the Parties and Quiksilver shall bear the
expenses and fees incurred by them or on their behalf in relation to this
Agreement and the transactions contemplated herein, including advisory and
brokerage fees.

7.2      NOTIFICATIONS

(a)      Any notices or communications pursuant to this Agreement shall be made
by fax or registered mail with return receipt, or by an express courier service,
and be sent to the parties and addresses indicated below, or to any other
address or fax number indicated in writing, in the same fashion, by any of the
Parties to the others or to Quiksilver or by Quiksilver to any of the Parties:

         To the Purchaser or to Quiksilver:

Skis Rossignol SA
Lieu-dit "Le Menon",
38500 Voiron
Fax: +33.4.76.65.67.51
Attn.:


Quiksilver, Inc.
15202 Graham Street, Huntington Beach,
California (United States of America)
Fax: +1.714.889.4250
Attn.: Mr. Charlie Exon

With copy to:
Me Pierre Servan-Schreiber
Avocat a la Cour
Skadden, Arps, Slate, Meagher & Flom LLP
68, rue du Faubourg Saint-Honore
75008 Paris
Fax: +33.1.55.27.11.99

         To the Sellers:

Mr. Laurent Boix-Vives
1, Boulevard du Marechal Joffre
38000 Grenoble
Fax: +33.4.76.47.73.31
With copy to:

Me Jean-Philippe Delsol
Avocat a la Cour
Delsol et Associes
12, quai Andre Lassagne
69001 Lyon



Fax: +33.4.72.10.20.31

(b)      The date of receipt of the notice shall be deemed to be the date
when the fax or registered letter is received or the delivery date by express
courier, as attested by the relevant delivery form, provided that if such
receipt occurs on a day that is not a Business Day in the United States (for a
notification sent to Quiksilver) or in France (for a notification sent to the
Sellers or to the Purchaser), or outside normal business hours in the United
States or France, as the case may be, such correspondence will be deemed as
having been received on the date and time of opening of office hours immediately
after receipt of such correspondence. Any correspondence sent to the Sellers at
the above address or fax number will be deemed as having been received
simultaneously by each of the Sellers, with none of them entitled to any
recourse against Quiksilver or Rossignol for sending such correspondence solely
to the Sellers' Representative.

7.3      SELLERS' REPRESENTATIVE

(a)      The Sellers hereby appoint Mr. Laurent Boix-Vives (the "SELLERS'
REPRESENTATIVE") to receive any notice hereunder and thereunder, to take any
necessary measures in the name of and on behalf of the Sellers in connection
with the execution of this Agreement and the performance and completion of all
of the transactions contemplated herein and, if necessary, to amend this
Agreement and to waive all rights under this Agreement. The Purchaser and
Quiksilver may rely on any action undertaken by the Sellers' Representative on
behalf of the Sellers; they will not generate any correspondence or notices in
relation to this Agreement by a Seller other than the Sellers' Representative
(except as provided for in paragraph (b) below).

(b)      Representations made, agreements entered into, and actions
undertaken by the Sellers' Representative pursuant to this clause will have
binding fore against each of the Sellers, who will be jointly and severally
liable for any damage caused to the Purchaser or to Quiksilver for this reason,
and who shall assume responsibility for any gain or loss in this regard.

(c)      Should Mr. Laurent Boix-Vives be impeded from acting as Sellers'
Representative for any reason whatsoever, the Sellers hereby appoint Ms.
Jeannine Boix-Vives as the replacement for Sellers' Representative. The
appointment of Ms. Jeannine Boix-Vives as the Sellers' Representative shall
become effective as of the date on which the Purchaser is notified of such
appointment by Ms. Jeannine Boix-Vives in the manner set forth in Article 7.2.
Subsequently, should Ms. Jeannine Boix-Vives be impeded from acting for any
reason whatsoever, the Sellers hereby appoint SDI as the Sellers' Representative
(or, should SDI have been dissolved by that date, Ms. Christine Simon shall be
appointed -- and, if Ms. Christine Simon is impeded, Ms. Sylvie Bernard shall be
appointed). The appointment of SDI, of Ms. Christine Simon, or of Ms. Sylvie
Bernard as the Sellers' Representative shall become effective as of the date on
which the Purchaser is notified of such appointment by the legal representative
of SDI, by Ms. Christine Simon, or by Ms. Sylvie Bernard, as provided for in
Article 7.2 (provided that, if SDI should issue several contradictory notices in
such a context, only the first notice shall be valid).

7.4      TRANSFER

No Party may in any way whatsoever sale or transfer its rights and obligations
under this Agreement without the prior written consent (a) of the Sellers'
Representative and Quiksilver, for a transfer by the Purchaser, (b) of the
Purchaser and Quiksilver, for a transfer by any of the Sellers, or (b) of
Quiksilver, for a transfer by the Purchaser or by any of the Sellers.



7.5      SUCCESSORS AND BENEFICIARIES

Any and all rights and obligations pursuant to this Agreement actively and
passively bind the successors, heirs, beneficiaries, and legal representatives
of the Parties and Quiksilver, jointly and severally, with this Agreement
concluded in consideration of the person of the Sellers, and consequently the
rights conferred to the Sellers by this Agreement may not be subject to any
transfer of any kind whatsoever, except to the benefit of another Seller.

7.6      DIVISIBILITY

If any of the provisions of this Agreement is found to be null, illegal,
unenforceable, or incapable of being performed in any manner whatsoever
(hereinafter "DISPUTED PROVISIONS"):

(a)      the validity and enforceability of the other provisions shall not be
affected or compromised in any way; and

(b)      the Parties and Quiksilver will negotiate in good faith to replace
the Disputed Provisions by valid and enforceable provisions as close as possible
to the common intent of the Parties and Quiksilver or, if such common intent
cannot be determined, the intent of those Parties or of Quiksilver that the
Disputed Provision is aimed at protecting.

7.7      ENTIRETY OF THE AGREEMENT

This Agreement, together with the Acquisition Agreement, sets forth the entire
agreement of the Parties and Quiksilver with respect to the subject matters
hereof. It replaces and supersedes any prior agreement, written or oral, and any
exchange of letters or electronic mail between the Parties or between the
Parties and Quiksilver with respect hereto, with the exception of the
Acquisition Agreement.

7.8      CHANGES AND WAIVERS

(a)      This Agreement may only be modified by a written agreement duly
signed by the Purchaser, the Sellers' Representative, and Quiksilver.

(b)      A waiver by any of the Parties or by Quiksilver to the benefit of any
of the provisions of this Agreement may only be valid if made in writing, and it
shall be strictly interpreted.

(c)      No waiver of any one of the provisions of this Agreement shall
constitute a waiver of any other provision of this agreement other than the
waived provision.

7.9      APPLICABLE LAW - JURISDICTION

(a)      This Agreement and its interpretation are exclusively governed by
French law.

(b)      Any dispute arising in connection of this Agreement, including relative
to its validity, interpretation or performance, which cannot be resolved
amicably, shall fall under the exclusive jurisdiction of the courts within the
jurisdiction of the Paris Court of Appeals.



Signed in Lyon, on April 12, 2005, in six (6) originals.



- ---------------------------------
FOR SKIS ROSSIGNOL SA
by



- ---------------------------------
FOR SDI SOCIETE DE SERVICES ET
DEVELOPPEMENT
by Mr. Laurent Boix-Vives



- ---------------------------------
MR. LAURENT BOIX-VIVES



- ---------------------------------
MRS. JEANNINE BOIX-VIVES



- ---------------------------------
MRS. CHRISTINE SIMON



- ---------------------------------
MRS. SYLVIE BERNARD



- ---------------------------------
FOR QUIKSILVER, INC.
by Mr. Bernard Mariette

                                                                     Exhibit 2.6

                               PURCHASE AGREEMENT
                      OF THE RESIDUAL SKIS ROSSIGNOL SHARES




BETWEEN THE UNDERSIGNED:
- ------------------------

- - MR. LAURENT BOIX-VIVES,
Residing at 1, Boulevard du Marechal Joffre, Grenoble (38000), Born on August
30, 1926 in BRIDES LES BAINS (Savoy), Nationality, French,

                                                         PARTY OF THE FIRST PART

- - MS. JEANNINE BOIX-VIVES,
Residing at 1, Boulevard du Marechal Joffre, Grenoble (38000), Born on December
25, 1927 in MONTBONNOT SAINT MARTIN (Isere), Nationality, French,

                                                        PARTY OF THE SECOND PART

- - MS. SYLVIE BERNARD,
Residing at 1, Boulevard du Marechal Joffre, Grenoble (38000),
Born on January 23, 1964 in GRENOBLE (Isere),
Nationality, French,

                                                         PARTY OF THE THIRD PART

- - MS. CHRISTINE SIMON,
Residing at 1, Boulevard du Marechal Joffre, Grenoble (38000),
Born on January 23, 1964 in GRENOBLE (Isere),
Nationality, French,

                                                        PARTY OF THE FOURTH PART

- - SDI SOCIETE DE SERVICE ET DE DEVELOPPEMENT S.A., a Swiss societe anonyme
(corporation) with share capital of CHF 500,000, with its registered offices at
120 chemin de la Rueyre, 1020, Renens, Switzerland ("SDI"), represented by Mr.
Laurent Boix-Vives, acting as President (Chairman and CEO), duly authorized for
the present purposes,

                                                        PARTY OF THE FIFTH PART,

                           HEREINAFTER COLLECTIVELY REFERRED TO AS THE "SELLERS"
                           -----------------------------------------------------
                                                 AND INDIVIDUALLY AS A "SELLER".
                                                 -------------------------------

AND

- - SKI EXPANSION, a societe en commandite par actions with share capital of EUR
8,096,624, having its registered office at "Le Menon", Voiron (38500), France,
registered with the Registry of Commerce and Companies of Grenoble under number
070 501 374, represented by Mr. Laurent BOIX-VIVES, in his capacity as Manager,

                                     HEREINAFTER REFERRED TO AS THE "TRANSFEREE"
                                     -------------------------------------------





IN THE PRESENCE OF
- ------------------

- - QUIKSILVER, INC., a Delaware corporation, with its registered offices at 15202
Graham Street Huntington Beach, California, United States of America,
represented by Mr. Bernard Mariette, acting in the capacity of President,

                                        HEREINAFTER REFERRED TO AS "QUIKSILVER",


WHEREAS
- -------

The Sellers and Quiksilver have entered into, on the date of this Purchase
Agreement (the "PURCHASE Agreement"), an Acquisition Agreement (the "ACQUISITION
AGREEMENT"), which provides for the conditions for Quiksilver's purchase of the
control of the group consisting of Skis Rossignol SA and its subsidiaries, held
directly and indirectly by the Sellers.

Skis Rossignol is a societe anonyme with a share capital of EUR 49,792,256 eros,
with its registered offices Rue du Docteur Butterlin, at Voiron (38500),
registered with the Grenoble Registry of Commerce and Companies under number 056
502 958 (the "COMPANY").

In addition to Quiksilver's purchase of the control of the Transferee, a holding
company with 49.90% of the voting rights of Skis Rossignol SA, on the Second
Closing Date, the Acquisition Agreement provides for: (i) the transfer by the
Sellers to the Transferee of the shares of Skis Rossignol that are still held by
them, a transfer which will be followed by (ii) an capital increase of the
Transferee pursuant to the terms of the Acquisition Agreement, which will be
offset by the Transferee's debt resulting from the purchase price to be paid by
the Transferee to the Sellers pursuant to the sale described in (i) above, and
(iii) which will be followed by the Sellers' transfer to Quiksilver of a part of
the shares newly issued by the Transferee.

This Purchase Agreement sets forth the terms and conditions of the transaction
mentioned in paragraph (i) above, that is, the transfer by the Sellers to the
Transferee of the entirety of the shares of Skis Rossignol that are still held
by the Sellers following the Pre-Signing Transactions.

Terms in this Purchase Agreement, which begin with a capital letter, and have
not been defined herein, will have the meaning assigned to them in the
Acquisition Agreement.

NOW THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
- --------------------------------------------------

1 - TRANSFER

The Sellers commit themselves to transfer to the Transferee, who accepts, on the
Date of the Transfer of the Remaining Skis Rossignol Shares (as defined in the
Acquisition Agreement) the entire property of
SEVEN-HUNDRED-AND-FORTY-NINE-THOUSAND-NINE-HUNDRED-AND-FIFTY-EIGHT (749,958)
common shares which they hold and will hold, on the Date of the Transfer of the
Remaining Skis Rossignol Shares, in the Company's capital (collectively, the
"SHARES"), as follows:




                                                                                        
- - Mr. Laurent Boix-Vives, transfers to the Transferee.......................................248,162 Shares
- - Mrs. Jeannine Boix-Vives transfers to the Transferee......................................249,308 Shares
- - Mrs. Sylvie Bernard transfers to the Transferee............................................51,244 Shares
- - Mrs. Christine Simon transfers to the Transferee.......................................... 51,244 Shares
- - SDI transfers to the Transferee...........................................................150,000 Shares
 Total number of shares transferred ........................................................749,958 Shares








2 - TRANSFER OF PROPERTY

The transfer of property of the Shares will take effect on the Date of the
Transfer of the Remaining Skis Rossignol Shares. On such date, the Sellers will
deliver to Quiksilver (for the benefit of the Transferee) the transfer orders,
duly executed, ordering the transfer of the Shares, as well as the CERFA forms
No. 2759, duly completed and executed, in relation to the transfer of the
Shares.

The Sellers commit themselves vis-a-vis Quiksilver, to take charge of the
practical aspects of the transfer, including in compliance with the provisions
of article 516-2 of the General Regulation of the French Autorite des marches
financiers and market rules relating to block trades, in such a manner that it
will be effective on the Date of the Transfer of the Remaining Skis Rossignol
Shares, and that the transfer will be valid and enforceable against third
parties as of such date.

3 - PRICE

This sale is approved for a price of EUR 19 per share proposed in the Tender
Offer, that is, a total price of
FOURTEEN-MILLION-TWO-HUNDRED-AND-FORTY-NINE-THOUSAND-TWO-HUNDRED-AND-TWO EUROS
(EUR 14,249,202), that is:

- - for the transfer of 248,162 Shares owned by Mr. Laurent Boix-Vives,
FOUR-MILLION-SEVEN HUNDRED-AND-FIFTEEN-THOUSAND-AND-SEVENTY-EIGHT EUROS (EUR
4,715,078),

- - for the transfer of 249,308 Shares owned by Mrs. Jeannine Boix-Vives,
FOUR-MILLION-SEVEN-HUNDRED-AND-THIRTY-SIX-THOUSAND-EIGHT-HUNDRED-AND-FIFTY-TWO
EUROS (EUR 4,736,852),

- - for the transfer of 51,244 Shares solely owned by Mrs. Sylvie Bernard,
NINE-HUNDRED-AND-SEVENTY-THREE-THOUSAND-AND-SIX-HUNDRED-AND-THIRTY-SIX EUROS
(EUR 973,636),

- - for the transfer of 51,244 Shares solely owned by Mrs. Christine Simon,
NINE-HUNDRED-AND-SEVENTY-THREE-THOUSAND-AND-SIX-HUNDRED-AND-THIRTY-SIX EUROS
(EUR 973,636),

- - for the transfer of 150,000 Shares solely owned by SDI,
TWO-MILLION-EIGHT-HUNDRED-AND-FIFTY-THOUSAND EUROS (EUR 2,850,000),


These sums will be payable beginning on the Date of the Transfer of the
Remaining Skis Rossignol Shares, with the understanding that the Sellers agree
in advance to use the amounts for the purpose of paying in full, by way of
compensation, the Capital Increase, which the Transferee accepts in accordance
with the Acquisition Agreement.

4 - POSSESSION

Beginning on the Date of the Transfer of the Remaining Skis Rossignol Shares,
all dividends, payment on advance payment on dividends, or any other sum
deriving from the Shares and which are to be distributed, will be entirely and
exclusively due to the Transferee.

5 - REPRESENTATIONS OF THE PARTIES

5.1 - Representations and guarantees by the Sellers

Each of the Sellers represents and guarantees the following, jointly with all
the other Sellers, to the benefit of Quiksilver:

- - As of the date hereof and until the Date of the Transfer of the Remaining Skis
Rossignol Shares, the Sellers will hold together all the rights conferred by the
full ownership of the Shares, which are wholly released and free from all
privilege, security, charges or other restrictions, limitation, collateral
security, pledges or rights by any third parties whatsoever ("CHARGES"). As a
consequence, (i) on the Date of the Transfer of the Remaining Skis Rossignol
Shares, the Transferee will be the valid owner of the Shares, free of all
Charges, and (ii) on this same date, the shares will be validly assigned and
transferred to the Transferee who will become their owner, and this transfer
shall be enforceable against third parties.



- - Except for the Shares, the Sellers do not hold as of the date hereof, and will
not hold on the Date of the Transfer of the Remaining Skis Rossignol Shares, any
direct or indirect share in the capital of the Company, with the exception of
the legal rights resulting from the agreements entered into pursuant to the
Acquisition Agreement and its exhibits; nor will they retain directly or
indirectly, any legal rights over the Company or any of its subsidiaries, with
the exception of Roger Cleveland Golf Company, Inc.

- - The Sellers have the necessary powers to enter into this Purchase Agreement
and to perform their obligations to this effect. This Purchase Agreement and all
related documents have been or will be duly executed by each of the Sellers, and
constitute with respect to each of them, valid and enforceable obligations in
accordance with their terms. Mr. Laurent Boix-Vives represents and personally
guarantees to the Parties and to the other signatories, that he has been duly
authorized by the relevant corporate entities of SDI, which he represents, to
execute this Purchase Agreement.

- - The Sellers have obtained as of the date hereof, the consents, approvals,
authorizations or renunciations necessary for the executions, and for the
complete performance of their obligations pursuant to this Purchase Agreement.
As of the date hereof, no judicial, arbitrative or administrative proceeding,
claim, trial or investigation preventing the Sellers from executing the Purchase
Agreement or from performing their obligations pursuant thereto is pending or
threatened. The execution of this Purchase Agreement, the consummation of the
Transfer it contemplates, and the performance by the Sellers of their
obligations pursuant to this Purchase Agreement (i) do not and shall not
conflict with or violate the provisions of the bylaws of SDI, of the Company or
its affiliates, nor shall they require the consent of any corporate body of any
of these companies, (ii) do not and shall not conflict with or violate any
statutory or regulatory provisions or any other administrative, judicial or
arbitral decision, (iii) do not and shall not conflict with or violate, or
create any right to revocation or annulment of any of the permits, consents or
authorizations necessary for the activity of the Company or any of its
subsidiaries, and (iv) do not and shall not conflict with or violate any
commitment or any obligation of the Company or its subsidiaries whatsoever, nor
will they provide any person with any right pursuant to any agreement to which
the Company or any of its subsidiaries is a party (including any change in the
expiration of any obligation, and any right of early termination or specific
performance).

5.2 - Representations of the Transferee

The Transferee represents:

- -        that it has full capacity to enter into and be bound by this Purchase
         Agreement and its sequels, and, more particularly, that it is not the
         object of any liquidation procedure (procedure collective), nor in a
         condition of non-payment or insolvency (cessation de paiement or
         deconfiture);

- -        that the person drafting this Purchase Agreement is exempted from
         providing any further details regarding the Company's assets and
         liabilities.

6 - DECLARATIONS FOR REGISTRATION

The registration tax will be paid by the Transferee.

7 - FEES

Unless otherwise agreed, each of the Parties shall bear the expenses and fees
incurred by it or on its behalf in connection with this Purchase Agreement and
the transactions contemplated herein, including advisory and brokerage fees.

8 - MISCELLANEOUS PROVISIONS

8.1 - ACTION BY QUIKSILVER

The Parties recognize that the present Purchase Agreement is part of a
contractual framework which includes the Acquisition Agreement and whose purpose
is the transfer by the Sellers of the interest they hold directly in Skis
Rossignol, to a holding corporation controlled by Quiksilver as of the date of
this Purchase Agreement; consequently, the Parties agree that any failure by the
Sellers to perform their obligations pursuant to this Purchase Agreement could
be claimed directly by Quiksilver and result in Quiksilver's indemnification,
which the Company explicitly accepts.



8.2 - REFERENCE TO THE ACQUISITION AGREEMENT

Articles 8.2 to 8.6, 8.9 and 8.10 of the Acquisition Agreement will be applied
mutatis mutandis to the present Purchase Agreement.

Executed in Lyon, on April 12, 2005
In six (6) originals


LAURENT BOIX-VIVES                                   JEANNINE BOIX-VIVES



SYLVIE BERNARD                                        CHRISTINE SIMON



THE SDI COMPANY REPRESENTED                    THE QUIKSILVER, INC. CORPORATION,
BY LAURENT BOIX-VIVES,                         REPRESENTED BY BERNARD
PRESIDENT                                      MARIETTE, PRESIDENT




THE SKI EXPANSION SCA COMPANY, REPRESENTED
BY LAURENT BOIX-VIVES, MANAGER



                                                                     Exhibit 2.7

                        --------------------------------
                                 ROGER CLEVELAND

                             SHAREHOLDERS' AGREEMENT
                        --------------------------------


BETWEEN THE UNDERSIGNED:

MR. LAURENT BOIX-VIVES, born on August 30, 1926 in Brides les Bains (73570),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. JEANNINE BOIX-VIVES, born on December 25, 1927 in Montbonnot (38330),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. CHRISTINE SIMON, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble, France,

MS. SYLVIE BERNARD, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble, France,

SDI SOCIETE DE SERVICE ET DEVELOPPEMENT, a Swiss societe anonyme (corporation)
with share capital of CHF 500,000, with registered offices at 120 chemin de la
Rueyre, 1020, Renens, Switzerland ("SDI"), represented by Mr. Laurent
Boix-Vives, acting as President (Chairman and CEO),

acting jointly for the purposes of this Agreement,

                     (hereinafter referred to collectively as the "FAMILY GROUP"
                                     and each as a "MEMBER OF THE FAMILY GROUP")

                                                                    PARTY OF THE
                                                                     FIRST PART,

AND

QUIKSILVER, INC., a Delaware corporation, with its registered offices at 15202
Graham Street Huntington Beach, California, United States of America,
represented by Mr. Bernard Mariette, acting in the capacity of President,

                                      (hereinafter referred to as "QUIKSILVER"),

ROSSIGNOL SKI COMPANY, INC., a Delaware corporation, with its registered offices
at 306 South State Street, Dover, County of Kent, Delaware, represented by Mr.
Laurent Boix-Vives, duly authorized for the purposes of this Agreement,

                           (hereinafter referred to as "ROSSIGNOL SKI COMPANY"),



SKIS ROSSIGNOL SA, a societe anonyme (corporation) with share capital of EUR
49,792,256, with registered offices located at the place called "Le Menon",
Voiron (38500), France, registered with the Registry of Commerce and Companies
of Grenoble under number 056 502 958 and the shares of which are listed on
Eurolist of Euronext Paris under Euroclear France code 12041, represented by one
or the other of Ms. Sylvie Bernard and Ms. Christine Simon, duly authorized for
the purposes of this Agreement,

                                   (hereinafter referred to as "SKIS ROSSIGNOL",
                                      and together with Quiksilver and Rossignol
                                    Ski Company, the "QUIKSILVER SHAREHOLDERS"),

                                                       PARTY OF THE SECOND PART,

(the Quiksilver Shareholders and the Family Group are hereinafter referred to
collectively as the "SHAREHOLDERS")


IN THE PRESENCE OF:

ROGER CLEVELAND GOLF COMPANY, INC., a California corporation, represented by Mr.
Laurent Boix-Vives, duly authorized for the purposes of this Agreement,

                                     (hereinafter referred to as the "COMPANY"),

(each of the Members of the Family Group, Skis Rossignol, Quiksilver, Rossignol
Ski Company and the Company being hereinafter referred to individually as a
"PARTY" and collectively as the "PARTIES").


WHEREAS:


A.       The Company's capital is made up of 290,224 common shares, of which
         105,536 shares, or 36.37% of the share capital, are held by the Family
         Group (the "FAMILY GROUP SHARES"), 32,980 shares, or 11.36% of the
         share capital, are held by Skis Rossignol and 151,708 shares, or 52.27%
         of the share capital, are held by Rossignol Ski Company, an indirect
         100% subsidiary of Skis Rossignol (the shares held by Skis Rossignol
         and Rossignol Ski Company being hereinafter referred to as the
         "QUIKSILVER SHAREHOLDER SHARES").


B.       Pursuant to an acquisition agreement dated as of the date of this
         Agreement (the "ACQUISITION AGREEMENT"), Quiksilver and the Family
         Group have agreed that the Family Group transfer its direct and
         indirect holdings in Skis Rossignol to Quiksilver.

                                       2



C.       As a result of the re-formation of the management bodies of Skis
         Rossignol pursuant to Article 5.2 of the Acquisition Agreement (the
         "EFFECTIVE DATE",) Quiksilver shall have indirectly acquired control of
         the Company.


D.       The Family Group intends to remain a minority shareholder in the
         Company until either of the parties exercises the call and put options
         granted under this Agreement, or until such time as either of the
         parties ceases to be a shareholder in the Company as a result of the
         exercise of the rights of first refusal and the tag along rights
         pursuant to this Agreement.


E.       The Quiksilver Shareholders and the Family Group therefore wish to
         agree on certain rules relating to the Company's administration, and to
         create between them certain rights and obligations regarding the
         assignment of their securities in the Company, according to the terms
         defined in this Agreement.


NOW THEREFORE, THE FOLLOWING HAS BEEN AGREED:

ARTICLE 1 - DEFINITIONS

"AGREEMENT" means this Shareholders' Agreement.

"APPRAISAL PROCEDURE" has the meaning given to it under Article 5.8.

"BUSINESS DAY" means, with respect to France or the United States, any day other
than a Saturday, a Sunday or a day on which commercial banks or regulated
markets are closed for business during the entire day in Paris or New York,
respectively, it being specified that references herein to a "Business Day"
without reference to France or the United States shall be references to days
which are both French Business Days and US Business Days.

"CALL OPTION" has the meaning given to it under Article 5.7.

"CALL OPTION EVENT" has the meaning given to it under Article 5.7(b).

"CALL OPTION EXERCISE DATE" has the meaning given to it under Article 5.7(b).

"COMPANY" has the meaning given to it in the Preamble.

"DISPUTED PROVISIONS" has the meaning given to it under Article 7.8.

"DISPUTED VALUE" has the meaning given to it under Article 5.8(b).

"EFFECTIVE DATE" has the meaning given to it in the Preamble.

"EXERCISE PERIOD" has the meaning given to it in the Article 5.3(c).

                                       3


"EXPERT" has the meaning given to it under Article 5.8(d).

"EXPIRATION DATE" has the meaning given to it under Article 2.2.

"FAMILY GROUP SHARES" has the meaning given to it in the Preamble, for which
greater details are provided under Article 5.7.

"FAMILY GROUP'S RIGHT OF FIRST REFUSAL" has the meaning given to it under
Article 5.4.

"FAMILY GROUP'S REPRESENTATIVE" has the meaning given to it under Article 7.5.

"INTERIM PERIOD" has the meaning given to it under Article 3.1.

"KNOWLEDGE OF THE FAMILY GROUP" means, with respect to any fact or event, the
knowledge of such fact or event by any of the Members of the Family Group.

"LIEN" means any encumbrance, charge, lien, security interest or other
restriction, limitation or third party right whatsoever.

"NOTICE OF CALL" has the meaning given to it under Article 5.7(d).

"NOTICE OF DISAGREEMENT" has the meaning given to it under Article 5.9(b).

"NOTICE OF FAMILY GROUP RFR" has the meaning given to it under Article 5.4(d).

"NOTICE OF FAMILY GROUP TRANSFER" has the meaning given to it under Article
5.3(c).

"NOTICE OF PUT" has the meaning given to it under Article 5.6(d).

"NOTICE OF QUIKSILVER RFR" has the meaning given to it under Article 5.3(d).

"NOTICE OF QUIKSILVER TRANSFER" has the meaning given to it under Article
5.4(c).

"NOTICE OF TAG-ALONG" has the meaning given to it under Article 5.5(d).

"OPTION EXERCISE PRICE" means, with respect to a transfer of Family Group Shares
pursuant to Articles 5.6 or 5.7, (i) if the Company's capital is composed
exclusively of common shares giving their holders the same rights, both in terms
of voting rights and in terms of financial rights, a price equal to the
proportion represented by the shares transferred in the total number of shares
issued by the Company, multiplied by the Company's Valuation, and (ii) if the
Company has issued different categories of equity securities, giving their
holders different rights, a price corresponding to the Parties' good faith
estimate of the proportion represented by the shares transferred in the total
value of the equity securities issued by the Company (which proportion may, in
the event of a disagreement, be appraised pursuant to the Appraisal Procedure),
multiplied by the Company's Valuation ; provided that the "COMPANY'S VALUATION"
shall mean the product of the Company's Average Profit, times Quiksilver's PER,
where (i) the "COMPANY'S AVERAGE PROFIT" means the weighted average of Roger
Cleveland's profits before non-

                                       4


recurrent items in the three years preceding the Notice of Put or the Notice of
Call, as the case may be (the "NOTICE DATE"), adjusted for fiscal years that are
not twelve months periods, and applying a multiple of 1 for the most remote
year, 2 for the second year and 3 for the most recent fiscal year before the
Notice Date, provided that if the Notice Date and the date set out for payment
of the price should occur before the approval of the accounts of the most recent
fiscal year, payment of the price shall not be made, by exception to the
provisions of Articles 5.6 or 5.7, until the accounts for such year are
approved, and (ii) "QUIKSILVER'S PER" means the ratio equal to (x) the average
weighted by volumes of the daily weighted average of Quiksilver's stock price on
the New York Stock Exchange during the 60 trading days preceding the Notice
Date, divided by (y) Quiksilver's consolidated net earnings per share before
non-recurrent items, on an non-diluted basis, for the fiscal year preceding the
Notice Date, provided that Quicksilver's' PER may not be lower than 15X or
higher than 17X. Quiksilver shall provide the Family Group with the financial
statements used as a basis for determining the Company's Average Profit pursuant
to this paragraph.

"PILOT EXPANSION" means Pilot Expansion, a societe a responsabilite limitee
(limited liability company) with capital of EUR 16,000, with registered offices
at the place called "Le Menon", Voiron (38500), France, registered with the
Registry of Commerce and Companies of Grenoble under number 431 779 156.

"PLEDGE OF FAMILY GROUP SHARES" has the meaning given to it under Article 7.2.

"PLEDGE OF QUIKSILVER SHAREHOLDER SHARES" has the meaning given to it under
Article 7.2.

"PLEDGES" has the meaning given to it under Article 7.2.

"PREAMBLE" means (i) the introductory paragraphs A, B, C, D and E of this
Agreement and (ii) the designation of the Parties set forth at the top of this
Agreement.

"PUT OPTION" has the meaning given to it under Article 5.6.

"PUT OPTION EVENT" has the meaning given to it under Article 5.6(b).

"PUT OPTION EXERCISE DATE" has the meaning given to it under Article 5.6(b).

"QUIKSILVER SHAREHOLDER SHARES" has the meaning given to it in the Preamble.

"QUIKSILVER SHAREHOLDERS" has the meaning given to it in the Preamble.

"QUIKSILVER'S RIGHT OF FIRST REFUSAL" has the meaning given to it under Article
5.3.

"ROGER CLEVELAND US" has the meaning given to it in the Preamble.

"ROSSIGNOL SKI COMPANY" has the meaning given to it in the Preamble.

"SKIS ROSSIGNOL" has the meaning given to it in the Preamble.

                                       5


"SUBSIDIARY" means, with regard to any legal person, any person or entity
controlled by that legal person according to the meaning provided by Article L.
233-3 of the French Commercial Code, including any joint-venture company
(societe en participation), economic interest groupings (groupements d'interet
economiques) or partnership of which that legal person is a member, provided
that Article L. 233-3 of the French Commercial Code shall be interpreted to
include, mutatis mutandis, entities that are not commercial companies (for
example, non-commercial entities, economic interest groupings or associations).

"TAG-ALONG RIGHT" has the meaning given to it under Article 5.5.

"THIRD-PARTY TRANSFEREE" has the meaning given to it under Article 5.3(c).

"TRANSFER" means any transaction involving a transfer of ownership, including,
without limitation, (i) sales and transfers (with or without consideration,
inter vivos or mortis causa), including any transfer by means of an adjudication
or by virtue of a judgment, (ii) transfers for the payment of goods or services
(dation en paiement), or by means of an exchange, partition, division, loan
(including specifically any loan of securities), sale with right of repurchase
(vente a remere), contribution, business contribution, liquidation, merger or
demerger, spin-off, split-off or any combination of these transactions, (iii)
transfers concerning ownership, usufruct or any other subdivision of ownership
rights or any other right concerning the object of the transfer (and including,
where applicable, any voting right or the right to receive dividends), and to
"TRANSFER" means the right to proceed with any of the foregoing transactions, or
to undertake to proceed with such a transaction.

"TRANSFER OF THE SHARES OF PILOT EXPANSION" means the sale by the Family Group
to Quiksilver of all of the shares in Pilot Expansion, pursuant to the
Acquisition Agreement.


ARTICLE 2 - TERM

2.1      With the exception of the provisions of Article 3 hereinafter, which
shall take effect immediately as of the date of this Agreement (but shall
expire, if applicable, on the date on which the Transfer of the Shares of Pilot
Expansion is cancelled (resolu)), this Agreement shall become effective as of
the Effective Date.

2.2      With the exception of rights and obligations that this Agreement
expressly states shall continue in effect after the Expiration Date, the
Parties' obligations shall terminate (i) on the date that the Family Group
Shares are transferred pursuant to the Call Option, the Put Option, Quiksilver's
Right of First Refusal or Quiksilver's Tag-Along Right, or on the date of
transfer of the entirety of Quiksilver Shareholder Shares pursuant to the Family
Group's Right of First Refusal, or (ii) on the date of Transfer by the Family
Group of the Family Group Shares to a Third-Party Transferee in the event that
the Quiksilver Shareholders do not exercise Quiksilver's Right of First Refusal,
or on the date of Transfer of the Quiksilver Shareholder Shares to a Third-Party
Transferee in the event that the Family Group does not exercise the Family
Group's Right of First Refusal, or (iii)

                                       6


         on any other date on which the Members of the Family Group, for any
         reason whatsoever, cease to hold the Family Group Shares, or (iv) if
         applicable, upon a cancellation of the Transfer of the Shares of Pilot
         Expansion, or (v) upon expiration of the Company (the "EXPIRATION
         DATE").

ARTICLE 3 - MANAGEMENT BEFORE EFFECTIVE DATE

3.1      The Family Group shall procure, from the date of this Agreement until
the Effective Date (the "INTERIM PERIOD"), that the Company be managed prudently
(en bon pere de famille), carry out activities in the ordinary course of
business and in compliance with past practice, and perform only those everyday
operations falling within their normal scope of activities.

(a)      Without prejudice to the foregoing, the Family Group shall procure that
the Company neither resolve to nor carry out, during the Interim Period, unless
Quiksilver so agrees, (i) any distribution of profits or reserves, any
amortization or redemption of its capital, any purchase of its own limited or
unlimited shares, or any other distribution to their limited or unlimited
partners; (ii) any merger, contribution, demerger, spin-off, split-off or other
transaction affecting the Company's stock or equity, any issuance of securities
or equity, or any allocation of options to subscribe for or purchase stock;
(iii) any change to its bylaws; (iv) any application for or any early repayment
of a loan or any other type of financial obligation with a total value greater
than or equal to fifty thousand Euros (Euro 50,000); (v) any significant
acquisition or sale of assets; (vi) any acquisition or sale of a significant
equity interest (titres de participation), or the creation or dissolution of any
subsidiary or branch; (vii) any increase in the remuneration packages of its
senior executives, or the replacement of any senior executive; (viii) any
material change to its contractual or business practices; (ix) any termination
of or entry into a significant agreement, including any agreement which term
exceeds three years, any agreement containing an exclusivity or non-competition
clause, and any agreement reasonably likely to involve (through a single
agreement or through a series of related agreements) payment to or by the
Company of an amount greater than fifty thousand Euros (Euro 50,000); (x) the
granting of any loan, advance, security, pledge, or guarantee, or the creation
of any Lien, other than loans and advances made by the Company in favor of its
Subsidiaries in the normal course of business.

3.3      The Family Group shall ensure that the Company consult with Quiksilver,
during the Interim Period, prior to making any significant decision concerning
the Company (other than the transfer of shares pursuant to Article 5.1(d)).

3.4      The Family Group shall not Transfer any of the Company's shares during
the Interim Period. It shall procure that Ski Rossignol do not Transfer any of
the Company's shares during that same period.

ARTICLE 4 - REPRESENTATIONS AND WARRANTIES

4.1      REPRESENTATIONS AND WARRANTIES OF THE FAMILY GROUP

                                       7


The Members of the Family Group represent and warrant the following to
Quiksilver, on the date of this Agreement and on the Effective Date:

(a)      the Members of the Family Group together hold all of the rights
conferring full ownership (pleine propriete) over the Family Group Shares, and
Rossignol Ski Company holds all of the rights conferring full ownership (pleine
propriete) over the Quiksilver Shareholder Shares, free of any Liens.

(b)      With the exception of the Family Group Shares and the Quiksilver
Shareholder Shares, the Company has not issued any shares or securities or other
rights representing, or giving access to the capital or voting rights of the
Company and there are no agreements or commitments which contemplate the grant
or the issue of such securities or rights.

(c)      The Members of the Family Group have all requisite power to enter into
this Agreement and carry out their obligations hereunder. This Agreement, the
Pledges and all documents related hereto and thereto have been or will be duly
signed by each of the Members of the Family Group and they constitute valid and
enforceable obligations of each of them (or their successors and assigns
pursuant to Article 5.2 of this Agreement) in accordance with their terms, such
that (i) Rossignol Ski Company (or a company designated by Quiksilver for the
purposes of the Put Option or the Call Option pursuant to Articles 5.6 and 5.7
of this Agreement) shall, on the transfer date set out for the completion of the
Put Option or the Call Option, be the valid owner of the Family Group Shares,
free of any Liens, and (ii) the Family Group Shares shall on that same date be
validly transferred to Rossignol Ski Company (or to any company designated by
Quiksilver) which will become the owner of them, and this transfer shall be
enforceable against third parties. Mr. Laurent Boix-Vives represents and
warrants personally to the Parties that he has been duly authorized by the
competent company bodies of SDI, which he represents, for the purposes of
signing this Agreement.

(b)      The Members of the Family Group have obtained all consents and all
approvals, authorizations and waivers necessary to sign and fully perform their
obligations under this Agreement. No legal, arbitral or administrative action,
claim, lawsuit, or investigation likely to prevent the Members of the Family
Group from signing this Agreement or performing their obligations hereunder is
currently pending, and to the Knowledge of the Members of the Family Group, no
such action, claim, lawsuit or investigation is likely to be brought against any
Member of the Family Group. The signature of this Agreement and the performance
by the Members of the Family Group of their obligations hereunder (i) do not
conflict with or violate any of the bylaws of SDI, the Company or Rossignol Ski
Company; (ii) do not conflict with or violate any legal or regulatory provision
or any administrative, legal or arbitral decision; (iii) do not conflict with or
violate, or create any rescission, termination or cancellation right under, any
permits, approvals or authorizations which are required for business purposes of
the Company or Rossignol Ski Company; and (iv) do not conflict with or violate,
or entitle a third party to any rights (including any acceleration or early
termination rights) under, any of the contracts entered into by the Company or
Rossignol Ski Company.

                                       8


(c)      There is no clause or provision which may prevent Skis Rossignol or
         Rossignol Ski Company from fully enjoying the rights conferred on them
         in their capacity as owners of the Quiksilver Shareholder Shares,
         whether in the Company's bylaws, or in any contract or agreement
         entered into by the Company, or under any obligation by which the
         Company is bound.

4.2      REPRESENTATIONS AND WARRANTIES OF QUIKSILVER

Quiksilver represents and warrants the following to the Members of the Family
Group, on the date of this Agreement and on the Effective Date:

(a)      Quiksilver has all requisite power to enter into this Agreement and
         carry out its obligations hereunder. This Agreement, the Pledges and
         all documents relating hereto and thereto have been or shall be duly
         signed by Quiksilver, and they constitute valid and enforceable
         obligations of Quiksilver in accordance with their terms, such that the
         Put Option effectively entails, on the part of Quiksilver, an
         obligation to buy (or to procure the purchase by an entity designated
         by it for the purposes of the Put Option or the Call Option pursuant to
         Articles 5.6 and 5.7) the Family Group Shares from the Family Group
         pursuant to this Agreement. Mr. Bernard Mariette represents and
         warrants personally to the Parties that he has been duly authorized by
         the competent company bodies of Quiksilver, which he represents, for
         the purposes of signing this Agreement.

(b)      Quiksilver has obtained all consents and all approvals, authorizations
         and waivers necessary to sign and fully perform its obligations under
         this Agreement. No legal, arbitral or administrative action, claim,
         lawsuit, or investigation likely to prevent Quiksilver from signing the
         Agreement or performing its obligations hereunder is currently pending,
         and to the Knowledge of Quiksilver, no action, claim, lawsuit or
         investigation of this nature is likely to be brought against
         Quiksilver. The signature of this Agreement and the performance by
         Quiksilver of its obligations under this Agreement (i) do not conflict
         with or violate any of the bylaws of Quiksilver; (ii) do not conflict
         with or violate any legal or regulatory provision or any
         administrative, legal or arbitral decision; (iii) do not conflict with
         or violate, or create any rescission, termination or cancellation right
         under, any permits, approvals or authorizations which are required for
         business purposes of Quiksilver; and (iv) do not conflict with or
         violate, or entitle a third party to any rights (including any
         acceleration or early termination rights) under, any of the contracts
         entered into by Quiksilver.

ARTICLE 5 - RESTRICTIONS ON THE TRANSFER OF SHARES

5.1      PRINCIPLE

(a)      The Family Group Shares and the Quiksilver Shareholder Shares may only
         be Transferred pursuant to Articles 5.2 to 5.7 hereinafter. Any
         Transfer made according to a different procedure shall be null and
         void, and shall be treated as such by the Company.

(b)      The Parties agree, upon receipt of notice of a Transfer or a proposed
         Transfer of Family Group Shares or Quiksilver Shareholder Shares in
         accordance with this Agreement, to take the measures necessary to
         release the Pledges, to the extent that such

                                       9


         a release is necessary for the purposes of the consummation of the
         proposed Transfer. In the event of a transfer to a Third-Party
         Transferee, the costs, fees and expenses associated with the release of
         the Pledges shall be entirely borne by the Transferor, jointly with the
         Transferee and (if the Transferor is a member of the Family Group) the
         other Members of the Family Group. In the event of a Transfer to one of
         the Members of the Family Group or to Quiksilver, these costs, fees and
         expenses shall be borne by the Transferee.

(c)      The Members of the Family Group undertake not to make any conveyance
         inter vivos of the Family Group Shares free of charge (transmission a
         titre gratuit), nor to bequest any of said Family Group Shares, except
         to other Members of the Family Group in accordance with Article 5.2.

(d)      The Shareholders agree that in order to involve Mr. Gregory Hopkins,
         currently the President and Chief Operating Officer of the Company, in
         the growth of the Company's earnings, the Family Group shall transfer
         to Mr. Hopkins a number of common shares in the Company corresponding
         to one percent (1%) of the Company's capital and voting rights, and
         Quiksilver shall transfer to Mr. Hopkins a number of common shares in
         the Company corresponding to two percent (2%) of the Company's capital
         and voting rights, at a price equal to 99.17 euros per share or the
         equivalent in US dollars, as calculated on the date of purchase of such
         shares by Mr. Hopkins (or, alternatively, the Company shall carry out a
         capital increase on the basis of the same valuation, allowing Mr.
         Hopkins to acquire 3% of the Company's share capital), provided that
         Mr. Hopkins shall enter into an agreement with Quiksilver, whereby (i)
         Quiksilver shall grant Mr. Hopkins an option to sell all of the shares
         so transferred to Quiksilver, to be exercised at the price and on the
         dates set out in Article 5.6, (ii) Mr. Hopkins shall grant Quiksilver
         an option to purchase all of his shares in the Company, to be exercised
         at the price and on the dates set out in Article 5.7, and (iii)
         Quiksilver shall have a right of first refusal with respect to the
         Company Shares held by Mr. Hopkins, on terms and conditions equivalent
         to those set out in Article 5.3.

5.2      TRANSFERS TO AFFILIATES

(a)      Each of the Members of the Family Group may Transfer the Family Group
         Shares to any other Member of the Family Group and to any company whose
         capital and voting rights are 100% held by Members of the Family Group,
         directly or indirectly, provided that (i) Quiksilver shall have been
         notified of the terms of the Transfer (nature of the Transfer, price of
         the Transfer (if it is a sale), identity of the Transferee and, where
         applicable, all documents establishing that 100% of the Transferee's
         capital and voting rights are held by the Family Group) at least eight
         (8) days before the proposed Transfer date, (ii) the Transferee shall
         have agreed in writing to be bound by, and comply with all of the
         obligations of the Members of the Family Group under this Agreement,
         provided that the Family Group shall be jointly liable in the event of
         a breach of such obligations by the Transferee, and (iii) the
         Transferee, if a legal person, shall remain (and the Family Group shall
         procure that the Transferee remain) 100% held by the Family Group, and
         shall not be Transferred to any third party (other than a director
         receiving qualifying shares in connection with his appointment as a
         director). The Members of the Family Group agree, at any time at
         Quiksilver's request, to provide evidence that the Transferees

                                       10


         which are legal entities and SDI are 100% held by natural persons who
         are Members of the Family Group or by legal persons which are
         themselves 100% held by the natural persons who are Members of the
         Family Group, directly or indirectly (not taking into account
         qualifying shares transferred to a third party in order for such party
         to exercise his duties as a director).

(b)      Rossignol Ski Company and Skis Rossignol may Transfer the Quiksilver
         Shareholder Shares to any company whose capital and voting rights are
         100% held by Quiksilver or Rossignol Ski Company, directly or
         indirectly, provided that (i) the Family Group shall have been notified
         of the terms of the Transfer (nature of the transfer, price of the
         transfer (if it is a sale), identity of the Transferee and, where
         applicable, all documents establishing that 100% of the Transferee's
         capital and voting rights are held by Quiksilver) at least eight (8)
         days before the planned Transfer date, (ii) the Transferee shall have
         agreed in writing to be bound by, and comply with all obligations of
         Quiksilver under this Agreement, provided that Quiksilver shall be
         jointly liable in the event of a breach of such obligations by the
         Transferee, and (iii) the Transferee, if a legal person, shall remain
         (and Quiksilver shall procure that the Transferee remain) 100% held by
         Quiksilver or Skis Rossignol, directly or indirectly, and shall not be
         Transferred to any third party (other than a director receiving
         qualifying shares in connection with his appointment as a director).
         The Quiksilver Shareholders agree, at any time at the request of the
         Family Group's Representative, to provide evidence that the Transferees
         which are legal entities are 100% held by the Quiksilver Shareholders
         or by one or several companies which are themselves 100% held by the
         Quiksilver Shareholders, directly or indirectly (not taking into
         account qualifying shares transferred to a third party in order for
         such party to exercise his duties as a director).

(c)      If the Transferee of shares transmitted pursuant to paragraph (a) or
         paragraph (b) hereinabove should cease to be, directly or indirectly,
         100% held by the Family Group or by the Quiksilver Shareholders,
         whichever is applicable, in violation of the provisions of this
         Article, the Transfer of Company Shares made to the Transferee shall be
         fully and finally cancelled and rescinded (resolu), and the Transferee
         shall have no further claims or rights against the Company or any other
         Party, arising from this Agreement or the ownership of Company Shares.

(d)      The Family Group Shares and the Quiksilver Shareholder Shares which are
         Transferred pursuant to this Article 5.2 (including qualifying shares
         transferred to a third-party in order for such third-party to exercise
         his duties as a director) shall remain "Family Group Shares" and
         "Quiksilver Shareholder Shares" for the purposes of this Agreement,
         even though they shall no longer be directly held by the original
         signatories of this Agreement. References herein to the "Family Group"
         and the "Quiksilver Shareholders" shall be references not only to the
         relevant Shareholders, but also to their respective Transferees
         pursuant to this Article 5.2, jointly and severally with the relevant
         Shareholders.

5.3      QUIKSILVER'S RIGHT OF FIRST REFUSAL

                                       11


(a)      From the First Closing Date until the expiry of a period of four (4)
         years and six (6) months thereafter, Members of the Family Group shall
         not Transfer any Family Group Shares to any Third-Party Transferee,
         other than pursuant to Article 5.2(a) and Article 5.1(d) hereinabove.

(b)      From the end of such four (4) years and six (6) months period and until
         the seventh anniversary of this Agreement, any Transfer of Family Group
         Shares other than Transfers pursuant to Article 5.2(a), (i) shall only
         consist of Transfers of all, and not less than all, of Family Group
         Shares together with all rights attached thereto, free of any Liens,
         and (ii) shall give Rossignol Ski Company, or any other person
         designated by Quiksilver, a right of first refusal with respect to all
         of the Family Group Shares (and not some only) pursuant to this Article
         5.3 ("QUIKSILVER'S RIGHT OF FIRST REFUSAL").

(c)      Prior to any Transfer of Family Group Shares to any third party (the
         "THIRD-PARTY TRANSFEREE"), except for Transfers authorized under
         Article 5.2(a) above, the Transferor shall send a notice to Quiksilver
         (the "NOTICE OF FAMILY GROUP TRANSFER"), in accordance with Article 7.4
         of this Agreement, indicating (i) the identity of the proposed
         Third-Party Transferee(s), (ii) if the proposed Third-Party Transferee
         is a legal person, the name(s) of the person(s) controlling it
         (directly and indirectly) within the meaning of Article L. 233-3 of the
         French Commercial Code, (iii) the nature of the proposed Transfer (e.g.
         sale, donation, contribution, merger, etc.), (iv) the price payable,
         directly or indirectly, to the Family Group in consideration for the
         Family Group Shares (together with the terms and conditions for
         payment) or, if the consideration is in a form other than cash, an
         estimate of the fair market value in euro of such non-cash
         consideration, established by an Expert, and (v) all other material
         terms and conditions of the proposed Transfer, and including (vi) the
         irrevocable written agreement of the proposed Third-Party Transferee to
         comply with this Agreement if the proposed Transfer is consummated,
         including the following statement: "The undersigned certifies that he
         is in bonis and has, in good faith, on his own behalf and without the
         intent to resell the shares to any third party, made an offer to
         purchase the shares of Roger Cleveland Golf Company, Inc. held by the
         Boix-Vives family group. He represents that he has read the provisions
         of the shareholders' agreement between the Boix-Vives family group and
         Quiksilver, including those relating the call option with respect to
         such shares, and understands and agrees that he shall be bound by such
         provisions in accordance with their terms."

(d)      The Notice of Family Group Transfer shall constitute an offer made by
         the Family Group to Rossignol Ski Company and Quiksilver to purchase
         all of the Family Group Shares. This offer may be accepted by
         Quiksilver, by means of a "NOTICE OF QUIKSILVER RFR" issued in
         accordance with Article 7.4, at any time during a period of thirty (30)
         days from the date of the Notice of Family Group Transfer (the
         "EXERCISE Period"). The Family Group shall have a period of fifteen
         (15) days from receipt of a Notice of Quiksilver RFR within which to
         renounce its proposed Transfer, in which case no Transfer of the Family
         Group Shares shall take place, neither in favor of the proposed
         Transferee, nor in favor of the Quiksilver Shareholders pursuant t to
         their right of first refusal.

                                       12


(e)      If Quiksilver accepts the offer made in accordance with the foregoing
paragraph and the Family Group does not renounce the proposed transfer,
Quiksilver (or any other person designated by Quiksilver in its Notice of
Quiksilver RFR) shall acquire from the Family Group, who shall sell, all of the
Family Group Shares, under the terms and conditions set out in the Notice of
Family Group Transfer, at a price in cash equal to: (i) if the planned Transfer
is a sale in which the price is paid exclusively in cash, the price agreed upon
by the Transferor and the Third-Party Transferee, as indicated in the Notice of
Family Group Transfer; (ii) if the Transfer is a transfer in which the
consideration does not entirely consist of cash (including in the event that the
planned Transfer is an exchange, a contribution, a merger or a division, or any
combination of these operations), the fair market value indicated by the
Transferor in the Notice of Family Group Transfer; or (iii) in the event that
Quiksilver disagrees on the calculation of such fair market value (such
disagreement to be set forth in the Notice of Quiksilver RFR), an amount
determined in accordance with the Appraisal Procedure.

(f)      In the absence of a Notice of Quiksilver RFR, the Family Group may
Transfer the Family Group Shares to the Transferee, provided that said Transfer
shall be performed solely in accordance with the provisions of this Agreement,
and in strict compliance with the terms of the Notice of Family Group Transfer.
The Transfer shall be signed within forty-five (45) days from the expiration of
the Exercise Period (even if it is consummated on a later date pursuant to the
terms set out in the Notice of Family Group Transfer).

5.4      NON-TRANSFERABILITY, FAMILY GROUP'S RIGHT OF FIRST REFUSAL

(a)      From the First Closing Date until the expiry of a period of four (4)
years and six (6) months thereafter, Skis Rossignol and Rossignol Ski Company
shall not Transfer any Family Group Shares to any Third-Party Transferee, other
than pursuant to Article 5.2(b) and Article 5.1(d) hereinabove.

(b)      From the end of such four (4) years and six (6) months period and until
the seventh anniversary of this Agreement, any Transfer of Family Group Shares
other than Transfers pursuant to Article 5.2(a) shall give the Family Group a
right of first refusal ("FAMILY GROUP'S RIGHT OF FIRST REFUSAL").

(c)      Prior to any Transfer of Quiksilver Shareholder Shares to a Third-Party
Transferee which gives right to a Family Group's Right of First Refusal,
Quiksilver shall send a notice to Quiksilver (the "NOTICE OF QUIKSILVER
TRANSFER"), in accordance with Article 7.4 of this Agreement, indicating (i) the
identity of the proposed Third-Party Transferee(s), (ii) if the proposed
Third-Party Transferee is a legal person, the name(s) of the person(s)
controlling it (directly and indirectly) within the meaning of Article L. 233-3
of the French Commercial Code, (iii) the nature of the proposed Transfer (e.g.
sale, donation, contribution, merger, etc.), (iv) the price payable, directly or
indirectly, to the Quiksilver Shareholders in consideration for the Quiksilver
Shareholder Shares (together with the terms and conditions for payment) or, if
the consideration is in a form other than cash, an estimate of the fair market
value in euro of such non-cash consideration, established by an Expert, and (v)
all other material terms and conditions of the proposed Transfer, and including
(vi) at Quiksilver's choice, either (x) an irrevocable written

                                       13

agreement from the proposed Third-Party Transferee to replace the Quiksilver
Shareholders in the performance of their obligations under this Agreement if the
proposed Transfer is consummated, including an agreement to purchase the Family
Group Shares in the event that the Put Option is exercised, or (y) a
confirmation that the Quiksilver Shareholders remain bound by their obligations
under this Agreement, even if the planned Transfer is consummated.

(d)      The Notice of Quiksilver Transfer shall constitute an offer made by the
Quiksilver Shareholders to the Family Group to purchase all the Quiksilver
Shareholder Shares which are the subject of the proposed Transfer. This offer
may be accepted by the Family Group, unless a Notice of Tag-Along or a Notice of
Put has already been served, by means of a "NOTICE OF FAMILY GROUP RFR" issued
in accordance with Article 7.4, at any time during a period of thirty (30) days
from the date of the Notice of Quiksilver Transfer (the "EXERCISE PERIOD").
Quiksilver shall have a period of fifteen (15) days from receipt of a Notice of
Family Group RFR within which to renounce its proposed Transfer, in which case
no Transfer of the relevant Quicksilver Shareholder Shares shall take place,
neither in favor of the proposed Transferee, nor in favor of the Family Group
pursuant to its right of first refusal.

(e)      If the Family Group accepts the offer made in accordance with the
foregoing paragraph and Quiksilver does not renounce the proposed transfer, the
Family Group (or any other person designated by the Family Group in its Notice
of Family Group RFR) shall acquire from the Quiksilver Shareholders, who shall
sell, all of the Quiksilver Shareholder Shares which are the subject of the
proposed Transfer, under the terms and conditions set out in the Notice of
Quiksilver Transfer, at a price in cash equal to: (i) if the planned Transfer is
a sale in which the price is paid exclusively in cash, the price agreed upon by
the Transferor and the Third-Party Transferee, as indicated in the Notice of
Quiksilver Transfer; (ii) if the Transfer is a transfer in which the
consideration does not entirely consist of cash (including in the event that the
planned Transfer is an exchange, a contribution, a merger or a division, or any
combination of these operations), the fair market value indicated by the
Transferor in the Notice of Quiksilver Transfer; or (iii) in the event that the
Family Group disagrees on the calculation of such fair market value (such
disagreement to be set forth in the Notice of Family Group RFR), an amount
determined in accordance with the Appraisal Procedure.

(f)      The Family Group Members understand and agree that the Notice of Family
Group RFR issued by the Family Group's Representative shall constitute a joint
and several undertaking made by all of the Family Group Members. The Family
Group Members shall be responsible for the allocation amongst themselves of any
Quiksilver Shareholder Shares acquired pursuant to their right of first refusal.

(g)      In the absence of a Notice of Family Group RFR, or of a Notice of
Tag-Along, during the thirty (30)-day period provided for this purpose, the
Quiksilver Shareholders may Transfer the Quiksilver Shareholder Shares to the
Transferee, provided, however, that said Transfer shall be performed solely in
accordance with the provisions of this Agreement, and in strict compliance with
the terms of the Notice of Quiksilver Transfer. The Transfer shall be signed
within forty-five (45) days from the expiry of the Exercise

                                       14

Period (even if it is consummated on a later date pursuant to the terms set out
in the Notice of Quiksilver Transfer).

(g)      The Company shares acquired by the Family Group upon exercise of the
Family Group's Right of First Refusal set out in this Article shall be, once
they are acquired, "Family Group Shares" for the purposes of this Agreement. For
the avoidance of doubt, they shall be subject to the Put Option granted by
Quiksilver, and the Call Option granted by the Family Group.

(h)      From the seventh (7th) anniversary of this Agreement, Company shares
held by the Quiksilver Shareholders or their authorized Transferees shall be
freely Transferable, including to any Third-Party Transferee.

5.5      TAG-ALONG RIGHT

(a)      In the event that, from the expiration of a four (4) years and six (6)
months period after the date of this Agreement and until the seventh (7)
anniversary of this Agreement, the Notice of Quiksilver Transfer referred to in
Article 5.4(c) provides for a proposed Transfer of Quiksilver's control of the
Company, the Family Group shall have an option to Transfer all, but not less
than all, of the Family Group's Shares to the Transferee shown on the Notice of
Quiksilver Transfer (or any other person designated by Quiksilver), on terms and
conditions equivalent to those set forth in the Notice of Quiksilver Transfer
(the "TAG-ALONG RIGHT").

(b)      The Family Group shall have a period of thirty (30) days from the
Notice of Quiksilver Transfer to notify Quiksilver of its decision to exercise
its Tag-Along Right (the "NOTICE OF TAG-ALONG"), provided that no Notice of Put
or Notice of Family Group RFR shall have been delivered before.

(c)      The Notice of Tag-Along shall constitute a offer by the Family Group to
Transfer all of the Family Group Shares to the Transferee indicated in the
Notice of Quiksilver Transfer (or any other person designated by Quiksilver), on
the terms and conditions set out in the Notice of Quiksilver Transfer, provided
that Quiksilver shall, at any time during a period of fifteen (15) days from the
receipt of a Notice of Tag-Along, have a right to renounce its proposed
Transfer, in which case no Transfer of Family Group Shares and no Transfer of
Quiksilver Shareholder Shares shall take place.

(d)      If the Family Group delivers a Notice of Tag-Along, it shall become a
party to the final Transfer agreements; it shall make the same representations
and warranties as the Quiksilver Shareholders; it shall bear any consequences,
positive or negative, of any price adjustment (pro-rata to its quota share of
the Transfer price), excluding any adjustment resulting from an earn-out clause
relating to continued service from Company officers subsequent to the Transfer
or the Company's performance subsequent to the Transfer; it shall bear the
consequences of any breach or violation of its representations or obligations
under the Transfer agreements. The Transfer of Family Group Shares and payment
of the price therefor shall be completed concurrently with the Transfer of the
Quiksilver Shareholder Shares, at an equal price per share, provided that, if
the

                                       15

consideration received by the Quiksilver Shareholders is in a form other than
cash (in whole or in part), Quiksilver may decide, within fifteen (15) days from
the receipt of the Notice of Tag-Along, that the Family Group shall receive,
instead of its quota share of the non-cash consideration, the fair market value
in euro of such share of the non-cash consideration, determined on the basis of
the valuation of the relevant assets, as set forth in the Notice of Quiksilver
Transfer (or, if the Family Group disputes the appraisal set forth therein, as
determined by the Appraisal Procedure).

5.6      PUT OPTION

(a)      Unless all of the Family Group Shares and all rights attached thereto
have been transferred to a Third-Party Transferee pursuant to Articles 5.3 or
5.5 and the Family Group no longer has any direct or indirect equity interest in
the Company, the Quiksilver Shareholders irrevocably promise to the Family Group
that they shall buy, at the Family Group's request, all of the Family Group
Shares (the "PUT OPTION"), in accordance with this Article 5.6.

(b)      The Put Option thus granted may be exercised by the Family Group if no
Notice of Tag-Along and no Notice of Family Group RFR has been previously
delivered, (i) in the event of a continued failure by Quiksilver to perform any
of its obligations under this Agreement or the Pledge of Quiksilver Shareholder
Shares, and (ii) as of the expiration date of a period of four (4) years and six
(6) months after the date of this Agreement (the "PUT OPTION EXERCISE DATE" and,
together with the events listed in (i), a "PUT OPTION EVENT").

(c)      The Family Group may only exercise the Put Option once and only for all
of the Family Group Shares (and not for a portion of them) at any time during
the period beginning on the occurrence of a Put Option Event and ending on the
date that no Put Option Event is continuing. If the relevant Put Option Event is
the occurrence of the Put Option Exercise Date, the Put Option may be exercised
at any time after the Put Option Exercise Date and no later than thirty (30)
months after that date. The Put Option shall become null and void if it has not
been previously exercised, (i) on the date of the Notice of Call, or (ii) at the
end of the thirty (30) months period referred to hereinabove.

(d)      If the Family Group wishes to exercise the Put Option, it shall notify
Quiksilver of its intent to do so (the "NOTICE OF PUT") during the applicable
exercise period in the manner set forth in Article 7.4. The Quiksilver
Shareholders shall have a period of fifteen (15) days from receipt of the Notice
of Put in order to notify the Family Group of the amount of the Option Exercise
Price. The Notice of Put shall constitute an irrevocable commitment on the part
of the Family Group to sell the Family Group Shares to the Quiksilver
Shareholders or to any party designated by Quiksilver, which the Quiksilver
Shareholders accept. Except in the event that an Appraisal Procedure is
requested with respect to the Option Exercise Price, the Parties shall procure
that the transfer be consummated within sixty (60) days from the Notice of Put,
at the Option Exercise Price.

5.7      CALL OPTION

                                       16


(a)      The Family Group Members irrevocably promise the Quiksilver
Shareholders to sell, at Quiksilver' request, all of the Family Group Shares
(the "CALL OPTION"), in accordance with this Article 5.7.


(b)      The Call Option thus granted may be exercised by Quiksilver (i) in the
event of a continued failure by any one of the Family Group Members to perform
any of its obligations under this Agreement or the Pledge of Family Group
Shares, (ii) in the event of the death or disability of all of the Family Group
Members who are natural persons, or (iii) as of the expiration date of a period
of seven (7) years after the date of this Agreement (the "CALL OPTION EXERCISE
DATE" and, together with the events listed in (i) and (ii) above, a "CALL OPTION
EVENT").

(c)      Quiksilver may exercise the Put Option once and only for all of the
Family Group Shares (and not for a portion of them), at any time during the
period beginning on the occurrence of a Call Option Event and ending on the date
that no Call Option Event is continuing. If the relevant Call Option Event is
the occurrence of the Call Option Exercise Date, the Call Option may be
exercised at any time after the Call Option Exercise Date, without any
limitation of the term, provided, however, that if any tribunal or court of
arbitration were to challenge the validity of the Call Option as a result of the
absence of a time limit for the exercise thereof, the Call Option shall in any
event remain exercisable at any time during a period of twenty (20) years
following the Call Option Exercise Date.

(d)      If the Quiksilver Shareholders wish to exercise the Call Option, they
shall notify the Family Group of their intent to do so (the "NOTICE OF CALL")
during the applicable exercise period, in the manner set forth in Article 7.4.
The Notice of Call shall set out the Option Exercise Price. It shall constitute
an irrevocable commitment by the Quiksilver Shareholders to purchase (or to
procure that a person designated by Quiksilver purchase) all of the Family Group
Shares, which the Family Group irrevocably commits to sell. Except in the event
that an Appraisal Procedure is requested with respect to the Option Exercise
Price, the parties shall procure that the transfer be consummated within sixty
(60) days from the Notice of Call, at the Option Exercise Price.

(e)      For the avoidance of doubt, "Family Group Shares" as used in this
Article shall mean all of the Family Group's equity interests in the Company on
the date of Notice of Call, whether held directly or indirectly.

5.8      APPRAISAL PROCEDURE

(a)      In the event of a disagreement between the Parties as to the
determination of the fair market value of the assets offered as consideration
for the Company shares, as set forth in Articles 5.3(e), 5.4(e) and 5.5(d), and
in the event of a disagreement between the Parties as to the determination of
the proportion represented by the Family Group Shares in the calculation of the
Option Exercise Price, the fair market value or the proportion used as a basis
for the calculation of the share price shall be determined in accordance with
the following procedure (the "APPRAISAL PROCEDURE").

                                       17

 (b)      The Shareholder disputing, in good faith, the fair market value or the
proportion indicated in the notice received from the other Shareholder (the
"DISPUTED VALUE") shall notify the other Shareholder of his disagreement (the
"NOTICE OF DISAGREEMENT") within fifteen (15) days from the other Shareholder's
giving notice of the Disputed Value. The Notice of Disagreement shall indicate,
in as much detail as possible, the items of disagreement existing between the
Shareholders on the Disputed Value, and shall include the disputing
Shareholder's determination of the Disputed Value.

(c)      The Shareholders shall then have a period of twenty (20) days from the
date of the Notice of Disagreement to come to an agreement on the Disputed
Value. In the event that an agreement is reached, the Transfer price of the
Company shares pursuant to Articles 5.3(e), 5.4(e) or 5.5(d), or the Option
Exercise Price, whichever is applicable, shall be determined on the basis of the
Disputed Value on which the Shareholders shall have agreed, and the Shareholders
shall have no further recourse against one another with respect to the
determination of the relevant Transfer price.

(d)      Unless an agreement is reached during the foregoing twenty (20) day
period, each of the Shareholders shall appoint, within a period of ten (10)
days, an independent investment bank or firm of accountants with an established
international reputation as a valuer of securities (an "EXPERT"). The two
Experts shall be responsible for negotiating in good faith, to reach an
agreement as to the determination of the Disputed Value. Their duties shall be
limited to the determination of the Disputed Value, and shall not include any
other element relevant to the calculation of the price of the Company's shares.
In the event that an agreement is reached between the Experts, the Transfer
price of the Company shares pursuant to Articles 5.3(e), 5.4(e) or 5.5(d), or
the Option Exercise Price, whichever is applicable, shall be determined on the
basis of the Disputed Value on which the Experts shall have agreed, and the
Shareholders shall have no further recourse against one another with respect to
the determination of the relevant Transfer price.

(e)      If a disagreement persists between the Experts on the Disputed Value,
following a period of twenty (20) days after the appointment of the last of the
two Experts to have been appointed, each of the Experts shall remit to his
client, within forty (40) days following the appointment of the last of the two
Experts to have been appointed, a written report stating, in all necessary
detail, its determination of the Disputed Value. If the difference between the
Disputed Values established by each of the two Experts is less than five per
cent. (5%) (calculated relative to the higher of the two equity values thus
calculated), then the Shareholders agree that the Disputed Value shall be deemed
to be the arithmetical mean of the two Disputed Values thus calculated.

(f)      If the difference between the values determined by the Experts in
calculating the Disputed Value are equal to or greater than five percent (5%),
the Shareholders shall appoint, within ten (10) days after the remittance of the
last of the two Expert reports to have been submitted, a third Expert (or, if
the Shareholders fail to agree on the third Expert, then the third Expert shall
be appointed by the President of the Paris Commercial Court (ruling on an
interim basis (en refere) without appeal), at the request of either
Shareholder). The third Expert shall be sent the reports of the two Experts
mentioned in paragraph (e) hereinabove; he shall be instructed to determine the
Disputed Value within

                                       18

twenty (20) days from his appointment. The Transfer price of the Company
shares, pursuant to Articles 5.3(e), 5.4(e) or 5.5(d), or the Option Exercise
Price, whichever is applicable, shall be determined on the basis of the Disputed
Value determined by the third Expert, provided that such Disputed Value shall
not be greater than the higher, nor less than the lower, of the values proposed
by the Experts designated by the Parties.

(g)      Each Shareholder shall pay the fees and expenses of the Expert
appointed by it; the fees and expenses of the third Expert shall be paid in full
by the Shareholder whose Expert has proposed the appraisal of the Disputed Value
that is closest to the value ultimately determined by the third Expert.

ARTICLE 6 - MANAGEMENT OF THE COMPANY

6.1      MANAGEMENT OF THE COMPANY

(a)      Mr. Laurent Boix-Vives shall be appointed, no later than fifteen (15)
days after the Effective Date, Chairman of the Board of the Company. As such, he
shall receive, directly or indirectly, a compensation in US dollars
corresponding to three hundred thousand (300,000) euros per year, for the entire
term of his office. He shall remain Chairman of the Board for so long as the
Family Group remains a shareholder in the Company.

(b)      The Company's other managers shall be appointed by the shareholders'
general meeting of the Company and by its Board of Directors, pursuant to the
Company's bylaws and in accordance with applicable laws and regulations.

(c)      The Family Group agrees, for the entire term of the Agreement, not to
interfere in the Company's management, other than for the purposes of exercising
its rights as a shareholder in the Company, which rights shall be exercised in
good faith and in the Company's interest, and for the purposes of Mr. Laurent
Boix-Vives' exercise of his duties pursuant to paragraph (a) hereinabove. In the
event of the death or disability of Mr. Laurent Boix-Vives, the Family Group
shall perform its role as a shareholder in close cooperation with Quiksilver,
and it shall provide Quiksilver with a proxy to represent it in the general
meetings of the Company whenever necessary, provided that Quiksilver shall
protect the economic value of the Family Group Shares.

(d)      The Parties agree that the closing date of the Company's accounting
year shall not be changed without the Family Group's agreement.

6.2      ISSUANCE OF COMPANY'S EQUITY SECURITIES

(a)      During the entire term of the Agreement, the Family Group Shares shall
be voted on all matters together with ordinary shares of the Company, voting as
a single class, pari passu, with each share being entitled to one vote.

(b)      The Quiksilver Shareholders acknowledge and agree that the Family Group
shall have a preferential right to the subscription of shares or other equity
interests issued by the Company, in proportion to their percentage interest in
the common stock of the

                                       19

Company, allowing it, if it chooses to subscribe to the issue, to maintain an
identical quota share of the voting rights and financial rights in the Company;
provided that (i) if the Company wishes to issue stock in consideration for an
asset other than cash, the Family Group shall be given the opportunity to make a
cash contribution in an amount determined in such a way that the Family Group's
percentage interest in the voting rights and financial rights in the Company
shall be maintained, based on a valuation of the Company agreed upon in good
faith between the Parties (or, if the Parties fail to reach an agreement, by
means of an appraisal pursuant to the Appraisal Procedure), and (ii) the
preferential right to subscribe provided in this Article 6.2(b) shall not apply
in the event that the Company issues to its employees and directors, or to
employees and directors of its subsidiaries, shares or other securities
representing or giving access to, immediately or in the future, the Company's
capital.

(c)      The Quiksilver Shareholders shall not, during the entire term of this
Agreement, proceed with the issuance of any equity interests in the Company,
other than with the and prior written consent of the Family Group's
Representative.

6.3      DISTRIBUTIONS OF DIVIDENDS

The Quiksilver Shareholders shall procure that the Company distribute, each year
and for the entire term of this Agreement, an amount equal to or greater than
twenty percent (20%) of the distributable income earned by the Company in the
previous fiscal year, provided that such distribution shall always comply with
the provisions of corporate laws and regulations applicable to the Company.

6.4      TRANSFER OF FAMILY GROUP SHARES

(a)      For the avoidance of doubt, "Family Group Shares" as used in connection
with the exercise of Quiksilver's Right of First Refusal, the Tag-Along Right,
the Call Option and the Put Option, shall include all of the equity interests
held directly or indirectly by the Family Group in the Company as of the date of
the relevant Transfer, including any shares acquired by the Family Group in
connection with the exercise of its preferential right to subscribe for
additional shares as set out in Article 6.2(b), any securities acquired by the
Family Group in the exercise of the Family Group's Right of First Refusal
pursuant to Article 5.4(h), and all of the Company's other securities subscribed
for or otherwise acquired by the Family Group.

(b)      The Members of the Family Group warrant to Quiksilver that the Family
Group Shares transferred pursuant to Articles 5.3, 5.5, 5.6 et 5.7, shall, on
the date of their transfer, constitute all of their rights in the Company; they
warrant that the transfer price received by them pursuant to Article 5 shall be
paid to them in consideration for the transfer to the relevant transferee of all
of such rights, and they agree, in advance, to waive and not to exercise any
right or claim which they may have against the Company as a result of their
former capacity as shareholder in the Company.

ARTICLE 7 - MISCELLANEOUS PROVISIONS

7.1      TAX TREATMENT OF THE TRANSACTION

                                       20


Each Member of the Family Group shall, within ten (10) days of any request sent
by Quiksilver to the Family Group's Representative, fully and accurately
complete and deliver to Quiksilver, a United States Internal Revenue Service
Form W-8BEN or any similar or successor form thereto representing that such
Member of the Family Group is a non-U.S. person and claiming the benefit of the
Convention Between the Government of the United States of America and the
Government of the French Republic for the Avoidance of Double Taxation and the
Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, dated
as of August 31, 1994, as amended or supplemented from time to time (or any
successor thereto) with respect to any payments received under the terms of the
Call Option or the Put Option, as well as all distributions made by the Company
to Members of the Family Group.

7.2      PLEDGES

As security for its obligation to pay the Option Exercise Price under the Put
Option or the Call Option, and as security for certain obligations of Quiksilver
pursuant to that certain shareholders' agreement between Quiksilver and the
Family Group with respect to Ski Expansion, Rossignol Ski Company shall enter
into the pledge agreement set forth in APPENDIX 7.2(A) to this Agreement in
favor of the Family Group (the "PLEDGE OF QUIKSILVER SHAREHOLDER SHARES"). As
security for its obligation to deliver the Family Group Shares under the Put
Option or the Call Option, the Family Group shall enter into the pledge of
Family Group Shares set forth in APPENDIX 7.2(B) in favor of the Quiksilver
Shareholders (the "PLEDGE OF FAMILY GROUP SHARES" and, together with the Pledge
of Quiksilver Shareholder Shares, the "PLEDGES").

7.3      EXPENSES AND FEES

Unless otherwise agreed, each of the Parties shall bear the expenses and fees
incurred by it or for it in relation to this Agreement and the transactions
contemplated herein, including the professional fees of its advisors and
brokers.

7.4      NOTICES

(a)      Any notices or communications pursuant to this Agreement shall be made
by fax or by registered mail with return receipt requested or by an express
courier service and must be addressed to the persons and addresses indicated
below, or to any other address or fax number indicated in writing, in the same
manner, by one Party to the other:

         To Quiksilver or to the Quiksilver Shareholders

Quiksilver, Inc.
15202 Graham Street Huntington Beach,
California (United States of America)
Fax: + 1 (714) 889 4250
To the attention of: Mr. Charlie Exon


With a copy to:

                                       21


Pierre Servan-Schreiber, Esq.
Avocat a la Cour
Skadden, Arps, Slate, Meagher & Flom LLP
68, rue du Faubourg Saint-Honore
75008 Paris, France
Fax: +33.1.55.27.11.99

         To the Family Group:

Mr. Laurent Boix-Vives
1, Boulevard du Marechal Joffre,
38000 Grenoble
Fax: +33.4.76.47.73.31


With a copy to:

Jean-Philippe Delsol, Esq.
Avocat a la Cour
Delsol et Associes
12, quai Andre Lassagne
69001 Lyon
Fax: +33.4.72.10.20.31

 (b)      The date of receipt of the notice shall be deemed to be the date
when the fax or registered letter is received or the delivery date by express
courier, as attested by the relevant delivery form, provided that if the receipt
of a notice takes place on a day that is not a US Business Day (when this
pertains to a notice addressed to the Quiksilver Shareholders) or a French
Business Day (when this pertains to a notice addressed to the Family Group) or
takes place outside normal office hours in the United States or in France, as
applicable, then such notice shall be deemed to have been received on the
opening date and time immediately following receipt of the correspondence. Any
correspondence addressed to the Family Group at the address or fax number
hereinabove shall be deemed simultaneously received by each of the Members of
the Family Group, and the Members of the Family Group shall have no recourse
against the Quiksilver Shareholders for sending notices solely to the Family
Group's Representative.

7.5      FAMILY GROUP'S REPRESENTATIVE

(a)      The Family Group hereby appoints Mr. Laurent Boix-Vives (the
"FAMILY GROUP'S REPRESENTATIVE") as its representative, and gives him all
powers, to receive any notice hereunder, to take any necessary measures in the
name of and on behalf of the Members of the Family Group in connection with the
execution of this Agreement and the performance and completion of all of the
transactions contemplated herein and, if necessary, to modify this Agreement and
waive any and all rights under this Agreement. Quiksilver may rely on any action
undertaken by the Family Group's Representative on behalf of the Family Group;
it will not entail any correspondence or notice delivered in

                                       22

connection with this Agreement by any Member of the Family Group other than the
Family Group's Representative (except as provided in paragraph (b) below). The
representations made, the agreements concluded, and the actions undertaken by
the Family Group's Representative pursuant to this clause shall have binding
force against each of the Members of the Family Group.

(b)      Should Mr. Laurent Boix-Vives be impeded from acting as the Family
Group' Representative for any reason whatsoever, the Family Group hereby appoint
Ms. Jeannine Boix-Vives as the replacement for Family Group's Representative.
The appointment of Ms. Jeannine Boix-Vives as the Family Group's Representative
shall become effective as of the date on which Quiksilver is notified of such
appointment by Ms. Jeannine Boix-Vives in the manner set forth in Article 7.4.
Subsequently, should Ms. Jeannine Boix-Vives be impeded from acting for any
reason whatsoever, the Members of the Family Group hereby appoint SDI as the
Family Group's Representative (or, should SDI have been dissolved by that date,
Ms. Christine Simon shall be appointed -- and, if Ms. Christine Simon is
impeded, Ms. Sylvie Bernard shall be appointed). The appointment of SDI, of Ms.
Christine Simon, or of Ms. Sylvie Bernard as the Family Group's Representative
shall become effective as of the date on which Quiksilver is notified of such
appointment by SDI's legal representative, by Ms. Christine Simon or by Ms.
Sylvie Bernard, respectively, in each case in the manner set forth in Article
7.4 (provided that, if SDI should issue several contradictory notices in such a
context, only the first notice shall be valid).

7.6      ASSIGNMENT

(a)      No Party may assign or transfer, in any way whatsoever, its rights
and obligations under this Agreement without the prior written consent of the
Family Group's Representative (when this pertains to a transfer by the
Quiksilver Shareholders) or from Quiksilver (when this pertains to a transfer by
any of the Quiksilver Shareholders).

(e)      As an exception to the foregoing, (i) the Members of the Family
Group shall be entitled to transfer all (but not some only) of their rights and
obligations pursuant to this agreement (except for the right of representation
referred to in Article 7.5), provided that the transferor shall remain jointly
liable with the transferee for the performance by the transferee of all of the
transferor's obligations pursuant to this Agreement, and (ii) the Quiksilver
Shareholders shall be entitled to assign all (but not some only) of their rights
and obligations under this Agreement to any company controlled by Quiksilver
within the meaning of Article L. 233-3 of the Commercial Code.

7.7      SUCCESSORS AND BENEFICIARIES

Any and all rights and obligations pursuant to this Agreement are actively and
passively, jointly and severally binding on the Parties' successors, heirs,
beneficiaries, and legal representatives, provided that this Agreement is
concluded in consideration of the person of the Members of the Family Group and,
consequently, the rights conferred to the Members of the Family Group by this
Agreement shall not be assigned, transferred or conveyed in any manner
whatsoever, except to another Member of the Family Group.

                                       23


1.2      SEVERABILITY

If any of the provisions of this Agreement becomes null, illegal, unenforceable,
or incapable of being performed in any manner whatsoever (hereinafter "DISPUTED
PROVISIONS"):

(a)      the validity and enforceability of the other provisions shall not be
affected or compromised in any way; and

(b)      the Parties shall negotiate in good faith in order to replace the
Disputed Provisions with valid and enforceable provisions that are as close as
possible to the Parties' common intent or, if such common intent cannot be
determined, the intent of those among the Parties which the Disputed Provision
is supposed to protect.

1.3      MODIFICATIONS AND WAIVERS

(a)      This Agreement shall only be modified by a written agreement duly
signed by Quiksilver and the Family Group's Representative.

(b)      Any waiver by a Party to one of its rights pursuant to this Agreement
shall only take effect if it was made in writing, and shall be strictly
interpreted.

No waiver of any one of the provisions of this agreement shall constitute a
waiver of any other provision of this Agreement other than the provision which
was waived.

7.10     APPLICABLE LAW - COMPETENT COURT

This Agreement and its interpretation are exclusively governed by French law.

Any dispute arising in connection with this Agreement, including the validity,
the interpretation and the performance hereof, and which cannot be resolved
amicably, shall fall under the exclusive jurisdiction of the courts within the
jurisdiction of the Paris Court of Appeals.



Signed in Lyon, on April 12, 2005, in eight (8) copies.


- ----------------------------------
FOR QUIKSILVER, INC.
by Mr. Bernard Mariette



- ----------------------------------
FOR ROSSIGNOL SKI COMPANY, INC.

                                       24


by Mr. Laurent Boix Vives



- ----------------------------------
FOR SKIS ROSSIGNOL SA
by



- ----------------------------------
FOR SDI SOCIETE DE SERVICE ET
DEVELOPPEMENT
by Mr. Laurent Boix Vives



- ----------------------------------
MR. LAURENT BOIX-VIVES



- ----------------------------------
MS. JEANNINE BOIX-VIVES



- ----------------------------------
MS. CHRISTINE SIMON



- ----------------------------------
MS. SYLVIE BERNARD



- ----------------------------------
FOR ROGER CLEVELAND, GOLF COMPANY, INC.
by Mr. Laurent Boix Vives


                                       25

                                                                  EXHIBIT 3.2(b)

                               UNLIMITED PARTNERS

                              WITHDRAWAL AGREEMENT

BETWEEN THE UNDERSIGNED:

MR. LAURENT BOIX-VIVES, born on August 30, 1926 in Brides les Bains (73570),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble,

MS. JEANNINE BOIX-VIVES, born on December 25, 1927 in Montbonnot (38330),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble,

MS. CHRISTINE SIMON, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble,

MS. SYLVIE BERNARD, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble,

                                        (hereinafter together referred to as the
                        "WITHDRAWING PARTNERS" and each a "WITHDRAWING PARTNER")

                                                                ON THE ONE HAND,

AND

PILOT EXPANSION, a societe a responsabilite limitee with capital of EUR 16,000,
with its registered office at Voiron (38500), "Le Menon", registered with the
Grenoble Commerce and Company Registry under number 431 779 156, represented by
Mr. Laurent Boix-Vives in his capacity as Manager (Gerant),

            (hereinafter referred to as "PILOT EXPANSION" and, together with the
 Withdrawing Partners, the "UNLIMITED PARTNERS" and each an "UNLIMITED PARTNER")


                                                              ON THE OTHER HAND,

IN THE PRESENCE OF:

SKI EXPANSION, a societe en commandite par actions with capital of EUR
8,096,624, with its registered office at Voiron (38500), "Le Menon", registered
with the Grenoble Registry of Commerce and Companies under number 070 501 374,
represented by Mr. Laurent Boix-Vives in his capacity as Manager (Gerant),

                                      (hereinafter referred to as the "COMPANY")

AND OF

QUIKSILVER, INC., a Delaware Corporation, with its registered office at 15202
Graham Street, Huntington Beach, California, U.S.A., represented by Mr. Bernard
Mariette, acting as President,


                                       1


                     (hereinafter referred to as "QUIKSILVER" or the "ACQUIRER")

(each of the Sellers and the Acquirer hereinafter being individually referred to
as a "PARTY" and collectively the "PARTIES").


WHEREAS:

A.   The Unlimited Partners (associes commandites) each hold ten (10) interests
     of the Company, representative of their business contribution to the
     Company, which do not enter into the composition of the Company's capital.

B.   In connection with the transfer by the Withdrawing Partners to Quiksilver
     of their direct and indirect interests in Skis Rossignol, a societe anonyme
     with capital of EUR 49,792,256, with its registered office at Voiron, "Le
     Menon", registered with the Grenoble Registry of Commerce and Companies
     under number 056 502 958 and whose shares are listed on the Eurolist of
     Euronext Paris, Quiksilver showed its interest in acquiring control of the
     Company.

C.   The Parties have agreed that this acquisition would be carried out by means
     of (i) the withdrawal of the Withdrawing Partners from the Company, in
     their capacity as business contributors, and the consecutive cancellation
     of their unlimited partner interests in the Company, pursuant to this
     Withdrawal Agreement, followed by (ii) the transfer to Quiksilver by the
     Withdrawing Partners of all of the interests (parts sociales) of Pilot
     Expansion (the "PILOT EXPANSION INTERESTS").

D.   This Unlimited Partners Withdrawal Agreement (the "WITHDRAWAL AGREEMENT")
     sets forth the terms and conditions of the withdrawal of the Withdrawing
     Partners and of the cancellation of their unlimited partner interests in
     accordance with (i) above.


CONSEQUENTLY, IT HAS BEEN AGREED AS FOLLOWS:

ARTICLE 1 - WITHDRAWAL OF THE WITHDRAWING PARTNERS

1.1 The Withdrawing Partners shall hereby cease, as from the date hereof, to
contribute their business to the Company. Consequently, their unlimited partner
interests, which represent their business contribution, are cancelled.

1.2 Pilot Expansion shall remain the sole unlimited partner of the Company.

1.3 This Withdrawal Agreement shall not entail the Company's dissolution.

ARTICLE 2 - COMPENSATION

2.1 In compensation for their withdrawal and for the cancellation of their
unlimited partner interests, the Withdrawing Partners shall receive from the
Company


                                       2



an indemnity, for all of their unlimited partner interests, equal to forty
thousand (40,000) euros (the "INDEMNITY").

2.2 It is agreed among the Parties that the Indemnity shall be paid to the
Withdrawing Partners by the Acquirer, in the name of and on behalf of the
Company, concurrently with the payment to the Withdrawing Partners concerned of
the transfer price of the Pilot Expansion Interests. On the payment date, the
Acquirer shall acknowledge a claim of an equal amount on the Company. The
payment of the Indemnity shall be made on the account indicated to the Acquirer
for the payment of the transfer price of the Pilot Expansion Interests. The
Withdrawing Partners shall allocate the Indemnity among themselves and the
Acquirer and the Company shall be entirely freed from their obligation to pay
the Indemnity once such Indemnity has been paid pursuant to this Article 2.2.

2.3 In the event of the cancellation of the transfer to the Acquirer of the
Pilot Expansion Interests, the Withdrawing Partners shall ensure that the
Company's debt towards the Acquirer, resulting from the payment by the Acquirer
of the Indemnity due by the Company, be paid concurrently with the reimbursement
to the Acquirer of the transfer price of the Pilot Expansion Interest, and
according to the same terms.

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

The Withdrawing Partners represent and warrant the following, to the benefit of
Pilot Expansion, the Company and the Acquirer:

3.1 The ten (10) unlimited partner interests held by each of the Unlimited
Partners on the date herein are the only unlimited partner interests of the
Company. The Withdrawing Partners have full property over such interests, which
are free from any lien, security, encumbrance or other restriction, limitation,
pledge, collateral or third-party right whatsoever, and they have all powers for
the purposes of bringing about their cancellation pursuant to this Withdrawal
Agreement. This Withdrawal Agreement has been duly executed by each of them and
constitutes against each of them valid and enforceable obligations pursuant to
its terms.

3.2 The execution of this Withdrawal Agreement by the Parties carries with it
the final cancellation, on the date hereof, of all of the unlimited partner
interests in the Company held by the Withdrawing Partners, and such cancellation
shall be enforceable against third parties, without need to obtain any consent,
approval, authorization or waiver whatsoever, nor to undertake any step that was
not obtained or undertaken, other than the filing of the amended Company bylaws
with the competent Commercial Court's registrar.

3.3 No judicial, arbitral, or administrative proceeding, nor any request, trial
or investigation which could prevent the Withdrawing Partners, Pilot Expansion
or the Company from executing this Withdrawal Agreement or performing their
obligations pursuant thereto, is pending or foreseeable by reason of any fact or
event.

3.4 The execution of this Withdrawal Agreement, the consummation of the
transactions contemplated herein and the performance by the Withdrawing
Partners, Pilot Expansion and the Company of all of their obligations herein (i)
do not and shall not conflict with or violate any provision of the bylaws of the
Company or of Pilot


                                       3



Expansion and do not and shall not require the consent of a corporate body of
any of these companies, (ii) do not and shall not conflict with or violate any
statutory or regulatory provision or any administrative, judicial or arbitral
decision, and (iii) do not and shall not conflict with or violate any commitment
or any obligation of Pilot Expansion or the Company whatsoever.

ARTICLE 4 - MISCELLANEOUS PROVISIONS

4.1 The Withdrawing Partners shall ensure, as of the date hereof, that they
submit to the general meeting of the limited partners (associes commanditaires)
of the Company a resolution approving the withdrawal of the Withdrawing Partners
and the cancellation of their unlimited partner interests, and that they obtain
the unanimous agreement from the meeting on this resolution; furthermore, they
shall ensure that the general meeting of the limited partners and such meeting
shall decide on an amendment to the Company bylaws, in particular in order to
amend Article 3 thereof and any other concerned provision of such bylaws to the
new capacity of Pilot Expansion as sole unlimited partner, and to suppress the
provision stipulating the loss of Pilot Expansion's capacity as unlimited
partner in the event of the amendment of certain provisions of Pilot Expansion's
bylaws; pursuant to this agreement, the Unlimited Partners shall already grant
their consent to the resolutions taken to such end in their capacity as
unlimited partner, and they furthermore approve the amendment to the Pilot
Expansion bylaws directed at rendering possible the transfer to the Acquirer of
all of the Pilot Expansion Interests.

4.2 With the exception of their claim to the Indemnity payment, the Withdrawing
Partners have no right over the Company or over Pilot Expansion, nor any claim
against any of these companies in relation to their past capacity as unlimited
partner, and they waive in advance any right or claim that they could derive
from such capacity. However, the Withdrawing Partners shall remain liable for
the Company's liabilities in accordance with applicable laws and regulations; in
the event that their liability is incurred in this regard, they shall retain any
claim that they may have against Pilot Expansion.

4.3 In the event that an administrative, judicial or arbitral decision would
consider that the unlimited partner interests held by the Withdrawing Partners,
or any right attached to such interests, survived the execution of this
Withdrawal Agreement, the Parties agree, as may be needed, that this Withdrawal
Agreement carries with it the transfer by the Withdrawing Partners to Pilot
Expansion, on the date hereof, of their unlimited partner interests and of all
the rights that may attach to them, the participation of all of the Unlimited
Partners to this Withdrawal Agreement being valid as unanimous approval by the
unlimited partners of such transfer, pursuant to Article 3.2 of the Company
bylaws.

4.4 The Acquirer or the Company shall bear the cost of all of the registration
fees and stamp duties that may be payable in connection with this Withdrawal
Agreement and the transactions contemplated herein, which would not have already
been taken into account in the calculation of the Indemnity.

4.5 The rights and obligations of the Acquirer and of the Withdrawing Partners
under this Withdrawal Agreement may only be assigned or transferred, in any
manner whatsoever (including by means of merger, spin-off or transfer at no
charge) jointly


                                       4



with the rights and obligations of the Acquirer or of the concerned Withdrawing
Partners pursuant to the agreement relating to the transfer of the Pilot
Expansion Interests, as referred to herein.

4.6 If any of the provisions of this Withdrawal Agreement were to be void,
illegal or not enforceable in any manner whatsoever (the "CONTESTED
PROVISIONS"), the validity and the enforceability of the other provisions shall
not in any way be affected or compromised, and the Parties shall negotiate in
good faith in order to replace the Contested Provisions by provisions that are
valid and enforceable and as close as possible to the common intent of the
Parties or, if such common intent cannot be determined, to the intent of those
of the Parties that the Contested Provisions were designed to protect.

4.7 This Agreement and its interpretation are exclusively governed by French
law. Any dispute arising in connection with this Agreement, including the
validity, the interpretation and the performance thereof, and which cannot be
resolved amicably, shall fall under the exclusive jurisdiction of the courts
within the jurisdiction of the Paris Court of Appeals.


Executed in Paris, on April 12, 2005,
in six (6) originals.



- --------------------------------------
FOR QUIKSILVER, INC.:
by Mr. Bernard Mariette



- --------------------------------------
FOR PILOT EXPANSION SARL:
by Mr. Laurent Boix-Vives



- --------------------------------------
FOR SKI EXPANSION SCA:
by Mr. Laurent Boix-Vives



- --------------------------------------
MR. LAURENT BOIX-VIVES



- --------------------------------------
MS. JEANNINE BOIX-VIVES



                                       5




- --------------------------------------
MS. CHRISTINE SIMON


- --------------------------------------
MS. SYLVIE BERNARD




                                       6

                                                                     EXHIBIT 8.8



                                 PILOT EXPANSION

                               PURCHASE AGREEMENT

BETWEEN THE UNDERSIGNED:

MR. LAURENT BOIX-VIVES, born on August 30, 1926 in Brides les Bains (73570),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble,

MS. JEANNINE BOIX-VIVES, born on December 25, 1927 in Montbonnot (38330),
residing at 1, Boulevard du Marechal Joffre, 38000 Grenoble,

MS. CHRISTINE SIMON, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble,

MS. SYLVIE BERNARD, born on January 23, 1964 in Grenoble, residing at 1,
Boulevard du Marechal Joffre, 38000 Grenoble,

acting jointly for the purposes of this Agreement,

                                                                    (hereinafter
                          together referred to as "SELLERS" and each a "SELLER")

                                                                ON THE ONE HAND,

AND

QUIKSILVER, INC., a Delaware corporation, with registered offices located at
1052 Graham Street, Huntington Beach, California, U.S.A., represented by Mr.
Bernard Mariette, acting as President,


                     (hereinafter referred to as "QUIKSILVER" or the "ACQUIRER")

                                                              ON THE OTHER HAND,

IN THE PRESENCE OF:

PILOT EXPANSION, a societe a responsabilite limitee with capital of EUR 16,000
euros, with registered offices at Voiron (38500), "Le Menon," registered with
the Grenoble Registry of Commerce and Companies under number 431 779 156,
represented by Mr. Laurent Boix-Vives as Manager,

                 (hereinafter referred to as "PILOT EXPANSION" or the "COMPANY")

(each of the Sellers and the Acquirer being hereinafter referred to as a "PARTY"
and together as the "PARTIES").





MWHEREAS:

A.   The Sellers together hold 1,600 (one thousand six hundred) interests of
     Pilot Expansion (hereinafter the "PILOT EXPANSION INTERESTS") of a nominal
     value of ten (10) euros each, fully paid up, representing the entirety of
     Pilot Expansion interests, divided among them in the manner described in
     Exhibit C hereto.

B.   Pursuant to an acquisition agreement dated the date hereof (the
     "ACQUISITION AGREEMENT"), the Sellers, together with SDI Societe de Service
     et Developpement, a Swiss societe anonyme with share capital of CHF
     500,000, with registered offices at 120 chemin de la Rueyre, 1020, in
     Renens, Switzerland ("SDI"), agreed to the sale to Quiksilver of their
     direct and indirect interests in Skis Rossignol, a societe anonyme with
     share capital of 49,792,256 euros, with registered offices at Voiron
     (38500), "Le Menon", registered with the Grenoble Registry of Commerce and
     Companies under number 056 502 958 and whose shares are listed on the
     Eurolist of Euronext Paris ("SKIS ROSSIGNOL").

C.   Pursuant to the Acquisition Agreement, the Sellers and SDI agreed to sell
     to Quiksilver, and Quiksilver agreed to acquire, as of the date hereof, the
     control of Ski Expansion, a societe en commandite par actions with capital
     of EUR 8,096,624, with registered offices at Voiron (38500), "Le Menon",
     registered with the Grenoble Registry of Commerce and Companies under
     number 070 501 374 ("SKI EXPANSION"), which holds approximately 38.43% of
     the shares and 49.90% of the voting rights of Skis Rossignol, by means of
     (i) the sale by the Sellers and SDI of limited interests representing
     approximately 71.53% of the capital of Ski Expansion, (ii) of the
     withdrawal by the Sellers of Ski Expansion, and the respective cancellation
     of their unlimited interests, and (iii) the sale by the Sellers to
     Quiksilver of the whole of Pilot Expansion's interests, which became the
     sole unlimited partner of Ski Expansion.

D.   This Agreement (the " AGREEMENT"), sets forth the terms and conditions of
     the sale of Pilot Expansion Interests.


CONSEQUENTLY, IT HAS BEEN AGREED AS FOLLOWS:

ARTICLE 1 - SALE OF PILOT EXPANSION INTERESTS

1.1 The Sellers sell to the Acquirer that acquires, as of the date hereof, 1,600
(one thousand six hundred) interests representing the entirety of interests of
Pilot Expansion, free from any liens, securities, encumbrances or other
restrictions, limits or third party rights whatsoever.

1.2 The Acquirer shall be the owner of the Pilot Expansion Interests as of the
date hereof. The Acquirer shall, as of the date hereof, be assigned all rights
and obligations in connection with the Pilot Expansion Interests.

1.3 The sale of the Pilot Expansion Interests is subject to the condition
subsequent of the non-obtaining of the authorizations necessary for the
consummation of the


                                       1



acquisition of Skis Rossignol by Quiksilver in accordance with laws and
regulations applicable in France and abroad, regulating mergers of corporations
or in more general terms free competition, including Articles L. 430-1 and
following of the Commercial Code and decree number 2002-689 of April 30, 2002,
Council Regulation number 4064/89 of December 21, 1989 concerning the
supervision of mergers between corporations, as modified, as well as the United
States Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

ARTICLE 2 - PRICE

(a) The sale of the Pilot Expansion Interests is effected and accepted for a
total price of ten thousand (10,000) euros (the "PURCHASE PRICE").

(b) The payment of the Purchase Price occurs immediately upon the execution of
this Agreement.

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

The Sellers represent and guarantee the following, for the benefit of the
Acquirer, Pilot Expansion and Ski Expansion:

3.1 The Pilot Expansion Interests held by each of the Sellers as of the date
hereof are the only interests of the Company. The Sellers have full property
over such interests, which are free of all liens, securities, encumbrances or
other restrictions, limits, pledges or any third party rights whatsoever, and
they have all powers for the purposes of selling them, in accordance with this
Agreement. This Agreement has been duly executed by each of them, and
constitutes against each of them valid and enforceable obligations pursuant to
its terms.

3.2 The execution of this Agreement by the Parties carries with it the final
sale, as of the date hereof, of the entirety of Pilot Expansion Interests to the
Acquirer, and this sale shall be enforceable against third parties, without the
need to obtain any consent, approval, authorization or waiver whatsoever, nor to
undertake any step that was not obtained or undertaken, other than the filing of
two originals of this Agreement with the competent Commercial Court's registrar.

3.3 No judicial, arbitral, or administrative proceeding, nor any request, trial
or investigation which could prevent the Sellers or Pilot Expansion from
executing this Agreement or performing their obligations pursuant thereto, is
pending or foreseeable by reason of any fact or event.

3.4 The execution of this Agreement, the consummation of the transactions
contemplated therein and the performance by the Sellers of all their obligations
herein (i) do not and shall not conflict with or violate any provision of the
bylaws of the Company or Pilot Expansion, and do not or shall not require the
consent of a corporate body of any of these companies (other than the consent of
the Company that was already obtained as of the date hereof), (ii) do not and
shall not conflict with or violate any statutory or regulatory provision or
administrative, judiciary or arbitration decision, and (iii) do not and shall
not conflict with or violate any commitment by Pilot Expansion or the Company
whatsoever.


                                       2



3.5 As of the date of this Agreement, Pilot Expansion is the owner of ten (10)
unlimited interests of Ski Expansion, free from any liens or other restrictions.
With the exception of such unlimited interests, Pilot Expansion does not own any
assets; furthermore, it is not a holder of any liability or debt, nor any
obligation of any nature whatsoever (other than the obligations provided in the
Acquisition Agreement and its exhibits).

3.6 With the exception of the Pilot Expansion Interests validly sold to the
Acquirer in connection with this Agreement, there are no interests or rights
granting access, immediately or in the future, to the capital or voting rights
of Pilot Expansion.

ARTICLE 4 - APPROVAL OF THE SALE AND AMENDMENT TO THE COMPANY BYLAWS

In accordance with Articles L. 223-27 of the Commercial Code and 10-1 of the
bylaws of Pilot Expansion, the Sellers as sole holders of interests of the
Company, unanimously agreed at the meeting of Pilot Expansion held on March 30,
2005 (i) to authorize the sale contemplated hereof and approve the Acquirer as a
new holder of interests and (ii) to amend the bylaws accordingly. A copy of the
minutes of such decision certified by the manager of Pilot Expansion is attached
as exhibit to this Agreement.

ARTICLE 5 - STATEMENT FOR REGISTRATION

For the purposes of the payment of registration fees, the Sellers attest that
Pilot Expansion is subject to the corporation tax and that the Pilot Expansion
Interests represent cash contributions.

ARTICLE 6 - FILING

In accordance with Article L. 221-14 of the Commercial Code, for the purposes of
the enforceability of this Agreement, an original of this Agreement shall be
filed at the registered office in exchange for a filing certificate by the
manager substantially in the form attached hereto as Exhibit 6.

ARTICLE 7 - MISCELLANEOUS PROVISIONS

7.1 The Sellers shall ensure, at the latest as of the date hereof, that the
general meeting of the limited partners of Ski Expansion decides to amend its
bylaws, in particular in order to amend Article 3 thereof and any other
concerned provision of such bylaws to the new capacity of Pilot Expansion as
sole unlimited partner, and to suppress the provision stipulating the loss of
Pilot Expansion's capacity as unlimited partner in the event of the amendment of
certain provisions of Pilot Expansion's bylaws; by means of this agreement, the
Sellers agree to the resolutions made for this purpose as limited partners of
Ski Expansion.

7.2 With the exception of their right to receive the Purchase Price, the Sellers
do not have any rights on Pilot Expansion, nor any claim against Pilot Expansion
in connection with their former position as holders of Pilot Expansion
Interests, and they waive in advance any rights or claims that they could derive
from this position. However, the Sellers remain liable for the liabilities of
Pilot Expansion in accordance


                                       3



with applicable laws and regulations; in the event that their liability is
incurred in this regard, they shall retain any claim that they may have against
Pilot Expansion.

7.3 If any of the provisions of this Agreement were to be null, illegal or not
enforceable in any manner whatsoever, (the "CONTESTED PROVISIONS"), the validity
and the enforceability of the other provisions shall not be affected or
compromised, and the Parties shall negotiate in good faith in order to replace
the Contested Provisions by provisions that are valid and enforceable and as
close as possible to the common intent of the Parties or, if such common intent
cannot be determined, to the intent of those of the Parties that the Contested
Provisions were designed to protect.

7.4 This Agreement and its interpretation are exclusively governed by French
law. Any dispute arising in connection with this Agreement, including the
validity, the interpretation and the performance thereof, and which cannot be
resolved amicably, shall fall under the exclusive jurisdiction of the courts
within the jurisdiction of the Paris Court of Appeals.

Executed in Lyon, on April 12, 2005, in nine (9) originals.



- --------------------------------------
FOR QUIKSILVER, INC.:
by Mr. Bernard Mariette


- --------------------------------------
FOR SKI EXPANSION SCA:
by Mr. Laurent Boix-Vives


- --------------------------------------
FOR SDI SOCIETE DE SERVICES ET
DEVELOPPEMENT:
by Mr. Laurent Boix-Vives


- --------------------------------------
MR. LAURENT BOIX-VIVES


- --------------------------------------
MS. JEANNINE BOIX-VIVES


- --------------------------------------
MS. CHRISTINE SIMON


- --------------------------------------
MS. SYLVIE BERNARD



                                       4

EX-10.2

                                                                    EXHIBIT 10.2

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

                                [JPMORGAN LOGO]

                                CREDIT AGREEMENT

                                   dated as of

                                 April 12, 2005

                                      among

                                QUIKSILVER, INC.,

                           QUIKSILVER AMERICAS, INC.,
                                  as Borrower,

                            The Lenders Party Hereto

                                       and

                           JPMORGAN CHASE BANK, N.A.,
                             as Administrative Agent

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

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



                               TABLE OF CONTENTS



                                                                                                                    PAGE
                                                                                                                 
ARTICLE I    DEFINITIONS......................................................................................        2
   SECTION 1.1.   Defined Terms...............................................................................        2
   SECTION 1.2.   Other Definitional Provisions...............................................................       29
ARTICLE II   AMOUNT AND TERMS OF COMMITMENTs; LETTERS OF CREDIT...............................................       29
   SECTION 2.1.A  Revolving Loans and Letters of Credit; Revolving Loan Commitment Amounts....................       29
   2.1.B   Swing Line Loans; Swing Line Commitment............................................................       33
   2.1.C   Alternate Currency Loans...........................................................................       34
   SECTION 2.2.   Letters of Credit...........................................................................       37
   SECTION 2.3.   Optional Prepayments; Optional Commitment Reductions........................................       42
   SECTION 2.4.   Mandatory Prepayments.......................................................................       42
   SECTION 2.5.   Conversion and Continuation Options.........................................................       43
   SECTION 2.6.   Minimum Amounts of Tranches.................................................................       44
   SECTION 2.7.   Interest Rates and Payment Dates............................................................       44
   SECTION 2.8.   Computation of Interest and Fees............................................................       45
   SECTION 2.9.   Inability to Determine Interest Rate........................................................       45
   SECTION 2.10.  Pro Rata Treatment and Payments.............................................................       46
   SECTION 2.11.  Illegality..................................................................................       47
   SECTION 2.12.  Increased Costs.............................................................................       47
   SECTION 2.13.  Taxes.......................................................................................       48
   SECTION 2.14.  Indemnity...................................................................................       49
   SECTION 2.15.  Unused-Commitment Fees......................................................................       50
   SECTION 2.16.  Mitigation of Costs.........................................................................       50
   SECTION 2.17.  Determination of US Dollar Equivalent.......................................................       50
   SECTION 2.18.  Funding Account.............................................................................       50
   SECTION 2.19.  Protective Advances and Overadvances........................................................       50
   SECTION 2.20.  Replacement of Lenders Under Certain Circumstances..........................................       51
   SECTION 2.21.  Settlement..................................................................................       52
ARTICLE III  REPRESENTATIONS AND WARRANTIES...................................................................       52
   SECTION 3.1.   Organization and Good Standing..............................................................       53
   SECTION 3.2.   Power and Authority.........................................................................       53
   SECTION 3.3.   Validity and Legal Effect...................................................................       53
   SECTION 3.4.   No Violation of Laws or Agreements..........................................................       53
   SECTION 3.5.   Title to Assets; Existing Encumbrances......................................................       53
   SECTION 3.6.   Taxes and Assessments.......................................................................       54
   SECTION 3.7.   Litigation and Legal Proceedings............................................................       54
   SECTION 3.8.   Bank Accounts...............................................................................       54
   SECTION 3.9.   Accuracy of Financial Information...........................................................       54
   SECTION 3.10.  Accuracy of Other Information...............................................................       55
   SECTION 3.11.  Compliance with Laws Generally..............................................................       55
   SECTION 3.12.  ERISA Compliance............................................................................       55
   SECTION 3.13.  Environmental Compliance....................................................................       56
   SECTION 3.14.  Federal Regulations.........................................................................       56
   SECTION 3.15.  Fees and Commissions........................................................................       56
   SECTION 3.16.  Solvency....................................................................................       56
   SECTION 3.17.  Investment Company Act......................................................................       57
   SECTION 3.18.  Nature of Business..........................................................................       57


                                       i



                                                                                                                  
   SECTION 3.19.  Ranking of Loans............................................................................       57
   SECTION 3.20.  Intellectual Property.......................................................................       57
   SECTION 3.21.  Security Interest in Collateral.............................................................       57
   SECTION 3.22.  Insurance...................................................................................       57
   SECTION 3.23.  Representations and Warranties Contained in the Purchase Agreement Documentation and
               the Bridge Loan Agreement Documentation........................................................       57
ARTICLE IV   CONDITIONS TO BORROWING..........................................................................       58
   SECTION 4.1.   Conditions to Closing.......................................................................       58
   SECTION 4.2.   Conditions to Each Loan or Letter of Credit.................................................       61
ARTICLE V    AFFIRMATIVE COVENANTS............................................................................       62
   SECTION 5.1.   Financial Statements........................................................................       62
   SECTION 5.2.   Certificates; Other Information.............................................................       63
   SECTION 5.3.   Payment of Obligations......................................................................       65
   SECTION 5.4.   Conduct of Business; Maintenance of Existence and Licenses; Contractual Obligations.........       65
   SECTION 5.5.   Maintenance of Property.....................................................................       65
   SECTION 5.6.   Insurance...................................................................................       65
   SECTION 5.7.   Inspection; Communication with Accountants..................................................       66
   SECTION 5.8.   Appraisals and Field Examinations...........................................................       67
   SECTION 5.9.   Collateral Access Agreements................................................................       67
   SECTION 5.10.  Deposit Account Control Agreements..........................................................       67
   SECTION 5.11.  Environmental Laws..........................................................................       68
   SECTION 5.12.  Use of Proceeds.............................................................................       68
   SECTION 5.13.  Compliance with Laws, Etc...................................................................       68
   SECTION 5.14.  Additional Collateral; Further Assurances...................................................       68
   SECTION 5.15.  Notices.....................................................................................       69
ARTICLE VI   NEGATIVE COVENANTS...............................................................................       70
   SECTION 6.1.   Financial Condition Covenants...............................................................       70
   SECTION 6.2.   Limitation on Indebtedness..................................................................       70
   SECTION 6.3.   Limitation on Liens.........................................................................       72
   SECTION 6.4.   Limitation on Fundamental Changes...........................................................       73
   SECTION 6.5.   Limitation on Sale of Assets................................................................       73
   SECTION 6.6.   Limitation on Dividends.....................................................................       73
   SECTION 6.7.   Limitation on Investments, Loans and Advances...............................................       74
   SECTION 6.8.   Transactions with Affiliates................................................................       75
   SECTION 6.9.   Fiscal Year.................................................................................       75
   SECTION 6.10.  Sale-Leaseback Transactions.................................................................       75
   SECTION 6.11.  Unfunded Liabilities........................................................................       75
   SECTION 6.12.  Hedging Obligations.........................................................................       75
   SECTION 6.13.  Optional Payments of Certain Debt Instruments...............................................       76
   SECTION 6.14.  Amendments to Purchase Agreement Documentation and Tender Offer Documentation...............       76
   SECTION 6.15.  Amendments to Certain Documentation.........................................................       76
   SECTION 6.16.  Negative Pledge Clauses.....................................................................       76
   SECTION 6.17.  Clauses Restricting Subsidiary Distributions................................................       76
ARTICLE VII  EVENTS OF DEFAULT................................................................................       77
ARTICLE VIII THE AGENT........................................................................................       80
   SECTION 8.1.   Appointment.................................................................................       80
   SECTION 8.2.   Delegations of Duties.......................................................................       80
   SECTION 8.3.   Exculpatory Provisions......................................................................       80
   SECTION 8.4.   Reliance by the Agent.......................................................................       81



                                       ii



                                                                                                                  
   SECTION 8.5.   Notice of Default...........................................................................       81
   SECTION 8.6.   Non-Reliance on the Agent and Other Lenders.................................................       81
   SECTION 8.7.   Indemnification.............................................................................       82
   SECTION 8.8.   The Agent in Its Individual Capacity........................................................       82
   SECTION 8.9.   Successor Agent.............................................................................       82
   SECTION 8.10.  Alternate Currency Fronting Lender, Swing Line Lender and Issuing Banks.....................       83
ARTICLE IX   MISCELLANEOUS....................................................................................       83
   SECTION 9.1.   Amendments and Waivers......................................................................       83
   SECTION 9.2.   Notices.....................................................................................       84
   SECTION 9.3.   No Waiver; Cumulative Remedies..............................................................       85
   SECTION 9.4.   Survival of Representations and Warranties..................................................       85
   SECTION 9.5.   Payment of Expenses and Taxes...............................................................       85
   SECTION 9.6.   Successors and Assigns; Participations; Purchasing Lenders..................................       87
   SECTION 9.7.   Adjustments; Setoff.........................................................................       89
   SECTION 9.8.   Counterparts................................................................................       90
   SECTION 9.9.   Severability................................................................................       90
   SECTION 9.10.  Integration.................................................................................       90
   SECTION 9.11.  GOVERNING LAW...............................................................................       90
   SECTION 9.12.  WAIVER OF JURY TRIAL........................................................................       90
   SECTION 9.13.  Acknowledgements............................................................................       90
   SECTION 9.14.  Headings....................................................................................       91
   SECTION 9.15.  Copies of Certificates, Etc.................................................................       91
   SECTION 9.16.  Confidentiality.............................................................................       91
   SECTION 9.17.  Patriot Act Notice..........................................................................       91
   SECTION 9.18.  Conversion of Currencies....................................................................       91
   SECTION 9.19.  Submission To Jurisdiction; Waivers.........................................................       92
   SECTION 9.20.  Intercreditor Agreement.....................................................................       92



                                      iii



Exhibits

     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      Compliance Certificate
     F      Continuation Notice
     G-1    Revolving Loan Borrowing Notice
     G-2    Alternate Currency Loan Borrowing Notice
     H-1    Swing Line Borrowing Notice
     H-2    Swing Line Loan Participation Certificate
     I      Security Agreement
     J      Guarantee
     K      Borrowing Base Certificate
     L-1    Form of Legal Opinion of Hewitt & O'Neil LLP
     L-2    Form of Legal Opinion of De Pardieu, Broacas, Maffei, special French
            counsel to the Agent
     M      Form of Exemption Certificate
     N      Form of Intercreditor Agreement

Schedules

     1.1    Revolving Loan Commitments
     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
     3.6    Taxes
     3.7    Litigation
     3.8    Bank Accounts
     3.13   Environmental Liabilities
     3.22   Insurance
     6.2    Existing Indebtedness
     6.7    Existing Investments

                                       iv




                                CREDIT AGREEMENT

      THIS CREDIT AGREEMENT, dated as of April 12, 2005, among (1) QUIKSILVER,
INC., a Delaware corporation ("Quiksilver"), (2) QUIKSILVER AMERICAS, INC., a
California corporation (the "Borrower"), (3) the several banks and other
financial institutions from time to time parties to this Agreement (the
"Lenders"), (4) JPMORGAN CHASE BANK, N.A., as administrative agent for the
Lenders hereunder (in such capacity, the "Agent"), and (5) JPMORGAN CHASE BANK,
N.A., LONDON BRANCH, as Alternate Currency Fronting Lender.

                                   WITNESSETH:

      WHEREAS, Quiksilver intends to directly or indirectly acquire (the
"Transaction") 100% of the outstanding capital stock (the "Target Stock") of
Skis Rossignol S.A. (the "Target");

      WHEREAS, certain existing stockholders of the Target (such stockholders,
the "Sellers") own approximately 44.46% of the outstanding capital stock of the
Target, consisting of (i) approximately 38.44% held by a holding company (the
"Holding Company") controlled by the Sellers and (ii) approximately 6.02% of the
Target held directly by the Sellers (the "Direct Interest");

      WHEREAS, upon the consummation of the Transaction, Quiksilver intends to
(i) have purchased, indirectly through the Holding Company, 75% of the Target
Stock currently held by the Sellers, with total consideration of approximately
$108,000,000, payable in a combination of 70% cash and 30% newly issued shares
of common stock of Quiksilver and (ii) have consummated the Tender Offer and, if
applicable, the Buy Out and Squeeze Out (each as defined below);

      WHEREAS, Quiksilver has entered into a Purchase Agreement (the "Purchase
Agreement") pursuant to which Quiksilver will effect the Transaction in two
stages;

      WHEREAS, in the first stage of the Transaction, Quiksilver has agreed to
(i) indirectly become the managing general partner ("commandite") of the Holding
Company on the date of execution of the Purchase Agreement, (ii) make a direct
cash payment to the Sellers in an amount of approximately $8,800,000, (iii)
deposit approximately $52,700,000 (the "Escrowed Amount"), which will be
escrowed into an account held at Societe Generale (the "Escrow Account") and
(iv) indirectly, or pay a redemption price for, purchase commandite shares from
or of the Sellers in the amount of approximately (euro)50,000 (collectively, the
"Initial Purchase");

      WHEREAS, in connection with the Initial Purchase, Quiksilver has informed
the Lenders that it will concurrently terminate the Existing Credit Agreement
(as hereinafter defined) (such refinancings, together with the Initial Purchase,
the "Initial Transactions");

      WHEREAS, the second stage of the Transaction will commence upon completion
of the Initial Transactions and will involve, among other things, (i) the
transfer of the Escrowed Amount to the Sellers, (ii) a direct cash payment by
Quiksilver to the Sellers in the amount of approximately $14,600,000, (iii) a
non-cash payment by Quiksilver to the Sellers in the form of newly issued shares
of Quiksilver valued at approximately $31,900,000, (iv) the purchase of the
remaining shares of Target Stock to be acquired by Quiksilver pursuant to a
tender offer under French law (offre publique d'achat) (the "Tender Offer"),
followed, if applicable, by a offre publique de retrait (the "Buy Out") and a
retrait obligatoire (the "Squeeze Out") and (v) the refinancing of certain
indebtedness of the Target;

      WHEREAS, to finance the Transaction, the Borrower has requested the
Lenders to make available the credit facilities set forth herein; and



                                                                               2

      WHEREAS, the Lenders are willing to make such credit facilities available
upon and subject to the terms and conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:

                           ARTICLE I   DEFINITIONS

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

      "ABR" and "Alternate Base Rate": the higher 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") and (ii) 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 (including, without limitation, any Protective Advance
or Overadvance).

      "Account Debtor": any Person obligated on an Account.

      "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": as defined in Article 9 of the UCC.

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

      "Adjustment Date": as defined in the Pricing Grid.

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

      "Additional Domestic Guarantors": Fidra, Inc., Hawk Designs, Inc. and
Mervin Manufacturing. Inc.

      "Affected Alternate Currency": as defined in Section 2.9.

      "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 to this Agreement.

      "Aggregate Credit Exposure": at any time, the aggregate amount of the
Credit Exposure of the Lenders outstanding at such time.



                                                                               3

      "Aggregate Revolving Loan Commitment": the sum of the Revolving Loan
Commitments set forth on Schedule 1.1 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$250,000,000.

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

      "Agreement Currency": as defined in Section 9.18.

      "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 Fronting Lender": JPMorgan Chase Bank, N.A., London
Branch.

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

      "Alternate Currency Loan": as defined in Section 2.1.C(a).

      "Alternate Currency Loan Borrowing Notice": a notice from the Borrower to
the Agent and the Alternate Currency Fronting Lender requesting a borrowing of
Alternate Currency Loans, substantially in the form of Exhibit G-2 hereto.

      "Alternate Currency Loan Participants": with respect to each Alternate
Currency Loan, the collective reference to all of the Lenders.

      "Alternate Currency Sublimit": US$35,000,000.

      "AMF": Autorites des marches financiers.

      "Applicable Creditor": as defined in Section 9.18.

      "Applicable Margin": (a) with respect to ABR Loans, 0% per annum and (b)
with respect to LIBOR Loans, 1.375% per annum; provided, that on and after the
first Adjustment Date occurring after the completion of two full fiscal quarters
of Quiksilver after the Closing Date, the Applicable Margin with respect to
Loans will be determined pursuant to the Pricing Grid.

      "Approved Currencies": US Dollars, Canadian Dollars, Mexican Pesos, Euros,
Japanese Yen, Australian Dollars and Pounds Sterling (each, an "Approved
Currency"), and such other currencies as shall be requested by the Borrower to
be an Approved Currency hereunder subject to the approval of the Agent and the
Alternate Currency Fronting Lender, in their sole and absolute discretion, in
each case constituting freely transferable lawful money of the country of
issuance and in the case of each such



                                                                               4

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 in Schedule 1.1 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 the
Borrower, 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 of Quiksilver or any of its Subsidiaries to any Person or Persons other
than to Quiksilver or any of its Subsidiaries; provided that Asset Dispositions
shall not include (i) the sale of Inventory in the ordinary course of business
and (ii) the sale or other such disposition of other assets not exceeding
US$5,000,000 in the aggregate during any calendar year.

      "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": at any time, the difference between (a) the lesser of (x)
the Aggregate Revolving Loan Commitment and (y) the Borrowing Base minus (b) the
Aggregate Credit Exposure, in each case at such time.

      "Availability Event": the occurrence of any date if, on such date, average
daily Availability for the preceding 30-day period was less than (x) if the
Guarantee Date has not yet occurred, US$17,000,000, or (y) on and after the
Guarantee Date, US$25,000,000; provided that such Availability Event shall be
deemed to be continuing until average daily Availability for any 90-day period
thereafter (calculated as of any date during such period to reflect average
Availability for the preceding 30 days) was no less than (x) if the Guarantee
Date has not yet occurred, US$20,000,000, or (y) on and after the Guarantee
Date, US$30,000,000.

      "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 (other than Swing Line Loans) and
Letters of Credit outstanding.

      "Banking Services": each and any of the following bank services provided
to any Loan Party by JPMorgan Chase Bank, N.A. or any of its Affiliates: (a)
commercial credit cards, (b) stored value cards and (c) treasury management
services (including, without limitation, controlled disbursement, automated
clearinghouse transactions, return items, overdrafts and interstate depository
network services).



                                                                               5

      "Banking Services Obligations": any and all obligations of the Loan
Parties, whether absolute or contingent and howsoever and whensoever created,
arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor) in connection with Banking
Services.

      "Borrower": as defined in the preamble to this Agreement.

      "Borrowing Base": at any time, the sum of:

      (a) 85% of Eligible Accounts of the Loan Parties at such time, plus

      (b) the lesser of (i) 75% of Eligible Inventory of the Quiksilver Loan
Parties, valued at the lower of cost or market value, determined on a
first-in-first-out basis, at such time and (ii) 85% of the Net Orderly
Liquidation Value of Eligible Inventory of the Quiksilver Loan Parties at such
time, plus

      (c) the lesser of (i) 70% of Eligible Inventory of the Target Loan
Parties, valued at the lower of cost or market value, determined on a
first-in-first-out basis, at such time and (ii) 85% of the Net Orderly
Liquidation Value of Eligible Inventory of the Target Loan Parties at such time,
plus

      (d) the lesser of (i) 85% of the Net Orderly Liquidation Value of
Inventory of the Quiksilver Loan Parties at such time to the extent such
Inventory would be included in the calculation of "Quiksilver L/C Amount" and
(ii) 75% of the Quiksilver L/C Amount at such time (with the Inventory subject
to the "Quiksilver L/C Amount" definition being valued at the lower of cost or
market value, determined on a first-in-first-out basis), plus

      (e) the lesser of (i) 85% of the Net Orderly Liquidation Value of
Inventory of the Target Loan Parties at such time to the extent such Inventory
would be included in the calculation of "Target L/C Amount" and (ii) 70% of the
Target L/C Amount at such time (with the Inventory subject to the "Target L/C
Amount" definition being valued at the lower of cost or market value, determined
on a first-in-first-out basis), minus

      (f) Reserves at such time.

Notwithstanding the foregoing, during the Target Seasonal Period of each year,
(1) the 70% advance rate for Eligible Inventory contained in clause (c)(i) above
shall be increased to 80% and (2) the 70% advance rate for the Target L/C Amount
contained in clause (e)(ii) above shall be increased to 80%. The maximum amount
of the Borrowing Base calculation based on Inventory shall be equal to (x) if
the Guarantee Date has not yet occurred, US$125,000,000 or, (y) after the
Guarantee Date, US$175,000,000; provided, further, that such amounts shall be
subject to increase by the Agent in its Permitted Discretion in connection with
any new Revolving Loan Commitments established in accordance with Section
2.1.A(b)(i).

      "Borrowing Base Certificate": a certificate, signed by a Responsible
Officer of the Borrower, in the form of Exhibit K or another form which is
acceptable to the Agent in its sole discretion.

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



                                                                               6

      "Bridge Loan Agreement": the Credit Agreement, dated as of the date
hereof, among Quiksilver, the lenders party thereto and JPMorgan Chase Bank,
N.A., as administrative agent.

      "Bridge Loan Agreement Documentation": the collective reference to the
Bridge Loan Agreement, the guarantee entered into in connection therewith by the
relevant Loan Parties, the exchange notes issued in connection therewith, any
indenture governing such exchange notes and all documentation entered into in
connection therewith, as such Bridge Loan Agreement Documentation may be
amended, supplemented or otherwise modified from time to time in accordance with
Section 6.15.

      "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.

      "Buy Out": as defined in the preamble to this Agreement.

      "Calculation Date": with respect to each Alternate Currency, the fifteenth
and last day of each calendar month (or, if such day is not a Business Day, the
next succeeding Business Day) and such other days from time to time as the Agent
shall designate as a "Calculation Date", provided that each of the following
shall also be a "Calculation Date": (i) the second Business Day preceding each
Borrowing Date with respect to, and each date of any continuation of, any
Alternate Currency Loan, (ii) the Business Day preceding each date on which (w)
a fronting fee is payable pursuant to Section 2.1.C(e), (x) a participation fee
is payable pursuant to Section 2.1.C(f), (y) a risk participation is funded
pursuant to Section 2.1.C(h) or (z) interest is payable pursuant to Section
2.7(c), (iii) the Business Day preceding each date on which a participation in
an Alternate Currency Letter of Credit is calculated pursuant to Section 2.2(d)
or a reimbursement obligation with respect to an Alternate Currency Letter of
Credit is calculated pursuant to Section 2.2(e), (iv) the Business Day preceding
the Fee Payment Date on which any fee payable pursuant to Section 2.2(f)(i) is
payable in respect of an Alternate Currency Letter of Credit, and (v) the date
of issuance or amendment of a Letter of Credit in an Alternate Currency.

      "Canada": Canada (including the Provinces and Territories thereof).

      "Canadian Dollars": freely transferable lawful money of Canada.

      "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.



                                                                               7

      "Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition; (b)
certificates of deposit, time deposits, eurodollar time deposits or overnight
bank deposits having maturities of six months or less from the date of
acquisition issued by any Lender or by any commercial bank organized under the
laws of the United States or any state thereof having combined capital and
surplus of not less than US$500,000,000; (c) commercial paper of an issuer rated
at least A-1 by Standard & Poor's Ratings Services ("S&P") or P-1 by Moody's
Investors Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies
cease publishing ratings of commercial paper issuers generally, and maturing
within six months from the date of acquisition; (d) repurchase obligations of
any Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days, with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government (as the case may be) are rated at least A
by S&P or A by Moody's; (f) securities with maturities of six months or less
from the date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of this
definition; (g) money market mutual or similar funds that invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition; or (h) money market funds that (i) comply with the criteria set
forth in SEC Rule 2a-7 under the Investment Company Act of 1940, as amended,
(ii) are rated AAA by S&P and Aaa by Moody's and (iii) have portfolio assets of
at least US$5,000,000,000.

      "Change in Control": (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of Rule 13d-3 of the Exchange Act as in effect on the date hereof) of
Capital Stock representing more than 35% of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of Quiksilver; (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors of Quiksilver by Persons who were neither (i) nominated by the board
of directors of Quiksilver nor (ii) appointed by directors so nominated; (c) the
failure by Quiksilver to own, directly or indirectly, beneficially or of record,
100% of the Capital Stock of the Borrower or (d) a "Change in Control" (or any
such similar term) under and as defined in the Bridge Loan Agreement
Documentation or the Senior Note Indenture.

      "Closing Date": April 12, 2005, 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.

      "Collateral": all property of the Loan Parties (other than (a)
Intellectual Property Rights and (b) monies on deposit in, or released from, the
Escrow Account to the extent such monies were initially deposited therein by
Quiksilver or any of its Subsidiaries), now owned or hereafter acquired, upon
which a Lien is purported to be created by any Security Document.

      "Collateral Access Agreement": any landlord waiver or other agreement, in
form and substance reasonably satisfactory to the Agent, between the Agent and
any third party (including any bailee, consignee, customs broker, or other
similar Person) in possession of any Collateral or any landlord of any Loan
Party for any real Property where any Collateral is located, as such landlord
waiver or other agreement may be amended, restated, or otherwise modified from
time to time.



                                                                               8

      "Commitment Fee Rate": 0.30% per annum; provided, that on and after the
first Adjustment Date occurring after the completion of two full fiscal quarters
of the Borrower after the Closing Date, the Commitment Fee Rate will be
determined pursuant to the Pricing Grid.

      "Commitment Letter" the Commitment Letter, dated as of March 20, 2005,
among Quiksilver, the Borrower, JPMorgan and the Agent, as amended from time to
time.

      "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.

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

      "Consideration": with respect to any Permitted 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 Permitted Acquisition and the expenses associated therewith, including
all brokerage commissions, legal fees and similar expenses.

      "Consolidated Rentals": with reference to any period, the Rentals of
Quiksilver and its Subsidiaries calculated on a consolidated basis for such
period.

      "Consolidated Tangible Assets": of any Person as of any date, the total
amount of assets of such Person and its Subsidiaries (less applicable reserves)
on a consolidated basis at the end of the fiscal quarter immediately preceding
such date, as determined in accordance with GAAP, less (i) Intangible Assets and
(ii) appropriate adjustments on account of minority interests of other Persons
holding equity investments in such Person's Subsidiaries.

      "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.

      "Control": the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.

      "Copyrights": with respect to any Person, all of such Person's right,
title, and interest in and to the following: (a) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(d) the right to sue for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.

      "Credit Exposure": with respect to any Lender at any time, an amount equal
to the sum of (a) the aggregate principal amount of all Revolving Loans held by
such Lender then outstanding, (b) such



                                                                               9

Lender's Revolving Loan Commitment Percentage of the Letter of Credit Exposure,
(c) such Lender's Revolving Loan Commitment Percentage of the aggregate
principal amount of Swing Line Loans then outstanding, (d) such Lender's
Revolving Loan Commitment Percentage of the US Dollar Equivalent of the
aggregate principal amount of Alternate Currency Loans then outstanding and (e)
such Lender's Revolving Loan Commitment Percentage of the aggregate principal
amount of Protective Advances and Overadvances then outstanding.

      "Currency": any Approved Currency.

      "Customer List": a list of the Loan Parties' customers in a form
reasonably acceptable to the Agent.

      "Debt Offering": the issuance or sale of any debt securities by Quiksilver
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.

      "Deposit Account Control Agreement": an agreement, in form and substance
reasonably satisfactory to the Agent, among any Loan Party, a banking
institution holding such Loan Party's funds, and the Agent with respect to
collection and control of all deposits and balances held in a deposit account
maintained by any Loan Party with such banking institution.

      "Direct Interest": as defined in the recitals to this Agreement.

      "Documents": as defined in Article 9 of the UCC.

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

      "EBITDA": for Quiksilver and its Subsidiaries on a consolidated basis, for
the calendar quarter most recently ended for which financial statements have
been delivered and the immediately preceding three quarters, Net Income after
eliminating extraordinary gains and losses, plus (a) provisions for income
taxes, (b) depreciation and amortization and (c) Interest Expense. For the
purposes of calculating EBITDA for any period of twelve months (each, a
"Reference Period"), (i) if at any time during such Reference Period Quiksilver
or any Subsidiary shall have made any Material Disposition, the EBITDA for such
Reference Period shall be reduced by an amount equal to the EBITDA (if positive)
attributable to the property that is the subject of such Material Disposition
for such Reference Period or increased by an amount equal to the EBITDA (if
negative) attributable thereto for such Reference Period and (ii) if during such
Reference Period Quiksilver or any Subsidiary shall have made a Material
Acquisition, Consolidated EBITDA for such Reference Period shall be calculated
after giving pro forma effect thereto as if such Material Acquisition occurred
on the first day of such Reference Period. As used in this definition, "Material
Acquisition" means the Transaction and any acquisition of property or series of
related acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by Quiksilver and its Subsidiaries in excess of US$10,000,000;
and "Material Disposition" means any disposition of property or series of
related dispositions of property that yields gross proceeds to Quiksilver or any
of its Subsidiaries in excess of US$10,000,000.



                                                                              10

      "Eligible Accounts" means, at any time, the Accounts of the Loan Parties
which the Agent determines in its Permitted Discretion are eligible as the basis
for extensions of credit hereunder. Without limiting the Agent's discretion
provided herein, Eligible Accounts shall not include any Account:

            (a) which is not subject to a first priority perfected security
      interest in favor of the Agent;

            (b) which is subject to any Lien other than (i) a Lien in favor of
      the Agent and (ii) a Permitted Lien which does not have priority over the
      Lien in favor of the Agent;

            (c) with respect to which (i) more than 90 days have elapsed since
      the date of the original invoice therefor or which is more than 60 days
      past the due date for payment; provided, that this clause (c) shall not,
      in and of itself, render ineligible (i) Accounts in an aggregate amount
      not in excess of $75,000,000 with respect to which more than 90 days but
      less than 120 days have elapsed since the date of the original invoice so
      long as no more than 60 days have elapsed since the due date for payment
      and (ii) Accounts in an aggregate amount not in excess of $10,000,000 with
      respect to which more than 90 days but less than 210 days have elapsed
      since the date of the original invoice so long as no more than 30 days
      have elapsed since the due date for payment;

            (d) which is owing by an Account Debtor for which more than 50% of
      the Accounts owing from such Account Debtor and its Affiliates are
      ineligible hereunder;

            (e) which is owing by an Account Debtor to the extent the aggregate
      amount of Accounts owing from such Account Debtor and its Affiliates to
      any Loan Party exceeds 15% of the aggregate Eligible Accounts;

            (f) with respect to which any covenant, representation, or warranty
      contained in this Agreement or any of the other Loan Documents has been
      breached or is not true;

            (g) which (i) does not arise from the sale of goods or performance
      of services in the ordinary course of business, (ii) is not evidenced by
      an invoice or other documentation reasonably satisfactory to the Agent
      which has been sent to the Account Debtor, (iii) represents a progress
      billing, (iv) is contingent upon such Loan Party's completion of any
      further performance, or (v) represents a sale on a bill-and-hold,
      guaranteed sale, sale-and-return, sale on approval, consignment,
      cash-on-delivery or any other repurchase or return basis;

            (h) for which the goods giving rise to such Account have not been
      shipped to the Account Debtor or for which the services giving rise to
      such Account have not been performed by such Loan Party;

            (i) with respect to which any check or other instrument of payment
      has been returned uncollected for any reason;

            (j) which, unless such Account is covered by credit insurance
      reasonably satisfactory to the Agent, is owed by an Account Debtor which
      has (i) applied for, suffered, or consented to the appointment of any
      receiver, custodian, trustee, or liquidator of its assets, (ii) has had
      possession of all or a material part of its property taken by any
      receiver, custodian, trustee or liquidator, (iii) filed, or had filed
      against it, any request or petition for liquidation, reorganization,
      arrangement, adjustment of debts, adjudication as bankrupt, winding-up, or
      voluntary or involuntary case under any state or federal bankruptcy laws,
      (iv) has admitted in writing its



                                                                              11

      inability, or is generally unable to, pay its debts as they become due,
      (v) become insolvent, or (vi) ceased operation of its business;

            (k) which is owed by any Account Debtor which has sold all or
      substantially all of its assets;

            (l) which is owed by an Account Debtor which (i) does not maintain
      its chief executive office or principal residence in the United States or
      Canada, (ii) is not organized under applicable law of the United States or
      Canada unless, in either case, (x) such Account is backed by a letter of
      credit acceptable to the Agent which is in the possession of the Agent,
      (y) (A) the Account Debtor on such Account has investment grade debt
      ratings from each of Moody's Investor Service Inc. and Standard & Poor's
      Ratings Group and (B) the US Dollar Equivalent of the sum of (1) the
      aggregate amount of such Accounts which qualify as Eligible Accounts plus
      (2) the aggregate amount of Accounts of the type described in clause (m)
      below which qualify as Eligible Accounts, exceeds US$15,000,000 at any one
      time or (z) such Account is deemed satisfactory by the Agent in its
      Permitted Discretion;

            (m) which is owed in any currency other than US Dollars or, in the
      case of Eligible Accounts owed by Account Debtors which maintain their
      chief executive office or principal residence in Canada, Canadian Dollars,
      to the extent that the US Dollar Equivalent of the sum of (A) the
      aggregate amount of such Accounts plus (B) the aggregate amount of
      Accounts of the type described in clause (l)(y) above which qualify as
      Eligible Accounts, exceeds US$15,000,000 at any one time;

            (n) which is owed by the government (or any department, agency,
      public corporation, or instrumentality thereof) of any country other than
      the United States unless such Account is backed by a letter of credit
      acceptable to the Agent which is in the possession of the Agent;

            (o) which (i) is owed by the government of the United States, or any
      department, agency, public corporation, or instrumentality thereof and
      (ii) after a request by the Agent to so comply, does not comply with the
      Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. Section
      3727 et seq. and 41 U.S.C. Section 15 et seq.), and any other steps
      necessary to perfect the Lien of the Agent in such Account to the Agent's
      reasonable satisfaction;

            (p) which is owed by any Affiliate, employee, or director of any
      Loan Party;

            (q) which is owed by an Account Debtor or any Affiliate of such
      Account Debtor to which any Loan Party is indebted, but only to the extent
      of such indebtedness;

            (r) which is subject to any counterclaim, deduction, defense, setoff
      or dispute but only to the extent of any such counterclaim, deduction,
      defense, setoff or dispute;

            (s) which is evidenced by any promissory note, chattel paper, or
      instrument;

            (t) which is owed by an Account Debtor located in any jurisdiction
      which requires filing of a "Notice of Business Activities Report" or other
      similar report in order to permit such Loan Party to seek judicial
      enforcement in such jurisdiction of payment of such Account, unless such
      Loan Party has filed such report or qualified to do business in such
      jurisdiction; or



                                                                              12

            (u) with respect to which such Loan Party has made any agreement
      with the Account Debtor for any reduction thereof, other than discounts
      and adjustments given in the ordinary course of business.

      "Eligible Inventory": at any time, the Inventory of the Loan Parties which
the Agent determines in its Permitted Discretion is eligible as the basis for
extensions of credit hereunder. Without limiting the Agent's discretion provided
herein, Eligible Inventory shall not include any Inventory:

            (a) which is not subject to a first priority perfected Lien in favor
      of the Agent;

            (b) which is subject to any Lien other than (i) a Lien in favor of
      the Agent and (ii) a Permitted Lien which does not have priority over the
      Lien in favor of the Agent;

            (c) which is, in the Agent's Permitted Discretion, slow moving,
      obsolete, unmerchantable, defective, unfit for sale, or not salable at
      prices approximating at least the cost of such Inventory in the ordinary
      course of business;

            (d) with respect to which any covenant, representation, or warranty
      contained in this Agreement or any other Loan Document has been breached
      or is not true;

            (e) which does not conform to all standards imposed by any
      governmental authority;

            (f) which is not finished goods or which constitutes
      work-in-process, raw materials, spare or replacement parts, subassemblies,
      packaging and shipping material, manufacturing supplies, display items,
      bill-and-hold goods, returned or repossessed goods, defective goods, goods
      held on consignment, or goods which are not of a type held for sale in the
      ordinary course of business;

            (g) which is not located in the United States or Canada;

            (h) which is in transit with a common carrier from vendors and
      suppliers, to the extent the amount of such in transit Inventory exceeds,
      in the aggregate, US$10,000,000;

            (i) which is located in any location leased by a Loan Party unless
      (i) the lessor has delivered to the Agent a Collateral Access Agreement or
      (ii) a Reserve for rent, charges, and other amounts due or to become due
      with respect to such facility has been established by the Agent in its
      Permitted Discretion;

            (j) which is located in any third party warehouse or is in the
      possession of a bailee and is not evidenced by a Document, unless such
      warehouseman or bailee has delivered to the Agent a Collateral Access
      Agreement and such other documentation as the Agent may require;

            (k) which is the subject of a consignment by any Loan Party as
      consignor;

            (l) which is perishable (other than sports nutrition products to the
      extent the useful life or sale period shall not have expired);

            (m) which contains or bears any Intellectual Property Rights
      licensed to any Loan Party unless the Agent is satisfied that it may sell
      or otherwise dispose of such Inventory without (i) infringing the rights
      of such licensor, (ii) violating any contract with such licensor, or (iii)



                                                                              13

      incurring any liability with respect to payment of royalties other than
      royalties incurred pursuant to sale of such Inventory under the current
      licensing agreement; or

            (n) which is not reflected in a current perpetual inventory report
      of any Loan Party.

            In the event that Inventory which was previously Eligible Inventory
ceases to be Eligible Inventory hereunder, the Borrower shall notify the Agent
thereof (i) within three (3) Business Days of the date the Borrower has obtained
knowledge thereof if any such Inventory has a value (based on the lower of cost,
determined on a first-in, first-out basis, or market) in excess of US$10,000,000
in the aggregate and (ii) on and at the time of submission to the Agent of the
next Borrowing Base Certificate in all other cases.

      "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 Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally enforceable
requirement (including, without limitation, common law) of the United States or
any other nation, or any state, local, municipal or other governmental
authority, regulating, relating to or imposing liability or standards of conduct
concerning protection of the environment or of human health, or employee health
and safety, as has been, is now, or may at any time hereafter be, in effect.

      "Equity Offering": the sale or issuance (or reissuance) by Quiksilver 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 (i) to officers, employees, directors and/or consultants of Quiksilver
and/or any Subsidiary pursuant to one or more employee stock option or stock
purchase plans or (ii) in connection with Permitted Acquisitions (including the
Transaction).

      "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.

      "Escrow Account": as defined in the preamble to this Agreement.

      "Escrowed Amount": as defined in the preamble to this Agreement.

      "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 Nassau, Bahamas (with respect to
Alternate Currency Loans denominated in Mexican Pesos only), 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 is open for business on that day; and if, on that day,
a payment in or a purchase of Euro is to be made, the day is also a TARGET Day.



                                                                              14

      "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.

      "Exchange Act": the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission thereunder, as amended.

      "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.

      "Existing Credit Agreement": the Credit Agreement, dated as of June 27,
2003, as amended, among Quiksilver, the Borrower, Quiksilver Wholesale, Inc., NA
Pali, S.A.S., Quiksilver Japan K.K., Ug, the lenders party thereto, JPMorgan
Chase Bank, N.A. as agent, and others.

      "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
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.

      "Fee Letter": the Fee Letter, dated as of March 20, 2005, among
Quiksilver, the Borrower, JPMorgan and the Agent, as amended from time to time.

      "Fee Payment Date": (a) the third Business Day following the last day of
each March, June, September and December and (b) the Revolving Loan Commitment
Expiration Date.

      "Fixed Charge Coverage Ratio": for Quiksilver and its Subsidiaries on a
consolidated basis, the ratio, determined as of the end of each fiscal quarter
of Quiksilver for the then most-recently ended four fiscal quarters, of (a)
EBITDA for such period minus Capital Expenditures paid in cash during such
period (other than Capital Expenditures financed with Indebtedness (other than
the Loans), it being understood that any subsequent payment of the principal of
such Indebtedness shall be deducted from EBITDA in the calculation of the Fixed
Charge Coverage Ratio with respect to the period during which such payment is
made) minus expense for taxes paid in cash for such period to (b) Fixed Charges
for such period.

      "Fixed Charges": for Quiksilver and its Subsidiaries on a consolidated
basis, the sum of (a) cash Interest Expense, plus (b) scheduled principal
payments on Indebtedness made during such period, plus (c) (without duplication)
payments in respect of Capitalized Lease Obligations which reduce the amount
thereof, plus (d) cash contributions to any Plan; provided, that for any
four-quarter period ending prior to the completion of four fiscal quarters after
the Closing Date, Fixed Charges of the type described in clause (a) and clause
(d) above (but only, in the case of clause (d), to the extent that regular
quarterly contributions exceed $1,000,000 during the most recent quarter) shall
be equal to Fixed Charges of that type for the number of full fiscal quarters
that have elapsed since the Closing Date multiplied by 4, 2 or 4/3, as
applicable.

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

      "Funding Account": as defined in Section 2.18.



                                                                              15

      "GAAP": generally accepted accounting principles in the United States in
effect from time to time.

      "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 Loan Party that has granted liens and/or security interests
in its assets to secure the Obligations.

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

      "Guarantee Date": the date on which each of the Domestic Subsidiaries of
the Target become party to the Guarantee and the Security Agreement.

      "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 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 the
Borrower in a manner and with a result reasonably satisfactory to the Majority
Lenders.

      "Guarantors": each of Quiksilver, each Material Domestic Subsidiary (other
than the Borrower) and each Additional Domestic Guarantor.

      "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


                                                                              16

exchange agreements, interest rate cap or collar protection agreements, forward
rate currency or interest 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.

      "Holding Company": as defined in the recitals to this Agreement.

      "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 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. For the avoidance of doubt and with respect to clause (vi) above,
in the situation where (x) one or more standby letters of credit are issued for
the account of Quiksilver or any Subsidiary to backstop (y) one or more other
letters of credit issued for the account of Quiksilver or such Subsidiary in the
same aggregate face amount, the amount of Indebtedness attributed to all such
letters of credit shall be limited to the sum of (A) the aggregate face amount
of the standby letters of credit referred to in clause (x) above plus (B) the
aggregate amount of unpaid reimbursement obligations owing in respect of such
standby letters of credit.

      "Initial Purchase": as defined in the recitals to this Agreement.

      "Initial Transactions": as defined in the recitals to this Agreement.

      "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.

      "Intangible Assets": all unamortized debt discount and expense,
unamortized deferred charges, goodwill, Patents, Trademarks, Copyrights,
write-ups of assets over their carrying value at the date of issuance of the
Loans or the date of acquisition, if acquired subsequent thereto, and all other
items which would be treated as intangibles on the consolidated balance sheet of
such Person prepared in accordance with GAAP.

      "Intellectual Property Rights": with respect to any Person, all of such
Person's Patents, Copyrights, Trademarks, and Licenses, all other rights under
any of the foregoing, all extensions, renewals, reissues, divisions,
continuations and continuations-in-part of any of the foregoing, and all rights
to sue for past, present, and future infringement of any of the foregoing.

      "Intercreditor Agreement": the Intercreditor Agreement, dated as of the
date hereof, between the Borrower, the Agent, on behalf of the Lenders, and the
Leasehold Improvement Lender (as such agreement may be amended, modified or
restated from time to time), substantially in the form of Exhibit N hereto.



                                                                              17

      "Interest Expense": for any period, total cash interest expense (including
that attributable to Capital Lease Obligations) of Quiksilver and its
Subsidiaries for such period with respect to all outstanding Indebtedness of
Quiksilver and its Subsidiaries (including all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing and net costs under Hedging Agreements in respect of interest rates to
the extent such net costs are allocable to such period in accordance with GAAP).

      "Interest Payment Date": (a) as to any ABR Loan, the first day of each
calendar month 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, (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:

            (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 the Borrower 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 the Borrower 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:

                  (a) 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;

                  (b) 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

                  (c) 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": as defined in Article 9 of the UCC.

      "Issuing Bank": as the context may require, (a) JPMorgan Chase Bank, N.A.,
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.

      "JPMorgan": J.P. Morgan Securities Inc.



                                                                              18

      "Judgment Creditor": as defined in Section 9.18.

      "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 US$12,300,000 made by the Leasehold Improvement Lender to Quiksilver
and referred to in the Intercreditor Agreement.

      "Lender" or "Lenders": as defined in the preamble to this Agreement and in
Section 8.8. Each such term shall include any Lender in its capacity as an
Issuing Bank; provided that, for purposes of Sections 2.9, 2.11, 2.12, 2.13,
2.14, 2.20, 2.21 and 9.5, the Alternate Currency Fronting Lender shall, in its
capacity as such, be deemed to be a "Lender".

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

      "Letter of Credit Amount": the stated maximum amount available to be drawn
under a particular Letter of Credit, 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 Borrower 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. The Letter of
Credit Exposure shall be calculated using the US Dollar Equivalent amounts for
amounts otherwise denominated in any Alternate Currency.

      "Letter of Credit Rate": 0.50% per annum; provided, that on and after the
first Adjustment Date occurring after the completion of two full fiscal quarters
of Quiksilver after the Closing Date, the Letter of Credit Rate will be
determined pursuant to the Pricing Grid.

      "Letter of Credit Request": a request by the 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": with respect to an Interest Period pertaining to any LIBOR
Loan, the rate of interest determined on the basis of the rate for deposits in
US Dollars or the relevant Alternate Currency, as the case may be, for a period
equal to such Interest Period commencing on the first day of such Interest
Period appearing on Page 3750 of the Telerate Screen as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period or on the
day on which it is market practice in the relevant interbank market for prime
banks to give quotations for deposits in the currency of such Loan for delivery
on the first day of such Interest Period. In the event that such rate does not
appear on such page of the Telerate Screen (or otherwise on the Telerate
Service), the "LIBO Rate" shall instead be the interest rate



                                                                              19

per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
average of the rates at which deposits in Dollars or the relevant Alternate
Currency, as the case may be, approximately equal in principal amount to
US$5,000,000 and for a maturity comparable to such Interest Period, are offered
by the principal London office of JPMorgan Chase Bank, N.A. for 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. In the event that the LIBO Rate is unable to be determined pursuant to
any of the foregoing mechanisms, the "LIBO Rate" shall instead be the interest
rate per annum reasonably determined by JPMorgan Chase Bank, N.A.

      "LIBOR Loan": any Loan bearing interest based upon the Adjusted LIBO Rate
(including, without limitation, any Alternate Currency Loan).

      "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.

      "License": with respect to any Person, all of such Person's right, title,
and interest in and to (a) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (c) all rights to sue for past,
present, and future breaches thereof.

      "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, the Agent or the Alternate Currency
Fronting Lender to the Borrower pursuant to this Agreement (including, without
limitation, each Revolving Loan, each Swing Line Loan, each Protective Advance,
each Overadvance and each Alternate Currency Loan).

      "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 Security
Documents, the Guarantee, the Intercreditor Agreement, any Specified Hedging
Agreements and any other agreement executed by an Loan Party 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.

      "Loan Party": the collective reference to the Borrower and the Guarantors.



                                                                              20

      "Majority Lenders": at any time, the holders of more than 50% of the
Revolving Loan Commitments then in effect or, if the Revolving Loan Commitments
have been terminated, the Aggregate Credit Exposure.

      "Margin Stock": as defined in Regulation U.

      "Material Adverse Effect": a material adverse effect on (a) the business,
operations, property, condition (financial or otherwise) or prospects of
Quiksilver and its Subsidiaries taken as a whole, (b) the ability of any Loan
Party 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; provided, that, notwithstanding the
foregoing, the Borrower shall be deemed to be a Material Domestic Subsidiary of
Quiksilver at all times.

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

      "Materials of Environmental Concern": any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products, polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos, molds, pollutants,
contaminants, radioactivity, and any other substances of any kind, regulated
pursuant to or that could give rise to liability under any Environmental Law.

      "Mexican Pesos": freely transferable lawful money of Mexico.

      "Monthly Reports": as defined in Section 4.1(i).

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

      "Net Income": for any period, the consolidated net income (or loss) of
Quiksilver and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded (a) except as
otherwise contemplated in the definition of "EBITDA", the income (or deficit) of
any Person accrued prior to the date it becomes a Subsidiary of Quiksilver or is
merged into or consolidated with Quiksilver or any of its Subsidiaries and (b)
the income (or deficit) of any Person (other than a Subsidiary of Quiksilver) in
which Quiksilver or any of its Subsidiaries has an ownership interest, except to
the extent that any such income is actually received by Quiksilver or such
Subsidiary in the form of dividends or similar distributions.

      "Net Orderly Liquidation Value": with respect to Inventory of any Person,
the orderly liquidation value thereof as determined in a manner acceptable to
the Agent by an appraiser acceptable to the Agent, net of all costs of
liquidation thereof.



                                                                              21

      "Net Proceeds": (a) with respect to any Equity Offering or Debt Offering
by Quiksilver 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 Quiksilver 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) and (b) with respect to any Asset Disposition or Recovery Event, the
proceeds thereof in the form of cash and cash equivalents (as determined by GAAP
and including any such proceeds received by way of deferred payment of principal
pursuant to a note or installment receivable or purchase price adjustment
receivable or otherwise, but only as and when received), net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied to
the repayment of Indebtedness secured by a Lien expressly permitted hereunder on
any asset that is the subject of such Asset Disposition or Recovery Event (other
than any Lien securing the Obligations hereunder) and other customary fees and
expenses actually incurred in connection therewith and net of taxes paid or
reasonably estimated to be payable as a result thereof (after taking into
account any available tax credits or deductions and any tax sharing
arrangements).

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

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

      "Non-US Lender": as defined in Section 2.13(b).

      "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 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 Borrower, 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 Loans, 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 Borrower to the Agent, the Alternate Currency
Fronting Lender, each Issuing Bank, the Swing Line Lender and the Lenders
(including, without limitation, obligations of any Loan Party in respect of
Specified Hedging Agreements and Banking Services Obligations), 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 Borrower pursuant to the terms
of this Agreement) or otherwise.

      "Operating Lease": with respect to any Person, any lease of real or
personal property (other than any lease with respect to which Capitalized Lease
Obligations are owing) by such Person as lessee which has an original term
(including any required renewals and any renewals effective at the option of the
lessor) of one year or more.



                                                                              22

      "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.

      "Other Taxes": any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement or any other Loan Document.

      "Overadvance": as defined in Section 2.19(b).

      "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).

      "Patents": with respect to any Person, all of such Person's right, title,
and interest in and to: (a) any and all patents and patent applications; (b) all
inventions and improvements described and claimed therein; (c) all reissues,
divisions, continuations, renewals, extensions, and continuations-in-part
thereof; (d) all income, royalties, damages, claims, and payments now or
hereafter due or payable under and with respect thereto, including, without
limitation, damages and payments for past and future infringements thereof; (e)
all rights to sue for past, present, and future infringements thereof; and (f)
all rights corresponding to any of the foregoing throughout the world.

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

      "Permitted 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.

      "Permitted Discretion": a determination made in good faith and in the
exercise of reasonable (from the perspective of secured asset-based lenders in
similar financings) business judgment.

      "Permitted Lien": any Lien which is permitted by Section 6.3 hereunder.

      "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.

      "Plan": as to any Person, any employee benefit plan subject to 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.



                                                                              23

      "Prepayment Account": as defined in Section 2.4(b).

      "Pricing Grid": the table set forth below.



                                                                  Applicable Margin
                                                               -----------------------   Commitment Fee      Letter of
   Fixed Charge Coverage Ratio                                 LIBOR Loans   ABR Loans         Rate         Credit Rate
   ---------------------------                                 -----------   ---------         ----         -----------
                                                                                                
less than or equal to 1.25 to 1.00                                1.875%       0.375%          0.40%            0.875%
 > 1.25 to 1.00 but less than or equal to 1.50 to 1.00            1.625%       0.125%          0.35%             0.75%
 > 1.50 to 1.00 but less than or equal to 1.75 to 1.00            1.375%       0    %          0.30%             0.50%
          > 1.75 to 1.00                                          1.125%       0    %          0.25%             0.40%


      For the purposes of the Pricing Grid, changes in the Applicable Margin,
the Commitment Fee Rate or the Letter of Credit Rate, as the case may be,
resulting from changes in the Fixed Charge Coverage Ratio shall become effective
on the date (the "Adjustment Date") that is three Business Days after the date
on which financial statements are delivered to the Lenders pursuant to Section
5.1 and shall remain in effect until the next change to be effected pursuant to
this paragraph. If any financial statements referred to above are not delivered
within the time periods specified in Section 5.1, then, until the date that is
three Business Days after the date on which such financial statements are
delivered, the highest rate set forth in each column of the Pricing Grid shall
apply. In addition, at all times while an Event of Default shall have occurred
and be continuing, the highest rate set forth in each column of the Pricing Grid
shall apply. Each determination of the Fixed Charge Coverage Ratio pursuant to
the Pricing Grid shall be made in a manner consistent with the determination
thereof pursuant to Section 6.1.

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

      "Projected Pro Forma Balance Sheet": the unaudited projected pro forma
consolidated balance sheet of Quiksilver and its consolidated Subsidiaries as at
January 1, 2005, with respect to Quiksilver and its Subsidiaries (other than the
Target and its Subsidiaries) and September 30, 2004, with respect to the Target
and its Subsidiaries (including, in each case, the notes thereto), giving effect
(as if such events had occurred on such date) to (i) the consummation of the
Transaction, (ii) the Loans to be made hereunder and the loans to be made under
the Senior Bridge Facility on the Closing Date and the use of proceeds thereof,
(iii) the Indebtedness to be issued on or after the Closing Date for the
purposes of financing the Transaction and (iv) the payment of fees and expenses
in connection with the foregoing.

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

      "Protective Advances": as defined in Section 2.19(a).

      "Purchase Agreement": as defined in the recitals to this Agreement.

      "Purchase Agreement Documentation": collectively, the Purchase Agreement
and all schedules, exhibits and annexes thereto and all side letters and
agreements affecting the terms thereof or entered into in connection therewith
as such Purchase Agreement Documentation may be amended, waived or otherwise
modified pursuant to Section 6.14.

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



                                                                              24

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

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

      "Quiksilver": as defined in the preamble to this Agreement.

      "Quiksilver L/C Amount": the sum of (a) the aggregate undrawn face amount
of Trade Letters of Credit issued to finance the purchase of Inventory
(excluding any Eligible Inventory) of the Quiksilver Loan Parties and (b) the
aggregate value of Inventory (valued at the lower of cost or market value,
determined on a first-in-first-out basis, at such time) of the Quiksilver Loan
Parties financed with Trade Letters of Credit which have been fully drawn and
the Reimbursement Obligations in respect of which have been fully paid so long
as, in the case of clause (a) and (b), (i) such Inventory shall be in transit to
customers in the United States or Canada or properties owned or leased by the
Quiksilver Loan Parties in the United States or Canada, (ii) such Inventory is
not Eligible Inventory and, upon arrival in the United States or Canada, will be
subject to a first priority security interest in favor of the Agent to secure
the Obligations and shall otherwise be included in the calculation of Eligible
Inventory, and (iii) to the extent requested by the Agent, the Agent or its
agent or bailee shall be named as the consignee of the applicable bill of lading
or other document of title.

      "Quiksilver Loan Parties": all Loan Parties other than the Target Loan
Parties.

      "Recovery Event": any settlement of or payment in respect of any property
or casualty insurance claim or any condemnation proceeding relating to any asset
of Quiksilver or any of its Subsidiaries; provided that Recovery Events shall
not include settlements of or payments in respect of any property or casualty
insurance claim or any condemnation proceeding not exceeding US$5,000,000 in the
aggregate during any calendar year.

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

      "Reimbursement Obligations": the obligation of the Borrower to reimburse
the applicable Issuing Bank pursuant to Section 2.2(e) for amounts drawn under
Letters of Credit.

      "Reinvestment Deferred Amount": with respect to any Reinvestment Event,
the aggregate Net Proceeds received by Quiksilver or any Subsidiary in
connection therewith that are not applied to prepay the Loans pursuant to
Section 2.4(b) as a result of the delivery of a Reinvestment Notice.

      "Reinvestment Event": any Asset Sale or Recovery Event in respect of which
the Borrower has delivered a Reinvestment Notice.



                                                                              25

      "Reinvestment Notice": a written notice executed by a Responsible Officer
stating that no Event of Default has occurred and is continuing and that the
Borrower (directly or indirectly through a Subsidiary) intends and expects to
use all or a specified portion of the Net Proceeds of an Asset Sale or Recovery
Event to acquire or repair assets useful in its business.

      "Reinvestment Prepayment Amount": with respect to any Reinvestment Event,
the Reinvestment Deferred Amount relating thereto less any amount expended prior
to the relevant Reinvestment Prepayment Date to acquire or repair assets useful
in the Borrower's business.

      "Reinvestment Prepayment Date": with respect to any Reinvestment Event,
the earlier of (a) the date occurring six months after such Reinvestment Event
and (b) the date on which the Borrower shall have determined not to, or shall
have otherwise ceased to, acquire or repair assets useful in the Borrower's
business with all or any portion of the relevant Reinvestment Deferred Amount.

      "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.

      "Rentals": with respect to any Person, means the aggregate fixed amounts
payable by such Person under any Operating Lease to which such Person is a
party.

      "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(c) 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.

      "Reserves": any and all reserves which the Agent deems necessary, in its
Permitted Discretion, to maintain with respect to the Collateral of any Loan
Party.

      "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, with respect to financial matters, the chief financial
officer, the vice president of finance or treasurer.

      "Restricted Payments": as defined in Section 6.6.

      "Revolving Loan Borrowing Notice": a notice from the Borrower to the Agent
requesting a borrowing of Revolving Loans, substantially in the form of Exhibit
G-1 hereto.

      "Revolving Loan Commitment": with respect to each Lender, its commitment,
if any, listed as its "Revolving Loan Commitment" on Schedule 1.1, 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, Protective Advances,
Overadvances and Alternate Currency Loans hereunder through its Approved Lending
Office(s), as the same shall be adjusted from time to time pursuant to this
Agreement.



                                                                              26

      "Revolving Loan Commitment Expiration Date": April 12, 2010 or such
earlier date as the Aggregate Revolving Loan Commitment shall expire (whether by
acceleration, reduction to zero or otherwise).

      "Revolving Loan Commitment Percentage": (a) with respect to each Lender on
or before the Revolving Loan Commitment Expiration Date, 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 and (b) with respect to each Lender after
the Revolving Loan Commitment Expiration Date, the percentage equivalent of the
ratio which such Lender's Credit Exposure bears to the Aggregate Credit
Exposure.

      "Revolving Loans": as defined in Section 2.1.A(a).

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

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

      "Security Documents": the collective reference to the Security Agreement
and all other security documents hereafter delivered to the Agent granting a
Lien on any property of any Person to secure the obligations and liabilities of
any Loan Party under any Loan Document.

      "Sellers": as defined in the recitals to this Agreement.

      "Senior Credit Engagement Letter": the Senior Credit Engagement Letter,
dated as of February 28, 2005, among Quiksilver and JPMorgan, as amended from
time to time.

      "Senior Notes": the senior unsecured notes to be issued by Quiksilver
after the Closing Date, which are intended to refinance the Bridge Loan
Agreement.

      "Senior Note Indenture": the Indenture to be entered into by Quiksilver
and the other Loan Parties after the Closing Date in connection with the
issuance of the Senior Notes, together with all instruments and other agreements
entered into by Quiksilver or such other Loan Party in connection therewith.

      "Settlement": as defined in Section 2.1.

      "Settlement Date": as defined in Section 2.1.

      "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



                                                                              27

            (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.

      "Specified Hedging Agreement": any Hedging Agreement entered into by any
Loan Party and any Lender or affiliate thereof in respect of interest rates,
currency exchange rates or commodity prices.

      "Squeeze Out": as defined in the preamble to this Agreement.

      "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 Quiksilver.

      "Super-Majority Lenders": at any time, the holders of more than 66 2/3% of
the Revolving Loan Commitments then in effect or, if the Revolving Loan
Commitments have been terminated, the Aggregate Credit Exposure.

      "Swing Line Borrowing Notice": a notice from the Borrower 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 2.1.B(a).

      "Swing Line Lender": JPMorgan Chase Bank, N.A.

      "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
2.1.B(a).

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

      "Target": as defined in the recitals to this Agreement.

      "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.

      "Target L/C Amount": the sum of (a) the aggregate undrawn face amount of
Trade Letters of Credit issued to finance the purchase of Inventory (excluding
any Eligible Inventory) of the Target Loan Parties and (b) the aggregate value
of Inventory (valued at the lower of cost or market value, determined on a
first-in-first-out basis, at such time) of the Target Loan Parties financed with
Trade Letters of Credit which have been fully drawn and the Reimbursement
Obligations in respect of which have been fully paid so long as, in the case of
clause (a) and (b), (i) such Inventory shall be in transit to customers in the
United States or Canada or properties owned or leased by the Target Loan Parties
in the United States or Canada, (ii) such Inventory is not Eligible Inventory
and, upon arrival in the United States or Canada, will be subject to a first
priority security interest in favor of the Agent to secure the Obligations and
shall otherwise be included in the calculation of Eligible Inventory, and (iii)
to the extent requested by the



                                                                              28

Agent, the Agent or its agent or bailee shall be named as the consignee of the
applicable bill of lading or other document of title.

      "Target Loan Parties": each Loan Party that is, or was at any time, a
Subsidiary of the Target.

      "Target Seasonal Period": a period determined by the appraiser (and
reasonably acceptable to the Agent) which conducted the then most recent
appraisal delivered pursuant to Section 4.1(o) or Section 5.8, as the case may
be, based on such appraisal.

      "Target Stock": as defined in the recitals to this Agreement.

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

      "Tender Offer": as defined in the recitals to this Agreement.

      "Tender Offer Documentation": the collective reference to (a) the mandate
letter of Quiksilver appointing Calyon to act as the presenting bank for the
Tender Offer and, if applicable, the Buy Out and the Squeeze Out, (b) the draft
communique de depot to be published in connection with the Tender Offer pursuant
to article 231-17 of the AMF General Regulation, (c) the draft lettre de depot
to be filed with the AMF in accordance with article 231-14 of the AMF General
Regulation, (d) the resolutions of the supervisory board of Target regarding the
launch of the Tender Offer, and recommending the Tender Offer, (e) the draft
joint note d'information in relation to the Tender Offer issued by Quiksilver
and the Target, (f) the AMF decision de recevabilite (approval decision) of the
Tender Offer and of the AMF visa (approval) on the joint note d'information, and
(g) a certificate issued by the Company stating that the funds from the Initial
Loans drawn during the Availability Period will be used solely in relation with
the Tender Offer and, if applicable, the Buy Out and the Squeeze Out.

      "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.

      "Trade Letter of Credit": a commercial Letter of Credit issued in respect
of the purchase of Inventory or other goods or services by any Loan Party in the
ordinary course of business.

      "Trademarks": with respect to any Person, all of such Person's right,
title, and interest in and to the following: (a) all trademarks, service marks,
logos, trade names, trade dress, trade styles, domain names and other source or
business identifiers and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the foregoing; (b) all
licenses of the foregoing, whether as licensee or licensor; (c) all renewals of
the foregoing; (d) all income, royalties, damages, and payments now or hereafter
due or payable with respect thereto, including, without limitation, damages,
claims, and payments for past and future infringements thereof; (e) all rights
to sue for past, present, and future infringements of the foregoing, including
the right to settle suits involving claims and demands for royalties owing; and
(f) all rights corresponding to any of the foregoing throughout the world.

      "Tranche": the collective reference to LIBOR Loans in the same currency
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).

      "Transaction": as defined in the recitals to this Agreement.



                                                                              29

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

      "UCC": the Uniform Commercial Code, as in effect from time to time, of the
State of New York or of any other state the laws of which are required as a
result thereof to be applied in connection with the attachment, perfection or
priority of, or remedies with respect to, the Agent's or any Lender's Lien on
any Collateral.

      "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,
Commonwealths and Territories 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.

            SECTION 1.2. Other Definitional Provisions.

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

            (b) As used herein, 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 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 II AMOUNT AND TERMS OF COMMITMENTs; LETTERS OF CREDIT

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



                                                                              30

            (a) Subject to the terms and conditions hereof, each Lender
severally agrees to (i) make loans denominated in US Dollars on a revolving
credit basis through its Applicable Lending Office to the Borrower from time to
time during the Availability Period (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
issued for the account of the Borrower pursuant to Section 2.2 from time to time
during the Availability Period (each a "Letter of Credit" and, collectively, the
"Letters of Credit"); provided, however, that, after giving effect thereto, (A)
the Aggregate Credit Exposure shall not exceed the lesser of (x) the Borrowing
Base then in effect and (y) the Aggregate Revolving Loan Commitment at such
time, and (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$100,000,000 at such
time.

            (b) Subject to the terms and conditions hereof, the Borrower may
borrow, have Letters of Credit issued for its account, prepay Revolving Loans,
reborrow Revolving Loans and have additional Letters of Credit issued for its
account. The Revolving Loans, together with all accrued and unpaid interest
thereon, shall mature and be due and payable in US Dollars on the Revolving Loan
Commitment Expiration Date. The principal amount of each (A) Revolving Loan of a
Lender and (B) participation of a Lender in a Letter of Credit, Swing Line Loan,
Alternate Currency Loan, Overadvance or Protective Advance 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, the
Swing Line Loan, the Letter of Credit or the Alternate Currency Loan, as
applicable, requested by the Borrower in each instance. Subject to Section 2.19,
in no event shall any Lender be obligated to make a requested Revolving Loan or
participate in a requested Letter of Credit, Swing Line Loan, Alternate Currency
Loan, Overadvance or Protective Advance if after giving effect to such Revolving
Loan or such participation, such Lender's Credit Exposure is in excess of such
Lender's available Revolving Loan Commitment.

                  (i) The Borrower and any one or more Lenders (including New
            Lenders) may from time to time after the Closing 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
            2.1.A(b)(ii) or, in the case of each Lender which is not a New
            Lender, a Loan Commitment Increase Supplement meeting the
            requirements of Section 2.1.A(b)(iii). Notwithstanding the
            foregoing, (x) without the consent of all Lenders, the aggregate
            amount of incremental Revolving Loan Commitments established or
            increased after the Closing Date pursuant to this paragraph shall
            not exceed US$100,000,000, 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 US$12,500,000 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.

                  (ii) Any additional bank, financial institution or other
            entity which, with the consent of the Borrower 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 2.1.A(b)(i) shall execute a New Lender
            Supplement



                                                                              31

            (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.

                  (iii) Any Lender, which, with the consent of the Borrower and
            the Agent, elects to increase its Loan Commitment under this
            Agreement shall execute and deliver to the Borrower 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 Commitment after giving effect to such
            Revolving Loan Commitment increase, and (iii) the date upon which
            such Revolving Loan Commitment increase shall become effective.

                  (iv) Notwithstanding anything to the contrary in this
            Agreement (including Section 2.10), unless otherwise agreed by the
            Agent in connection with other procedures approved by the Agent to
            implement such increase, on each date upon which the Revolving Loan
            Commitments shall be increased pursuant to this Section, the
            Borrower 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 2.14 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
            Borrower 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 or (iii) a combination thereof,
as determined by the Borrower and notified to the Agent in accordance with
either Section 2.1.A(e) or 2.5 hereof. Each Lender may make or maintain its
Revolving Loans or participate in Letters of Credit, Protective Advance,
Overadvance or Alternate Currency Loans to or for the account of the Borrower by
or through any Applicable Lending Office.

            (d) The Revolving Loans made by each Lender to the Borrower may, at
the request of each Lender, 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 Borrower to pay the
aggregate unpaid principal amount of all Loans made by such Lender, the Agent
(with respect to Overadvances and Protective Advances), the Swing Line Lender
(with respect to Swing Line Loans) or the Alternate Currency Fronting Lender
(with respect to Alternate Currency Loans) to the Borrower pursuant to Section
2.1.A(a) or Section 2.1.C(a), as applicable, 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 Borrower (or its risk participation in Swing Line
Loans, Protective Advances, Overadvances and Alternate Currency Loans made to
the Borrower), 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
Borrower hereunder or under the Revolving Notes. Each Revolving Note shall (i)
be dated the Closing Date thereof, (ii) provide for the



                                                                              32

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) The Borrower 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
denominated in US Dollars and three (3) Business Days prior to the Borrowing
Date of each LIBOR Loan denominated in US Dollars) requesting that the Lenders
make the Revolving 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, 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 date of such borrowing, the aggregate principal amount of the
Revolving Loans to be made, 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, New York
City time, on the date specified for the borrowing of Revolving Loans, each
Lender shall make available to the Agent at the Funding Account 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 2.1.A(b)) in US
Dollars in immediately available funds. The Agent will then make available to
the Borrower at such Funding Account, in US Dollars, and in immediately
available funds, the aggregate of the amounts so made available by the Lenders
prior to 2:00 p.m. (New York City time) on such day.

            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 the Borrower 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 2.1.A(e),
the Agent shall promptly notify the Borrower 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. 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 the Borrower of its obligations under this Agreement and the
other Loan Documents.

            (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.

            (h) Any Revolving Loans made on the Closing Date shall initially be
ABR Loans and, unless otherwise agreed by the Agent in its sole discretion, no
Revolving Loan may be converted into or continued as a LIBOR Loan having an
Interest Period in excess of one month prior to the date that is 30 days after
the Closing Date.



                                                                              33

            SECTION 2.1.B Swing Line Loans; Swing Line Commitment.

            (a) Subject to the terms and conditions hereof, the Swing Line
Lender agrees to make loans in US Dollars through its Applicable Lending Office
to the Borrower 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 US$25,000,000 (the "Swing Line Commitment"); provided, that the
Aggregate Credit Exposure shall not exceed the lesser of (x) the Borrowing Base
then in effect and (y) the Aggregate Revolving Loan Commitments at any time.
Subject to the foregoing, the Borrower 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 earlier of (x) the date of any borrowing of Revolving Loans
hereunder (with the proceeds of each Revolving Loan borrowing to be applied
towards the prepayment of any outstanding Swing Line Loans) and (y) the
Revolving Loan Commitment Expiration Date. Swing Line Loans shall be ABR Loans
only.

            (b) The Swing Line Loans shall (to the extent requested by the Swing
Line Lender) 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 Borrower 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 Borrower hereunder or under the Swing Line Note.
The Swing Line Note shall (x) be dated the Closing Date, (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) The Borrower 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
US$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 the Borrower by the Swing Line Lender by
crediting the account of the Borrower 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 Borrower (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 Section 2.1.B(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.



                                                                              34

            (e) If, prior to refunding a Swing Line Loan with a Revolving Loan
pursuant to Section 2.1.B(d), one of the events described in Section 7(g) shall
have occurred, then, subject to the provisions of Section 2.1.B(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 2.1.B(d) and to purchase participating interests in accordance with
Section 2.1.B(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
Borrower 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 any Loan Party or any other Person; (D) any breach
of this Agreement by Quiksilver, the Borrower or any other Person; (E) any
inability of the Borrower 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
2.1.B(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 greater of the daily average Federal Funds Effective Rate and a rate
determined by the Agent in accordance with banking industry rules on interbank
compensation for the period until such Lender makes such amount immediately
available to the Agent, for the account of the Swing Line Lender. If such amount
is not made available to the Agent, for the account of the Swing Line Lender, by
such Lender within three Business Days of such due date, the Swing Line Lender
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to ABR Loans, on demand. Notwithstanding the foregoing
provisions of this Section 2.1.B(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 2.1.B(d) or to purchase a participating interest in a Swing
Line Loan pursuant to Section 2.1.B(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.

            SECTION 2.1.C Alternate Currency Loans.

            (a) Subject to the terms and conditions hereof, the Alternate
Currency Fronting Lender agrees to make loans denominated in any Alternate
Currency through its Approved Lending Office (each, an "Alternate Currency
Loan") on a revolving credit basis to the Borrower from time to time during the
Availability Period in accordance with the provisions of this Agreement;
provided, however, that (A) the Aggregate Credit Exposure shall not exceed the
lesser of (x) the Borrowing Base then in



                                                                              35

effect and (y) the Aggregate Revolving Loan Commitment at such time and (B) the
sum of (1) the US Dollar Equivalent of the aggregate principal amount of all
Alternate Currency Loans outstanding and (2) the US Dollar Equivalent of the
Letter of Credit Exposure of all outstanding Alternate Currency Letters of
Credit shall not exceed the Alternate Currency Sublimit. During the period from
the Closing Date through the Revolving Loan Commitment Expiration Date, the
Borrower may borrow, prepay and reborrow Alternate Currency Loans in whole or in
part, all in accordance with the terms and conditions hereof.

            (b) The Alternate Currency Loans shall be LIBOR Loans. The principal
of and interest on each Alternate Currency Loan shall be paid in the applicable
Currency for such Alternate Currency Loan and, subject to Section 2.1.C(e),
shall be for the account of the Alternate Currency Fronting Lender.

            (c) The Borrower shall give the Agent and the Alternate Currency
Fronting Lender irrevocable written notice (which notice must be received prior
to 11:00 a.m., London time, four (4) Eurodollar Business Days prior to the
Borrowing Date of each LIBOR Loan denominated in an Alternate Currency)
requesting that the Alternate Currency Fronting Lender make an Alternate
Currency Loan on the proposed Borrowing Date and specifying (i) the aggregate
amount of Alternate Currency Loans requested to be made, (ii) the Alternate
Currency in which such Loan is to be denominated, and (iii) the length of the
initial Interest Period therefor, which shall be a period contemplated by the
definition of the term "Interest Period". Each Alternate Currency Loan Borrowing
Notice shall be irrevocable, and shall be appropriately completed to specify the
date of such borrowing, the aggregate principal amount of the Alternate Currency
Loans to be made, the Alternate Currency in which such Alternate Currency Loan
is to be denominated and the initial Interest Period applicable thereto.

            (d) The Alternate Currency Fronting Lender shall make available to
the Borrower (through the Agent) at the Funding Account, in the requested
Alternate Currency, and in immediately available funds, the aggregate amount of
Alternate Currency Loans requested to be borrowed prior to 2:00 p.m. (London
time) on such day.

            (e) The Borrower shall pay to the Alternate Currency Fronting Lender
with respect to each Alternate Currency Loan made by such Alternate Currency
Fronting Lender (in addition to interest required to be paid pursuant to Section
2.7), for the account of the Alternate Currency Fronting Lender, a fronting fee
in US Dollars with respect to the period from and including the date of such
Alternate Currency Loan to but excluding the date of repayment thereof computed
at a rate per annum agreed by the Borrower and the Alternate Currency Fronting
Lender on the average daily principal amount of such Alternate Currency Loan
outstanding during the period for which such fee is calculated. Such fronting
fee shall be (i) payable in US Dollars (calculated by the Agent through
determining the US Dollar Equivalent of the fronting fee which would otherwise
be payable hereunder in the relevant Alternate Currency), (ii) payable in
arrears on each Fee Payment Date to occur after the making of such Alternate
Currency Loan and (iii) nonrefundable.

            (f) The Borrower shall pay to the Agent for the account of the
Alternate Currency Loan Participants, a participation fee with respect to each
Alternate Currency Loan for the period from and including the date such
Alternate Currency Loan was made to but excluding the date of repayment thereof,
computed at a rate per annum equal to the Applicable Margin in respect of LIBOR
Loans from time to time in effect on the average daily principal amount of such
Alternate Currency Loan outstanding during the period for which such fee is
calculated. Such participation fee shall be (i) payable in US Dollars(calculated
by the Agent through determining the US Dollar Equivalent of the participation
fee which would otherwise be payable hereunder in the relevant Alternate
Currency), (ii) payable in arrears on each Fee Payment Date to occur after the
making of such Alternate Currency Loan and (iii)



                                                                              36

nonrefundable. Such fee shall be shared ratably among the Alternate Currency
Loan Participants in accordance with their respective Revolving Loan Commitment
Percentages.

            (g) The Agent shall, promptly following its receipt thereof,
distribute to the Alternate Currency Fronting Lender and the Alternate Currency
Loan Participants all fees received by the Agent for their respective accounts
pursuant to Section 2.1.C(e) and (f).

            (h) The Alternate Currency Fronting Lender irrevocably agrees to
grant and hereby grants to each Alternate Currency Loan Participant (other than
the Alternate Currency Fronting Lender), and, to induce the Alternate Currency
Fronting Lender to make Alternate Currency Loans hereunder, each such Alternate
Currency Loan Participant irrevocably agrees to accept and purchase and hereby
accepts and purchases from the Alternate Currency Fronting Lender, on the terms
and conditions set forth below, for such Alternate Currency Loan Participant's
own account and risk, an undivided interest equal to such Alternate Currency
Loan Participant's Revolving Loan Commitment Percentage of the Alternate
Currency Fronting Lender's obligations and rights in respect of each Alternate
Currency Loan made by the Alternate Currency Fronting Lender hereunder. Each
Alternate Currency Loan Participant unconditionally and irrevocably agrees with
the Alternate Currency Fronting Lender that, if any amount in respect of the
principal, interest or fees owing to the Alternate Currency Fronting Lender in
respect of an Alternate Currency Loan is not paid when due in accordance with
the terms of this Agreement, such Alternate Currency Loan Participant shall pay
to the Agent, for the account of the Alternate Currency Fronting Lender, upon
demand an amount in US Dollars (with the US Dollar Equivalent of the unpaid
amount of such Alternate Currency Loan to be calculated by the Agent) equal to
such Alternate Currency Loan Participant's Revolving Loan Commitment Percentage
of such unpaid amount. Each Alternate Currency Loan Participant's obligation to
make the payment referred to in the immediately preceding sentence 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 Alternate Currency Fronting Lender, the
Borrower 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 any Loan Party or any other Person; (D) any breach
of this Agreement by Quiksilver, the Borrower or any other Person; (E) any
inability of the Borrower 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.

            (i) If any amount required to be paid by any Alternate Currency Loan
Participant to the Alternate Currency Fronting Lender pursuant to this Section
2.1.C(e) is not made available to the Agent when due, such Alternate Currency
Loan Participant shall pay to the Agent, for the account of the Alternate
Currency Fronting Lender, on demand, such amount with interest thereon at a rate
equal to the greater of the daily average Federal Funds Effective Rate and a
rate determined by the Agent in accordance with banking industry rules on
interbank compensation for the period until such Alternate Currency Loan
Participant makes such amount immediately available to the Agent, for the
account of the Alternate Currency Fronting Lender. If such amount is not made
available to the Agent, for the account of the Alternate Currency Fronting
Lender, by such Alternate Currency Loan Participant within three Business Days
of such due date, the Alternate Currency Fronting Lender shall also be entitled
to recover such amount with interest thereon at the rate per annum applicable to
ABR Loans, on demand. A certificate of the Alternate Currency Fronting Lender
submitted to any Lender with respect to any amounts owing under this Section
2.1.C(i) shall be conclusive in the absence of manifest error.

            (j) Whenever, at any time after the Alternate Currency Fronting
Lender has received from any Alternate Currency Loan Participant the full amount
owing by such Alternate Currency Loan Participant pursuant to and in accordance
with this Section 2.1.C(j) in respect of any Alternate Currency



                                                                              37

Loan, the Alternate Currency Fronting Lender receives any payment related to
such Alternate Currency Loan (whether directly from the Borrower or otherwise,
including proceeds of collateral applied thereto by the Alternate Currency
Fronting Lender or the Agent, on behalf of the Alternate Currency Fronting
Lender), or any payment of interest on account thereof, the Alternate Currency
Fronting Lender will distribute to such Alternate Currency Loan Participant its
pro rata share thereof.

            (k) If any payment received by the Alternate Currency Fronting
Lender pursuant to Section 2.1.C(e) with respect to any Alternate Currency Loan
made by it shall be required to be returned by the Alternate Currency Fronting
Lender, each Alternate Currency Loan Participant shall pay to such Alternate
Currency Fronting Lender its pro rata share thereof.

            (l) All outstanding Alternate Currency 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.

            (m) Following the date on which any risk participation with respect
to an Alternate Currency Loan is converted to US Dollars pursuant to Section
2.1C(h), all amounts payable in connection with such risk participation shall be
denominated in US Dollars for all purposes.

            SECTION 2.2. Letters of Credit. (a) General. Subject to the terms
and conditions set forth herein, the Borrower may request the issuance of
Letters of Credit (or the amendment, renewal or extension of an outstanding
Letter of Credit) for its own account or the account of Quiksilver or any of its
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 the Borrower to, or
entered into by the Borrower with, the applicable Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control.

            (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 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 the Agent (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, N.A. 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 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 Borrower 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 US$100,000,000, (ii) the sum of (A)
the US Dollar Equivalent of the aggregate principal amount of all Alternate
Currency Loans outstanding and (B) the US Dollar Equivalent of the Letter of
Credit Exposure of all outstanding Alternate Currency Letters of Credit shall
not exceed the Alternate Currency Sublimit, and (iii) the total Credit Exposure
shall not exceed the lesser of (x) the Borrowing Base then in effect and (y) the
Aggregate Loan Commitment. Subsequent to the receipt by any Issuing



                                                                              38

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 either the Aggregate Revolving Loan Commitment or the Borrowing Base then in
effect is greater than 80% and (b) will withdraw when it determines that such
percentage is less than 80%, 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 2.17.

            (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 five Business Days prior to the Revolving Loan Commitment Expiration
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 by
the Agent, of each Letter of Credit Disbursement made by such Issuing Bank in an
Alternate Currency and, in each case, not reimbursed by the Borrower on the date
due as required in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrower for any reason; provided, that
upon calculating the US Dollar Equivalent of each Letter of Credit Disbursement,
the Agent shall promptly notify the applicable Issuing Bank and each Lender.
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 Borrower 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 (or in the
relevant Alternate Currency), 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, in the case of any such reimbursement
obligation which is in an amount of not less than US$500,000, the Borrower may,
subject to the conditions to borrowing set forth herein, request that such
payment be financed in US Dollars with an ABR Loan in an equivalent amount, and,
to the extent so financed, the Borrower's obligation to make such payment shall
be discharged and replaced by the resulting ABR Loan. If the Borrower fails to
make when due any reimbursement payment required pursuant to this paragraph, the
applicable 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



                                                                              39

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 Borrower 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 Borrower, 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 Borrower pursuant to this
paragraph, including the Borrower's payment 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
Borrower of its obligation to reimburse such Letter of Credit Disbursement.

            (f) Letter of Credit Fees.

                  (i) The Borrower will pay a fee on all outstanding Letters of
            Credit at a per annum rate equal to (A) in the case of Letters of
            Credit (other than Trade Letters of Credit), the Applicable Margin
            then in effect with respect to LIBOR Loans, and (B) in the case of
            Trade Letters of Credit, the Letter of Credit Rate, in each case
            shared ratably among the Lenders and payable quarterly in arrears on
            each Fee Payment Date after the issuance date. In addition, the
            Borrower shall pay to the Issuing Bank for its own account a
            fronting fee in the percentage agreed among the Borrower and the
            applicable Issuing Bank (and, subject to a maximum percentage to be
            reasonably approved by the Agent) computed as agreed per annum of
            the undrawn and unexpired amount of each Letter of Credit, payable
            quarterly in arrears on each Fee Payment Date after the issuance
            date. Each fee payable pursuant to this Section 2.2(f) shall be
            payable in US Dollars (calculated by the Agent through determining
            the US Dollar Equivalent of the fee or fronting fee, as applicable,
            which would otherwise be payable hereunder in the relevant Alternate
            Currency).

                  (ii) In addition to the foregoing fees, the Borrower shall pay
            or reimburse the Issuing Bank for such normal and customary costs
            and expenses as are incurred or charged by the Issuing Bank in
            issuing, negotiating, effecting payment under, amending or otherwise
            administering any Letter of Credit.

            (g) Obligations Absolute. The Borrower's 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
Borrower's 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



                                                                              40

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 Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby waived
by the Borrower to the extent permitted by applicable law) suffered by the
Borrower 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 Borrower of its obligation to
reimburse such Issuing Bank and the Lenders with respect to any such Letter of
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 Borrower 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 Borrower reimburses such Letter of Credit Disbursement, at the
rate per annum then applicable to ABR Loans; provided that, if the Borrower
fails 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 until such time as such amount
is converted to US Dollars as provided herein. 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 Borrower, 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 Borrower 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


                                                                              41

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 Borrower receives notice from the
Agent or the Majority Lenders demanding the deposit of cash collateral pursuant
to this paragraph, the Borrower 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 collateral for the
payment and performance of the obligations of the Borrower 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
Borrower 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
Borrower under this Agreement. If the Borrower is 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 Borrower 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 Borrower fails 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)

                                                                              42

such other information with respect to Letters of Credit issued by such Issuing
Bank as the Agent may reasonably request.

            (n) Conversion to US Dollars. Following the date on which any risk
participation with respect to an Alternate Currency Letter of Credit is
converted to US Dollars pursuant to Section 2.2(d), all amounts payable in
connection with such risk participation (and the underlying reimbursement
obligation from the Borrower under Section 2.2(e)) shall be denominated in US
Dollars for all purposes.

            SECTION 2.3. Optional Prepayments; Optional Commitment Reductions.
The Borrower may, on the last day of any Interest Period with respect thereto in
the case of any Loans that are maintained as LIBOR Loans, or at any time and
from time to time in the case of any Loans that are maintained as ABR Loans,
prepay such 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 the Borrower to the Agent (and, with respect to a prepayment of Alternate
Currency Loans, the Alternate Currency Fronting Lender), 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 the Borrower, the Agent shall promptly notify each Lender (and, if
applicable, the Alternate Currency Fronting Lender) thereof. If any such notice
is given, the amount specified in such notice shall be due and payable by the
Borrower on the date specified therein, together with accrued interest to such
date on the amount prepaid. Partial prepayments of Loans shall be in an
aggregate principal amount of no less than US$1,000,000. Permanent reductions in
the Aggregate Revolving Loan Commitment shall be in an amount equal to
US$5,000,000, or a whole multiple thereof, and shall reduce permanently the
Aggregate Revolving Loan Commitment then in effect.

            SECTION 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 2.17,
the Aggregate Credit Exposure exceeds (i) the Borrowing Base then in effect or
(ii) the Aggregate Revolving Loan Commitment, then the Borrower shall
immediately, without notice or request by the Agent, prepay the Loans and
Reimbursement Obligations in an aggregate principal amount such that the
Aggregate Credit Exposure does not exceed the Borrowing Base or the Aggregate
Revolving Loan Commitments, as applicable, after such prepayment is applied. If
any such excess remains (in the form of outstanding and undrawn Letters of
Credit) at such time after repayment in full of all outstanding Loans and
Reimbursement Obligations, the Borrower shall provide cash collateral to the
extent required to eliminate such excess.

            (b) On the day of receipt by Quiksilver or any of its Subsidiaries
of any Net Proceeds with respect to an Equity Offering, a Debt Offering, an
Asset Disposition or a Recovery Event (unless, with respect to any Asset
Disposition or Recovery Event, a Reinvestment Notice shall have been delivered
in respect thereof), the Borrower shall prepay the Loans in the aggregate amount
equal to 100% of such Net Proceeds; provided, that (i) any such Debt Offering or
Asset Disposition must be permitted by Section 6.2 or 6.5, as applicable, or
otherwise consented to by the Majority Lenders in their sole discretion, (ii)
with respect to any Asset Disposition or Recovery Event by any Subsidiary (other
than a Loan Party), any Equity Offering and any unsecured Debt Offering, such
Net Proceeds need not be applied to the prepayment of the Loans to the extent
that such Net Proceeds are required to be and are applied pursuant to the Bridge
Loan Agreement in satisfaction of obligations thereunder, (iii) with respect to
any Asset Disposition or Recovery Event by any Loan Party or any secured Debt
Offering, the Borrower may, in lieu of delivering a Reinvestment Notice or
prepaying the Loans as set forth above and


                                                                              43

with the consent of the Agent and the Majority Lenders (such consent to be
granted in their sole discretion), apply such mandatory prepayment towards the
satisfaction of obligations under the Bridge Loan Agreement and (iv) with
respect to any Asset Disposition or Recovery Event, on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to such Reinvestment Event shall be applied as set forth in the
following sentence. Any such prepayment shall be applied first, to pay the
principal, interest and fees in respect of the Protective Advances and
Overadvances, and, second, to pay the principal, interest and fees in respect of
the Loans (other than Protective Advances and Overadvances) without a
concomitant reduction in the Aggregate Revolving Loan Commitment. On or prior to
the date of any such Equity Offering, Debt Offering, Asset Disposition or
Recovery Event, the Borrower will provide to the Agent the calculations used by
the Borrower in determining the amount of any such prepayment under this Section
2.4(b). Notwithstanding any of the other provisions of this Section 2.4(b), if
any prepayment of LIBOR Loans is required to be made under this Section 2.4(b) ,
other than on the last day of the Interest Period therefor, the Borrower may, in
its sole discretion, deposit the amount of any such prepayment otherwise
required to be made hereunder into the Prepayment Account (as defined below).
The Agent shall apply any cash deposited in the Prepayment Account to prepay
LIBOR Loans on the last day of the respective Interest Periods therefor (or, at
the direction of the Borrower, on any earlier date) until all outstanding LIBOR
Loans have been prepaid or until all cash on deposit in the Prepayment Account
with respect to such Loans has been exhausted. For purposes of this Agreement,
the term "Prepayment Account" shall mean an account established by the Borrower
with the Agent and over which the Agent shall have exclusive dominion and
control, including the right of withdrawal for application in accordance with
this Section 2.4(b). The Agent will, at the request of the Borrower, invest
amounts on deposit in the Prepayment Account in Cash Equivalents that mature
prior to the last day of the applicable Interest Periods of the LIBOR Loans to
be prepaid, provided that the Agent shall not be required to make any investment
that, in its sole judgment, would require or cause the Agent to be in, or would
result in any, violation of any Requirement of Law and (ii) the Agent shall have
no obligation to invest amounts on deposit in the Prepayment Account if a
Default or Event of Default shall have occurred and be continuing. The Borrower
shall indemnify the Agent for any losses relating to the investments so that the
amount available to prepay LIBOR Loans on the last day of the applicable
Interest Periods therefor is not less than the amount that would have been
available had no investments been made. Other than any interest earned on such
investments, the Prepayment Account shall not bear interest. Interest or
profits, if any, on such investments shall be deposited and reinvested and
disbursed as described above. If the maturity of the Loans has been accelerated
pursuant to Article VII, the Agent shall apply amounts on deposit in the
Prepayment Account to ratably prepay LIBOR Loans. The Borrower hereby grants to
the Agent, for its benefit and the benefit of the Lenders, a security interest
in the Prepayment Account to secure the Obligations.

            (c) 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
Borrower agrees to indemnify the Lenders in accordance with Section 2.14.

            (d) 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.

            (e) For the avoidance of doubt, no mandatory prepayment shall be
required under this Section 2.4 from proceeds received by Quiksilver or any of
its Subsidiaries from the Escrow Account.

            SECTION 2.5. Conversion and Continuation Options.

            (a) The Borrower may elect from time to time to convert LIBOR Loans
(other than Alternate Currency Loans) to ABR Loans, by the Borrower giving the
Agent at least two Business Days'


                                                                              44

prior irrevocable 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. The Borrower may elect from
time to time to convert ABR Loans (other than Swing Line Loans, Protective
Advances and Overadvances) 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 Loan Commitment Expiration Date, (iii) the Borrower
shall not have the right to elect to convert to a LIBOR Loan if a Default shall
have occurred and be continuing, (iv) subject to Section 2.9, no Alternate
Currency Loan may be converted to an ABR Loan and (v) no Protective Advance or
Overadvance may be converted to a LIBOR Loan.

            (b) Any LIBOR Loan may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower 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 Loan
Commitment Expiration Date or (iii) if a Default shall have occurred and be
continuing; and further, provided, however, that, if the Borrower 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.

            SECTION 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 US$1,000,000 or a
whole multiple of US$100,000 in excess thereof (or an amount in the applicable
Alternate Currency having a US Dollar Equivalent of approximately US$1,000,000
or an integral multiple of US$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 US$500,000.

            SECTION 2.7. Interest Rates and Payment Dates.

            (a) Each Loan (other than an Alternate Currency 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 Adjusted 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 plus the Applicable Margin.

            (c) Each Alternate Currency Loan shall bear interest (which interest
shall be for the account of the Alternate Currency Fronting Lender) for each day
during each Interest Period with respect thereto at a rate per annum equal to
the Adjusted LIBO Rate determined for such day; provided, that such amount shall
be payable in US Dollars (based on the US Dollar Equivalent of the amount of
interest payable pursuant to this Section calculated by the Agent).



                                                                              45

            (d) Each Protective Advance and each Overadvance shall bear interest
(which interest shall be for the account of the Agent) at a rate per annum equal
to the Alternate Base Rate plus the Applicable Margin plus 2%.

            (e) 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), (b) or
(c) plus 2% per annum, from the date of the occurrence of such Event of Default
until such Event of Default is no longer continuing (after as well as before
judgment).

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

            SECTION 2.8. Computation of Interest and Fees.

            (a) Interest on Loans, unused-commitment fees and all other
Obligations of the Borrower shall be calculated on the basis of a 360-day year
for the actual days elapsed, provided, however, that interest on ABR Loans and
obligations denominated in Pounds Sterling shall be calculated on the basis of a
365- (or 366-, as the case may be) day year. The Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a LIBO
Rate. Any change in the interest rate on a 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
Borrower 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 Borrower
and the Lenders in the absence of manifest error.

            SECTION 2.9. Inability to Determine Interest Rate. If prior to the
first day of any Interest Period:

            (a) the Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower 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
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 Loans during
such Interest Period, or

            (c) the Agent or the Alternate Currency Fronting Lender determines
(which determination shall be conclusive and binding upon the Borrower absent
manifest error) that deposits in the applicable currency are not generally
available, or cannot be obtained by the Alternate Currency Fronting Lender, in
the applicable market (any Alternate Currency affected by the circumstances
described in clause (a), (b) or (c) is referred to as an "Affected Alternate
Currency"),

the Agent shall give telecopy or telephonic notice thereof to the Borrower and
the relevant Lenders as soon as practicable thereafter. If such notice is given
(y) pursuant to clause (a) or (b) of this Section 2.9


                                                                              46

in respect of LIBOR Loans denominated in US Dollars, then (i) any LIBOR Loans
denominated in US Dollars requested to be made on the first day of such Interest
Period shall be made as ABR Loans, (ii) any ABR Loans that were to have been
converted on the first day of such Interest Period to LIBOR Loans denominated in
US Dollars shall be continued as ABR Loans and (iii) any outstanding LIBOR Loans
denominated in US Dollars shall be converted, on the last day of the
then-current Interest Period, to ABR Loans and (z) in respect of any Alternate
Currency Loans, then (i) any Alternate Currency Loans in an Affected Alternate
Currency requested to be made on the first day of such Interest Period shall not
be made and (ii) any outstanding Alternate Currency Loans in an Affected
Alternate Currency shall be due and payable on the first day of such Interest
Period. Until such relevant notice has been withdrawn by the Agent, no further
Alternate Currency Loans denominated in an Affected Alternate Currency shall be
made or continued as such, nor shall the Borrower have the right to convert ABR
Loans to LIBOR Loans denominated in Dollars.

            SECTION 2.10. Pro Rata Treatment and Payments. (a) Each borrowing by
the Borrower 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 Borrower on account of principal of and interest on the
Loans (other than (x) Alternate Currency Loans, which shall be payable to the
Alternate Currency Fronting Lender, (y) Swing Line Loans, which shall be payable
to the Swing Line Lender and (z) Protective Advances and Overadvances, which
shall be payable to the Agent) shall be made pro rata according to the
respective outstanding principal and interest amounts of such Loans then held by
the Lenders. Subject to Section 2.10(b), all payments (including prepayments) to
be made by the Borrower hereunder and under the other Loan Documents, 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 (or, if
applicable, in the relevant Alternate Currency) and in immediately available
funds. All payments shall be remitted to the Agent and all such payments not
relating to principal or interest of specific Loans or not constituting payment
of specific fees as specified by the Borrower, and all proceeds of any
Collateral received by the Agent, shall be applied pursuant to Section 7.03(b)
of the Security Agreement or Section 11.06 of the Security Agreement, as
applicable. 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.

      (b) All payments (including prepayments) to be made by the Borrower
hereunder in respect of Alternate Currency Loans, on account of principal and
interest thereon, shall be made without set off or counterclaim and shall be
made prior to 11:00 a.m., London time, on the due date thereof to the Alternate
Currency Fronting Lender, at the Alternate Currency Fronting Lender's office
specified in Section 9.2, in the currency in which such Alternate Currency Loans
are denominated and in immediately available funds. If any payment of principal
or interest of an Alternate Currency 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.



                                                                              47

            SECTION 2.11. Illegality. Notwithstanding any other provision of
this Agreement, if, after the date hereof, (i) (A) the adoption of any law, rule
or regulation after the date of this Agreement, (B) any change in any law, rule
or regulation or in the interpretation or application thereof by any
Governmental Authority after the date of this Agreement or (C) compliance by the
Alternate Currency Fronting Lender with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement, shall make it unlawful for the
Alternate Currency Fronting Lender to make or maintain any Alternate Currency
Loan or to give effect to its obligations as contemplated hereby with respect to
any Alternate Currency Loan, or (ii) there shall have occurred any change in
national or international financial, political or economic conditions (including
the imposition of or any change in exchange controls, but excluding conditions
otherwise covered by this Section 2.11) or currency exchange rates which would
make it unfeasible for the Alternate Currency Fronting Lender to make or
maintain Alternate Currency Loans denominated in the relevant currency to, or
for the account of, the Borrower, then, by written notice to the Borrower and to
the Agent:

            (a) the Alternate Currency Fronting Lender may declare that
Alternate Currency Loans (in the affected currency or currencies) will not
thereafter (for the duration of such unlawfulness) be made by the Alternate
Currency Fronting Lender hereunder (or be continued for additional Interest
Periods), whereupon any request for a Alternate Currency Loan (in the affected
currency or currencies) or to continue a Alternate Currency Loan (in the
affected currency or currencies), as the case may be, for an additional Interest
Period) shall, as to such Lender or Lenders only, be of no force and effect,
unless such declaration shall be subsequently withdrawn; and

            (b) the Alternate Currency Fronting Lender may require that all
outstanding Alternate Currency Loans (in the affected currency or currencies) be
repaid on the last day of the then current Interest Period with respect thereto
or, if earlier, the date on which the applicable notice becomes effective.

For purposes of Section 2.11, a notice to the Borrower by the Alternate Currency
Fronting Lender shall be effective as to each Alternate Currency Loan made by
the Alternate Currency Fronting Lender, if lawful, on the last day of the
Interest Period currently applicable to such Alternate Currency Loan; in all
other cases such notice shall be effective on the date of receipt thereof by the
Borrower.

            SECTION 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;


                                                                              48

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 reasonably 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 an Alternate Currency
Loan, or to reduce any amount receivable hereunder in respect thereof, then, in
any such case, the Borrower 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 Borrower, 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 the Borrower shall be prima facie evidence of the
accuracy of the information so recorded. This covenant shall survive the
termination of this Agreement, the expiration of the Letters of Credit and the
payment in full of the Loans 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 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)
reasonably determines that the amount of capital maintained by such Lender or
such corporation which is attributable to or based upon the 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 Borrower 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 prima facie evidence of such amounts. This covenant shall
survive the termination of this Agreement, expiration of the Letters of Credit
and the payment in full of the Loans and all other amounts payable hereunder.

            SECTION 2.13. Taxes.

            (a) All payments made by the Borrower 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 or Other 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 and Other Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement and the other Loan Documents The Agent or a
Lender, as the case may be, shall deliver to the Borrower a certificate setting
forth the amount of such Taxes or Other Taxes, the calculation of such Taxes or
Other Taxes and an explanation of the requirement therefor, all in reasonable
detail, and such certificate shall be conclusive, absent manifest error.
Whenever any Taxes or Other Taxes are payable by the Borrower, as promptly as
possible thereafter, the Borrower shall send to the Agent, for its own account
or for the account of such Lender, as the case may be, a copy


                                                                              49

of an original official receipt received by the Borrower showing payment thereof
or such other evidence of payment reasonably satisfactory to the Agent. If the
Borrower fails to pay any Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the 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 Loans and all other amounts payable hereunder.

            (b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

            (c) Each Lender that is not a "U.S. Person" as defined in section
7701(a)(30) of the Code (each, a "Non-US Lender") agrees that it will deliver to
the Borrower and the Agent (i) two duly completed copies of United States
Internal Revenue Service Form W-8BEN or W-8ECI (as applicable to it) or, in the
case of a Non-US Lender claiming exemption from United States federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest," a statement substantially in the form of
Exhibit M and a Form W-8BEN. Each such Non-US Lender also agrees to deliver to
the Borrower and the Agent two further copies of the said Form 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 Borrower and
the Agent, and such extensions or renewals thereof as may reasonably be
requested by the Borrower or the Agent, unless in any such case an event beyond
the control of such Non-US 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 Non-US Lender from duly completing and delivering any such form
with respect to it, and such Non-US Lender so advised the Borrower and the
Agent. Each such Non-US Lender shall certify, pursuant to such Forms, that it is
entitled to receive payments under this Agreement and the other Loan Documents
without deduction or withholding of any United States federal income taxes.

            SECTION 2.14. Indemnity. The Borrower agrees to indemnify each
Lender for, and to hold each Lender harmless from, any loss or expense that such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of LIBOR Loans after the
Borrower has given a notice requesting the same in accordance with the
provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from LIBOR Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of LIBOR Loans on a day that is not the last day of an
Interest Period with respect thereto. Such indemnification may include an amount
equal to the excess, if any, of (i) the amount of interest that would have
accrued on the amount so prepaid, or not so borrowed, converted or continued,
for the period from the date of such prepayment or of such failure to borrow,
convert or continue to the last day of such Interest Period (or, in the case of
a failure to borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the applicable rate of
interest for such Loans provided for herein (excluding, however, the Applicable
Margin included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) that would have accrued to such Lender on such amount
by placing such amount on deposit for a comparable period with leading banks in
the interbank eurodollar market. A certificate as to any amounts payable
pursuant to this Section submitted to the Borrower by any Lender shall be
conclusive in the absence of manifest error. This covenant shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.


                                                                              50

            SECTION 2.15. Unused-Commitment Fees. The Borrower agrees to pay to
the Lenders the 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 Loan Commitment Expiration Date, based on the
daily aggregate Available Loan Commitments from time to time in effect and
computed at the Commitment Fee Rate. Such fee shall be payable quarterly in
arrears on each Fee Payment Date, commencing on the first Fee Payment Date to
occur after the Closing Date.

            SECTION 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 Borrower under Section 2.9, 2.11, 2.12 or 2.13, such Lender shall take such
action.

            SECTION 2.17. Determination of US Dollar Equivalent. (a) No later
than 1:00 P.M., New York City time, on each Calculation Date with respect to any
Alternate Currency Loan or Alternate Currency Letter of Credit, the Agent shall
determine the US Dollar Equivalent as of such Calculation Date with respect to
such Alternate Currency Loan or Alternate Letter of Credit. The US Dollar
Equivalent so determined shall become effective on the relevant Calculation Date
(a "Reset Date"), shall remain effective until the next succeeding Reset Date,
except as otherwise provided, and shall for all purposes of this Agreement be
the US Dollar Equivalent employed in converting any amounts between US Dollars
and Alternate Currencies.

            (b)No later than 5:00 P.M., New York City time, on each Reset Date,
the Agent shall determine the aggregate amount of the US Dollar Equivalent of
the principal amounts of the Alternate Currency Loans then outstanding (after
giving effect to any Alternate Currency Loans to be made or repaid on such date)
and the aggregate amount of the Letter of Credit Exposure in respect of
Alternate Currency Letters of Credit.

            (c)The Agent shall promptly notify the Borrower of each
determination pursuant to this Section 2.17.

            SECTION 2.18. Funding Account. The Borrower shall deliver to the
Agent and the Alternate Currency Fronting Lender, on the Closing Date, a notice
setting forth the deposit account of the Borrower (the "Funding Account") to
which the Agent (and, with respect to Alternate Currency Loans, the Alternate
Currency Fronting Lender) is authorized by the Borrower to transfer the proceeds
of any Loans requested pursuant to this Agreement. The Borrower may designate a
replacement Funding Account from time to time by written notice to the Agent.
Any designation by the Borrower of the Funding Account must be reasonably
acceptable to the Agent.

            SECTION 2.19. Protective Advances and Overadvances. (a) Subject to
the limitations set forth below, the Agent is authorized by the Borrower and the
Lenders, from time to time in the Agent's sole discretion (but shall have
absolutely no obligation to), to make Revolving Loans to the Borrower, on behalf
of all Lenders, in an aggregate amount outstanding at any time not to exceed 10%
of the Aggregate Revolving Loan Commitment, which the Agent, in its Permitted
Discretion, deems necessary or desirable (i) to preserve or protect the
Collateral, or any portion thereof, (ii) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, or (iii)
to pay any other amount chargeable to or required to be paid by the Borrower
pursuant to the terms of this Agreement, including costs, fees, and expenses as
described in Section 9.5 (any of such Revolving Loans are herein referred to as
"Protective Advances"); provided that, no Protective Advance shall cause the
Aggregate Credit Exposure to exceed the Aggregate Revolving Loan Commitment.
Protective Advances may be made even if the conditions precedent set forth in
Section 4.2 have not been satisfied. The Protective Advances shall be secured by
the Liens in favor of the Agent in and to the Collateral and shall


                                                                              51

constitute Obligations hereunder. All Protective Advances shall be ABR Loans,
shall bear interest at the rate set forth in Section 2.7(d) and shall be payable
on the earlier of demand or the Revolving Loan Commitment Expiration Date. The
Majority Lenders may at any time revoke the Agent's authorization to make
Protective Advances. Any such revocation must be in writing and shall become
effective prospectively upon the Agent's receipt thereof. At any time that there
is sufficient Availability and the conditions precedent set forth in Section 4.2
have been satisfied, the Agent may request the Revolving Lenders to make a
Revolving Loan to repay a Protective Advance. At any other time the Agent may
require the Lenders to fund their risk participations described in Section
2.19(c).

            (b) Any provision of this Agreement to the contrary notwithstanding,
at the request of the Borrower, the Agent may in its sole discretion (but shall
have absolutely no obligation to), make Revolving Loans to the Borrower, on
behalf of the Lenders, in amounts that exceed Availability (any such excess
Advances are herein referred to collectively as "Overadvances"); provided, that,
(i) no such event or occurrence shall cause or constitute a waiver of the
Agent's, the Alternate Currency Fronting Lender's or the Lenders' right to
refuse to make any further Overadvances or other Loans or issue Letters of
Credit, as the case may be, at any time that an Overadvance exists, and (ii) no
Overadvance shall result in a Default or an Event of Default due to Borrower's
failure to comply with Sections 2.1.A, 2.1.B, 2.1.C or 2.2 for so long as the
Agent permits such Overadvance to remain outstanding, but solely with respect to
the amount of such Overadvance. In addition, Overadvances may be made even if a
Default or an Event of Default exists, but may not be made if the conditions
precedent set forth in Section 4.2 have not been satisfied (other than the
conditions set forth in Section 4.2(a)(ii) (solely to the extent such lack of
Availability is caused by Borrowing Base noncompliance) and 4.2(c)). All
Overadvances shall be ABR Loans, shall bear interest at the rate set forth in
Section 2.7(d) and shall be payable on the earlier of demand or the Revolving
Loan Commitment Expiration Date. The authority of the Agent to make Overadvances
is limited to: (x) an aggregate amount not to exceed US$10,000,000 at any time,
(y) Overadvances (whether borrowed on the same date or on different dates) may
not be outstanding hereunder for a period of more than thirty days and (z) no
Overadvance shall cause any Lender's Credit Exposure to exceed its Revolving
Loan Commitment or the Aggregate Credit Exposure to exceed the Aggregate
Revolving Loan Commitment; provided that, the Majority Lenders may at any time
revoke the Agent's authorization to make Overadvances. Any such revocation must
be in writing and shall become effective prospectively upon the Agent's receipt
thereof.

            (c) Upon the making of a Protective Advance or an Overadvance by the
Agent (whether before or after the occurrence of a Default or an Event of
Default and regardless of whether the Agent has requested a Settlement with
respect to such Protective Advance or Overadvance), the Agent shall be deemed,
without further action by any party hereto, to have unconditionally and
irrevocably sold to each Lender and each Lender shall be deemed, without further
action by any party hereto, to have unconditionally and irrevocably purchased
from the Agent, without recourse or warranty, an undivided interest and
participation in such Protective Advance or Overadvance in proportion to its
Revolving Loan Commitment Percentage. From and after the date, if any, on which
any Lender is required to fund its participation in any Protective Advance or
Overadvance purchased hereunder, the Agent shall promptly distribute to such
Lender, such Lender's Revolving Loan Commitment Percentage of all payments of
principal and interest and all proceeds of Collateral received by the Agent in
respect of such Protective Advance or Overadvance

            SECTION 2.20. Replacement of Lenders Under Certain Circumstances.
The Borrower shall be permitted to replace with a financial institution any
Lender that (a) requests reimbursement for amounts owing pursuant to Section
2.12 or 2.13 or gives a notice of illegality pursuant to Section 2.11, (b)
defaults in its obligation to make Loans hereunder, or (c) that has refused to
consent to any waiver or amendment with respect to any Loan Document that has
been consented to by the Super-Majority Lenders, provided, that (i) such
replacement does not conflict with any Requirement of Law, (ii) no Event



                                                                              52

of Default shall have occurred and be continuing at the time of such
replacement, (iii) prior to any such replacement, such Lender shall have taken
no action under Section 2.16 so as to eliminate the continued need for payment
of amounts owing pursuant to Section 2.12 or 2.13 or to eliminate such
illegality pursuant to Section 2.11, (iv) the replacement financial institution
shall purchase, at par, all Loans and other amounts owing to such replaced
Lender on or prior to the date of replacement, (v) the Borrower shall be liable
to such replaced Lender under Section 2.14 (as though Section 2.14 were
applicable) if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution shall be reasonably satisfactory to
the Agent, the Alternate Currency Fronting Lender and each Issuing Bank (such
consent not to be unreasonably withheld), (vii) the replaced Lender shall be
obligated to make such replacement in accordance with the provisions of Section
9.6 (provided, that the Borrower shall be obligated to pay (or cause to be paid)
the registration and processing fee referred to therein), (viii) the Borrower
shall pay all additional amounts (if any) required pursuant to Section 2.12 or
2.13, as the case may be, in respect of any period prior to the date on which
such replacement shall be consummated, (ix) any such replacement shall not be
deemed to be a waiver of any rights that the Borrower, the Agent or any other
Lender shall have against the replaced Lender and (x) such replacement Lender
shall, with respect to clause (c) above, agree to consent to such amendment or
waiver.

            SECTION 2.21. Settlement. Each Lender's funded portion of the
Revolving Loans is intended by the Lenders to be equal at all times to such
Lender's Revolving Loan Commitment Percentage of the outstanding Revolving
Loans. Notwithstanding such agreement, the Agent and the Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Loan Parties)
that in order to facilitate the administration of this Agreement and the other
Loan Documents, settlement among them as to the Revolving Loans, including the
Protective Advances and the Overadvances shall take place on a periodic basis as
follows. The Agent shall request settlement (a "Settlement") with the Lenders on
at least a weekly basis, or on a more frequent basis at the Agent's election, by
notifying the Lenders of such requested Settlement by telecopy, telephone, or
e-mail no later than 1:00 p.m. (New York city time) on the date of such
requested Settlement (the "Settlement Date"). Each Lender (other than the Agent,
in the case of the Protective Advances and Overadvances) shall transfer the
amount of such Lender's Revolving Loan Commitment Percentage of the outstanding
principal amount of the applicable Loan with respect to which Settlement is
requested to the Agent, to such account of the Agent as the Agent may designate,
not later than 3:00 p.m. (New York City time), on the Settlement Date applicable
thereto. Settlements may occur during the existence of a Default or an Event of
Default and whether or not the applicable conditions precedent set forth in
Section 4.2 have then been satisfied. Such amounts transferred to the Agent
shall be applied against the amounts of the applicable Loan and, together with
the Agent's Revolving Loan Commitment Percentage of such Protective Advance or
Overadvance, shall constitute Revolving Loans of such Lenders, respectively. If
any such amount is not transferred to the Agent by any Lender on the Settlement
Date applicable thereto, the Agent shall be entitled to recover such amount on
demand from such Lender together with interest thereon at a rate equal to the
greater of the daily average Federal Funds Effective Rate and a rate determined
by the Agent in accordance with banking industry rules on interbank compensation
for the period until such Lender makes such amount immediately available to the
Agent. If such amount is not made available to the Agent by such Lender within
three Business Days of such due date, the Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
ABR Loans, on demand.

                   ARTICLE III REPRESENTATIONS AND WARRANTIES

      To induce the Lenders and the Agent to enter into this Agreement, to
induce the Alternate Currency Fronting Lender to make the Alternate Currency
Loans, induce the Lenders to make the Revolving Loans and participate in the
Letters of Credit and the Alternate Currency Loans, to induce the


                                                                              53

Agent to make Protective Advances and Overadvances and to induce the Issuing
Banks to issue the Letters of Credit, Quiksilver and the Borrower hereby
severally represent and warrant to the Agent and each Lender that:

            SECTION 3.1. Organization and Good Standing. Quiksilver and each
Subsidiary (a) is duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, (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 Quiksilver and each Subsidiary is organized or is
qualified to conduct business is listed on Schedule 3.1. In addition, Schedule
3.1 separately sets forth, for each Loan Party, the type of entity, the
organizational number issued to it by its state of organization and its federal
employer identification number.

            SECTION 3.2. Power and Authority. The Borrower has all requisite
power and authority under applicable Requirements of Law to borrow hereunder.
Quiksilver and each other Loan Party 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 Loan Party to
execute, deliver and perform the Loan Documents to which it is a party have been
taken and/or received.

            SECTION 3.3. Validity and Legal Effect. This Agreement constitutes,
and the other Loan Documents to which any Loan Party is a party constitute (or
will constitute when executed and delivered), the legal, valid and binding
obligations of such Loan Party 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.

            SECTION 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 material
agreement or instrument by which Quiksilver or any Subsidiary or any of their
respective properties 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 Quiksilver or any Subsidiary, whether such
properties are now owned or hereafter acquired. To the knowledge of Quiksilver
and the Borrower, the Target is not, nor will it be upon the consummation of the
Transaction, in default under or with respect to any agreements evidencing
Indebtedness of the Target.

            SECTION 3.5. Title to Assets; Existing Encumbrances. Each of
Quiksilver and its Subsidiaries 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,
(ii) the other Liens against the assets of Quiksilver and each Subsidiary set
forth on Schedule 3.5A and (iii) Permitted Liens. The property and assets of
Quiksilver 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. Neither Quiksilver nor any Material Domestic Subsidiary or Additional
Domestic Guarantor 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.


                                                                              54

            SECTION 3.6. Taxes and Assessments. Except as otherwise identified
on Schedule 3.6, each of Quiksilver 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. Except as otherwise
identified on Schedule 3.6, neither Quiksilver nor the 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 Quiksilver 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 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
Quiksilver 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 Loan
Parties, the Agent, or the Lenders of this Agreement or any other Loan Document
to which the Loan Parties are party, or on any payment to be made by the Loan
Parties pursuant hereto or thereto.

            SECTION 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 Quiksilver's knowledge, threatened (i) with respect to any Loan Document or
the transactions contemplated thereby or (ii) against Quiksilver or any
Subsidiary that, if adversely resolved, could reasonably be expected to have a
Material Adverse Effect.

            SECTION 3.8. Bank Accounts. As of the Closing Date, Schedule 3.8
contains a complete and accurate list of all bank accounts maintained by each
Loan Party with any bank or other financial institution.

            SECTION 3.9. Accuracy of Financial Information. (a) All financial
information (other than the Projected Pro Forma Balance Sheet and the Monthly
Reports) previously furnished to the Agent and the Lenders that was prepared by
or on behalf of the Borrower concerning the financial condition and operations
of Quiksilver and its Subsidiaries, including the audited consolidated financial
statements of Quiksilver as of October 31, 2002, October 31, 2003 and October
31, 2004, for the applicable fiscal year then ended and the unaudited
consolidated financial statements of Quiksilver as of January 31, 2003, January
31, 2004 and January 31, 2005 for the applicable 3-month fiscal period then
ended, (A) has been prepared in accordance with GAAP consistently applied
(provided that the unaudited financial statements are subject to normal year-end
audit adjustments and do not include all of the footnotes required under GAAP
for annual financial statements), (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. The Monthly Reports have been prepared based on
the books and records of Quiksilver and its Subsidiaries for use by senior and
financial management of Quiksilver and its Subsidiaries and present fairly in
all material respects the financial condition of the organizations covered
thereby as of the dates and for the periods covered thereby. The Projected Pro
Forma Balance Sheet has been prepared based on the best information available to
the Borrower as of the date of delivery thereof, and, to the knowledge of the
Borrower, presents fairly in all material respects on a pro forma basis the
estimated financial position of Quiksilver and its consolidated Subsidiaries as
at October 31, 2004 (with respect to Quiksilver and its Subsidiaries (other than
the Target and its Subsidiaries)) and as at September 30, 2004 (with respect to
the Target and its Subsidiaries), assuming that the Transaction had been
consummated on such date.

            (b) Since October 31, 2004 there has been no event or condition
resulting in a Material Adverse Effect.


                                                                              55

            SECTION 3.10. Accuracy of Other Information. All information
contained in any material application, schedule, report, certificate, or any
other document (including any Customer List) given to the Agent or any Lender by
Quiksilver, the Borrower or any other Person on behalf of the Borrower in
connection with the Loan Documents is (or, in the case of information concerning
the Target or any of its Subsidiaries, is, to the best knowledge of Quiksilver
and the Borrower) 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 the Quiksilver,
the Borrower or any other Person on behalf of the Borrower 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 the Borrower 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.

            SECTION 3.11. Compliance with Laws Generally. Each of Quiksilver and
its Subsidiaries is in compliance in all material respects with all Requirements
of Law applicable to it, its operations and its properties.

            SECTION 3.12. ERISA (a)Compliance. Each of Quiksilver, each
Subsidiary and each Plan is in compliance in all material respects with all
applicable provisions of ERISA and the Code, and all rules, regulations and
orders implementing ERISA and the Code.

            (b) Neither Quiksilver nor any Subsidiary or any ERISA Affiliate
thereof, maintains or contributes to (or has maintained or contributed to) any
Multiemployer Plan under which Quiksilver, such Subsidiary or any ERISA
Affiliate thereof could have any withdrawal liability.

            (c) Neither Quiksilver nor any Subsidiary or any ERISA Affiliate
thereof sponsors, maintains or contributes to any Plan under which there is an
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived.

            (d) The liability for accrued benefits under each Plan that will be
sponsored, maintained or contributed to by Quiksilver, 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 Plan.

            (e) The aggregate liability of Quiksilver, each Subsidiary and each
ERISA Affiliate thereof arising out of or relating to a failure of any Plan 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 Quiksilver, 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 Quiksilver or any Subsidiary is subject to
the pension law of any jurisdiction other than the United States, each of the
representations contained in Sections 3.13(a) through (g) would be true and
correct if (i) a reference to the corresponding provisions of such foreign


                                                                              56

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 Quiksilver 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.

            SECTION 3.13. Environmental Compliance. (a).Each of Quiksilver and
each Subsidiary has received all permits and made all filings and notifications
necessary under and is otherwise in compliance in all material respects with all
applicable Environmental Laws.

            (b) Neither Quiksilver nor any Subsidiary has given any written or
oral notice to any Governmental Authority with regard to any actual or
imminently threatened removal, storage, transportation, spill, release or
discharge of any Materials of Environmental Concern either (i) on properties now
or formerly owned, operated or leased by Quiksilver or any Subsidiary or (ii)
otherwise in connection with the conduct of its business and operations, and
there is no basis for giving any such notice.

            (c) Neither Quiksilver nor any Subsidiary has received any written
request for information, or been notified that it is potentially responsible for
costs of clean-up of any actual or imminently threatened spill, release or
discharge of any Materials of Environmental Concern or with respect to any
Environmental Laws, and there is no basis for any such request or notice.

            (d) No judicial proceeding or governmental or administrative action
is pending, or, to the knowledge of Quiksilver or the Borrower, threatened,
under or relating to any Environmental Laws to which Quiksilver or any
Subsidiary is named as a party, 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 Laws
with respect to Quiksilver, the Borrower, any Subsidiary or the Properties.

            (e) To the knowledge of Quiksilver and the Borrower, except as set
forth in Schedule 3.13, neither Quicksilver nor any Subsidiary has assumed or
retained, by contract or operation of law, any liabilities of any kind, fixed or
contingent, known or unknown, under any Environmental Law or with respect to any
Materials of Environmental Concern that could reasonably be expected to result
in a material liability to any of them.

            SECTION 3.14. 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, the 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.

            SECTION 3.15. 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.

            SECTION 3.16. Solvency. Immediately prior to, upon and immediately
following the execution of this Agreement, the funding of the Loans and the
issuance of any Letters of Credit to be funded or issued on the Closing Date,
the funding of the loans under the Bridge Loan Agreement and the


                                                                              57

consummation of the Initial Transactions, Quiksilver, both individually and
together with its Subsidiaries, was, is and will be Solvent.

            SECTION 3.17. Investment Company Act. 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.

            SECTION 3.18. 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.

            SECTION 3.19. Ranking of Loans. This Agreement and the other Loan
Documents to which the Borrower is a party, when executed, and the Loans, when
borrowed are and will be the direct and general obligations of the Borrower. The
Borrower's obligations hereunder and thereunder rank and will rank at least pari
passu in priority of payment to all other senior Indebtedness of the Borrower.

            SECTION 3.20. Intellectual Property. Each of Quiksilver and its
Subsidiaries owns, or is licensed to use, all Intellectual Property Rights
necessary for the conduct of its business as currently conducted in all material
respects. No material claim has been asserted and is pending by any Person
challenging or questioning the use of any Intellectual Property Rights of
Quiksilver or any of its Subsidiaries or the validity or effectiveness of any
such Intellectual Property Rights, nor does Quiksilver or the Borrower know of
any valid basis for any such claim. To the knowledge of Quiksilver and the
Borrower, the use of Intellectual Property Rights by Quiksilver and each of its
Subsidiaries does not infringe on the rights of any Person in any material
respect.

            SECTION 3.21. Security Interest in Collateral. The provisions of
this Agreement and the other Loan Documents create legal and valid Liens on all
the Collateral in favor of the Agent, for the benefit of the Agent and the
Lenders, and such Liens constitute perfected and continuing Liens on the
Collateral, securing the Obligations, enforceable against the applicable Loan
Party and all third parties, and having priority over all other Liens on the
Collateral except in the case of (a) Permitted Liens, to the extent any such
Permitted Liens would have priority over the Liens in favor of the Agent
pursuant to any applicable law and (b) Liens perfected only by possession
(including possession of any certificate of title) to the extent the Agent has
not obtained or does not maintain possession of such Collateral.

            SECTION 3.22. Insurance. Schedule 3.22 lists in all material
respects all insurance policies of any nature maintained, as of the Closing
Date, by Quiksilver and each Subsidiary, as well as a summary of the terms of
each such policy.

            SECTION 3.23. Representations and Warranties Contained in the
Purchase Agreement Documentation and the Bridge Loan Agreement Documentation.
Each of the Purchase Agreement Documentation and the Bridge Loan Agreement
Documentation (in each case, to the extent executed and delivered on or before
the Closing Date) have been duly executed and delivered by Quiksilver, the
Borrower and each Subsidiary party thereto and, to the best knowledge of
Quiksilver and the Borrower, have been duly executed and are in full effect. The
representations and warranties of Quiksilver and the Borrower, and the
representations and warranties of the Subsidiaries party thereto, are accurate
and correct in all material respects with respect to each of the Purchase
Agreement Documentation and the Bridge Loan Agreement Documentation.


                                                                              58

                       ARTICLE IV CONDITIONS TO BORROWING

            SECTION 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 (to the extent requested by the relevant Lender), (ii) the Security
Agreement, executed and delivered by each Loan Party, (iii) the Guarantee,
executed and delivered by each Guarantor party thereto, (iv) the Intercreditor
Agreement, executed and delivered by each party thereto and (v) all other
agreements or instruments required to create or perfect a security interest in
the Collateral, in each case executed and delivered by officers of the Borrower
and the Guarantors, as applicable.

            (c) Bridge Loan Agreement Documentation. Quiksilver shall have
received at least the US Dollar Equivalent of US$135,000,000 in gross cash
proceeds from the initial advance under the Bridge Loan Agreement. The Lenders
shall have received certified copies of the Bridge Loan Agreement Documentation
(and any amendments, waivers or other modifications thereto), and such
documentation shall be in form and substance reasonably satisfactory to the
Lenders.

            (d) Purchase Agreement and Tender Offer Documentation. The Lenders
shall have received: (i) certified copies of the Purchase Agreement
Documentation (and any amendments, waivers or other modifications thereto) and
(ii) the most recent drafts of the Tender Offer Documentation, and such
documentation shall be, in each case, in form and substance reasonably
satisfactory to the Lenders

            (e) Termination of Existing Credit Agreement. The Agent shall have
received satisfactory evidence that the Existing Credit Agreement shall have
been, or shall concurrently be, terminated and all amounts thereunder shall have
been paid in full (other than the obligations that expressly survive the
termination thereof, including obligations in relation to letters of credit
issued by Union Bank of California, N.A. in the aggregate face amount of
approximately $47,750,050) and (ii) satisfactory arrangements shall have been
made for the termination of all Liens granted in connection therewith.

            (f) Fees and Costs. The Lenders and the Agent shall have received
all fees required to be paid, and all expenses for which invoices have been
presented (including the reasonable fees and expenses of legal counsel), on or
before the Closing Date. All such amounts will be paid with proceeds of Loans
(or loans under the Senior Bridge Facility) made on the Closing Date and will be
reflected in the funding instructions given by the Borrower to the Agent on or
before the Closing Date.

            (g) Approvals. All governmental and third party approvals necessary
in connection with the Initial Transactions, the continuing operations of
Quiksilver and its Subsidiaries and the transactions contemplated hereby shall
have been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Initial Transactions or the financing contemplated hereby.

            (h) Financial Statements; Projected Pro Forma Balance Sheet. The
Lenders shall have received (i) audited financial statements of Quiksilver and
the Target, in each case for the three most


                                                                              59

recent fiscal years, (ii) unaudited interim consolidated financial statements of
Quiksilver for each quarterly period ended after the latest fiscal year referred
to in clause (i) above and such unaudited consolidated financial statements for
the same period of the prior fiscal year, (iii) unaudited interim consolidated
financial statements of the Target for each semi-annual period ended after the
latest fiscal year referred to in clause (i) above and such unaudited
consolidated financial statements for the same period of the prior fiscal year,
(iv) to the extent available to management, monthly financial data generated by
Quiksilver's internal accounting systems for use by senior and financial
management or any monthly financial data of the Target available to Quiksilver
(collectively, the "Monthly Reports") for each month ended after the latest
fiscal period referred to in clause (ii) or (iii) above, as applicable and (v)
the Projected Pro Forma Balance Sheet. The foregoing financial statements and
Monthly Reports shall not reflect any material adverse change in the
consolidated financial condition of Quiksilver and its subsidiaries or the
Target and its subsidiaries from what was reflected in the financial statements
previously furnished to the Lenders.

            (i) Projections. The Lenders shall have received satisfactory
projections through 2010, which shall include monthly projections for the 2005
fiscal year.

            (j) Lien Searches. The Agent shall have received the results of a
recent lien search in each of the jurisdictions where assets of the Loan Parties
are located, and such search shall reveal no liens on any of the assets of the
Loan Parties except for Permitted Liens or Liens discharged on or prior to the
Closing Date pursuant to documentation reasonably satisfactory to the Agent.

            (k) Filings, Registrations and Recordings. Each document (including
any Uniform Commercial Code financing statement) required by the Security
Documents or under law or reasonably requested by the Agent to be filed,
registered or recorded in order to create in favor of the Agent, for the benefit
of the Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Permitted
Liens), shall be in proper form for filing, registration or recordation.

            (l) Pledged Stock; Stock Powers; Pledged Notes. The Agent shall have
received (i) the certificates representing the shares of Capital Stock pledged
pursuant to the Security Documents, together with an undated stock power for
each such certificate executed in blank by a duly Responsible Officer of the
pledgor thereof and (ii) each promissory note (if any) pledged to the Agent
pursuant to the Security Documents endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank) by the pledgor thereof.

            (m) Solvency Certificate. The Agent shall have received a
satisfactory solvency certificate from the Chief Financial Officer of
Quiksilver, prepared to give effect to the Initial Transactions and the other
transactions contemplated thereby.

            (n) Legal Opinions. The Agent shall have received the following
executed legal opinions:

                  (i) the legal opinion of Hewitt & O'Neil LLP, counsel to
            Quiksilver and its Subsidiaries, substantially in the form of
            Exhibit L-1;

                  (ii) the legal opinion of De Pardeiu, Broacas, Maffei, special
            French counsel to the Agent, substantially in the form of Exhibit
            L-2;


                                                                              60

                  (iii) to the extent consented to by the relevant counsel, each
            legal opinion, if any, delivered in connection with the Purchase
            Agreement, accompanied by a reliance letter in favor of the Lenders;
            and

                  (iv) the legal opinion of local counsel in Luxembourg and of
            such other special and local counsel as may be required by the
            Agent.

Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may reasonably require.

            (o) Asset Appraisals. The Loan Parties shall have delivered asset
appraisals (covering inventory), reasonably satisfactory to the Agent, prepared
by an independent firm engaged directly by the Agent.

            (p) Field Examination. The Agent or its designee shall have
conducted a satisfactory field examination of the accounts receivable, inventory
and related working capital matters and financial information of the Loan
Parties and of the related data processing and other systems.

            (q) Borrowing Base Certificate. The Borrower shall have delivered a
Borrowing Base Certificate which calculates the Borrowing Base, as of a date no
more than five days prior to the Closing Date, with customary supporting
documentation and supplemental reporting in form and substance reasonably
satisfactory to the Agent.

            (r) Availability. As of the Closing Date, there shall be minimum
Availability of US$35,000,000.

            (s) Secretary's Certificates. The Agent shall have received
certificates dated as of the Closing Date of the Secretary or an Assistant
Secretary of each Loan Party, in each case attaching (i) a copy of the
resolutions of the Board of Directors of such Loan Party, authorizing (A) the
execution, delivery and performance of the Loan Documents to which such Loan
Party is or will be a party and (B) in the case of the Borrower, the borrowings
contemplated hereunder, (ii) copies of the Organic Documents of such Loan Party
and (iii) a certificate, dated a recent date, of the Secretary of State of the
state of formation of such Loan Party and each other jurisdiction where such
Loan Party 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 Loan Party in such state.

            (t) 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 the
Borrower to such effect in the form of Exhibit C, dated as of the Closing Date
and executed by a Responsible Officer of the Borrower.

            (u) Regulatory Matters. All legal (including tax implications) and
regulatory matters, including, but not limited to compliance with applicable
requirements of Regulations U, T and X of the Board of Governors of the Federal
Reserve System, shall be reasonably satisfactory to the Agent and the Lenders.


                                                                              61

            (v) Subsidiary Certificate. The Borrower shall have delivered to the
Agent a closing certificate, which shall set forth (a) a correct and complete
list of the name and relationship to Quiksilver of each and all of Quiksilver's
Material Domestic Subsidiaries and Material Foreign Subsidiaries and of each
Additional Domestic Guarantor, (b) the location of the chief executive office of
Quiksilver, each Material Domestic Subsidiary and each Additional Domestic
Guarantor and each other location where any of them have maintained their chief
executive office in the past five years, (c) a true and complete listing of each
class of each of Quiksilver's authorized Capital Stock, of which all of such
issued shares are validly issued, outstanding, fully paid and non-assessable,
and owned beneficially and of record by the Persons identified on such closing
certificate, and (d) the type of entity of Quiksilver, each of its Material
Domestic Subsidiaries and each of the Additional Domestic Guarantors. With
respect to each Loan Party, such closing certificate shall also set forth the
employer or taxpayer identification number of each Loan Party and the
organizational identification number issued by each Loan Party's jurisdiction of
organization or a statement that no such number has been issued.

            (w) Customer List. The Borrower shall have delivered to the Agent a
true and complete Customer List.

            (x) Insurance. The Agent shall have received evidence satisfactory
to it of insurance required to be maintained by Quiksilver and its Subsidiaries.

            (y) Amendment to Leasehold Improvement Loan documentation. The
Borrower shall have entered into an amendment to the Leasehold Improvement Loan
documentation in form and substance reasonably satisfactory to the Agent.

            SECTION 4.2. Conditions to Each Loan or Letter of Credit. Subject to
Section 2.19, the agreement of each Lender to make each Loan, the agreement of
each Issuing Bank to issue each Letter of Credit and the agreement of the
Alternate Currency Fronting Lender to make each Alternate Currency Loan,
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:

            (a) Representations and Warranties; No Default. The following
statements shall be true, and the Borrower's acceptance of the proceeds of such
Loan or its delivery of an executed Letter of Credit Request shall be deemed to
be a representation and warranty of the Borrower 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 or Event of 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 Borrower or any other Loan Party.


                                                                              62

            (c) Availability. After giving effect to such Loan or the issuance
of such Letter of Credit, Availability would not be less than zero.

            (d) Borrowing Notice, Letter of Credit Request. The Agent (and, with
respect to Alternate Currency Loans, the Alternate Currency Fronting Lender)
shall have received a Revolving Loan Borrowing Notice, an Alternate Currency
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
Borrower.

                        ARTICLE V AFFIRMATIVE COVENANTS

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

            SECTION 5.1. Financial Statements.

            (a) Within 105 days (or, if earlier, the date on which such
financial statements are filed by Quiksilver with the Securities and Exchange
Commission) after the end of each fiscal year, the Borrower 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 and each 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; provided, that in the event that
the Borrower is unable to deliver unaudited consolidating financial statements
with respect to one or more Material Foreign Subsidiaries, it shall provide such
other financial statements with respect thereto in form and substance reasonably
satisfactory to the Agent. 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 Compliance Certificate.

            (b) Within 60 days (or, if earlier, the date on which such financial
statements are filed by Quiksilver with the Securities and Exchange Commission)
after the end of each of Quiksilver's first three fiscal quarters, the Borrower
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 and each Material Foreign Subsidiary,
including a balance sheet, an income statement and a cash flow statement (with
accompanying notes and schedules); provided, that in the event that the Borrower
is unable to deliver unaudited consolidating financial statements with respect
to one or more Material Foreign Subsidiaries, it shall provide such other
financial statements with respect thereto in form and substance reasonably


                                                                              63

satisfactory to the Agent. Such financial statements shall be prepared in
accordance with GAAP consistently applied (it being understood that such
financial statements are subject to normal year-end audit adjustments and do not
include all of the footnotes required under GAAP for annual financial
statements). 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 Compliance Certificate.

            (c) Within 105 days after the end of each fiscal year, the Borrower
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, quarterly
consolidating income statements and shall set forth in reasonable detail all
material assumptions made in connection with such projections and shall
otherwise be in form and scope reasonably satisfactory to the Agent; provided,
that in the event that the Borrower is unable to deliver quarterly consolidating
balance sheets with respect to any Foreign Subsidiaries, it shall be permitted
to deliver consolidated balance sheets with respect thereto.

            SECTION 5.2. Certificates; Other Information. The Borrower 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, the AMF 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) (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 US$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;

            (d) 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



                                                                              64

Subsidiary, notice of (i) each material action, suit or proceeding before any
Governmental Authority and (ii) any material claim under any Environmental Law;

            (e) as soon as available but in any event within 15 days of the end
of each calendar month, and at such other times as may be requested by the
Agent, as of the month then ended, a Borrowing Base Certificate and supporting
information in connection therewith;

            (f) as soon as available but in any event within 15 days of the end
of each calendar month (or, in the case of clauses (iv) and (v) below, each
fiscal quarter) and at such other times as may be requested by the Agent, as of
the month (or quarter, as the case may be) then ended:

                  (i) a detailed aging of the Loan Parties' Accounts (1)
            including all invoices aged by due date and (2) reconciled to the
            Borrowing Base Certificate delivered as of such date prepared in a
            manner reasonably acceptable to the Agent, together with a summary
            specifying the name, address, and balance due for each Account
            Debtor;

                  (ii) a schedule detailing the Loan Parties' Inventory, in form
            reasonably satisfactory to the Agent, including by division, by
            season and by class (i.e., raw materials and finished goods);

                  (iii) a worksheet of calculations prepared by the Borrower to
            determine Eligible Accounts and Eligible Inventory, such worksheets
            reasonably detailing the Accounts and Inventory excluded from
            Eligible Accounts and Eligible Inventory and the reason for such
            exclusion;

                  (iv) a reconciliation of the Loan Parties' Accounts and
            Inventory between the amounts shown in the Borrower's (or, to the
            extent applicable, the Target Loan Parties') general ledger and
            financial statements and the reports delivered pursuant to clauses
            (i) and (ii) above; and

                  (v) a reconciliation of the loan balance per the Borrower's
            (or, to the extent applicable, the Target Loan Parties') general
            ledger to the loan balance under this Agreement;

            (g) as soon as available but in any event within 15 days of the end
of each calendar month and at such other times as may be requested by the Agent,
as of the month then ended, a schedule of the Loan Parties' accounts payable in
form and substance reasonably satisfactory to the Agent;

            (h) promptly upon the Agent's request:

                  (i) copies of invoices in connection with the invoices issued
            by any Loan Party in connection with any Accounts, credit memos,
            shipping and delivery documents, and other information related
            thereto;

                  (ii) copies of purchase orders, invoices, and shipping and
            delivery documents in connection with any Inventory or Equipment
            purchased by any Loan Party; and

                  (iii) a schedule detailing the balance of all intercompany
            accounts of any Loan Party;


                                                                              65

            (i) within 25 days of each October 31, an updated Customer List;

            (j) 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

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

Following the occurrence and during the continuation of an Availability Event,
the Agent may, in its sole discretion, require more frequent reporting with
respect to Sections 5.2(e), (f), (g) and (i).

            SECTION 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.

            SECTION 5.4. Conduct of Business; Maintenance of Existence and
Licenses; Contractual Obligations. Quiksilver 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 the
Borrower, any Material Domestic Subsidiary, a Material Foreign Subsidiary or an
Additional Domestic Guarantor) 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.

            SECTION 5.5. Maintenance of Property. Quiksilver shall, and shall
cause each of its Subsidiaries to, do all things necessary to (i) maintain,
preserve, protect and keep its Property in good repair, working order and
condition (normal wear and tear excepted), and make all necessary and proper
repairs, renewals and replacements so that its business carried on in connection
therewith may be properly conducted at all times and (ii) obtain and maintain in
effect at all times all material franchises, governmental authorizations,
Intellectual Property Rights, licenses and permits, which are necessary for it
to own its Property or conduct its business as conducted on the Closing Date.

            SECTION 5.6. Insurance. (a) Quiksilver shall, and shall cause each
of its Subsidiaries to, at all times maintain, with financially sound and
reputable carriers having a Financial Strength rating of at least A- by A.M.
Best Company, insurance against: (i) loss or damage by fire and loss in transit;
(ii) theft, burglary, pilferage, larceny, embezzlement, and other criminal
activities; (iii) business interruption; (iv) general liability and (v) and such
other hazards, as is customary in the business of Quiksilver or such Subsidiary.
All such insurance shall be in amounts, cover such assets and be under policies
acceptable to the Agent in its Permitted Discretion. In the event any Collateral
is located in any area that has been designated by the Federal Emergency
Management Agency as a "Special Flood Hazard Area", Quiksilver or such
Subsidiary shall purchase and maintain flood insurance on such Collateral
(including any personal Property which is located on any real Property leased by
Quiksilver or any Subsidiary within a "Special Flood Hazard Area"). The amount
of all insurance required by this Section 5.6 shall at a minimum


                                                                              66

comply with applicable law, including the Flood Disaster Protection Act of 1973,
as amended. All premiums on such insurance shall be paid when due by Quiksilver
or the relevant Subsidiary, and copies of the policies delivered to the Agent.
If Quiksilver or any of its Subsidiaries fails to obtain any insurance as
required by this Section, the Agent at the direction of the Majority Lenders may
obtain such insurance at the Borrower' expense. By purchasing such insurance,
the Agent shall not be deemed to have waived any Default or Event of Default
arising from Quiksilver's or any Subsidiary's failure to maintain such insurance
or pay any premiums therefor. Quiksilver shall, and shall cause each of its
Subsidiaries to, use such Property in compliance with applicable law and not to
use it in any manner which might render inapplicable any insurance coverage.

            (b) All insurance policies required under Section 5.6(a) with
respect to Domestic Subsidiaries and Subsidiaries maintaining their chief
executive office or principal residence in, or organized under applicable law in
Canada (or any province thereof) shall name the Agent (for the benefit of the
Agent and the Lenders) as an additional insured or as loss payee, as applicable,
and shall provide that, or contain loss payable clauses or mortgagee clauses, in
form and substance satisfactory to the Agent, which provide that:

                  (i) all proceeds thereunder with respect to any Collateral
            shall be payable to the Agent (to the extent such proceeds are
            required to be applied to prepay the Obligations in accordance with
            Section 2.4 or to the extent otherwise required pursuant to the
            Security Agreement);

                  (ii) no such insurance shall be affected by any act or neglect
            of the insured or owner of the Property described in such policy;
            and

                  (iii) such policy and loss payable clauses may be canceled,
            amended, or terminated only upon at least thirty days prior written
            notice given to the Agent.

            SECTION 5.7. Inspection; Communication with Accountants. Quiksilver
shall, and shall cause each of its Subsidiaries to, permit the Agent and the
Lenders, by their respective employees, representatives and agents, from time to
time upon two Business Days' prior notice as frequently as Agent reasonably
determines to be appropriate, to (a) inspect any of the Property, the
Collateral, and the books and financial records of any Loan Party, (b) examine,
audit and make extracts or copies of the books of accounts and other financial
records of any Loan Party, (c) have access to its properties, facilities, the
Collateral and its advisors, officers, directors and employees to discuss the
affairs, finances and accounts of any Loan Party and (d) review, evaluate and
make test verifications and counts of the Accounts, Inventory and other
Collateral of such Loan Party. If a Default or an Event of Default has occurred
and is continuing, Quiksilver shall, and shall cause each of its Subsidiaries
to, provide such access to the Agent and to each Lender at all times and without
advance notice. Furthermore, so long as any Default has occurred and is
continuing, Quiksilver shall, and shall cause each of its Subsidiaries to,
provide the Agent and each Lender with access to its suppliers. Quiksilver
shall, and shall cause each of its Subsidiaries to, promptly make available to
the Agent and its counsel originals or copies of all books and records that the
Agent may reasonably request. Quiksilver and the Borrower acknowledge that from
time to time the Agent may prepare and may distribute to the Lenders certain
audit reports pertaining to the Loan Parties' assets for internal use by the
Agent and the Lenders from information furnished to it by or on behalf of the
Loan Parties, after the Agent has exercised its rights of inspection pursuant to
this Agreement. Upon reasonable notice and at such reasonable times during usual
business hours, Quiksilver shall, and shall cause each of its Subsidiaries to,
permit representatives of the Agent (on behalf of the Lenders) 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 its

                                                                              67

Accountants; provided that the Agent shall give notice of any such communication
to Quiksilver and allow Quiksilver the opportunity to be present during such
communication.

            SECTION 5.8. Appraisals and Field Examinations. Whenever a Default
or Event of Default exists, and at such other times (not more frequently than
once per calendar year or, if average daily Availability for any period of
thirty consecutive days during such calendar year is less than (x) if the
Guarantee Date has not yet occurred, US$25,000,000, or (y) on and after the
Guarantee Date, US$40,000,000, twice per calendar year) as the Agent requests,
Quiksilver shall, and shall cause each other Loan Party to, at their sole
expense, permit the Agent to conduct field examinations and/or provide the Agent
with appraisals or updates thereof of their Inventory from an appraiser selected
and engaged by the Agent, and prepared on a basis satisfactory to the Agent,
such appraisals and updates to include, without limitation, information required
by applicable law and regulations and by the internal policies of the Lenders;
provided, however, that the Agent and the Lenders shall at all times, at their
own expense, have the right (after reasonable notice to the Loan Parties) to
conduct field examinations and/or obtain appraisals or updates of the Inventory
of the Loan Parties.

            SECTION 5.9. Collateral Access Agreements. Quiksilver shall, and
shall cause each of its Subsidiaries to, use commercially reasonable efforts to
obtain a Collateral Access Agreement, from the lessor of each leased property,
mortgagee of owned property or bailee or consignee with respect to any
warehouse, processor or converter facility or other location where Collateral is
stored or located, which agreement or letter shall provide access rights,
contain a waiver or subordination of all Liens or claims that the landlord,
mortgagee, bailee or consignee may assert against the Collateral at that
location, and shall otherwise be reasonably satisfactory in form and substance
to the Agent. With respect to such locations or warehouse space leased or owned
as of the Closing Date and thereafter, if the Agent has not received a
Collateral Access Agreement as of the Closing Date (or, if later, as of the date
such location is acquired or leased), the Loan Parties' Eligible Inventory at
that location shall be subject to such Reserves as may be established by the
Agent. After the Closing Date, no real property or warehouse space shall be
leased by any Loan Party and no Inventory shall be shipped to a processor or
converter under arrangements established after the Closing Date, unless and
until a satisfactory Collateral Access Agreement shall first have been obtained
with respect to such location and if it has not been obtained, the Loan Parties'
Eligible Inventory at that location shall be subject to the establishment of
Reserves acceptable to the Agent. Quiksilver shall, and shall cause each Loan
Party to, timely and fully pay and perform its obligations under all leases and
other agreements with respect to each leased location or third party warehouse
where any Collateral is or may be located. Notwithstanding the foregoing or
anything set forth in Article VII to the contrary, the sole remedy for failure
to comply with the first and third sentences of this Section 5.9 shall be the
establishment of Reserves acceptable to the Agent with respect to any affected
Collateral.

            SECTION 5.10. Deposit Account Control Agreements. Within 90 days
after the Closing Date, Quiksilver and the Borrower will provide to the Agent a
Deposit Account Control Agreement, duly executed on behalf of each financial
institution holding a deposit account of a Loan Party as set forth in the
Security Agreement. Thereafter, Quiksilver and the Borrower shall provide to the
Agent, upon the Agent's request, a Deposit Account Control Agreement duly
executed on behalf of each financial institution holding a deposit account of a
Loan Party as set forth in the Security Agreement. Following the occurrence and
during the continuance of an Availability Event, funds deposited into a deposit
account subject to a Deposit Account Control Agreement will be swept on a daily
basis into a blocked account with the Agent, and such funds (other than
collections representing Net Proceeds from an Asset Sale or a Recovery Event
with respect to which a Reinvestment Notice has been delivered, so long as such
Net Proceeds are not required to be applied to prepay Loans pursuant to Section
2.4) shall be applied toward the prepayment of the Loans hereunder. At all times
during the term of this Agreement, Quiksilver and the Borrower shall cause each
Loan Party to have established and shall maintain Union

                                                                              68

Bank of California, N.A., JPMorgan Chase Bank, N.A. or any other Lender approved
by the Agent, as such Loan Party's principal depository bank(s), including for
the maintenance of operating, administrative, cash management, collection
activity, and other deposit accounts for the conduct of its business. The
Borrower herby authorizes the Agent to transfer funds to controlled disbursement
accounts of any Loan Party hereunder to the extent necessary to pay items to be
drawn on such controlled disbursement accounts.

            SECTION 5.11. Environmental Laws. Quiksilver shall, and shall cause
each of its Subsidiaries to:

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

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

            (c) Generate, use, treat, store, release, dispose of, and otherwise
manage Materials of Environmental Concern in a manner that would not reasonably
be expected to result in a material liability to Quiksilver or any of its
Subsidiaries or to materially affect any real property owned or leased by any of
them; and take reasonable efforts to prevent any other Person from generating,
using, treating, storing, releasing, disposing of, or otherwise managing
Materials of Environmental Concern in a manner that could reasonably be expected
to result in a material liability to, or materially affect any real property
owned or operated by, Quiksilver or any of its Subsidiaries.

            SECTION 5.12. Use of Proceeds. The Borrower will use the proceeds of
the Loans solely to finance a portion of the Initial Transactions (and, to the
extent also financed by additional loans under the Bridge Loan Agreement, the
other Transactions) and to provide funds for working capital, capital
expenditures, acquisitions permitted by Section 6.7 and general corporate
purposes of the Borrower. Letters of Credit shall be used solely for general
corporate purposes of the Borrower. Notwithstanding anything herein to the
contrary, no Loan or Letter of Credit shall be used for the purchasing or
carrying of any Margin Stock.

            SECTION 5.13. Compliance with Laws, Etc. Quiksilver shall comply,
and shall cause each of its Subsidiaries to comply, in all material respects
with all applicable Requirements of Law.

            SECTION 5.14. Additional Collateral; Further Assurances. (a) The
Borrower shall at all times remain party to the Security Agreement. Quiksilver
shall, and shall cause each of its Material Domestic Subsidiaries (other than
the Borrower) and each of the Additional Domestic Guarantors to, at all times
(1) guarantee payment and performance of the Guaranteed Obligations pursuant to
the Guarantee and (2) be party to the Security Agreement. Subject to the last
sentence of Section 5.14(c) below, Quiksilver shall cause each Material Domestic
Subsidiary formed or acquired after the Closing Date in accordance with the
terms of this Agreement to (1) guarantee payment and performance of the
Guaranteed Obligations pursuant to the Guarantee and (2) become party to the
Security Agreement.

            (b) Quiksilver shall cause (i) 100% of the issued and outstanding
Capital Stock of each of its Material Domestic Subsidiaries and of each of the
Additional Domestic Guarantors and (ii)

                                                                              69

65% (or such greater percentage that, due to a change in an applicable law after
the date hereof, (1) could not reasonably be expected to cause the undistributed
earnings of its Material Foreign Subsidiary as determined for United States
federal income tax purposes to be treated as a deemed dividend to such Material
Foreign Subsidiary's United States parent and (2) could not reasonably be
expected to cause any material adverse tax consequences) of the issued and
outstanding Capital Stock entitled to vote (within the meaning of Treas. Reg.
Section 1.956-2(c)(2)) and 100% of the issued and outstanding Capital Stock not
entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in
each Material Foreign Subsidiary directly owned by Quiksilver or any Domestic
Subsidiary, in each case to be subject at all times to a first priority,
perfected Lien in favor of the Agent pursuant to the terms and conditions of the
Loan Documents or other security documents as the Agent shall reasonably
request; provided, that, notwithstanding the foregoing, neither Quiksilver nor
the Borrower shall be required to pledge any Capital Stock of the Target or the
Holding Company unless the Holding Company and/or the Target, as applicable,
remains a first-tier Material Foreign Subsidiary on the date which is ninety
(90) days following the completion of the Tender Offer.

            (c) Without limiting the foregoing, Quiksilver shall, and shall
cause each of the Domestic Subsidiaries which is required to become a Loan Party
pursuant to the terms of this Agreement to, execute and deliver, or cause to be
executed and delivered, to the Agent such documents and agreements, and shall
take or cause to be taken such actions as the Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents. Following the completion of the Tender Offer,
Quiksilver shall, and shall cause each of its Subsidiaries to, use commercially
reasonable efforts to have each of the Material Domestic Subsidiaries (to the
extent that such Material Domestic Subsidiaries are also Subsidiaries of the
Target) promptly become party to both the Guarantee and the Security Agreement.

            SECTION 5.15. Notices. Each of Quiksilver and the Borrower will give
prompt notice in writing to the Agent and the Lenders of:

            (a) the occurrence of any Default or Event of Default;

            (b) any other development, financial or otherwise, which could
reasonably be expected to have a Material Adverse Effect;

            (c) receipt of any written notice (i) that Quiksilver or any
Subsidiary is subject to any investigation by any governmental entity with
respect to any potential or alleged material violation of any applicable
Environmental Laws, (ii) that any Governmental Authority may deny or refuse to
renew any material permit, license, approval, registration, exemption or other
authorization required under any Environmental Law, or (iii) of imposition of
any Lien against any Property of Quiksilver or any Subsidiary for any liability
with respect to damages arising from, or costs resulting from, any violation of
any Environmental Laws;

            (d) receipt of any notice of litigation commenced or threatened
against Quiksilver or any Subsidiary that (i) seeks damages in excess of
US$10,000,000, (ii) seeks injunctive relief, (iii) is asserted or instituted
against any Plan, its fiduciaries or its assets, (iv) alleges criminal
misconduct by Quiksilver or any Subsidiary, (v) alleges the material violation
of any law regarding, or seeks remedies in connection with, any Environmental
Control Statutes; or (vi) involves any product recall;

            (e) any material Lien (other than Permitted Liens) or material claim
made or asserted against any of the Collateral;

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            (f) its decision (i) to change any Loan Party's name or type of
entity or (ii) to make any other material change to any Loan Party's articles or
certificate of incorporation, partnership agreement, certificate of partnership,
articles or certificate of organization, by-laws, or operating or other
management agreement; provided, that, in no event shall the Agent receive notice
of such change less than ten days prior thereto;

            (g) commencement of any proceedings involving Quiksilver or any
Subsidiary contesting any tax, fee, assessment, or other governmental charge in
excess of US$10,000,000;

            (h) the opening of any new deposit account by any Loan Party with
any bank or other financial institution;

            (i) any loss, damage, or destruction to the Collateral in the amount
of US$10,000,000 or more, whether or not covered by insurance;

            (j) any and all material default notices received under or with
respect to any leased location or public warehouse where a material amount of
Collateral is located (which shall be delivered within two Business Days after
receipt thereof); and

            (k) any other matter as the Agent may reasonably request.

                         ARTICLE VI      NEGATIVE COVENANTS

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

            SECTION 6.1. Financial Condition Covenants. To the extent that
average daily Availability for the preceding 30-day period is at any date less
than (x) if the Guarantee Date has not yet occurred, US$17,000,000, or (y) on
and after the Guarantee Date, US$25,000,000, the Borrower will not from and
after such date permit the Fixed Charge Coverage Ratio, calculated as of the
date of the most recent financial statements of the Borrower delivered to the
Agent in accordance with Section 5.1, to be less than 1.1 to 1.0; provided, that
if at any time thereafter average daily Availability (calculated as of any date
to reflect average Availability for the preceding 30 days) is greater than or
equal to (x) if the Guarantee Date has not yet occurred, US$20,000,000, or (y)
on and after the Guarantee Date, US$30,000,000, for ninety consecutive days,
this Section 6.1 shall no longer be applicable (until such time as it may
thereafter become applicable as set forth above).

            SECTION 6.2. Limitation on Indebtedness. Quiksilver and the Borrower
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;

            (b) Indebtedness of Quiksilver and its 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

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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 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;

            (g) Indebtedness of Foreign Subsidiaries in an amount at any one
time outstanding up to the greater of (a) 75% of such Foreign Subsidiaries'
Consolidated Tangible Assets or (b) the US Dollar Equivalent of US$300,000,000;

            (h) Indebtedness of Quiksilver (and Guarantee Obligations of any
other Loan Party) under (x) the Bridge Loan Agreement Documentation in an
aggregate principal amount not to exceed US$350,000,000; provided, that such
Bridge Loan Agreement Documentation contains terms and conditions reasonably
satisfactory to the Agent and (y) the Senior Note Indenture in an aggregate
principal amount not to exceed US$450,000,000; provided, that (i) the Senior
Note Indenture and related documentation contains terms and conditions
reasonably satisfactory to the Agent and (ii) the proceeds of the Senior Notes
are used to repay the principal of all outstanding Indebtedness under the Bridge
Loan Agreement Documentation;

            (i) Indebtedness of Quiksilver and/or the Borrower with respect to
the Leasehold Improvement Loan together with up to US$35,000,000 of additional
leasehold improvement financing described in Section 6.3(h);

            (j) Capitalized Lease Obligations incurred to acquire, construct or
improve capital assets; provided, that (i) the principal amount of such
Capitalized Lease Obligations does not exceed the amount of such acquisition,
construction or improvement and (ii) such Capitalized Lease Obligations are
incurred no later than 180 days after the date of such acquisition, construction
or improvement;

            (k) other unsecured Indebtedness of Quiksilver and its Domestic
Subsidiaries; provided, that, (i) no Default or Event of Default has occurred
and is continuing or would result from the incurrence of such unsecured
Indebtedness; (ii) average daily Availability is at least (x) if the Guarantee
Date has not yet occurred, US$25,000,000, or (y) on and after the Guarantee
Date, US$40,000,000, for any period of thirty consecutive days during the
12-month period ending on the date on which such incurrence is to occur, (iii)
the Fixed Charge Coverage Ratio exceeds 1.25 to 1.00 after giving pro forma
effect to such incurrence of Indebtedness as if such Indebtedness was incurred
on the first day of the relevant period and (iv) such unsecured Indebtedness
shall have no scheduled amortization prior to the date that is six months after
the Revolving Loan Commitment Expiration Date;

            (l) Indebtedness of (i) any Loan Party to any other Loan Party and
(ii) Quiksilver or the Borrower to any Subsidiary (other than any Loan Party)
and of any Subsidiary to Quiksilver, the Borrower or any other Subsidiary;
provided, that no such Indebtedness of any Subsidiary (other than any Loan
Party) to any Loan Party shall be permitted to be incurred to the extent that
(x) after giving pro forma effect to such incurrence, average daily Availability
was less than (A) if the Guarantee Date has not

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yet occurred, US$25,000,000, or (B) on and after the Guarantee Date,
US$40,000,000, for any period of thirty consecutive days during the 12-month
period ending on the date on which such incurrence is to occur and (y) no
Default or Event of Default has occurred and is continuing or would be caused
thereby; and

            (m) other Indebtedness of Quiksilver or of any Subsidiary in
addition to the foregoing, provided that such Indebtedness does not exceed
US$35,000,000 in aggregate principal amount at any time outstanding.

            SECTION 6.3. Limitation on Liens. Quiksilver and the Borrower 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 the
acquisition of such Property and not created in anticipation of such
acquisition; provided however, with respect to a Subsidiary, the stock of which
is acquired by Quiksilver or another Subsidiary, of such Property shall be
deemed to be acquired a the time the stock of such Subsidiary is acquired by
Quiksilver or such other Subsidiary;

            (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 Quiksilver or any Subsidiary, as the case
may be, in conformity with GAAP or accounting principles generally accepted in
the applicable jurisdiction;

            (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 (x)
securing the Leasehold Improvement Loan and (y) granted by the Borrower in favor
of the Leasehold Improvement Lender pursuant to a security agreement, dated as
of October 29, 2004, executed by the Borrower securing its obligations under its
guaranty, dated as of October 29, 2004, of the obligations of Quiksilver under
the Leasehold Improvement Loan Agreement, and an intercreditor agreement
acceptable to the Agent, to secure an aggregate amount of up to US$35,000,000 of
additional financing for the build-out retail stores expected to be opened
and/or existing stores which may be expanded, which Liens are subject

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to the terms of the Intercreditor Agreement or an intercreditor agreement in
form and substance reasonably satisfactory to the Agent;

            (i) any Lien on assets (other than trademarks, copyrights and other
intellectual-property rights) of Foreign Subsidiaries securing Indebtedness of
the relevant Foreign Subsidiary permitted under Section 6.2(g);

            (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(j) or (m); and a Lien on QIPL's trademark rights to
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; and

            (k) Liens granted pursuant to the Escrow Security Agreement (as
defined in the Bridge Loan Agreement).

            SECTION 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 Permitted Acquisitions permitted
by Section 6.7 (including, without limitation, the Transaction).

            SECTION 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 or Event of Default has
occurred and is continuing or would result from such Asset Disposition and (iv)
the consideration for such Asset Disposition, (x)when aggregated with the
consideration for all previous Asset Dispositions by Quiksilver or any Domestic
Subsidiary during the same calendar year, does not exceed US$10,000,000 and (y)
when aggregated with the consideration for all previous Asset Dispositions by
any Foreign Subsidiary during the term of this Agreement, does not exceed
US$75,000,000.

            SECTION 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) 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 or Event of 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 (x) after giving pro forma effect
thereto, average daily Availability was not less than (x) if the Guarantee Date
has

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not yet occurred, US$25,000,000, or (y) on and after the Guarantee Date,
US$40,000,000, for any period of thirty consecutive days during the 12-month
period ending on the date on which such Restricted Payment is to be made, (y)
the Fixed Charge Coverage Ratio exceeds 1.25 to 1.00 after giving pro forma
effect to such Restricted Payment as if such Restricted Payment was paid on the
first day of the relevant period and (z) no Default or Event of 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 or any Subsidiary, to the extent paid
ratably to all stockholders of the Person paying the applicable dividend or
contribution.

            SECTION 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 Permitted
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) investments in the form of Permitted Acquisitions or other
investments in Persons or businesses, in each case, in the same line of business
as that described in Section 3.18, provided that (i) no Default or Event of
Default has occurred and is continuing or would result from the consummation of
such Permitted Acquisition or other investment, (ii) such Permitted Acquisition
is not opposed by the Person to be, or whose business is to be, acquired and
(iii) in the case of any Permitted Acquisition or other investment by Quiksilver
or any of its Domestic Subsidiaries (A) with respect to Permitted Acquisitions
or other investments involving aggregate cash Consideration in excess of
US$5,000,000, the Borrower shall have delivered to the Agent a Compliance
Certificate showing pro forma calculations, as of the most recent quarter-end
for which a Compliance Certificate has been provided by the Borrower, and as of
each of the three subsequent quarter-ends and on an annual basis, thereafter
through the Revolving Loan Commitment Expiration Date, assuming such Permitted
Acquisition had been consummated or such other investment had been made, as
applicable, (B) the aggregate cash Consideration therefor shall not exceed
US$10,000,000 annually, and US$50,000,000 in the aggregate, during the term of
this Agreement (provided, that no restriction on the cash Consideration for
Permitted Acquisitions shall be applicable if, after giving pro forma effect
thereto, average daily Availability was not less than (x) if the Guarantee Date
has not yet occurred, US$25,000,000, or (y) on and after the Guarantee Date,
US$40,000,000, for any period of thirty consecutive days during the 12-month
period ending on the date on which such Permitted Acquisition is to be
consummated) and (C) with respect to any Permitted Acquisition, 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 (other than
Intellectual Property Rights), 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;

            (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

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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 Quiksilver 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 Quiksilver 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;

            (g) investments entered into in connection with the Transaction and
pursuant to the terms of the Purchase Agreement Documentation (including,
without limitation, (i) the Initial Purchase, the purchase of the Direct
Interest and the Tender Offer and (ii) following the completion of the Tender
Offer, the transfer by Quiksilver of shares of the Target and/or the Holding
Company to QS Holdings S.a r.l.);

            (h) the purchase by Quiksilver, or one of its Subsidiaries, of the
distribution rights for the DC Shoes brand in Canada pursuant to a purchase
agreement to be signed prior to October 31, 2005 and for an amount of up to
8,000,000 Canadian Dollars;

            (i) investments in an aggregate amount not to exceed US$5,000,000 by
Quiksilver, the Borrower or QS Holdings S.a r.l. in Quiksilver Mexico JV
pursuant to a joint venture agreement to be signed prior to October 31, 2005;
and

            (j) investments of up to US$10,000,000 by the Borrower in a core
surf apparel company based in California pursuant to an agreement to be signed
prior to October 31, 2005; and

            (k) other investments not to exceed US$10,000,000 during the term of
this Agreement.

            SECTION 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 is not a Loan Party,
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.

            SECTION 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.

            SECTION 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.

            SECTION 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$1,000,000 in the aggregate at any
time.

            SECTION 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

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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.

            SECTION 6.13. Optional Payments of Certain Debt Instruments.
Quiksilver shall not, and shall not permit any of its Subsidiaries to make or
offer to make any optional or voluntary payment, prepayment, repurchase or
redemption of or otherwise optionally or voluntarily defease or segregate funds
with respect to the Bridge Loan Agreement, the Senior Notes or any Indebtedness
incurred pursuant to Section 6.2(k); provided, that Quiksilver shall be
permitted to optionally prepay or redeem the Bridge Loan Agreement, the Senior
Notes or any Indebtedness incurred pursuant to Section 6.2(k) to the extent that
(x) after giving pro forma effect thereto, average daily Availability was not
less than (x) if the Guarantee Date has not yet occurred, US$25,000,000, or (y)
on and after the Guarantee Date, US$40,000,000, for any period of thirty
consecutive days during the 12-month period ending on the date on which such
prepayment or redemption is to be made, (y) the Fixed Charge Coverage Ratio
exceeds 1.25 to 1.00 after giving pro forma effect to such prepayment or
redemption as if such prepayment or redemption was paid on the first day of the
relevant period and (z) no Default or Event of Default has occurred and is
continuing or would be caused thereby.

            SECTION 6.14. Amendments to Purchase Agreement Documentation and
Tender Offer Documentation. (a) Quiksilver shall not, and shall not permit any
of its Subsidiaries to, enter into definitive Tender Offer Documentation, unless
such documentation is in form and substance reasonably satisfactory to the
Agent.

            (b) Quiksilver shall not, and shall not permit any of its
Subsidiaries to, amend, supplement or otherwise modify the terms and conditions
of the Purchase Agreement Documentation, the Tender Offer Documentation or any
such other documents except for (i) with respect to any such amendment,
supplement or modification which becomes effective on or prior to the
consummation of the Transaction (including, without limitation, the Tender
Offer), to the extent consented to by the Agent and the Majority Lenders and
(ii) with respect to any such amendment, supplement or modification which
becomes effective following the consummation of the Transaction, to the extent
not materially adverse to the interests of the Lenders.

            SECTION 6.15. Amendments to Certain Documentation. Quiksilver shall
not, and shall not permit any of its Subsidiaries to, amend, supplement or
otherwise modify (pursuant to a waiver or otherwise) the terms and conditions of
(a) any Bridge Loan Documentation or (b) the Senior Note Indenture and related
documentation in such a manner that is materially adverse to the interests of
the Lenders.

            SECTION 6.16. Negative Pledge Clauses. Quiksilver shall not, and
shall not permit any of its Subsidiaries to, enter into or suffer to exist or
become effective any agreement that prohibits or limits the ability of such
Person to create, incur, assume or suffer to exist any Lien upon any of its
property or revenues, whether now owned or hereafter acquired, to secure its
obligations under the Loan Documents to which it is a party other than (a) this
Agreement and the other Loan Documents and (b) any agreements governing any
purchase money Liens or Capital Lease Obligations otherwise permitted hereby (in
which case, any prohibition or limitation shall only be effective against the
assets financed thereby).

            SECTION 6.17. Clauses Restricting Subsidiary Distributions.
Quiksilver shall not, and shall not permit any of its Subsidiaries to, enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of Quiksilver to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, Quiksilver or any other Subsidiary of
Quiksilver, (b) make loans or advances to, or other Investments in, Quiksilver

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or any other Subsidiary of Quiksilver or (c) transfer any of its assets to
Quiksilver or any other Subsidiary of Quiksilver, except for such encumbrances
or restrictions existing under or by reason of (i) any restrictions existing
under the Loan Documents, (ii) any restrictions with respect to a Subsidiary
imposed pursuant to an agreement that has been entered into in connection with
the disposition of all or substantially all of the Capital Stock or assets of
such Subsidiary, (iii) any encumbrance or restriction pursuant to the Bridge
Loan Agreement or the Senior Notes Indenture; (iv) any encumbrance or
restriction with respect to a Foreign Subsidiary pursuant to any agreement
relating to Indebtedness incurred by such Foreign Subsidiary pursuant to Section
6.2(g); (v) any encumbrance or restriction with respect to a Subsidiary pursuant
to an agreement relating to any Capital Stock or Indebtedness incurred by such
Subsidiary on or prior to the date on which such Subsidiary was acquired by
Quiksilver or any other Subsidiary (other than Capital Stock or Indebtedness
incurred as consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary of Quiksilver
or was acquired by Quiksilver or any other Subsidiary or in contemplation of the
transaction) and outstanding on such date, provided, that any such encumbrance
or restriction shall not extend to any assets or property of Quiksilver or any
other Subsidiary other than the assets and property so acquired; (vi) any
encumbrance or restriction with respect to a Subsidiary pursuant to an agreement
effecting a refunding, replacement or refinancing of Indebtedness incurred
pursuant to an agreement referred to in clauses (c)(i), (iii), (iv) or (v) or
this clause (c) (vi) or contained in any amendment to an agreement referred to
in clauses (c)(i), (iii), (iv) or (v) or this clause (c)(vi); provided, however,
that the encumbrances and restrictions with respect to such Subsidiary contained
in any such agreement or amendment are no less favorable in any material respect
to the Lenders than the encumbrances and restrictions with respect to such
Subsidiary contained in such agreements referred to in clauses (c)(i), (iii),
(iv) or (v) on the Closing Date or the date such Subsidiary became a Subsidiary,
whichever is applicable; (vii) in the case of clause (c) above, any encumbrance
or restriction (1) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a lease,
license or similar contract, or the assignment or transfer of any such lease,
license or other contract, (2) contained in mortgages, pledges or other security
agreements permitted under this Agreement securing Indebtedness of Quiksilver or
a Subsidiary to the extent such encumbrances or restrictions restrict the
transfer of the property subject to such mortgages, pledges or other security
agreements or (3) pursuant to customary provisions restricting dispositions of
real property interests set forth in any reciprocal easement agreements of
Quiksilver or any Subsidiary; (viii) (A) purchase money obligations for property
acquired in the ordinary course of business and (B) Capitalized Lease
Obligations permitted under this Agreement, in each case, that impose
encumbrances or restrictions of the nature described in clause (c) above on the
property so acquired; (ix)any restriction with respect to a Subsidiary (or any
of its property or assets) imposed pursuant to an agreement entered into for the
direct or indirect sale or disposition of all or substantially all the Capital
Stock or assets of such Subsidiary (or the property or assets that are subject
to such restriction) pending the closing of such sale or disposition; (x) any
customary provisions in joint venture agreements relating to joint ventures that
are not Subsidiaries and other similar agreements entered into in the ordinary
course of business; (xi) net worth provisions in leases and other agreements
entered into by Quiksilver or any Subsidiary in the ordinary course of business;
(xii) encumbrances or restrictions arising or existing by reason of applicable
law, or any applicable rule, regulation or order; and (xiii) customary
restrictions imposed on the transfer of, or in Licenses related to, Copyrights,
Patents, Trademarks or other Intellectual Property Rights and contained in
agreements entered into in the ordinary course of business.

                        ARTICLE VII      EVENTS OF DEFAULT

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

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            (a) The Borrower shall fail to pay any principal on any Loan or
Reimbursement Obligation when due, or the Borrower shall fail to pay any
interest on any Loan or Reimbursement Obligation, any fee referred to in this
Agreement (including, without limitation, Section 4.1(g)) or any other amount
payable hereunder within three days after any such interest or other amount
becomes due in accordance with the terms hereof; or

            (b) Any representation or warranty made or deemed made by any Loan
Party 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) Quiksilver or the Borrower shall default in the observance or
performance of any agreement contained in Sections 5.10, 5.12 or 5.15(a) or in
any provision of Article 6; or

            (d) Any Loan Party 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 the Borrower and (ii)
actual knowledge thereof by a Responsible Officer of such Loan Party; 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 Loan Party, or a
proceeding shall be commenced by any Loan Party, or by any Governmental
Authority or other Person having jurisdiction over any Loan Party, seeking to
establish the invalidity or unenforceability thereof, or any Loan Party shall
deny that it has any liability or obligation purported to be created under any
Loan Document; or

            (f) Quiksilver or any Subsidiary shall (i) default in any payment of
principal or interest, regardless of the amount, due in respect of any (A)
Indebtedness (other than the Loans and other extensions of credit made
hereunder), issued under the same indenture or other agreement, if the original
principal amount of Indebtedness covered by such indenture or agreement is
US$10,000,000 or greater or (B) Guarantee Obligation with respect to an amount
of US$10,000,000 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 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; provided, however,
that any default by Quiksilver or such Subsidiary under a Guarantee Obligation
with respect to a real property lease shall not constitute a Default under this
Section 7(f) if Quiksilver or such Subsidiary is contesting the validity of such
default in good faith by appropriate proceedings, Quiksilver or such Subsidiary
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) Quiksilver or any Subsidiary 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

                                                                              79

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 Quiksilver or any
Subsidiary shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against Quiksilver or any Subsidiary 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 Quiksilver or any
Subsidiary 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) Quiksilver or any
Subsidiary 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) Quiksilver or any Subsidiary 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, (vi) any other similar event or condition shall occur or
exist with respect to a Plan or (vii) any of clauses (i) through (v) would be
true if a reference under the laws of any 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 (vii) herein, such event or condition, together with all other such
events or conditions, if any, would reasonably be expected to subject Quiksilver
or any Commonly Controlled Entity to any tax, penalty or other liabilities in
the aggregate to exceed US$1,000,000; or

            (i) One or more judgments or decrees shall be entered against
Quiksilver or any Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance) of US$10,000,000 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 Quiksilver or any Subsidiary 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 or the property purported to be covered
thereby; or

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            (k) a Change in Control shall occur;

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 Borrower 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, the Borrower 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 the Borrower 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 the Borrower, declare the Loans
(with accrued interest thereon) and all other Obligations under this Agreement
and the other Loan Documents 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, the Borrower 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 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
the Borrower.

                        ARTICLE VIII      THE AGENT

            SECTION 8.1. Appointment. Each Lender hereby irrevocably designates
and appoints JPMorgan Chase Bank, N.A., as Agent of such Lender under this
Agreement and the other Loan Documents, and each such Lender irrevocably
authorizes JPMorgan Chase Bank, N.A., 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.

            SECTION 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.

            SECTION 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 Loan Party or any officer thereof contained in this
Agreement or

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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 any other Loan Document or for any failure of Quiksilver, any
Subsidiary or any other Loan Party 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 Loan Party.

            SECTION 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 (including counsel to the Borrower), 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 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 Lenders.

            SECTION 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 the Borrower 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.

            SECTION 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 Loan Party, 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 Loan Parties 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

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

            SECTION 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 Loan Parties 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 in full of the Loans and the other amounts payable hereunder) 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 in full of the Loans and
all other amounts payable hereunder and the expiration of the Letters of Credit.

            SECTION 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 Loan Parties 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.

            SECTION 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 the Borrower (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. 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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            SECTION 8.10. Alternate Currency Fronting Lender, Swing Line Lender
and Issuing Banks. Each Issuing Bank, the Swing Line Lender and the Alternate
Currency Fronting Lender shall act on behalf of the Lenders with respect to
Letters of Credit, Swing Line Loans and Alternate Currency Loans issued or made
under this Agreement and the documents associated therewith. It is understood
and agreed that each Issuing Bank, the Swing Line Lender and the Alternate
Currency Fronting Lender (a) shall have all of the benefits and immunities (i)
provided to the Agent in this Section 8 with respect to acts taken or omissions
suffered by each Issuing Bank, the Swing Line Lender and the Alternate Currency
Fronting Lender in connection with Letters of Credit, Swing Line Loans and
Alternate Currency Loans issued or made under this Agreement and the documents
associated therewith as fully as if the term "Agent", as used in this Section 8,
included each Issuing Bank, the Swing Line Lender and the Alternate Currency
Fronting Lender with respect to such acts or omissions and (ii) as additionally
provided in this Agreement and (b) shall have all of the benefits of the
provisions of Section 8.7 or Section 9.5 as fully as if the term "Agent", as
used in Section 8.7 or Section 9.5, included each Issuing Bank, the Swing Line
Lender and the Alternate Currency Fronting Lender.

                        ARTICLE IX     MISCELLANEOUS

            SECTION 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 the Borrower
(and, in the case of any Loan Document other than this Agreement, the relevant
Loan Party), the Borrower may, from time to time, enter into written amendments,
supplements or modifications hereto and to the other Loan Documents for the
purposes of adding any provisions to this Agreement or the other Loan Documents
or changing in any manner the rights of the Lenders, the Borrower or any other
Loan Party 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 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 Loan 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" or "Super-Majority Lenders," without the written consent of
all of the Lenders, or consent to the assignment or transfer by any Loan Party
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 Loan Party
from any liability under its respective Loan Documents; or (d) release any
material portion of the 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 2.1.A(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
or any provision of this Agreement relating to Protective Advances or
Overadvances without the written consent of the Agent, or any provision
affecting the rights and duties of any Issuing Bank as the issuer of Letters of
Credit (including, without limitation, Section 8.10) without the consent of such
Issuing Bank; or (iv) amend, modify or waive any provision of Section 8.10 or
any provision relating to Alternate Currency Loans without the consent of the
Alternate Currency Fronting Lender; or (v) amend, modify or waive any provision
of Section 2.2B or Section 8.10 without the consent

                                                                              84

of the Swing Line Lender; or (vi) (x) increase the percentage advances rates or
components of the Borrowing Base if such increase would increase Availability or
(y) include additional categories of Collateral in the Borrowing Base if such
inclusion would increase Availability, in each case without the prior written
consent of the Super-Majority Lenders. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the other Loan Parties, the Lenders, the Agent and
all future Lenders. In the case of any waiver, the Borrower, the other Loan
Parties, the Lenders and the Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default waived
shall be deemed to be cured and not continuing; but no such waiver shall extend
to any subsequent or other Default, or impair any right consequent thereon.

            SECTION 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 Borrower 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 Lenders:

The Borrower:                       Quiksilver Americas, Inc.
                                    15202 Graham Street
                                    Huntington Beach, California 92649
                                    Attention: Bill Bussiere/Erik Johnson
                                    Telecopy: (714) 889-4467/2766

                                    with a copy to:

                                    Quiksilver Americas, Inc.
                                    15202 Graham Street
                                    Huntington Beach, California 92649
                                    Attention: Thomas Webster
                                    Telecopy: (714) 893-5566

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

With a copy to:                     JPMorgan Chase Bank, N.A.
                                    One Chase Square, 25th Floor
                                    Rochester, New York 14643
                                    Attention: Credit Executive
                                    Telecopy: (585) 258-7440

With a copy to:                     JPMorgan Chase Bank, N.A
                                    277 Park Avenue 22nd Floor
                                    New York, NY 10172
                                    Attention: Louis Mastrianni

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                                    Telecopy:  (646) 534-0693

The Alternate Currency
Fronting Lender:                    JPMorgan Chase Bank, N.A., London Branch
                                    125 London Wall,
                                    London EC2Y 5AJ
                                    Attention: Ching Loh
                                    Telecopy: (44) 207-777-2360

provided, however, that any notice, request or demand to or upon the Agent or
the Lenders pursuant to Section 2.1.A, 2.1.B, 2.2, 2.3 or 2.5 shall not be
effective until received. Notices and other communications to the Lenders, the
Swing Line Lender, the Alternate Currency Fronting Lender and each Issuing Bank
hereunder may be delivered or furnished by electronic communication (including
e-mail and internet or intranet websites) pursuant to procedures approved by the
Agent or as otherwise determined by the Agent, provided that, the foregoing
shall not apply to notices to any Lender, the Swing Line Lender, the Alternate
Currency Fronting Lender or any Issuing Bank pursuant to Section 2.1.A, 2.1.B,
2.1.C or 2.2 if such Person has notified the Agent that it is incapable of
receiving notices under such Section by electronic communication. The Agent or
the Borrower may, in its respective discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it or as it otherwise determines, provided that such
determination or approval may be limited to particular notices or
communications. Notwithstanding the foregoing, in every instance, the Borrower
shall be required to provide paper copies of the Compliance Certificates.

Unless the Agent otherwise prescribes, (i) notices and other communications sent
to an e-mail address shall be deemed received upon the sender's receipt of an
acknowledgement from the intended recipient (such as by the "return receipt
requested" function, as available, return e-mail or other written
acknowledgement), provided that if such notice or other communication is not
given during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on
the next Business Day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

            SECTION 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.

            SECTION 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 other Loan Documents.

            SECTION 9.5. Payment of Expenses and Taxes. The Borrower agrees (a)
to pay or reimburse the Agent for all its reasonable costs and out-of-pocket
expenses (including lien searches and 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 other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the

                                                                              86

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 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 or reimburse the Agent and each Lender for all its reasonable costs and
out-of-pocket expenses incurred in connection with appraisals of all or any
portion of the Collateral, which appraisals shall be in conformity with the
applicable requirements of any law or any governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law), or any
interpretation thereof, including, without limitation, the provisions of Title
XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989,
as amended, reformed or otherwise modified from time to time, and any rules
promulgated to implement such provisions (including travel, lodging, meals and
other out of pocket expenses), (d) to pay or reimburse the Agent and each Lender
for all its reasonable costs and out-of-pocket expenses incurred in connection
with field examinations and audits and the preparation of Reports at the Agent's
then customary charge plus travel, lodging, meals and other out of pocket
expenses, (e) to pay or reimburse the Agent and each Lender for all its
reasonable costs and out-of-pocket expenses incurred in connection with costs
and expenses of forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Funding Account and lock boxes,
and costs and expenses of preserving and protecting the Collateral, (f) 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 other Loan Documents and any such other
documents and (g) 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 and the other Loan Documents,
the Permitted Acquisitions or the use of the proceeds of the Loans or the
Letters of Credit and any such other documents, including any of the foregoing
relating to the use of proceeds of the Loans or the violation of, noncompliance
with or liability under, any Environmental Law and the reasonable fees and
expenses of legal counsel in connection with claims, actions or proceedings by
any Indemnitee against any Obligor under any Loan Document (all the foregoing,
collectively, the "indemnified liabilities"), provided, however, that the
Borrower 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. Without limiting the foregoing, and to
the extent permitted by applicable law, each of Quiksilver and the Borrower
agrees not to assert and to cause its Subsidiaries not to assert, and hereby
waives and agrees to cause its Subsidiaries to waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws that any of
them might have by statute or otherwise against any Indemnitee. The agreements
in this Section shall survive repayment of the Loans 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.

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            SECTION 9.6. Successors and Assigns; Participations; Purchasing
Lenders. (a) This Agreement shall be binding upon and inure to the benefit of
the Borrower, the Lenders, the Agent, all future Lenders and their respective
successors and assigns, except that the Borrower 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, 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 Loan Party or any
substantial portion of the 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 Borrower 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 Borrower agrees that if amounts outstanding under this
Agreement and the other Loan Documents 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 , with
the consent of the Agent, the Alternate Currency Fronting Lender and each
Issuing Bank (in each case, such consent not to be unreasonably withheld), sell
to any lenders or financial institutions, which lenders or financial
institutions (but not any Lender, any Affiliate of any Lender or any Approved
Fund) shall be subject to the consent of the Borrower (such consent not to be
unreasonably withheld and not to be required if a Default has occurred and is
continuing) ("Purchasing Lenders"), all or any part of its rights and
obligations under this Agreement 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 (i) any such
sale must be in an amount not less than US$5,000,000 (or, if less, the entire
remaining amount of the selling Lender's obligations) under this Agreement and
the other Loan Documents and (ii) the Purchasing Lender, if it

                                                                              88

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 Closing 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 and the other Loan
Documents. On or prior to the transfer Closing Date determined pursuant to such
Assignment and Assumption, the Borrower, at its own expense, shall (upon the
request of the relevant Lender) 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 the
Borrower 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 and Alternate Currency Loans
participated in by, each Lender from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, 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 and Alternate Currency Loans, if applicable, recorded therein for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower 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 the Borrower 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 US$3,500,
the Agent shall (i) promptly accept such Assignment and Assumption and (ii) on
the Closing Date determined pursuant thereto record the information contained
therein in the Register and give notice of such Assumption and recordation to
the Lenders and the Borrower.

            (f) The Borrower 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 the Borrower pursuant to this
Agreement or any other Loan Document or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of Quiksilver and its Subsidiaries and Affiliates prior to becoming a
party to this Agreement.

                                                                              89

            (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 a
Non-US Lender, 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
the Borrower) that under applicable law and treaties no taxes will be required
to be withheld by the Agent, the Borrower 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 the
Borrower United States Internal Revenue Service Form W-8BEN or W-8ECI (as
applicable to it) or, in the case of a Non-US Lender claiming exemption from
United States federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of "portfolio interest," a statement substantially in
the form of Exhibit M and a Form W-8BEN. (wherein such Transferee claims
entitlement to complete exemption from United States federal withholding tax on
all interest payments hereunder) and (iii) to agree (for the benefit of the
transferor Lender, the Agent and the Borrower) to provide the transferor Lender,
the Agent and the Borrower a new Form 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 United States laws and
regulations and amendments duly executed and completed by such Transferee, and
to comply from time to time with all applicable United States 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.

            SECTION 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. the Borrower agrees that each Lender so purchasing a portion of
another Lender's Loans or its participations in Letters of Credit may exercise
all rights 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
Borrower, any such notice being expressly waived by the Borrower 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 the Borrower. Each Lender agrees promptly to notify the
Borrower 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.

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            SECTION 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.

            SECTION 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.

            SECTION 9.10. Integration. This Agreement (and with respect to
Quiksilver, the Borrower and the Agent only, the Commitment Letter, the Fee
Letter and the Senior Credit Engagement Letter) represents the entire agreement
of Quiksilver, the Borrower, 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 in the Commitment Letter, the Fee Letter
and the Senior Credit Engagement Letter (with respect to Quiksilver, the
Borrower and the Agent only), herein or in the other Loan Documents.

            SECTION 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.

            SECTION 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 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.

            SECTION 9.13. Acknowledgements. Each of Quiksilver and the Borrower
hereby acknowledges that:

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

            (b) neither the Agent nor any Lender has any fiduciary relationship
to Quiksilver or the Borrower 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 Quiksilver and the Borrower on the other hand, is
solely that of creditor and debtor; and

                                                                              91

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

            SECTION 9.14. Headings. Section headings are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.

            SECTION 9.15. Copies of Certificates, Etc. Whenever the Borrower is
required to deliver notices, certificates, opinions, statements or other
information hereunder to the Agent for delivery to any Lender (including under
Article 4), it shall do so in such number of copies as the Agent shall
reasonably specify.

            SECTION 9.16. 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 the Borrower, 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 9.16 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.

            SECTION 9.17. Patriot Act Notice. To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that identifies
each person or entity that opens an account, including any deposit account,
treasury management account, loan, other extension of credit, or other financial
services product. What this means for the Borrower: When the Borrower opens an
account, if the Borrower is an individual, the Agent and the Lenders will ask
for the Borrower's name, residential address, date of birth, and other
information that will allow Agent and the Lenders to identify the Borrower, and,
if the Borrower is not an individual, the Agent and the Lenders will ask for the
Borrower's name, employer identification number, business address, and other
information that will allow the Agent and the Lenders to identify the Borrower.
The Agent and the Lenders may also ask, if the Borrower is an individual, to see
the Borrower's driver's license or other identifying documents, and, if the
Borrower is not an individual, to see the Borrower's legal organizational
documents or other identifying documents.

            SECTION 9.18. Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto agrees, to
the fullest extent that it may effectively do so, that the rate of exchange used
shall be that at which, in accordance with normal banking procedures in the
relevant jurisdiction, the first currency could be purchased with such other
currency on the Business Day immediately preceding the day on which final
judgment is given.

            (b) The obligations of the Borrower in respect of any sum due to any
party hereto or any holder of the obligations owing hereunder (the "Applicable
Creditor") shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than the currency in which such sum is stated to be due
hereunder (the "Agreement Currency"), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency,

                                                                              92

the Applicable Creditor may, in accordance with normal banking procedures in the
relevant jurisdiction, purchase the Agreement Currency with the Judgment
Currency; if the amount of the Agreement Currency so purchased is less than the
sum originally due to the Applicable Creditor in the Agreement Currency, the
Borrower agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify the Applicable Creditor against such loss. The obligations of the
Borrower contained in this Section 9.18 shall survive the termination of this
Agreement and the payment of all other amounts owing hereunder.

            SECTION 9.19. Submission To Jurisdiction; Waivers. Each of
Quiksilver and the Borrower hereby irrevocably and unconditionally:

            (a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;

            (b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court or forum and agrees not to plead
or claim the same;

            (c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to the Borrower, at
the address specified in Section 9.2 or at such other address of which the Agent
shall have been notified pursuant thereto;

            (d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the right
to sue in any other jurisdiction; and

            (e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.

            SECTION 9.20. 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.

                                                                              93

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

                                    QUIKSILVER, INC.

                                    By: ________________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                    BORROWER:

                                    QUIKSILVER AMERICAS, INC.

                                    By: ________________________________________
                                        Name: __________________________________
                                        Title: _________________________________



                                    AGENT

                                    JPMORGAN CHASE BANK, N.A.,
                                     as Agent and as a Lender

                                    By: ________________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                    ALTERNATE CURRENCY FRONTING LENDER

                                    JPMORGAN CHASE BANK, N.A., LONDON
                                     BRANCH, as Alternate Currency Fronting
                                     Lender

                                    By: ________________________________________
                                        Name: __________________________________
                                        Title: _________________________________



                                    LENDERS

                                    [NAME OF LENDER],
                                     as a Lender

                                    By: ________________________________________
                                        Name: __________________________________
                                        Title: _________________________________


                                                                     EXHIBIT A-1

                             FORM OF REVOLVING NOTE

$______________                                                  April ___, 2005

            FOR VALUE RECEIVED, the undersigned, QUIKSILVER AMERICAS, INC. (the
"Borrower"), hereby unconditionally promises to pay to the order of
_______________ (the "Lender"), in lawful money of the United States and in
immediately available funds, the aggregate unpaid principal amount of all
Revolving Loans made by the Lender to the undersigned pursuant to the Credit
Agreement (as hereinafter defined), on the Revolving Loan Commitment Expiration
Date (as defined in the Credit Agreement) and on such other dates as are
required under the Credit Agreement. Such payment shall be made for the account
of the Lender at such office as the holder of this Note may notify the
undersigned of and as agreed to by JPMorgan Chase Bank, N.A., as administrative
agent under the Credit Agreement. The undersigned further agrees to pay interest
in like money at such office or such other office on the unpaid principal amount
hereof, from time to time from the date hereof, at the rates per annum and on
the dates specified in the Credit Agreement until such amount is paid in full
(both before and after judgment to the extent permitted by law).

            This Revolving Note is one of the Revolving Notes referred to in the
Credit Agreement dated as of April 12, 2005 (as amended, supplemented, restated
or otherwise modified from time to time, the "Credit Agreement") among
Quiksilver, Inc., the undersigned, the Lender and other Lenders party thereto,
and JPMorgan Chase Bank, N.A. as administrative agent, is entitled to the
benefits thereof and of the other Loan Documents and is subject to prepayment in
whole or in part as provided therein. Reference is hereby made to the Credit
Agreement and for a more complete statement of the terms and conditions under
which the Revolving Loans evidenced hereby are to be made and repaid.
Capitalized terms used herein that are defined in the Credit Agreement shall
have such meanings unless otherwise defined herein or unless the contest
otherwise requires.

            Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Revolving Note shall become, or may be declared to be, immediately due and
payable, all as provided in the Credit Agreement.

            THIS REVOLVING NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK RELEVANT TO
CONTRACTS TO BE PERFORMED WHOLLY WITHIN NEW YORK.



            IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its authorized officer as of the date stated above.

                                    QUIKSILVER AMERICAS, INC.

                                    By: ________________________________________
                                        Name:
                                        Title:

                                       2

                                                                     EXHIBIT A-2

                             FORM OF SWINGLINE NOTE

$______________                                                  April ___, 2005

            FOR VALUE RECEIVED, the undersigned, QUIKSILVER AMERICAS, INC. (the
"Borrower"), hereby unconditionally promises to pay to the order of JPMORGAN
CHASE BANK, N.A. (the "Lender"), in lawful money of the United States and in
immediately available funds, the aggregate unpaid principal amount of all Swing
Line Loans made by the Lender to the undersigned pursuant to the Credit
Agreement (as hereinafter defined), on the Revolving Loan Commitment Expiration
Date (as defined in the Credit Agreement) and on such other dates as are
required under the Credit Agreement. Such payment shall be made for the account
of the Lender at such office as the holder of this Swing Line Note may notify
the undersigned of and as agreed to by JPMorgan Chase Bank, N.A., as
administrative agent under the Credit Agreement. The undersigned further agrees
to pay interest in like money at such office or such other office on the unpaid
principal amount hereof, from time to time from the date hereof, at the rates
per annum and on the dates specified in the Credit Agreement until such amount
is paid in full (both before and after judgment to the extent permitted by law).

            This Swing Line Note is the Swing Line Note referred to in the
Credit Agreement dated as of April 12, 2005 (as amended, supplemented, restated
or otherwise modified from time to time, the "Credit Agreement") among
Quiksilver, Inc., the undersigned, the Lender and the other Lenders party
thereto, and JPMorgan Chase Bank, N.A., as administrative agent, is entitled to
the benefits thereof and of the other Loan Documents and is subject to
prepayment in whole or in part as provided therein. Reference is hereby made to
the Credit Agreement for a more complete statement of the terms and conditions
under which the Swing Line Loans evidenced hereby are to be made and repaid.
Capitalized terms used herein that are defined in the Credit Agreement shall
have such meanings unless otherwise defined herein or unless the context
otherwise requires.

            Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Swing Line Note shall become, or may be declared to be, immediately due and
payable, all as provided in the Credit Agreement.

            THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK RELEVANT TO CONTRACTS TO BE
PERFORMED WHOLLY WITHIN NEW YORK.



            IN WITNESS WHEREOF, the Borrower has caused this Note to be duly
executed by its authorized officer as of the date stated above.

                                    QUIKSILVER AMERICAS, INC.

                                    By: ________________________________________
                                        Name:
                                        Title:

                                                                               2


                                                                       EXHIBIT C

                 FORM OF NO DEFAULT / REPRESENTATION CERTIFICATE

            QUIKSILVER AMERICAS, INC., a Delaware corporation (the "Borrower"),
hereby certifies in connection with the Credit Agreement dated as of April 12,
2005 among the Borrower, the several banks and other financial institutions
parties thereto, and JPMorgan Chase Bank, N.A. as administrative agent (the
"Agent"; such Credit Agreement, as it may be amended, supplemented, restated or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein and not defined shall have the meanings assigned to them in the
Credit Agreement), as of the date set forth below, that:

            (i) the representations and warranties contained in the Credit
Agreement and in each other Loan Document and each certificate or other writing
delivered to the Lenders in satisfaction of the conditions set forth in Section
4.1 of the Credit Agreement prior to or on the Closing Date are correct in all
material respects on and as of the Closing Date as though made on and as of such
date; and

            (ii) no Default has occurred or is 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.

            IN WITNESS WHEREOF, the Borrower has caused this Certificate to be
duly executed and delivered by its proper and duly authorized officer as of
_____________, 200_.

                                    QUIKSILVER AMERICAS, INC.

                                    By: ________________________________________
                                        Name:
                                        Title:



                                                                     EXHIBIT D-1

                          FORM OF NEW LENDER SUPPLEMENT

            SUPPLEMENT, dated __________ __, 20__, to the Credit Agreement dated
as of April 12, 2005 (as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"; unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement), among QUIKSILVER, INC., QUIKSILVER AMERICAS, INC. (the
"Borrower"), the lenders party thereto (the "Lenders"), and JPMORGAN CHASE BANK,
N.A., as administrative agent (the "Agent").

                                   WITNESSETH:

            WHEREAS, the Credit Agreement provides in Section 2.1A(b)(ii)
thereof that any bank, financial institution or other entity may become a party
to the Credit Agreement with the consent of the Borrower and the Agent (which
consent, in the case of the Agent, shall not be unreasonably withheld) by
executing and delivering to the Borrower and the Agent a supplement to the
Credit Agreement in substantially the form of this Supplement; and

            WHEREAS, the undersigned now desires to become a party to the Credit
Agreement;

            NOW, THEREFORE, the undersigned hereby agrees as follows:

            1. The undersigned agrees to be bound by the provisions of the
Credit Agreement, and agrees that it shall, on the date this Supplement is
accepted by the Borrower and the Agent, become a Lender for all purposes of the
Credit Agreement to the same extent as if originally a party thereto, with a
Revolving Loan Commitment of $[_____________].

            2. The undersigned (a) represents and warrants that it is legally
authorized to enter into this Supplement; (b) confirms that it has received a
copy of the Credit Agreement, together with copies of the financial statements
referred to in Section 5.1 thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Supplement; (c) agrees that it has made and 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 decisions in taking or not taking action under the Credit Agreement
or any instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement or any instrument
or document furnished pursuant hereto or thereto as are delegated to the Agent
by the terms thereof, together with such powers as are incidental thereto; and
(e) agrees that it will be bound by the provisions of the Credit Agreement and
will perform in accordance with its terms all the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Lender
including, without limitation, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant to Section
2.13(b) of the Credit Agreement.

            3. The undersigned's address for notices for the purposes of the
Credit Agreement is as follows: ________________________________________________
_______________________________________________________________________________.



            IN WITNESS WHEREOF, the undersigned has caused this Supplement to be
executed and delivered by a duly authorized officer on the date first above
written.

                                    [INSERT NAME OF NEW LENDER]

                                    By: ________________________________________
                                        Name:
                                        Title:

Consented to and agreed:

JPMORGAN CHASE BANK, N.A.,
  as Agent

By: ________________________________________
    Name:
    Title:

QUIKSILVER AMERICAS, INC.

By: ________________________________________
    Name:
    Title:

                                                                               2



                                                                     EXHIBIT D-2

                   FORM OF LOAN COMMITMENT INCREASE SUPPLEMENT

To:   JPMORGAN CHASE BANK, N.A., as Agent under the Credit Agreement referred to
      below.

            Reference is hereby made to the Credit Agreement dated as of April
12, 2005 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"; unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement), among QUIKSILVER, INC., QUIKSILVER AMERICAS, INC. (the "Borrower"),
the lenders party thereto (the "Lenders"), and JPMORGAN CHASE BANK, N.A., as
administrative agent (the "Agent").

            This notice is an Loan Commitment Increase Supplement referred to in
the Credit Agreement, and the Borrower and each of the Lenders party hereto
hereby notify you that:

            1. Each Lender party hereto agrees to increase the amount of its
Revolving Loan Commitment by the amount set forth below such Lender's name on
the signature pages hereof under the caption "Loan Commitment Increase Amount".

            2. The amount of the total Revolving Loan Commitment after giving
effect to such Revolving Loan Commitment increase is set forth below such
Lender's name on the signature pages hereof under the caption "Total Revolving
Loan Commitment".

            2. The effective date of such Loan Commitment Increase is __________
___, 20__.

            3. The Borrower hereby represents and warrants to the Agent and each
Lender party hereto that the increase in the Aggregate Revolving Loan Commitment
effected by this Supplement pursuant to Section 2.1A(b) of the Credit Agreement
has been duly authorized by all necessary corporate action.



            IN WITNESS WHEREOF, the undersigned have caused this Supplement to
be executed and delivered by a duly authorized officer on the date first above
written.

                                    QUIKSILVER AMERICAS, INC.

                                    By: ________________________________________
                                        Name:
                                        Title:

                                    [NAME OF LENDER]



                                    By: ________________________________________
                                        Name:
                                        Title:

                                    Loan Commitment
                                    Increase Amount: $ _________________________

                                    Total Revolving
                                    Loan Commitment: $ _________________________

Consented to and agreed:

JPMORGAN CHASE BANK, N.A.,
  as Agent

By: ________________________________
    Name
    Title:

                                                                               2



                                                                       EXHIBIT E

                         FORM OF COMPLIANCE CERTIFICATE

To:     The Lenders parties to the Credit Agreement Described Below

            This Compliance Certificate is furnished pursuant to that certain
Credit Agreement dated as of April 12, 2005 (as amended, modified, renewed or
extended from time to time, the "Credit Agreement") among QUIKSILVER, INC.
("Quiksilver"), QUIKSILVER AMERICAS, INC. (the "Borrower"), the Lenders from
time to time party thereto and JPMORGAN CHASE BANK, NA, as administrative agent
for the Lenders (the "Agent"). Unless otherwise defined herein, capitalized
terms used in this Compliance Certificate have the meanings ascribed thereto in
the Agreement.

            THE UNDERSIGNED HEREBY CERTIFIES THAT:

            1. I am the duly elected Chief Financial Officer of Quiksilver;

            2. I have reviewed the terms of the Credit Agreement and I have
made, or have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements;

            3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
a Default or Event of Default during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate [, except as set forth below];

            4. I hereby certify that no Loan Party has changed (i) its name,
(ii) its chief executive office, (iii) principal place of business, (iv) the
type of entity it is or (v) its state of incorporation or organization without
having given the Agent the notice required by the Security Agreement;

            5. Schedule I attached hereto sets forth financial data and
computations evidencing Quiksilver's compliance with certain covenants of the
Agreement, all of which data and computations are true, complete and correct in
all material respects;

            6. Schedule II hereto sets forth the determination of the Applicable
Margin commencing on the third day following the delivery hereof; and

            7. Schedule III attached hereto sets forth the various reports and
deliveries which are required at this time under the Credit Agreement and the
other Loan Documents and the status of compliance.

            Described below are the exceptions, if any, to paragraph 3 by
listing, in detail, the nature of the condition or event, the period during
which it has existed and the action which Quiksilver and/or the Borrower has
taken, is taking, or proposes to take with respect to each such condition or
event:



            The foregoing certifications, together with the computations set
forth in Schedule I and Schedule II hereto and the financial statements
delivered with this Certificate in support hereof, are made and delivered this
_____ day of __________, 20__.

                                    QUIKSILVER, INC.

                                    By: ________________________________________
                                        Name:
                                        Title: Chief Financial Officer

                                                                               2



                      SCHEDULE I TO COMPLIANCE CERTIFICATE

        [Borrower to provide calculations demonstrating compliance as of
      __________ __, 20__ with the provisions of Section 6.1 of the Credit
                    Agreement [Fixed Charge Coverage Ratio]]

                      SCHEDULE II TO COMPLIANCE CERTIFICATE

[Borrower to calculate Applicable Margin in accordance with the Pricing Grid and
               the Fixed Charge Coverage Ratio calculated above.]

                     SCHEDULE III TO COMPLIANCE CERTIFICATE

             [Borrower to list reports and deliveries currently due
                  under the Credit Agreement and the status of
                      compliance with such requirements.]

                                                                               3


                                                                       EXHIBIT F

                           FORM OF CONTINUATION NOTICE

                                                             __________ __, 20__

To:      JPMorgan Chase Bank, N.A., as Agent
         Attention: ___________________________________

         Re:      QUIKSILVER AMERICAS, INC.

            We refer to that certain Credit Agreement dated as of April 12, 2005
among Quiksilver, Inc., the Borrower, the Lenders parties thereto, and JPMorgan
Chase Bank, N.A., as administrative agent (such Credit Agreement, as amended,
modified, supplemented or restated from time to time, the "Credit Agreement").
Capitalized terms used herein and not defined have the meanings assigned to them
in the Credit Agreement.

            [Pursuant to Section 2.5(a) of the Credit Agreement, the undersigned
elects to convert the following Revolving Loans currently maintained as LIBOR
Loans to ABR Loans at the end of the current Interest Period for such LIBOR
Loans:



LIBOR Loan Amount                       Last Day of Current Interest Period
- -----------------                       -----------------------------------
                                     
1.  $__________                                 __________ __, 20__
2.  $__________                                 __________ __, 20__
3.  $__________                                 __________ __, 20__]


            [Pursuant to Section 2.5(a) of the Credit Agreement, the undersigned
elects to convert the following Revolving Loans currently maintained as ABR
Loans to LIBOR Loans as follows:



LIBOR Loan Amount                       Last Day of Current Interest Period
- -----------------                       -----------------------------------
                                     
1.  $__________                                 __________ __, 20__
2.  $__________                                 __________ __, 20__
3.  $__________                                 __________ __, 20__]


            [Pursuant to Section 2.5(b) of the Credit Agreement, the undersigned
elects to continue the Interest Periods with respect to the following Revolving
Loans currently maintained as LIBOR Loans for the following additional Interest
Period:



                     Last Day of Current Interest    Length of Continued
LIBOR Loan Amount               Period                 Interest Period
- -----------------    ----------------------------    -------------------
                                               
1.  $__________           __________ __, 20__            ___ Month(s)
2.  $__________           __________ __, 20__            ___ Month(s)
3.  $__________           __________ __, 20__            ___ Month(s)]




                                   Sincerely,

                                   QUIKSILVER AMERICAS, INC.

                                   By: _________________________________________
                                       Name:
                                       Title:

                                                                               2



                                                                     EXHIBIT G-1

                     FORM OF REVOLVING LOAN BORROWING NOTICE

                                                             __________ __, 20__

To:      JPMorgan Chase Bank, N.A., as Agent
         Attention: ___________________________________

Ladies and Gentlemen:

            The undersigned, Quiksilver Americas, Inc., refers to that certain
Credit Agreement dated as of April 12, 2005 (as it may be amended, supplemented,
restated or otherwise modified from time to time, the "Credit Agreement") among
Quiksilver, Inc., the undersigned, the Lenders from time to time parties
thereto, and JPMorgan Chase Bank, N.A., as administrative agent for said Lenders
(the "Agent"). Terms defined in the Credit Agreement and not otherwise defined
herein have the same respective meanings when used herein. Pursuant to Section
2.1A(e) of the Credit Agreement, the undersigned hereby requests Revolving Loans
under the Credit Agreement and in that connection sets forth below the
information relating to such Revolving Loans (the "Proposed Loan"), as required
by Section 2.1A(e) of the Credit Agreement.

            1. The date of the Proposed Loan is __________ __, 20__.

            2. The aggregate amount of the Proposed Loan is $___________.

            3. The type of Proposed Loan will be [a LIBOR Loan] [an ABR Loan] [a
combination of a LIBOR Loan in the amount of $______________ and an ABR Loan in
the amount of $_____________].

            4. [With regard to the LIBOR Loan, the length of the initial
Interest Period shall be ___ Month(s).]

            The undersigned hereby certifies that the following statements are
true on the date hereof and will be true on the date of the Proposed Loan:

            a. The representations and warranties contained in each Loan
Document and certificate or other writing delivered to the Lenders prior to, on
or after the Closing Date and on or prior to the date for the Proposed Loan are
correct on and as of the date hereof in all material respects as though made on
and as of the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date; and



            b. No Default has occurred and is continuing or would result from
the making of the Proposed Loan as of the date hereof.

                                   Very truly yours,

                                   QUIKSILVER AMERICAS, INC.

                                   By: _________________________________________
                                       Name:
                                       Title:

                                                                               2



                                                                     EXHIBIT G-2

                FORM OF ALTERNATE CURRENCY LOAN BORROWING NOTICE

                                                             __________ __, 20__

To:      JPMorgan Chase Bank, N.A., as Agent
         Attention: ___________________________________

To:      J.P. Morgan Europe Limited, as Alternate Currency Fronting Lender
         Attention: ___________________________________

Ladies and Gentlemen:

            The undersigned, Quiksilver Americas, Inc., refers to that certain
Credit Agreement dated as of April 12, 2005 (as it may be amended, supplemented,
restated or otherwise modified from time to time, the "Credit Agreement") among
Quiksilver, Inc., the undersigned, the Lenders from time to time parties
thereto, and JPMorgan Chase Bank, N.A., as administrative agent for said Lenders
(the "Agent"). Terms defined in the Credit Agreement and not otherwise defined
herein have the same respective meanings when used herein. Pursuant to Section
2.1C(c) of the Credit Agreement, the undersigned hereby requests Alternate
Currency Loans under the Credit Agreement and in that connection sets forth
below the information relating to such Alternate Currency Loans (the "Proposed
Loan"), as required by Section 2.1C(c) of the Credit Agreement.

            1. The date of the Proposed Loan is __________ __, 20__.

            2. The aggregate amount of the Proposed Loan is ___________
[Euros][Japanese Yen][Australian Dollars][Pounds Sterling].

            3. The Proposed Loan shall be a LIBOR Loan.

            4. The length of the initial Interest Period shall be ___ Month(s).

            The undersigned hereby certifies that the following statements are
true on the date hereof and will be true on the date of the Proposed Loan:

            a. The representations and warranties contained in each Loan
Document and certificate or other writing delivered to the Lenders prior to, on
or after the Closing Date and on or prior to the date for the Proposed Loan are
correct on and as of the date hereof in all material respects as though made on
and as of the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date; and

            b. No Default has occurred and is continuing or would result from
the making of the Proposed Loan as of the date hereof.


                                   Very truly yours,

                                   QUIKSILVER AMERICAS, INC.

                                   By: _________________________________________
                                       Name:
                                       Title:

                                                                               2



                                                                     EXHIBIT H-1

                    FORM OF SWING LINE LOAN BORROWING NOTICE

                                                             __________ __, 20__

To:      JPMorgan Chase Bank, N.A., as Agent
         Attention: ___________________________________

Ladies and Gentlemen:

            The undersigned, Quiksilver Americas, Inc., refers to that certain
Credit Agreement dated as of April 12, 2005 (as it may be amended, supplemented,
restated or otherwise modified from time to time, the "Credit Agreement") among
Quiksilver, Inc., the undersigned, the Lenders from time to time parties
thereto, and JPMorgan Chase Bank, N.A., as administrative agent for said Lenders
(the "Agent"). Terms defined in the Credit Agreement and not otherwise defined
herein have the same respective meanings when used herein. Pursuant to Section
2.1B(c) of the Credit Agreement, the undersigned hereby requests Swing Line
Loans under the Credit Agreement and in that connection sets forth below the
information relating to such Swing Line Loans (the "Proposed Loan"), as required
by Section 2.1B(c) of the Credit Agreement.

            1. The date of the Proposed Loan is __________ __, 20__.

            2. The Proposed Loan shall be an ABR Loan.

            3. The aggregate amount of the Proposed Loan is $___________.

            The undersigned hereby certifies that the following statements are
true on the date hereof and will be true on the date of the Proposed Loan:

            a. The representations and warranties contained in each Loan
Document and certificate or other writing delivered to the Lenders prior to, on
or after the Closing Date and on or prior to the date for the Proposed Loan are
correct on and as of the date hereof in all material respects as though made on
and as of the date hereof, except to the extent that such representations and
warranties expressly relate to an earlier date; and

            b. No Default has occurred and is continuing or would result from
the making of the Proposed Loan as of the date hereof.

                                   Very truly yours,

                                   QUIKSILVER AMERICAS, INC.

                                   By: _________________________________________
                                       Name:
                                       Title:



                                                                     EXHIBIT H-2

                FORM OF SWING LINE LOAN PARTICIPATION CERTIFICATE

                                                             __________ __, 20__

To:      [Name of Lender]
         Attention: ______________________

Ladies and Gentlemen:

            Pursuant to Section 2.1B(e) of the Credit Agreement dated as of
April 12, 2005 among Quiksilver, Inc., Quiksilver Americas, Inc., the several
banks and other financial institutions from time to time parties thereto (the
"Lenders"), and JPMorgan Chase Bank, N.A., as administrative agent for the
Lenders, and the undersigned hereby acknowledges receipt from you of
$________________ as payment for a participating interest in the following Swing
Line Loan:

            Date of Swing Line Loan: ____________________

            Principal Amount of Swing Line Loan: $____________________

                                   Sincerely,

                                   JPMORGAN CHASE BANK, N.A.,
                                    as Agent

                                   By: _________________________________________
                                       Name
                                       Title:



                                                                       EXHIBIT I

                           FORM OF SECURITY AGREEMENT

            This AGREEMENT is dated as of April 12, 2005, and made by
QUIKSILVER, INC., a Delaware corporation ("Quiksilver"), QUIKSILVER AMERICAS,
INC. (the "Borrower"), the Domestic Subsidiaries (as defined in the Credit
Agreement referred to below) of Quiksilver parties hereto (collectively, the
"Subsidiary Grantors" and, together with Quiksilver and the Borrower, the
"Grantors") in favor of JPMORGAN CHASE BANK, N.A., as administrative agent (in
such capacity, the "Agent") for the Lenders (as defined in the Credit Agreement
referred to below, the "Lenders").

                                    Recitals

            The Agent and the Lenders have entered into a Credit Agreement,
dated as of April 12, 2005 (said Agreement, as it may be amended, modified or
restated from time to time, being called the "Credit Agreement") with Quiksilver
and the Borrower.

            It is a condition precedent to the extension of credit by the
Lenders under the Credit Agreement that each Grantor shall have executed and
delivered this Agreement.

            Terms defined in the Credit Agreement and not otherwise defined
herein have the same respective meanings when used herein, and the rules of
interpretation set forth in Section 1.2 of the Credit Agreement are incorporated
herein by reference.

                                    Agreement

            NOW, THEREFORE, in order to induce the Lenders to enter into the
Credit Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Grantor hereby represents,
warrants, covenants, agrees, assigns and grants as follows:

                        SECTION 1      DEFINITIONS.

            Unless the context otherwise requires, terms defined in the Uniform
Commercial Code of the State of New York (the "Uniform Commercial Code") and not
otherwise defined in this Agreement or in the Credit Agreement shall have the
meanings defined for those terms in the Uniform Commercial Code. In addition,
the following terms shall have the meanings respectively set forth after each:

            "Collateral": all present and future right, title and interest of
each Grantor in or to any personal property or assets whatsoever (excluding
Intellectual Property Rights), whether now owned by or owing to or existing or
hereafter arising in favor of or acquired by such Grantor and whether owned or
consigned by or to, or leased from or to, such Grantor and wheresoever located,
and all rights and powers of such Grantor to transfer any interest in or to any
personal property or assets whatsoever, including any and all of the following
personal property:

                  (a)   All Accounts;

                  (b)   All General Intangibles;

                  (c)   All Payment Intangibles;


                  (d)   All letters of credit, Letter-of-Credit Rights and
            Supporting Obligations;

                  (e)   All Commercial Tort Claims to the extent they have been
            notified to the Agent in accordance with Section 6.01(i);

                  (f)   All Deposit Accounts and (without duplication) each
            account listed on Schedule C attached hereto and made a part hereof
            (as such Schedule may be supplemented from time to time in
            accordance with the terms of this Agreement), and all money, cash
            and cash equivalents of such Grantor, whether or not deposited in
            any Deposit Account;

                  (g)   All present and future books and records, including
            books of account and ledgers of every kind and nature, all
            electronically recorded data relating to such Grantor or the
            business thereof, all receptacles and containers for such records,
            and all files and correspondence;

                  (h)   All Equipment;

                  (i)   All Inventory;

                  (j)   All Chattel Paper;

                  (k)   All Documents;

                  (l)   All Goods;

                  (m)   All Instruments;

                  (n)   All Investment Property; provided, however, that (i) no
            stock or other equity interests in Foreign Subsidiaries of any
            Grantor shall be included in the Collateral, other than 65% of the
            stock or other equity interests in each Material Foreign Subsidiary
            of such Grantor (or such greater percentage to the extent a pledge
            of a greater percentage could not reasonably be expected to result
            in adverse tax consequences or is not permitted under applicable
            law), (ii) no stock or other equity interests in the Holding Company
            or the Target are required to be pledged hereunder except in
            accordance with Section 5.14(b) of the Credit Agreement and (iii)
            the only share certificates or similar certificates of any Domestic
            Subsidiary that are required to be physically delivered to the Agent
            shall be those share certificates and related certificates of the
            Borrower and each Subsidiary Grantor;

                  (o)   All Fixtures;

                  (p)   upon the making of a request by the Agent pursuant to
            Section 6.01(h) hereof, all Vehicles and title documents with
            respect to Vehicles;

                  (q)   All present and future accessions, appurtenances,
            components, repairs, repair parts, spare parts, replacements,
            substitutions, additions, issue and/or improvements to or of or with
            respect to any of the foregoing;

                                       2


                  (r)   All other property not otherwise described above (except
            for any property specifically excluded from any clause in this
            section above, and any property specifically excluded from any
            defined term used in any clause of this section above); and

                  (s)   Any and all Proceeds, Supporting Obligations and
            products of any and all of the foregoing and, without duplication,
            any other tangible or intangible property received upon the sale or
            disposition of any of the foregoing and all collateral security and
            guarantees given by any Person with respect to any of the foregoing.

            "Collateral Report": any certificate (including any Borrowing Base
Certificate), report or other document delivered by any Grantor to the Agent or
any Lender with respect to the Collateral pursuant to any Loan Document.

            "Pledged Investment Property": collectively, all Instruments,
Securities and other Investment Property of the Grantors which are required to
be physically delivered to the Agent pursuant to this Security Agreement. For
the avoidance of doubt, with respect to any equity securities, the term "Pledged
Investment Property" shall only include (i) the share certificates and related
certificates of the Borrower and each Subsidiary Grantor and (ii) the share
certificates and related certificates of each Material Foreign Subsidiary
required to be pledged hereunder in accordance with the proviso to clause (n) of
the "Collateral" definition.

            "Receivables": collectively, all Accounts, Chattel Paper, Documents,
Investment Property, Instruments and any other rights or claims to receive money
which are General Intangibles or which are otherwise included as Collateral.

            "Secured Party": the Agent, on its own behalf and on behalf of and
for the benefit of the Lenders (including, to the extent party to any Specified
Hedging Agreement or Banking Services, any affiliate of any Lender), in each
case allocated in the manner set forth herein, their respective successors,
indorsees, transferees and assigns.

            "Vehicles": all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title law of any
state.

                        SECTION 2      CREATION OF SECURITY INTEREST

            Each Grantor hereby assigns, pledges and grants to the Secured Party
a security interest in and to, all right, title and interest of such Grantor in
and to all presently existing and hereafter acquired Collateral.

                        SECTION 3      SECURITY FOR OBLIGATIONS

            This Agreement and the assignments and pledges made, and security
interests granted herein secure the prompt payment, in full in cash, and full
performance of all obligations of each Grantor to the Secured Party now or
hereafter existing under any Loan Document (including, without limitation, all
Obligations as defined in the Credit Agreement), whether for principal,
interest, fees, expenses or otherwise, including all obligations of each Grantor
now or hereafter existing under this Agreement and all interest that accrues
(whether or not allowed) at then applicable rate (including interest at the
default rate described in Section 2.7(d) of the Credit Agreement) specified in
the Credit Agreement on all or any part of any of such obligations after the
filing of any petition or pleading against such Grantor for a proceeding under
any bankruptcy or related law (collectively, the "Obligations"); provided,
however, that

                                       3


notwithstanding any of the other provisions set forth in this Section 3, this
Agreement shall not constitute a grant of a security interest in any property to
the extent that such grant of a security interest is prohibited by any
Requirement of Law of a Governmental Authority, requires a consent not obtained
of any Governmental Authority pursuant to such Requirement of Law or is
prohibited by, or constitutes a breach or default under or results in the
termination of or requires any consent not obtained under, any contract,
license, agreement, instrument or other document evidencing or giving rise to
such property or, in the case of any Investment Property (or Pledged Investment
Property), any applicable shareholder or similar agreement, except to the extent
that such Requirement of Law or the term in such contract, license, agreement,
instrument or other document or shareholder or similar agreement providing for
such prohibition, breach, default or termination or requiring such consent is
ineffective under applicable law.

                        SECTION 4      FURTHER ASSURANCES

      4.01. (a) At any time and from time to time at the reasonable written
request of the Agent, each Grantor shall execute and deliver to the Agent, at
such Grantor's expense, all such financing statements and other instruments,
certificates and documents in form and substance reasonably satisfactory to the
Agent, and perform all such other acts as shall be necessary or reasonably
desirable to fully perfect or protect or maintain, when filed, recorded,
delivered or performed, the Secured Party's security interests granted pursuant
to this Agreement or to enable the Secured Party to exercise and enforce their
rights and remedies hereunder with respect to any Collateral.

      (b) Without limiting the generality of the foregoing, each Grantor: (i)
shall, at the reasonable request of the Agent, mark conspicuously each Document
included in the Inventory and each other Contract relating to the Accounts
(excluding invoices), and all Chattel Paper, Instruments and other Documents and
each of its Records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Agent, indicating that such Document, Contract,
Chattel Paper, Instrument or Collateral is subject to the security interest
granted hereby, provided that each Grantor shall be required to so mark each
such Document, Contract, Chattel Paper, Instrument and Record only to the extent
that the same is in such Grantor's possession; (ii) shall, at the request of the
Agent, if any Account or contract or other writing relating thereto shall be
evidenced by a promissory note or other instrument, deliver and pledge to the
Secured Party such note or other instrument duly endorsed and accompanied by
duly executed undated instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Agent; (iii) hereby authorizes the
filing of such financing or continuation statements, or amendments thereto, and
such other instruments or notices, as may be necessary or reasonably desirable,
or as the Agent may reasonably request, in order to perfect and preserve, with
the required priority, the security interests granted, or purported to be
granted hereby; and (iv) shall cause, within 90 days after the Closing Date,
Deposit Account Control Agreements to be executed by all parties necessary to
establish "control" under the Uniform Commercial Code in favor of the Agent with
respect to all Deposit Accounts in accordance with Section 5.10 of the Credit
Agreement.

      4.02. At any time and from time to time, the Agent shall be entitled to
file and/or record any or all such financing statements, instruments and
documents held by it, and any or all such further financing statements,
documents and instruments, relative to the Collateral or any part thereof in
each instance, and to take all such other actions as the Agent may reasonably
deem appropriate to perfect and to maintain perfected the security interests
granted herein.

      (a) Each Grantor hereby authorizes the Agent to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of such Grantor where permitted by law.
A carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.

                                       4


      (b) Each Grantor shall furnish to the Agent from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent may reasonably request.
Upon such Grantor's obtaining any rights or interests in any additional Deposit
Accounts, such Grantor shall, in addition to all other acts required to be
performed in respect thereof pursuant to this Agreement, supplement Schedule C
attached hereto to reflect such additional Deposit Accounts.

      (c) Upon any Grantor's obtaining any rights or interests in any Chattel
Paper or Electronic Chattel Paper in an aggregate amount in excess of
US$[100,000], such Grantor shall, in addition to all other acts required to be
performed in respect thereof pursuant to this Agreement, promptly notify the
Agent of such rights or interests.

            SECTION      5 GRANTOR REPRESENTATIONS AND WARRANTIES

            Each Grantor represents and warrants as follows:

      5.01. General.

      (a) As of the date hereof, (i) the locations listed in Part I of Schedule
A attached hereto and made a part hereof with respect to such Grantor constitute
all locations, by street address, at which Equipment owned by such Grantor is
located; and the locations referred to in Part II of Schedule A attached hereto
with respect to such Grantor constitute all locations, by street address, at
which Inventory owned by such Grantor is located as of the date of this
Agreement; (ii) the chief executive office of each Grantor, where such Grantor
keeps its records concerning the Collateral and any Chattel Paper evidencing the
Collateral, is located at the address set forth for such Grantor on Schedule B
attached hereto and made a part hereof; (iii) all records concerning any Account
and all originals of all contracts and other writings which evidence any Account
are located at the addresses listed on Schedule B attached hereto with respect
to such Grantor; (iv) such Grantor's exact legal name, and the place of
formation of such Grantor, are as set forth in Schedule 3.1 to the Credit
Agreement; and (v) such Grantor's state organizational identification number, if
any, is set forth on Schedule 3.1 to the Credit Agreement.

      (b) Such Grantor is the legal and beneficial owner of the Collateral free
and clear of all Liens except for Permitted Liens. Such Grantor has the power,
authority and legal right to grant the security interests in the portion of the
Collateral owned by such Grantor purported to be granted hereby, and to execute,
deliver and perform this Agreement. The pledge of the portion of the Collateral
owned by such Grantor pursuant to this Agreement creates a valid security
interest in such portion of the Collateral. Upon the filing of appropriate
financing statements in the filing offices set forth on Schedule D attached
hereto with respect to such Grantor and the execution of Deposit Account Control
Agreements with respect to any Deposit Accounts of such Grantor that are not
maintained with the Secured Party, the Secured Party will have a first-priority
perfected security interest in that portion of the Collateral owned by such
Grantor (except for any Permitted Liens).

      (c) No authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority (other than such authorizations,
approvals and other actions as have already been taken and are in full force and
effect) are required (i) for any pledge of the Collateral or grant of security
interest in the Collateral by such Grantor hereby or for the execution, delivery
or performance of this Agreement by such Grantor, or (ii) for the exercise by
the Agent of the rights or remedies in respect of the Collateral hereunder.

      (d) Schedule C attached hereto and made a part hereof sets forth all
Deposit Accounts, Letter-of-Credit Rights and Chattel Paper of such Grantor. All
action by such Grantor necessary or

                                       5


desirable to protect and perfect the Agent's Lien on each item listed on
Schedule C (other than any Deposit Account subject to Section 5.10 of the Credit
Agreement), has been duly taken to the extent that such action was requested by
the Agent (including the delivery of all originals and the placement of a legend
on all Chattel Paper as required hereunder).

      5.02. Accounts and Chattel Paper.

      (a) The names of the obligors, amounts owing, due dates and other
information with respect to the Accounts and Chattel Paper are and will be
correctly stated in all material respects in all records of such Grantor
relating thereto and in all invoices and Collateral Reports with respect thereto
furnished to the Agent by such Grantor from time to time. As of the time when
each Account or each item of Chattel Paper arises, such Account or Chattel
Paper, as the case may be, and all records relating thereto, shall be genuine
and in all respects what they purport to be.

      (b) With respect to Accounts, except as specifically disclosed on the most
recent Collateral Report, (i) all Accounts are Eligible Accounts; (ii) all
Accounts represent bona fide sales of Inventory or rendering of services to
Account Debtors in the ordinary course of such Grantor's business and are not
evidenced by a judgment, Instrument or Chattel Paper; (iii) to such Grantor's
knowledge, there are no setoffs, claims or disputes existing or asserted with
respect thereto and such Grantor has not made any agreement with any Account
Debtor for any extension of time for the payment thereof, any compromise or
settlement for less than the full amount thereof, any release of any Account
Debtor from liability therefor, or any deduction therefrom except a discount or
allowance allowed by Grantor in the ordinary course of its business for prompt
payment and disclosed to the Agent; (iv) to Grantor's knowledge, there are no
facts, events or occurrences which in any way impair the validity or
enforceability thereof or could reasonably be expected to reduce the amount
payable thereunder as shown on such Grantor's books and records and any
invoices, statements and Collateral Reports with respect thereto; (v) such
Grantor has not received any notice of proceedings or actions which are
threatened or pending against any Account Debtor which might result in any
adverse change in such Account Debtor's financial condition; and (vi) such
Grantor has no knowledge that any Account Debtor is unable generally to pay its
debts as they become due.

      (c) In addition, with respect to all Accounts, (i) to such Grantor's
knowledge, the amounts shown on all invoices, statements and Collateral Reports
with respect thereto are actually and absolutely owing to such Grantor as
indicated thereon and are not in any way contingent; (ii) following the date
which is 90 days after the Closing Date, no payments shall be made thereon
except payments immediately delivered to a Lock Box or a Deposit Account subject
to a Deposit Account Control Agreement as required pursuant to Section 7; and
(iii) to such Grantor's knowledge, all Account Debtors have the capacity to
contract.

      5.03. Inventory. With respect to any Inventory scheduled or listed on the
most recent Collateral Report, (a) such Inventory (other than Inventory in
transit) is located at one of such Grantor's locations set forth on Schedule A,
(b) no Inventory (other than Inventory in transit) is now, or shall at any time
or times hereafter be stored at any other location except as permitted by
Section 6.01(g), (c) such Grantor has good, indefeasible and merchantable title
to such Inventory and such Inventory is not subject to any Lien or security
interest or document whatsoever except for the Lien granted to the Agent, for
the benefit of the Agent and Lenders, and except for Permitted Liens, (d) except
as specifically disclosed in the most recent Collateral Report, such Inventory
is Eligible Inventory of good and merchantable quality, free from any defects,
(e) such Inventory is not subject to any licensing, patent, royalty, trademark,
trade name or copyright agreements with any third parties which would require
any consent of any third party upon sale or disposition of that Inventory or the
payment of any monies to any third party upon such sale or other disposition,
(f) such Inventory has been produced in accordance with the Federal Fair Labor

                                       6


Standards Act of 1938, as amended, and all rules, regulations and orders
thereunder and (g) the completion of manufacture, sale or other disposition of
such Inventory by the Agent following a Default shall not require the consent of
any Person and shall not constitute a breach or default under any contract or
agreement to which such Grantor is a party or to which such property is subject.

      5.04. Pledged Investment Property.

      (a) Schedule E sets forth a complete and accurate list of all of the
Pledged Investment Property. Such Grantor is the direct, sole beneficial owner
and sole holder of record of the Pledged Investment Property listed on Schedule
E as being owned by it, free and clear of any Liens, except for the security
interest granted to the Secured Party. Such Grantor further represents and
warrants that (i) all Pledged Investment Property constituting Capital Stock has
been (to the extent such concepts are relevant with respect to such Pledged
Investment Property) duly authorized, validly issued, are fully paid and
non-assessable, (ii) with respect to any certificates delivered to the Agent
representing Capital Stock, either such certificates are Securities as defined
in Article 8 of the UCC as a result of actions by the issuer or otherwise, or,
if such certificates are not Securities, such Grantor has so informed the Agent
so that the Agent may take steps to perfect its security interest therein as a
General Intangible, (iii) all Pledged Investment Property held by a securities
intermediary is covered by a control agreement among such Grantor, the
securities intermediary and the Agent pursuant to which the Agent has Control
and (iv) all Pledged Investment Property which represents Indebtedness owed to
such Grantor has been duly authorized, authenticated or issued and delivered by
the issuer of such Indebtedness, is the legal, valid and binding obligation of
such issuer and such issuer is not in default thereunder.

      (b) In addition, (i) none of the Pledged Investment Property has been
issued or transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance or
transfer may be subject, (ii) there are existing no options, warrants, calls or
commitments of any character whatsoever relating to the Pledged Investment
Property or which obligate the issuer of any Capital Stock included in the
Pledged Investment Property to issue additional Capital Stock, and (iii) no
consent, approval, authorization, or other action by, and no giving of notice,
filing with, any governmental authority or any other Person is required for the
pledge by such Grantor of the Pledged Investment Property pursuant to this
Security Agreement or for the execution, delivery and performance of this
Security Agreement by such Grantor, or for the exercise by the Agent of the
voting or other rights provided for in this Security Agreement or for the
remedies in respect of the Pledged Investment Property pursuant to this Security
Agreement, except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally.

      (c) Except as set forth in Schedule E, such Grantor owns 100% of the
issued and outstanding Capital Stock which constitutes Pledged Investment
Property and none of the Pledged Investment Property which represents
Indebtedness owed to such Grantor is subordinated in right of payment to other
Indebtedness or subject to the terms of an indenture.

                        SECTION 6      GRANTOR COVENANTS

            In addition to the other covenants and agreements set forth herein
and in the other Loan Documents, and except as otherwise expressly set forth in
the Credit Agreement, each Grantor covenants and agrees as follows:

      6.01. General.

      (a) Such Grantor will pay, prior to delinquency, all taxes, charges, Liens
and assessments against the Collateral owned by it, except those with respect to
which the amount or validity is being

                                       7


contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of such
Grantor.

      (b) The Collateral will not be used in violation of any material law,
regulation or ordinance or any Requirement of Law applicable to such Grantor,
nor used in any way that will void or impair any insurance required to be
carried in connection therewith.

      (c) Such Grantor will keep the Collateral in reasonably good repair,
working order and operating condition (normal wear and tear excluded), and from
time to time make all necessary and proper repairs, renewals, replacements,
additions and improvements thereto and, as appropriate and applicable, will
otherwise deal with the Collateral in all such ways as are considered customary
practice by owners of like property.

      (d) Such Grantor will take all reasonable steps to preserve and protect
the Collateral.

      (e) Such Grantor will maintain all insurance coverage required pursuant to
the Loan Documents.

      (f) Such Grantor will promptly notify the Agent in writing in the event of
any material damage to the Collateral from any source whatsoever.

      (g) Such Grantor will not (i) establish any location of Equipment not
listed in Part I of Schedule A attached hereto, (ii) move its principal place of
business, chief executive offices or any other office listed on Schedule B
attached hereto, (iii) adopt, use or conduct business under any trade name or
other corporate or fictitious name not disclosed on Schedule 3.5B to the Credit
Agreement, (iv) acquire or open, as applicable, any Deposit Account except in
accordance with Section 5.10 of the Credit Agreement, (v) create any Chattel
Paper without placing a legend on the Chattel Paper acceptable to the Agent
indicating the Secured Party's security interest therein or (vi) change its
legal name, its place of incorporation, formation or organization (as
applicable) or its state organizational identification number, from those
specified in Schedule 3.1 to the Credit Agreement, except in each case described
above upon not less than 30 days' prior notice to the Agent and such Grantor's
prior compliance with all applicable requirements of Section 4 hereof necessary
or reasonably desirable to perfect the Secured Party's security interest
hereunder. Upon reasonable request by any Lender through the Agent at any time
and from time to time, such Grantor will provide the Lenders an updated list of
locations of Inventory, by street address.

      (h) Such Grantor, upon request of the Agent, shall cause the Agent to be
listed as the lienholder on the certificates of title covering any Vehicle
within 120 days of such request, and at any time after the occurrence and during
the continuance of an Event of Default, shall deliver evidence of the same to
the Agent; provided, that so long as no Default or Event of Default has occurred
and is continuing, the Agent shall only be permitted to make such a request in
the event that the fair market value of Vehicles owned by all Grantors is in
excess of US$1,000,000. At any time during this Agreement when any Grantor is
required to cause the Agent to be listed on the certificate of title covering
any Vehicle, such Grantor shall promptly notify the Agent of the acquisition of
any additional Vehicles.

      (i) Such Grantor shall promptly, and in any event within ten (10) Business
Days after the same is acquired by it, notify the Agent of any commercial tort
claim (as defined in the UCC) acquired by it and, unless the Agent otherwise
consents, such Grantor shall enter into an amendment to this Security Agreement,
granting to Agent a first priority security interest in such commercial tort
claim.

      (j) If such Grantor is or becomes the beneficiary of a letter of credit,
such Grantor shall promptly, and in any event within ten (10) Business Days
after becoming a beneficiary, notify the Agent

                                       8


thereof and cause the issuer and/or confirmation bank to (i) consent to the
assignment of any Letter-of-Credit Rights to the Agent and (ii) agree to direct
all payments thereunder to a Deposit Account at the Agent or subject to a
Deposit Account Control Agreement, all in form and substance reasonably
satisfactory to the Agent.

      (k) Inventory and Equipment.

                  (i) Maintenance of Goods. Such Grantor will do all things
            necessary to maintain, preserve, protect and keep the Inventory and
            the Equipment in good repair and working and saleable condition,
            except for damaged or defective goods arising in the ordinary course
            of such Grantor's business and except for ordinary wear and tear in
            respect of the Equipment.

                  (ii) Returned Inventory. If an Account Debtor returns any
            Inventory collectively in excess of US$250,000 to such Grantor when
            no Event of Default exists, then such Grantor shall promptly
            determine the reason for such return and shall issue a credit
            memorandum to the Account Debtor in the appropriate amount. Such
            Grantor shall immediately report to the Agent any return involving
            an amount in excess of US$750,000. Each such report shall indicate
            the reasons for the returns and the locations and condition of the
            returned Inventory. In the event any Account Debtor returns
            Inventory to such Grantor when an Event of Default exists, such
            Grantor, upon the request of the Agent, shall: (i) hold the returned
            Inventory in trust for the Agent; (ii) segregate all returned
            Inventory from all of its other property; (iii) dispose of the
            returned Inventory solely according to the Agent's written
            instructions; and (iv) not issue any credits or allowances with
            respect thereto without the Agent's prior written consent. All
            returned Inventory shall be subject to the Agent's Liens thereon.
            Whenever any Inventory is returned, the related Account shall be
            deemed ineligible to the extent of the amount owing by the Account
            Debtor with respect to such returned Inventory and such returned
            Inventory shall not be Eligible Inventory.

                  (iii) Inventory Count; Perpetual Inventory System. To the
            extent reasonably requested by the Agent, such Grantor will conduct
            a physical count of the Inventory at least once per fiscal year.
            After and during the continuation of an Event of Default, such
            Grantor will conduct a physical count of the Inventory at such other
            times as the Agent requests. Such Grantor, at its own expense, shall
            deliver to the Agent the results of each physical verification,
            which such Grantor has made, or has caused any other Person to make
            on its behalf, of all or any portion of its Inventory. Such Grantor
            will maintain a perpetual inventory reporting system at all times.

                  (iv) Equipment. Such Grantor shall promptly inform the Agent
            of any additions to or deletions from the Equipment which
            individually exceed US$2,500,000. Such Grantor shall not permit any
            Equipment to become a fixture with respect to real property or to
            become an accession with respect to other personal property with
            respect to which real or personal property the Agent does not have a
            Lien. Such Grantor will not, without the Agent's prior written
            consent, alter or remove any identifying symbol or number on any of
            such Grantor's Equipment constituting Collateral.

      (l) Delivery of Instruments, Securities, Chattel Paper and Documents. Such
Grantor will (a) deliver to the Agent immediately upon execution of this
Security Agreement the originals of all Chattel Paper, Securities and

                                       9


Instruments constituting Collateral (if any then exist), (b) hold in trust for
the Agent upon receipt and immediately thereafter deliver to the Agent any
Chattel Paper, Securities and Instruments constituting Collateral, (c) upon the
Agent's request, deliver to the Agent (and thereafter hold in trust for the
Agent upon receipt and immediately deliver to the Agent) any Document evidencing
or constituting Collateral and (d) upon the Agent's request, deliver to the
Agent a duly executed amendment to this Security Agreement, pursuant to which
such Grantor will pledge such additional Collateral. Such Grantor hereby
authorizes the Agent to attach each amendment to this Security Agreement and
agrees that all additional Collateral set forth in such amendments shall be
considered to be part of the Collateral.

                  SECTION 7      RECEIVABLES; CASH MANAGEMENT

      7.01. Certain Agreements on Receivables. (a) No Grantor will make or agree
to make any discount, credit, rebate or other reduction in the original amount
owing on an Account or accept in satisfaction of an Account less than the
original amount thereof, except that, prior to the occurrence of a Default, such
Grantor may reduce the amount of Accounts arising from the sale of Inventory in
accordance with its present policies and in the ordinary course of business.

      (b) Collection of Receivables. Except as otherwise provided in this
Security Agreement, such Grantor will collect and enforce, at such Grantor's
sole expense, all amounts due or hereafter due to such Grantor under the
Receivables.

      (c) Delivery of Invoices. Such Grantor will deliver to the Agent
immediately upon its request duplicate invoices with respect to each Account.

      (d) Disclosure of Counterclaims on Receivables. If (i) any discount,
credit or agreement to make a rebate or to otherwise reduce the amount owing on
a Receivable exists with respect to any discount, credit, rebate or reduction in
excess of US$250,000 or (ii) if, to the knowledge of such Grantor, any dispute,
setoff, claim, counterclaim or defense exists or has been asserted or threatened
with respect to a Receivable in excess of US$250,000, such Grantor will promptly
disclose such fact to the Agent in writing. Such Grantor shall send the Agent a
copy of each credit memorandum in excess of US$250,000 as soon as issued, and
such Grantor shall promptly report each such credit memo and each of the facts
required to be disclosed to the Agent in accordance with this Section on the
Borrowing Base Certificates submitted by it.

      (e) Electronic Chattel Paper. Such Grantor shall take all steps necessary
to grant the Agent Control of all Electronic Chattel Paper in accordance with
the UCC and all "transferable records" as defined in each of the Uniform
Electronic Transactions Act and the Electronic Signatures in Global and National
Commerce Act.

      7.02. Establishment of Lock Boxes. (a) Within 90 days after the Closing
Date, in accordance with Section 5.10 of the Credit Agreement, each Grantor
shall (a) execute and deliver to the Agent Deposit Account Control Agreements
for each Deposit Account maintained by such Grantor into which all cash, checks
or other similar payments relating to or constituting payments made in respect
of Receivables will be deposited (a "Collateral Deposit Account"), which
Collateral Deposit Accounts will be identified as such in writing to the Agent,
and (b) establish lock box service (the "Lock Boxes") with the bank(s) set forth
in such Deposit Account Control Agreements, which Lock Boxes shall be subject to
irrevocable lockbox agreements in the form provided by or otherwise acceptable
to the Agent and shall be accompanied by an acknowledgment by the bank where the
Lock Box is located of the Lien of the Agent granted hereunder and of
irrevocable instructions to wire all amounts collected therein to the Collection
Account (a "Lock Box Agreement"). After the Closing Date, each Grantor will
comply with the terms of Section 7.02(c).

                                       10


      (b) Instructions to Account Debtors. Immediately upon the establishment of
the Lock Boxes, but in no event later than 90 days after the Closing Date, each
Grantor shall direct all of its Account Debtors to forward payments directly to
a Lock Box subject to a Lock Box Agreement. The Agent shall have sole access to
the Lock Boxes at all times and each Grantor shall take all actions necessary to
grant the Agent such sole access. On and after the date in which (and for so
long as) cash dominion becomes effective pursuant to Section 5.10 of the Credit
Agreement, at no time shall any Grantor remove any item from the Lock Box or
from a Collateral Deposit Account without the Agent's prior written consent. If
any Grantor should refuse or neglect to notify any Account Debtor to forward
payments directly to a Lock Box subject to a Lock Box Agreement after notice
from the Agent, the Agent shall be entitled to make such notification directly
to Account Debtor. If notwithstanding the foregoing instructions, any Grantor
receives any proceeds of any Receivables, such Grantor shall receive such
payments as the Agent's trustee, and shall immediately deposit all cash, checks
or other similar payments related to or constituting payments made in respect of
Receivables received by it to a Collateral Deposit Account. On and after the
date in which (and for so long as) cash dominion becomes effective pursuant to
Section 5.10 of the Credit Agreement, all funds deposited into any Lock Box
subject to a Lock Box Agreement or a Collateral Deposit Account will be swept on
a daily basis into a collection account maintained by the Borrower with the
Agent (the "Collection Account"). The Agent shall hold and apply funds received
into the Collection Account as provided by the terms of Section 11.06.

      (c) Covenant Regarding New Deposit Accounts; Lock Boxes. Prior to (or
simultaneously with) opening or replacing any Collateral Deposit Account or
other Deposit Account, or establishing a new Lock Box (other than any Lock Box
established in accordance with Section 7.02(a)), the relevant Grantor shall
cause each bank or financial institution in which it seeks to open (i) a Deposit
Account, to enter into a Deposit Account Control Agreement with the Agent in
order to give the Agent Control of such Deposit Account, or (ii) a Lock Box, to
enter into a Lock Box Agreement with the Agent in order to give the Agent
Control of the Lock Box. In the case of Deposit Accounts or Lock Boxes
maintained with Lenders, the terms of such letter shall be subject to the
provisions of the Credit Agreement regarding setoffs.

      7.03. Application of Proceeds. (a) Unless an Event of Default or an
Availability Event shall have occurred and be continuing, all cash proceeds of
the Collateral swept into the Collection Account, other than amounts required to
be applied to the Obligations pursuant to Section 2.4 (which shall be so
applied) of the Credit Agreement, shall be swept from the Collection Account
into the Borrower's general operating account with the Agent, Union Bank of
California, N.A. or any other Lender reasonably acceptable to the Agent.

      (b) Following the occurrence and during the continuation of an
Availability Event (unless Section 7.03(c) shall be applicable), all amounts
deposited in the Collection Account shall, after having been credited in
immediately available funds to the Collection Account, be applied, ratably,
subject to the provisions of the Credit Agreement and the other Loan Documents,
first, to pay any fees, indemnities, or expense reimbursements including amounts
then due to the Agent from the Borrower (other than in connection with Banking
Services or Specified Hedging Agreements), second, to pay any fees or expense
reimbursements then due to the Lenders from the Borrower (other than in
connection with Banking Services or Specified Hedging Agreements), third, to pay
interest due in respect of the Protective Advances and Overadvances, fourth, to
pay the principal of the Protective Advances and Overadvances, fifth, to pay
interest due in respect of the Loans (other than Protective Advances), sixth, to
pay or prepay principal of the Loans (other than Protective Advances and
Overadvances) and unpaid reimbursement obligations in respect of Letters of
Credit. In no event shall any amount be so applied unless and until such amount
shall have been credited in immediately available funds to the Collection
Account. All other cash proceeds of the Collateral, which are not required to be
applied to the Obligations pursuant to Section 2.4 of the Credit Agreement or
this Section 7.03(b), shall be swept from the Collection Account

                                       11


into the Borrower's general operating account with the Agent, Union Bank of
California, N.A. or any other Lender reasonably acceptable to the Agent.

      (c) Following the occurrence and during the continuation of an Event of
Default, at the option of the Agent, all amounts deposited in the Collection
Account shall, after having been credited in immediately available funds to the
Collection Account, be applied to the reduction of the Obligations in accordance
with Section 11.06. In no event shall any amount be so applied unless and until
such amount shall have been credited in immediately available funds to the
Collection Account. The balance, if any, after all of the Obligations have been
satisfied, shall be deposited by the Agent into the Borrower's general operating
account with the Agent.

              SECTION 8      AGENT'S RIGHTS REGARDING COLLATERAL.

            At any time and from time to time, the Agent (for the benefit of the
Secured Party) may, to the extent necessary or reasonably desirable to protect
the security hereunder, but the Agent shall not be obligated to: (a) (whether or
not a Default has occurred) itself or through its representatives, at its own
expense, upon reasonable notice and at such reasonable times during usual
business hours, visit and inspect each Grantor's 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 discuss the business, operations, properties
and financial and other condition of each Grantor and its Subsidiaries with
officers and employees of each Grantor and its Subsidiaries and with its
Accountants or (b) if an Event of Default has occurred and is continuing, at the
expense of the relevant Grantor, perform any obligation of such Grantor under
this Agreement. At any time and from time to time after an Event of Default has
occurred and is continuing, at the expense of each relevant Grantor, the Agent
(for the benefit of the Secured Party) may, to the extent necessary or
reasonably desirable to protect the security hereunder, but the Agent shall not
be obligated to: (i) notify obligors on the Collateral that the Collateral has
been assigned as security to the Secured Party; (ii) at any time and from time
to time request from obligors on the Collateral, in the name of the relevant
Grantor or in the name of the Secured Party, information concerning the
Collateral and the amounts owing thereon; and (iii) direct obligors under the
contracts included in the Collateral to which any Grantor is party to direct
their performance to the Agent or the Lenders. Each Grantor shall keep proper
books and records and accounts in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all material
dealings and transactions pertaining to the Collateral. The Agent shall at all
reasonable times on reasonable notice have full access to and the right to audit
any and all of each Grantor's books and records pertaining to the Collateral,
and to confirm and verify the value of the Collateral. Neither the Agent nor the
Lenders shall be under any duty or obligation whatsoever to take any action to
preserve any rights of or against any prior or other parties in connection with
the Collateral, to exercise any voting rights or managerial rights with respect
to any Collateral or to make or give any presentments for payment, demands for
performance, notices of non-performance, protests, notices of protest, notices
of dishonor or notices of any other nature whatsoever in connection with the
Collateral or the Obligations. Neither the Agent nor the Lenders shall be under
any duty or obligation whatsoever to take any action to protect or preserve the
Collateral or any rights of any Grantor therein, or to make collections or
enforce payment thereon, or to participate in any foreclosure or other
proceeding in connection therewith. Nothing contained herein or in any consent
by the Agent shall constitute an assumption by the Lenders of any obligations of
any Grantor under the contracts assigned hereunder unless the Agent shall have
given written notice to the counterparty to such assigned contract of the
Lenders' intention to assume such contract. Each Grantor shall continue to be
liable for performance of its obligations under such contracts.

                                       12


                    SECTION 9      COLLECTIONS ON COLLATERAL

            Except as provided to the contrary in Section 7.03 and in the Credit
Agreement, each Grantor shall have the right to use and to continue to make
collections on and receive dividends and other proceeds of all of the Collateral
in the ordinary course of business so long as no Event of Default shall have
occurred and be continuing. Upon the occurrence and during the continuance of an
Event of Default, at the option of the Agent, such Grantor's right to make
collections on and receive dividends and other proceeds of the Collateral and to
use or dispose of such collections and proceeds shall terminate, and any and all
dividends, proceeds and collections, including all partial or total prepayments,
then held or thereafter received on or on account of the Collateral will be held
or received by such Grantor in trust for the Secured Party and immediately
delivered in kind to the Agent (duly endorsed to the Agent, if required), to be
applied to the Obligations or held as Collateral, as the Agent shall elect. Upon
the occurrence and during the continuance of an Event of Default, the Agent
shall have the right at all times to receive, receipt for, endorse, assign,
deposit and deliver, in the name of the Agent or the Lenders or in the name of
each Grantor, any and all checks, notes, drafts and other instruments for the
payment of money constituting proceeds of or otherwise relating to the
Collateral; and each Grantor hereby authorizes the Agent to affix, by facsimile
signature or otherwise, the general or special endorsement of such Grantor, in
such manner as the Agent shall deem advisable, to any such instrument in the
event the same has been delivered to or obtained by the Agent without
appropriate endorsement, and the Agent and any collecting bank are hereby
authorized to consider such endorsement to be a sufficient, valid and effective
endorsement by such Grantor, to the same extent as though it were manually
executed by the duly authorized representative of such Grantor, regardless of by
whom or under what circumstances or by what authority such endorsement actually
is affixed, without duty of inquiry or responsibility as to such matters, and
each Grantor hereby expressly waives demand, presentment, protest and notice of
protest or dishonor and all other notices of every kind and nature with respect
to any such instrument.

               SECTION 10      POSSESSION OF COLLATERAL BY AGENT.

            All the Collateral now, heretofore or hereafter delivered to the
Agent shall be held by the Agent in its possession, custody and control. Any or
all of the Collateral delivered to the Agent constituting cash or cash
equivalents shall, prior to the occurrence of any Event of Default, be held in
an interest-bearing account with one or more of the Lenders, and shall be, upon
request of the relevant Grantor, invested in investments permitted by Section
6.7 of the Credit Agreement. Nothing herein shall obligate the Agent to obtain
any particular return thereon. Upon the occurrence and during the continuance of
an Event of Default, whenever any of the Collateral is in the Agent's
possession, custody or control, the Agent may use, operate and consume the
Collateral, whether for the purpose of preserving and/or protecting the
Collateral, or for the purpose of performing any Grantor's obligations with
respect thereto, or otherwise, and, subject to the terms of Section 9.7 of the
Credit Agreement, any or all of the Collateral delivered to the Agent
constituting cash or cash equivalents shall be applied by the Agent to payment
of the Obligations to the extent permitted by the terms of the Credit Agreement
or otherwise held as Collateral as the Agent shall elect. The Agent may at any
time deliver or redeliver the Collateral or any part thereof to the relevant
Grantor, and the receipt of any of the same by such Grantor shall be complete
and full acquittance for the Collateral so delivered, and the Agent thereafter
shall be discharged from any liability or responsibility arising after such
delivery to such Grantor. So long as the Agent exercises reasonable care with
respect to any Collateral in its possession, custody or control, neither the
Agent nor the Lenders shall have any liability for any loss of or damage to any
Collateral, and in no event shall the Agent or the Lenders have liability for
any diminution in value of Collateral occasioned by economic or market
conditions or events, absent the gross negligence or willful misconduct of the
Agent or any of the Lenders. The Agent shall be deemed to have exercised
reasonable care within the meaning of the preceding sentence if the Collateral
in the possession, custody or control of the Agent is accorded treatment
substantially equal to that which the Agent accords similar property for its own
account, it

                                       13


being understood that neither the Agent nor the Lenders shall have any
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relating to any
Collateral, whether or not the Agent or any Lender has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against any Person with respect to any Collateral.

                        SECTION 11      REMEDIES

      11.01. Rights Upon Event of Default. Upon the occurrence and during the
continuance of an Event of Default, each Grantor shall be in default hereunder
and the Agent for the benefit of the Secured Party shall have, in any
jurisdiction where enforcement is sought, in addition to all other rights and
remedies that the Agent on behalf of the Secured Party may have under this
Agreement and under applicable laws or in equity, all rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any such
jurisdiction in effect at that time, and in addition the following rights and
remedies, all of which may be exercised with or without further notice to any
Grantor except such notice as may be specifically required by applicable law:
(a) to foreclose the Liens and security interests created hereunder or under any
other Loan Document by any available judicial procedure or without judicial
process; (b) to enter any premises where any Collateral may be located for the
purpose of securing, protecting, inventorying, appraising, inspecting,
repairing, preserving, storing, preparing, processing, taking possession of or
removing the same; (c) to sell, assign, lease or otherwise dispose of any
Collateral or any part thereof, either at public or private sale or at any
broker's board, in lot or in bulk, for cash, on credit or otherwise, with or
without representations or warranties and upon such terms as shall be
commercially reasonable; (d) to notify obligors on the Collateral that the
Collateral has been assigned to the Agent for the benefit of the Secured Party
and that all payments thereon, or performance with respect thereto, are to be
made directly and exclusively to the Agent for the account of the Secured Party;
(e) to collect by legal proceedings or otherwise all dividends, distributions,
interest, principal or other sums now or hereafter payable upon or on account of
the Collateral; (f) to enter into any extension, reorganization, disposition,
merger or consolidation agreement, or any other agreement relating to or
affecting the Collateral, and in connection therewith the Agent may deposit or
surrender control of the Collateral and/or accept other property in exchange for
the Collateral as the Agent reasonably deems appropriate and is commercially
reasonable; (g) to settle, compromise or release, on terms acceptable to the
Agent, in whole or in part, any amounts owing on the Collateral and/or any
disputes with respect thereto; (h) to extend the time of payment, make
allowances and adjustments and issue credits in connection with the Collateral
in the name of the Agent for the benefit of the Secured Party or in the name of
any Grantor; (i) to enforce payment and prosecute any action or proceeding with
respect to any or all of the Collateral and take or bring, in the name of the
Secured Party or in the name of any Grantor, any and all steps, actions, suits
or proceedings deemed necessary or reasonably desirable by the Agent to effect
collection of or to realize upon the Collateral, including any judicial or
nonjudicial foreclosure thereof or thereon, and each Grantor specifically
consents to any nonjudicial foreclosure of any or all of the Collateral or any
other action taken by the Secured Party which may release any obligor from
personal liability on any of the Collateral, and each Grantor waives, to the
extent permitted by applicable law, any right to receive notice of any public or
private judicial or nonjudicial sale or foreclosure of any security or any of
the Collateral, and any money or other property received by the Agent in
exchange for or on account of the Collateral, whether representing collections
or proceeds of Collateral, and whether resulting from voluntary payments or
foreclosure proceedings or other legal action taken by the Agent or any Grantor
may be applied by the Agent, without notice to any Grantor, to the Obligations
in such order and manner as the Agent in its sole discretion shall determine;
(j) to insure, protect and preserve the Collateral; (k) to exercise all rights,
remedies, powers or privileges provided under any of the Loan Documents; (l) to
give notice of sole control or any other instruction under any Deposit Account
Control Agreement or any other control agreement with any securities
intermediary and take any action therein with respect to such Collateral; and
(m) to remove, from any premises where the same may be located, the Collateral
and any

                                       14


and all documents, instruments, files and records, and any receptacles and
cabinets containing the same, relating to the Collateral, and the Agent may, at
the cost and expense of any Grantor, use such of its supplies, equipment,
facilities and space at its places of business as may be necessary or
appropriate to properly administer, process, store, control, prepare for sale or
disposition and/or sell or dispose of the Collateral or to properly administer
and control the handling of collections and realizations thereon, and the Agent
shall be deemed to have a rent-free tenancy of any premises of such Grantor for
such purposes and for such periods of time as reasonably required by the Agent.
Each Grantor will, at the Agent's request, assemble the Collateral and make it
available to the Agent at places which the Agent may designate, whether at the
premises of such Grantor or elsewhere, and will make available to the Agent,
free of cost, all premises, equipment and facilities of such Grantor for the
purpose of the Agent's taking possession of the Collateral or storing the same
or removing or putting the Collateral in salable form or selling or disposing of
the same.

      11.02. Possession by Agent. Upon the occurrence and during the continuance
of an Event of Default, the Agent also shall have the right, without notice or
demand, either in person, by agent or by a receiver to be appointed by a court
in accordance with the provisions of applicable law (and each Grantor hereby
expressly consents, to the fullest extent permitted by applicable law, upon the
occurrence and during the continuance of an Event of Default to the appointment
of such a receiver), and, to the extent permitted by applicable law, without
regard to the adequacy of any security for the Obligations, to take possession
of the Collateral or any part thereof and to collect and receive the rents,
issues, profits, income and proceeds thereof. The taking possession of the
Collateral by the Agent shall not cure or waive any Event of Default or notice
thereof or invalidate any act done pursuant to such notice. The rights, remedies
and powers of any receiver appointed by a court shall be as ordered by said
court.

      11.03. Sale of Collateral. Any public or private sale or other disposition
of the Collateral may be held at any office of Agent, or at any Grantor's place
of business, or at any other place permitted by applicable law, and without the
necessity of the Collateral's being within the view of prospective purchasers.
The Agent may direct the order and manner of sale of the Collateral, or portions
thereof, as it in its sole and absolute discretion may determine provided such
sale is commercially reasonable, and each Grantor expressly waives, to the
extent permitted by applicable law, any right to direct the order and manner of
sale of any Collateral. The Agent or any Person acting on the Agent's behalf may
bid and purchase at any such sale or other disposition. In addition to the other
rights of the Agent and the Lenders hereunder, each Grantor hereby grants to the
Agent and the Lenders a license or other right to use, without charge, but only
after the occurrence and during the continuance of an Event of Default, each
Grantor's labels, copyrights, patents, rights of use of any name, trade names,
trademarks and advertising matter, or any property of a similar nature, in
advertising for sale and selling any Collateral.

      11.04. Notice of Sale. Unless the Collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Agent will give each Grantor reasonable notice of the time and place
of any public sale thereof or of the time on or after which any private sale
thereof is to be made. The requirement of reasonable notice conclusively shall
be met if such notice is mailed, certified mail, postage prepaid, to each
Grantor at its address set forth on the signature pages hereto or delivered or
otherwise sent to each Grantor, at least ten (10) Business Days before the date
of the sale. Each Grantor expressly waives, to the fullest extent permitted by
applicable law, any right to receive notice of any public or private sale of any
Collateral or other security for the Obligations except as expressly provided
for in this paragraph. The Agent shall not be obligated to make any sale of the
Collateral if it shall determine not to do so regardless of the fact that notice
of sale of the Collateral may have been given. The Agent may, without notice or
publication, except as required by applicable law, adjourn the sale from time to
time by announcement at the time and place fixed for sale; and such sale may,
without further notice (except as required by applicable law), be made at the
time and place to which the same was so adjourned.

                                       15


      11.05. Title of Purchasers. Upon consummation of any sale of Collateral
hereunder, the Agent on behalf of the Secured Party shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the
Collateral so sold absolutely free from any claim or right upon the part of any
Grantor or any other Person claiming through any Grantor, and each Grantor
hereby waives (to the extent permitted by applicable laws) all rights of
redemption, stay and appraisal which it now has or may at any time in the future
have under any rule of law or statute now existing or hereafter enacted. If the
sale of all or any part of the Collateral is made on credit or for future
delivery, the Agent shall not be required to apply any portion of the sale price
to the Obligations until such amount actually is received by the Agent, and any
Collateral so sold may be retained by the Agent until the sale price is paid in
full by the purchaser or purchasers thereof. The Secured Party shall not incur
any liability in case any such purchaser or purchasers shall fail to pay for the
Collateral so sold, and, in case of any such failure, the Collateral may be sold
again.

      11.06. Disposition of Proceeds of Sale. The proceeds resulting from the
collection, liquidation, sale or other disposition of the Collateral shall be
applied, shall be applied, ratably, subject to the provisions of the Credit
Agreement and the other Loan Documents, first, to pay any fees, indemnities, or
expense reimbursements including amounts then due to the Agent from the Borrower
(other than in connection with Banking Services or Specified Hedging
Agreements), second, to pay any fees or expense reimbursements then due to the
Lenders from the Borrower (other than in connection with Banking Services or
Specified Hedging Agreements), third, to pay interest due in respect of the
Protective Advances and Overadvances, fourth, to pay the principal of the
Protective Advances, fifth, to pay interest due in respect of the Loans (other
than Protective Advances and Overadvances), sixth, to pay or prepay principal of
the Loans (other than Protective Advances and Overadvances) and unpaid
reimbursement obligations in respect of Letters of Credit, seventh, to pay an
amount to the Agent equal to one hundred five percent (105%) of the aggregate
undrawn face amount of all outstanding Letters of Credit, to be held as cash
collateral for such Obligations, eighth, to payment of any amounts owing with
respect to Banking Services Obligations and Specified Hedging Agreeements,
ninth, to the payment of any other Obligation due to the Agent or any Lender by
the Borrower and, tenth, any surplus remaining to be paid over to the Borrower.

      11.07. Certain Waivers. To the extent permitted by applicable law, each
Grantor waives all claims, damages and demands against the Agent and the Lenders
arising out of the repossession, retention or sale of the Collateral, or any
part or parts thereof, except to the extent any such claims, damages and awards
arise out of the gross negligence or willful misconduct of the Agent or the
Lenders.

      11.08. Remedies Cumulative. The rights and remedies provided under this
Agreement are cumulative and may be exercised singly or concurrently, and are
not exclusive of any other rights and remedies provided by law or equity.

      11.09. Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to this Section 11 are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Obligations, each Grantor shall remain liable for any deficiency.

                        SECTION 12      MISCELLANEOUS.

      12.01. Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints the Agent as such Grantor's attorney-in-fact, effective upon and during
the continuance of an Event of Default, with full authority in the place and
stead of such Grantor, and in the name of such Grantor, or otherwise, from time
to time, in the Agent's sole and absolute discretion to do any of the following
acts or things: (a) to do all acts and things and to execute all documents
necessary or reasonably desirable to perfect and continue perfected the security
interests created by this Agreement and to preserve, maintain and protect the

                                       16


Collateral; (b) to do any and every act which such Grantor is obligated to do
under this Agreement; (c) to prepare, sign, file and record, in such Grantor's
name, any financing statement covering the Collateral; and (d) to endorse and
transfer the Collateral upon foreclosure by the Agent; provided, however, that
the Agent shall be under no obligation whatsoever to take any of the foregoing
actions, and neither the Agent nor the Lenders shall have any liability or
responsibility for any act or omission (other than the Agent's or the Lenders'
own gross negligence or willful misconduct) taken with respect thereto.

      12.02. Costs and Expenses. Each Grantor agrees to pay to the Agent all
reasonable costs and out-of-pocket expenses (including reasonable attorneys'
fees and disbursements) (a) of the Agent and the Lenders incurred thereby in the
enforcement or attempted enforcement of this Agreement, whether or not an action
is filed in connection therewith, and (b) of the Agent incurred thereby in
connection with any waiver or amendment of any term or provision hereof. All
reasonable advances, charges, costs and expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by the Agent and/or the
Lenders in exercising any right, privilege, power or remedy conferred by this
Agreement (including the right to perform any Obligation of any Grantor), or in
the enforcement or attempted enforcement thereof, shall be secured hereby and
shall become a part of the Obligations and shall be due and payable to the Agent
and/or the Lenders, as applicable, by each Grantor on demand therefor.

      12.03. Transfers and Other Liens. Each Grantor agrees that, except as
specifically permitted under the Credit Agreement or any other Loan Document, it
will not (i) sell, assign, exchange, transfer or otherwise dispose of, or
contract to sell, assign, exchange, transfer or otherwise dispose of, or grant
any option with respect to, any of the Collateral, or (ii) create or permit to
exist any Lien upon or with respect to any of the Collateral, except for Liens
in favor of the Agent for the benefit of the Secured Party. To the extent any
Collateral permitted to be sold or otherwise disposed of is sold or disposed of,
such sale or disposition shall be for fair value.

      12.04. Understandings with Respect to Waivers and Consents. Each Grantor
warrants and agrees that each of the waivers and consents set forth herein are
made with full knowledge of its significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Grantor
otherwise may have against the Secured Party or others, or against any
Collateral. If any of the waivers or consents herein are determined to be
unenforceable under applicable law, such waivers and consents shall be effective
to the maximum extent permitted by law.

      12.05. Indemnity. Each Grantor agrees to indemnify the Agent and the
Lenders from and against any and all claims, losses and liabilities growing out
of or resulting from this Agreement (including enforcement of this Agreement),
except to the extent such claims, losses or liabilities result from the Agent's
or the Lenders' gross negligence or willful misconduct.

      12.06. Amendments, Etc. No amendment or waiver of any provision of this
Agreement nor consent to any departure by any Grantor herefrom (other than
supplements to the Schedules hereto in accordance with the terms of this
Agreement) shall in any event be effective unless the same shall be in writing
and made in accordance with Section 9.1 of the Credit Agreement, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

      12.07. Notices. All notices and other communications provided for
hereunder shall be given in the manner, and to the respective addresses, set
forth in Section 9.2 of the Credit Agreement.

      12.08. Continuing Security Interest; Successors and Assigns. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until indefeasible payment in full in
cash of the Obligations and the termination or expiration of the Loan
Commitments and

                                       17


the Letters of Credit, (b) be binding upon each Grantor, its successors and
assigns and (c) inure, together with the rights and remedies of the Lenders
hereunder, to the benefit of the Agent, any successor Agent and the Lenders,
subject to the terms and conditions of the Credit Agreement. Subject to the
terms of the Credit Agreement, any Lender may assign or otherwise transfer any
Loans, Loan Commitments, participations in Letters of Credit, or any rights in
Collateral held by it to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Agent or
Lender herein or otherwise. Nothing set forth herein or in any other Loan
Document is intended or shall be construed to give to any other party any right,
remedy or claim under, to or in respect of this Agreement or any other Loan
Document or any Collateral. Each Grantor's successors and assigns shall include,
without limitation, a receiver, trustee or debtor-in-possession thereof or
therefor, provided that, none of the rights or obligations of any Grantor
hereunder may be assigned or otherwise transferred without the prior written
consent of the Lenders.

      12.09. Release of Grantor. (a) This Agreement and all obligations of each
Grantor hereunder and all security interests granted hereby shall be released
and terminated when all Obligations have been indefeasibly paid in full in cash
and when all Loan Commitments and all Letters of Credit have expired or have
otherwise been terminated. Upon such release and termination of all Obligations
and such expiration or termination of all Loan Commitments and all Letters of
Credit and the security interest hereunder, all rights in and to the Collateral
pledged or assigned by any Grantor hereunder shall automatically revert to the
relevant Grantor, and the Agent and the Lenders shall return any pledged
Collateral in their possession to the relevant Grantor, or to the Person or
Persons legally entitled thereto, and shall endorse, execute, deliver, record
and file all instruments and documents, and do all other acts and things,
reasonably required for the return of the Collateral to the relevant Grantor, or
to the Person or Persons legally entitled thereto, and to evidence or document
the release of the interests of the Secured Party arising under this Agreement,
all as reasonably requested by, and at the sole expense of, the requesting
Grantor.

            (b) The Agent agrees that if an Asset Disposition permitted under
the Credit Agreement occurs, the Agent shall release the Collateral that is the
subject of such Asset Disposition to the relevant Grantor free and clear of the
Lien and security interest under this Agreement, provided that so long as any
Obligations remain outstanding under the Credit Agreement or any Loan Commitment
or Letter of Credit remains outstanding, the Agent shall have no obligation to
make such release until arrangements reasonably satisfactory to it have been
made for delivery to it of any Net Proceeds of any Asset Disposition required to
be used to prepay the Loans pursuant to Section 2.4 of the Credit Agreement.

      12.10. Headings. The title of and section headings in this Security
Agreement are for convenience of reference only, and shall not govern the
interpretation of any of the terms and provisions of this Security Agreement.

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

      12.12. Limitation by Law; Severability of Provisions. All rights, remedies
and powers provided in this Security Agreement may be exercised only to the
extent that the exercise thereof does not violate any applicable provision of
law, and all the provisions of this Security Agreement are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they shall not render this
Security Agreement invalid, unenforceable or not entitled to be recorded or
registered, in whole or in part. Any provision in this Security Agreement that
is

                                       18


held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as
to that jurisdiction, be inoperative, unenforceable, or invalid without
affecting the remaining provisions in that jurisdiction or the operation,
enforceability, or validity of that provision in any other jurisdiction, and to
this end the provisions of this Security Agreement are declared to be severable.

      12.13. Reinstatement. This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Grantor for liquidation or reorganization, should any Grantor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced in
amount, or must otherwise be restored or returned by any obligee of the Secured
Obligations, whether as a "voidable preference," "fraudulent conveyance," or
otherwise, all as though such payment or performance had not been made. In the
event that any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.

      12.14. Acknowledgements. Each Grantor hereby acknowledges that:

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

      (b) neither the Agent nor any Lender has any fiduciary relationship with
or duty to any Grantor arising out of or in connection with this Agreement or
any of the other Loan Documents, and the relationship between the Grantors, on
the one hand, and the Agent and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

      (c) no joint venture is created hereby or by the other Loan Documents or
otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Grantors and the Lenders.

      12.15. Additional Grantors. Each Subsidiary of Quiksilver that is required
to become a party to this Agreement pursuant to the Credit Agreement shall
become a Grantor for all purposes of this Agreement upon execution and delivery
by such Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.

      12.16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

      12.17. WAIVER OF JURY TRIAL. EACH GRANTOR, THE AGENT AND EACH LENDER
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY
OTHER LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

      12.18. Submission To Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:

                                       19


      (a) submits for itself and its property in any legal action or proceeding
relating to this Agreement and the other Loan Documents to which it is a party,
or for recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

      (b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

      (c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such Grantor at the
address referred to in Section 9.2 of the Credit Agreement for the Borrower or
at such other address of which the Agent shall have been notified pursuant
thereto;

      (d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction; and

      (e) waives, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damages.

      12.19. Counterparts. This Security Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Security Agreement by signing any
such counterpart.

      12.20. Copies of Certificates Etc. Whenever any Grantor is required to
deliver notices, certificates, opinions, statements or other information
hereunder to the Agent for delivery to any Lender, it shall do so in such number
of copies as the Agent shall reasonably specify.

      12.21. Filing of Financing Statements. Pursuant to any applicable law,
each Grantor authorizes the Agent to file or record financing statements and
other filing or recording documents or instruments with respect to the
Collateral without the signature of such Grantor in such form and in such
offices as the Agent determines appropriate to perfect the security interests of
the Agent under this Agreement. Each Grantor authorizes the Agent to use the
collateral descriptions "all personal property (excluding Intellectual Property
Rights)" or "All right, title and interest in the assets and personal property
of the Debtor now owned or hereinafter acquired (excluding Intellectual Property
Rights)" in any such financing statements. Each Grantor hereby ratifies and
authorizes the filing by the Agent of any financing statement with respect to
the Collateral made prior to the date hereof.

                                       20


            IN WITNESS WHEREOF, each Grantor has executed this Agreement by its
duly authorized representative as of the date first written above.

                                   QUIKSILVER, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   QUIKSILVER AMERICAS, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   QS RETAIL, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   QS WHOLESALE, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   DC SHOES, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________



                                   HAWK DESIGNS, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   MERVIN MANUFACTURING, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                   FIDRA, INC.

                                   By: _________________________________________
                                       Name: ___________________________________
                                       Title: __________________________________


                                                                       EXHIBIT J

                                FORM OF GUARANTEE

            This Guarantee, dated as of April 12, 2005, is made by Quiksilver,
Inc. ("Quiksilver") and each of its Domestic Material Subsidiaries (other than
the Borrower (as defined below)) (collectively, the "Guarantors"), in favor of
the financial institutions (the "Lenders") from time to time party to the Credit
Agreement referred to below and JPMORGAN CHASE BANK, N.A., as administrative
agent (the "Agent") for the Lenders.

                                    Recitals

            A. Quiksilver, Quiksilver Americas, Inc. (the "Borrower"), the
Lenders and the Agent, have entered into a Credit Agreement dated as of April
12, 2005 (such agreement, as it may be amended, restated or otherwise modified
from time to time, herein called the "Credit Agreement"). Terms defined in the
Credit Agreement and not otherwise defined herein have the same respective
meanings when used herein, and the rules of interpretation set forth in Section
1.2 of the Credit Agreement are incorporated herein by reference.

            B. Each Guarantor has a business relationship with the Borrower that
causes it to have a substantial economic interest in the continuing health of
the business, condition (financial and otherwise), operations, performance,
properties and prospects of the Borrower. It is a condition precedent to the
extension of credit by the Lenders under the Credit Agreement that each
Guarantor execute and deliver this Guarantee. Accordingly, each Guarantor hereby
agrees as set forth below.

      Section 1. Guarantee. (a) Each Guarantor hereby absolutely and
unconditionally guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all Obligations now or hereafter
existing under the Credit Agreement and the other Loan Documents, including any
extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal (including reimbursement for amounts drawn under Letters
of Credit), interest, fees, expenses, indemnification or otherwise (the
"Guaranteed Obligations").

      (b) Each Guarantor agrees to pay, in addition, any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agent or the
Lenders in enforcing any rights under this Guarantee.

      (c) Without limiting the generality of the foregoing, this Guarantee
guarantees, to the extent provided herein, the payment of all amounts that
constitute part of the Guaranteed Obligations and would be owed by the Borrower
to the Agent or any of the Lenders under any Loan Document but for the fact that
they are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.

      (d) The obligations of each Guarantor under this Guarantee is independent
of the Guaranteed Obligations, and a separate action may be brought and
prosecuted against any Guarantor to enforce this Guarantee up to the full amount
of the Guaranteed Obligations, irrespective of whether any action is brought
against the Borrower or any other Guarantor or whether the Borrower or any other
Guarantor is joined in any such action or actions, and without proceeding
against any other Guarantor, against any security for the Guaranteed Obligations
or under any other guarantee covering all or any portion of the Guaranteed
Obligations.

      (e) It is the intention of each Guarantor, the Lenders and the Agent that
the amount of the Guaranteed Obligations guaranteed by each Guarantor shall be
in, but not in excess of, the maximum



amount permitted by fraudulent conveyance, fraudulent transfer and similar
Requirements of Law applicable to such Guarantor. Accordingly, notwithstanding
anything to the contrary contained in this Guarantee or in any other agreement
or instrument executed in connection with the payment of any of the Guaranteed
Obligations, the amount of the Guaranteed Obligations guaranteed by each
Guarantor under this Guarantee shall be limited to an aggregate amount equal to
the largest amount that would not render such Guarantor's obligations hereunder
subject to avoidance under the United States Bankruptcy Code or any other
applicable Requirement of Law.

      Section 2. Guarantee Absolute. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the
Credit Agreement and the other Loan Documents, regardless of any Requirement of
Law now or hereafter in effect in any jurisdiction affecting any of such terms
or the rights of the Agent or any of the Lenders with respect thereto. The
liability of each Guarantor under this Guarantee shall be absolute and
unconditional, irrespective of the following:

      (a) any lack of validity or enforceability of, or any release or discharge
of the Borrower from liability under, the Credit Agreement or any other Loan
Document;

      (b) any change in the time, manner or place of payment of, or in any other
term of, any or all of the Guaranteed Obligations; or any other amendment or
waiver of, or any consent to departure from, the Credit Agreement or any other
Loan Document, including any increase in the Guaranteed Obligations resulting
from the extension of additional credit to the Borrower;

      (c) any taking, subordination, compromise, exchange, release,
nonperfection or liquidation of any collateral, or any release, amendment or
waiver of, or consent to departure from, any other guarantee, for any or all of
the Guaranteed Obligations;

      (d) any exercise or nonexercise by the Agent or any Lender of any right or
privilege under this Guarantee or any of the other Loan Documents;

      (e) any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to any Guarantor or
the Borrower or any action taken with respect to this Guarantee by any trustee,
receiver or court in any such proceeding, whether or not any Guarantor has had
notice or knowledge of any of the foregoing;

      (f) any assignment or other transfer, in whole or in part, of this
Guarantee or any of the other Loan Documents;

      (g) any acceptance of partial performance of the Guaranteed Obligations;

      (h) any consent to the transfer of, or any bid or purchase at sale of, any
collateral for the Guaranteed Obligations;

      (i) any manner of application of collateral, or proceeds thereof, to any
or all of the Guaranteed Obligations; or any manner of sale or other disposition
of any collateral or any other assets of the Borrower;

      (j) any change, restructuring or termination of the corporate structure or
existence of the Borrower; or

      (k) any other circumstance (including any statute of limitations) that
might otherwise constitute a defense available to, or a discharge of, the
Borrower or any Guarantor of the Guaranteed Obligations.

                                                                               2



This Guarantee shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Agent, any Lender or any other Person upon
the insolvency, bankruptcy or reorganization of the Borrower, any other
Guarantor or otherwise, all as though such payment had not been made.

      Section 3. Waivers. (a) Each Guarantor irrevocably waives the following,
to the extent permitted by applicable law:

            (i)    promptness, diligence, notice of acceptance, demand of
                   payment, presentation and any other notice with respect to
                   any of the Guaranteed Obligations or this Guarantee;

            (ii)   any requirement that the Agent, any Lender or any other
                   Person protect, secure, perfect or insure any Lien or any
                   property subject thereto or exhaust any right or assert any
                   remedy or take any action against the Borrower, any other
                   Person or any collateral;

            (iii)  any duty on the part of the Agent or any Lender to disclose
                   to the Guarantor any matter, fact or thing relating to the
                   business, operation or condition of the Borrower or its
                   assets now known or hereafter known by the Agent or such
                   Lender;

            (iv)   any default, failure or delay, willful or otherwise, in the
                   performance of the Guaranteed Obligations by any other
                   Guarantor;

            (v)    any defense based upon any legal disability or other defense
                   of the Borrower, or by reason of the cessation or limitation
                   of the liability of the Borrower from any cause (other than
                   full payment of all Guaranteed Obligations), including, but
                   not limited to, failure of consideration, breach of warranty,
                   statute of frauds, statute of limitations, accord and
                   satisfaction, and usury;

            (vi)   any defense based upon any legal disability or other defense
                   of any other Guarantor or other Person;

            (vii)  any defense based upon any statute or rule of law which
                   provides that the obligation of a surety must be neither
                   larger in amount nor in any other respects more burdensome
                   than that of a principal;

            (viii) any defense based on legal prohibition of the Agent's or any
                   Lender's acceleration of the maturity of the Guaranteed
                   Obligations during the occurrence of an Event of Default or
                   any other legal prohibition on enforcement of any other right
                   or remedy of the Lender with respect to the Guaranteed
                   Obligations and the security therefor; and

            (ix)   the benefits of any statute of limitation affecting the
                   liability of the Guarantor hereunder or the enforcement
                   hereof.

      (b) Without limiting the generality of any other provision of this
Guarantee, each Guarantor waives all rights and defenses arising out of an
election of remedies by the Agent or any Lender.

      Section 4. Right of Contribution. Each Guarantor other than Quiksilver
(each, a "Subsidiary Guarantor") hereby agrees that to the extent that a
Subsidiary Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Subsidiary Guarantor shall be entitled to seek and
receive contribution from and against any other Subsidiary Guarantor hereunder
which has not paid

                                                                               3



its proportionate share of such payment. Each Subsidiary Guarantor's right of
contribution shall be subject to the terms and conditions of Section 5. The
provisions of this Section 4 shall in no respect limit the obligations and
liabilities of any Subsidiary Guarantor to the Agent and the Lenders, and each
Subsidiary Guarantor shall remain liable to the Agent and the Lenders for the
full amount guaranteed by such Subsidiary Guarantor hereunder.

      Section 5. No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Agent or any Lender, no Guarantor shall be entitled to be subrogated to any
of the rights of the Agent or any Lender against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held by the
Agent or any Lender for the payment of the Obligations, nor shall any Guarantor
seek or be entitled to seek any contribution or reimbursement from the Borrower
or any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Agent and the Lenders by the Borrower on account
of the Obligations are paid in full, no Letter of Credit shall be outstanding
and the Revolving Loan Commitments are terminated. If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Obligations shall not have been paid in full, such amount shall be held by
such Guarantor in trust for the Agent and the Lenders, segregated from other
funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be
turned over to the Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Agent, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as set forth in Section
7.03 of the Security Agreement.

      Section 6. Amendments, etc. with respect to the Obligations. Each
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Obligations made
by the Agent or any Lender may be rescinded by the Agent or such Lender and any
of the Obligations continued, and the Obligations, or the liability of any other
Person upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Agent or any Lender, and the
Credit Agreement and the other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Agent (or the Majority Lenders,
Super-Majority Lenders or all Lenders, as the case may be) may deem advisable
from time to time, and any collateral security, guarantee or right of offset at
any time held by the Agent or any Lender for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released. Neither the Agent nor any
Lender shall have any obligation to protect, secure, perfect or insure any Lien
at any time held by it as security for the Obligations or for the guarantee
contained herein or any property subject thereto.

      Section 7. Solvency. Quiksilver is not, on a consolidated basis with the
Borrower and the other Guarantors, Insolvent (as defined below) as of the date
hereof, and the execution and delivery of this Guarantee will not (a) render
Quiksilver, on a consolidated basis, insolvent under GAAP nor render Quiksilver,
on a consolidated basis, Insolvent (as defined below), (b) leave Quiksilver, on
a consolidated basis, with remaining assets that constitute unreasonably small
capital given the nature of Quiksilver's business or (c) result in the
incurrence of Debts (as defined below) by Quiksilver, on a consolidated basis,
beyond the ability of Quiksilver, on a consolidated basis, to pay them when and
as they mature. For the purposes of this section, (i) "Insolvent" means that the
present fair salable value of assets is less than the amount that will be
required to pay the probable liability on existing Debts as they become absolute
and matured, and (ii) "Debts" means any legal liability for indebtedness,
whether matured or unmatured, liquidated or unliquidated, absolute, fixed or
contingent.

                                                                               4



      Section 8. Amendments, Etc. No amendment or waiver of any provision of
this Guarantee or consent to any departure by any Guarantor therefrom shall in
any event be effective unless the same is in writing and signed by the Agent and
the Majority Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders, (a) limit the liability of any Guarantor
hereunder, (b) postpone any date fixed for payment hereunder or (c) change the
number of Lenders required to take any action hereunder.

      Section 9. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including communication by
telecopier) and shall be mailed, telecopied or delivered to each Guarantor or
the Agent, as the case may be, at the address therefor (or, in the case of the
Guarantors, the address for Quiksilver) set forth in the Credit Agreement or at
such other address as may be designated by any such party in a written notice to
the other parties complying with the terms of this section. All such notices and
other communications shall be effective as provided in the Credit Agreement.
Delivery by telecopier of an executed counterpart of any amendment or waiver of,
or consent to departure from, any provision of this Guarantee shall be effective
as delivery of an originally executed counterpart thereof.

      Section 10. No Waiver; Remedies. No failure on the part of the Agent or
any Lender to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, and no single or partial exercise of any right
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

      Section 11. Right of Setoff. Upon the occurrence and during the
continuation of any Event of Default, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender to or for the credit or the account of any Guarantor against any and all
of the obligations of such Guarantor now or hereafter existing under this
Guarantee, irrespective of whether such Lender has made any demand under this
Guarantee and although such obligations may be contingent and unmatured. Each
Lender agrees to notify the Guarantor promptly 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. The
rights of each Lender under this section are in addition to other rights and
remedies (including other rights of setoff) that such Lender may have.

      Section 12. Continuing Guarantee. This Guarantee is a continuing guarantee
and shall (a) remain in full force and effect until payment in full of the
Guaranteed Obligations and all other amounts payable under this Guarantee and
expiration or termination of the Loan Commitments and all Letters of Credit, (b)
be binding upon each Guarantor and their successors and assigns and (c) inure to
the benefit of and be enforceable by the Agent, the Lenders and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Lender may assign or otherwise transfer any or all of
its rights and obligations under the Loan Documents to any other Person, and
such other Person shall thereupon become vested with all of the rights in
respect thereof granted to such Lender herein or otherwise, subject, however, to
the provisions of Article 8 (concerning the Agent) and Section 9.6 of the Credit
Agreement.

      Section 13. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THE STATE OF NEW YORK.

                                                                               5



      Section 14. Headings. The section and subsection headings used herein have
been inserted for convenience of reference only and do not constitute matters to
be considered in interpreting this Guarantee.

      Section 15. Execution in Counterparts. This Guarantee may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery by telecopier of an executed counterpart of a signature page to this
Guarantee shall be effective as delivery of an originally executed counterpart
of this Guarantee.

      Section 16. WAIVER OF JURY TRIAL. IN CONNECTION WITH ANY ACTION OR
PROCEEDING, WHETHER BROUGHT IN STATE OR FEDERAL COURT, EACH GUARANTOR, HEREBY
EXPRESSLY, INTENTIONALLY AND IRREVOCABLY WAIVES ANY RIGHT IT MAY OTHERWISE HAVE
TO TRIAL BY JURY OF ANY CLAIM.

                                                                               6



      IN WITNESS WHEREOF, the undersigned have executed this Guarantee as of the
date first written above.

                                       QUIKSILVER, INC.

                                       By: __________________________
                                           Name:
                                           Title:

                                       QS RETAIL, INC.

                                       By: __________________________
                                           Name:
                                           Title:

                                       DC SHOES, INC.

                                       By: __________________________
                                           Name:
                                           Title:

                                       QS WHOLESALE, INC.

                                       By: __________________________
                                           Name:
                                           Title:

                                       FIDRA, INC.

                                       By: __________________________
                                           Name:
                                           Title:

                                                                               7



                                       HAWK DESIGNS, INC.

                                       By: __________________________
                                           Name:
                                           Title:

                                       MERVIN MANUFACTURING, INC.

                                       By: __________________________
                                           Name:
                                           Title:

                                                                               8



                                                                       EXHIBIT L

                 OPINIONS REQUESTED FROM COUNSEL TO THE BORROWER

            1. Each of the Loan Parties (a) has been duly incorporated and is
validly existing and in good standing as a corporation under the laws of the
jurisdiction in which it is organized, and has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted (b)
has the corporate power and authority to execute and deliver each Loan Document
to which it is a party and to borrow (in the case of the Borrower), perform its
obligations thereunder and grant the security interests to be granted by it
pursuant to the Security Documents to which it is a party and (c) has duly
authorized, executed and delivered each Loan Document to which it is a party.

            2. The execution and delivery by each Loan Party of the Loan
Documents to which it is a party, its borrowings in accordance with the terms of
the Credit Agreement (in the case of the Borrower), performance of its
obligations thereunder and granting of the security interests to be granted by
it pursuant to the Security Documents to which it is a party (a) will not result
in any violation of (1) the Organic Documents of such Loan Party, (2) assuming
that proceeds of borrowings will be used in accordance with the terms of the
Credit Agreement, any federal, California or New York statute or the Delaware
General Corporation Law or any rule or regulation issued pursuant to any
federal, California or New York statute or the Delaware General Corporation Law
or any order known to us issued by any court or governmental agency or body and
(b) will not breach or result in a default under, or result in the creation of
any lien upon or security interest in the Loan Parties' properties pursuant to,
the terms of any indenture, agreement, contract or undertaking, known to us of
any Loan Party.

            3. No consent, approval, authorization, order, filing, registration
or qualification of or with any federal, California or New York governmental
agency or body or any Delaware governmental agency or body acting pursuant to
the Delaware General Corporation Law is required for the execution and delivery
by any Loan Party of the Loan Documents to which it is a party, the borrowings
by the Borrower in accordance with the terms of the Loan Documents or the
performance by the Loan Parties of their respective payment obligations under
the Loan Documents or the granting of any security interests under the Security
Documents , except filings required for the perfection of security interests
granted pursuant to the Security Documents.

            4. The execution and delivery by each Loan Party of the Loan
Documents to which it is a party and the performance by such Loan Party of its
obligations thereunder will not require any consent of such Loan Party's
shareholders or members (other than any such consent as has already been given
and remains in full force and effect).

            5. Assuming that each Loan Document is a valid and legally binding
obligation of each of the Lenders parties thereto, such Loan Document
constitutes, and each of the Notes delivered to the Lenders after the date
hereof, assuming the due execution and delivery by the Borrower, will
constitute, the valid and legally binding obligation of each Loan Party which is
a party thereto, enforceable against such Loan Party in accordance with its
terms.

            6. There is no litigation, arbitration, governmental investigation,
proceeding or inquiry pending or, to the best of our knowledge after due
inquiry, threatened against any Loan Party which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.



            7. No Loan Party is an "investment company" within the meaning of
and subject to regulation under the Investment Company Act of 1940, as amended,
or a "holding company", or a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

            8. Assuming that the Borrower will comply the provisions of the
Credit Agreement relating to the use of proceeds, the making of the Loans under
the Credit Agreement will not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

            9. The provisions of the Security Documents create in favor of the
Agent a security interest in all right, title and interest of each Loan Party in
those items and types of collateral described in the Security Documents in which
a security interest may be created under Article 9 of the UCC as in effect on
the date hereof in the State of New York. The Financing statements on Form UCC-1
listed on Schedule II hereto have been duly authorized by each Loan Party and
have been duly filed in each filing office indicated in Schedule II hereto under
the UCC in effect in each state in which said filing offices are located. The
description of the collateral set forth in said financing statements is
sufficient to perfect a security interest in the items and types of collateral
described therein in which a security interest may be perfected by the filing of
a financing statement under the UCC as in effect in such states. Such filings
are in proper form for filing and are sufficient to perfect the security
interest created by the Collateral Documents in all right, title and interest of
the Borrower in those items and types of collateral described in the Security
Documents in which a security interest may be perfected by the filing of a
financing statement under the UCC in such states.

            10. The UCC Search Reports listed on Schedule II set forth the
proper filing offices and the proper debtors necessary to identify those Persons
which, as of the effective Dates for such UCC Search Reports set forth on
Schedule III, have on file financing statements in the States of New York and
California against the Loan Parties covering the Collateral in which a security
interest is perfected by filing a financing statement under the New York UCC or
the California UCC(the "Filing Collateral").

            11. The Security Documents create in favor of the Agent for the
benefit of the Lenders a security interest under the New York UCC in the
investment property identified on Schedule [ ] to the Security Agreement (the
"Pledged Securities").

            12. The Agent will have a perfected security interest in the Pledged
Securities for the benefit of the Lenders under the New York UCC upon delivery
to the Agent for the benefit of the Lenders in the State of New York of the
certificates representing the Pledged Securities in registered form, indorsed in
blank by an effective indorsement or accompanied by undated indorsements with
respect thereto duly indorsed in blank by an effective indorsement. Assuming the
Agent and each of the Lenders does not have notice of any adverse claim to the
Pledged Securities, the Agent will acquire the security interest in the Pledged
Securities for the benefit of the Lenders free of any adverse claim.

            13. All of the shares of Capital Stock described on Schedule [ ] to
the Security Agreement (except for directors' qualifying shares) are owned of
record by Quiksilver or a Subsidiary of Quiksilver.

            [The foregoing opinions may be subject to such qualifications,
exceptions and limitations as shall be reasonable and customary.]

                                                                               2



                                                                       EXHIBIT M

                          FORM OF EXEMPTION CERTIFICATE

            Reference is made to the Credit Agreement, dated as of April 12,
2005 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among QUIKSILVER, INC. ("Quiksilver"), QUIKSILVER AMERICAS,
INC. (the "Borrower"), the Lenders party thereto and JPMORGAN CHASE BANK, N.A.,
as administrative agent (in such capacity, the "Agent"). Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement. ______________________ (the
"Non-U.S. Lender") is providing this certificate pursuant to Section 2.13(c) of
the Credit Agreement. The Non-U.S. Lender hereby represents and warrants that:

            1. The Non-U.S. Lender is the sole record and beneficial owner of
the Loans in respect of which it is providing this certificate.

            2. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In
this regard, the Non-U.S. Lender further represents and warrants that:

      (a) the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and

      (b) the Non-U.S. Lender has not been treated as a bank for purposes of any
tax, securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements.

            3. The Non-U.S. Lender is not a 10-percent shareholder of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code.

            4. The Non-U.S. Lender is not a controlled foreign corporation
receiving interest from a related person within the meaning of Section
881(c)(3)(C) of the Code.

            IN WITNESS WHEREOF, the undersigned has duly executed this
certificate.

                                                    [NAME OF NON-U.S. LENDER]

                                                    By: _______________________
                                                        Name:
                                                        Title:



                                                                       EXHIBIT N

                         FORM OF INTERCREDITOR AGREEMENT

      This INTERCREDITOR AGREEMENT ("Agreement"), dated as of April 12, 2005, is
made by (1) UNION BANK OF CALIFORNIA, N.A., in its individual capacity as lender
of the Term Loan referred to below (the "Term Loan Lender"), (2) JPMORGAN CHASE
BANK, N.A., as administrative agent for the Lenders referred to below (in such
capacity, the "Agent") and (3) QUIKSILVER AMERICAS, INC., a California
corporation (the "Debtor").

                                    RECITALS

      A. The Debtor has entered into a Credit Agreement, dated the date hereof,
with the lenders referred to therein (the "Lenders") and the Agent (as amended
to date and as it- may be further amended, modified, supplemented or restated
from time to time, the "Credit Agreement"), pursuant to which the Lenders have
agreed to make revolving credit facilities available to the Debtor in an
aggregate principal amount up to US$250,000,000 (subject to increase to
US$350,000,000 pursuant to the terms of the Credit Agreement). In connection
with the Credit Agreement, and the guarantee of the Debtor's obligations
thereunder by Quiksilver, the Debtor will execute in favor of the Agent, for the
benefit of the Lenders, the Security Agreement dated as of the date hereof (as
it may be amended, modified, supplemented or restated from time to time, the
"Security Agreement"). The Credit Agreement, the Security Agreement and the
other documents, instruments and agreements executed in connection therewith
are, collectively, the "Loan Documents".

      B. Pursuant to the Security Agreement, the Debtor is granting, pledging
and assigning to the Agent, for the benefit of the Lenders, a lien on all
Collateral (as defined therein), including but not limited to the FF&E
Collateral (as defined below).

      C. Quiksilver is party to a Term Loan Agreement dated as of April 25, 2000
with the Term Loan Lender (as amended to date and as it may be further amended,
modified, supplemented or restated from time to time, the "Term Loan
Agreement"), pursuant to which the Term Loan Lender has made a term loan to
Quiksilver in the original principal amount of $12,300,000 (the "Term Loan"). In
connection with the Term Loan Agreement, the Debtor has executed in favor of the
Term Loan Lender a Security Agreement dated as of October 29, 2004 (as it may be
amended, modified, supplemented or restated from time to time, the "Term
Security Agreement") to secure the Debtor's obligations under a Guarantee, dated
as of October 29, 2004, in favor of the Term Loan Lender (as it may be amended,
modified, supplemented or restated from time to time, the "Term Guarantee").
Pursuant to the Term Guarantee, the Debtor guarantees Quiksilver's obligations
under the Term Loan Agreement and the other Loan Documents (as defined in the
Term Loan Agreement). The Term Loan Agreement, the Term Security Agreement, the
Term Guarantee and the other documents, instruments and agreements executed in
connection therewith are, collectively, the "Term Loan Documents".

      D. Pursuant to the Term Security Agreement, the Debtor has granted,
pledged and assigned to the Term Loan Lender a lien on the FF&E Collateral.

      E. The Agent (on behalf of the Lenders), the Term Loan Lender and the
Debtor are entering into this Agreement for the purpose of defining the relative
priorities of the Lenders, on the one hand, and the Term Loan Lender, on the
other hand, with respect to the FF&E Collateral.



                                    AGREEMENT

      SECTION 1. Definitions. The following capitalized terms shall have the
following meanings when used in this Agreement:

      "FF&E Collateral": all present and future right, title and interest of the
Debtor in or to the following personal property and assets, whether now owned or
existing or hereafter arising or acquired, in each case located at the Debtor's
headquarters building (the "Subject Property") at 15202 Graham Street,
Huntington Beach, California, and all rights and powers of the Debtor to
transfer any interest in or to any such personal property or assets: (i) all
present and future equipment, machinery, spare parts, tools, molds, dies,
furniture, furnishings, fixtures, tenant improvements and trade fixtures, in
each case located in' or at the Subject Property, (ii) all present and future
accessions, appurtenances, components, repairs, repair parts, spare parts,
replacements, substitutions, additions, issue and/or improvements to or of or
with respect to any of the foregoing, (iii) all rights, remedies, powers and/or
privileges of the Debtor with respect to any of the foregoing and (iv) any and
all proceeds and products of the foregoing, including all money, accounts,
general intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds and any other tangible or intangible property received
upon the sale or disposition of any of the foregoing.

      "General Collateral": all personal property in which the Debtor grants the
Agent a security interest, for the benefit of the Lenders, including the FF&E
Collateral.

      "Lien": any lien, security interest or other charge or encumbrance of any
kind.

      SECTION 2. Lien Priority.

      (a) The Term Loan Lender and the Agent agree that (i) the Term Loan
Lender's Lien on and interest in the FF&E Collateral shall be senior to the
Agent's Lien on and interest in the FF&E Collateral and (ii) the Term Loan
Lender shall have no Lien on or interest in the General Collateral other than
the FF&E Collateral. In furtherance of the foregoing, (w) the Agent hereby
subordinates any and all Liens which it now has or may hereafter acquire in and
to any or all of the FF&E Collateral to the Lien of the Term Loan Lender in the
FF&E Collateral, (x) the Term Loan Lender hereby acknowledges that it has no
Lien on the General Collateral other than the FF&E Collateral, (y) the Agent
agrees to immediately forward to the Term Loan Lender any FF&E Collateral or
proceeds thereof received by the Agent or the Lenders, and (z) the Term Loan
Lender agrees to immediately forward to the Agent any General Collateral or
proceeds thereof (other than FF&E Collateral in each case) received by the Term
Loan Lender.

      (b) The parties hereto agree that the foregoing priorities in the FF&E
Collateral and the General Collateral shall be effective notwithstanding the
order or time of filing or recordation of any document or instrument, or other
method of perfecting a security interest in, such collateral.

      SECTION 3. Certain Representations, Warranties and Covenants. Each of the
Term Loan Lender and the Agent represents and warrants to the other, and agrees
with the other, as follows:

            (i) The execution, delivery and performance by it of this Agreement
      do not contravene any law or contractual restriction binding on or
      affecting it.

            (ii) The execution, delivery and performance of this Agreement have
      been duly authorized by it.



            (iii) This Agreement is its legal, valid and binding obligation,
      enforceable against it in accordance with its terms.

            (iv) It will not sell, assign, pledge, encumber or otherwise dispose
      of its Lien on and rights in the FF&E Collateral unless such sale,
      assignment, pledge, encumbrance or disposition is made expressly subject
      to this Agreement.

            (v) It agrees to give prompt written notice to the other of any
      "Event of Default" under the Term Loan Agreement or the Credit Agreement,
      as applicable; provided that its failure to provide such notice shall not
      diminish its rights under this Agreement.

            (vi) It will not take any action with respect to the FF&E
      Collateral, whether by judicial or nonjudicial foreclosure, the acceptance
      of collateral in full or partial satisfaction of the obligations owed to
      it by the Debtor, the seeking of the appointment of a receiver or
      otherwise, without giving the other party ten business days' prior written
      notice thereof.

      SECTION 4. Agreement by the Debtor. The Debtor agrees that it will not
take any action in contravention of the provisions of this Agreement.

      SECTION 5. Obligations Hereunder Not Affected. The Term Loan Lender and
the Agent agree that the provisions of this Agreement shall remain in full force
and effect irrespective of:

      (a) any lack of validity or enforceability of the Term Loan Documents or
the Loan Documents;

      (b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Debtor's obligations under the Term Guarantee or any
other amendment or waiver of or any consent to departure from any document
evidencing such obligations (it being agreed by the Lenders and the Agent that
the Term Loan Lender may enter into any amendment, modification or restatement
of the Term Loan Documents, including any of the foregoing resulting in an
increase of the principal amount of the Term Loan);

      (c) any change in the time, manner or place of payment of, or in any other
term of, all or any of Debtor's obligations under the Credit Agreement, or any
other amendment or waiver of or any consent to departure from any document
evidencing such obligations (it being agreed by the Term Loan Lender that the
Lenders and/or the Agent may enter into any amendment, modification or
restatement of the Loan Documents, including any of the foregoing resulting in
an increase of the principal amount of the credit facilities thereunder); or

      (d) the filing of a petition for relief by or against the Debtor under the
United States Bankruptcy Code; and the Term Loan Lender and the Agent agree that
this Agreement shall apply with full force and effect with respect to all FF&E
Collateral acquired by the Debtor, and all obligations incurred by the Debtor to
the Term Loan Lender or the Agent, subsequent to the date of filing of any such
petition.

      SECTION 6. Amendments, Etc. No amendment or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing and signed
by the Agent and the Term Loan Lender (and, if Section 4 is amended, the
Debtor), and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.



      SECTION 7. Notices. All notices, requests and demands or other
communications hereunder to be effective shall be in writing (including by
facsimile), 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 facsimile notice, when received, in each
case addressed as follows:

      If to the Term Loan Lender, to it at:

      Union Bank of California, N.A.
      18300 Von Karman Avenue, Suite 310
      Irvine, California 92612
      Attention: Margaret Furbank
      Facsimile: (949) 553-7122

      If to the Agent, to it at:

      JPMorgan Chase Bank, N.A.
      One Chase Square, 25th Floor
      Rochester, New York 14643
      Attention:
      Telecopy:

or, as any party, to it at such other address as shall be designated by such
party in a written notice to the other parties.

      SECTION 8. Continuing Agreement; Assignment. This Agreement is a
continuing agreement and shall (i) remain in full force and effect until all
obligations of the Debtor under the Term Loan Documents or the Loan Documents
shall have been paid in full or otherwise terminated, (ii) be binding upon the
parties hereto and their respective successors and assigns and (iii) inure to
the benefit of and be enforceable by the Term Loan Lender and the Agent and
their respective successors, transferees and assigns. This Agreement replaces
the Intercreditor Agreement dated as of October 29, 2004 among the Term Loan
Lender, JPMorgan Chase Bank, as administrative agent, and the Debtor.

      SECTION 9. Third-Party Beneficiaries. All of the understandings,
agreements, representations and warranties contained herein are solely for the
benefit of the Term Loan Lender, the Lenders and the Agent, and there are no
other parties (including but not limited to the Debtor) who are intended to be
benefited in any way by this Agreement.

      SECTION 10. Governing Law. This Agreement and the rights and obligations
of the parties under this Agreement shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.



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

AGENT:                                      JPMORGAN CHASE BANK, N.A.,
                                            as Agent

                                            By: _______________________________
                                            Name: _____________________________
                                            Title: ____________________________

TERM LOAN LENDER:                           UNION BANK OF CALIFORNIA, N.A., as
                                            Term Loan Lender

                                            By: _______________________________
                                            Name: _____________________________
                                            Title: ____________________________

DEBTOR:                                     QUIKSILVER AMERICAS, INC.,
                                            as a Debtor

                                            By: _______________________________
                                            Name: _____________________________
                                            Title: ____________________________

EX-10.3

                                                                    EXHIBIT 10.3

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

                                [JPMORGAN LOGO]

                                QUIKSILVER, INC.,

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

                                  $350,000,000

                                CREDIT AGREEMENT

                           dated as of April 12, 2005

                           JPMORGAN CHASE BANK, N.A.,
                             as Administrative Agent

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

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

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



                                TABLE OF CONTENTS



                                                                                                                Page
                                                                                                                ----
                                                                                                             
SECTION 1 DEFINITIONS...................................................................................           2
         1.1   Defined Terms............................................................................           2
         1.2   Other Definitional Provisions............................................................          30

SECTION 2 AMOUNT AND TERMS OF LOANS.....................................................................          31
         2.1   Loans....................................................................................          31
         2.2   Procedure for Borrowing..................................................................          32
         2.3   Maturity and Exchange Notes..............................................................          32
         2.4   Repayment of Loans.......................................................................          32
         2.5   Optional and Mandatory Prepayments.......................................................          32
         2.6   Interest Rates and Payment Dates.........................................................          34
         2.7   Inability to Determine Interest Rates....................................................          35
         2.8   Computation of Interest and Fees.........................................................          35
         2.9   Pro Rata Treatment and Payments..........................................................          35
         2.10   Requirements of Law.....................................................................          37
         2.11   Illegality..............................................................................          38
         2.12   Taxes...................................................................................          39
         2.13   Indemnity...............................................................................          40
         2.14   Change of Lending Office................................................................          41
         2.15   Replacement Lenders.....................................................................          41

SECTION 3 REPRESENTATIONS AND WARRANTIES................................................................          41
         3.1   Organization and Good Standing...........................................................          41
         3.2   Power and Authority......................................................................          41
         3.3   Validity and Legal Effect................................................................          42
         3.4   No Violation of Laws, Agreements or the Transaction......................................          42
         3.5   Taxes and Assessments....................................................................          42
         3.6   Title to Assets; Existing Encumbrances...................................................          42
         3.7   Litigation and Legal Proceedings.........................................................          42
         3.8   Accuracy of Financial Information........................................................          42
         3.9   Accuracy of Other Information............................................................          43
         3.10   Compliance with Laws Generally..........................................................          44
         3.11   ERISA Compliance........................................................................          44
         3.12   Environmental Compliance................................................................          44
         3.13   Intellectual Property...................................................................          45
         3.14   Federal Regulations.....................................................................          45
         3.15   Fees and Commissions....................................................................          45
         3.16   Solvency................................................................................          45
         3.17   Investment Company Act..................................................................          46
         3.18   Nature of Business......................................................................          46
         3.19   Ranking of Loans........................................................................          46
         3.20   Insurance...............................................................................          46
         3.21   Subsidiaries............................................................................          46
         3.22   Security Interest in Collateral.........................................................          46
         3.23   Approvals...............................................................................          46
         3.24   Use of Proceeds.........................................................................          46
         3.25   Representations and Warranties Contained in the Transaction Documents...................          46


                                       i





                                                                                                                Page
                                                                                                                ----
                                                                                                             
SECTION 4 CONDITIONS PRECEDENT..........................................................................          47
         4.1   Initial Loans on the Initial Closing Date................................................          47
         4.2   Initial Loans on the Tender Offer Closing Date...........................................          50
         4.3   Initial Loans on the Final Drawdown Date.................................................          53

SECTION 5 AFFIRMATIVE COVENANTS.........................................................................          56
         5.1   Financial Statements.....................................................................          56
         5.2   Certificates; Other Information..........................................................          57
         5.3   Payment of Obligations...................................................................          58
         5.4   Conduct of Business; Maintenance of Existence and Licenses; Contractual Obligations......          58
         5.5   Maintenance of Property..................................................................          58
         5.6   Insurance................................................................................          58
         5.7   Inspection of Property; Books and Records; Communications with Accountants...............          58
         5.8   Environmental Laws.......................................................................          59
         5.9   Use of Proceeds..........................................................................          59
         5.10   Compliance with Laws, Etc...............................................................          59
         5.11   Guarantees, Etc.........................................................................          59
         5.12   Notices.................................................................................          60
         5.13   Take-Out Financing......................................................................          61
         5.14   Exchange Notes..........................................................................          61
         5.15   Use of Proceeds of the Take-Out Debt....................................................          62
         5.16   Initiation of Buy Out...................................................................          62
         5.17   Prepayment of Loans with Released Amount................................................          62
         5.18   Further Assurances......................................................................          62

SECTION 6 NEGATIVE COVENANTS............................................................................          62
         6.1   Limitation on Indebtedness...............................................................          63
         6.2   Limitation on Restricted Payments........................................................          66
         6.3   Limitation on Restrictions on Distributions from Restricted Subsidiaries.................          69
         6.4   Limitation on Sales of Assets and Subsidiary Stock.......................................          70
         6.5   Limitation on Liens......................................................................          71
         6.6   Limitation on Affiliate Transactions.....................................................          71
         6.7   Change of Control........................................................................          72
         6.8   Limitation on Voting Stock of Restricted Subsidiaries....................................          73
         6.9   Merger, Consolidation, etc...............................................................          73
         6.10   Limitation on Sale/Leaseback Transactions...............................................          75
         6.11   Limitation on Lines of Business.........................................................          75
         6.12   Fiscal Year.............................................................................          75
         6.13   Amendments to Acquisition Documents and Offer Documents.................................          75
         6.14   Amendments to Revolving Credit Documents................................................          75

SECTION 7 EVENTS OF DEFAULT.............................................................................          76

SECTION 8 THE ADMINISTRATIVE AGENT......................................................................          78
         8.1   Appointment..............................................................................          78
         8.2   Delegation of Duties.....................................................................          78
         8.3   Exculpatory Provisions...................................................................          78
         8.4   Reliance by Administrative Agent.........................................................          79
         8.5   Notice of Default........................................................................          79
         8.6   Non-Reliance on Administrative Agent and Other Lenders...................................          79
         8.7   Indemnification..........................................................................          80


                                       ii





                                                                                                                Page
                                                                                                                ----
                                                                                                             
         8.8   Administrative Agent in Its Individual Capacity..........................................          80
         8.9   Successor Administrative Agent...........................................................          80

SECTION 9 MISCELLANEOUS.................................................................................          81
         9.1   Amendments and Waivers...................................................................          81
         9.2   Notices..................................................................................          81
         9.3   No Waiver; Cumulative Remedies...........................................................          82
         9.4   Survival of Representations and Warranties...............................................          82
         9.5   Payment of Expenses and Taxes............................................................          83
         9.6   Successors and Assigns; Participations and Assignments...................................          83
         9.7   Adjustments; Set-off.....................................................................          86
         9.8   Counterparts.............................................................................          87
         9.9   Severability.............................................................................          87
         9.10   Integration.............................................................................          87
         9.11   GOVERNING LAW...........................................................................          87
         9.12   Submission To Jurisdiction; Waivers.....................................................          87
         9.13   Acknowledgements........................................................................          88
         9.14   WAIVERS OF JURY TRIAL...................................................................          88
         9.15   Confidentiality.........................................................................          88
         9.16   Judgment Currency.......................................................................          88
         9.17   USA Patriot Act.........................................................................          89


SCHEDULES:

               
SCHEDULE 1.1A     Commitments
SCHEDULE 1.1B     Permitted Investment Agreements
SCHEDULE 3.1      Jurisdictions of Organization or Qualification to Conduct Business
SCHEDULE 3.5      Taxes and Assessments
SCHEDULE 3.6      Title to Assets; Existing Encumbrances
SCHEDULE 3.7      Litigation
SCHEDULE 3.12     Environmental Compliance
SCHEDULE 3.20     Insurance
SCHEDULE 3.21     Subsidiaries
SCHEDULE 6.2      Transaction Payments
SCHEDULE 6.3      Encumbrances
SCHEDULE 6.6      Affiliate Transactions



EXHIBITS:

               
EXHIBIT A         Form of Guarantee
EXHIBIT B         Form of Assignment and Acceptance
EXHIBIT C-1       Form of Initial Loan Note
EXHIBIT C-2       Form of Term Note
EXHIBIT D         Form of No Default/Representation Certificate
EXHIBIT E-1       Form of Opinion of Hewitt & O'Neil LLP



                                      iii





                                                                                            Page
                                                                                            ----
                                                                                      
EXHIBIT E-2       Form of Legal Opinion of De Pardieu, Brocas, Maffei, special French
                  counsel to the Administrative Agent
EXHIBIT F         Form of Exemption Certificate
EXHIBIT G         Form of Secretary's Certificate
EXHIBIT H         Terms of Exchange Notes


                                       iv



      CREDIT AGREEMENT dated as of April 12, 2005 (as amended, supplemented or
otherwise modified from time to time, this "Agreement"), among QUIKSILVER, INC.,
a Delaware corporation (the "Company"), as borrower, the several lenders from
time to time parties hereto (collectively, the "Lenders"; individually, a
"Lender"), and JPMORGAN CHASE BANK, N.A., a national banking association
organized under the laws of the United States of America, as administrative
agent for the Lenders hereunder (in such capacity, the "Administrative Agent").

                              W I T N E S S E T H:

      WHEREAS, the Company intends to directly or indirectly acquire (the
"Transaction") up to 100% of the outstanding capital stock (the "Target Stock")
of Skis Rossignol S.A. (the "Target");

      WHEREAS, certain existing stockholders of the Target (such stockholders,
the "Sellers") own approximately 44.46% of the outstanding capital stock of the
Target, consisting of (i) approximately 38.44% held by a holding company (the
"Holding Company") controlled by the Sellers and (ii) approximately 6.02% of the
Target held directly by the Sellers (the "Direct Interest");

      WHEREAS, upon the consummation of the Transaction, the Company intends to
(i) have purchased, indirectly through the Holding Company, 75% of the Target
Stock currently held by the Sellers, with total consideration of approximately
$108,000,000, payable in a combination of 70% cash and 30% newly issued shares
of common stock of the Company and (ii) have consummated the Tender Offer and,
if applicable, the Buy Out and Squeeze Out (each as defined below);

      WHEREAS, the Company has entered into an Acquisition Agreement (the
"Acquisition Agreement") pursuant to which the Company will effect the
Transaction in two stages;

      WHEREAS, in the first stage of the Transaction, the Company has agreed to
(i) indirectly become the managing general partner ("commandite") of the Holding
Company on the date of execution of the Acquisition Agreement, (ii) make a
direct cash payment to the Sellers in an amount of approximately $8,800,000,
(iii) deposit approximately $52,700,000 (the "Escrowed Amount"), which will be
escrowed into an account held at Societe Generale (the "Escrow Account") and
(iv) indirectly purchase, or pay a redemption price for, commandite shares from
or of the Sellers in the amount of (euro)50,000 (collectively, the "Initial
Purchase");

      WHEREAS, in connection with the Initial Purchase, the Company has informed
the Lenders that it will concurrently terminate the Existing Credit Agreement
(as hereinafter defined);

      WHEREAS, the second stage of the Transaction will commence upon completion
of the transactions to be completed on the date of execution of the Acquisition
Agreement and will involve, among other things, (i) the transfer of the Escrowed
Amount to the Sellers, (ii) a direct cash payment by the Company to the Sellers
in the amount of approximately $14,600,000, (iii) a non-cash payment by the
Company to the Sellers in the form of newly issued shares of the Company valued
at approximately $31,900,000, (iv) the purchase of the remaining shares of
Target Stock to be acquired by the Company pursuant to a tender offer under
French law (offre publique d'achat) (the "Tender Offer"), followed, if
applicable, by a offre publique de retrait (the "Buy Out") and a retrait
obligatoire (the "Squeeze Out") and (v) the refinancing of certain indebtedness
of the Target;

      WHEREAS, to finance the Transaction, the Company has requested the Lenders
to make available the credit facility set forth herein; and



                                                                               2

      WHEREAS, the Lenders are willing to make such credit facility available
upon and subject to the terms and conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:

                                   SECTION 1

                                   DEFINITIONS

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

      "ABR Loan": a Loan bearing interest at a rate determined by reference to
the Alternate Base Rate in accordance with the provisions of Section 2.

      "Accepting Holder": as defined in Section 2.5(d).

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

      "Acquired Indebtedness": the Indebtedness (i) of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
(ii) assumed in connection with the acquisition of assets from such Person, in
each case whether or not Incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
or such acquisition. Acquired Indebtedness shall be deemed to have been
Incurred, with respect to clause (i) of the preceding sentence, on the date such
Person becomes a Restricted Subsidiary and, with respect to clause (ii) of the
preceding sentence, on the date of consummation of such acquisition of assets.

      "Acquisition Agreement": as defined in the recitals to this Agreement.

      "Acquisition Documents": collectively, the Acquisition Agreement and all
schedules, exhibits and annexes thereto (including any documentation related to
the Escrow Account) and all side letters and agreements contemplated thereby or
affecting the terms thereof.

      "Adjusted LIBO Rate": with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, a rate per annum determined for such day in
accordance with the following formula (rounded upward to the nearest 1/100th of
1%):

                              Eurodollar Base Rate
                    -----------------------------------------
                    1.00 - Eurocurrency Reserve Requirements

      "Adjusted Margin": with respect to any Loan, 0% during the three-month
period commencing on the Initial Maturity Date and, for each subsequent
three-month period thereafter, 0.50% higher than the Adjusted Margin for the
immediately preceding three-month period.

      "Adjusted Rate": the rate equal to the greater of (i) the interest rate
borne by the Loans on the day immediately preceding the Initial Maturity Date
plus 0.50% and (ii) the Treasury Rate on the Initial Maturity Date plus 5.0%.



                                                                               3

      "Administrative Agent": JPMorgan Chase Bank, N.A., together with its
affiliates, as the arranger of the Commitments and as the administrative agent
for the Lenders under this Agreement and the other Loan Documents, together with
any of its successors.

      "Affiliate": of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that beneficial ownership of 10% or more of the Voting Stock of a
Person shall be deemed to be control.

      "Affiliate Transaction": as defined in Section 6.6.

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

      "Agreement Currency": as defined in Section 9.16.

      "Alternate Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in
effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Administrative
Agent as its prime rate in effect at its principal office in New York City; and
"Federal Funds Effective Rate" shall mean, for any day, the weighted average 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 of the
quotations for the day of such transactions received by the Administrative Agent
from three federal funds brokers of recognized standing selected by it. If for
any reason the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms thereof, the Alternate Base Rate shall be determined without regard to
clause (b) of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.

      "AMF": as defined in Section 4.2(e)(ii).

      "Applicable Margin": with respect to any Loan, 0% during the three-month
period commencing on the Initial Closing Date and, for each subsequent
three-month period thereafter until the Initial Maturity Date, 0.50% higher than
the Applicable Margin for the immediately preceding three-month period.

      "Asset Disposition": any direct or indirect sale, lease (other than an
operating lease entered into in the ordinary course of business), transfer,
issuance or other disposition (or series of related sales, leases, transfers,
issuances or dispositions that are part of a common plan) of shares of Capital
Stock of a Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction),
other than (i) a



                                                                               4

disposition of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of the Company's and/or its Restricted Subsidiaries'
business and that is disposed of in the ordinary course of business; (ii) a
disposition of inventory in the ordinary course of business; (iii) the sale of
Cash Equivalents in the ordinary course of business; (iv) a disposition by a
Restricted Subsidiary to the Company or by the Company or a Restricted
Subsidiary to a Restricted Subsidiary; provided that in the case of a sale by a
Restricted Subsidiary to another Restricted Subsidiary, the Company directly or
indirectly owns an equal or greater percentage of the Capital Stock of the
transferee than of the transferor; (v) for purposes of Section 6.4 only, the
making of a Permitted Investment or a disposition subject to Section 6.2; (vi)
transactions permitted under Section 6.9; (vii) an issuance of Capital Stock by
a Restricted Subsidiary of the Company to the Company or to a Wholly Owned
Subsidiary; (viii) dispositions of assets in a single transaction or series of
related transactions with an aggregate fair market value since the Initial
Closing Date of less than $2,500,000; (ix) dispositions in connection with
Permitted Liens; (x) the licensing or sublicensing of Intellectual Property
Rights or other general intangibles and licenses, leases or subleases of other
property in the ordinary course of business which do not materially interfere
with the business of the Company and its Restricted Subsidiaries; (xi)
dispositions of receivables in connection with the compromise, settlement or
collection thereof in the ordinary course of business or in bankruptcy or
similar proceedings and exclusive of factoring or similar arrangements; (xii)
foreclosure on assets; and (xiii) any release of claims or rights in the
ordinary course of business in connection with the loss or settlement of a bona
fide lawsuit, dispute or controversy.

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

      "Assignment and Assumption": an assignment and assumption, substantially
in the form of Exhibit B hereto.

      "Attributable Indebtedness": in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate implicit in such transaction determined in accordance with GAAP)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).

      "Availability Period": the period from and including the Tender Offer
Closing Date to and including the Final Drawdown Date.

      "Average Life": as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.

      "Benefitted Lender": as defined in Section 9.7(a).

      "Board of Directors": as to any Person, the board of directors of such
Person or any committee thereof duly authorized to act on behalf of such board.

      "Board of Governors": the Board of Governors of the Federal Reserve System
(or any successor thereto).

      "Borrowing": a Loan of any Type made, converted or continued on the same
date and, in the case of Eurodollar Loans, as to which a single Interest Period
is in effect.



                                                                               5

      "Borrowing Base": as of the date of determination, an amount equal to the
sum, without duplication of (1) 85% of the net book value of the Company's and
its Restricted Subsidiaries' accounts receivable at such date and (2) 70% of the
net book value of the Company's and its Restricted Subsidiaries' inventories at
such date. Net book value shall be determined in accordance with GAAP and shall
be that reflected on the most recent available balance sheet (it being
understood that the accounts receivable and inventories of an acquired business
or Person may be included if such acquisition has been completed on or prior to
the date of determination).

      "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 Eurodollar Loan, is a Eurodollar Business Day.

      "Buy Out": as defined in the preamble to this Agreement.

      "Buy Out Transactions": as defined in Section 4.3(b)(iii).

      "Buy Out Undertakings": as defined in Section 4.3(i).

      "Callable Exchange Note": any Exchange Note which is subject to redemption
at the option of the Company pursuant to the Indenture.

      "Capital Stock": of a Person, any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of, or
interests in (however designated) equity of such Person, including any Preferred
Stock, partnership interests and limited liability company membership interests,
but excluding any debt securities convertible into such equity.

      "Capitalized Lease Obligations": an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation at the time
any determination thereof is to be made as determined in accordance with GAAP;
and the Stated Maturity thereof shall be the date of the last payment of rent or
any other amount due under such lease prior to the first date such lease may be
terminated without penalty.

      "Cash Equivalents": means (i) securities issued or directly and fully
guaranteed or insured by the United States government, or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof), having maturities of not more than one
year from the date of acquisition; (ii) marketable general obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within one year from
the date of acquisition thereof (provided that the full faith and credit of the
United States is pledged in support thereof) and, at the time of acquisition
thereof, having a credit rating of "A" or better from either S&P or Moody's;
(iii) certificates of deposit, time deposits, eurodollar time deposits,
overnight bank deposits or bankers' acceptances having maturities of not more
than one year from the date of acquisition thereof issued by any commercial bank
the long-term debt of which is rated at the time of acquisition thereof at least
"A" or the equivalent thereof by S&P, or "A" or the equivalent thereof by
Moody's, and having combined capital and surplus in excess of $250,000,000; (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i), (ii) and (iii) entered into
with any bank meeting the qualifications specified in clause (iii) above; (v)
commercial paper rated at the time of acquisition thereof at least "A-2" or the
equivalent thereof by S&P or "P-2" or the equivalent thereof by Moody's, or
carrying an equivalent rating by a nationally recognized rating agency, if both
of the two named rating agencies cease publishing ratings of investments, and in
either case maturing within one year after the date of acquisition thereof; and
(vi) interests in any



                                                                               6

investment company which invests solely in instruments of the type specified in
clauses (i) through (v) above.

      "Change of Control": the occurrence of any of the following events:

            (i) any "person" or "group" of related persons (as such terms are
      used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
      beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
      Act, except that such person or group shall be deemed to have "beneficial
      ownership" of all shares that any such person or group has the right to
      acquire, whether such right is exercisable immediately or only after the
      passage of time), directly or indirectly, of more than 35% of the total
      voting power of the Voting Stock of the Company (or a successor to the
      relevant entity by merger, consolidation or purchase of all or
      substantially all of its assets) (for the purposes of this clause, such
      person or group shall be deemed to beneficially own any Voting Stock of
      the Company held by a parent entity, if such person or group "beneficially
      owns" (as defined above), directly or indirectly, more than 35% of the
      voting power of the Voting Stock of such parent entity); or

            (ii) the first day on which a majority of the members of the Board
      of Directors (excluding any committee thereof) of the Company are not
      Continuing Directors; or

            (iii) the sale, lease, transfer, conveyance or other disposition
      (other than by way of merger or consolidation), in one or a series of
      related transactions, of all or substantially all of the assets of the
      Company and its Restricted Subsidiaries taken as a whole to any "person"
      (as such term is used in Sections 13(d) and 14(d) of the Exchange Act); or

            (iv) the adoption by the stockholders of the Company of a plan or
      proposal for the liquidation or dissolution of the Company; or

            (v) a "change of control" as defined in the Revolving Credit
      Agreement.

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

      "Collateral": all property of the Obligor, now owned or hereafter
acquired, upon which a Lien is purported to be created by the Escrow Security
Agreement.

      "Commitment": as to any Lender, its (i) Dollar Loan Commitment and (ii)
Euro Loan Commitment.

      "Commitment Letter": the Commitment Letter dated as of March 20, 2005,
among Quiksilver Americas, the Company, JPMSI and the Administrative Agent, as
amended from time to time.

      "Commitment Percentage": as to any Lender at any time, the percentage of
the aggregate Loans (based, in the case of Euro-Denominated Loans, on the Dollar
Equivalent thereof as determined by the Administrative Agent) then constituted
by such Lender's Loans (or, prior to the Final Drawdown Date, the percentage of
the sum of (i) the aggregate Initial Loans (based, in the case of
Euro-Denominated Loans, on the Dollar Equivalent thereof as determined by the
Administrative Agent) then constituted by such Lender's Initial Loans and (ii)
the undrawn Commitment of such Lender).

      "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



                                                                               7

group which includes such Person and which is treated as a single employer under
Section 414 of the Code.

      "Company": as defined in the preamble to this Agreement.

      "Consolidated Coverage Ratio": as of any date of determination, with
respect to any Person, the ratio of (i) the aggregate amount of Consolidated
EBITDA of such Person for the period of the most recent four consecutive fiscal
quarters ending prior to the date of such determination for which financial
statements are in existence to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (1) if the Company or any Restricted
Subsidiary (x) has Incurred any Indebtedness since the beginning of such period
that remains outstanding on such date of determination or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is an
Incurrence of Indebtedness, or both, Consolidated EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving effect on a
pro forma basis to such Indebtedness as if such Indebtedness had been Incurred
on the first day of such period (except that in making such computation, the
amount of Indebtedness under any revolving credit facility outstanding on the
date of such calculation shall be computed based on (A) the average daily
balance of such Indebtedness during such four fiscal quarters or such shorter
period for which such facility was outstanding or (B) if such facility was
created after the end of such four fiscal quarters, the average daily balance of
such Indebtedness during the period from the date of creation of such facility
to the date of such calculation) and the discharge of any other Indebtedness
repaid, repurchased, defeased or otherwise discharged with the proceeds of such
new Indebtedness as if such discharge had occurred on the first day of such
period or (y) has repaid, repurchased, defeased or otherwise discharged any
Indebtedness since the beginning of the period that is no longer outstanding on
such date of determination or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio involves a discharge of Indebtedness
(in each case other than Indebtedness Incurred under any revolving credit
facility unless such Indebtedness has been permanently repaid and the related
commitment terminated), Consolidated EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving effect on a pro forma basis to
such discharge of such Indebtedness, including with the proceeds of such new
Indebtedness, as if such discharge had occurred on the first day of such period,
(2) if since the beginning of such period, the Company or any Restricted
Subsidiary shall have made any Asset Disposition or disposed of any company,
division, operating unit, segment, business, group of related assets or line of
business or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Asset Disposition, (x) the Consolidated EBITDA
for such period shall be reduced by an amount equal to the Consolidated EBITDA
(if positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period or increased by an amount equal to the
Consolidated EBITDA (if negative) directly attributable thereto for such period
and (y) Consolidated Interest Expense for such period shall be reduced by an
amount equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (3) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary
or is merged with or into the Company) or an acquisition of assets, including
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
any company, division, operating unit, segment, business, group of related
assets or line of business, Consolidated EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (4) if since the
beginning of such



                                                                               8

period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have Incurred any Indebtedness or discharged any
Indebtedness, made any disposition or Asset Disposition or any Investment or
acquisition of assets that would have required an adjustment pursuant to clause
(2) or (3) above if made by the Company or a Restricted Subsidiary during such
period, Consolidated EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such Incurrence,
discharge, disposition, Asset Disposition, Investment or asset acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to any calculation under this
definition, the pro forma calculations shall be determined in good faith by a
responsible financial or accounting officer of the Company (including any pro
forma expense and cost reductions and related adjustments calculated on a basis
consistent with Regulation S-X under the Securities Act). If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months). If any Indebtedness that is being given pro forma effect bears an
interest rate at the option of the Company, the interest rate shall be
calculated by applying such optional rate chosen by the Company.

      "Consolidated EBITDA": for any period, without duplication, the
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income: (i) Consolidated Interest
Expense, (ii) Consolidated Income Taxes, (iii) consolidated depreciation
expense, (iv) consolidated amortization expense or impairment charges recorded
in connection with the application of Financial Accounting Standard No. 142
"Goodwill and Other Intangibles," and (v) other non-cash items reducing
Consolidated Net Income (excluding any such non-cash charge to the extent it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period not
included in the calculation). Notwithstanding the preceding sentence, clauses
(ii) through (v) relating to amounts of a Restricted Subsidiary of a Person will
be added to Consolidated Net Income to compute Consolidated EBITDA of such
Person only to the extent (and in the same proportion) that the net income
(loss) of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and, to the extent the amounts set forth
in clauses (ii) through (v) are in excess of those necessary to offset a net
loss of such Restricted Subsidiary or if such Restricted Subsidiary has net
income for such period included in Consolidated Net Income, only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior approval
(that has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.

      "Consolidated Income Taxes": with respect to any Person for any period,
taxes imposed upon such Person or other payments required to be made by such
Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing Consolidated Net Income for such period), regardless of
whether such taxes or payments are required to be remitted to any governmental
authority.

      "Consolidated Interest Expense": for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, whether
paid or accrued, plus, to the extent not included in such interest expense, (i)
interest expense attributable to Capitalized Lease Obligations and the interest
portion of rent expense associated with Attributable Indebtedness in respect of
the relevant lease giving rise thereto, determined as if such lease were a
capitalized lease in accordance with GAAP, and the interest component of any
deferred payment obligations, (ii) amortization of debt discount and debt
issuance cost,



                                                                               9

(provided that any amortization of bond premium will be credited to reduce
Consolidated Interest Expense unless, pursuant to GAAP, such amortization of
bond premium has otherwise reduced Consolidated Interest Expense), (iii)
non-cash interest expense, (iv) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (v) the interest expense on Indebtedness of another Person under a
Guarantee Obligation of the Company or a Restricted Subsidiary of the Company or
secured by a Lien on assets of the Company or one of its Restricted Subsidiaries
if such Person is not current in the payment of principal, interest or premium
on such Indebtedness, (vi) net costs associated with Hedging Obligations
(including amortization of fees), provided, however, that if Hedging Obligations
result in net benefits rather than costs, such benefits shall be credited to
reduce Consolidated Interest Expense unless, pursuant to GAAP, such net benefits
are otherwise reflected in Consolidated Net Income, (vii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period, (viii) the product of (a) all dividends paid or
payable in cash, Cash Equivalents or Indebtedness or accrued during such period
on any series of Disqualified Stock of such Person or on Preferred Stock of its
Restricted Subsidiaries payable to a party other than the Company or a Wholly
Owned Subsidiary times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state,
provincial and local statutory tax rate of such Person expressed as a decimal,
in each case, on a consolidated basis and in accordance with GAAP, (ix)
Receivable Fees, and (x) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company or any
Restricted Subsidiary of the Company) in connection with Indebtedness Incurred
by such plan or trust; provided, however, that there shall be excluded therefrom
any such interest expense of any Unrestricted Subsidiary to the extent the
related Indebtedness is not a Guarantee Obligation of or paid by the Company or
any Restricted Subsidiary. For purposes of the foregoing, gross interest expense
shall be determined (i) after giving effect to any net payments made or received
by the Company and its Subsidiaries with respect to Interest Rate Agreements and
(ii) exclusive of amounts classified as other comprehensive income in the
balance sheet of the Company. Notwithstanding anything to the contrary contained
herein, commissions, discounts, yield and other fees and charges Incurred in
connection with any transaction pursuant to which the Company or any Restricted
Subsidiary of the Company may sell, convey or otherwise transfer or grant a
security interest in any accounts receivable or related assets shall be included
in Consolidated Interest Expense.

      "Consolidated Net Income": for any period, the net income (loss) of the
Company and its consolidated Restricted Subsidiaries determined in accordance
with GAAP; provided, however, that there shall not be included in such
Consolidated Net Income: (i) any net income (loss) of any Person if such Person
is not a Restricted Subsidiary, except that (A) subject to the limitations
contained in clauses (iii), (iv) and (v) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in clause
(ii) below) and (B) the Company's equity in a net loss of any such Person (other
than an Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income to the extent such loss has been funded
with cash from the Company or a Restricted Subsidiary; (ii) any net income (but
not loss) of any Restricted Subsidiary if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the limitations contained in (iii), (iv) and
(v) below, the Company's equity in the net income of any such Restricted
Subsidiary for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend (subject, in the case of a dividend to another
Restricted Subsidiary, to the limitation contained in this clause) and (B) the
Company's equity in a net loss of any such Restricted



                                                                              10

Subsidiary for such period shall be included in determining such Consolidated
Net Income; (iii) any gain (loss) realized upon the sale or other disposition of
any property, plant or equipment of the Company or its consolidated Restricted
Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not
sold or otherwise disposed of in the ordinary course of business and any gain
(loss) realized upon the sale or other disposition of any Capital Stock of any
Person; (iv) any extraordinary gain or loss, and (v) the cumulative effect of a
change in accounting principles.

      "Consolidated Net Worth": the total of the amounts shown on the balance
sheet of the Company and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made, as (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.

      "Consolidated Tangible Assets": of any Person as of any date means the
total amount of assets of such Person and its Subsidiaries (less applicable
reserves) on a consolidated basis at the end of the fiscal quarter immediately
preceding such date, as determined in accordance with GAAP, less (i) Intangible
Assets and (ii) appropriate adjustments on account of minority interests of
other Persons holding equity investments in Restricted Subsidiaries.

      "Continuing Directors": as of any date of determination, any member of the
Board of Directors of the Company who (1) was a member of such Board of
Directors on the date of this Agreement; or (2) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of the Board of Directors at the time of
such nomination or election.

      "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.

      "Copyrights": with respect to any Person, all of such Person's right,
title, and interest in and to the following: (i) all copyrights, rights and
interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (ii) all renewals of any of the
foregoing; (iii) all income, royalties, damages, and payments now or hereafter
due and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements for any of the foregoing;
(iv) the right to sue for past, present, and future infringements of any of the
foregoing; and (v) all rights corresponding to any of the foregoing throughout
the world.

      "Credit Facility": with respect to the Company or any Guarantor, one or
more debt facilities (including, without limitation, the Revolving Credit
Agreement) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables), bankers
acceptances or letters of credit or similar instruments, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time (and whether or not with the original
administrative agent and lenders or another administrative agent or agents or
other lenders and whether provided under the original Revolving Credit Agreement
or any other credit or other agreement or indenture).



                                                                              11

      "Currency Agreement": in respect of a Person any foreign exchange
contract, currency swap agreement, futures contract, option contract or other
similar agreement as to which such Person is a party or a beneficiary.

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

      "Direct Interest": as defined in the recitals to this Agreement.

      "Disqualified Stock": with respect to any Person, any Capital Stock of
such Person that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding Capital Stock that is convertible or exchangeable
solely at the option of the Company or a Restricted Subsidiary) or (iii) is
redeemable at the option of the holder thereof, in whole or in part, in each
case, on or prior to the date that is 91 days after the Final Maturity Date
provided, that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable at
the option of the holder thereof prior to such date shall be deemed to be
Disqualified Stock; provided, further, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
change of control or asset disposition (each defined in a substantially
identical manner to the corresponding definitions in this Agreement) shall not
constitute Disqualified Stock if the terms of such Capital Stock (and all such
securities into which it is convertible or for which it is ratable or
exchangeable) provide that the Company may not repurchase or redeem any such
Capital Stock (and all such securities into which it is convertible or for which
it is ratable or exchangeable) pursuant to such provision prior to compliance by
the Company with the provisions of this Agreement.

      "Dollar-Denominated Exchange Notes": Exchange Notes denominated in
Dollars.

      "Dollar-Denominated Loans": Loans denominated in Dollars.

      "Dollar Equivalent": with respect to Euros, on the date of determination
thereof, the amount of Dollars which could be purchased with the amount of Euros
involved in such computation at the spot rate at which Euros may be exchanged
into Dollars as set forth on such date on (i) the Telerate Service pages, or
(ii) if such rate does not appear on such Telerate Service pages, at the spot
exchange rate therefor as determined by the Administrative Agent, in each case
as of 11:00 A.M. London time on such date of determination thereof.

      "Dollar Loan Commitment": as to any Lender, its obligation to make a
Dollar-Denominated Loan to the Company on the Initial Closing Date in an
aggregate amount not to exceed the amount set forth opposite such Lender's name
in Schedule 1.1A under the heading "Dollar Loan Commitment"; collectively, as to
all such Lenders, the "Dollar Loan Commitments".

      "Dollar Loan Facility": the Dollar Loan Commitments and the
Dollar-Denominated Loans made hereunder.

      "Dollar Loan Lender": each Lender with a Dollar Loan Commitment.

      "Dollar Loan Percentage": as to any Lender at any time, the percentage of
the aggregate Dollar Loan Commitments then constituted by such Lender's Dollar
Loan Commitment (or, after the Initial



                                                                              12

Closing Date, the percentage of the aggregate Dollar-Denominated Loans then
constituted by such Lender's Dollar-Denominated Loans).

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

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

      "Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally enforceable
requirement (including, without limitation, common law) of the United States or
any other nation, or any state, local, municipal or other governmental
authority, regulating, relating to or imposing liability or standards of conduct
concerning protection of the environment or of human health, or employee health
and safety, as has been, is now, or may at any time hereafter be, in effect.

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

      "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.

      "Escrow Account": as defined in the preamble to this Agreement.

      "Escrowed Amount": as defined in the preamble to this Agreement.

      "Escrow Security Agreement": the Pledge of Claims dated as of April 12,
2005, by the Company in favor of the Administrative Agent.

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

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

      "Euro-Denominated Exchange Notes": Exchange Notes denominated in Euros.

      "Euro-Denominated Loans": Loans denominated in Euros.

      "Eurodollar Base Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum determined by the
Administrative Agent to be the offered rate for deposits in Dollars or Euros, as
applicable, with a term comparable to such Interest Period that appears on the
Telerate Page as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does not appear
on the Telerate Page, the "Eurodollar Base Rate" shall be determined by
reference to such other comparable publicly available service for displaying
Eurodollar rates as may be selected by the Administrative Agent or, in the
absence of such availability, by reference to the interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the average of
the rates at which deposits in the relevant currency, approximately equal in
principal



                                                                              13

amount to $5,000,000, and for a maturity comparable to such Interest Period, are
offered by the principal London office of the Administrative Agent for
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. In the event that the Eurodollar Base Rate is unable to be
determined pursuant to any of the foregoing mechanisms, the "Eurodollar Base
Rate" shall instead be the interest rate per annum reasonably determined by the
Administrative Agent.

      "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 Euro is to be made, the day is also a
TARGET Operating Day.

      "Eurodollar Loan": a Loan bearing interest at a rate determined by
reference to the Adjusted LIBO Rate in accordance with the provisions of Section
2.

      "Euro Equivalent": on any date of determination thereof, the amount of
Euros which could be purchased with the amount of Dollars involved in such
computation at the spot rate at which Euros may be exchanged into Dollars as set
forth on such date on (i) the applicable Telerate Service pages or (ii) if such
rate does not appear on such Telerate Service pages, at the spot exchange rate
therefor as determined by the Administrative Agent, in each case as of 11:00
a.m. London time on such date of determination thereof.

      "Euro Loan Commitment": as to any Lender, its obligation to make a
Euro-Denominated Loan to the Company (i) on the Initial Closing Date and (ii)
during the Availability Period in an aggregate amount the Dollar Equivalent of
which (as determined by the Administrative Agent on April 8, 2005) shall not
exceed the amount set forth opposite such Lender's name in Schedule 1.1A under
the heading "Euro Loan Commitment"; collectively, as to all such Lenders, the
"Euro Loan Commitments".

      "Euro Loan Facility": the Euro Loan Commitments and the Euro-Denominated
Loans made hereunder.

      "Euro Loan Lender": each Lender with a Euro Loan Commitment.

      "Euro Loan Percentage": as to any Lender at any time, the percentage of
the aggregate Euro Loan Commitments then constituted by such Lender's Euro Loan
Commitment (or, prior to the Final Drawdown Date, the percentage of the sum of
(a) the aggregate Euro-Denominated Loans and (b) the aggregate undrawn Euro Loan
Commitments (based on the Euro Equivalent thereof as determined by the
Administrative Agent) then constituted by such Lender's (i) Euro-Denominated
Loans and (ii) undrawn Euro Loan Commitment (based on the Euro Equivalent
thereof as determined by the Administrative Agent)).

      "Event of Default": any of the events specified in Section 7, provided
that all requirements for the giving of notice, the lapse of time, or both, and
any other conditions, have been satisfied.

      "Exchange Act": the Securities Exchange Act of 1934, as amended.

      "Exchange Note": each note issued under the Indenture delivered pursuant
to Section 2.3 and 5.14; collectively, the "Exchange Notes".

      "Exchange Request": as defined in Section 5.14(b).



                                                                              14

      "Existing Credit Agreement": the Credit Agreement, dated as of June 27,
2003, as amended, among the Company, Quiksilver Americas, Inc., Quiksilver
Wholesale, Inc., NA Pali, S.A.S., Quiksilver Japan K.K., Ug Manufacturing Co.
Pty Ltd, the lenders party thereto, JPMorgan Chase Bank, N.A. as agent, and
others.

      "Facility": each of (i) the Dollar Loan Facility and (ii) the Euro Loan
Facility.

      "Fee Letter": the Fee Letter dated as of March 20, 2005, among the
Company, Quiksilver Americas, JPMSI and the Administrative Agent, as amended
from time to time.

      "Final Drawdown Date": the earlier of (i) September 15, 2005 and (ii) the
date of completion of the Squeeze Out.

      "Final Maturity Date": the seventh anniversary of the Initial Closing
Date.

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

      "Funding Office": with respect to any Facility, the office of the
Administrative Agent specified in Section 9.2 or such other office as may be
specified from time to time by the Administrative Agent as its funding office by
written notice to the Company and the relevant Lenders.

      "GAAP": generally accepted accounting principles in the United States of
America in effect on the date of this Agreement, including those set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such entity as are approved by a significant segment of the
accounting profession.

      "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.

      "Group Members": the collective reference to the Company and its
Subsidiaries.

      "Guarantee": each guarantee made by a Guarantor in favor of the
Administrative Agent for the benefit of the Lenders, in the form of Exhibit A
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 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



                                                                              15

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 the
Company in good faith in a manner and with a result reasonably satisfactory to
the Administrative Agent.

      "Guarantor": each Subsidiary which executes a Guarantee in favor of the
Administrative Agent. As of the Initial Closing Date, the Guarantors shall be
Quiksilver Americas, each other Material Domestic Subsidiary, Hawk Designs,
Inc., Mervin Manufacturing, Inc. and Fidra, Inc.

      "Guarantor Subordinated Obligation": with respect to a Guarantor, any
Indebtedness of such Guarantor (whether outstanding on the date of this
Agreement or thereafter Incurred) which is expressly subordinate in right of
payment to the obligations of such Guarantor under its Guarantee pursuant to a
written agreement.

      "Hedging Obligations": of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.

      "Holder": the Person in whose name an Exchange Note or a Loan (and any
corresponding Note(s)) is registered.

      "Holding Company": as defined in the recitals to this Agreement.

      "Incur": issue, create, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be deemed to be
Incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.

      "Indebtedness": with respect to any Person on any date of determination
(without duplication):

            (i) the principal of and premium, if any, in respect of indebtedness
      of such Person for borrowed money,

            (ii) the principal of and premium, if any, in respect of obligations
      of such Person evidenced by bonds, debentures, notes or other similar
      instruments,

            (iii) the principal component of all obligations of such Person in
      respect of letters of credit, bankers' acceptances or other similar
      instruments (including reimbursement obligations with respect thereto
      except to the extent such reimbursement obligation relates to a trade
      payable and such obligation is satisfied within 30 days of Incurrence),

            (iv) the principal component of all obligations of such Person to
      pay the deferred and unpaid purchase price of property (except trade
      payables), which purchase price is due more than six months after the date
      of placing such property in service or taking delivery and title thereto,



                                                                              16

            (v) all Capitalized Lease Obligations and all Attributable
      Indebtedness of such Person,

            (vi) the principal component or liquidation preference of all
      obligations of such Person with respect to the redemption, repayment or
      other repurchase of Disqualified Stock or, with respect to any Subsidiary
      that is not a Guarantor, any Preferred Stock (but excluding, in each case,
      any accrued dividends),

            (vii) the principal component of all Indebtedness of other Persons
      secured by a Lien on any asset of such Person, whether or not such
      Indebtedness is assumed by such Person; provided, however, that the amount
      of Indebtedness of such Person shall be the lesser of (A) the fair market
      value of such asset at such date of determination and (B) the amount of
      such Indebtedness of such other Persons,

            (viii) the principal component of all Indebtedness of other Persons
      to the extent subject to a Guarantee Obligation by such Person,

            (ix) to the extent not otherwise included in this definition, net
      obligations of such Person under Currency Agreements and Interest Rate
      Agreements (the amount of any such obligations to be equal at any time of
      determination to the termination value of such agreement or arrangement
      giving rise to such obligation that would be payable by such Person at
      such time), and

            (x) to the extent not otherwise included in this definition, the
      amount then outstanding (i.e., advanced, and received by, and available
      for use by such Person) under any receivables financing (as set forth in
      the books and records of such Person and confirmed by the agent, trustee
      or other representative of the institution or group providing such
      receivables financing).

The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability at such date, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations described above at such
date.

In addition, "Indebtedness" of any Person shall include Indebtedness described
in the preceding paragraph that would not appear as a liability on the balance
sheet of such Person if:

      (i)   such Indebtedness is the obligation of a partnership or joint
            venture that is not a Restricted Subsidiary (a "Joint Venture");

      (ii)  such Person or a Restricted Subsidiary of such Person is a general
            partner of the Joint Venture (a "General Partner"); and

      (iii) there is recourse, by contract or operation of law, with respect to
            the payment of such Indebtedness to property or assets of such
            Person or a Restricted Subsidiary of such Person; and then such
            Indebtedness shall be included in an amount not to exceed:

            (a)   the lesser of (1) the net assets of the General Partner and
                  (2) the amount of such obligations to the extent that there is
                  recourse, by contract or



                                                                              17

                  operation of law, to the property or assets of such Person or
                  a Restricted Subsidiary of such Person; or

            (b)   if less than the amount determined pursuant to clause (a)
                  immediately above, the actual amount of such Indebtedness that
                  is recourse to such Person or a Restricted Subsidiary of such
                  Person, if the Indebtedness is evidenced by a writing and is
                  for a determinable amount and the related interest expense
                  shall be included in Consolidated Interest Expense to the
                  extent actually paid by the Company or its Restricted
                  Subsidiaries.

      "Indenture": the Indenture, in form and substance customary for bridge
exchange notes with such changes therein as the Company may request and the
Administrative Agent may approve, such approval not to be unreasonably withheld,
if and when executed and delivered by the Company and the Trustee thereunder, as
amended, waived, supplemented or otherwise modified from time to time; provided,
however, that the negative covenants contained in the Indenture shall be no more
restrictive on the Company and its Subsidiaries (as determined by the
Administrative Agent in its reasonable discretion) than those negative covenants
applicable to the Initial Loans contained herein.

      "Initial Closing Date": the date on which the conditions precedent set
forth in Section 4.1 shall be satisfied or waived.

      "Initial Loan": as defined in Section 2.1(a).

      "Initial Loan Rate": the rate equal to the greater of (i) the Adjusted
LIBO Rate plus 4.25% or, in the circumstances set forth in Section 2.7, the
Alternate Base Rate plus 3.25%, and (ii) the Treasury Rate plus 3.0%.

      "Initial Maturity Date": April 12, 2006.

      "Initial Note": as defined in Section 9.6(e).

      "Initial Purchase": as defined in the recitals to this Agreement.

      "Initial Transactions": as defined in Section 4.1(b)(vii).

      "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.

      "Intangible Assets": all unamortized debt discount and expense,
unamortized deferred charges, goodwill, Patents, Trademarks, Copyrights,
write-ups of assets over their carrying value at the date of issuance of the
Loans or the date of acquisition, if acquired subsequent thereto, and all other
items which would be treated as intangibles on the consolidated balance sheet of
such Person prepared in accordance with GAAP.

      "Intellectual Property Rights": with respect to any Person, all of such
Person's Patents, Copyrights, Trademarks, and Licenses, all other rights under
any of the foregoing, all extensions, renewals, reissues, divisions,
continuations and continuations-in-part of any of the foregoing, and all rights
to sue for past, present, and future infringement of any of the foregoing.



                                                                              18

      "Intercreditor Agreement": the Intercreditor Agreement dated as of April
12, 2005, among Quiksilver Americas, JPMorgan Chase Bank, N.A., as
administrative agent for the lenders party to the Revolving Credit Agreement,
and the Leasehold Improvement Lender, as the same may be amended, modified or
restated from time to time.

      "Interest Payment Date": with respect to any Loan, the last day of the
Interest Period applicable to the Loan, and in addition, the date of any
prepayment of such Loan.

      "Interest Period": (a) prior to the Initial Maturity Date, as to any
Initial Loan, (i) initially, the period commencing on the Initial Closing Date
and, subject to clause (y) of the proviso below, ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is three months thereafter and (ii) thereafter,
each period commencing on the last day of the next preceding Interest Period and
ending on the earlier of (A) the numerically corresponding day (or, if there is
no numerically corresponding day, on the last day) in the calendar month that is
three months thereafter and (B) the Initial Maturity Date and (b) following the
Initial Maturity Date, as to any Term Loan, (i) initially, the period commencing
on the Initial Maturity Date and ending on the last day of the fiscal quarter of
the Company following the Initial Maturity Date and (ii) thereafter, each period
commencing on the last day of the next preceding Interest Period and ending on
the earlier of (A) the last day of the fiscal quarter of the Company following
such date, and (B) the Final Maturity Date; provided, however, that (x) if any
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar Loan only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day and (y) notwithstanding anything herein to the contrary,
the initial Interest Period for Euro-Denominated Loans borrowed on the Initial
Closing Date shall be one week, and each Interest Period thereafter for such
Euro-Denominated Loans shall be for a period of three months as set forth in
clause (a) above. Interest shall accrue from and including the first day of an
Interest Period to but excluding the last day of such Interest Period.

      "Interest Rate Agreement": with respect to any Person any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.

      "Investment": with respect to any Person, all investments by such Person
in other Persons (including Affiliates) in the form of any direct or indirect
advance, loan (other than advances or extensions of credit to customers in the
ordinary course of business) or other extension of credit (including by way of a
Guarantee Obligation or similar arrangement, but excluding any debt or extension
of credit represented by a bank deposit other than a time deposit) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, Indebtedness or other similar
instruments issued by, such Person and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that none of the following will be deemed to be an Investment: (a)
Hedging Obligations entered into in the ordinary course of business and in
compliance with this Agreement; (b) endorsements of negotiable instruments and
documents in the ordinary course of business; and (c) an acquisition of assets,
Capital Stock or other securities by the Company or a Subsidiary for
consideration to the extent such consideration consists of common equity
securities of the Company. For purposes of Section 6.2, (i) "Investment" shall
include the portion (proportionate to the Company's equity interest in a
Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the
fair market value of the net assets of such Restricted Subsidiary of the Company
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company shall be deemed to continue to



                                                                              19

have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if
positive) equal to (x) the Company's "Investment" in such Subsidiary at the time
of such redesignation less (y) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the net assets
(as conclusively determined by the Board of Directors of the Company in good
faith) of such Subsidiary at the time that such Subsidiary is so redesignated a
Restricted Subsidiary; and (ii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its fair market value at the time of
such transfer, in each case as determined in good faith by the Board of
Directors of the Company. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Voting Stock of any Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such entity is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value (as conclusively determined in good
faith by the Board of Directors of the Company) of the Capital Stock of such
Subsidiary not sold or disposed of.

      "Investment Bank": one or more investment banks reasonably satisfactory to
the Administrative Agent which may be engaged by the Company to publicly sell or
privately place the Take-Out Debt in accordance with Section 5.13.

      "Investment Company Act": the Investment Company Act of 1940, as amended.

      "JPMSI": J.P. Morgan Securities Inc., a Delaware corporation.

      "Judgment Currency": as defined in Section 9.16.

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

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

      "Lenders": as defined in the preamble to this Agreement.

      "License": with respect to any Person, all of such Person's right, title,
and interest in and to (i) any and all licensing agreements or similar
arrangements in and to its Patents, Copyrights, or Trademarks, (ii) all income,
royalties, damages, claims, and payments now or hereafter due or payable under
and with respect thereto, including, without limitation, damages and payments
for past and future breaches thereof, and (iii) all rights to sue for past,
present, and future breaches thereof.

      "Lien": any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

      "Loans": as defined in Section 2.1.

      "Loan Documents": this Agreement, the Loan Notes, the Guarantees and the
Escrow Security Agreement.

      "Loan Notes": the collective reference to the Term Notes and the Initial
Notes.

      "Major Default": as defined in Section 4.2(h).



                                                                              20

      "Major Representations": as defined in Section 4.2(g).

      "Margin Stock": as defined in Regulation U.

      "Material Adverse Effect": a material adverse effect on (a) the
Transaction, (b) the business, operations, property, condition (financial or
otherwise) or prospects of the Company and its Subsidiaries taken as a whole,
(c) the ability of the Company, any Material Domestic Subsidiary or any Material
Foreign Subsidiary to perform their respective obligations under the Loan
Documents or (d) the validity or enforceability of the Revolving Credit
Agreement or the Loan Documents or the rights or remedies of the Administrative
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 the Company or another Subsidiary) of at least 5% of
the Company's consolidated net worth as of the last day of the most recently
ended fiscal quarter of the Company, (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 the Company's consolidated revenue for the 12-month
period ended as of the most recently ended fiscal quarter of the Company 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 the Company's
consolidated net income for the 12-month period ended as of the most recently
ended fiscal quarter of the Company.

      "Material Foreign Subsidiary": a Foreign Subsidiary having at any time a
net worth equal to 10% or more of the Company's consolidated net worth as of the
last day of the most recently ended fiscal quarter of the Company.

      "Materials of Environmental Concern": any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products, polychlorinated
biphenyls, urea-formaldehyde insulation, asbestos, molds, pollutants,
contaminants, radioactivity, and any other substances of any kind, regulated
pursuant to or that could give rise to liability under any Environmental Law.

      "Monthly Reports": as defined in Section 4.1(f).

      "Moody's": Moody's Investors Service, Inc., and its successors.

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

      "Net Available Cash": with respect to an Asset Disposition, cash payments
received by the Company or any Restricted Subsidiary (including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise and net proceeds from the sale or other
disposition of any securities received as consideration, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses Incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP (after taking into account any available tax credits or
deductions and any tax sharing agreements) as a consequence of such Asset
Disposition, (ii) all payments made on any Indebtedness that is secured by any
assets subject to such Asset Disposition, in accordance with the terms of any
Lien upon such assets, or that must by its terms, or in order to obtain a
necessary consent to such Asset Disposition, or by applicable law be repaid out
of the proceeds from such Asset Disposition, (iii) all distributions and other



                                                                              21

payments required to be made to minority interest holders in Subsidiaries or
joint ventures as a result of such Asset Disposition and (iv) the deduction of
appropriate amounts (as determined or reasonably estimated by the seller
thereof) to be provided by the seller as a reserve, in accordance with GAAP,
against any liabilities associated with the assets disposed of in such Asset
Disposition and retained by the Company or any Restricted Subsidiary after such
Asset Disposition.

      "Net Cash Proceeds": with respect to any issuance or sale of Capital Stock
or Indebtedness, the cash proceeds of such issuance or sale net of attorneys'
fees, accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually Incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale (after taking into account any
available tax credit or deductions and any tax sharing arrangements).

      "Non-Excluded Taxes": as defined in Section 2.12(a).

      "Non Recourse Debt": Indebtedness (i) as to which neither the Company nor
any of its Restricted Subsidiaries (a) provides any Guarantee Obligation or
credit support of any kind (including any undertaking, guarantee, indemnity,
agreement or instrument that would constitute Indebtedness) or (b) is directly
or indirectly liable as a guarantor or otherwise; (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of any other Indebtedness of the Company or any
of its Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment thereof to be accelerated or payable prior to its stated
maturity; and (iii) the explicit terms of which provide that there is no
recourse against any of the assets of the Company or any of its Restricted
Subsidiaries.

      "Non-U.S. Lender": as defined in Section 2.12(d).

      "Notes": the Loan Notes and the Exchange Notes, as originally executed or
as subsequently amended from time to time pursuant to the applicable provisions
hereof.

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

      "Offer Account": as defined in Section 4.2(f).

      "Offer Documents": as defined in Section 4.2(e).

      "OPRO Account": as defined in Section 4.3(f).

      "OPRO Documents": as defined in Section 4.3(e).

      "OPRO Major Default": as defined in Section 4.3(e).

      "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.

      "Original Initial Note": as defined in Section 9.6(e).



                                                                              22

      "Original Term Note": as defined in Section 9.6(e).

      "Other Taxes": any and all present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement or any other Loan Document.

      "Participant": as defined in Section 9.6(c).

      "Patents": with respect to any Person, all of such Person's right, title,
and interest in and to: (i) any and all patents and patent applications; (ii)
all inventions and improvements described and claimed therein; (iii) all
reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof; (iv) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof; (v) all rights to sue for past, present, and future
infringements thereof; and (vi) all rights corresponding to any of the foregoing
throughout the world.

      "Patriot Act": as defined in Section 9.17.

      "Payment Sharing Notice": a written notice from the Company or any Lender
informing the Administrative Agent that an Event of Default has occurred and is
continuing and directing the Administrative Agent to allocate payments
thereafter received from or on behalf of the Company in accordance with the
provisions of Section 2.9.

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

      "Permitted Investment": an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person which will, upon the
making of such Investment, become a Restricted Subsidiary, provided, however,
that the primary business of such Restricted Subsidiary is a Related Business,
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary,
provided, however, that such Person's primary business is a Related Business,
(iii) cash and Cash Equivalents, (iv) receivables owing to the Company or any
Restricted Subsidiary created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms, provided,
however, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances, (v) payroll, travel, moving and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business, (vi) to the extent permitted by law, loans or advances to employees
(other than executive officers) made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary,
(vii) Capital Stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Company or any
Restricted Subsidiary or in satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of a
debtor, (viii) Investments made as a result of the receipt of non-cash
consideration from an Asset Disposition that was made pursuant to and in
compliance with Section 6.4, (ix) Investments in existence on the Initial
Closing Date, (x) Currency Agreements, Interest Rate Agreements and related
Hedging Obligations, which transactions or obligations are Incurred in
compliance with Section 6.1, (xi) Investments by the Company or any of its
Restricted Subsidiaries, together with all other Investments pursuant to this
clause (xi), in an aggregate amount at the time of such Investment not to exceed
$10,000,000 outstanding at any one time (with the fair market value of such
Investment being measured at the time made and without giving effect to
subsequent changes in value),



                                                                              23

(xii) Guarantee Obligations issued in accordance with Section 6.1, (xiii)
Investments constituting prepayments or credits made to customers or suppliers
in the ordinary course of business and consistent with past practice and (xiv)
Investments made pursuant to the agreements set forth on Schedule 1.1B.

      "Permitted Liens": with respect to any Person, (i) Liens securing
Indebtedness and other obligations of the Company under a Credit Facility,
including the Revolving Credit Agreement, Interest Rate Agreements, Currency
Agreements and Banking Services Obligations (as defined in the Revolving Credit
Agreement) and Liens on assets of any Guarantors securing Guarantee Obligations
with respect to Indebtedness and other obligations of the Company under a Credit
Facility, including under the Revolving Credit Agreement, Interest Rate
Agreements, Currency Agreements and such Banking Services Obligations, in each
case permitted to be Incurred pursuant to Section 6.1(b)(i) of this Agreement;
(ii) Liens securing Indebtedness and related Hedging Obligations of Foreign
Subsidiaries permitted to be Incurred under clause (xi) of Section 6.1(b)(i) of
this Agreement; (iii) pledges or deposits by such Person under workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Indebtedness) or leases to which such Person is a party, or deposits
to secure public or statutory obligations of such Person or deposits of cash or
United States government bonds to secure surety or appeal bonds to which such
Person is a party, or deposits as security for contested taxes or import or
customs duties or for the payment of rent, in each case Incurred in the ordinary
course of business; (iv) Liens imposed by law, including carriers',
warehousemen's and mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings if a reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made in respect thereof; (v) Liens for taxes, assessments or other governmental
charges not yet subject to penalties for non-payment or which are being
contested in good faith by appropriate proceedings provided appropriate reserves
required pursuant to GAAP have been made in respect thereof; (vi) Liens in favor
of issuers of surety or performance bonds or letters of credit or bankers'
acceptances issued pursuant to the request of and for the account of such Person
in the ordinary course of its business; provided, however, that such letters of
credit do not constitute Indebtedness; (vii) encumbrances, ground leases,
easements or reservations of, or rights of others for, licenses, rights of way,
sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning, building codes, or other restrictions (including, without
limitation, minor defects or irregularities in title and similar encumbrances)
as to the use of real properties or liens incidental to the conduct of the
business of such Person or to the ownership of its properties which do not in
the aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such Person;
(viii) Liens securing Hedging Obligations so long as the related Indebtedness
is, and is permitted to be under this Agreement, secured by a Lien on the same
property securing such Hedging Obligation; (ix) leases, licenses, and subleases
and sublicenses of assets (including, without limitation, real property and
Intellectual Property Rights), which do not materially interfere with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries; (x) judgment Liens not giving rise to an Event of Default so long
as such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment have not been
finally terminated or the period within which such proceedings may be initiated
has not expired; (xi) Liens for the purpose of securing the payment (or the
refinancing of the payment) of all or a part of the purchase price of, or
Capitalized Lease Obligations, purchase money obligations or other payments
Incurred to finance the acquisition, improvement or construction of, assets or
property acquired or constructed in the ordinary course of business; provided
that (A) the aggregate principal amount of Indebtedness secured by such Liens is
otherwise permitted to be Incurred under this Agreement and does not exceed the
cost of the assets or property acquired or constructed and (B) such Liens are
created within 180 days of construction or acquisition of such assets or
property and do not encumber any other assets or property of the Company or any
Restricted Subsidiary other than such assets or property and assets affixed or
appurtenant thereto; (xii) Liens arising solely by virtue of any statutory or
common law provision relating to banker's Liens, rights of set-off or similar
rights and remedies as to deposit accounts



                                                                              24

or other funds maintained with a depositary institution; provided that (A) such
deposit account is not a dedicated cash collateral account and is not subject to
restrictions against access by the Company in excess of those set forth by
regulations promulgated by the Federal Reserve Board, and (B) such deposit
account is not intended by the Company or any Restricted Subsidiary to provide
collateral to the depository institution; (xiii) Liens arising from Uniform
Commercial Code financing statement filings regarding operating leases entered
into by the Company and its Restricted Subsidiaries in the ordinary course of
business; (xiv) Liens existing on the Initial Closing Date; (xv) Liens on
property or shares of stock of a Person at the time such Person becomes a
Restricted Subsidiary; provided, that (A) such Liens are not created, Incurred
or assumed in connection with, or in contemplation of, such other Person
becoming a Restricted Subsidiary and (B) any such Lien may not extend to any
other property owned by the Company or any other Restricted Subsidiary; (xvi)
Liens on property at the time the Company or a Restricted Subsidiary acquired
the property, including any acquisition by means of a merger or consolidation
with or into the Company or any other Restricted Subsidiary; provided, that (A)
such Liens are not created, Incurred or assumed in connection with, or in
contemplation of, such acquisition and (B) such Liens may not extend to any
other property owned by the Company or any other Restricted Subsidiary; (xvii)
Liens securing Indebtedness or other obligations of a Restricted Subsidiary
owing to the Company or another Restricted Subsidiary; (xviii) Liens securing
the Loans and the Exchange Notes and Guarantees; (xix) Liens securing
Refinancing Indebtedness Incurred to refinance Indebtedness that was previously
so secured; provided, that any such Lien is limited to all or part of the same
property or assets (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured (or, under the written
arrangements under which the original Lien arose, could secure) the Indebtedness
being refinanced or is in respect of property that is the security for a
Permitted Lien hereunder; (xx) Liens in favor of customs and revenue authorities
to secure payment of customs duties in connection with the importation of goods;
(xxi) Liens securing Indebtedness (other than Subordinated Obligations and
Guarantor Subordinated Obligations) in an aggregate principal amount outstanding
at any one time not to exceed $10,000,000; (xxii) any interest or title of a
lessor under any Capitalized Lease Obligation or operating lease; (xxiii) Liens
on the assets of Foreign Subsidiaries to the extent such Liens secure
Indebtedness that is permitted by this Agreement; (xxiv) Liens on QIPL's
Trademark rights to the Company's name and logo and related Intellectual
Property Rights 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 shares of QIPL by QAPL;
and (xxv) Liens under the Escrow Security Agreement.

      "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.

      "Plan": as to any Person, any employee benefit plan subject to 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).

      "Preferred Stock": as applied to the Capital Stock of any corporation,
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.

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

      "Projected Pro Forma Balance Sheet": as defined in Section 3.8(c).



                                                                              25

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

      "Quiksilver Americas": Quiksilver Americas, Inc., a California
corporation.

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

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

      "Receivable": a right to receive payment arising from a sale or lease of
goods or the performance of services by a Person pursuant to an arrangement with
another Person pursuant to which such other Person is obligated to pay for goods
or services under terms that permit the purchase of such goods and services on
credit and shall include, in any event, any items of property that would be
classified as an "account," "chattel paper," "payment intangible" or
"instrument" under the Uniform Commercial Code as in effect in the State of New
York and any "supporting obligations" as so defined.

      "Receivables Fees": any fees or interest paid to purchasers or lenders
providing the financing in connection with a factoring agreement or other
similar agreement, including any such amounts paid by discounting the face
amount of Receivables or participations therein transferred in connection with a
factoring agreement or other similar arrangement, regardless of whether any such
transaction is structured as on-balance sheet or off-balance sheet or through a
Restricted Subsidiary or an Unrestricted Subsidiary.

      "Refinancing Indebtedness": Indebtedness that is Incurred to refund,
refinance, replace, exchange, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinance", "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of this Agreement or Incurred in compliance with this Agreement (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided, however, that (i)(x) if the
Stated Maturity of the Indebtedness being refinanced is earlier than the Final
Maturity Date, the Refinancing Indebtedness has a Stated Maturity no earlier
than the Stated Maturity of the Indebtedness being refinanced or (y) if the
Stated Maturity of the Indebtedness being refinanced is later than the Final
Maturity Date, the Refinancing Indebtedness has a Stated Maturity at least 91
days later than the Final Maturity Date, (ii) the Refinancing Indebtedness has
an Average Life at the time such Refinancing Indebtedness is Incurred that is
equal to or greater than the Average Life of the Indebtedness being refinanced,
(iii) such Refinancing Indebtedness is Incurred in an aggregate principal amount
(or if issued with original issue discount, an aggregate issue price) that is
equal to or less than the sum of the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value) then outstanding of
the Indebtedness being refinanced (plus, without duplication, any additional
Indebtedness Incurred to pay interest or premiums required by the instruments
governing such existing Indebtedness and fees Incurred in connection therewith)
and (iv) if the Indebtedness being extended, refinanced, replaced, defeased or
refunded is subordinated in right of payment to the Loans or a Guarantee, such
Refinancing Indebtedness is subordinated in right of payment to the Loans or
such Guarantee on terms at least as favorable to the Holders as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded.

      "Registration Rights Agreement": a registration rights agreement, in form
and substance customary for bridge exchange notes with such changes therein as
the Company may request and the Administrative Agent may approve, such approval
not to be unreasonably withheld, if and when executed



                                                                              26

and delivered by the Company and the Trustee thereunder, as amended, waived,
supplemented or otherwise modified from time to time.

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

      "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 S-X": Regulation S-X of the Securities Act, 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 T": Regulation T 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.

      "Regulations": regulations 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 regulations
thereto.

      "Related Business": any business that is the same as or related, ancillary
or complementary to any of the businesses of the Company and its Restricted
Subsidiaries or Target and its subsidiaries, in each case, on the date hereof.

      "Released Amount": as defined in Section 2.5(b)(iii).

      "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(c) of
ERISA, other than those events as to which the thirty day notice period is
waived under PBGC regulations.

      "Required Lenders": at any time, Lenders holding more than 50% in
principal amount of outstanding Loans (based, in the case of Euro-Denominated
Loans, on the Dollar Equivalent of such Loans as determined by the
Administrative Agent) (or, prior to the Final Drawdown Date, more than 50% of
(x) the Initial Loans (based, in the case of Euro-Denominated Loans, on the
Dollar Equivalent of such Initial Loans as determined by the Administrative
Agent) and (y) any undrawn Commitments).

      "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



                                                                              27

executive vice president, any senior vice president or, with respect to
financial matters, the chief financial officer, the vice president of finance or
the treasurer.

      "Restricted Investment": any Investment other than a Permitted Investment.

      "Restricted Payment": as defined in Section 6.2(a).

      "Restricted Subsidiary": any Subsidiary of the Company other than an
Unrestricted Subsidiary.

      "Revolving Credit Agreement": the Credit Agreement dated as of the date
hereof, among the Company, Quiksilver Americas, Inc., as Borrower, the lenders
party thereto and JPMorgan Chase Bank, N.A., as administrative agent, as the
same may be amended, supplemented or otherwise modified from time to time.

      "Revolving Credit Documents": the collective reference to the Revolving
Credit Agreement, the security agreements and guarantees entered into in
connection therewith by the relevant grantors party thereto, the notes issued in
connection therewith and all documentation entered into in connection therewith,
as such Revolving Credit Documents may be amended, supplemented or otherwise
modified from time to time.

      "Sale/Leaseback Transaction": an arrangement relating to property now
owned or hereafter acquired by the Company or a Restricted Subsidiary whereby
the Company or such Restricted Subsidiary transfers such property to a Person
and the Company or such Restricted Subsidiary leases it from such Person.

      "SEC": the Securities and Exchange Commission or any Governmental
Authority which succeeds to the powers and functions thereof.

      "Second Step Transactions": as defined in Section 4.2(b)(iii).

      "Securities Act": the Securities Act of 1933, as amended.

      "Securities Demand": as defined in Section 5.13(a).

      "Sellers": collectively, certain existing stockholders of Target as
defined in the Acquisition Agreement.

      "Senior Credit Engagement Letter": the Senior Credit Engagement Letter
dated as of February 28, 2005, between the Company and JPMSI, as amended 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



                                                                              28

            (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.

      "S&P": Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc., and its successors.

      "Squeeze Out": as defined in the preamble to this Agreement.

      "Stated Maturity": with respect to any security, the date specified in
such security as the fixed date on which the payment of principal of such
security is due and payable, including pursuant to any mandatory redemption
provision, but shall not include any contingent obligations to repay, redeem or
repurchase any such principal prior to the date originally scheduled for the
payment thereof.

      "Subordinated Obligation": any Indebtedness of the Company (whether
outstanding on the date of this Agreement or thereafter Incurred) which is
subordinate or junior in right of payment to the Loans pursuant to a written
agreement.

      "Subsequent Initial Note": as defined in Section 9.6(e).

      "Subsequent Term Note": as defined in Section 9.6(e).

      "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 Company.

      "Successor Company": as defined in Section 6.9(b)(i).

      "Super-Majority Lenders": at any time, Lenders holding more than 66 2/3%
in principal amount of outstanding Loans (based, in the case of Euro-Denominated
Loans, on the Dollar Equivalent of such Loans as determined by the
Administrative Agent) (or, prior to the Final Drawdown Date, more than 66 2/3%
of (x) the Initial Loans (based, in the case of Euro-Denominated Loans, on the
Dollar Equivalent of such Initial Loans as determined by the Administrative
Agent) and (y) any undrawn Commitments).

      "Take-Out Debt": any notes or debentures (which may include cash pay or
non-cash pay securities, senior, subordinate or senior subordinated securities,
discount issue securities or a combination of any of the foregoing) of the
Company that may be issued by the Company after the Initial Closing Date to
refinance the Loans or Exchange Notes.

      "Target": as defined in the recitals to this Agreement.

      "TARGET Operating Day": any day that is not (a) a Saturday or Sunday, (b)
Christmas Day or New Year's Day or (c) any other day on which the Trans-European
Real-time Gross Settlement Operating System (or any successor settlement system)
is not operating (as determined by the Administrative Agent).

      "Target Stock": as defined in the recitals to this Agreement.



                                                                              29

      "Telerate Page": the display designated as Page 3750 on the Telerate
System Incorporated Service (or such other page as may replace such page on such
service for the purpose of displaying the rates at which Dollar deposits are
offered by leading banks in the London interbank deposit market).

      "Tender Offer": as defined in the preamble to this Agreement.

      "Tender Offer Closing Date": the date on which the conditions precedent
set forth in Section 4.2 shall be satisfied or waived.

      "Tender Offer Undertakings": as defined in Section 4.2(i).

      "Term Loan": as defined in Section 2.1(b).

      "Term Note": as defined in Section 9.6(e).

      "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.

      "Trademarks": with respect to any Person, all of such Person's right,
title, and interest in and to the following: (i) all trademarks, service marks,
logos, trade names, trade dress, trade styles, domain names and other sources of
business identifiers and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the foregoing; (ii) all
licenses of the foregoing, whether as licensee or licensor; (iii) all renewals
of the foregoing; (iv) all income, royalties, damages, and payments now or
hereafter due or payable with respect thereto, including, without limitation,
damages, claims, and payments for past and future infringements thereof; (v) all
rights to sue for past, present, and future infringements of the foregoing,
including the right to settle suits involving claims and demands for royalties
owing; and (vi) all rights corresponding to any of the foregoing throughout the
world.

      "Transaction Documents": the collective reference to the Acquisition
Documents, the Loan Documents, the Revolving Credit Documents, the Indenture,
the Registration Rights Agreement, the Exchange Notes, the Offer Documents and
the OPRO Documents.

      "Transaction": as defined in the recitals to this Agreement.

      "Transferee": any Assignee or Participant.

      "Treasury Rate": with respect to each day during each Interest Period, the
rate per annum determined by the Administrative Agent two days prior to the
beginning of such Interest Period as (x) the rate borne by direct obligations of
the United States maturing on the seventh anniversary of the Initial Closing
Date or (y) if there are no such obligations, the rate determined by linear
interpolation between the rates borne by the two direct obligations of the
United States maturing closest to, but straddling, the seventh anniversary of
the Initial Closing Date, in each case as most recently published by the Board
of Governors on or prior to such date of determination.

      "Treasury Rate Loan": a Loan bearing interest at a rate determined by
reference to the Treasury Rate in accordance with the provisions of Section 2.

      "Trustee": as defined in Section 5.14(a).


                                                                              30

      "Type": when used in respect of any Loan, shall refer to the Rate by
reference to which interest on such Loan is determined. For purposes hereof, the
term "Rate" shall include the Adjusted LIBO Rate, the Treasury Rate and the
Alternate Base Rate.

      "Unrestricted Subsidiary": (i) any Subsidiary of the Company that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors of the Company in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company
may designate any Subsidiary of the Company (including any newly acquired or
newly formed Subsidiary or a Person becoming a Subsidiary through merger or
consolidation or Investment therein) to be an Unrestricted Subsidiary only if:
(a) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or
Indebtedness of or have any Investment in, or own or hold any Lien on any
property of, any other Subsidiary of the Company which is not a Subsidiary of
the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; (b)
all the Indebtedness of such Subsidiary and its Subsidiaries shall, at the date
of designation, and will at all times thereafter, consist of Non Recourse Debt;
(c) such designation and the Investment of the Company in such Subsidiary
complies with Section 6.2; (d) such Subsidiary, either alone or in the aggregate
with all other Unrestricted Subsidiaries, does not operate, directly or
indirectly, all or substantially all of the business of the Company and its
Subsidiaries; (iii) such Subsidiary is a Person with respect to which neither
the Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation: (a) to subscribe for additional Capital Stock of such Person; or (b)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; and (iv) on the
date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary
is not a party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary with terms substantially less favorable to
the Company than those that might have been obtained from Persons who are not
Affiliates of the Company. Any such designation by the Board of Directors of the
Company shall be evidenced to the Administrative Agent by filing with the
Administrative Agent a resolution of the Board of Directors of the Company
giving effect to such designation and an Officer's Certificate certifying that
such designation complies with the foregoing conditions. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Agreement and any Indebtedness of such
Subsidiary shall be deemed to be Incurred as of such date. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided that immediately after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof and the Company could Incur
at least $1.00 of additional Indebtedness under Section 6.1(a) on a pro forma
basis taking into account such designation.

      "United States": the United States of America (including the states,
commonwealths and territories thereof and the District of Columbia).

      "Voting Stock": of any Person as of any date, the Capital Stock of such
Person that is as of such time entitled to vote in the election of the Board of
Directors of such Person.

      "Wholly Owned Subsidiary": a Restricted Subsidiary of the Company all the
Capital Stock of which (other than directors' qualifying shares) is owned by the
Company or another Wholly Owned Subsidiary.

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


                                                                              31

            (b) As used herein and in any Notes and any other Loan Document, and
any certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries 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,
Schedule, Annex and Exhibit references are to this Agreement unless otherwise
specified.

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

                                   SECTION 2

                            AMOUNT AND TERMS OF LOANS

      2.1 Loans. (a) Subject to the terms and conditions hereof, (i) each Dollar
Loan Lender severally agrees to make a Dollar-Denominated Loan on the Initial
Closing Date in an amount equal to such Lender's Dollar Loan Commitment and (ii)
each Euro Loan Lender severally agrees to make Euro-Denominated Loans (together
with the Dollar-Denominated Loans, the "Initial Loans") in an aggregate
principal amount the Euro Equivalent of which (as determined by the
Administrative Agent on April 8, 2005) shall not exceed such Lender's Euro Loan
Commitment, with such Euro-Denominated Loans to be available to the Company in
up to three drawings on or prior to the Final Drawdown Date with (x) the first
drawing to be made on the Initial Closing Date, (y) the second drawing to be
made on the Tender Offer Closing Date and (z) the final drawing to be made on
the Final Drawdown Date; provided that, the maximum principal amount of
Euro-Denominated Loans made on the Initial Closing Date shall not exceed
(euro)49,000,000; and provided, further, that the Escrowed Amount shall be
deposited into the Escrow Account on the Initial Closing Date. Any Dollar Loan
Commitments not drawn on the Initial Closing Date shall terminate and any Euro
Loan Commitments not drawn on or prior to the Final Drawdown Date shall
terminate.

            (b) Subject to the terms and conditions hereof, each Lender
severally agrees, if the Initial Loans have not been repaid or exchanged for
Exchange Notes on the Initial Maturity Date, to convert the then outstanding
principal amount of its Initial Loans into a loan (individually, a "Term Loan"
and collectively, the "Term Loans"; the Initial Loans and the Term Loans,
collectively, the "Loans") to the Company, on the Initial Maturity Date, in an
aggregate principal amount equal to then outstanding principal amount of the
Initial Loans held by such Lender. Upon the making by such Lender of such Term
Loan, each Lender shall cancel on its records the principal amount of the
Initial Loans held by such Lender corresponding to the principal amount of Term
Loans made by such Lender, which corresponding principal amount of the Initial
Loans shall be satisfied by the conversion thereof into Term Loans.

            (c) Prior to the Initial Maturity Date, the Initial Loans shall be
comprised of (i) Eurodollar Loans, in the case of Euro-Denominated Loans, and
(ii) Eurodollar Loans, Treasury Rate Loans or ABR Loans, in the case of
Dollar-Denominated Loans. Each Lender may at its option make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Company to repay such Loan in accordance with the terms of
this Agreement.


                                                                              32

            (d) The failure of any Lender to make any Loan required to be made
by it shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender's failure to make the Loans required.

      2.2 Procedure for Borrowing. To request a Borrowing, the Company shall
give the Administrative Agent irrevocable notice (which notice must be received
by the Administrative Agent prior to 10:00 A.M., New York City time (or, in the
case of Borrowings of Euro-Denominated Loans, 11:00 A.M., London time), three
Business Days prior to the date of the proposed Borrowing) specifying (a) the
Facility under which such Loans are to be borrowed and (b) the amount to be
borrowed. Upon receipt of such notice the Administrative Agent shall promptly
notify each Lender thereof. Not later than 12:00 Noon, New York City time (or,
in the case of Borrowings of Euro-Denominated Loans, 11:00 A.M., London time),
on the date of the proposed Borrowing, each Lender shall make available to the
Administrative Agent at the relevant Funding Office an amount in immediately
available funds equal to the Loans to be made by such Lender. The Administrative
Agent shall credit the account of the Company on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Lenders in immediately available funds; provided
that, the Escrowed Amount shall be deposited into the Escrow Account.

      2.3 Maturity and Exchange Notes. (a) All the Initial Loans will mature on
the Initial Maturity Date.

            (b) All the Term Loans will mature on the Final Maturity Date.

            (c) Each Lender will have the option on or after the Initial
Maturity Date at any time or from time to time to receive Exchange Notes in
exchange for the Term Loans or, on the Initial Maturity Date, the Initial Loans,
of such Lender then outstanding in accordance with Section 5.14 of this
Agreement; provided, that a Lender may not elect to exchange only a portion of
its outstanding Initial Loans for Exchange Notes unless such Lender intends at
the time of such partial exchange of Initial Loans promptly to sell the Exchange
Notes received in such exchange. The principal amount of the Exchange Notes will
equal 100.0% of the aggregate principal amount of, and be denominated in the
currency of, the Loans for which they are exchanged. If a Default (but not an
Event of Default) shall have occurred and be continuing on the date of such
exchange, any notices given or cure periods commenced while the Loan was
outstanding shall be deemed given or commenced (as of the actual dates thereof)
for all purposes with respect to the Exchange Note (with the same effect as if
the Exchange Note had been outstanding as of the actual dates thereof). All
accrued and unpaid interest on the date of conversion of any Loans into Exchange
Notes shall be payable on the applicable interest payment date under the
Indenture to the Holders of such Exchange Notes.

      2.4 Repayment of Loans. The Company hereby unconditionally promises to pay
to the Administrative Agent at the relevant Funding Office for the account of
each Lender the then unpaid principal amount of each Loan in Dollars or Euros,
as applicable, in accordance with the terms hereof and of the Loan Notes. The
Company hereby further agrees to pay to the Administrative Agent for the account
of each Lender interest on the unpaid principal amount of the Loans in Dollars
or Euros, as applicable, from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.6.

      2.5 Optional and Mandatory Prepayments. (a) The Company may at any time
and from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agent at least
three Business Days prior thereto, which notice shall specify the date and
amount of prepayment; provided, that if a Loan is prepaid on any day other than
the last day of the Interest Period applicable thereto, the Company shall also
pay any amounts owing pursuant to Section


                                                                              33

2.13 and provided, further, that on or after the Initial Maturity Date, any
prepayment shall be applied pro rata among the Loans and Exchange Notes as
provided in Section 2.5(d) below. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof. If any
such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with accrued interest to such
date on the amount prepaid. Partial prepayments of Loans and the Exchange Notes
shall be in an aggregate principal amount equal to the lesser of (A) $1,000,000
or (euro)1,000,000, as the case may be, or a whole multiple thereof and (B) the
aggregate unpaid principal amount of the Loans and Exchange Notes, as the case
may be.

            (b) (i) If, subsequent to the Initial Closing Date, the Company or
any of its Subsidiaries shall issue the Take-Out Debt or any Indebtedness (other
than Indebtedness Incurred pursuant to Section 6.1(b)) or Capital Stock (other
than shares of Capital Stock of (i) a Subsidiary issued to the Company or any
Wholly Owned Subsidiary of the Company or (ii) the Company issued pursuant to
exercises of stock options or purchases under an employee stock purchase plan)),
an amount equal to 100% of the Net Cash Proceeds thereof shall be promptly
applied toward the prepayment of the Loans and the Exchange Notes as provided in
Section 2.5(d) below; provided that such Net Cash Proceeds (excluding Net Cash
Proceeds received by the Company or any of its Subsidiaries from the issuance of
the Take-Out Debt) need not be applied to the prepayment of the Loans and the
Exchange Notes to the extent that such Net Cash Proceeds (excluding Net Cash
Proceeds received by the Company or any of its Subsidiaries from the issuance of
the Take-Out Debt) are required to be and are applied pursuant to the Revolving
Credit Agreement, in satisfaction of the obligations thereunder.

               (ii) If, subsequent to the Initial Closing Date, the Company or
any of its Subsidiaries shall be required to apply any Net Available Cash
pursuant to Section 6.4, an amount equal to such Net Available Cash shall be
promptly applied toward the prepayment of the Loans and the Exchange Notes as
provided in Section 2.5(d) below; provided that such Net Available Cash need not
be applied to the prepayment of the Loans and the Exchange Notes to the extent
that such Net Available Cash is required to be and is applied pursuant to the
Revolving Credit Agreement in satisfaction of the obligations thereunder.

               (iii) If, subsequent to the Initial Closing Date, the Escrowed
Amount or any portion thereof is released from the Escrow Account (such amount,
the "Released Amount") to the Company or any of its Subsidiaries, an amount
equal to such Released Amount shall be applied toward the prepayment of the
Loans and the Exchange Notes as provided in Section 2.5(d) below on the date on
which such funds are released.

               (iv) The Company shall give the Administrative Agent (which shall
promptly notify each Lender) at least three (3) Business Days' prior notice or,
telephone notice promptly confirmed in writing of each prepayment in whole or in
part pursuant to this Agreement setting forth the date and amount thereof.

            (c) Accrued and unpaid interest on the amount of any principal of
the Loans prepaid under this Section 2.5 shall be paid to and on the date of
such prepayment.

            (d) As promptly as practicable after the Administrative Agent
receives notice of a prepayment pursuant to Section 2.5(b)(iii), the
Administrative Agent, in cooperation with the Trustee, shall give notice to each
holder of an Exchange Note of the pro rata amount that would be payable to such
holder in respect of such holder's Exchange Note and the expected date of such
prepayment. Any holder of Exchange Notes (other than Callable Exchange Notes)
that wishes to accept such prepayment (each, an "Accepting Holder") shall
promptly notify the Trustee and the Administrative Agent in writing. Payments
and offers to prepay the Loans and Exchange Notes shall be made ratably among
the Loans and


                                                                              34

Exchange Notes. After the Administrative Agent receives the prepayment amount,
such prepayment amount shall be distributed by the Administrative Agent, in
cooperation with the Trustee, subject to Section 2.9(b), in the following order,
with appropriate adjustments being made to account for the receipt by the
Trustee of any prepayment in respect of the Exchange Notes: First, to the
payment of all amounts described in clauses "First" and "Second" of Section
2.9(b)(i); Second, to the payment of interest then due and payable on the Loans,
Exchange Notes of Accepting Holders and Callable Exchange Notes, ratably among
the Lenders, the Accepting Holders and Holders of Callable Exchange Notes in
accordance with the aggregate amount of interest owed to each such Lender,
Accepting Holder and Holder; and Third, to the payment of the principal amount
of, and premium, if any, due on, the Loans, the Exchange Notes of Accepting
Holders and the Callable Exchange Notes that is then due and payable, ratably
among the Lenders, the Accepting Holders and Holders of Callable Exchange Notes
in accordance with the aggregate principal amount and premium, if any, owed to
each such Lender, Accepting Holder and Holder. Amounts offered to and rejected
by any Exchange Note holder shall be ratably applied to prepay the Loans, the
Exchange Notes held by Accepting Holders and Callable Exchange Notes. Any offers
to prepay non-Callable Exchange Notes shall be made in accordance with the
provisions relating thereto in the Indenture, and with applicable law, and the
distribution of the relevant prepayment amount hereunder shall be made promptly
after the expiration of such offer.

            (e) All optional and mandatory prepayments pursuant to this Section
2.5 shall be applied ratably to outstanding Dollar-Denominated Loans and
Euro-Denominated Loans (based, in the case of Euro-Denominated Loans, on the
Dollar Equivalent thereof as determined by the Administrative Agent). For
purposes of this Section 2.5, to the extent that there are any undrawn Euro Loan
Commitments on the date of any prepayment pursuant to this Section, such Euro
Loan Commitments shall be deemed to be drawn at the time of such prepayment such
that, after giving effect thereto, (i) any undrawn Euro Loan Commitments shall
be reduced pro rata by any such prepayment as if such Euro Loan Commitments had
been drawn on such date and (ii) the reduction of the Euro Loan Commitments
pursuant to foregoing clause (i) shall reduce the amount of any mandatory
prepayment otherwise required by this Section.

      2.6 Interest Rates and Payment Dates. (a) Initial Loans shall bear
interest for the period from and including the Initial Closing Date to, but
excluding, the Initial Maturity Date on the unpaid principal thereof at a rate
per annum equal to the Initial Loan Rate for the Interest Period in effect for
such Initial Loan plus the Applicable Margin, and shall be payable in the
currency in which such Initial Loans are denominated.

            (b) Term Loans shall bear interest for the period from and including
the Initial Maturity Date to, but excluding, the Final Maturity Date or date of
exchange for an Exchange Note on the unpaid principal thereof at a rate per
annum equal to the Adjusted Rate plus the Adjusted Margin, and shall be payable
in the currency in which such Term Loans are denominated.

            (c) Notwithstanding Sections 2.6(a) and (b), the interest rate borne
by the Loans pursuant to such Sections shall not exceed 10.5% per annum;
provided that the interest rate shall not be less than (a) 7.25% per annum for
Initial Loans and (b) 9.25% for Term Loans.

            (d) If all or a portion of (i) the principal amount of any of the
Loans, (ii) any interest payable thereon, or (iii) any commitment fee or other
amount payable hereunder shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise, but taking into account any applicable
grace period under 7(a)), such Loan and any such overdue amount shall, without
limiting the rights of the Lenders under Section 7, bear interest at a rate per
annum which is (x) in the case of overdue principal, the rate that would
otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% or (y) in the case of overdue interest, commitment fees or other
amounts due and payable


                                                                              35

hereunder, the applicable rate hereunder for any Loan in the relevant currency
(but without giving effect to the foregoing clause (x)) plus 2%.

            (e) Interest shall be payable in arrears on each Interest Payment
Date and upon the maturity date of the Loan in respect of which any such
interest is accruing, provided that interest accruing pursuant to Section 2.6(d)
shall be payable from time to time on demand.

      2.7 Inability to Determine Interest Rates. In the event, and on each
occasion, that on the day prior to the first day of any Interest Period:

            (a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company absent manifest
error) that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Adjusted LIBO Rate for
such Interest Period, or

            (b) the Administrative Agent shall have received notice from the
Required Lenders acting in good faith that the Adjusted 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 Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the
Company and the relevant Lenders as soon as practicable thereafter. If such
notice is given (i) in respect of Eurodollar Loans that are Dollar-Denominated
Loans, then (x) any such Eurodollar Loans requested to be made on the first day
of such Interest Period shall be made as ABR Loans and (y) any such outstanding
Eurodollar Loans shall be converted, on the last day of the then-current
Interest Period, to ABR Loans and (ii) in respect of Eurodollar Loans that are
Euro-Denominated Loans, then (x) any such Eurodollar Loans requested to be made
on the first day of such Interest Period shall not be made and (y) any such
outstanding Eurodollar Loans shall be due and payable on the first day of such
Interest Period or, at the option of the Company, converted into
Dollar-Denominated Loans at an exchange rate determined by the Administrative
Agent. Until such relevant notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans denominated in Euros shall be made or
continued as such.

      2.8 Computation of Interest and Fees. (a) Interest, fees and commissions
payable pursuant hereto shall be calculated on the basis of a 360-day year for
the actual days elapsed, except that, with respect to ABR Loans the rate of
interest on which is calculated on the basis of the Prime Rate, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Company and the relevant Lenders of each determination of
an Adjusted LIBO Rate. Any change in the interest rate on a Loan resulting from
a change in the Alternate Base Rate or the Adjusted LIBO Rate shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Company and the relevant Lenders of the effective date and the amount of each
such change in interest rate.

            (b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Company, deliver to the
Company a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Sections 2.6(a) and (b).

      2.9 Pro Rata Treatment and Payments. (a) Except to the extent otherwise
provided herein, any Borrowing and any reduction of the Commitments of the
Lenders hereunder shall be made pro rata under


                                                                              36

the relevant Facility according to the respective Dollar Loan Commitment
Percentages and Euro Loan Commitment Percentages of the Lenders with respect to
the Loans borrowed or the Commitments to be reduced.

            (b) Whenever any payment received by the Administrative Agent under
this Agreement or any Note or any Loan Document is insufficient to pay in full
all amounts then due and payable to the Administrative Agent and the Lenders
under this Agreement:

               (i) if the Administrative Agent has not received a Payment
      Sharing Notice (or, if the Administrative Agent has received a Payment
      Sharing Notice but the Event of Default specified in such Payment Sharing
      Notice has been cured or waived in accordance with the provisions of this
      Agreement), such payment shall be distributed by the Administrative Agent
      and applied by the Administrative Agent, in cooperation with the Trustee,
      and the Lenders in the following order, with appropriate adjustment being
      made to account for any payment received by the Trustee in respect of the
      Exchange Notes: First, to the payment of reasonable fees and expenses due
      and payable to the Administrative Agent under and in connection with this
      Agreement or any Guarantee or due and payable to the Trustee under the
      Indenture; Second, to the payment of all reasonable expenses due and
      payable under Section 9.5 and any equivalent section of the Indenture,
      ratably among the Lenders and the Exchange Note Holders in accordance with
      the aggregate amount of such payments owed to each such Lender or Holder;
      Third, to the payment of accrued and unpaid interest then due and payable
      on the Loans and the Exchange Notes ratably among the Lenders and the
      Exchange Note Holders in accordance with the aggregate amount of interest
      owed to each Lender and Exchange Note Holder; and Fourth, to the payment
      of the principal amount of, and premium, if any, due on, the Loans and the
      Exchange Notes that is then due and payable, ratably among the Lenders and
      the Exchange Note Holders in accordance with the aggregate principal
      amount or premium, if any, owed to each such Lender and Exchange Note
      Holder; or

               (ii) if the Administrative Agent has received a Payment Sharing
      Notice that remains in effect, all payments received by the Administrative
      Agent under this Agreement or any Note shall be distributed by the
      Administrative Agent and applied by the Administrative Agent, in
      cooperation with the Trustee, and the Lenders in the following order, with
      appropriate adjustment being made to account for any payment received by
      the Trustee in respect of the Exchange Notes: First, to the payment of all
      amounts described in clauses "First" and "Second" of the foregoing clause
      (i), in the order set forth therein; Second, to the payment of the
      interest accrued and unpaid on all Loans and Exchange Notes, regardless of
      whether any such amount is then due and payable, ratably among the Lenders
      and the Exchange Note Holders in accordance with the aggregate accrued
      interest plus the aggregate principal amount and premium, if any, owed to
      such Lender and the Exchange Note Holders; and Third, to the payment of
      the principal amount of, and premium, if any, due on, all Loans and
      Exchange Notes, regardless of whether any such amount is then due and
      payable, ratably among the Lenders and the Exchange Note Holders in
      accordance with the aggregate principal amount and premium, if any, owed
      to each Lender and Exchange Note Holder.

            (c) All payments (including prepayments) to be made by the Company
on account of principal, interest and fees shall be made without setoff or
counterclaim and shall be made prior to 12:00 Noon, New York City time (or, in
the case of Euro-Denominated Loans, 11:00 A.M., London time), on the due date
thereof to the Administrative Agent, for the account of the Lenders at the
relevant Funding Office, in Dollars or Euros, as the case may be, and in
immediately available funds. The Administrative Agent shall promptly distribute
such payments in accordance with the provisions of Section 2.9(b) upon receipt
in like funds as received. If any payment hereunder (other than payments on the
Eurodollar

                                                                              37

Loans) becomes due and payable on a day other than a Business Day, such payment
shall be extended to the next succeeding Business Day. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day 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 Business Day. In the case of any extension of any payment of principal
pursuant to the preceding two sentences, interest thereon shall be payable at
the then applicable rate during such extension. Without limiting any other
provision hereof, the Administrative Agent shall have the right, where
appropriate, to determine the Dollar Equivalent or Euro Equivalent of amounts
denominated in other currencies in connection with payments made pursuant to
this Agreement.

            (d) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to the date of any proposed Borrowing that such
Lender will not make the amount that would constitute its share of such
Borrowing available to the Administrative Agent, the Administrative Agent may
assume that such Lender is making such amount available to the Administrative
Agent, and the Administrative Agent may, in reliance upon such assumption, make
available to the Company a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the date of such
proposed Borrowing, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate equal to the daily average
Federal Funds Effective Rate for the period until such Lender makes such amount
immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this Section 2.9(d) shall be conclusive in the absence of manifest error.
If such Lender's share of such Borrowing is not made available to the
Administrative Agent by such Lender within three Business Days of the proposed
Borrowing, the Administrative Agent shall also be entitled to recover such
amount with interest thereon at the rate per annum applicable to ABR Loans (or,
in the case of Euro-Denominated Loans, the rate otherwise applicable to such
Loans), on demand, from the Company.

      2.10 Requirements of Law. (a) If the adoption of or any change 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 date hereof:

               (i) shall subject any Lender to any tax of any kind whatsoever
      with respect to this Agreement or any other Loan Document or change the
      basis of taxation of payments to such Lender in respect thereof (except
      for Non-Excluded Taxes covered by Section 2.12 below and changes in the
      rate of tax on the overall net income of such Lender);

               (ii) shall impose, modify or hold applicable any reserve, special
      deposit, compulsory loan or similar requirement against assets held 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 which is not otherwise included in the determination
      of the Adjusted LIBO Rate hereunder; or

               (iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of making,
continuing, or maintaining Eurodollar Loans or to reduce any amount receivable
hereunder in respect thereof, then, in either case, the Company shall promptly
pay such Lender, upon its demand, any additional amounts necessary to compensate
such Lender for such increased cost or reduced amount receivable. If any Lender
becomes entitled to claim


                                                                              38

any additional amounts pursuant to Section 2.10(a), it shall promptly notify the
Company (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled.

            (b) If any Lender shall have reasonably determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount reasonably deemed by such Lender to be
material, then from time to time, after submission by such Lender to the Company
(with a copy to the Administrative Agent) of a prompt written request therefor,
the Company shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction.

            (c) A certificate as to any additional amounts payable pursuant to
this Section 2.10 submitted by any Lender to the Company (with a copy to the
Administrative Agent) shall be prima facie evidence of such amounts. The
obligations of the Company pursuant to this Section 2.10 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

      2.11 Illegality. Notwithstanding any other provision of this Agreement,
if, after the date hereof, (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by a Lender with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement, shall
make it unlawful for such Lender to make or maintain any Euro-Denominated Loan
or to give effect to its obligations as contemplated hereby with respect to any
Euro-Denominated Loan, or (ii) there shall have occurred any change in national
or international financial, political or economic conditions (including the
imposition of or any change in exchange controls, but excluding conditions
otherwise covered by this Section 2.11) or currency exchange rates which would
make it infeasible for the Lender to make or maintain Euro-Denominated Loans to,
or for the account of, the Company, then, by written notice to the Company and
to the Administrative Agent:

            (a) such Lender may declare that Euro-Denominated Loans will not
thereafter (for the duration of such unlawfulness) be made by the Lender
hereunder (or be continued for additional Interest Periods), whereupon any
request for a Euro-Denominated Loan or to continue a Euro-Denominated Loan for
an additional Interest Period, as the case may be, shall, as to such Lender
only, be of no force and effect, unless such declaration shall be subsequently
withdrawn; and

            (b) such Lender may require that all outstanding Euro-Denominated
Loans be repaid on the last day of the then current Interest Period with respect
thereto or, if earlier, the date on which the applicable notice becomes
effective unless the Company shall have elected to convert such Euro-Denominated
Loans into Dollar-Denominated Loans at an exchange rate determined by the
Administrative Agent.

For purposes of this Section 2.11, a notice to the Company by the Lender shall
be effective as to each Euro-Denominated Loan made by such Lender, if lawful, on
the last day of the Interest Period currently applicable to such
Euro-Denominated Loan; in all other cases such notice shall be effective on the
date of receipt thereof by the Company.


                                                                              39

      2.12 Taxes. (a) All payments made by the Company under this Agreement
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, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent or any Lender as a result of a present or
former connection between the Administrative Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from the Administrative Agent or such Lender having
executed, delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any other Loan Document). If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or Other Taxes are required to be withheld from any
amounts payable to the Administrative Agent or any Lender hereunder, the amounts
so payable to the Administrative Agent or such Lender shall be increased to the
extent necessary to yield to the Administrative Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Company shall not be required to increase
any such amounts payable to any Lender with respect to any Non-Excluded Taxes
(i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
such Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Company with respect to such Non-Excluded Taxes
pursuant to this paragraph.

            (b) In addition, the Company shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

            (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Company, as promptly as possible thereafter the Company shall send to the
Administrative Agent for its own account or for the account of the relevant
Lender, as the case may be, a certified copy of an original official receipt
received by the Company showing payment thereof. If the Company fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority
or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Company shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of any such
failure.

            (d) Each Lender (or Transferee) that is not a "U.S. Person" as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
to the Company and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either United States Internal Revenue Service Form W-8BEN or Form
W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a statement substantially in the form of
Exhibit F and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Company under this Agreement and the other Loan Documents.
Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, each Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Company at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Company (or any other form of certification adopted
by the U.S. taxing authorities for such purpose). Notwithstanding any other


                                                                              40

provision of this paragraph, a Non-U.S. Lender shall not be required to deliver
any form pursuant to this paragraph that such Non-U.S. Lender is not legally
able to deliver.

            (e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Company
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Company (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Company, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in such
Lender's reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.

            (f) If the Administrative Agent or any Lender determines, in its
reasonable discretion, that it has received a refund of any Non-Excluded Taxes
or Other Taxes as to which it has been indemnified by the Company or with
respect to which the Company has paid additional amounts pursuant to this
Section 2.12, it shall pay over such refund to the Company (but only to the
extent of indemnity payments made, or additional amounts paid, by the Company
under this Section 2.12 with respect to the Non-Excluded Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of the
Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); provided, that the Company, upon the request of the Administrative
Agent or such Lender, agrees to repay the amount paid over to the Company (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes which it deems confidential) to the
Company or any other Person.

            (g) The agreements in this Section 2.12 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.

      2.13 Indemnity. The Company agrees to indemnify each Lender and to hold
each Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Company in payment when due of the
principal amount of or interest on any Eurodollar Loan, (b) default by the
Company in making a borrowing of Eurodollar Loans after the Company has given a
notice requesting the same in accordance with the provisions of this Agreement,
(c) default by the Company in making any prepayment of any Eurodollar Loan after
the Company has given a notice thereof in accordance with the provisions of this
Agreement or (d) the making of a prepayment of Eurodollar Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so paid or prepaid, or
not so borrowed, for the period from the date of such prepayment or of such
failure to borrow to the last day of such Interest Period (or, in the case of a
failure to borrow, the Interest Period that would have commenced on the date of
such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate as to any amounts payable pursuant to this Section 2.13
submitted to the Company by any Lender shall be conclusive in the absence of
manifest error. This covenant shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.


                                                                              41

      2.14 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.10 or 2.12(a)
with respect to such Lender, it will, if requested by the Company, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section 2.14 shall
affect or postpone any of the obligations of any Company or the rights of any
Lender pursuant to Section 2.10 or 2.12(a).

      2.15 Replacement Lenders. The Company shall be permitted to replace with a
replacement financial institution any Lender which (a) requests reimbursement
for amounts owing pursuant to Section 2.10 or 2.12(a), (b) defaults in its
obligation to make Loans hereunder or (c) has refused to consent to any waiver
or amendment with respect to any Loan Document that has been consented to by the
Super-Majority Lenders; provided that (i) such replacement does not conflict
with any Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) prior to any such replacement,
such Lender shall have taken no action under Section 2.14 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 2.10 or 2.12(a),
(iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Company shall be liable to such replaced Lender under
Section 2.13 if any Eurodollar Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution shall be reasonably satisfactory to
the Administrative Agent, (vii) the replaced Lender shall be obligated to make
such replacement in accordance with the provisions of Section 9.6 (provided that
the Company shall be obligated to pay the registration and processing fee
referred to therein), (viii) until such time as such replacement shall be
consummated, the Company shall pay all additional amounts (if any) required
pursuant to Section 2.10 or 2.12(a), as the case may be, and (ix) any such
replacement shall not be deemed to be a waiver of any rights which the Company,
the Administrative Agent or any other Lender shall have against the replaced
Lender.

                                   SECTION 3

                         REPRESENTATIONS AND WARRANTIES

      To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, the Company hereby represents and warrants to
the Administrative Agent and each Lender that:

      3.1 Organization and Good Standing. The Company and each Subsidiary (a) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization, (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 the Company and each Subsidiary is organized or is
qualified to conduct business is listed on Schedule 3.1.

      3.2 Power and Authority. The Company has all requisite power and authority
under applicable Requirements of Law to borrow hereunder. The Company 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 the Company to execute, deliver and perform the
Loan Documents to which it is a party have been taken and/or received.


                                                                              42

      3.3 Validity and Legal Effect. This Agreement constitutes, and the other
Loan Documents to which the Company or any Subsidiary is a party constitute (or
will constitute when executed and delivered), the legal, valid and binding
obligations of the Company, 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, Agreements or the Transaction. The execution,
delivery and performance of the Loan Documents and the consummation of the
Transaction by the Company and, to the knowledge of the Company, the other
parties thereto (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 the Company or any
Subsidiary or any of their respective Properties 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 the Company or any
Subsidiary, whether such Properties are now owned or hereafter acquired. To the
knowledge of the Company, the execution, delivery and performance of the Loan
Documents and the consummation of the Transaction will not result in any
material breach or violation of, or constitute a material default or change of
control under, or cause the acceleration of, any existing indebtedness of
Target.

      3.5 Taxes and Assessments. Except as otherwise identified on Schedule 3.5,
each of the Company and its Subsidiaries have timely filed all required tax
returns and reports (federal, state, local and foreign) or have properly filed
for extensions of the time for the filing thereof. Except as otherwise
identified on Schedule 3.5, the Company has no knowledge of any deficiency,
penalty or additional assessment due or appropriate in connection with any such
taxes. All taxes (federal, state, local and foreign) imposed upon the Company or
any Subsidiary or any of their respective properties, operations or income have
been paid and discharged prior to the date when any interest or penalty would
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 the Company 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 Company, the
Administrative Agent, or the Lenders of this Agreement or any other Loan
Document to which the Company is party, or on any payment to be made by the
Company pursuant hereto or thereto.

      3.6 Title to Assets; Existing Encumbrances. Each Obligor 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 JPMorgan Chase Bank, N.A., as
administrative agent for the lenders party to the Revolving Credit Agreement,
(ii) the other Liens against the assets of the Company and each Subsidiary set
forth on Schedule 3.6 and (iii) the Liens granted to the Administrative Agent
pursuant to the Escrow Security Agreement. The property and assets of the
Company 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.

      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 the Company's
knowledge, threatened (i) with respect to any Loan Document or the transactions
contemplated thereby, (ii) the Transaction or (iii) against the Company or any
Subsidiary that, if adversely resolved, could reasonably be expected to have a
Material Adverse Effect.

      3.8 Accuracy of Financial Information. (a) (i) The audited consolidated
financial statements of the Company as of October 31, 2002, October 31, 2003 and
October 31, 2004 for the fiscal years then


                                                                              43

ended and (ii) the unaudited consolidated financial statements of the Company as
of January 31, 2004 and January 31, 2005 for the quarterly periods then ended
(subject to normal year-end audit adjustments and the absence of footnotes),
copies of which have heretofore been furnished to each Lender on or before the
Initial Closing Date, (A) have been prepared in accordance with GAAP
consistently applied (provided that, the unaudited financial statements do not
include all of the information and notes required in accordance with GAAP and
are subject to normal year-end adjustments), (B) are true, accurate and complete
in all material respects, (C) present fairly in all material respects the
financial condition of the organizations covered thereby as of the dates and for
the periods covered thereby and (D) disclose all material liabilities
(contingent and otherwise) of the Company and its Subsidiaries. The Monthly
Reports have been prepared based on the books and records of the Company and its
Subsidiaries for use by senior and financial management of the Company and its
Subsidiaries and fairly present in all material respects the financial condition
of the organizations covered thereby as of the dates and for the periods covered
thereby.

            (b) (i) To the Company's knowledge, the audited consolidated
financial statements of Target as of March 31, 2002, March 31, 2003 and March
31, 2004 for the fiscal years then ended and (ii) the unaudited consolidated
financial statements of Target as of September 30, 2003 and September 30, 2004
for the semi-annual periods then ended (subject to normal year-end audit
adjustments and the absence of footnotes), copies of which have heretofore been
furnished to each Lender on or before the Initial Closing Date, (A) have been
prepared in accordance with French GAAP consistently applied (provided that, the
unaudited financial statements do not include all of the information and notes
required in accordance with GAAP and are subject to normal year-end
adjustments), (B) are true, accurate and complete in all material respects, (C)
present fairly in all material respects the financial condition of the
organizations covered thereby as of the dates and for the periods covered
thereby and (D) disclose all material liabilities (contingent and otherwise) of
Target and its subsidiaries.

            (c) (i) The unaudited projected pro forma balance sheet (the
"Projected Pro Forma Balance Sheet") of the Company and its consolidated
Subsidiaries as at January 31, 2005 with respect to the Company and its
Subsidiaries (other than Target and its subsidiaries) and September 30, 2004,
with respect to Target and its subsidiaries (including, in each case, the notes
thereto), a copy of which has heretofore been furnished to each Lender on or
before the Initial Closing Date, is adjusted to give effect to the consummation
of the Transaction and the payment of estimated fees, expenses, financing costs
and estimated tax payments related to the transactions contemplated hereby and
thereby, as if such events had occurred on such date. The Projected Pro Forma
Balance Sheet (i) has been prepared based on the best information available to
the Company as of the date of delivery thereof and (ii) to the knowledge of the
Company, presents fairly in all material respects on a pro forma basis the
estimated financial position of the Company and its Subsidiaries (including, as
applicable, Target and its subsidiaries) as at such date, assuming that the
Transaction had been consummated on such date.

            (d) Since October 31, 2004, 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 Administrative Agent or any Lender by the Company or any other Person on
behalf of the Company in connection with the Loan Documents is (or, in the case
of information concerning Target or any of its subsidiaries, is to the best
knowledge of the Company) 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 Administrative Agent or any Lender
by the Company or any other Person on behalf of the Company 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


                                                                              44

projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by the Company to be
reasonable at the time made and as of the Initial 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. The Company is in compliance in all
material respects with all Requirements of Law applicable to it, its operations
and its Properties.

      3.11 ERISA Compliance. (a) The Company, each Subsidiary and each Plan, is
in compliance in all material respects with all applicable provisions of ERISA
and the Code, and all rules, regulations and orders implementing ERISA and the
Code.

            (b) None of the Company, its Subsidiaries or any ERISA Affiliate
thereof, maintains or contributes to (or has maintained or contributed to) any
Multiemployer Plan under which the Company or any ERISA Affiliate thereof could
have any withdrawal liability.

            (c) None of the Company, its Subsidiaries or any ERISA Affiliate
thereof sponsors, maintains, or contributes to any Plan under which there is an
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, whether or not waived.

            (d) The liability for accrued benefits under each Plan that will be
sponsored, maintained, or contributed to by the Company, 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. The aggregate liability of
the Company, each Subsidiary and each ERISA Affiliate thereof arising out of or
relating to a failure of any Plan to comply with provisions of ERISA or the Code
will not have a Material Adverse Effect.

            (e) 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 the Company, any Subsidiary or any ERISA
Affiliate thereof under any Plan, program or arrangement providing
post-retirement, life or health benefits.

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

            (g) To the extent that the Company 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 (f) 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 Company 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 of the Company and each Subsidiary
has received all permits and made all filings and notifications necessary under,
and is otherwise in compliance in all material respects with, all applicable
Environmental Laws.


                                                                              45

            (b) Neither the Company nor any Subsidiary has given any written or
oral notice to any Governmental Authority with regard to any actual or
imminently threatened removal, storage, transportation, spill, release or
discharge of any Materials of Environmental Concern either (i) on Properties now
or formerly owned, operated or leased by the Company or any Subsidiary or (ii)
otherwise in connection with the conduct of its business and operations, and
there is no basis for giving any such notice.

            (c) Neither the Company nor any Subsidiary has received any written
request for information, or been notified that it is potentially responsible for
costs of clean-up of any actual or imminently threatened spill, release or
discharge of any Materials of Environmental Concern or with respect to any
Environmental Laws, and there is no basis for any such request or notice.

            (d) No judicial proceeding or governmental or administrative action
is pending, or, to the knowledge of the Company, threatened, under or relating
to any Environmental Laws to which the Company or any Subsidiary is named as a
party, 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 Laws with respect to the
Company, any Subsidiary or the Properties.

            (e) To the knowledge of the Company, except as set forth on Schedule
3.12, neither the Company nor any Subsidiary has assumed or retained, by
contract or operation of law, any liabilities of any kind, fixed or contingent,
known or unknown, under any Environmental Law or with respect to any Materials
of Environmental Concern that could reasonably be expected to result in a
material liability to any of them.

      3.13 Intellectual Property. Each of the Company and its Subsidiaries owns,
or is licensed to use, all Intellectual Property Rights necessary for the
conduct of its business as currently conducted in all material respects. No
material claim has been asserted and is pending by any Person challenging or
questioning the use of any Intellectual Property Rights of the Company or any of
its Subsidiaries or the validity or effectiveness of any such Intellectual
Property Rights, nor does the Company know of any valid basis for any such
claim. To the knowledge of the Company, the use of Intellectual Property Rights
by the Company and each of its Subsidiaries does not infringe on the rights of
any Person in any material respect.

      3.14 Federal Regulations. 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 T, U or X. If requested by any Lender
or the Administrative Agent, the Company will furnish to the Administrative
Agent and each Lender a statement to the foregoing effect in conformity with the
requirements of Form U-1 referred to in Regulation U.

      3.15 Fees and Commissions. Except as set forth in Section 4.1(b)(iv),
neither the Company nor any Subsidiary owes or will owe any fees or commissions
of any kind in connection with this Agreement or the Transaction, and the
Company does not know of any claim (or any basis for any claim) for any fees or
commissions in connection with this Agreement or the Transaction.

      3.16 Solvency. Immediately prior to, upon and immediately following the
execution of this Agreement and the funding of the Loans on the Initial Closing
Date and on the date of any Borrowing, the Company, both individually and
together with its Subsidiaries, was, is and will be Solvent.


                                                                              46

      3.17 Investment Company Act. Neither the Company nor any Subsidiary is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act.

      3.18 Nature of Business. Neither the Company 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.

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

      3.20 Insurance. Schedule 3.20 lists in all material respects all insurance
policies of any nature maintained, as of the Initial Closing Date, by the
Company and each Subsidiary, as well as a summary of the terms of each such
policy.

      3.21 Subsidiaries. The Company has no Subsidiaries other than those listed
on Schedule 3.1. As of the date of this Agreement, the Company has the
Restricted Subsidiaries, Unrestricted Subsidiaries, Material Domestic
Subsidiaries and Material Foreign Subsidiaries listed on Schedule 3.21.

      3.22 Security Interest in Collateral. The provisions of this Agreement and
the Escrow Security Agreement create legal and valid first-priority Liens on the
Collateral in favor of the Administrative Agent, for the benefit of the Lenders,
and such Liens constitute perfected and continuing Liens on the Collateral,
enforceable against the Company and all third parties.

      3.23 Approvals. All governmental and third party approvals (including, if
applicable, any approvals of French national or other competition authorities)
necessary in connection with the Initial Transactions, the continuing operations
of the Company and its Subsidiaries and the transactions contemplated hereby
have been obtained and are in full force and effect, and all applicable waiting
periods have expired without any action being taken or threatened by any
competent authority that would restrain, prevent or otherwise impose adverse
conditions on the Initial Transactions or the financing contemplated hereby.

      3.24 Use of Proceeds. The proceeds of the Initial Loans drawn on the
Initial Closing Date shall be used to finance the Initial Transactions. The
proceeds of the Initial Loans drawn during the Availability Period shall be used
to finance the Second Step Transactions and the Buy Out Transactions.
Notwithstanding anything herein to the contrary, no Loan shall be used for the
purchasing or carrying of any Margin Stock.

      3.25 Representations and Warranties Contained in the Transaction
Documents. Each of the Transaction Documents (other than the Offer Documents,
the OPRO Documents, the Exchange Notes, the Indenture and the Registration
Rights Agreement) have been duly executed and delivered by the Company and each
Subsidiary party thereto and, to the best knowledge of the Company, have been
duly executed and are in full effect. The representations and warranties of the
Company, and the representations and warranties of the Subsidiaries party
thereto, are accurate and correct in all material respects with respect to each
of the Transaction Documents.


                                                                              47

                                   SECTION 4

                              CONDITIONS PRECEDENT

      4.1 Initial Loans on the Initial Closing Date. The agreement of each
Lender to make the Initial Loan requested to be made by it is subject to the
satisfaction of the following conditions precedent:

            (a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of the
Company with a counterpart for each Lender, (ii) for the account of each Lender
requesting the same, a Loan Note conforming to the requirements hereof and
executed by a duly authorized officer of the Company, (iii) each Guarantee to be
entered into on the Initial Closing Date, executed and delivered by a duly
authorized officer of the relevant Guarantor and (iv) the Escrow Security
Agreement, executed and delivered by a duly authorized officer of each of the
parties thereto.

            (b) Initial Transactions. The following transactions shall have been
consummated, in each case on terms and conditions reasonably satisfactory to the
Administrative Agent:

               (i) the Company shall have consummated the Initial Purchase, and
the other transactions described in the Acquisition Documents pertaining to the
Initial Purchase shall have been consummated in accordance with the terms of the
Acquisition Documents;

               (ii) the Administrative Agent shall have received a complete and
correct copy of the Revolving Credit Documents, in form and substance
satisfactory to the Administrative Agent, such documents shall be in full force
and effect and none of the provisions thereof shall have been amended, waived,
supplemented, or otherwise modified without the prior written consent of the
Administrative Agent;

               (iii) all conditions precedent for the funding of the Revolving
Credit Agreement shall have been satisfied or waived contemporaneously with the
satisfaction of the conditions hereunder and such funding shall occur
contemporaneously with the funding of the Initial Loans, in each case on terms
and conditions satisfactory to the Administrative Agent;

               (iv) the Administrative Agent shall have received satisfactory
evidence that the fees and expenses to be incurred in connection with the
Initial Purchase and the financing thereof do not exceed $15,000,000.

               (v) the Administrative Agent shall have received satisfactory
evidence that the Existing Credit Agreement shall have been terminated and all
amounts thereunder shall have been paid in full;

               (vi) the Administrative Agent shall have received satisfactory
evidence that Quiksilver Americas shall have entered into an amendment to the
Leasehold Improvement Loan documentation in form and substance reasonably
satisfactory to it;

               (vii) all other transactions in connection with foregoing clauses
(i) through (vi) and the financing of the Initial Purchase (collectively, the
"Initial Transactions") shall have been consummated pursuant to the Transaction
Documents in form and substance consistent with the terms previously disclosed
to the Administrative Agent in writing and on other terms reasonably
satisfactory to the Administrative Agent, and none of the material terms and
conditions of the Transaction Documents


                                                                              48

shall have been amended, waived, supplemented or otherwise modified in any
manner materially adverse to the interests of the Lenders without the consent of
the Administrative Agent.

            (c) Corporate Proceedings. The Administrative Agent shall have
received a copy of the resolutions of the Board of Directors of each of the
Company and the Guarantors, authorizing (i) the execution, delivery and
performance of the Loan Documents and the Transaction Documents to which such
Obligor is or will be a party and (ii) in the case of the Company, any Borrowing
hereunder, in each case certified by the Secretary or an Assistant Secretary of
each the Company and the Guarantors, as applicable, as of the Initial 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.

            (d) Organic Documents. The Administrative Agent shall have received
copies of the Organic Documents of each of the Company and the Guarantors,
certified as of the Initial Closing Date as complete and correct copies thereof
by the Secretary or an Assistant Secretary of each of the Company and the
Guarantors, as applicable.

            (e) Secretary`s Certificates. The Administrative Agent shall have
received certificates dated as of the Initial Closing Date of the Secretary or
an Assistant Secretary of each Obligor, in each case attaching (i) a copy of the
resolutions of the Board of Directors of such Obligor, authorizing (A) the
execution, delivery and performance of the Loan Documents to which such Obligor
is or will be a party and (B) in the case of the Company, any Borrowing
hereunder, (ii) copies of the Organic Documents of such Obligor and (iii) a
certificate, dated as of 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, substantially in the form of Exhibit G.

            (f) Financial Statements. The Administrative Agent shall have
received (i) the financial statements and the Projected Pro Forma Balance Sheet
referred to in Section 3.8 and (ii) to the extent available to management,
monthly financial data generated by the Company's internal accounting systems
for use by senior and financial management or any monthly financial data of
Target available to the Company (collectively, the "Monthly Reports") for each
month ended after the latest fiscal period referred to in Section 3.8(a)(ii) and
Section 3.8(b)(ii), and such financial statements and Monthly Reports shall not
reflect any material adverse change in the consolidated financial condition of
the Company and its Subsidiaries or Target and its subsidiaries from what was
reflected in the financial statements furnished to the Lenders prior to the date
hereof.

            (g) Projections. The Administrative Agent shall have received
satisfactory projections of the Company and its Subsidiaries for fiscal year
2005 through fiscal year 2010 and monthly projections for fiscal year 2005.

            (h) Delivery of the Transaction Documents. The Administrative Agent
shall have received a certified copy of each of the Transaction Documents
(including all exhibits, schedules and disclosure letters referred to therein or
delivered pursuant thereto, if any, but excluding the Offer Documents, the OPRO
Documents, the Exchange Notes, the Indenture and the Registration Rights
Agreement) and all amendments thereto, waivers relating thereto and other side
letters or agreements contemplated thereby or affecting the terms thereof in any
material respect, and such documents shall be in form and substance reasonably
satisfactory to the Administrative Agent. The Administrative Agent shall also
have received the most recent drafts of each of the Offer Documents, and such
drafts shall be in form and substance reasonably satisfactory to the
Administrative Agent.


                                                                              49

            (i) Approvals. All governmental and third party approvals
(including, if applicable, any approvals of French national or other competition
authorities) necessary in connection with the Initial Transactions, the
continuing operations of the Company and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and effect,
and all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the Initial Transactions or the financing
contemplated hereby.

            (j) Regulatory Matters. All legal (including tax implications) and
regulatory matters, including, but not limited to compliance with applicable
requirements of Regulations T, U and X shall be reasonably satisfactory to the
Administrative Agent and the Lenders.

            (k) Fees and Costs. The Lenders and the Administrative Agent shall
have received all fees required to be paid in connection with the Initial
Transactions, and all expenses for which invoices have been presented (including
the reasonable fees and expenses of counsel), on or before the Initial Closing
Date. All such amounts will be paid with the proceeds of the Initial Loans (or
loans under the Revolving Credit Agreement) made on the Initial Closing Date and
will be reflected in the funding instructions given by the Borrower to the
Administrative Agent on or before the Initial Closing Date.

            (l) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:

               (i) the legal opinion of Hewitt & O'Neil LLP, counsel to the
      Company and its Subsidiaries, substantially in the form of Exhibit E-1
      hereto;

               (ii) the legal opinion of De Pardieu, Brocas, Maffei, special
      French counsel to the Administrative Agent, substantially in the form of
      Exhibit E-2; and

               (iii) to the extent consented to by the relevant counsel, each
      legal opinion, if any, delivered in connection with the Acquisition
      Agreement, accompanied by a reliance letter in favor of the Lenders.

Each such legal opinion shall cover matters customary for transactions of this
type and such other matters incident to the transactions contemplated by this
Agreement in form and substance reasonably satisfactory to the Administrative
Agent.

            (m) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in the jurisdiction where the Collateral is
located, and such search shall not reveal any Lien on the Collateral.

            (n) Filings, Registrations and Recordings. Each document required by
the Escrow Security Agreement or under law or reasonably requested by the
Administrative Agent to be filed, registered or recorded in order to create in
favor of the Administrative Agent, for the benefit of the Lenders, a perfected
Lien on the Collateral, prior and superior in right to any other Person, shall
be in proper form for filing, registration or recordation.

            (o) Solvency Certificate. The Administrative Agent shall have
received a satisfactory solvency certificate from the Chief Financial Officer of
the Company, prepared to give effect to the Transaction.


                                                                              50

            (p) Take-Out Debt. The Company shall have engaged the Investment
Bank for the purpose of selling the Take-Out Debt.

            (q) No Default/Representations. No Default shall have occurred and
be continuing on the Initial Closing Date or would occur after giving effect to
the Loans requested to be made on the Initial 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 prior to or
on the Initial Closing Date shall be correct in all material respects on and as
of the Initial Closing Date, and the Administrative Agent shall have received a
certificate of the Company to such effect in the form of Exhibit D, dated as of
the Initial Closing Date and executed by a Responsible Officer of the Company.

The making of the Initial Loans on the Initial Closing Date by the Lenders
hereunder shall conclusively be deemed to constitute an acknowledgement by the
Administrative Agent and each Lender that each of the conditions precedent set
forth in this Section 4.1 shall have been satisfied in accordance with its
respective terms or shall have been irrevocably waived by such Person.

      4.2 Initial Loans on the Tender Offer Closing Date. The agreement of each
Lender to make the Initial Loan requested to be made by it on the Tender Offer
Closing Date (limited to Initial Loans drawn on such date to fund the
consideration to be paid for shares of Target Stock acquired pursuant to the
Tender Offer) is subject to the satisfaction of the following conditions
precedent:

            (a) Initial Closing Date. The Initial Closing Date shall have
occurred in accordance with the terms of Section 4.1.

            (b) Second Step Transactions. The following transactions shall have
been consummated on terms and conditions reasonably satisfactory to the
Administrative Agent:

               (i) the Company shall have consummated in all material respects
the Initial Purchase and the other transactions described in the Acquisition
Documents pertaining to the Initial Purchase shall have been consummated in all
material respects in accordance with the terms of the Acquisition Documents;

               (ii) the Company shall have commenced the Tender Offer in all
material respects in accordance with the terms of the Acquisition Documents, the
Offer Documents, the French commercial code and all other applicable codes,
rules and laws relating thereto; and

               (iii) all other transactions in connection with foregoing clauses
(i) and (ii) and the financing of the Initial Purchase (collectively, the
"Second Step Transactions") shall have been consummated pursuant to, or
commenced in accordance with, the Transaction Documents in form and substance
consistent with the terms previously disclosed to the Administrative Agent in
writing and on other terms reasonably satisfactory to the Administrative Agent,
and none of the material terms and conditions of the Transaction Documents shall
have been amended, waived, supplemented or otherwise modified in any manner
materially adverse to the interests of the Lenders without the consent of the
Administrative Agent.

            (c) Fees and Costs. The Lenders and the Administrative Agent shall
have received all fees required to be paid in connection with the Second Step
Transactions, and all expenses for which invoices have been presented (including
the reasonable fees and expenses of counsel), on or before the Tender Offer
Closing Date. All such amounts will be paid with the proceeds of the Initial
Loans made on the Tender Offer Closing Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or before the
Tender Offer Closing Date.


                                                                              51

            (d) Approvals. All governmental and third party approvals
(including, if applicable, any approvals of French national or other competition
authorities) necessary in connection with the Second Step Transactions, the
continuing operations of the Company and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and effect,
and all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the Second Step Transactions or the
financing contemplated hereby.

            (e) Offer Documents. The Administrative Agent shall have received a
copy (certified by the Company) of the following documents (collectively, the
"Offer Documents"), and such Offer Documents shall be in form and substance
reasonably satisfactory to the Administrative Agent:

               (i) the mandate letter of the Company appointing Calyon to act as
      the presenting bank for the Tender Offer and, if applicable, the Buy Out
      and the Squeeze Out;

               (ii) the communique de depot to be published in connection with
      the Tender Offer pursuant to article 231-17 of the Autorites des marches
      financiers (the "AMF") General Regulation;

               (iii) the lettre de depot relating to the Tender Offer to be
      filed with the AMF pursuant to article 231-14 of the AMF General
      Regulation;

               (iv) the resolutions of the supervisory board of Target regarding
      the launch of the Tender Offer and recommending the Tender Offer;

               (v) the joint note d'information in relation to the Tender Offer
      issued by the Company and Target;

               (vi) the AMF decision de recevabilite (approval decision) of the
      Tender Offer and the AMF visa (approval) of the joint note d'information;

               (vii) a certificate of the Company stating the number of shares
      of Target Stock that have been tendered pursuant to the Tender Offer
      according to the avis de resultat published by the AMF; and

               (viii) a certificate of the Company stating that the Initial
      Loans drawn on the Tender Offer Closing Date will be used in a manner
      consistent with Section 3.24.

            (f) Offer Account. The Company shall have established an account
(the "Offer Account") in which (i) cash to fund the Tender Offer will be
deposited and (ii) a security interest will be granted in favor of the
Administrative Agent for the benefit of the Lenders (taking the form of a
nantissement).

            (g) Major Representations. The representations of the Company and
each of its Subsidiaries (other than Target and its subsidiaries) contained in
Sections 3.1, 3.2, 3.3, 3.4, 3.8, 3.9 and 3.23 (the "Major Representations")
shall be correct in all material respects on and as of the Tender Offer Closing
Date and after giving effect to the Initial Loans requested to be made on the
Tender Offer Closing Date. Any Borrowing of Initial Loans by the Company on the
Tender Offer Closing Date shall be deemed to be a representation by the Company
that the Major Representations are correct in all material respects on and as of
such date and after giving effect to the Initial Loans requested to be made on
such date.


                                                                              52

            (h) No Major Default. No Major Default shall have occurred and be
continuing on the date of any Borrowing or would occur after giving effect to
such Borrowing. Any Borrowing of Initial Loans by the Company on the Tender
Offer Closing Date shall be deemed to be a representation by the Company that no
Major Default has occurred and is continuing on such date or would occur after
giving effect to such Borrowing. As used herein, a "Major Default" shall mean
any of the following events:

               (i) any of the events in Section 7(a), (b), (c), (e), (f), (g) or
      (j) shall have occurred and be continuing, provided that, for purposes of
      this clause (i), (x) 7(e) and 7(j) shall be deemed to apply to any
      Transaction Document and (y) all requirements for the giving of notice,
      the lapse of time, or both, and any other conditions, are hereby expressly
      waived by the Company and each of its Subsidiaries;

               (ii) the maximum price per share of Target Stock payable by the
      Company pursuant to the Tender Offer shall be, or may required to be,
      greater than (euro)19 per share (unless such increase is (x) imposed by
      the AMF or a court of competent jurisdiction and (y) fully funded by
      additional cash equity of the Company for this purpose, provided that, in
      no event shall any increase pursuant to foregoing clauses (x) and (y)
      cause the maximum price per share to exceed (euro)21 per share);

               (iii) the Company shall have increased (or agreed to increase)
      the price payable per share of Target Stock pursuant to the Tender Offer
      in excess of (euro)19 per share and such increase is not, prior to such
      increase being made, fully funded by additional cash equity of the Company
      for this purpose, provided that, in no event shall any increase pursuant
      to this clause (iii) cause the maximum price per share to exceed (euro)21
      per share;

               (iv) the consideration to be paid by the Company for the shares
      of Target Stock acquired pursuant to the Tender Offer shall be in a form
      other than cash;

               (v) the Tender Offer shall not have been conducted in accordance
      with the Acquisition Documents, the Offer Documents, the French commercial
      code, the AMF General Regulation and all other applicable codes, rules and
      laws relating thereto;

               (vi) the Company or any Subsidiary shall have defaulted in the
      observance or performance of its obligations under Section 5.4; or

               (vii) a Change of Control shall have occurred.

            (i) The following actions shall have been taken, or such events
shall have occurred, with respect to the Tender Offer (collectively, the "Tender
Offer Undertakings"):

               (i) the Company shall have delivered to the Administrative Agent
      all relevant documents (including the Offer Documents) relating to the
      Tender Offer filed with, or approved by, the AMF;

               (ii) there shall have been no modification of, or amendment to,
      the terms or conditions of the Tender Offer without the prior written
      consent of the Administrative Agent;

               (iii) no press release shall have been issued, and no statement
      or announcement shall have been made, which refers to this Agreement or to
      any or all of the Lenders without the prior consent of the Administrative
      Agent (such consent not be unreasonably withheld), except as


                                                                              53

      required by the note d'information filed with the AMF in connection with
      the Tender Offer or other applicable law;

               (iv) on or prior to (or promptly following) the Initial Closing
      Date, the Company shall have initiated discussions with the AMF regarding
      the Tender Offer; and

               (v) the Company shall have promptly and adequately informed the
      Administrative Agent of the progress of the Tender Offer.

            (j) Consummation of Tender Offer . The Administrative Agent shall
have received satisfactory evidence that the Tender Offer will be consummated on
or prior to July 31, 2005.

            (k) Enforcement of Rights. The Administrative Agent shall have
received satisfactory evidence that the Company shall have used its commercially
reasonable best efforts to enforce any claims or remedies available to it under
the Acquisition Documents, the Tender Offer and the Offer Documents.

      4.3 Initial Loans on the Final Drawdown Date. The agreement of each Lender
to make the Initial Loan requested to be made by it on the Final Drawdown Date
(limited to Initial Loans drawn on such date to fund the consideration to be
paid for shares of Target Stock acquired pursuant to the Buy Out and the Squeeze
Out) is subject to the satisfaction of the following conditions precedent:

            (a) Tender Offer Closing Date. The Tender Offer Closing Date shall
have occurred in accordance with the terms of Section 4.2.

            (b) Buy Out Transactions. The following transactions shall have been
consummated on terms and conditions reasonably satisfactory to the
Administrative Agent:

               (i) the Company shall have consummated in all material respects
the Second Step Transactions and the other transactions described in the
Acquisition Documents pertaining to the Second Step Transactions shall have been
consummated in all material respects in accordance with the terms of the
Acquisition Documents;

               (ii) the Company shall have commenced the Buy Out in all material
respects in accordance with the terms of the Acquisition Documents, the OPRO
Documents, the French commercial code and all other applicable codes, rules and
laws relating thereto; and

               (iii) all other transactions in connection with foregoing clauses
(i) and (ii) and the financing of the Buy Out Transactions (collectively, the
"Buy Out Transactions") shall have been consummated pursuant to, or commenced in
accordance with, the Transaction Documents in form and substance consistent with
the terms previously disclosed to the Administrative Agent in writing and on
other terms reasonably satisfactory to the Administrative Agent, and none of the
material terms and conditions of the Transaction Documents shall have been
amended, waived, supplemented or otherwise modified in any manner materially
adverse to the interests of the Lenders without the consent of the
Administrative Agent.

            (c) Fees and Costs. The Lenders and the Administrative Agent shall
have received all fees required to be paid in connection with the Buy Out
Transactions, and all expenses for which invoices have been presented (including
the reasonable fees and expenses of counsel), on or before the Final Drawdown
Date. All such amounts will be paid with the proceeds of the Initial Loans made
on the Final Drawdown Date and will be reflected in the funding instructions
given by the Borrower to the Administrative Agent on or before the Final
Drawdown Date.


                                                                              54

            (d) Approvals. All governmental and third party approvals
(including, if applicable, any approvals of French national or other competition
authorities) necessary in connection with the Buy Out Transactions, the
continuing operations of the Company and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and effect,
and all applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority that would restrain, prevent or
otherwise impose adverse conditions on the Buy Out Transactions or the financing
contemplated hereby.

            (e) OPRO Documents. The Administrative Agent shall have received a
copy (certified by the Company) of the following documents (collectively, the
"OPRO Documents"), and such OPRO Documents shall be in form and substance
reasonably satisfactory to the Administrative Agent:

               (i) the mandate letter of the Company appointing Calyon to act as
      the presenting bank for the Buy Out and the Squeeze Out;

               (ii) the communique de depot to be published in connection with
      the Buy Out pursuant to article 231-17 of the AMF General Regulation;

               (iii) the lettre de depot relating to the Buy Out and the Squeeze
      Out to be filed with the AMF pursuant to article 231-14 of the AMF General
      Regulation;

               (iv) the joint note d'information in relation to the Buy Out and
      the Squeeze Out issued by the Company and Target;

               (v) the AMF decision de recevabilite (approval decision) of the
      Buy Out and the Squeeze Out and the AMF visa (approval) of the joint note
      d'information;

               (vi) a certificate of the Company stating the number of shares of
      Target Stock that have been tendered pursuant to the Buy Out and the
      Squeeze Out according to the avis de resultat published by the AMF; and

               (vii) a certificate of the Company stating that the Initial Loans
      drawn on the Final Drawdown Date will be used in a manner consistent with
      Section 3.24.

            (f) OPRO Account. The Company shall have established an account (the
"OPRO Account") in which (i) cash to fund the Buy Out and the Squeeze Out will
be deposited and (ii) a security interest will be granted in favor of the
Administrative Agent for the benefit of the Lenders (taking the form of a
nantissement).

            (g) Major Representations. The Major Representations of the Company
and each of its Subsidiaries (other than Target and its subsidiaries) shall be
correct in all material respects on and as of the Final Drawdown Date and after
giving effect to the Initial Loans requested to be made on the Final Drawdown
Date. Any Borrowing of Initial Loans by the Company on the Final Drawdown Date
shall be deemed to be a representation by the Company that the Major
Representations are correct in all material respects on and as of such date and
after giving effect to the Initial Loans requested to be made on such date.

            (h) No OPRO Major Default. No OPRO Major Default shall have occurred
and be continuing on the date of any Borrowing or would occur after giving
effect to such Borrowing. As used herein, an "OPRO Major Default" shall mean any
of the following events:


                                                                              55

               (i) any of the events in Section 7(a), (b), (c), (e), (f), (g) or
      (j) shall have occurred and be continuing, provided that, for purposes of
      this clause (i), (x) 7(e) and 7(j) shall be deemed to apply to any
      Transaction Document and (y) all requirements for the giving of notice,
      the lapse of time, or both, and any other conditions, are hereby expressly
      waived by the Company and each of its Subsidiaries;

               (ii) the consideration to be paid by the Company for the shares
      of Target Stock acquired pursuant to the Buy Out and the Squeeze Out shall
      be in a form other than cash;

               (iii) the Buy Out and the Squeeze Out shall not have been
      conducted in accordance with the Acquisition Documents, the OPRO
      Documents, the French commercial code, the AMF General Regulation and all
      other applicable codes, rules and laws relating thereto;

               (iv) the Company or any Subsidiary shall have defaulted in the
      observance or performance of its obligations under Section 5.4; or

               (v) a Change of Control shall have occurred.

            (i) The following actions shall have been taken, or such events
shall have occurred, with respect to the Buy Out and the Squeeze Out
(collectively, the "Buy Out Undertakings"):

               (i) the Company shall have delivered to the Administrative Agent
      all relevant documents (including the OPRO Documents) relating to the Buy
      Out and the Squeeze Out filed with, or approved by, the AMF;

               (ii) there shall have been no modification of, or amendment to,
      the terms or conditions of the Buy Out and the Squeeze Out without the
      prior written consent of the Administrative Agent;

               (iii) no press release shall have been issued, and no statement
      or announcement shall have been made, which refers to this Agreement or to
      any or all of the Lenders without the prior consent of the Administrative
      Agent (such consent not be unreasonably withheld), except as required by
      the note d'information filed with the AMF in connection with the Buy Out
      and the Squeeze Out or other applicable law;

               (iv) promptly upon acquiring (directly or indirectly and together
      with the Sellers) at least 95% of Target Stock, the Company shall have
      initiated the Buy Out and, immediately thereafter, the Squeeze Out, which,
      when consummated, will result in the automatic delisting of Target from
      Eurolist by Euronext; and

               (v) the Company shall have promptly and adequately informed the
      Administrative Agent of the progress of the Buy Out and the Squeeze Out.

            (j) Consummation of Buy Out and Squeeze Out. The Administrative
Agent shall have received satisfactory evidence that the Buy Out and the Squeeze
Out shall be consummated on or prior to September 15, 2005.

            (k) Enforcement of Rights. The Administrative Agent shall have
received satisfactory evidence that the Company shall have used its commercially
reasonable best efforts to enforce any claims or remedies available to it under
the Acquisition Documents, the Buy Out, the Squeeze Out and the OPRO Documents.


                                                                              56

                                   SECTION 5

                              AFFIRMATIVE COVENANTS

            The Company hereby agrees that, so long as the Commitments remain in
effect, any Loan or Loan Note remains outstanding and unpaid, or any other
amount is owing to any Lender or the Administrative Agent hereunder or under any
of the other Loan Documents, the Company shall, and, in the case of the
agreements contained in Sections 5.3 through 5.8 and 5.10, shall cause each of
its Subsidiaries to:

      5.1 Financial Statements. (a) Within 105 days after the end of each fiscal
year (or, if earlier, the date on which such financial statements are filed by
the Company with the SEC), the Company shall deliver to the Lenders a complete
set of audited annual consolidated financial statements of the Company, and
unaudited consolidating financial statements with respect to the Company, each
current or future Domestic Subsidiary (to the extent included in the Company's
consolidating financial statements immediately before the date hereof), each
current or future Material Domestic Subsidiary and each other current or future
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; provided that, in the event that the Company is unable to deliver
unaudited consolidating financial statements with respect to one or more
Material Foreign Subsidiaries, it shall provide such other financial statements
with respect thereto in form and substance reasonably satisfactory to the
Administrative Agent. 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 Administrative 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 the Company and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied and (B) a certificate executed by the Chief Financial
Officer of the Company certifying that the financial statements fairly present
the financial condition of the Company 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.

            (b) Within 60 days after the end of each of the Company's first
three fiscal quarters (or, if earlier, the date on which such financial
statements are filed by the Company with the SEC), the Company shall deliver to
the Lenders the unaudited quarterly consolidated financial statements of the
Company and unaudited consolidating financial statements with respect to the
Company, each current or future Domestic Subsidiary (to the extent included in
the Company's consolidating financial statements immediately before the date
hereof), each current or future Material Domestic Subsidiary and each other
current or future Material Foreign Subsidiary, including a balance sheet, an
income statement and a cash flow statement (with accompanying notes and
schedules); provided that, in the event that the Company is unable to deliver
unaudited consolidating financial statements with respect to one or more
Material Foreign Subsidiaries, it shall provide such other financial statements
with respect thereto in form and substance reasonably satisfactory to the
Administrative Agent. Such financial statements shall be prepared in accordance
with GAAP consistently applied (it being understood that such financial
statements are subject to normal year-end audit adjustments and do not include
all of the footnotes required under GAAP for annual financial statements).
Together with the quarterly financial statements, the Lenders must also receive
a certificate executed by the Chief Financial Officer of the Company (A) stating
that the financial statements fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and for the period covered
thereby and (B) certifying that as of the date


                                                                              57

of such certificate such officer has obtained no knowledge of any Default except
as specified in such certificate.

            (c) Within 105 days after the end of each fiscal year, the Company
shall deliver to the Lenders its projections with respect to the financial
performance of the Company 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 set forth in reasonable
detail all material assumptions made in connection with such projections and
shall otherwise be in form and scope reasonably satisfactory to the
Administrative Agent; provided that, in the event that the Company is unable to
deliver quarterly consolidating balance sheets with respect to any Foreign
Subsidiaries, it shall be permitted to deliver quarterly consolidated balance
sheets with respect thereto.

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

            (a) within 10 days after the same are filed, copies of all financial
statements and reports which the Company or any Subsidiary may make to, or file
with, the SEC;

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

            (c) (A) as soon as possible and in any event within 30 days after
the Company knows or has reason to know that any Termination Event with respect
to any Plan has occurred, a statement of a Responsible Officer of the Company
describing such Termination Event and the action, if any, which the Company
proposes to take with respect thereto, (B) promptly and in any event within ten
days after receipt thereof by the Company or any ERISA Affiliate of the Company
from the PBGC, copies of each notice received by the Company 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 Employee Benefits Security Administration,
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 the Company 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
the Company or any ERISA Affiliate of the Company from a sponsor of a
Multiemployer Plan or from the PBGC, a copy of each notice received by the
Company 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 the Company 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;

            (d) 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, the Company or any Subsidiary, notice of (i) each
material action, suit or proceeding before any Governmental Authority and (ii)
any material claim under any Environmental Control Statute;

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


                                                                              58

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

      5.3 Payment of Obligations. The Company 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 the Company or
such Subsidiaries, as the case may be.

      5.4 Conduct of Business; Maintenance of Existence and Licenses;
Contractual Obligations. The Company shall, and shall cause each of its
Subsidiaries to, (a) continue to engage in business of the same general type as
conducted by the Company 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. The Company shall, and shall cause each of
its Subsidiaries to, do all things necessary to (i) maintain, preserve, protect
and keep its Properties in good repair, working order and condition (normal wear
and tear excepted), and make all necessary and proper repairs, renewals and
replacements so that its business carried on in connection therewith may be
properly conducted at all times and (ii) obtain and maintain in effect at all
times all material franchises, governmental authorizations, Intellectual
Property Rights, Licenses and permits, which are necessary for it to own its
Properties or conduct its business as conducted on the Initial Closing Date.

      5.6 Insurance. The Company shall, and shall cause each of its Subsidiaries
to, at all times maintain, with financially sound and reputable carriers having
a "Financial Strength" rating of at least A- by A.M. Best Company, insurance
against: (i) loss or damage by fire and loss in transit; (ii) theft, burglary,
pilferage, larceny, embezzlement, and other criminal activities; (iii) business
interruption; (iv) general liability and (v) and such other hazards, as is
customary in the business of the Company or such Subsidiary. All such insurance
shall be in amounts, cover such assets and be under policies acceptable to the
Administrative Agent in its reasonable discretion. The amount of all insurance
required by this Section 5.6 shall at a minimum comply with applicable law,
including the Flood Disaster Protection Act of 1973, as amended. All premiums on
such insurance shall be paid when due by the Company or the relevant Subsidiary
and, upon request, copies of the policies delivered to the Administrative Agent.
If the Company or any Subsidiary fails to obtain any insurance as required by
this Section 5.6, the Administrative Agent may obtain such insurance at the
Company's or such Subsidiary's expense. By purchasing such insurance, the
Administrative Agent shall not be deemed to have waived any Default or Event of
Default arising from the Company's or any Subsidiary's failure to maintain such
insurance or pay any premiums therefor. The Company shall, and shall cause each
of its Subsidiaries to, use its Properties in compliance with applicable law and
not to use such Properties in any manner which might render inapplicable any
insurance coverage.

      5.7 Inspection of Property; Books and Records; Communications with
Accountants. The Company shall, and shall cause each of its Subsidiaries to,
permit the Administrative Agent and the Lenders, by their respective employees,
representatives and agents, from time to time upon two Business


                                                                              59

Days' prior notice as frequently as the Administrative Agent reasonably
determines to be appropriate, to (a) inspect any of the Properties and the books
and financial records of such Obligor, (b) examine, audit and make extracts or
copies of the books of accounts and other financial records of such Obligor and
(c) have access to its Properties, facilities and its advisors, officers,
directors and employees to discuss the affairs, finances and accounts of any
Obligor. If a Default or an Event of Default has occurred and is continuing, the
Company shall, and shall cause each of its Subsidiaries to, provide such access
to the Administrative Agent and to each Lender at all times and without advance
notice. The Company shall, and shall cause each of its Subsidiaries to, promptly
make available to the Administrative Agent and its counsel originals or copies
of all books and records that the Administrative Agent may reasonably request.
Upon reasonable notice and at such reasonable times during usual business hours,
the Company shall, and shall cause each of its Subsidiaries to, permit
representatives of the Administrative Agent (on behalf of the Lenders) 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 the Company and its Subsidiaries with its Accountants;
provided that the Administrative Agent shall give notice of any such
communication to the Company and allow the Company the opportunity to be present
during such communication

      5.8 Environmental Laws. The Company shall, and shall cause each of its
Subsidiaries to:

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

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

            (c) generate, use, treat, store, release, dispose of, and otherwise
manage Materials of Environmental Concern in a manner that would not reasonably
be expected to result in a material liability to the Company or any of its
Subsidiaries or to materially affect any real property owned or leased by any of
them; and take reasonable efforts to prevent any other Person from generating,
using, treating, storing, releasing, disposing of, or otherwise managing
Materials of Environmental Concern in a manner that could reasonably be expected
to result in a material liability to, or materially affect any real property
owned or operated by, the Company or any of its Subsidiaries.

      5.9 Use of Proceeds. The Company shall use the proceeds of the Initial
Loans in accordance with the terms of Section 3.24.

      5.10 Compliance with Laws, Etc. The Company shall comply, and shall cause
each of its Subsidiaries to comply, in all material respects with all applicable
Requirements of Law.

      5.11 Guarantees, Etc. The Company shall not permit any current or future
Domestic Subsidiary to Incur a Guarantee Obligation with respect to the payment
of any Indebtedness of the Company or any other Restricted Subsidiary or
otherwise become an obligor, including as a co-borrower, under a Credit
Facility, unless (i) such Domestic Subsidiary simultaneously executes and
delivers an assumption agreement supplemental hereto providing for a Guarantee
of such Domestic Subsidiary pursuant to which such Domestic Subsidiary will
unconditionally guarantee, on a joint and several basis, all of the



                                                                              60

obligations of the Company and the other Guarantors under this Agreement,
including the full and prompt payment of the principal of, premium, if any and
interest on the Loans and the Exchange Notes on a senior basis and all other
obligations under this Agreement; provided that if such Indebtedness is by its
express terms subordinated in right of payment to the Loans or the Guarantees,
as the case may be, any such Guarantee Obligation of such Domestic Subsidiary
with respect to such Indebtedness shall be subordinated in right of payment to
such Domestic Subsidiary's Guarantee with respect to the Loans and the Exchange
Notes substantially to the same extent as such Indebtedness is subordinated to
the Loans; (ii) such Domestic Subsidiary waives and will not in any manner
whatsoever claim or take the benefit or advantage of, any rights or
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Domestic
Subsidiary under its Guarantee of the Loans and Exchange Notes so long as any of
the Loans or Exchange Notes remain outstanding; and (iii) such Domestic
Subsidiary shall deliver to the Administrative Agent an opinion of counsel to
the effect that (A) such Guarantee has been duly executed and authorized and (B)
such Guarantee constitutes a valid, binding and enforceable obligation of such
Domestic Subsidiary, except insofar as enforcement thereof may be limited by
bankruptcy, insolvency or similar laws (including, without limitation, all laws
relating to fraudulent transfers) and except insofar as enforcement thereof is
subject to general principles of equity. In addition, the Company shall cause
such Domestic Subsidiary to deliver to the Administrative Agent (a) such other
agreements, instruments, approvals or other documents as any Lender through the
Administrative Agent may reasonably request and (b) copies of the organizational
documents, resolutions and incumbency certificates of such Domestic Subsidiary,
promptly upon request thereby. Notwithstanding the foregoing, in the event a
Guarantor is released and discharged from all of its obligations (other than
contingent indemnification obligations) (1) under its Guarantee Obligations with
respect to Indebtedness and other obligations under a Credit Facility and all
other Indebtedness of the Company and its Restricted Subsidiaries, and (2) as an
obligor, including as a co-borrower, under a Credit Facility, then the Guarantee
of such Guarantor shall be automatically and unconditionally released and
discharged. Each Guarantee will be limited to an amount not to exceed the
maximum amount that can be guaranteed by that Subsidiary without rendering the
Guarantee, as it relates to such Subsidiary, voidable under applicable law
relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.

      5.12 Notices. The Company shall give prompt notice in writing to the
Administrative Agent and the Lenders of:

         (a) the occurrence of any Default or Event of Default;

         (b) any other development, financial or otherwise, which could
reasonably be expected to have a Material Adverse Effect;

         (c) receipt of any written notice (i) that the Company or any
Subsidiary is subject to any investigation by any governmental entity with
respect to any potential or alleged material violation of any material
applicable Environmental Laws, (ii) that any Governmental Authority may deny or
refuse to renew any material permit, license, approval, registration, exemption
or other authorization required under any Environmental Law, or (iii) of
imposition of any Lien against any Property of the Company or any Subsidiary for
any liability with respect to damages arising from, or costs resulting from, any
violation of any Environmental Laws;

         (d) receipt of any notice of litigation commenced or threatened against
the Company or any Subsidiary that (i) seeks damages in excess of $10,000,000,
(ii) seeks injunctive relief, (iii) is asserted or instituted against any Plan,
its fiduciaries or its assets, (iv) alleges criminal misconduct by the Company
or any Subsidiary, (v) alleges the material violation of any law regarding, or
seeks remedies in connection with, any Environmental Control Statutes; or (vi)
involves any product recall;



                                                                              61

         (e) commencement of any proceedings involving the Company or any
Subsidiary contesting any tax, fee, assessment, or other governmental charge in
excess of $10,000,000;

         (f) any Lien or claim made or asserted against the Collateral; or

         (g) any other matter as the Administrative Agent may reasonably
request.

      5.13 Take-Out Financing. The Company shall take any and every action
reasonably necessary or desirable so that the Investment Bank can, as soon as
practicable after the date hereof, publicly sell or privately place, in one or
more offerings or placements, the Take-Out Debt. The Investment Bank, in its
reasonable discretion after consultation with the Company, shall determine
whether, and in which amounts, the Take-Out Debt shall be issued by the Company
and the amount of each series of Take-Out Debt to be issued if the Take-Out Debt
is to be issued in a series of offerings and/or placements. Upon notice by the
Investment Bank (a "Securities Demand"), at any time and from time to time if
all Loans shall not have been repaid in full or the commitments in respect
thereof shall not have been terminated, the Company will cause the issuance and
sale of Take-Out Debt upon such terms and conditions as specified in the
Securities Demand; provided that (i) the interest rate (whether floating or
fixed) shall be determined by the Investment Bank in light of the then
prevailing market conditions for comparable securities but in no event shall the
weighted average effective yield on the Take-Out Debt exceed 10.5% per annum;
(ii) the Investment Bank, in its reasonable discretion after consultation with
the Company, shall determine whether the Take-Out Debt shall be issued through a
public offering or a private placement; (iii) the maturity of any Take-Out Debt
shall not be earlier than six months after the final maturity of the last
facility to mature under the Revolving Credit Agreement; (iv) the Take-Out Debt
will be issued pursuant to an indenture or indentures, which shall contain such
terms, conditions and covenants as are typical and customary for similar
financings and as are reasonably satisfactory in all respects to the Investment
Bank, the Company and the Administrative Agent; and (v) all other arrangements
with respect to the Take-Out Debt shall be reasonably satisfactory in all
respects to the Investment Bank in light of the then prevailing market
conditions.

         (b) The Company shall give the Administrative Agent prior notice of its
intention to file the registration statement or to effect a private placement of
the Take-Out Debt. The Company will notify the Administrative Agent promptly
upon the receipt of any comments from the SEC in connection with the
registration statement, will furnish the Administrative Agent with a copy of any
written comments from the SEC, will respond in a reasonably prompt manner and
appropriately to any such comments and will furnish a copy to the Administrative
Agent of any such response to the SEC.

         (c) The Company shall use its commercially reasonable best efforts to
deliver to the Investment Bank, within 30 days from the execution of the
Acquisition Agreement, a substantially complete initial draft of a registration
statement or an offering memorandum under Rule 144A of the Securities Act
relating to the Take-Out Debt (including audited financial statements of the
Company for the three preceding years, audited financial statements of Target,
as required by Regulation S-X, unaudited interim financial statements of the
Company and Target, as required by Regulation S-X, pro forma financial
statements and information and such other financial information as may be
required by applicable law or as may be customarily included therein).

      5.14 Exchange Notes. The Company shall, as promptly as practicable after
the six-month anniversary of the Initial Closing Date and in any event prior to
the Initial Maturity Date, enter into the Indenture with a bank or trust company
acting as indenture trustee thereunder (the "Trustee"), which shall be a
corporation organized and doing business under the laws of the United States or
any state thereof, in good standing, which is authorized under such laws to
exercise corporate trust powers and is subject to



                                                                              62

supervision or examination by Federal or state authority and which has a
combined capital and surplus of not less than $50,000,000.

         (b) The Company shall, on or prior to the third Business Day following
the written request (the "Exchange Request") of any Lender, execute, and cause
the Trustee to authenticate, and deliver to such Lender in accordance with the
Indenture an Exchange Note bearing interest as set forth therein in exchange for
such Lender's Loan dated the date of the issuance of such Exchange Note,
registered in the name specified by such Lender, in the principal amount equal
to 100% of the aggregate principal amount of the Loans for which they are
exchanged. Each Exchange Request shall specify the principal amount of the Loans
to be exchanged pursuant to this Section 5.14, which shall be at least
$1,000,000 or (euro)1,000,000, as the case may be, and in integral multiples of
$100,000 or (euro)100,000, as the case may be, in excess thereof and, if such
Lender holds Loan Notes, be accompanied by the Loan Notes to be exchanged for
Exchange Notes. No Exchange Request shall be made more than thirty (30) days
prior to the Initial Maturity Date. Any Loan Notes delivered to Company under
this Section 5.14 in exchange for Exchange Notes shall be canceled by the
Company and the corresponding amount of the Lender's Loan deemed repaid and the
Exchange Notes shall be governed by and construed in accordance with the terms
of the Indenture, which terms shall include those set forth in Exhibit H.

         (c) The Company shall, as promptly as practicable after the six-month
anniversary of the Initial Closing Date and in any event prior to the Initial
Maturity Date, enter into the Registration Rights Agreement with the Trustee for
the benefit of the Holders. If Exchange Notes are issued pursuant to the terms
hereof, the holders of such Exchange Notes shall have the registration rights
set forth in the Registration Rights Agreement, and the Company hereby agrees to
be bound by the provisions thereof applicable to the Company.

      5.15 Use of Proceeds of the Take-Out Debt. The Company shall use the net
proceeds received by it from the sale of the Take-Out Debt to repay the Loans
and the Exchange Notes pursuant to Section 2.5(d).

      5.16 Initiation of Buy Out. The Company shall, promptly upon acquiring
(directly or indirectly) at least 95% of Target Stock pursuant to the Tender
Offer, initiate the Buy Out and, immediately thereafter, the Squeeze Out,
resulting in the automatic delisting of Target from Eurolist by Euronext.

      5.17 Prepayment of Loans with Released Amount. The Company shall, upon
receipt by the Company or any of its Subsidiaries of the Released Amount, apply
an amount equal to the Released Amount toward the prepayment of the Loans and
the Exchange Notes in accordance with Section 2.5(b)(iii).

      5.18 Further Assurances. Upon reasonable request of the Administrative
Agent, the Company shall execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Agreement.

                                   SECTION 6

                               NEGATIVE COVENANTS

            So long as any Loan or Loan Note remains outstanding and unpaid, or
any other amount is owing to any Lender or the Administrative Agent hereunder or
under any other Loan Document or the Fee Letter:



                                                                              63

      6.1 Limitation on Indebtedness. The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, Incur any Indebtedness (including
Acquired Indebtedness); provided, however, that from and after the Initial
Maturity Date the Company and any Guarantor may Incur Indebtedness if on the
date thereof (A) the Consolidated Coverage Ratio for the Company and its
Restricted Subsidiaries is at least 2.0 to 1.0 and (B) no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence of
Incurring such Indebtedness or the transactions relating to such Incurrence.

         (b) Section 6.1(a) will not prohibit the Incurrence of the following
Indebtedness:

            (i) Indebtedness of the Company or any Guarantor Incurred pursuant
      to a Credit Facility in an aggregate amount up to the greater of (a) the
      Borrowing Base, less the aggregate principal amount of Indebtedness
      outstanding at any one time under clause (xi), and (b) $300,000,000 less
      the aggregate principal amount of all scheduled principal repayments and
      all mandatory prepayments of principal thereof permanently reducing the
      commitments thereunder, repayments with the proceeds from Asset
      Dispositions that are required under Section 6.4 hereof to reduce
      permanently the revolving commitments under a Credit Facility and
      Guarantee Obligations of Restricted Subsidiaries in respect of the
      Indebtedness Incurred pursuant to a Credit Facility under this clause (i);

            (ii) Guarantee Obligations of the Company or any Guarantor of
      Indebtedness Incurred in accordance with the provisions of this Agreement;
      provided that in the event such Indebtedness that is subject to a
      Guarantee Obligation is a Subordinated Obligation or a Guarantor
      Subordinated Obligation, then the related Guarantee Obligation shall be
      subordinated in right of payment to the Loans or the Guarantee Obligation,
      as the case may be;

            (iii) Indebtedness of the Company owing to and held by any
      Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to
      and held by the Company or any other Restricted Subsidiary; provided,
      however, (A) if the Company is the obligor on such Indebtedness, such
      Indebtedness is expressly subordinated to the prior payment in full in
      cash of all obligations with respect to the Loans, (B) if a Guarantor is
      the obligor on such Indebtedness and the Company or a Guarantor is not the
      obligee, such Indebtedness constitutes a Guarantor Subordinated Obligation
      and (C)(1) any subsequent issuance or transfer of Capital Stock or any
      other event which results in any such Indebtedness being beneficially held
      by a Person other than the Company or a Restricted Subsidiary of the
      Company and (2) any sale or other transfer of any such Indebtedness to a
      Person other than the Company or a Restricted Subsidiary of the Company
      shall be deemed, in each case, to constitute an Incurrence of such
      Indebtedness by the Company or such Subsidiary, as the case may be;

            (iv) Indebtedness represented by (w) the Loans and the related
      Guarantees and the Exchange Notes and the related Guarantees, (x) the
      Take-Out Debt, (y) any Indebtedness (other than the Indebtedness described
      in clauses (i), (ii), (iii), (vi), (vii), (viii), (ix) and (xi) of this
      Section 6.1(b)) outstanding on the Initial Closing Date and (z) any
      Refinancing Indebtedness Incurred in respect of any Indebtedness described
      in this clause (iv) or clause (v) or Incurred pursuant to Section 6.1(a);

            (v) Indebtedness of a Guarantor Incurred and outstanding on the date
      on which such Guarantor was acquired by the Company or a Restricted
      Subsidiary and Indebtedness of a Foreign Subsidiary Incurred and
      outstanding on the date on which such Foreign Subsidiary was acquired by
      the Company or a Restricted Subsidiary (other than Indebtedness Incurred
      (a) to provide all or any portion of the funds utilized to consummate the
      transaction or series of related



                                                                              64

      transactions pursuant to which such Guarantor or Foreign Subsidiary, as
      the case may be, became a Guarantor or Foreign Subsidiary, as the case may
      be, or was otherwise acquired by the Company or (b) otherwise in
      connection with, or in contemplation of, such acquisition), provided,
      however, that at the time such Guarantor is acquired by the Company or
      such Restricted Subsidiary, the Company would have been able to Incur
      $1.00 of additional Indebtedness pursuant to Section 6.1(a) after giving
      effect to the Incurrence of such Indebtedness pursuant to this clause (v)
      or, in the case of an acquisition of a Foreign Subsidiary, such Foreign
      Subsidiary would have been able to Incur $1.00 of additional Indebtedness
      pursuant to clause (xi), provided that, prior to the Initial Maturity
      Date, such Indebtedness (other than Indebtedness existing at the time of
      the Transaction of the Holding Company, the Target or Subsidiaries of the
      Target) of such Foreign Subsidiary shall not exceed $35,000,000;

            (vi) Indebtedness under Currency Agreements and Interest Rate
      Agreements; provided, however, that in the case of Currency Agreements,
      such Currency Agreements are related to business transactions of the
      Company or its Restricted Subsidiaries entered into in the ordinary course
      of business or in the case of Currency Agreements and Interest Rate
      Agreements, such Currency Agreements and Interest Rate Agreements are
      entered into for bona fide hedging purposes of the Company or its
      Restricted Subsidiaries (as determined in good faith by the Board of
      Directors or senior management of the Company) and substantially
      correspond in terms of notional amount, duration, currencies and interest
      rates, as applicable, to Indebtedness of the Company or its Restricted
      Subsidiaries Incurred without violation of this Agreement;

            (vii) Indebtedness Incurred in respect of workers' compensation
      claims, self-insurance obligations, performance, surety and similar bonds
      and completion guarantees provided by the Company or a Restricted
      Subsidiary in the ordinary course of business;

            (viii) Indebtedness arising from agreements of the Company or a
      Restricted Subsidiary providing for indemnification, adjustment of
      purchase price or similar obligations, in each case, Incurred or assumed
      in connection with the acquisition or disposition of any business, assets
      or Capital Stock of a Restricted Subsidiary in accordance with the terms
      of this Agreement, other than Guarantee Obligations by the Company or any
      Restricted Subsidiary of Indebtedness Incurred by any Person acquiring all
      or any portion of such business, assets or a Subsidiary of the Company for
      the purpose of financing such acquisition, provided that, in the case of a
      disposition, the maximum aggregate liability in respect of all such
      Indebtedness shall at no time exceed the gross proceeds (including all
      cash and non-cash proceeds) actually received by the Company and its
      Restricted Subsidiaries in connection with such disposition;

            (ix) Indebtedness arising from the honoring by a bank or other
      financial institution of a check, draft or similar instrument (except in
      the case of daylight overdrafts) drawn against insufficient funds in the
      ordinary course of business, provided, however, that such Indebtedness is
      extinguished within five Business Days of Incurrence;

            (x) the Incurrence by the Company or any Guarantor of Indebtedness
      represented by Capitalized Lease Obligations, the Leasehold Improvement
      Loan, mortgage financings or purchase money obligations with respect to
      assets other than Capital Stock or other Investments, in each case
      Incurred for the purpose of financing all or any part of the purchase
      price or cost of construction or improvements of property used in the
      business of the Company or such Guarantor, in an aggregate principal
      amount not to exceed $20,000,000 at any time outstanding;

            (xi) Indebtedness of Foreign Subsidiaries in an amount at any one
      time outstanding up to the greater of (a) 75% of such Foreign
      Subsidiaries' Consolidated Tangible Assets or (b)



                                                                              65

      $300,000,000, in each case, less the aggregate principal amount of
      Indebtedness of a Foreign Subsidiary Incurred pursuant to clause (v) of
      this Section 6.1(b);

            (xii) Guarantee Obligations of the Company of Indebtedness in
      respect of letters of credit issued on behalf of Foreign Subsidiaries to
      vendors in an aggregate amount not to exceed $20,000,000 at any one time
      outstanding; and

            (xiii) Indebtedness (other than Indebtedness described in clauses
      (i)-(xii) above) of the Company or any Guarantor in a principal amount
      which, when taken together with the principal amount of all other
      Indebtedness Incurred pursuant to this Section 6.1(b)(xiii) and then
      outstanding, will not exceed (A) $5,000,000 prior to the Initial Maturity
      Date or (B) $20,000,000 from and after the Initial Maturity Date.

         (c) Notwithstanding the foregoing, the Company shall not Incur any
Indebtedness under Section 6.1(b) if the proceeds thereof are used, directly or
indirectly, to refinance any Subordinated Obligations of the Company unless such
Indebtedness shall be subordinated to the Loans to at least the same extent as
such Subordinated Obligations. No Guarantor shall Incur any Indebtedness under
Section 6.1(b) if the proceeds thereof are used, directly or indirectly, to
refinance any Guarantor Subordinated Obligations of such Guarantor unless such
Indebtedness shall be subordinated to the obligations of such Guarantor under
its Guarantee to at least the same extent as such Guarantor Subordinated
Obligations. No Restricted Subsidiary may Incur Indebtedness if the proceeds are
used to refinance Indebtedness of the Company or any Guarantor. The Company
shall not, directly or indirectly, Incur, or permit any Guarantor to Incur, any
Indebtedness which by its terms (or by the terms of any agreement governing such
Indebtedness) is expressly subordinated in right of payment to any other
Indebtedness of the Company or such Guarantor, as the case may be, unless such
Indebtedness is also by its terms (or the by the terms of any agreement
governing such Indebtedness) made expressly subordinate to the Loans, in the
case of the Company, or the Guarantees, in the case of a Guarantor, to the same
extent and the same manner as such Indebtedness is subordinated to other
Indebtedness of the Company or such Guarantor. For purposes of the foregoing, no
Indebtedness will be deemed to be subordinated in right of payment to any other
Indebtedness solely by virtue of such Indebtedness being unsecured or by virtue
of the fact that the holders of such Indebtedness have entered into one or more
intercreditor agreements giving one or more of such holders priority over the
other holders in the collateral held by them.

         (d) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred pursuant to and in
compliance with, this covenant:

            (i) in the event that Indebtedness meets the criteria of more than
      one of the types of Indebtedness described in Section 6.1, the Company, in
      its sole discretion, will classify such item of Indebtedness on the date
      of Incurrence and only be required to include the amount and type of such
      Indebtedness in one of such clauses;

            (ii) all Indebtedness outstanding on the date of this Agreement
      under the Revolving Credit Agreement shall be deemed initially Incurred on
      the Initial Closing Date under Section 6.1(b)(i) and not under Section
      6.1(a) or 6.1(b)(iv);

            (iii) if obligations in respect of letters of credit are Incurred
      pursuant to a Credit Facility and are being treated as Incurred pursuant
      to Section 6.1(b)(i) and the letters of credit relate to other
      Indebtedness, then such other Indebtedness shall not be included;

            (iv) the principal amount of any Disqualified Stock of the Company
      or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary
      that is not a Guarantor, will be equal to



                                                                              66

      the greater of the maximum mandatory redemption or repurchase price (not
      including, in either case, any redemption or repurchase premium) or the
      liquidation preference thereof;

            (v) Guarantee Obligations with respect to, or obligations in respect
      of letters of credit relating to, Indebtedness which is otherwise included
      in the determination of a particular amount of Indebtedness shall not be
      included;

            (vi) Indebtedness permitted by this covenant need not be permitted
      solely by reference to one provision permitting such Indebtedness but may
      be permitted in part by one such provision and in part by one or more
      other provisions of this covenant permitting such Indebtedness; and

            (vii) the amount of Indebtedness issued at a price that is less than
      the principal amount thereof will be equal to the amount of the liability
      in respect thereof determined in accordance with GAAP.

      Accrual of interest, accrual of dividends, the accretion of accreted
value, the payment of interest in the form of additional Indebtedness and the
payment of dividends in the form of additional shares of Preferred Stock or
Disqualified Stock will not be deemed to be an Incurrence of Indebtedness for
purposes of this covenant. The amount of any Indebtedness outstanding as of any
date shall be (i) the accreted value of the Indebtedness in the case of any
Indebtedness issued with original issue discount and (ii) the principal amount
or liquidation preference thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other Indebtedness. For purposes
of determining compliance with any U.S. dollar-denominated restriction on the
Incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of
Indebtedness denominated in a foreign currency shall be calculated based on the
relevant currency exchange rate in effect on the date such Indebtedness was
Incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness; provided that if such Indebtedness is Incurred to
refinance other Indebtedness denominated in a foreign currency, and such
refinancing would cause the applicable U.S. dollar-dominated restriction to be
exceeded if calculated at the relevant currency exchange rate in effect on the
date of such refinancing, such U.S. dollar-dominated restriction shall be deemed
not to have been exceeded so long as the principal amount of such refinancing
Indebtedness does not exceed the principal amount of such Indebtedness being
refinanced. Notwithstanding any other provision of this Section 6.1, the maximum
amount of Indebtedness that the Company or a Restricted Subsidiary may Incur
pursuant to this covenant shall not be deemed to be exceeded solely as a result
of fluctuations in the exchange rate of currencies. The principal amount of any
Indebtedness Incurred to refinance other Indebtedness, if Incurred in a
different currency from the Indebtedness being refinanced, shall be calculated
based on the currency exchange rate applicable to the currencies in which such
Refinancing Indebtedness is denominated that is in effect on the date of such
refinancing.

         (e) In addition, the Company will not permit any of its Unrestricted
Subsidiaries to Incur any Indebtedness or issue any shares of Disqualified
Stock, other than Non Recourse Debt. If at any time an Unrestricted Subsidiary
becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be
deemed to be Incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be Incurred as of such date under
this Section 6.1, the Company shall be in Default of this Section 6.1).

      6.2 Limitation on Restricted Payments. Prior to the Initial Maturity Date,
the Company shall not, and shall not permit any Restricted Subsidiary, directly
or indirectly, to (i) declare or pay any dividend or make any distribution on or
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries)



                                                                              67

except (x) dividends or distributions payable solely in the Capital Stock of the
Company (other than Disqualified Stock) or in options, warrants or other rights
to purchase such Capital Stock of the Company and (y) dividends or distributions
payable to the Company or any Restricted Subsidiary (and if such Restricted
Subsidiary is not a Wholly Owned Subsidiary, to its other holders of Capital
Stock on a pro rata basis), (ii) purchase, redeem, retire or otherwise acquire
for value any Capital Stock of the Company or any direct or indirect parent of
the Company held by Persons other than the Company or a Restricted Subsidiary of
the Company (other than in exchange for Capital Stock of the Company (other than
Disqualified Stock)), (iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment any Subordinated Obligations or Guarantor
Subordinated Obligations (other than the purchase, repurchase, redemption,
defeasance or other acquisition or retirement of Subordinated Obligations or
Guarantor Subordinated Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of purchase, repurchase, redemption, defeasance
or other acquisition or retirement) or (iv) make any Restricted Investment in
any Person (any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Restricted Investment referred to
in clauses (i) through (iv) being herein referred to as a "Restricted Payment").

         (b) From and after the Initial Maturity Date, the Company shall not,
and shall not permit any of its Restricted Subsidiaries, directly or indirectly,
to make any Restricted Payment if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and
be continuing (or would result therefrom); or (2) the Company is not able to
Incur an additional $1.00 of Indebtedness pursuant to Section 6.1(a) after
giving effect on a pro forma basis to such Restricted Payment; or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
declared or made subsequent to the Initial Maturity Date would exceed 25% of the
Consolidated Net Income for the period (treated as one accounting period) from
the Initial Maturity Date to the end of the most recent fiscal quarter ending
prior to the date of such Restricted Payment as to which financial statements
are in existence (or, in case such Consolidated Net Income shall be a deficit,
minus 100% of such deficit).

         (c) The provisions of Section 6.2(a) (in the case of clauses (iv), (v),
(vi), (vii) and (viii) below only) and Section 6.2(b) shall not prohibit:

            (i) any purchase, retirement, payment, defeasance, redemption or
      other acquisition of Capital Stock, Disqualified Stock or Subordinated
      Obligations of the Company or Guarantor Subordinated Obligations of any
      Guarantor made by exchange for, or out of the proceeds of the
      substantially concurrent sale of, Capital Stock of the Company (other than
      Disqualified Stock and other than Capital Stock issued or sold to a
      Subsidiary or an employee stock ownership plan or similar trust to the
      extent such sale to an employee stock ownership plan or similar trust is
      financed by loans from or is subject to a Guarantee Obligation by the
      Company or any Restricted Subsidiary unless such loans have been repaid
      with cash on or prior to the date of determination)); provided, however,
      that such purchase, retirement, payment, defeasance, redemption or other
      acquisition shall be excluded in subsequent calculations of the amount of
      Restricted Payments;

            (ii) any purchase, retirement, payment, defeasance, redemption or
      other acquisition of Subordinated Obligations of the Company made by
      exchange for, or out of the proceeds of the substantially concurrent sale
      of, Subordinated Obligations of the Company or any purchase, retirement,
      payment, defeasance, redemption or other acquisition of Guarantor
      Subordinated Obligations made by exchange for, or out of the proceeds of
      the substantially concurrent sale of, Guarantor Subordinated Obligations
      that, in each case, is permitted to be Incurred pursuant to Section 6.1
      and that, in each case, constitutes Refinancing Indebtedness; provided,
      however, that



                                                                              68

      such purchase, retirement, payment, defeasance, redemption or other
      acquisition shall be excluded in subsequent calculations of the amount of
      Restricted Payments;

            (iii) dividends paid within sixty (60) days after the date of
      declaration if at such date of declaration such dividends would have
      complied with this provision; provided, however, that such dividend shall
      be included in subsequent calculations of the amount of Restricted
      Payments;

            (iv) so long as no Default or Event of Default has occurred and is
      continuing, (A) the purchase, redemption or other acquisition,
      cancellation or retirement for value of Capital Stock, or options,
      warrants, equity appreciation rights or other rights to purchase or
      acquire Capital Stock of the Company or any Restricted Subsidiary of the
      Company or any parent of the Company held by any existing or former
      employees or management of the Company or any Subsidiary of the Company or
      their assigns, estates or heirs, in each case in connection with the
      repurchase provisions under employee stock option or stock purchase
      agreements or other agreements to compensate management employees;
      provided that such redemptions or repurchases pursuant to this clause will
      not exceed $5,000,000 in the aggregate during any calendar year and
      $20,000,000 in the aggregate for all such redemptions and repurchases;
      provided, however, that the amount of any such repurchase or redemption
      will be included in subsequent calculations of the amount of Restricted
      Payments, and (B) to the extent permitted by law, loans or advances to
      employees of the Company or any Subsidiary of the Company the proceeds of
      which are used to purchase Capital Stock of the Company, in an aggregate
      amount not in excess of $5,000,000 at any one time outstanding; provided,
      however, that the amount of such loans and advances will be included in
      subsequent calculations of the amount of Restricted Payments;

            (v) so long as no Default or Event of Default has occurred and is
      continuing, the declaration and payment of dividends to holders of any
      class or series of Disqualified Stock of the Company issued in accordance
      with the terms of this Agreement to the extent such dividends are included
      in the definition of "Consolidated Interest Expense"; provided that the
      payment of such dividends will be excluded from the calculation of
      Restricted Payments;

            (vi) repurchases of Capital Stock deemed to occur upon exercise of
      stock options, warrants or other convertible securities if such Capital
      Stock represents a portion of the exercise price thereof; provided,
      however, that such repurchases will be excluded from subsequent
      calculations of the amount of Restricted Payments;

            (vii) any payments made in connection with the Transaction pursuant
      to or contemplated by the Acquisition Agreement and pursuant to any other
      agreements or documents related to the Transaction and set forth on
      Schedule 6.2 hereto in effect on the closing date of the Transaction
      (without giving effect to subsequent amendments, waivers or other
      modifications to such agreements or documents); provided, however, that
      such amounts will be excluded in the calculation of the amount of
      Restricted Payments; or

            (viii) (A) prior to the Initial Maturity Date, Restricted Payments
      in an amount not to exceed $5,000,000 and (B) from and after the Initial
      Maturity Date, Restricted Payments in an amount not to exceed $10,000,000;
      provided that, in each case, the amount of such Restricted Payments will
      be included in the subsequent calculation of the amount of Restricted
      Payments.

         The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of such Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The



                                                                              69

fair market value of any cash Restricted Payment shall be its face amount and
the fair market value of any non-cash Restricted Payment shall be determined
conclusively by the Board of Directors of the Company acting in good faith whose
resolution with respect thereto shall be delivered to the Administrative Agent,
such determination to be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if such
fair market value is estimated in good faith by the Board of Directors of the
Company to exceed $15,000,000. Not later than the date of making any Restricted
Payment in excess of $5,000,000, the Company shall deliver to the Administrative
Agent a certificate signed by a Responsible Officer stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this Section 6.2 were computed, together with any fairness opinion
or appraisal required hereby.

      6.3 Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Restricted Subsidiary to (i) pay dividends or make any other distributions
on its Capital Stock or pay any Indebtedness or other obligation owed to the
Company or any Restricted Subsidiary (it being understood that the priority of
any Preferred Stock in receiving dividends or liquidating distributions prior to
dividends or liquidating distributions being paid on common Capital Stock shall
not be deemed a restriction on the ability to make distributions on Capital
Stock), (ii) make any loans or advances to the Company or any Restricted
Subsidiary (it being understood that the subordination of loans or advances made
to the Company or any Restricted Subsidiary to other Indebtedness Incurred by
the Company or any Restricted Subsidiary shall not be deemed a restriction on
the ability to make loans or advances) or (iii) transfer any of its property or
assets to the Company or any Restricted Subsidiary; except:

                  (1) any encumbrance or restriction pursuant to an agreement in
            effect at or entered into on the Initial Closing Date and identified
            on Schedule 6.3 hereto, including, without limitation, this
            Agreement and the Revolving Credit Agreement, or pursuant to the
            Indenture;

                  (2) any encumbrance or restriction with respect to a Foreign
            Subsidiary pursuant to any agreement relating to Indebtedness
            Incurred by such Foreign Subsidiary under clause (xi) of Section
            6.1(b) hereto;

                  (3) any encumbrance or restriction with respect to a
            Restricted Subsidiary pursuant to an agreement relating to any
            Capital Stock or Indebtedness Incurred by such Restricted Subsidiary
            on or prior to the date on which such Restricted Subsidiary was
            acquired by the Company (other than Capital Stock or Indebtedness
            Incurred as consideration in, or to provide all or any portion of
            the funds or credit support utilized to consummate, the transaction
            or series of related transactions pursuant to which such Restricted
            Subsidiary became a Restricted Subsidiary of the Company or was
            acquired by the Company or in contemplation of the transaction) and
            outstanding on such date, provided, that any such encumbrance or
            restriction shall not extend to any assets or property of the
            Company or any other Restricted Subsidiary other than the assets and
            property so acquired;

                  (4) any encumbrance or restriction with respect to a
            Restricted Subsidiary pursuant to an agreement effecting a
            refunding, replacement or refinancing of Indebtedness Incurred
            pursuant to an agreement referred to in clauses (1), (2) or (3) or
            this clause (4) or contained in any amendment to an agreement
            referred to in clauses (1),(2) or (3) or this clause (4); provided,
            however, that the encumbrances and restrictions with respect to such
            Restricted Subsidiary contained in any such agreement or



                                                                              70

            amendment are no less favorable in any material respect to the
            Lenders than the encumbrances and restrictions with respect to such
            Restricted Subsidiary contained in such agreements referred to in
            clauses (1), (2) and (3) on the Initial Closing Date or the date
            such Restricted Subsidiary became a Restricted Subsidiary, whichever
            is applicable;

                  (5) in the case of clause (iii) above, any encumbrance or
            restriction (1) that restricts in a customary manner the subletting,
            assignment or transfer of any property or asset that is subject to a
            lease, license or similar contract, or the assignment or transfer of
            any such lease, license or other contract, (2) contained in
            mortgages, pledges or other security agreements permitted under this
            Agreement securing Indebtedness of the Company or a Restricted
            Subsidiary to the extent such encumbrances or restrictions restrict
            the transfer of the property subject to such mortgages, pledges or
            other security agreements or (3) pursuant to customary provisions
            restricting dispositions of real property interests set forth in any
            reciprocal easement agreements of the Company or any Restricted
            Subsidiary;

                  (6) (A) purchase money obligations for property acquired in
            the ordinary course of business and (B) Capitalized Lease
            Obligations permitted under this Agreement, in each case, that
            impose encumbrances or restrictions of the nature described in
            clause (iii) above on the property so acquired;

                  (7) any restriction with respect to a Restricted Subsidiary
            (or any of its property or assets) imposed pursuant to an agreement
            entered into for the direct or indirect sale or disposition of all
            or substantially all the Capital Stock or assets of such Restricted
            Subsidiary (or the property or assets that are subject to such
            restriction) pending the closing of such sale or disposition;

                  (8) any customary provisions in joint venture agreements that
            are not Restricted Subsidiaries and other similar agreements entered
            into in the ordinary course of business;

                  (9) net worth provisions in leases and other agreements
            entered into by the Company or any Restricted Subsidiary in the
            ordinary course of business;

                  (10) encumbrances or restrictions arising or existing by
            reason of applicable law, or any applicable rule, regulation or
            order; and

                  (11) customary restrictions imposed on the transfer of, or in
            Licenses related to, Copyrights, Patents, Trademarks or other
            Intellectual Property Rights and contained in agreements entered
            into in the ordinary course of business.

      6.4 Limitation on Sales of Assets and Subsidiary Stock. The Company shall
not, and shall not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless: (i) the Company or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Disposition at least
equal to the fair market value (such fair market value to be determined on the
date of contractually agreeing to such Asset Disposition), as determined in good
faith by the Company's Board of Directors (including as to the value of all
non-cash consideration), of the shares and assets subject to such Asset
Disposition; (ii) prior to the Initial Maturity Date, at least 85% and, from and
after the Initial Maturity Date, at least 75% of the consideration thereof
received by the Company or such Restricted Subsidiary, as the case may be, is in
the form of cash or Cash Equivalents; and (iii) to the extent required by
Section 2.5(b)(ii), an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company or such Restricted Subsidiary, as
the case may be, to prepay or redeem the Loans



                                                                              71

and Exchange Notes at par, plus accrued and unpaid interest, if any, thereon in
the manner set forth in Section 2.5(d).

         Notwithstanding the foregoing provisions, the Company and its
Restricted Subsidiaries shall not be required to apply any Net Available Cash in
accordance herewith except to the extent that the aggregate Net Available Cash
from all Asset Dispositions which are not applied in accordance with this
covenant exceeds $10,000,000.

         (b) For the purposes of this Section 6.4, the following will be deemed
to be cash: (x) the assumption by the transferee of Indebtedness (other than
Subordinated Obligations or Disqualified Stock) of the Company or Indebtedness
of a Wholly Owned Subsidiary (other than Guarantor Subordinated Obligations or
Disqualified Stock of any Wholly Owned Subsidiary that is a Subsidiary
Guarantor) and the release of the Company or such Restricted Subsidiary from all
liability on such Indebtedness in connection with such Asset Disposition (in
which case the Company shall, without further action, be deemed to have applied
such assumed Indebtedness in accordance with clause (A) of Section 6.4(a)) and
(y) securities, notes or other obligations received by the Company or any
Restricted Subsidiary of the Company from the transferee that are promptly
converted by the Company or such Restricted Subsidiary into cash.

      6.5 Limitation on Liens(a) . The Company shall not, and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly, create, Incur or
permit to exist any Lien (other than Permitted Liens) on any of its property or
assets (including Capital Stock), whether owned on the date of this Agreement or
thereafter acquired, securing any Indebtedness, unless contemporaneously
therewith effective provision is made to secure the Loans or, in respect of
Liens on any such Restricted Subsidiary's property or assets, any Guarantee by
such Restricted Subsidiary, equally and ratably with (or prior to in the case of
Liens with respect to Subordinated Obligations or Guarantor Subordinated
Obligations, as the case may be) such Indebtedness for so long as such
Indebtedness is so secured.

      6.6 Limitation on Affiliate Transactions. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or conduct any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Company (an "Affiliate Transaction") unless: (i) the terms of such Affiliate
Transaction are no less favorable to the Company or such Restricted Subsidiary,
as the case may be, than those that could be obtained in a comparable
transaction at the time of such transaction in arm's-length dealings with a
Person who is not such an Affiliate; (ii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $5,000,000, the terms of
such transaction have been approved by a majority of the members of the Board of
Directors of the Company and by a majority of the members of such Board having
no personal stake in such transaction, if any (and such majority or majorities,
as the case may be, determines that such Affiliate Transaction satisfies the
criteria in clause (i) above); and (iii) in the event such Affiliate Transaction
involves an aggregate amount in excess of $10,000,000, the Company has received
a written opinion from an independent investment banking, accounting or
appraisal firm of nationally recognized standing that such Affiliate Transaction
is not materially less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arms-length basis from a
Person that is not an Affiliate.

         (b) The foregoing provisions of Section 6.6(a) shall not apply to (i)
any Restricted Payment (other than a Restricted Investment) permitted to be made
pursuant to Section 6.2, (ii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or the funding
of, employment arrangements, stock options and stock ownership plans and fees,
compensation, benefits and indemnities paid or entered into by the Company or
its Restricted Subsidiaries in the ordinary course of business to or with
officers, directors or employees of the Company and its



                                                                              72

Restricted Subsidiaries approved by the Board of Directors, (iii) to the extent
permitted by law, loans or advances to employees in the ordinary course of
business of the Company or any of its Restricted Subsidiaries but in any event
not to exceed $5,000,000 in the aggregate outstanding at any one time with
respect to all loans or advances made since the date of this Agreement, (iv) any
transaction between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries, (v) the payment of reasonable and customary fees paid
to, and indemnity provided on behalf of, officers, directors or employees of the
Company or any Restricted Subsidiary of the Company in connection with providing
services to the Company or any Restricted Subsidiary, (vi) the performance of
obligations of the Company or any of its Restricted Subsidiaries under the terms
of any agreement to which the Company or any of its Restricted Subsidiaries is a
party on the Initial Closing Date and identified on Schedule 6.6 hereto, as
these agreements may be amended, modified, supplemented, extended or renewed
from time to time; and provided, however, that any future amendment,
modification, supplement, extension or renewal entered into after the Initial
Closing Date will be permitted to the extent that its terms are not more
disadvantageous to the Lenders than the terms of the agreements in effect on the
Initial Closing Date, and (vii) any transaction with a customer or supplier of
the Company or a Restricted Subsidiary so long as such transaction is in the
ordinary course of business and the terms of such transaction are no less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that could be obtained in a comparable transaction at the time of such
transaction in arm's length dealings with a Person who is not an Affiliate;
provided that, if such transaction or a series of related transactions exceeds
$5,000,000, the terms of such transaction must be approved by a majority of the
members of the Board of Directors of the Company and by a majority of the
members of such Board having no personal stake in such transaction.

      6.7 Change of Control. (a) Upon a Change of Control, each Holder shall
have the right to require that the Company repurchase all or any part of such
Holder's Loans at a purchase price in cash equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date), such repurchase to
be made in accordance with Section 6.7(b).

         (b) Within 30 days following any such Change of Control, the Company
shall mail a notice to each Holder with a copy to the Administrative Agent
stating:

            (i) that a Change of Control has occurred and that such Holder has
      the right to require the Company to purchase such Holder's Loans at a
      purchase price in cash equal to 101% of the principal amount thereof plus
      accrued and unpaid interest, if any, to the date of purchase (subject to
      the right of Holders of record on a record date to receive interest on the
      relevant interest payment date);

            (ii) the repurchase date (which shall be no earlier than 30 days nor
      later than 60 days from the date such notice is mailed); and

            (iii) the procedures determined by the Company, consistent with this
      Section, that a Holder must follow in order to have its Loans purchased.

         (c) Holders electing to have a Loan purchased will be required to give
notice in writing to the Company at the address specified in Section 9.2 at
least three Business Days prior to the purchase date. Each Holder will be
entitled to withdraw its election if the Company receives, not later than one
Business Day prior to the purchase date, a telegram, telex, facsimile
transmission or letter from such Holder setting forth the name of such Holder,
the principal amount of the Loan which was to be purchased and a statement that
such Holder is withdrawing its election to have such Loan purchased.



                                                                              73

         (d) On the purchase date, the Company shall pay the purchase price for
the Loans to be purchased, to the Holders entitled thereto upon, in the case of
Loans evidenced by Loan Notes, surrender of such Loan Notes.

         (e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Loans pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.

      6.8 Limitation on Voting Stock of Restricted Subsidiaries. The Company
shall not, and shall not permit any Restricted Subsidiary of the Company to,
transfer, convey, sell, lease or otherwise dispose of any Voting Stock of any
Restricted Subsidiary or to issue any Voting Stock of any Restricted Subsidiary
(other than, if necessary, shares of its Voting Stock constituting directors'
qualifying shares) to any Person except (i) to the Company or a Wholly Owned
Subsidiary; or (ii) in compliance with Section 6.4 and immediately after giving
effect to such issuance or sale, such Restricted Subsidiary continues to be a
Restricted Subsidiary. Notwithstanding the foregoing, the Company or any
Restricted Subsidiary may sell all the Voting Stock of a Restricted Subsidiary
as long as the Company complies with the terms of Section 6.4.

      6.9 Merger, Consolidation, etc. (a) Prior to the Initial Maturity Date,
neither the Company nor any of its Subsidiaries may merge with or consolidate
with any other Person, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets or liquidate, wind up or dissolve itself except that, if at the time
thereof and immediately after giving effect thereto no Default or Event of
Default shall have occurred and be continuing or would result therefrom, (i) any
Wholly Owned Subsidiary may merge into or consolidate with the Company in a
transaction in which the Company is the surviving corporation or sell or
transfer all or substantially all of its assets to the Company (upon voluntary
liquidation or otherwise) and (ii) any Wholly Owned Subsidiary may merge into or
consolidate with or sell all or substantially all of its assets to, any other
Wholly Owned Subsidiary in a transaction in which the surviving entity or
transferee is a Wholly Owned Subsidiary and no Person other than the Company or
a Wholly Owned Subsidiary receives any consideration. Notwithstanding the
foregoing, a Wholly Owned Subsidiary may merge or consolidate with a Person
that, immediately following such merger or consolidation, becomes a Wholly Owned
Subsidiary; provided that such merger or consolidation is otherwise permitted in
all respects by the terms of this Agreement.

         (b) From and after the Initial Maturity Date, the Company may
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, if:

            (i) the resulting, surviving or transferee Person (the "Successor
      Company") shall be a corporation organized and existing under the laws of
      the United States of America, any State thereof or the District of
      Columbia and the Successor Company (if not the Company) shall expressly
      assume, by an assumption agreement supplemental hereto, executed by the
      Successor Company and delivered to the Administrative Agent, in form and
      substance satisfactory to the Administrative Agent, all the obligations of
      the Company under the Notes, the Loans and this Agreement;

            (ii) immediately after giving effect to such transaction (and
      treating any Indebtedness which becomes an obligation of the Successor
      Company or any Subsidiary of the Successor Company as a result of such
      transaction as having been Incurred by the Successor Company or



                                                                              74

      such Subsidiary at the time of such transaction), no Default or Event of
      Default shall have occurred and be continuing;

            (iii) immediately after giving effect to such transaction, the
      Consolidated Net Worth of the Company or the Successor Company, as the
      case may be, is not less than that of the Company immediately prior to the
      transaction;

            (iv) immediately after giving effect to such transaction, the
      Successor Company would be able to Incur an additional $1.00 of
      Indebtedness pursuant to Section 6.1(a);

            (v) each Guarantor (unless it is the other party to the transactions
      above, in which case clause (i) shall apply) shall have by an assumption
      agreement supplemental hereto confirmed that its Guarantee shall apply to
      such Person's obligations in respect of this Agreement and the Loans; and

            (vi) the Company shall have delivered to the Administrative Agent a
      certificate of a Responsible Officer and an opinion of counsel to Company,
      each stating that such consolidation, merger, transfer or lease and such
      assumption agreement (if any) comply with this Agreement.

         For purposes of this Section 6.9, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.

         The Successor Company shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement, but in the
case of a lease of all or substantially all its assets, the predecessor Company
shall not be released from the obligation to pay the principal of and interest
on the Loans and the Notes.

         Notwithstanding clauses (iii) and (iv) of the first sentence of this
Section 6.9(b): (1) any Restricted Subsidiary of the Company may consolidate
with, merge into or transfer all or part of its properties and assets to the
Company; and (2) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction to realize
tax or other benefits; provided that, in the case of a Restricted Subsidiary
that merges into the Company, the Company will not be required to comply with
the preceding clause (vi).

         (c) From and after the Initial Maturity Date, the Company will not
permit any Guarantor to consolidate with or merge with or into any person (other
than another Guarantor) and will not permit the conveyance, transfer or lease of
substantially all of the assets of any Guarantor unless (1) (a) the resulting,
surviving or transferee Person will be a corporation, partnership, trust or
limited liability company organized and existing under the laws of the United
States of America, any State of the United States or the District of Columbia
and such Person (if not such Guarantor) will expressly assume, by an assumption
agreement supplemental hereto, executed and delivered to the Administrative
Agent, all the obligations of such Guarantor under its Guarantee; (b)
immediately after giving effect to such transaction (and treating any
Indebtedness that becomes an obligation of the resulting, surviving or
transferee Person or any Restricted Subsidiary of such Person as a result of
such transaction as having been Incurred by such Person or such Restricted
Subsidiary at the time of such transaction), no Default of Event of Default
shall have occurred and be continuing; and (c) the Company will have delivered
to the Administrative Agent a certificate of a Responsible Officer and an
opinion of counsel to the Company, each stating that



                                                                              75

such consolidation, merger or transfer and such assumption agreement (if any)
comply with this Agreement; or (2) the transaction is made in compliance with
Section 6.4 hereto.

      6.10 Limitation on Sale/Leaseback Transactions. The Company shall not, and
shall not permit any of its Restricted Subsidiaries to, enter into any
Sale/Leaseback Transaction unless (i) the Company or such Restricted Subsidiary,
as the case may be, receives consideration at the time of such Sale/Leaseback
Transaction at least equal to the fair market value (as evidenced by a
resolution of the Board of Directors of the Company) of the property subject to
such transaction, (ii) the Company or such Restricted Subsidiary could have
Incurred Indebtedness in an amount equal to the Attributable Indebtedness in
respect of such Sale/Leaseback Transaction pursuant to Section 6.1, (iii) the
Company or such Restricted Subsidiary would be permitted to create a Lien on the
property subject to such Sale/Leaseback Transaction without securing the Loans
pursuant to Section 6.5 and (iv) the Sale/Leaseback Transaction is treated as an
Asset Disposition and all of the conditions of this Agreement under Section 6.4
(including the provisions concerning the application of Net Available Cash) are
satisfied with respect to such Sale/Leaseback Transaction, treating all of the
consideration received in such Sale/Leaseback Transaction as Net Available Cash
for purposes of such covenant.

      6.11 Limitation on Lines of Business. The Company shall not, and shall not
permit any Restricted Subsidiary to, engage in any business other than a Related
Business.

      6.12 Fiscal Year. The Company 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.

      6.13 Amendments to Acquisition Documents and Offer Documents. (a) The
Company shall not, and shall not permit any of its Subsidiaries to, enter into
definitive Offer Documents or OPRO Documents, unless such Offer Documents or
OPRO Documents, as the case may be, are in form and substance reasonably
satisfactory to the Administrative Agent.

         (b) The Company shall not, and shall not permit any of its Subsidiaries
to, amend, supplement or otherwise modify the terms and conditions of the
Acquisition Documents, the Offer Documents, the OPRO Documents or any such other
documents except for (i) with respect to any such amendment, supplement or
modification which becomes effective on or prior to the consummation of the
Transaction (including, without limitation, the Tender Offer), to the extent
consented to by the Administrative Agent and (ii) with respect to any such
amendment, supplement or modification which becomes effective following the
consummation of the Transaction, to the extent not materially adverse to the
interests of the Lenders.

      6.14 Amendments to Revolving Credit Documents. The Company shall not, and
shall not permit any of its Subsidiaries to, amend, supplement or otherwise
modify (pursuant to a waiver or otherwise) the terms and conditions of any of
the Revolving Credit Documents in such a manner that is materially adverse to
the interests of the Lenders.



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                                   SECTION 7

                                EVENTS OF DEFAULT

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

         (a) the Company shall fail to pay any principal on any Loan when due,
or fail to redeem, prepay or purchase Loans when required pursuant to this
Agreement or any Note, or the Company shall fail to pay any interest on any
Loan, any fee referred to in this Agreement, or any other amount payable
hereunder within three days after any such interest or other amount becomes due
in accordance with the terms hereof; 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 Company shall default in the observance or performance of any
agreement contained in Section 5.9, Section 5.12(a), 5.12(f), Section 5.17 or in
any provision of Article 6; or

         (d) any Obligor shall default in the observance or performance of (i)
any other material agreement contained in this Agreement or in the other Loan
Documents (other than as provided in paragraphs (a) through (c) of this Section
7), and such default shall continue unremedied for a period of 30 days after the
earlier of (x) notice thereof from the Administrative Agent to the Company and
(y) actual knowledge thereof by a Responsible Officer of such Obligor or (ii)
its obligations under the Fee Letter; 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) (i) the Company or any Subsidiary 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 the Company or any Subsidiary 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 the Company or any Subsidiary 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) the Company or any Subsidiary 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 the Company or any Subsidiary shall generally not, or



                                                                              77

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

         (g) the Company or any Subsidiary shall (i) default in any payment of
principal or interest, 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
$10,000,000 or greater or (B) Guarantee Obligation with respect to an amount of
$10,000,000 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 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; provided, however,
that any default by the Company or any Subsidiary under a Guarantee Obligation
with respect to a real property lease shall not constitute a Default under this
7(g) if the Company or such Subsidiary is contesting the validity of such
default in good faith by appropriate proceedings, the Company or such Subsidiary
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

         (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) the Company 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, (vi) any other similar event or condition shall occur or
exist with respect to a Plan, or (vii) any of clauses (i) through (vi) would be
true if a reference under the laws of any 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 (vii) herein, such event or condition, together with all other such
events or conditions, if any, would reasonably be expected to subject any the
Company or any Commonly Controlled Entity to any tax, penalty or other
liabilities in the aggregate to exceed $1,000,000; or

         (i) one or more judgments or decrees shall be entered against the
Company or any Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance) of $10,000,000 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 the Company or any Subsidiary 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 ten 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



                                                                              78

         (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 in the Collateral or the property purported to be covered
thereby;

then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (f) of this Section with respect to the Company, the Loans (with
accrued interest thereon) and all other amounts owing under this Agreement shall
immediately become due and payable, and (B) if such event is any other Event of
Default, with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Company declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement to be due and payable
forthwith, whereupon the same shall immediately become due and payable. Except
as expressly provided above in this Section, presentment, demand, protest and
all other notices of any kind are hereby expressly waived.

                                   SECTION 8

                            THE ADMINISTRATIVE AGENT

      8.1 Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and
the other Loan Documents, and each such Lender irrevocably authorizes the
Administrative Agent, in such capacity, 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
Administrative 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
Administrative 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 Administrative Agent.

      8.2 Delegation of Duties. The Administrative 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 Administrative 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 Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates
shall be (a) 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 to the extent that any of the foregoing are found by a final
and nonappealable decision of a court of competent jurisdiction to have resulted
from its or such Person's own gross negligence or willful misconduct) or (b)
responsible in any manner to any of the Lenders for any recitals, statements,
representations or warranties made by any 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 Administrative 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 any other Loan Document or
for any failure of any Obligor a party thereto to perform its obligations
hereunder or thereunder. The Administrative 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



                                                                              79

agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Obligor.

      8.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, 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
(including, without limitation, counsel to the Company), independent accountants
and other experts selected by the Administrative Agent. The Administrative Agent
may deem and treat the payee of any Loans as the owner thereof for all purposes
unless a written notice of assignment, negotiation or transfer thereof shall
have been filed with the Administrative Agent. The Administrative 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 Required Lenders (or, if so specified by this Agreement, 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 which may
be incurred by it by reason of taking or continuing to take any such action. The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Required Lenders (or, if so specified by this
Agreement, all Lenders), 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 Loans.

      8.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received notice from a Lender or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, the Administrative Agent shall
give notice thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Lenders (or, if so specified by this Agreement, all
Lenders); provided, that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.

      8.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative 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 Administrative
Agent hereinafter taken, including any review of the affairs of any Obligor or
any Affiliate of any Obligor, shall be deemed to constitute any representation
or warranty by the Administrative Agent to any Lender. Each Lender represents to
the Administrative Agent that it has, independently and without reliance upon
the Administrative 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 the Obligors and their Affiliates and made its
own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative 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 the Loan Parties and their
Affiliates. Except for notices, reports and other documents expressly required
to be furnished to the Lenders by the Administrative Agent hereunder, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the



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

      8.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Company and
without limiting the obligation of the Company to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought under this Section 8.7 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with their Commitment
Percentages immediately prior to such date), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(whether before or after the payment of the Loans) be imposed on, incurred by or
asserted against the Administrative Agent in any way relating to or arising out
of, the Commitments, 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
Administrative Agent under or in connection with any of the foregoing; provided
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 which are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the
Administrative Agent's gross negligence or willful misconduct. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.

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

      8.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days' notice to the Lenders and the Company. If the
Administrative Agent shall resign as Administrative Agent under this Agreement
and the other Loan Documents, then the Required Lenders shall appoint from among
the Lenders a successor agent for the Lenders, which successor agent shall be
subject to the approval of the Company (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. After any retiring Administrative Agent's
resignation as Administrative Agent, the provisions of this Section 8 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent under this Agreement and the other Loan Documents.



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                                   SECTION 9

                                  MISCELLANEOUS

      9.1 Amendments and Waivers. Neither this Agreement nor any Loan Note, nor
any Guarantee, nor any terms hereof or thereof, may be amended, supplemented or
modified except in accordance with the provisions of this Section. The
Administrative Agent and each Obligor party to the relevant Loan Document may,
from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding
any provisions to this Agreement or the other Loan Documents or changing in any
manner the rights of the Lenders or of the Loan Parties hereunder or thereunder
or (b) waive, on such terms and conditions as the Administrative Agent may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of 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 scheduled date of
maturity of any Loan or of any mandatory prepayment thereof, (B) reduce the
stated rate of any interest thereon or fee payable hereunder or extend the
scheduled date of any payment thereof or increase the aggregate amount or extend
the expiration date of any Lender's Commitment or (C) restrict the right of each
Lender to exchange Term Loans, or Initial Loans on the Initial Maturity Date,
for Exchange Notes or amend the rate of such exchange, in each case without the
written consent of each Lender directly affected thereby, (ii) (A) amend,
modify, or waive any provision of this Section 9.1, (B) reduce the percentage
specified in the definition of Required Lenders, (C) consent to the assignment
or transfer by the Company of any of its rights and obligations under the Loan
Documents except as expressly permitted hereby, (D) amend, modify or waive any
provision in the Exchange Notes that requires (or would, if any Exchange Notes
were outstanding, require) the approval of all holders of Exchange Notes, (E)
release any Guarantor from its obligations under its Guarantee other than in
accordance with the terms thereof or (F) or release the Collateral, in each
case, without the consent of all Lenders or (iii) amend, modify or waive any
provision of Section 8 without the written consent of the then Administrative
Agent. Any such waiver and any such amendment, supplement or modification shall
apply equally to each of the Lenders and shall be binding upon the Company and
the other Loan Parties, the Lenders, the Administrative Agent, and all future
holders of the Loans. In the case of any waiver, the Company and the other Loan
Parties, the Lenders and the Administrative Agent shall be restored to their
former positions and rights hereunder and under the other Loan Documents, and
any Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.

      9.2 Notices. All notices, requests and demands 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, or three Business Days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as follows in the case of the Company and the Administrative Agent,
and as set forth in an administrative questionnaire delivered to the
Administrative Agent in the case of the Lenders, or to such other address as may
be hereafter notified by the respective parties hereto:

Company:                     Quiksilver, Inc.
                             15202 Graham Street
                             Huntington Beach, California 92649
                             Attention: Bill Bussiere/Erik Johnson
                             Telecopy: (714) 889-4467/2766

with a copy to:              Quiksilver, Inc.
                             15202 Graham Street



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                             Huntington Beach, California 92649
                             Attention: Thomas Webster
                             Telecopy: (714) 893-5566

Administrative Agent:        JPMorgan Loan and Agency
                             1111 Fannin, 10th Floor
                             Houston, Texas 77002
                             Attention:  Denise Ramon, Account Manager
                             Telecopy:  (713) 750-2938

with a copy to:              JPMorgan Chase Bank, N.A.
                             One Chase Square, 25th Floor
                             Rochester, New York 14643
                             Attention:  Credit Executive
                             Telecopy:  (585) 258-7440

with a copy to:              JPMorgan Chase Bank, N.A
                             277 Park Avenue, 22nd Floor
                             New York, NY  10172
                             Attention:  Louis Mastrianni
                             Telecopy:  (646) 534-0693

for Euro-Denominated Loans:  J.P. Morgan Europe Limited
                             125 London Wall
                             London EC2Y 5AJ
                             Attention:  Ching Loh
                             Telecopy:  44 207 777 2360

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders shall not be effective until received.

         Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Section 2 unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Company may, in its discretion, agree to accept notices and other communications
to it hereunder by electronic communications pursuant to procedures approved by
it; provided that approval of such procedures may be limited to particular
notices or communications.

      9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents 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, in the other Loan Documents and in any document,
certificate or statement delivered pursuant



                                                                              83

hereto or in connection herewith shall survive the execution and delivery of
this Agreement and the making of the Loans hereunder.

      9.5 Payment of Expenses and Taxes. The Company agrees (a) except as
otherwise agreed, to pay or reimburse the Administrative Agent for all its
reasonable out-of-pocket costs and 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 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 the reasonable fees and
disbursements of counsel to the Administrative Agent and filing and recording
fees and expenses, with statements with respect to the foregoing to be submitted
to the Company prior to the Initial Closing Date (in the case of amounts to be
paid on the Initial Closing Date) and from time to time thereafter on a
quarterly basis or such other periodic basis as the Administrative Agent shall
deem appropriate, (b) to pay or reimburse each Lender and the Administrative
Agent for all its costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including the fees and disbursements of counsel
(including the allocated fees and expenses of in-house counsel) to each Lender
and of counsel to the Administrative Agent, (c) to pay, indemnify, and hold each
Lender and the Administrative Agent harmless 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, that 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 other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "Indemnitee") harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or the violation of, noncompliance with or liability
under, any Environmental Law applicable to the operations of any Group Member
and the reasonable fees and expenses of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against any Obligor under any Loan
Document (all the foregoing in this clause (d), collectively, the "Indemnified
Liabilities"), provided, that the Company shall have no obligation hereunder to
any Indemnitee with respect to Indemnified Liabilities to the extent such
Indemnified Liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such Indemnitee. Without limiting the foregoing, and to
the extent permitted by applicable law, the Company agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Control Statutes that any of them might have by statute
or otherwise against any Indemnitee. All amounts due under this Section 9.5
shall be payable not later than 10 days after written demand therefor.
Statements payable by the Company pursuant to this Section 9.5 shall be
submitted to Bill Bussiere/Erik Johnson (Telecopy No. (714) 889-4467/2766), at
the address of the Company set forth in Section 9.2, or to such other Person or
address as may be hereafter designated by the Company in a written notice to the
Administrative Agent. The agreements in this Section 9.5 shall survive repayment
of the Loans and all other amounts payable hereunder.

      9.6 Successors and Assigns; Participations and Assignments. (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective



                                                                              84

successors and assigns permitted hereby, except that (i) the Company may not
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by the Company without such consent shall be null and void) and (ii) no
Lender may assign or otherwise transfer its rights or obligations hereunder
except in accordance with this Section.

         (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below,
any Lender may assign to one or more assignees (each, an "Assignee") all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of

         (A) the Company, provided that no consent of the Company shall be
required for an assignment (x) of any Loan or (y) to a Lender, an affiliate of a
Lender, an Approved Fund (as defined below) or, if an Event of Default has
occurred and is continuing, any other Person; and

         (B) the Administrative Agent.

            (ii) Assignments shall be subject to the following additional
      conditions:

         (A) except in the case of an assignment to a Lender, an affiliate of a
Lender or an Approved Fund or an assignment of the entire remaining amount of
the assigning Lender's Commitments or Loans under any Facility, the amount of
the Commitments or Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Administrative Agent) shall not be less than
$5,000,000 or (euro)5,000,000, as applicable, unless the Administrative Agent
otherwise consents, provided that such amounts shall be aggregated in respect of
each Lender and its affiliates or Approved Funds, if any;

         (B) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500; and

         (C) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire.

         For the purposes of this Section 9.6, the terms "Approved Fund" has the
following meaning:

         "Approved Fund" means, with respect to any Lender that is a fund which
      invests in bank loans and similar extensions of credit, any other fund
      that invests in bank loans and similar extensions of credit and is managed
      by the same investment advisor as such Lender or by an affiliate of such
      investment advisor.

            (iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) below, from and after the effective date specified in each
Assignment and Assumption the Assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Assumption, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.10, 2.12, 2.13 and 9.5). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply



                                                                              85

with this Section 9.6 shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance
with paragraph (c) of this Section.

            (iv) The Administrative Agent, acting for this purpose as an agent
of the Company, shall maintain at one of its offices a copy of each Assignment
and Assumption delivered to it and a register for the recordation of the names
and addresses of the Lenders, and the Commitments of, and principal amount of
the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the "Register"). The entries in the Register shall be conclusive, and the
Company, the Administrative Agent, the Issuing Lender and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Company
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

            (v) Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an Assignee, the Assignee's completed
administrative questionnaire (unless the Assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Assumption and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

         (c) (i) Any Lender may, without the consent of the Company or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); provided that (A) such Lender's obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Company, the Administrative Agent, the Issuing Lender and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or
waiver that (1) requires the consent of each Lender directly affected thereby
pursuant to the proviso to the second sentence of Section 9.1 and (2) directly
affects such Participant. Subject to paragraph (c)(ii) of this Section, the
Company agrees that each Participant shall be entitled to the benefits of
Sections 2.10, 2.12 and 2.13 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section.
To the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 9.7(b) as though it were a Lender, provided such Participant
shall be subject to Section 9.7(a) as though it were a Lender.

            (ii) A Participant shall not be entitled to receive any greater
payment under Section 2.10 or 2.12 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Company's prior written consent. Any Participant that is a Non-U.S. Lender shall
not be entitled to the benefits of Section 2.12 unless such Participant complies
with Section 2.12(d).

         (d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or



                                                                              86

Assignee for such Lender as a party hereto. The Company, upon receipt of written
notice from the relevant Lender, agrees to issue Notes to any Lender requiring
Notes to facilitate transactions of the type described in this paragraph (d).

         (e) (i) To the extent requested by any Lender, the Company shall
execute and deliver to such Lender an Initial Note dated the date on which such
Initial Loan was made substantially in the form of Exhibit C-1 hereto to
evidence the portion of the Initial Loan made by such Lender and with
appropriate insertions ("Original Initial Notes").

            (ii) Unless converted to an Exchange Note and, to the extent
requested by any Lender, the Company shall execute and deliver to such Lender a
Term Note dated the Initial Maturity Date substantially in the form of Exhibit
C-2 hereto to evidence the Term Loan made on such date, in the principal amount
of the Initial Notes held by such Lender on such date and with other appropriate
insertions (collectively, the "Original Term Notes").

            (iii) On or prior to the effective date of any Assignment and
Assumption, the assigning Lender shall surrender any outstanding Loan Notes held
by it all or a portion of which are being assigned, and the Company, at its own
expense, shall, upon a request to the Administrative Agent by the assigning
Lender or the Assignee, as applicable, execute and deliver to the Administrative
Agent (in exchange for outstanding Loan Notes of the assigning Lender, if any) a
new Loan Note to the order of such Assignee in an amount equal to the amount of
such Assignee's Loans after giving effect to such Assignment and Acceptance and,
if the assigning Lender has retained a Loan hereunder, a new Loan Note, to the
order of the assigning Lender in an amount equal to the amount of such Lender's
Loans after giving effect to such Assignment and Acceptance. Any such new Loan
Notes shall be dated the date on which such Loan was made by the assigning
Lender and shall otherwise be in the form of the Loan Note replaced thereby. Any
Loan Notes surrendered by the assigning Lender shall be returned by the
Administrative Agent to the Company marked "cancelled."

      9.7 Adjustments; Set-off. (a) If any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of its Loans or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in 7(f), or otherwise), in a greater proportion than any such
payment to or collateral received by any other Lender, if any, in respect of
such other Lender's Loans or interest thereon, such Benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loan, or shall provide such other Lenders
with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits of such collateral or proceeds ratably with each of the Lenders;
provided, however, that if all or any portion of such excess payment or benefits
is thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.

         (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
Company, any such notice being expressly waived by the Company to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Company hereunder to set-off and appropriate and apply against such amount 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 to or for the credit or the account of the Company. Each Lender agrees
promptly to notify the Company and the



                                                                              87

Administrative Agent after any such set-off and application made by such Lender,
provided that the failure to give such notice shall not affect the validity of
such set-off 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 signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Company and the Administrative Agent.

      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 (and with respect to the Company and the
Administrative Agent only, the Commitment Letter, the Fee Letter and the Senior
Credit Engagement Letter) and the other Loan Documents represent the entire
agreement of the Company, the Administrative Agent and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Administrative 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 RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

      9.12 Submission To Jurisdiction; Waivers. The Company hereby irrevocably
and unconditionally:

         (a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which it
is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;

         (b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the venue
of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court or forum and agrees not to plead
or claim the same;

         (c) agrees that service of process in any such action or proceeding may
be effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to the Company, at the
address specified in Section 9.2 or at such other address of which the
Administrative Agent shall have been notified pursuant thereto;

         (d) agrees that nothing herein shall affect the right to effect service
of process in any other manner permitted by law or shall limit the right to sue
in any other jurisdiction; and



                                                                              88

         (e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to in
this Section any special, exemplary, punitive or consequential damages.

      9.13 Acknowledgements. The Company hereby acknowledges that:

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

         (b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Company arising out of or in connection with
this Agreement or any of the other Loan Documents, and the relationship between
Administrative Agent and Lenders, on one hand, and the Company, on the other
hand, in connection herewith or therewith is solely that of creditor and debtor;
and

         (c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among the
Lenders or among the Company and the Lenders.

         9.14 WAIVERS OF JURY TRIAL. THE COMPANY, THE ADMINISTRATIVE AGENT AND
THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.

      9.15 Confidentiality. The Administrative 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 the Company, 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
Loans or participations therein 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 9.15 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
the Company or any Subsidiary.

      9.16 Judgment Currency. (a) If for the purpose of obtaining judgment in
any court it is necessary to convert a sum due hereunder in one currency into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the first currency with such other currency in the city in which it
normally conducts its foreign exchange operation for the first currency on the
Business Day preceding the day on which final judgment is given.

         (b) The obligation of the Company in respect of any sum due from it to
any Lender hereunder shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than that in which such sum is denominated in
accordance with the applicable provisions of this Agreement (the "Agreement
Currency"), be discharged only to the extent that on the Business Day following
receipt by such Lender of any sum adjudged to be so due in the Judgment Currency
such Lender may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency; if the



                                                                              89

amount of Agreement Currency so purchased is less than the sum originally due to
such Lender in the Agreement Currency, the Company agrees notwithstanding any
such judgment to indemnify such Lender against such loss, and if the amount of
the Agreement Currency so purchased exceeds the sum originally due to any
Lender, such Lender agrees to remit to the Company such excess.

      9.17 USA Patriot Act. Each Lender hereby notifies the Company that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the "Patriot Act"), it is required to
obtain, verify and record information that identifies the Company, which
information includes the name and address of the Company and other information
that will allow such Lender to identify the Company in accordance with the
Patriot Act.



         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.

                                       UIKSILVER, INC.

                                       By: _________________________________
                                           Name:
                                           Title:

                                       JPMORGAN CHASE BANK, N.A.,
                                         as Administrative Agent and as a Lender

                                       By: _________________________________
                                           Name:
                                           Title:

                            Bridge Credit Agreement



                                       JPMORGAN CHASE BANK, N.A., LONDON BRANCH

                                           By: _________________________________
                                               Name:
                                               Title:

                             Bridge Credit Agreement



                                                                SCHEDULE 1.1A TO
                                                                CREDIT AGREEMENT

                                   COMMITMENTS



                Lender                        Dollar Loan Commitment       Euro Loan Commitment
- ---------------------------------------       ----------------------       --------------------
                                                                     
JPMorgan Chase Bank, N.A.                        $    73,700,000

J.P. Morgan Europe Limited                                                   $     276,300,000
                                                 ---------------             -----------------
TOTAL                                            $    73,700,000             $     276,300,000



                                                                       EXHIBIT A

                          FORM OF GUARANTEE AGREEMENT

      GUARANTEE AGREEMENT dated as of April __, 2005, (this "Guarantee
Agreement") by each of the signatories hereto (each, a "Guarantor" and
collectively, the "Guarantors") in respect of Quiksilver, Inc., a Delaware
corporation (the "Company").

      Reference is made to the Credit Agreement dated as of April __, 2005 (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"), among the Company, the lenders from time to time party thereto and
JPMorgan Chase Bank, N.A., a New York banking corporation, as administrative
agent (the "Administrative Agent"). Capitalized terms used herein and not
defined herein shall have the meanings assigned to such terms in the Loan
Agreement.

      Each Guarantor is a Subsidiary of the Company and acknowledges that it
derives substantial benefit from the Loans made pursuant to the Loan Agreement
and/or the Exchange Note issued pursuant to the Indenture.

      Accordingly, the parties hereto agree as follows:

      SECTION 1. Guarantee. Each Guarantor fully, unconditionally and
irrevocably, guarantees to the Administrative Agent, the Trustee and the Holders
of the Loans, the Loan Notes and the Exchange Notes, as primary obligor and not
merely as surety, jointly and severally with the other Guarantors, the full and
punctual payment when due, whether at maturity, by acceleration, by redemption
or otherwise, of the principal of, premium, if any, and interest on the Loans
and the Loan Notes and the Exchange Notes issued under the Indenture (all the
foregoing being hereinafter collectively called the "Obligations"). Each
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Guarantor, and that
each Guarantor will remain bound hereunder notwithstanding any extension or
renewal of any Obligation.

         Each Guarantor waives presentation to, demand of, payment from and
protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Guarantor waives notice of any default under the
Obligations. The Obligations of the Guarantors shall not be affected by (a) the
failure of any Holder of any Loan or any Note, the Administrative Agent or the
Trustee to assert any claim or demand or to enforce any right or remedy against
the Company or any other Person under the Loan Agreement, the Indenture, the
Notes or any other agreement or otherwise; (b) any extension or renewal of any
Obligation; (c) any rescission, waiver, amendment, modification or supplement of
any of the terms or provisions of the Loan Agreement, the Indenture, the Notes
or any other agreement; (d) the failure of the Administrative Agent, the
Trustee, the Trustee or any Holder to exercise any right or remedy against any
other guarantor of the Obligations; or (e) any change in the ownership of the
Company.

         Each Guarantor further agrees that its Guarantee herein constitutes a
guarantee of payment when due (and not a guarantee of collection) and waives any
right to require that any resort be had by any Holder, the Administrative Agent
or the Trustee to any security held for payment of the Obligations.

         The obligations of the Guarantors hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense, setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantors shall not be discharged or impaired or otherwise
affected by the failure of any Holder, the Administrative Agent or the Trustee
to assert any claim or demand or to enforce any remedy under the Loan Agreement,
the Indenture, the Notes or any other agreement, by any waiver or modification
of any thereof, by any



                                                                               2

default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or thing or omission or delay to do any other
act or thing which may or might in any manner or to any extent vary the risk of
the Guarantors or would otherwise operate as a discharge of the Guarantors as a
matter of law or equity.

         Each Guarantor further agrees that its Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored by
any Holder, the Administrative Agent or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.

         In furtherance of the foregoing and not in limitation of any other
right which any Holder, the Administrative Agent or the Trustee has at law or in
equity against the Guarantors by virtue hereof, upon the failure of the Company
to pay any Obligation when and as the same shall become due, whether at
maturity, by acceleration, by redemption or otherwise, or to perform or comply
with any other Obligation, each Guarantor hereby promises to and will, upon
receipt of written demand by the Agent or the Trustee, forthwith pay, or cause
to be paid, in cash, to the Holders or the Administrative Agent or the Trustee,
as their interests may appear an amount equal to the sum of (i) the unpaid
principal amount of, and principal, if any, on such Obligations, (ii) accrued
and unpaid interest on such Obligations and (iii) all other monetary Obligations
of the Company to the Holders, the Administrative Agent or the Trustee.

         Each Guarantor further agrees that, as between each such Guarantor, on
the one hand, and the Holders, the Administrative Agent and the Trustee, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in the Loan Agreement and the Indenture for the purposes
of the Guarantee herein, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any such declaration of acceleration
of such Obligations such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purposes of this
Guarantee Agreement.

         Each Guarantor also agrees to pay any and all reasonable costs and
expenses (including reasonable attorneys' fees) incurred by the Administrative
Agent, the Trustee or any Holder in enforcing any rights under this Guarantee
Agreement.

      SECTION 2. Limitation on Liability; Termination, Release and Discharge.
The obligations of each Guarantor hereunder will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor (including, without limitation, any guarantees
under the Revolving Credit Agreement) and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
Obligations of such other Guarantor under this Guarantee Agreement or pursuant
to its contribution obligations as set forth below, result in the Obligations of
such Guarantor hereunder not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law.

         Upon the sale or disposition of a Guarantor (whether by merger,
consolidation, the sale of its Capital Stock or the sale of all or substantially
all of its assets) to a Person which is not the Company or a Subsidiary of the
Company, such Guarantor shall be released from all its obligations under this
Guarantee Agreement if (i) such sale or disposition is otherwise in compliance
with the Loan Agreement and the Indenture and (ii) all Obligations of such
Guarantor under all of its Guarantee Obligations with respect to, and under all
of its pledges of assets or other security interests which secure, any other
Indebtedness of the Company shall also terminate upon such release, sale or
transfer.

      SECTION 3. No Subrogation/Right of Contribution. (a) Notwithstanding any
payment or payments made by any Guarantor hereunder, it shall not be entitled to
be subrogated to any of the rights



                                                                               3

of the Administrative Agent, the Trustee or any Holder against the Company or
guarantee or right of offset held by the Administrative Agent, the Trustee or
any Holders for the payment of the Obligations, nor shall any Guarantor seek or
be entitled to seek any contribution or reimbursement from the Company in
respect of payments made by such Guarantor, until all amounts owing to the
Administrative Agent, the Trustee and the Holders by the Company on account of
the Obligations are paid in full. If any amount shall be paid to a Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full, such amount shall be held by such Guarantor in trust
for the Administrative Agent and the Trustee, segregated from other funds of the
Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to
the Administrative Agent and the Trustee, as their interests may appear, in the
exact form received by the Guarantor (duly indorsed by the Guarantor, if
required), to be applied against the Obligations.

      (b) Each Guarantor hereby agrees that to the extent that it shall have
paid more than its proportionate share of any payment made on the Obligations,
such Guarantor shall be entitled to seek and receive contribution from and
against the Company or any other Guarantor who has not paid its proportionate
share of such payment. The provisions of this Section shall in no respect limit
the obligations and liabilities of any of the Guarantors to the Administrative
Agent, the Trustee or the Holders, and each Guarantor shall remain liable to the
Administrative Agent, the Trustee and the Holders, for the full amount
guaranteed by such Guarantor hereunder.

      SECTION 4. [Intentionally Omitted]

      SECTION 5. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Trustee or any Holder in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial,
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Administrative Agent, the Trustee and the Holders under the Loan Agreement,
the Indenture and the Notes are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of this
Guarantee Agreement or consent to any departure by a Guarantor therefrom shall
in any event be effective unless the same shall be permitted by Section 5(b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on a Guarantor
in any case shall entitle such Guarantor to any other or further notice or
demand in similar or other circumstances.

      (b) Neither this Guarantee Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement entered into
between the Guarantor with respect to which such waiver, amendment or
modification relates and the Administrative Agent and the Trustee (if any
Exchange Notes are outstanding), in each case as authorized by the Required
Lenders and a majority of the Holders, as applicable.

      SECTION 6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

      SECTION 7. Notices. All communications and notices hereunder shall be in
writing and given as provided in the notice provisions of the Loan Agreement.
All communications and notices hereunder to the Guarantor shall be given to it
at its address set forth on the signature pages hereto.

      SECTION 8. Survival of Agreement; Severability. (a) All covenants,
agreements, representations and warranties made in writing by each of the
Guarantors herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Guarantee Agreement, the Loan
Agreement, or the Indenture shall be considered to have been relied upon by the
Administrative



                                                                               4

Agent, the Trustee and the Holders and shall survive the making by the Holders
of the Loans and the acceptance by the Holders of the Notes, regardless of any
investigation made by the Holders or on their behalf, and shall continue in full
force and effect as long as any Obligation is outstanding and unpaid.

      (b) In the event any one or more of the provisions contained in this
Guarantee Agreement should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not affect the validity of such provision in any
other jurisdiction).

      SECTION 9. Registration of Guarantees. If Exchange Notes are issued
pursuant to the terms of the Loan Agreement, the holders of such Exchange Notes
shall have the registration rights set forth in the Indenture, and each
Guarantor hereby agrees to be bound by the provisions thereof applicable to such
Guarantor.

      SECTION 10. Counterparts. This Guarantee Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. Delivery of an executed
signature page to this Guarantee Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Guarantee
Agreement.

      SECTION 11. Jurisdiction; Consent to Service of Process. (a) Each
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the exclusive jurisdiction of any New York State court or Federal
court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Guarantee Agreement or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Guarantee Agreement shall affect any right that the
Administrative Agent, the Trustee or any other Holder may otherwise have to
bring any action or proceeding relating to this Guarantee Agreement against any
Guarantor or any of its properties in the courts of any jurisdiction.

      (b) Each Guarantor hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Guarantee Agreement in any New York State or
Federal court. Each Guarantor hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

      (c) Each Guarantor irrevocably consents to service of process in the
manner provided for notices in Section 7. Nothing herein will affect the right
of any Person to serve process in any other manner permitted by law.

      SECTION 12. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS GUARANTEE AGREEMENT, THE LOAN AGREEMENT, THE
INDENTURE OR ANY NOTE. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE



                                                                               5

FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.

                         [signatures on following page]



      IN WITNESS WHEREOF, each Guarantor has duly executed this Guarantee
Agreement as of the day and year first above written.

                                              [GUARANTOR]

                                              By: ______________________________
                                                  Name:
                                                  Title:

                                              Address for Notice:

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

                               Guarantee Agreement
                             Bridge Credit Agreement


                                                                       EXHIBIT B

                        FORM OF ASSIGNMENT AND ACCEPTANCE

         Reference is made to the Credit Agreement, dated as of April 12, 2005
(as amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"), among Quiksilver, Inc., a Delaware corporation (the "Company"), the
several banks and other financial institutions from time to time parties
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent for the Lenders (in
such capacity, the "Administrative Agent"). Unless otherwise defined herein,
terms defined in the Loan Agreement and used herein shall have the meanings
assigned to them in the Loan Agreement.

         The Assignor identified on Schedule l hereto (the "Assignor") and the
Assignee identified on Schedule l hereto (the "Assignee") agree as follows:

         1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Transfer Effective Date (as defined below), the interest described in Schedule 1
hereto (the "Assigned Interest") in and to the Assignor's rights and obligations
under the Loan Agreement with respect to those credit facilities contained in
the Loan Agreement as set forth on Schedule 1 hereto (the "Assigned Facility")
in a principal amount as set forth on Schedule 1 hereto.

         2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Agreement, any Loan Note or Guarantee of any Loan Note or any other
instrument or document furnished pursuant thereto, other than that the Assignor
has not created any adverse claim upon the interest being assigned by it
hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company, any of its Subsidiaries, any
Person Guaranteeing any Loan Note or any other obligor or the performance or
observance by the Company, any Person Guaranteeing any Loan Note or any other
obligor of any of their respective obligations under the Loan Agreement or any
Loan Note or Guarantee of any Loan Note or any other instrument or document
furnished pursuant hereto or thereto; (c) attaches any Loan Notes held by it
evidencing the Assigned Facility and requests that the Administrative Agent
exchange the attached Loan Notes for a new Loan Note or Loan Notes payable to
the Assignee and (if the Assignor has retained any interest in the Assigned
Facility) a new Loan Note or Loan Notes payable to the Assignor (if requested by
the Assignor) in the respective amounts which reflect the assignment being made
hereby (and after giving effect to any other assignments which have become
effective on the Transfer Effective Date); and (d) represents and warrants that
it is legally authorized to enter into this Assignment and Acceptance.

         3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Loan Agreement, together with copies of the Company's
most recent annual audited and interim unaudited consolidated financial
statements delivered pursuant to the Loan Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (c) agrees that it will,
independently and without reliance upon the Assignor, the Administrative 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 decisions in taking or
not taking action under the Loan Agreement, the Loan Notes or Guarantee of any
Loan Notes or any other instrument or document furnished pursuant hereto or
thereto; (d) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Loan Agreement, the



                                                                               2

Loan Notes or Guarantee of any Loan Note or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are incidental thereto;
and (e) agrees that it will be bound by the provisions of the Loan Agreement and
will perform in accordance with its terms all the obligations which by the terms
of the Loan Agreement are required to be performed by it as a Lender including,
if it is organized under the laws of a jurisdiction outside the United States,
its obligations pursuant to Section 2.12 of the Loan Agreement.

         4. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule 1 hereto (the "Transfer
Effective Date"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for acceptance by it and recording
by the Administrative Agent pursuant to Section 9.6(b)(iv) of the Loan
Agreement, effective as of the Transfer Effective Date (which shall not, unless
otherwise agreed to by the Administrative Agent, be earlier than five Business
Days after the date of such acceptance and recording by the Administrative
Agent).

         5. The Assignor agrees that it shall pay the following fees to the
Assignee on the date on which the Assignor (i) shall have received the
applicable fees set forth below from the Company and (ii) shall be under no
obligation to refund all or a portion of any such fee to the Company at any
point thereafter:

         (a) a commitment fee in an amount equal to 0.50% of the Commitment of
             the Assignee (after giving effect to this assignment), which
             commitment fee is scheduled to be paid on the date of the
             consummation of the Tender Offer;

         (b) a take-down fee in an amount equal to 1.00% of the Dollar
             Equivalent of the principal amount of Initial Loans held by the
             Assignee during the term of the Loan Agreement, which take-down fee
             is scheduled to be paid on the date which is 120 days after the
             Initial Closing Date (such date, the "Take-Down Date") or, with
             respect to Initial Loans made by the Assignee after the Take-Down
             Date, the take-down fee with respect to such Initial Loans is
             scheduled to be paid on the date of such borrowing; provided, that
             with respect to Initial Loans held by the Assignee that were
             borrowed prior to the Take-Down Date, if all or any portion of such
             Initial Loans held by the Assignee is repaid on or prior to the
             Take-Down Date (the "Senior Bridge Facility Repayment"), the
             take-down fee with respect to such Initial Loans shall be reduced
             by 100% of the portion of such take-down fee applicable to the
             aggregate principal amount of the Senior Bridge Facility Repayment;
             and

         (c) a rollover fee equal to the product of (i) 2.75% and (ii) the
             aggregate principal amount of Initial Loans held by the Assignee on
             the Initial Maturity Date, which rollover fee, if any, shall be
             paid on the earlier of (x) the date which is 211 days following the
             Initial Maturity Date and (y) the date of the issuance of the
             Take-Out Debt (to the extent the issuance of the Take-Out Debt
             occurs on or after the Initial Maturity Date); provided that, such
             rollover fee shall be subject to reduction at the percentage rate
             specified in Column B below if the principal amount of the Initial
             Loans held by the Assignee on the Initial Maturity Date are
             prepaid, repaid or otherwise refinanced during the period specified
             in Column A below following the Initial Maturity Date:



                                                                               3



Column A                        Column B
- --------                        --------
                             
90 days                            75%
150 days                           50%
210 days                           25%
211 days and thereafter             0%


         6. Upon such acceptance and recording, from and after the Transfer
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignee and Assignor as their interest appear on Schedule 1
attached hereto.

         7. From and after the Transfer Effective Date, (a) the Assignee shall
be a party to the Loan Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender thereunder and under
the Loan Notes and all Guarantees of the Loan Notes and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Agreement.

         8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.

                  [remainder of page intentionally left blank]



                                   Schedule 1
                          to Assignment and Acceptance

Name of Assignor: ______________________________________________________________

Name of Assignee: ______________________________________________________________

Effective Date of Assignment: __________________________________________________

                                       Principal
Assigned Facility                    Amount Assigned
                                     ---------------
                                        $_______

[Name of Assignee]                                   [Name of Assignor]

By: ________________________________                 By: _______________________
Title:                                               Title:

Accepted:

JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

By: _______________________________
Title:

                            Assignment and Acceptance
                             Bridge Credit Agreement



                                                                     EXHIBIT C-1

                                                              New York, New York
                                                              ________ ___, 200_

                              FORM OF INITIAL NOTE

         FOR VALUE RECEIVED, the undersigned, Quiksilver, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to the order of
_________________, or registered assigns (the "Lender"), at the office of
JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, the
principal amount of ____________________________ [DOLLARS] [EUROS] ([$][(euro)]
), or, if less, the aggregate unpaid principal amount of all Initial Loans made
by the Lender pursuant to Section 2.1 of the Loan Agreement referred to below
(in either case, to be paid together with any accrued interest not required to
be paid currently in cash), which sum shall be due and payable in such amounts
and on such dates as are set forth in the Credit Agreement, dated as of April
12, 2005, among the Company, the Lender and certain other entities from time to
time parties thereto, and JPMorgan Chase Bank, N.A., as administrative agent
(the "Loan Agreement"; terms defined therein being used herein as so defined).
The undersigned further agrees to pay interest at said office, in like money,
from the date hereof on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in Section 2.6 of the Loan
Agreement. The holder of this Initial Note (the "Holder") is authorized to
record the date and amount of the Initial Loan made by the Lender pursuant to
the Loan Agreement, the date and amount of interest added to the principal
hereof and the date and amount of each payment or prepayment of principal hereof
on Schedule A annexed hereto and made a part hereof and any such recordation
shall constitute prima facie evidence of the information so recorded; provided
that the failure of the Lender or the Holder to make such recordation (or any
error in such recordation) shall not affect the obligations of the Company
hereunder or under the Loan Agreement. Unless this Initial Loan is repaid with
the proceeds of the Take-Out Debt prior to April 12, 2006, the Holder shall then
have the option at any time or from time to time to receive one or more Term
Notes or Exchange Notes in place of this Initial Note to the extent set forth in
Section 2.1 of the Loan Agreement.

         All parties now and hereafter liable with respect to this Initial Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever. The
nonexercise by the Holder of this Initial Note of any of its rights hereunder in
any particular instance shall not constitute a waiver thereof in that or any
subsequent instance.

         This Initial Note is one of the Loan Notes referred to in the Loan
Agreement, which Loan Agreement, among other things, contains provisions of the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.

         This Initial Note shall be construed in accordance with and governed by
the laws of the State of New York and any applicable laws of the United States
of America.

         THIS INITIAL NOTE AND THE INITIAL LOANS REPRESENTED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS
OF THIS INITIAL NOTE AND THE INITIAL LOANS REPRESENTED HEREBY MUST BE RECORDED
IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF
THE LOAN AGREEMENT.



                                                     QUIKSILVER, INC.

                                                     by: _______________________
                                                         Name:
                                                         Title:

                                  INITIAL NOTE



                                                                      SCHEDULE A
                                                                              TO
                                                                    INITIAL NOTE

                  INITIAL LOANS AND REPAYMENTS OF INITIAL LOANS



                                                                           UNPAID PRINCIPAL
                   PRINCIPAL AMOUNT     AMOUNT OF      AMOUNT OF INTEREST     BALANCE OF
       DATE        OF INITIAL LOANS  PRINCIPAL REPAID  ADDED TO PRINCIPAL    INITIAL LOANS   NOTATION MADE BY
- -----------------  ----------------  ----------------  ------------------  ----------------  ----------------
                                                                              
_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________

_________________  ________________  ________________  __________________  ________________  ________________


                                  Initial Note



                                                                     EXHIBIT C-2

                                                              New York, New York
                                                               ________ ___,____

                                FORM OF TERM NOTE

         FOR VALUE RECEIVED, the undersigned, Quiksilver, Inc, a Delaware
corporation (the "Company"), hereby promises to pay to the order of
____________________, or registered assigns (the "Lender"), at the office of
JPMorgan Chase Bank, N.A., 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, the
principal amount of ________ [DOLLARS] [EUROS] ([$][(euro)]______), or, if less,
the aggregate unpaid principal amount of all Term Loans made by the Lender
pursuant to Section 2.1 of the Loan Agreement referred to below (in either case,
to be paid together with any accrued interest not required to be paid currently
in cash), which sum shall be due and payable in such amounts and on such dates
as are set forth in the Credit Agreement, dated as of April 12, 2005, among the
Company, the Lender and certain other entities from time to time parties
thereto, and JPMorgan Chase Bank, N.A., as administrative agent (the "Loan
Agreement"; terms defined therein being used herein as so defined). The
undersigned further agrees to pay interest at said office, in like money, from
the date hereof on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in Section 2.6 of the Loan
Agreement. The holder of this Term Note (the "Holder") is authorized to record
the date and amount of the Term Loan made by the Lender pursuant to the Loan
Agreement, the date and amount of interest added to the principal hereof and the
date and amount of each payment or prepayment of principal hereof on Schedule A
annexed hereto and made a part hereof and any such recordation shall constitute
prima facie evidence of the information so recorded; provided that the failure
of the Lender or Holder to make such recordation (or any error in such
recordation) shall not affect the obligations of the Company hereunder or under
the Loan Agreement. The Holder shall then have the option at any time or from
time to time to receive one or more Exchange Notes in exchange for this Term
Note to the extent set forth in Section 2.3(c) of the Loan Agreement.

         All parties now and hereafter liable with respect to this Term Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
diligence, presentment, demand, protest and notice of any kind whatsoever. The
nonexercise by the Holder of this Term Note of any of its rights hereunder in
any particular instance shall not constitute a waiver thereof in that or any
subsequent instance.

         This Term Note is one of the Loan Notes referred to in the Loan
Agreement, which Loan Agreement, among other things, contains provisions of the
acceleration of the maturity hereof upon the happening of certain events, for
optional and mandatory prepayment of the principal hereof prior to the maturity
hereof and for the amendment or waiver of certain provisions of the Loan
Agreement, all upon the terms and conditions therein specified.

         This Term Note shall be construed in accordance with and governed by
the laws of the State of New York and any applicable laws of the United States
of America.

         THIS TERM NOTE AND THE TERM LOANS REPRESENTED HEREBY MAY NOT BE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE TERMS OF THE LOAN AGREEMENT. TRANSFERS
OF THIS TERM NOTE AND THE TERM LOANS REPRESENTED HEREBY MUST BE RECORDED IN THE
REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE TERMS OF THE
LOAN AGREEMENT.



                                                     QUIKSILVER, INC.

                                                     By: _______________________
                                                         Name:
                                                         Title:

                                    Term Note



                                                                      SCHEDULE A
                                                                              TO
                                                                       TERM NOTE

                     TERM LOANS AND REPAYMENTS OF TERM LOANS



                                                                          UNPAID PRINCIPAL
                  PRINCIPAL AMOUNT      AMOUNT OF     AMOUNT OF INTEREST     BALANCE OF
      DATE         OF TERM LOANS    PRINCIPAL REPAID  ADDED TO PRINCIPAL     TERM LOANS     NOTATION MADE BY
- ----------------  ----------------  ----------------  ------------------  ----------------  ----------------
                                                                             
________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________

________________  ________________  ________________  __________________  ________________  ________________


                                    Term Note



                                                                       EXHIBIT D

                     NO DEFAULT / REPRESENTATION CERTIFICATE

                                 APRIL __, 2005

      QUIKSILVER, INC., a Delaware corporation (the "Company"), hereby certifies
in connection with the Credit Agreement dated as of April 12, 2005 among the
Company, the several banks and other financial institutions parties thereto (the
"Lenders"), and JPMorgan Chase Bank, N.A. as administrative agent for the
Lenders (such Credit Agreement, as it may be amended, supplemented, restated or
otherwise modified from time to time, the "Credit Agreement"; capitalized terms
used herein and not defined shall have the meanings assigned to them in the
Credit Agreement), as of the date set forth below, that:

      1.    the representations and warranties contained in the Credit Agreement
and in each other Loan Document and each certificate or other writing delivered
to the Lenders in satisfaction of the conditions set forth in Section 4.1 of the
Credit Agreement prior to or on the Initial Closing Date are correct in all
material respects on and as of the Initial Closing Date as though made on and as
of such date; and

      2.    no Default has occurred or is continuing on the Initial Closing Date
or would occur after giving effect to the Loans requested to be made on the
Initial Closing Date.

                            [signature page follows]



      IN WITNESS WHEREOF, the Borrower has caused this Certificate to be duly
executed and delivered by its proper and duly authorized officer as of the date
set forth above.

                                                     QUIKSILVER, INC.

                                                     By: _______________________
                                                         Name:
                                                         Title:

                     No Default / Representation Certificate
                             Bridge Credit Agreement



                                                                     EXHIBIT E-1

                               FORM OF OPINION OF

                               HEWITT & O'NEIL LLP



                                                                     EXHIBIT E-2

                               FORM OF OPINION OF

                    SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP



                                                                       EXHIBIT F

                          FORM OF EXEMPTION CERTIFICATE

      Reference is hereby made to the Credit Agreement dated as of April 12,
2005, among QUIKSILVER, INC., a Delaware corporation (the "Company"), as
borrower, the several lenders from time to time parties hereto (collectively,
the "Lenders"; individually, a "Lender"), and JPMORGAN CHASE BANK, N.A., a New
York banking corporation, as administrative agent for the Lenders hereunder (in
such capacity, the "Administrative Agent") (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"). Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall have
the meanings given to them in the Credit Agreement. ______________________ (the
"Non-U.S. Lender") is providing this certificate pursuant to Section 2.12(d) of
the Credit Agreement. The Non-U.S. Lender hereby represents and warrants that:

      1. The Non-U.S. Lender is the sole record and beneficial owner of the
Loans in respect of which it is providing this certificate.

      2. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In
this regard, the Non-U.S. Lender further represents and warrants that:

      (a)   the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and

      (b)   the Non-U.S. Lender has not been treated as a bank for purposes of
any tax, securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements.

      3. The Non-U.S. Lender is not a ten percent shareholder of the Company
within the meaning of Section 881(c)(3)(B) of the Code.

      4. The Non-U.S. Lender is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(C) of the
Code.

         IN WITNESS WHEREOF, the undersigned has duly executed this certificate.

                                                     [NAME OF NON-U.S. LENDER]

                                                     By: _______________________
                                                         Name:
                                                         Title:

                                                     Date: _____________________


                                                                       EXHIBIT G

                                     FORM OF
                             SECRETARY'S CERTIFICATE

                                 April __, 2005

      Reference is hereby made to the Credit Agreement dated as of April 12,
2005 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among QUIKSILVER, INC., a Delaware corporation (the
"Company"), as borrower, the several lenders from time to time parties hereto
(collectively, the "Lenders"; individually, a "Lender"), and JPMORGAN CHASE
BANK, N.A., a New York banking corporation, as administrative agent for the
Lenders hereunder (in such capacity, the "Administrative Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.

      The undersigned Chief Financial Officer of the Company (the "Certifying
Loan Party") hereby certifies as follows:

      1. The representations and warranties of the Certifying Loan Party set
forth in each of the Loan Documents to which it is a party or which are
contained in any certificate furnished by or on behalf of the Certifying Loan
Party pursuant to any of the Loan Documents to which it is a party are true and
correct in all material respects on and as of the date hereof with the same
effect as if made on the date hereof, except for representations and warranties
expressly stated to relate to a specific earlier date, in which case such
representations and warranties were true and correct in all material respects as
of such earlier date.

      2. ___________________ is the duly elected and qualified Corporate
Secretary of the Certifying Loan Party and the signature set forth for such
officer below is such officer's true and genuine signature.

      3. No Default or Event of Default has occurred and is continuing as of the
date hereof or after giving effect to the Loans to be made on the date hereof
and the use of proceeds thereof.

      4. The conditions precedent set forth in Section 4.1 of the Credit
Agreement were satisfied as of the Initial Closing Date.

      The undersigned Corporate Secretary of the Certifying Loan Party certifies
as follows:

      1. There are no liquidation or dissolution proceedings pending or to my
knowledge threatened against the Certifying Loan Party, nor has any other event
occurred adversely affecting or threatening the continued corporate existence of
the Certifying Loan Party.

      2. The Certifying Loan Party is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
organization.

      3. Attached hereto as Annex 1 is a true and complete copy of resolutions
duly adopted by the Board of Directors of the Certifying Loan Party on
_________________; such resolutions have not in any way been amended, modified,
revoked or rescinded, have been in full force and effect since their adoption to
and including the date hereof and are now in full force and effect and are the
only corporate proceedings of the Certifying Loan Party now in force relating to
or affecting the matters referred to therein.



      4. Attached hereto as Annex 2 is a true and complete copy of the By-Laws
of the Certifying Loan Party as in effect on the date hereof.

      5. Attached hereto as Annex 3 is a true and complete copy of the
Certificate of Incorporation of the Certifying Loan Party as in effect on the
date hereof.

      6. The following persons are now duly elected and qualified officers of
the Certifying Loan Party holding the offices indicated next to their respective
names below, and the signatures appearing opposite their respective names below
are the true and genuine signatures of such officers, and each of such officers
is duly authorized to execute and deliver on behalf of the Certifying Loan Party
each of the Loan Documents to which it is a party and any certificate or other
document to be delivered by the Certifying Loan Party pursuant to the Loan
Documents to which it is a party:



         Name                      Office                           Signature
         ----                      ------                           ---------
                                                       
Robert B. McKnight        Chief Executive Officer            ___________________________

Bernard Mariette          President                          ___________________________

Steven L. Brink           Chief Financial Officer and        ___________________________
                          Treasurer


                  [remainder of page intentionally left blank]

                               Closing Certificate
                             Bridge Credit Agreement



      IN WITNESS WHEREOF, the undersigned have hereunto set our names as of the
date set forth above.

____________________________________________          __________________________
Name: Steve Brink                                     Name: [________________]
Title: Chief Financial Officer and Treasurer          Title: Corporate Secretary

                               Closing Certificate
                             Bridge Credit Agreement



                                     Annex 1

                                Board Resolutions



                                     Annex 2

                                     By-Laws



                                     Annex 3

                          Certificate of Incorporation



                                                                       EXHIBIT H

                         Summary of Terms and Conditions
                                of Exchange Notes

            Capitalized terms used but not defined herein have the meanings
given in the Credit Agreement.

                           
Issuer:                       The Company will issue Exchange Notes under the Indenture.  The Company
                              in its capacity as issuer of the Exchange Notes is referred to as the
                              "Issuer."

Guarantors:                   The Company and each of the Company's direct and indirect, existing and
                              future, material domestic subsidiaries (collectively, the "Guarantors";
                              the Borrower and the Guarantors, collectively, the "Loan Parties").

Principal Amount:             The Exchange Notes will be available only in exchange for the Loans on
                              or after the Initial Maturity Date.  The principal amount of any
                              Exchange Note will equal 100% of the aggregate principal amount
                              (including any accrued interest not required to be paid in cash) of the
                              Loan for which it is exchanged.  In the case of the initial exchange by
                              the Lenders, the minimum amount of Loans to be exchanged for Exchange
                              Notes shall equal 10% of the outstanding principal amount of the Loans
                              on the date of such exchange.

Maturity:                     The Exchange Notes will mature on the seventh anniversary of the
                              Initial Closing Date.

Interest Rate:                The Exchange Notes will bear interest at a rate equal to the Initial
                              Rate (as defined below) plus the Exchange Spread (as defined below).
                              Notwithstanding the foregoing, the interest rate in effect at any time
                              shall not exceed 10.5% per annum nor be less than 9.25% per annum.

                              "Exchange Spread" shall equal 0 basis points during the three month
                              period commencing on the Initial Maturity Date and shall increase by
                              50 basis points at the beginning of each subsequent three month period.

                              "Initial Rate" shall be determined on the Initial Maturity Date and
                              shall equal the greater of (a) the interest rate borne by the Loans on
                              the day immediately preceding the Initial Maturity Date plus 50 basis
                              points and (b) the Treasury Rate, on the Initial Maturity Date, plus
                              500 basis points.

                              "Treasury Rate" means (a) the rate borne by direct obligations of the
                              United States maturing on the seventh anniversary of the Initial
                              Closing Date and (b) if there are no such obligations, the rate
                              determined by linear interpolation between the rates borne by the two
                              direct obligations of the United States maturing closest to, but
                              straddling, the seventh anniversary of the Initial Closing Date,





                           
                              in each case as published by the Board of Governors of the Federal
                              Reserve System.

                              Interest will be payable in arrears at the end of each semi-annual
                              fiscal period.

Mandatory Redemption:         The Issuer will be required to make an offer to redeem the Exchange
                              Notes (and, if outstanding, prepay the Loans) on a pro rata basis, at
                              par plus accrued and unpaid interest (or, in the case of Fixed Rate
                              Exchange Notes (as defined below), at par plus accrued and unpaid
                              interest plus any applicable premiums), from the net proceeds of (a)
                              the sale of any assets outside the ordinary course of business, after
                              deduction of, among other things, amounts required to repay the Senior
                              Secured Facilities, (b) the incurrence of any debt ranking pari passu
                              or junior to the Exchange Notes and which provides no greater
                              collateral security than the Exchange Notes, (c) the incurrence of any
                              debt other than set forth in clause (b) above, after deduction of,
                              among other things, amounts required to repay the Revolving Credit
                              Agreement and (d) the issuance of any equity (in each case, subject to
                              exceptions and baskets to be agreed, including, but not limited to,
                              exceptions and baskets comparable to those applicable to the Revolving
                              Credit Agreement).  In addition, the Issuer will be required to offer
                              to redeem the Exchange Notes upon the occurrence of a change of control
                              (which offer shall be at 101% of the principal amount of such Exchange
                              Notes, plus accrued and unpaid interest).

Optional Redemption:          Subject to the following sentence, the Exchange Notes will be
                              redeemable at the option of the Issuer, in whole or in part, at any
                              time at par plus accrued and unpaid interest to the redemption date.
                              If any Exchange Note is sold by a Lender to a third party purchaser,
                              such Lender shall have the right to fix the interest rate on such
                              Exchange Note (a "Fixed Rate Exchange Note") at a rate equal to the
                              greater of (a) the then applicable rate of interest and (b) upon the
                              representation of such transferring Lender that a higher rate (such
                              higher rate, the "Transfer Rate") is necessary in order to permit such
                              Lender to transfer such Exchange Note to a third party and receive
                              consideration equal to the principal amount thereof plus all accrued
                              and unpaid interest to the date of such transfer, the Transfer Rate;
                              provided, that such Transfer Rate shall not exceed the maximum interest
                              rates applicable to the Exchange Notes.  If such Lender exercises such
                              right, such Exchange Note will be (a) non-callable for the first three
                              years from the Initial Maturity Date and (b) thereafter, callable at
                              par plus accrued and unpaid interest plus a premium equal to (i) 50% of
                              the applicable rate of interest in effect on the date of sale of such
                              Exchange Note to a third party purchaser or (ii) if the Transfer Rate
                              was used, 50% of the Transfer Rate, which premium in either case shall
                              decline ratably on each yearly anniversary of the date of such sale





                           
                              to zero one year prior to the maturity of the Exchange Notes,
                              provided that, such call protection shall not apply to any call for
                              redemption issued prior to the sale to such third party purchaser.

Registration Rights:          The Issuer will file within 30 days after the Initial Maturity Date,
                              and will use its commercially reasonable efforts to cause to become
                              effective as soon thereafter as practicable, a shelf registration
                              statement with respect to the Exchange Notes (a "Shelf Registration
                              Statement") and/or a registration statement relating to a Registered
                              Exchange Offer (as described below).  If a Shelf Registration Statement
                              is filed, the Issuer will keep such registration statement effective
                              and available (subject to customary exceptions) until it is no longer
                              needed to permit unrestricted resales of Exchange Notes but in no event
                              longer than two years from the Initial Maturity Date.  If within
                              120 days from the Initial Maturity Date, a Shelf Registration Statement
                              for the Exchange Notes has not been declared effective or the Issuer
                              has not effected an exchange offer (a "Registered Exchange Offer")
                              whereby the Issuer has offered registered notes having terms identical
                              to the Exchange Notes (the "Substitute Notes") in exchange for all
                              outstanding Exchange Notes and Loans (it being understood that a Shelf
                              Registration Statement is required to be made available in respect of
                              Exchange Notes the holders of which could not receive Substitute Notes
                              through the Registered Exchange Offer that, in the opinion of counsel,
                              would be freely saleable by such holders without registration or
                              requirement for delivery of a current prospectus under the Securities
                              Act of 1933, as amended (other than a prospectus delivery requirement
                              imposed on a broker-dealer who is exchanging Exchange Notes acquired
                              for its own account as a result of a market making or other trading
                              activities)), then the Issuer will pay additional interest of
                              $0.192 per week per $1,000 principal amount of Exchange Notes and Loans
                              outstanding to holders thereof who are, or would be, unable freely to
                              transfer Exchange Notes from and including the 121st day after the date
                              of the first issuance of Exchange Notes to but excluding the earlier of
                              the effective date of such Shelf Registration Statement or the date of
                              consummation of such Registered Exchange Offer (such damages may be
                              payable, at the option of the Borrower, in the form of additional Loans
                              or Exchange Notes, as applicable, if the then interest rate thereon
                              exceeds the applicable cash interest rate cap).  The Issuer will also
                              pay such additional interest for any period of time (subject to
                              customary exceptions) following the effectiveness of a Shelf
                              Registration Statement that such Shelf Registration Statement is not
                              available for resales thereunder.  In addition, unless and until the
                              Issuer has consummated the Registered Exchange Offer and, if required,
                              caused the Shelf Registration Statement to become effective, the
                              holders of the Exchange Notes will have the right to "piggy-back" the
                              Exchange Notes in the





                           
                              registration of any debt securities (subject to customary
                              scale-back provisions) that are registered by the Issuer
                              (other than on a Form S-4) unless all the Exchange Notes
                              and Loans will be redeemed or repaid from the proceeds of
                              such securities.

Right to Transfer
  Exchange Notes:             The holders of the Exchange Notes shall have the absolute and
                              unconditional right to transfer such Exchange Notes in
                              compliance with applicable law to any third parties.

Covenants:                    Similar to those in an indenture governing a high-yield senior
                              unsecured note issue, but modified to include additional
                              restrictions customary in interim facilities.

Events of Default:            Similar to those in an indenture governing a high-yield
                              senior unsecured note issue, but modified to include additional
                              events of default customary in interim facilities.

Governing Law and Forum:      New York.