Document:

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Exhibit 10.20

                           INDEMNIFICATION AGREEMENT

      This Indemnification Agreement (the "Agreement") is made and entered into
as March 1, 2000, by and between Alliance Bank, a California banking corporation
(the "Bank"), and the person executing this Agreement as Indemnitee
("Indemnitee"), a director and/or officer of the Bank, with reference to the
following:

      A. The Bank and the Indemnitee recognize that statutes, regulations, court
opinions and the Bank's Articles of Incorporation and Bylaws are sometimes
ambiguous and may not provide the Bank's directors and officers with clear
guidance as to the legal risks and potential liability to which they may be
exposed in performing their duties in good faith for the Bank;

      B. The Bank and the Indemnitee are aware of the substantial growth in the
number of lawsuits filed against corporate officers and directors in connection
with their activities in such capacities and by reason of their status as such;

      C. The Bank and Indemnitee recognize that the cost of defending against
such lawsuits, whether or not meritorious, is often beyond the financial
resources of directors and officers of the Bank;

      D. The Bank and Indemnitee recognize that the legal risks and potential
liabilities, or the threat thereof, and the substantial time and expense
incurred in defending against such lawsuits bear no reasonable relationship to
the compensation received by the Bank's directors and officers, which tends to
deter experienced and capable individuals from serving as Bank directors or
officers;

      E. The Bank has obtained liability insurance to provide its directors and
officers with some protection against the foregoing legal risks and potential
liability, however, the terms of such liability insurance may be inadequate and
thus it is in the best interests of the Bank and its shareholders to indemnify
the Bank's directors and selected officers to the fullest extent permitted by
law against personal liability for actions taken in the good faith performance
of their duties to the Bank;

      F. Section 317 of the General Corporation Law of the State of California,
requires indemnification of officers and directors (among others) of a
California corporation by such corporation in certain circumstances, permits in
its some circumstances, and prohibits it in other circumstances;

      G. Part 359 of the Federal Deposit Insurance Corporation regulations
prohibit indemnification payments under certain circumstances;

      H. The parties hereto intend to indemnify Indemnitee to the fullest extent
not prohibited by California law, Federal Deposit Insurance Corporation
regulations or other applicable laws or regulations;

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      I. The Board of Directors of the Bank has determined, after duly
considering this Agreement and investigating other options in lieu hereof, that
this Agreement is reasonable and appropriate to promote the best interests of
the Bank and its shareholders;

      J. This Agreement is intended to: (1) induce experienced and capable
persons such as Indemnitee to serve as directors and/or officers of the Bank;
(2) encourage such persons to defend against suits and claims they consider
unjustifiable in connection with the good faith performance of their duties to
the Bank, with the knowledge that certain expenses, costs and liabilities
incurred in their defense will be borne by the Bank and that they will receive
the maximum protection legally available to them; and (3) with respect to
directors, encourage them to exercise their best business judgment regarding
matters which come before the Board of Directors without undue concern for the
risk of claims against them on account thereof; and

      K. Indemnitee desire to continue to serve as an officer or director of the
Bank, provided, and on the express condition, that he or she be furnished with
the indemnity set forth herein.

      NOW, THEREFORE, based on the above and in consideration of the mutual
agreements set forth below, the Bank and Indemnitee hereby agree as follows:

      1. Definitions. For the purposes of this Agreement, the following
definitions will apply:

            (a) For the purposes of this Agreement, Indemnitee will be deemed to
have been acting as an "Agent" if Indemnitee was acting in his or her capacity
as a director of the Bank, member of a committee of the Board of Directors of
the Bank, or officer or employee of the Bank or was serving as a director or
nonsalaried officer of any other enterprise at the request of the Bank, whether
or not Indemnitee is serving in such capacity at the time any liability or
expense is incurred for which indemnification or reimbursement can be provided
under this Agreement.

            (b) "Proceeding" includes any threatened, pending or completion
action, suit or proceeding, whether brought in the name of the Bank or otherwise
and whether of a civil, criminal or administrative or investigative nature,
including, but not limited to, actions, suits or proceedings brought under
and/or predicated upon the Securities Act 1933, as amended, the Securities
Exchange Act of 1934, as amended, their respective state counterparts and/or any
rule or regulation thereunder, to which Indemnitee may be or may have been a
party or otherwise involved (other than plaintiff against the Bank), by reason
of the fact that Indemnitee is or was an Agent of the Bank, or by reason of any
action by Indemnitee or any inaction on his or her part while acting as such
Agent.

            (c) "Expenses" includes, without limitation, expenses of
investigations, judicial or administrative proceedings or appeals, court costs,
attorneys' fees and disbursements and any expenses of establishing a right to
indemnification under law or Paragraph 7 of this Agreement. "Expenses" does not
include the amount of any judgment, fines or penalties actually levied against
Indemnitee or amounts paid in settlement of a proceeding by or on behalf of
Indemnitee.

            (d) "Other enterprise" includes employee benefit plans; "fines"
includes any excise tax assessed with respect to any employee benefit plan;
"serving at the request of the Bank" includes any service as a director of the
Bank which imposes duties on, or involves services by, such director with
respect to an employee benefit plan, its participants, or beneficiaries; and a
person who act in good faith and in a manner he or she reasonably believes to be
in the interest of the participants and

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beneficiaries of an employee benefit plan will be deemed to have acted in a
manner "not opposed to the best interests of the Bank" as referred to in this
Agreement.

            (e) "Applicable Standard" means that a person acted in good faith
and in a manner such person reasonably believed to be in the best interests of
the Bank; except that in a criminal proceeding, such person must also have had
no reasonable cause to believe that such person's conduct was unlawful. The
termination of any Proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent does not, of itself, create any
presumption, or establish, that the person did not meet the "Applicable
Standard."

      2. Agreement to Serve. Indemnitee agrees to serve or continue to serve as
a director and/or officer of the Bank at the will of the Bank or under separate
contract, as the case may be, for as long as he or she is duly elected or
appointed, until such time as Indemnitee tenders his or her resignation in
writing, or his or her directorship or employment is otherwise terminated as
permitted by law.

      3. Indemnity in Third Party Proceedings. The Bank will indemnify
Indemnitee if Indemnitee is made a party to, or threatened to be made a party
to, or otherwise involved in, any Proceeding (other than a Proceeding by or in
the right of the Bank to procure a judgement in its favor) by reason of the fact
that Indemnitee is or was an Agent of the Bank. This indemnity will apply, and
be limited, to and against all Expenses, judgments, fines, penalties,
settlements, and other amounts actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of the Proceeding, as long as it is
determined pursuant to Paragraph 7 of this Agreement or by the court before
which such action was brought that Indemnitee met the Applicable Standard.

      4. Indemnity in Proceedings By or In the Name of the Bank. The Bank will
indemnify Indemnitee if Indemnitee is made a party to, or threatened to be made
a party to, or otherwise involved in, any Proceeding by or in the right of the
Bank to procure a judgment in its favor by reason of the fact that Indemnitee is
or was an Agent of the Bank. This indemnity will apply, and be limited, to and
against all Expenses actually and reasonably incurred by Indemnitee in
connection with the defense or settlement of such Proceeding, but only if: (a)
Indemnitee met the Applicable Standard (except that the Indemnitee's belief
regarding the best interests of the Bank need not have been reasonable); (b)
Indemnitee acted with such care, including reasonable inquiry, as an ordinarily
prudent person in a like position would use under similar circumstances; (c) the
action is not settled or otherwise disposed of without court approval. No
indemnification will be made under this Section 4 with respect to any Proceeding
or issue as to which Indemnitee has been adjudged to be liable to the Bank in
the performance of Indemnitee's duty of the Bank, unless, and only to the extent
that, the court in which such Proceeding is or was pending determines upon
application that, in view of all the circumstances of the case, Indemnitee is
fairly and reasonably entitled to indemnification for the Expenses which such
court determines.

      5. Indemnity in Administrative Proceedings. The Bank will indemnify
Indemnitee if Indemnitee is made a party to, or threatened to be made a party
to, or otherwise involved in, any administrative Proceeding or civil action
initiated by any federal banking agency. This indemnity will apply, and be
limited, to and against all Expenses actually and reasonably incurred by
Indemnitee in connection with the defense or settlement of such Proceeding, but
only if: (a) The Bank's board of directors, in good faith determines in writing
after due investigation and consideration that Indemnitee acted in good faith
and in a manner Indemnitee believed to be in the Bank's best interests; and (b)
the

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Banks' board of directors determines, in writing, after due investigation and
consideration that the payment of such expenses will not materially adversely
affect the Bank's safety and soundness.

      6. Expenses of Successful Indemnitee. Notwithstanding any other provision
of this Agreement, to the extent that Indemnitee is successful on the merits in
defense of any Proceeding or any claim, issue or matter therein, including the
dismissal of an action or portion thereof without prejudice, Indemnitee will be
indemnified against all Expenses actually and reasonably incurred in connection
therewith.

      7. Advances of Expenses. Expenses incurred by Indemnitee in any Proceeding
will be advanced by the Bank prior to the final disposition of such proceeding
upon Indemnitee's written request, but only if Indemnitee undertakes to repay
such advances unless and to the extent that it is ultimately determined that
Indemnitee is entitled to indemnification. Any advance required hereunder will
be deemed that Indemnitee is entitled to indemnification. Any advance required
hereunder will be deemed to have been approved by the Board of Directors of the
Bank to the extent this Agreement was so approved. In determining whether or not
to make an advance hereunder, Indemnitee's ability to repay will not be a
factor. However, in a proceeding brought by the Bank directly in its own right
(as distinguished from an action brought derivatively or by any receiver or
trustee), the Bank will have discretion whether or not to make the advances
called for hereby if independent legal counsel advises in writing that the Bank
has probable cause to believe, and the Bank does believe, that Indemnitee did
not act in good faith with regard to the subject matter of the proceeding or a
material portion thereof.

      8. Right of Indemnitee to Indemnification Upon Application; Procedure Upon
Application. Any indemnification or advance under Paragraphs 6 or 7 hereof will
be made no later than 45 days after receipt of Indemnitee's written request in
accordance with Paragraph 11 hereof. In all other cases, indemnification will be
made by the Bank only if authorized in the specific case, upon a determination
that indemnification is proper under the circumstances and the terms of this
Agreement by:

            (a) A majority of a quorum of the Board of Directors (or a duly
constituted committee thereof), consisting of directors who are not parties of
such proceeding;

            (b) The Bank's shareholders, with shares beneficially owned by
Indemnitee not being entitled to vote thereon;

            (c) The court in which such proceeding is or was pending, upon
application by the Bank, Indemnitee or any person rendering services in
connection with Indemnitee's defense, whether or not the Bank opposes such
application; or

            (d) To the extent permitted by law, independent legal counsel in a
written opinion.

      The right to indemnification or advances provided by this Agreement may be
enforced by Indemnitee in any court of competent jurisdiction. The burden of
proving that indemnification or advances are not appropriate will be on the
Bank. Neither the failure of the Bank (including its Board of Directors or
independent legal counsel) to have made a determination prior to the
commencement of such action that indemnification or advances are proper in the
circumstances because Indemnitee has met the Applicable Standard, not an actual
determination by the Bank (including its Board of Directors or independent legal
counsel) that Indemnitee has not met the Applicable Standard, will be

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a defense to the action or create a presumption that Indemnitee ha snot met the
Applicable Standard. Expenses incurred in connection with successfully
establishing Indemnitee's right to indemnification or advances, in whole or in
part, in any such Proceeding will also be indemnified by the Bank provided,
however, that if Indemnitee is only partially successful, only an equitably
allocated portion of such Expenses will be indemnified.

      If Indemnitee is entitled under any provision of this Agreement or law to
indemnification by the Bank for some or a portion of the Expenses, judgments,
fines or penalties actually and reasonably incurred by Indemnitee in the
investigation, defense, appeal or settlement of any Proceeding, but not for the
total amount thereof, the Bank will nevertheless indemnify Indemnitee for the
portion (determined on an equitable basis) of such Expenses, judgments, fines or
penalties to which Indemnitee is entitled.

      Bank's obligations to advance or indemnify hereunder will be deemed
satisfied to the extent of any payments made by an insurer on behalf of Bank or
Indemnitee.

      9. Indemnification Hereunder Not Exclusive. The indemnification provided
by this Agreement will not be exclusive of any other rights to which Indemnitee
may be entitled under the Bank's Articles of Incorporation or Bylaws, any
agreement, any vote of shareholders or disinterested directors, relevant
California or federal law or otherwise, both as to action in Indemnitee's
official capacity and as to action in another capacity while holding such
office. Indemnification under this Agreement will continue even though
Indemnitee may have ceased to be a director or officer, and will inure to the
benefit of the heirs and personal representatives of Indemnitee.

      10. Limitations. The Bank will not be liable under this Agreement to make
any payment in connection with any claim made against Indemnitee:

            (a) For which payment is actually made to Indemnitee under a valid
and collectible insurance policy, except with respect to any excess beyond the
amount of payment under such insurance;

            (b) For which Indemnitee is indemnified by the Bank otherwise than
pursuant to this Agreement;

            (c) Based upon or attributable to Indemnitee's gaining in fact any
personal profit or advantage to which Indemnitee was not legally entitled;

            (d) For an accounting of profits made from the purchase or sale by
Indemnitee of securities of the Bank within the meaning of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar provisions of
any state statutory law or common law;

            (e) Brought about or contributed to by the active and deliberate
dishonesty of Indemnitee; however, notwithstanding the foregoing, Indemnitee
will be protected to the extent otherwise provided under this Agreement as to
any claims upon which suit may be brought by reason of any alleged dishonesty on
Indemnitee's part unless a judgment or other final adjudication thereof adverse
to Indemnitee establishes that he or she committed acts of active and deliberate
dishonesty, with actual dishonest purpose and intent, which acts were material
to the cause of action so adjudicated;

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            (f) For omissions or acts committed in bad faith or which involve
intentional misconduct or a knowing and culpable violation of law;

            (g) For omissions or acts that Indemnitee believed at the time of
the action to be contrary to, or inconsistent with, the best interests of both
the Bank and its shareholders or that involved an absence of good faith on the
part of Indemnitee;

            (h) For any transaction from which Indemnitee derived an improper
personal economic benefit in a capacity other than as a shareholder of the Bank;

            (i) For expenses, penalties, or other payments incurred in an
administrative proceeding or action institute by an appropriate bank regulatory
agency which results in a final order removing Indemnitee from his or her
office, prohibiting Indemnitee from participating in the conduct of the Bank's
affairs, assessing civil money penalties or requiring affirmative action by
Indemnitee in the form of payments to the Bank;

            (j) For acts or omissions that show a reckless disregard for
Indemnitee's duty to the Bank or its shareholders in circumstances in which
Indemnitee was aware, or should have been aware, in the ordinary course of
performing his or her duties, of a risk of serious injury to the Bank or its
shareholders; or

            (k) For acts or omissions that constitute an unexercised pattern of
inattention that amounts to an abdication of Indemnitee's duty to the Bank or
its shareholders.

            (l) If such payment is otherwise prohibited by any governmental
agency charged with supervision and regulation of the Bank.

      11. Savings Clause. If this Agreement or any portion hereof is invalidated
on any ground by a court of competent jurisdiction or is materially affected by
any future change in statutory or regulatory law, then the Bank will
nevertheless indemnify Indemnitee as to Expenses, judgments, fines and penalties
with respect to any Proceeding to the full extent permitted by any applicable
portion of this Agreement or by any other applicable law.

      12. Notices. As a condition precedent to Indemnitee's right to be
indemnified under this Agreement, Indemnitee must give the Bank written notice
within 30 days after Indemnitee becomes aware of any claim made against him or
her for which he or she believes, or should reasonably believe, that
indemnification will or could be sought under this Agreement. Notice to the Bank
will be directed to the Bank's main office, Attention: President (or such other
address as the Bank designates in writing to Indemnitee). Failure to so notify
Bank will not relieve Bank of any liability which it may have to Indemnitee
otherwise than under this Agreement.

      All notices, requests, demands and other communications (collectively
"notices") provided for under this Agreement will be in writing (including
communications by telephone, telex or telecommunication facilities providing
facsimile transmission) and mailed (postage prepaid and return receipt
requested), telegraphed, telexed, transmitted or personally served to each party
at the address set forth at the end of this Agreement or at such other address
as any party affected may designate in a written notice to the other party in
compliance with this section. Such notices will be effective upon the earliest
of (a) actual receipt; (b) three business days after having been deposited in
the mail, properly addressed notice, or (c) 24 hours after electronic
transmission.

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      No Expenses for which indemnity is sought hereunder may be incurred
without the Bank's consent, which consent will not be unreasonably withheld.

      13. Choice of Law. This Agreement is to be interpreted and enforced in
accordance with the laws of the State of California, including applicable
statutes of limitation and other procedural statutes.

      14. Attorneys' Fees. If any legal action is necessary to enforce the terms
of this Agreement, the prevailing party will be entitled to recover, in addition
to the other amounts to which such party may be entitled, actual attorneys' fees
and court costs as may be awarded by the court.

      15. Entire Agreement. Except as provided in Section 8 hereof, this
Agreement represents and contains the entire agreement and understanding between
and among the parties, and all previous statements or understandings, whether
express or implied, oral or written, relating to the subject matter hereof are
fully and completely extinguished and superseded by this Agreement.

      16. Amendments. Provisions of this Agreement may be waived, altered,
amended or repealed in whole or in part only by the written consent of all
parties.

      17. Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any right or remedies under or by reason of this
Agreement to any persons other than the parties to it and their respective
successors and assigns (including an estate of Indemnitee), nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third persons to any party hereto. Furthermore, no provision of this
Agreement will give any third persons any right of subrogation or action against
any party hereto.

      18. Severability. If any portion of this Agreement is deemed by a court of
competent jurisdiction to be unenforceable, the remaining portions will be valid
and enforceable only if, after excluding the portion deemed to be unenforceable,
the remaining terms will be provide for the consummation of the transaction
contemplated herein in substantially the same manner as originally set forth at
the date this Agreement was executed.

      19. Successor and Assigns. This Agreement will be binding upon, and inure
to the benefit of, the parties and their respective transferees, successors and
assigns; provided, however, that this Agreement and all rights, privileges,
duties and obligations of the parties, may not be assigned or delegated by
Indemnitee without the Bank's prior written consent.

      20. Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

      IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.

BANK                             INDEMNITEE

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Alliance Bank,
A California Banking Corporation            ------------------------------------
                                            Print Name

By:
    -----------------------------           ------------------------------------
                                            Signature

Its:
     ---------------------------            Address:
Address:                                    33210 Helen Place
100 Corporate Pointe                        Rancho Palos Verdes, CA 90275
Culver City, CA 90230

                                       8Prepared by MERRILL CORPORATION

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EXHIBIT 10.1  

 
 

EMPLOYMENT AGREEMENT    
  

    This Employment Agreement ("Agreement") is entered into on May 8, 2001 by and between Richard M. Rodstein, an individual (the "Executive"), and
K2 Inc., a Delaware corporation (the "Company"). 

 
 

W I T N E S S E T H    
  

    WHEREAS, the Executive is currently the President and Chief Executive Officer of the Company, and has been serving in such position without an employment
agreement; and 

    WHEREAS,
the Company and the Executive mutually desire that an employment agreement be entered into setting forth their mutual rights and obligations in respect of the Executive's
employment; 

    NOW,
THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties do
hereby agree as follows: 

 
 

A G R E E M E N T    
  

1.  EMPLOYMENT BY THE COMPANY AND TERM.  

    (a) POSITION
AND REPORTING. Subject to the terms set forth herein, the Company agrees to employ the Executive as President and Chief Executive Officer and the Executive
hereby accepts such employment. During the term of the Executive's employment, the Executive will report solely and directly to the Board of Directors of the Company (the "Board"). During the term of
the Executive's employment, the Company will nominate and recommend the Executive for re-election as a director at each annual meeting of stockholders coinciding with the expiration of his
term as a director. 

    (b) FULL
TIME AND BEST EFFORTS. During the term of his employment with the Company, the Executive will devote substantially all of his business time and use his best
efforts to advance the business and welfare of the Company, except for sick leave, vacations and approved leaves of absence. During the term of the Executive's employment, he will not engage in any
other employment or business activities that would be directly harmful or detrimental to, or that may compete with, the business and affairs of the Company, or that would interfere with his duties
hereunder. However, the foregoing will not prevent the Executive from devoting a reasonable amount of time to personal investment, civic and charitable activities. 

    (c) DUTIES.
The Executive will perform such duties as are customarily associated with his position in a corporation of the size and nature of the Company, consistent
with the Bylaws of the Company and as reasonably required by the Board. 

    (d) COMPANY
POLICIES. The employment relationship between the parties will be governed by the general employment policies and practices of the Company, including but
not limited to those relating to protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from or are in conflict with the Company's
general employment policies or practices, this Agreement will control. 

    (e) TERM.
The term of this Agreement will begin as of May 8, 2001 and end on May 7, 2004 (such three-year period, the "Employment Term"),
unless extended and subject to the provisions for termination set forth herein. This Agreement shall automatically be extended for a period of one year following the Employment Term or any extension
thereof unless the Company shall have notified the Executive, in writing, of its election not to extend this Agreement not less than 120 nor more than 150 days prior to the expiration of this
Agreement. 

 

2.  COMPENSATION AND BENEFITS.  

    (a) SALARY.
The Executive will receive for services to be rendered hereunder a base salary at the annual rate of $400,000 payable at least as frequently as monthly and
subject to payroll deductions as may be necessary or customary in respect of the Company's salaried employees (the "Base Salary"). The Base Salary will be subject to review at least annually and to
increase at such times and in such amounts as the Board may approve. 

    (b) PARTICIPATION
IN BENEFIT PLANS. During the term of the Executive's employment, the Executive will be entitled to participate in any insurance, hospitalization,
medical, dental, health, accident, disability or similar plan or program of the Company now existing or established hereafter to the extent that he is eligible under the general provisions thereof.
The Company may, in its sole discretion and from time to time, amend, eliminate or establish additional benefit programs as it deems appropriate. The Executive will also participate in all fringe
benefits offered by the Company to any of its senior executives. 

3.  INCENTIVE, BONUS AND OPTION PLANS.  

    During the Executive's employment, the Executive will be entitled to participate, on terms and conditions that are appropriate to his position and
responsibilities at the Company and are no less favorable than those applying to other senior executives of the Company, in any incentive, bonus, deferred compensation, retirement, stock option and
other compensation plans of the Company currently or hereafter made available by the Company to senior executives of the Company. 

4.  PERQUISITES, VACATIONS AND REIMBURSEMENT OF EXPENSES.  

    During the term of the Executive's employment: 

    (a) The
Company will furnish the Executive with, and the Executive will be allowed full use of, office facilities, automobiles, secretarial and clerical assistance and
other Company property and services commensurate with his position and of at least comparable quality, nature and extent to those made available to other senior executives of the Company from time to
time; 

    (b) The
Executive will be allowed vacations and leaves of absence with pay on a basis no less favorable than that applying to other senior executives of the Company; 

    (c) The
Company will reimburse the Executive for all monies which he has expended for purposes of the Company's business, such reimbursement to be effected in
accordance with Company reimbursement policies and procedures from time to time in effect. 

5.  TERMINATION OF EMPLOYMENT.  

    (a) DEFINITIONS.
The following definitions will apply to Sections 5 and 6 as applicable: 

    (i)  CAUSE.
The term "Cause" means: (A) conviction of a felony involving moral turpitude, or (B) willful gross neglect or willful gross misconduct in
carrying out Executive's duties under this Agreement, resulting in material economic harm to the Company, unless Executive believed in good faith that such conduct was in, or not contrary to, the best
interests of the Company. 

    (ii) DISABILITY.
The term "Disability" means the inability of the Executive due to illness (mental or physical), accident, or otherwise, to perform his duties for any
period of 180 consecutive days, as determined by an independent physician selected by the Company and reasonably acceptable to the Executive or his legal representative. Any return to work from a
period of disability must be authorized by the Executive's physician. 

2

 

    (iii) GOOD REASON. The term "Good Reason" means: (A) a material breach of this Agreement by the Company; (B) without the Executive's prior written
consent, assignment to the Executive of duties materially inconsistent in any respect with his position or any other action by the Company that results in a material diminution in the Executive's
position, authority, duties or responsibilities, it being expressly understood that a change in the Executive's reporting responsibility so that he does not report directly and solely to the Board
will constitute "Good Reason"; (C) any transaction in which the Company becomes a subsidiary of another corporation or which is described in clause (iii) or (iv) of the definition
of "Change in Control" in Section 6(a) below; (D) reduction, without the Executive's prior written consent, of the Executive's Base Salary, or his bonus or other cash incentive
compensation opportunity, for any reason other than in connection with the termination of his employment or in connection with, and proportionate to, a Company-wide pay reduction;
(E) any material reduction of fringe benefits provided to the Executive for any reason other than in connection with the termination of the Executive's employment or in connection with any
change to the Company's benefit programs applicable to all Company employees generally made in the normal course of business; (F) assignment of the Executive, without his prior written consent,
to a Company office located more than 20 miles
from the Executive's current office location; (G) election by the Company not to extend the term of this Agreement in accordance with Section 1(e) hereof; or (H) the Company's
failure to obtain an agreement from any successor or assign of the Company to assume and to agree to perform this Agreement. A change in the formula, methodology or factors considered in determining
incentive cash incentive compensation shall not by itself constitute a reduction of the Executive's incentive compensation opportunity for purposes of clause (D) above. 

    (iv) NOTICE
OF TERMINATION. The term "Notice of Termination" means a notice which indicates the specific termination provision in this Agreement relied upon and sets
forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. Any purported termination of employment by the Company
or by the Executive must be communicated by written Notice of Termination to the other party hereto in accordance with Section 11(a) hereof. With respect to any termination of employment by the
Executive for Good Reason, the Executive will have 120 days following the occurrence of any event described in Section 5(a)(iii) to provide the Company with Notice of Termination,
and may not do so thereafter. 

    (v) SEVERANCE
TERM. The term "Severance Term" means the remaining period of the Employment Term as of a Termination Date or two full years, whichever is longer. 

    (vi) TERMINATION
DATE. The term "Termination Date" means: (i) if the Executive terminates his employment for Good Reason, the date that is 60 days after
Notice of Termination is given and (ii) if the Executive's employment is terminated by the Company other than for Cause, death or Disability, the date that is 30 days after Notice of
Termination is given. 

    (b) TERMINATION
BY THE COMPANY FOR CAUSE. The Board may terminate the Executive's employment with the Company at any time for Cause, immediately upon notice to the
Executive of the circumstances leading to such termination for Cause. In the event that the Executive's employment is terminated for Cause, the Executive will receive payment for all accrued salary
and vacation time through the Termination Date, which in this event will be the date upon which Notice of Termination is given. The Company will have no further obligation to pay severance of any kind
whether under this Agreement or otherwise nor to make any payment in lieu of notice. 

    (c) TERMINATION
BY THE EXECUTIVE FOR GOOD REASON. The Executive will have the right, at his election, to terminate his employment with the Company by written notice to
the Company to that effect for a period of 120 days following any occurrence constituting Good Reason; PROVIDED, HOWEVER, that termination for Good Reason will not be effective until the
Executive 

3

 

gives written notice specifying the occurrence constituting Good Reason and, PROVIDED that if such occurrence is curable, the Company fails to correct it within 10 days after the receipt of the
applicable notice. 

    (d) TERMINATION
BY THE COMPANY WITHOUT CAUSE OR BY THE EXECUTIVE FOR GOOD REASON. In the event that the Executive's employment is terminated by the Company (other than
pursuant to Section 5(b)) or such employment is terminated by the Executive for Good Reason (and in either such case the Executive is not entitled to benefits pursuant to Section 6(b)),
the Company agrees to pay or provide to the Executive as termination compensation the following: 

    (i)  A
single lump sum payment, payable in cash within five days of the Termination Date, equal to the sum of: 

    (A) the
accrued portion of any Base Salary and vacation through the Termination Date; plus 

    (B) an
amount representing bonus and all other cash incentive compensation for such period determined by multiplying: 

    (I) the
average of such bonus and other cash incentive compensation accrued for each of the three preceding full years, by 

    (II) the
fraction of the year of termination elapsed prior to the Termination Date; plus 

    (C) the
present value of: 

    (I) the
Executive's Base Salary in effect upon the Termination Date for the Severance Term, plus 

    (II) incentive
compensation for the Severance Term, based upon the Executive's average bonus and all other cash incentive compensation accrued for each of the three
preceding full years, 

less
standard withholdings for tax and social security purposes. For the purpose of determining present value, future payments will be discounted at an interest rate equal to the
short-term borrowing rate of the Company. 

    (ii) All
stock options, restricted stock or other equity awards then held by Employee will automatically be deemed amended, without further action on the part of the
Company or the Executive, so that (A) all options will be fully vested and not subject to forfeiture or expiration by reason of the Executive's termination, and will be subject to exercise in
full for one year from the Termination Date; and (B) all restricted stock or other equity awards will be fully vested and all restrictions thereon will lapse. 

    (iii) Continuation
of benefits as follows: 

    (A) All
benefits provided under Section 2(b) will continue for the remaining period of the Severance Term. Notwithstanding the foregoing, to the extent any such
benefit cannot be provided through the applicable plan of the Company, the Company will provide such benefit outside of the plan or will provide a cash lump sum payment equal to the value of such
additional benefit. 

    (B) The
Company shall meet its obligation under (A) above, in connection with its group medical/dental plan for the period ending on the earlier to occur of:
(i) the end of the Severance Term or (ii) the date the Executive ceases to be eligible for continuation coverage under the Company's group medical/dental plan pursuant to the provisions
of COBRA, by 

4

 

providing the continuation of such coverage at Company expense, contingent upon the Executive's timely election of such coverage under COBRA. 

    (C) To
the extent required to avoid adverse tax consequences under Section 105(h) of the Internal Revenue Code of 1986 (the "Code"), the Company's payments under
this Section 5(d)(iii) will be recognized by the Executive in his taxable income and the Executive will receive, in addition, a "gross-up" payment covering the tax liability
attributable to such recognized income consistent with principles of paragraph 6(c)(v), below. 

    (iv) Additional
credited service for retirement benefits under all retirement plans, including supplemental retirement plans (if any), equivalent to the Severance Term. 

    (e) TERMINATION
BY REASON OF DEATH OR DISABILITY. This Agreement will terminate upon the death of the Executive; and the Executive's employment hereunder may be
terminated by the Executive or the Company, at either of their election, upon the Executive's Disability. In the event the Executive's employment is terminated as the result of death or Disability,
except as set forth in the
following sentence, the Executive, or his estate or legal representative, will be entitled to receive the accrued portion of any Base Salary and vacation through the Termination Date, plus any
unreimbursed business expenses, plus for the remainder of the Employment Term: (i) periodically not less frequently than monthly in accordance with the Company's normal payroll practice,
payments at the rate of his then Base Salary; and (ii) at the normal and customary time for payment of bonuses and all other cash incentive compensation, amounts equal to the average of such
payments accrued for each of the three full preceding years; in each case subject to any applicable withholdings for tax and social security purposes. The payments provided in this Section 5(e)
will be reduced by the amount of any payments made to the Executive pursuant to any disability or life insurance policy provided by the Company for this purpose, which insurance policy is in addition
to any other insurance benefits provided to the Executive as a benefit hereunder. 

6.  BENEFITS UPON CHANGE OF CONTROL.  

    (a) DEFINITIONS.
In addition to the definitions provided in Section 5, the following definition will apply to this Section 6: 

    CHANGE
IN CONTROL. The term "Change in Control" means the occurrence of any of the following events after the date of this Agreement: (i) the acquisition by any individual,
entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (a "Person"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors ("Voting Securities"); PROVIDED, HOWEVER, that the following acquisitions will not constitute a Change in Control: (A) any acquisition by the Company,
(B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (C) any acquisition by the
Executive (or a group including the Executive); (ii) a change in the composition of a majority of the Board within a three-year period, which change has not been approved by a
majority of the persons then surviving as Directors who also comprised the Board immediately prior to the commencement of such period; or (iii) the consummation of any reorganization, merger or
consolidation other than a reorganization, merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 60% of the combined voting power of the Voting Securities of the Company or such surviving entity
outstanding immediately after such reorganization, merger or consolidation; or (iv) the consummation of a plan of complete liquidation of the Company or of an agreement for the sale 

5

 

or disposition by the Company (in one transaction or a series of transactions) of all or substantially all of the Company's assets. 

    (b) ELIGIBILITY
FOR BENEFITS. The Company agrees to pay to the Executive the benefits specified in Section 6(c) hereof if (i) there is a Change in Control
during the term of this Agreement and (ii) within the period commencing on the date of the Change in Control, or (if earlier) the date of any agreement by the Company to enter into the
transaction resulting in such Change in Control, and ending two years after the Change in Control (A) the Company terminates the employment of the Executive for any reason other than Cause,
death or Disability or (B) the Executive voluntarily terminates employment with the Company for Good Reason. A Change of Control will be deemed to have occurred during the term of this
Agreement, for purposes of this paragraph 6(b), if an agreement is entered into during the term of this Agreement for a transaction resulting in a Change of Control, notwithstanding that the
Change of Control transaction is not completed until after the term of this Agreement. 

    (c) BENEFITS
UPON TERMINATION OF EMPLOYMENT. If the Executive is entitled to benefits pursuant to Section 6(b) hereof, in lieu of any payments and benefits
provided in Section 5 the Company agrees to pay or provide to the Executive as termination compensation the following: 

    (i)  A
single lump sum payment, payable in cash within five days of the Termination Date, equal to the sum of: 

    (A) the
accrued portion of any Base Salary and vacation through the Termination Date; plus 

    (B) an
amount representing bonus and all other cash incentive compensation for such period determined by multiplying: 

    (I) the
average of such bonus and other cash incentive compensation accrued for each of the three preceding full years, by 

    (II) the
fraction of the year of termination elapsed prior to the Termination Date; plus 

    (C) 299%
of the sum of: 

    (I) the
Executive's Base Salary in effect upon the Termination Date plus 

    (II) the
Executive's average bonus and all other cash incentive compensation accrued for each of the three preceding full years. 

    (ii) All
stock options, restricted stock or other equity awards then held by Employee will automatically be deemed amended, without further action on the part of the
Company or the Executive, so that (A) all options will be fully vested and not subject to forfeiture or expiration by reason of the Executive's termination, and will be subject to exercise in
full for the remainder of their stated term; and (B) all restricted stock or other equity awards will be fully vested and all restrictions thereon will lapse. 

    (iii) Continuation
of benefits as follows: 

    (A) All
benefits provided under Section 2(b) will continue for the remaining period of the Severance Term. Notwithstanding the foregoing, to the extent any such
benefit cannot be provided through the applicable plan of the Company, the Company will provide such benefit outside of the plan or will provide a cash lump sum payment equal to the value of such
additional benefit. 

    (B) The
Company shall meet its obligation under (A) above, in connection with its group medical/dental plan for the period ending on the earlier to occur of:
(i) the end of the 

6

 

Severance Term or (ii) the date the Executive ceases to be eligible for continuation coverage under the Company's group medical/dental plan pursuant to the provisions of COBRA, by providing the
continuation of such coverage at Company expense, contingent upon the Executive's timely election of such coverage under COBRA. 

    (C) To
the extent required to avoid adverse tax consequences under Section 105(h) of the Internal Revenue Code of 1986 (the "Code"), the Company's payments under
this Section 6(c)(iii) will be recognized by the Executive in his taxable income and the Executive will receive, in addition, a "gross-up" payment covering the tax liability
attributable to such recognized income consistent with principles of paragraph 6(c)(v), below. 

    (iv) Additional
credited service for retirement benefits under all retirement plans, including supplemental retirement plans (if any), equivalent to the remaining
period of the Employment Term. 

    (v) In
the event that any amount or benefit that may be paid or otherwise provided to the Executive by the Company or any affiliated company, whether pursuant to this
Agreement or otherwise (collectively, "Covered Payments"), is or may become subject to the tax imposed under Code Section 4999 ("Excise Tax"), the Company will pay to the Executive a
"Reimbursement Amount" equal to the total of: (A) any Excise Tax on the Covered Payments, plus (B) any Federal, state, and local income taxes, employment and excise taxes (including the
Excise Tax) on the Reimbursement Amount (but without reduction for any Federal, state, or local income or employment taxes on such Covered Payments), plus (C) the product of any deductions
disallowed for Federal, state or local income tax purposes because of the inclusion of the Reimbursement Amount in the Executive's adjusted gross income multiplied by the highest applicable marginal
rate of Federal, state, and local income taxation, respectively, for the calendar year in which the Reimbursement Amount is to be paid. For purposes of this Section 6(c)(v), the Executive will
be deemed to pay (Y) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Reimbursement Amount is to be paid and
(Z) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which such Reimbursement Amount is to be paid, net of the maximum
reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the
amount of the Executive's adjusted gross income). 

    (d) CHANGES
TO BENEFITS. In the event the Board desires to approve a merger to be accounted for as a "pooling of interests," the Executive will, in good faith,
negotiate with the Company concerning such changes in the foregoing payments and benefits (if any) as may be necessary in order to achieve such accounting treatment. The parties acknowledge that the
Executive's obligation to negotiate in good faith hereunder will not require him to accept a material reduction in the net after tax benefits provided to him hereunder or in any alternative agreement
or arrangement. 

7.  NO OBLIGATION TO MITIGATE DAMAGES.  

    In the event of a termination of the Executive's employment for any reason, the Executive will not be required to seek other employment or to mitigate any of
the Company's obligations under this Agreement, and no amount payable hereunder will be reduced (a) by any claim the Company may assert against the Executive or (b) by any compensation
or benefits earned by the Executive as a result of employment by another employer, self-employment or from any other source after such termination of employment with the Company; PROVIDED,
HOWEVER, that the benefits provided pursuant to Sections 5(d)(iii) and 6(c)(iii)(A) will terminate at such time as the Executive becomes eligible for comparable benefits as the result of
employment by another Person. 

7

 

8.  PROPRIETARY INFORMATION OBLIGATIONS.  

    During the Executive's employment pursuant to this Agreement, the Executive will have access to and become acquainted with confidential and proprietary
information of the Company and its subsidiaries, including, but not limited to, information or plans regarding customer relationships, personnel, or sales, marketing, and financial operations and
methods; trade secrets; formulas; devices; secret inventions; processes; and other compilations of information, records, and specifications (collectively, "Proprietary Information"). The Executive
will not disclose any such Proprietary Information directly or indirectly, or use it in any way, either during the Executive's employment pursuant to this Agreement or at any time thereafter, except
as required in the course of his employment for the Company or as authorized in writing by the Company. All files, records, documents, computer-recorded information, drawings, specifications,
equipment and similar items relating to the business of the Company or its subsidiaries, whether prepared by the Executive or otherwise coming into his possession, will remain the exclusive property
of the Company or its subsidiaries, as the case may be, and may not be removed from the premises of the Company under any circumstances whatsoever without the prior written consent of the Company,
except when (and only for the period) necessary to carry out the Executive's duties hereunder, and if removed must be immediately returned to the Company upon any termination of his employment;
PROVIDED, HOWEVER, that the Executive may retain copies of documents reasonably related to his interest as a shareholder and any documents that were personally owned, which copies and the information
contained therein the Executive agrees not to use for any business purpose. Notwithstanding the foregoing, Proprietary Information will not include (a) information which is or becomes generally
public knowledge or public except through disclosure by the Executive in violation of this Agreement and (b) information that may be required to be disclosed by applicable law. 

9.  NON-INTERFERENCE.  

    While employed by the Company and for a period of one year after termination of this Agreement, the Executive agrees not to interfere with the business of the
Company or any subsidiary of the Company by directly or indirectly soliciting, attempting to solicit, or otherwise inducing, any employee of the Company or any subsidiary of the Company to terminate
his or her employment in order to become an employee, consultant or independent contractor to or for any other employer. 

10. NON-COMPETITION.  

    The Executive agrees that, during the Employment Term, he will not, without the prior consent of the Company, directly or indirectly, have an interest in, be
employed by, or be connected with, as an employee, consultant, officer, director, partner, stockholder or joint venturer, in any person or entity owning, managing, controlling, operating or otherwise
participating or assisting in any business which is in competition with the business of the Company, in any location, unless the Executive's employment is terminated by the Company without Cause or by
the Executive for Good Reason; PROVIDED, HOWEVER, that the foregoing will not prevent the Executive from being a stockholder of less than 1% of the issued and outstanding securities of any class of a
corporation listed on a national securities exchange or designated as national market system securities on an interdealer quotation system by the National Association of Securities
Dealers, Inc. 

8

 

11. MISCELLANEOUS.  

    (a) NOTICES.
Any notices provided hereunder must be in writing and will be deemed effective upon the earlier of two days following personal delivery (including personal
delivery by telecopy or telex), or the fourth day after mailing by first class mail to the recipient at the address indicated below: 

To
the Company: 

K2 Inc.

4900 South Eastern Avenue

Los Angeles, CA 90040

Attn: Secretary

Telecopier No: (213) 724-0667 

With
a copy to: 

Gibson,
Dunn & Crutcher LLP

333 South Grand Avenue

Los Angeles, California 90071-3197

Attention: Andrew E. Bogen, Esq.

Telecopier: (213) 229-7520

To
the Executive: 

RICHARD
RODSTEIN

K2 Inc.

4900 South Eastern Avenue

Los Angeles, CA 90040 

or
to such other address or to the attention of such other person as the recipient party will have specified by prior written notice to the sending party. 

    (b) SEVERABILITY.
Any provision of this Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction will, as to that jurisdiction and subject to
this Section be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any
other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered
excessive, such covenant will be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 

    (c) ENTIRE
AGREEMENT. This document constitutes the final, complete, and exclusive embodiment of the entire agreement and understanding between the parties related to
the subject matter hereof and supersedes and preempts any prior or contemporaneous understandings, agreements, or representations by or between the parties, written or oral. 

    (d) COUNTERPARTS.
This Agreement may be executed on separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken
together will constitute one and the same agreement. 

    (e) SUCCESSORS
AND ASSIGNS. This Agreement is intended to bind and inure to the benefit of and be enforceable by the Executive and the Company, and their respective
successors and assigns, except that the Executive may not assign any of his duties hereunder and he may not assign any of his rights hereunder without the prior written consent of the Company. 

    (f)  AMENDMENTS.
No amendments or other modifications to this Agreement may be made except by a writing signed by both parties. No amendment or waiver of this Agreement
requires the 

9

 

consent of any individual, partnership, corporation or other entity not a party to this Agreement. Nothing in this Agreement, express or implied, is intended to confer upon any third person any rights
or remedies under or by reason of this Agreement. 

    (g) CHOICE
OF LAW. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California
without giving effect to principles of conflicts of law. 

12. ARBITRATION.  

    (a) Any
disputes or claims arising out of or concerning the Executive's employment or termination by the Company, whether arising under theories of liability or damages
based upon contract, tort or statute, will be determined exclusively by arbitration before a single arbitrator in accordance with the employment arbitration rules of the American Arbitration
Association, except as modified by this Agreement. The arbitrator's decision will be final and binding on both parties. Judgment upon the award rendered by the arbitrator may be entered in any court
of competent jurisdiction. In recognition of the fact that resolution of any disputes or claims in the courts is rarely timely or cost effective for either party, the Company and the Executive enter
this mutual agreement to arbitrate in order to gain the benefits of a speedy, impartial and cost-effective dispute resolution procedure. 

    (b) Any
arbitration will be held in the Executive's place of employment with the Company. The arbitrator must be an attorney with substantial experience in employment
matters, selected by the parties alternately striking names from a list of five such persons provided by the American Arbitration Association (AAA) office located nearest to the place of employment,
following a request by the party seeking arbitration for a list of five such attorneys with substantial professional experience in employment matters. If either party fails to strike names from the
list, the arbitrator will be selected from the list by the other party. 

    (c) Each
party will have the right to take the deposition of one individual and any expert witness designated by the other party. Each party will also have the right to
propound requests for production of documents to any party and the right to subpoena documents and witnesses for the arbitration. Additional discovery may be made only where the arbitrator selected so
orders upon a showing of substantial need. The arbitrator will have the authority to entertain a motion to dismiss and/or a motion for summary judgment by any party and will apply the standards
governing such motions under the Federal Rules of Civil Procedure. 

    (d) The
Company and the Executive agree that they will attempt, and they intend that they and the arbitrator should use their best efforts in that attempt, to conclude
the arbitration proceeding and have a final decision from the arbitrator within 120 days from the date of selection of the arbitrator; PROVIDED, HOWEVER, that the arbitrator will be entitled to
extend such 120-day period for one additional 120-day period. The arbitrator will deliver a written award with respect to the dispute to each of the parties, who must promptly
act in accordance therewith. 

    (e) The
Company will pay any and all reasonable fees and expenses incurred by the Executive in seeking to obtain or enforce any rights or benefits provided by this
Agreement, including all reasonable attorneys' and experts' fees and expenses, accountants' fees and expenses, and court costs (if any) that may be incurred by the Executive in pursuing a claim for
payment of compensation or benefits or other
right or entitlement under this Agreement, PROVIDED that the Executive is successful as to at least part of the disputed claim by reason of litigation, arbitration or settlement. 

    (f)  In
a contractual claim under this Agreement, the arbitrator must act in accordance with the terms and provisions of this Agreement and applicable legal principles
and will have no authority to add, delete or modify any term or provision of this Agreement. 

10

 

    IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date it is last executed below by either party. 

	

 	
 	

/s/ RICHARD RODSTEIN   
 Richard Rodstein
	

 	
 	

K2 INC.
	

 	
 	

By:	
 	

/s/ JOHN J. RANGEL   
 John J. Rangel
 Senior Vice President-Finance

11

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