Document:

<PAGE>

                                                                    EXHIBIT 10.2

                                Escrow Agreement

                                  by and among

                        CCM Master Qualified Fund, Ltd.,

                               ARTISTdirect, Inc.,

                                       and

                         U.S. Bank National Association

                            Dated as of May 25, 2005

<PAGE>

      THIS ESCROW AGREEMENT is entered into as of May 25, 2005 (this
"Agreement") by and among U.S. Bank National Association (the "Escrow Agent"),
CCM Master Qualified Fund, Ltd. ("CCM") and ARTISTdirect, Inc. (the "Company"
and together with CCM, the "Interested Parties").

      WHEREAS, the Company, CCM and DKR SoundShore Holding Fund Ltd. ("Oasis")
are currently negotiating the terms of a Convertible Subordinated Debenture to
be issued by the Company (the "Debenture");

      WHEREAS, the net proceeds from the Debenture will be used by the Company
to finance in part the acquisition of an acquisition target (including the
purchase price therefor and all costs, fees and expenses incurred in connection
therewith), mutually acceptable to the Company, CCM and Oasis (the "Acquisition
Candidate") (the transaction is referred to herein as the "Acquisition");

      WHEREAS, the execution and funding of the Debenture by CCM and Oasis are
contingent upon the consummation of the Acquisition;

      WHEREAS, to induce Acquisition Candidate to execute a letter of intent and
to facilitate the consummation of the Acquisition, CCM has agreed to cause the
deposit of certain funds with the Escrow Agent;

      WHEREAS, Oasis deposited the sum of Twenty Five Million U.S. Dollars (U.S.
$25,000,000) into escrow with the Escrow Agent on May 23, 2005 (the "Oasis
Deposit"), on substantially the same terms and conditions contained herein, and
this Agreement constitutes the second agreement with the Escrow Agent pertaining
to the Acquisition;

      WHEREAS, a portion of the funds deposited by CCM with the Escrow Agent
(not more than Nine Million Fifty Four Thousand U.S. Dollars (U.S. $9,054,000)
shall be applied toward a portion of the purchase price of the Debenture and
such funds shall be distributed to the Company only upon consummation of the
Acquisition, or shall be returned to CCM in accordance with this Agreement; and

      WHEREAS, the parties to this Agreement desire to define the terms and
conditions pursuant to which the Escrow Agent shall hold and release such funds;

      NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Escrow Agent shall hold in escrow and shall distribute the
Escrowed Funds (as defined herein) in accordance with and subject to the
following terms and conditions:

      1.    Appointment as Escrow Agent. The Company and CCM each hereby appoint
Escrow Agent to act as the escrow agent under the terms hereof, and the Escrow
Agent hereby accepts such appointment and agrees to act as escrow holder for the
Escrowed Funds in accordance with the terms hereof.

      2.    Escrowed Funds. Upon the effectiveness of this Agreement, CCM shall
deposit with the Escrow Agent a sum of Fifteen Million U.S. Dollars (U.S.
$15,000,000) (the "CCM Deposit"), to be held subject to the terms and provisions
herein. The foregoing funds, plus all

                                      -1-
<PAGE>

interest, dividends, and other distributions and payments therein (collectively
the "Distributions") received by the Escrow Agent, less any funds distributed or
paid in accordance with this Agreement, are collectively referred to herein as
the "Escrowed Funds." The Escrow Agent shall hold the Escrowed Funds in escrow
and shall not withdraw, and none of the parties shall be entitled to any
disbursement of, the Escrowed Funds for any purpose or in any manner or
circumstances other than as set forth herein.

      3.    Investment of Escrowed Funds.

            (a)   The Escrow Agent shall invest the Escrowed Funds in Eligible
Investments. For purposes of this Agreement, "Eligible Investments" shall mean
money market funds investing in United States Government securities.

            (b)   All earnings received from the investment of the Escrowed
Funds shall be credited to, and shall become a part of, the Escrowed Funds (and
any losses on such investments shall be debited to the Escrow Account). The
Escrow Agent shall have no liability for any investment losses, including
without limitation any market loss on any investment liquidated prior to
maturity in order to make a payment required hereunder.

            (c)   The Interested Parties agree that, for tax reporting purposes,
all interest and other income earned from the investment of the Escrowed Funds
in any tax year shall, to the extent such interest or other income is
distributed by the Escrow Agent to any person or entity pursuant to the terms of
this Agreement during such tax year, be reported as allocated to such person or
entity.

            (d)   Each of the Interested Parties hereto agrees to provide the
Escrow Agent with a certified tax identification number by signing and returning
a Form W-9 (or Form W-8 BEN, in case of non-U.S. persons) to the Escrow Agent
upon the execution and delivery of this Agreement. The Interested Parties
understand that, in the event their tax identification numbers are not certified
to the Escrow Agent, the Internal Revenue Code, as amended from time to time,
may require withholding of a portion of any interest or other income earned on
the investment of the Escrowed Funds. Each of the Interested Parties agrees to
instruct the Escrow Agent in writing with respect to the Escrow Agent's
responsibility for withholding and other taxes, assessments or other
governmental charges, and to instruct the Escrow Agent with respect to any
certifications and governmental reporting that may be required under any laws or
regulations that may be applicable in connection with its acting as Escrow Agent
under this Agreement.

      4.    Distribution of Escrowed Funds. The Escrow Agent is directed to hold
and distribute the Escrowed Funds in the following manner:

            (a)   On the date the Acquisition is consummated, the Company and
CCM shall deliver a written notice to the Escrow Agent, duly executed by an
authorized signatory for the Company and CCM, notifying the Escrow Agent that
the Company and CCM have executed documentation in connection with the issuance
of the Debenture. Upon receipt of such notice, the Escrow Agent will release the
applicable portion of the CCM Deposit to the Company via wire transfer, and
return the balance of the CCM Deposit, plus any applicable accrued interest or

                                      -2-
<PAGE>

other income, to CCM via wire transfer, or as otherwise set forth in the written
notice, within two (2) Business Days after receipt of such notice.

            (b)   In the event Acquisition Candidate either (i) executes a
definitive purchase or acquisition agreement with a party other than the Company
or (ii) affirmatively rejects the Company's offer to acquire Acquisition
Candidate, whichever shall occur first, the Company and CCM shall deliver a
written notice to the Escrow Agent, duly executed by an authorized signatory for
the Company and CCM, notifying the Escrow Agent that the Acquisition, and
corresponding issuance of the Debenture, has been terminated. Upon receipt of
such notice, the Escrow Agent will return the CCM Deposit, plus any applicable
accrued interest or other income, to CCM via wire transfer, or as otherwise set
forth in the written notice, within two (2) Business Days after receipt of such
notice.

            (c)   In the event the Acquisition is not consummated by July 31,
2005 (with certification thereof provided to the Escrow Agent in accordance with
Section 4(a) above), the Escrow Agent shall thereupon immediately return the CCM
Deposit, plus any applicable accrued interest or other income, to CCM via wire
transfer within two (2) Business Days.

            (d)   The Escrow Agent shall return the CCM Deposit, plus any
applicable accrued interest to other income, to CCM within three (3) Business
Days if so requested by CCM, if at any time and for any reason CCM, in its sole
discretion, is not satisfied with the results of its due diligence review of the
Company and/or the Acquisition Candidate.

      For purposes of this Agreement, "Business Day" shall mean any day other
than a Saturday, Sunday or other day on which commercial banks in the City of
Los Angeles, California are authorized or required by law or executive order to
close.

      5.    Addresses and Account Information. Notices, instructions and other
communications hereunder shall be sent as specified in Exhibit 1. All notices or
communications required or permitted to be given hereunder shall be in writing
and shall be delivered by hand, sent by facsimile or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when actually so delivered by hand or facsimile, or,
if mailed, three (3) days after mailing (one (1) business day in the case of
express mail or overnight courier service).

      6.    Termination of Escrow Agreement. This Agreement shall terminate upon
the distribution of all of the Escrowed Funds by the Escrow Agent pursuant to
this Agreement.

      7.    Limitation of Escrow Agent's Duties and Liabilities.

            (a)   Each Interested Party acknowledges and agrees that the Escrow
Agent (i) shall not be responsible for any of the agreements referred to or
described herein (including without limitation any documents pertaining to the
Acquisition, including, but not limited to, the Debenture), or for determining
or compelling compliance therewith, and shall not otherwise be bound thereby,
(ii) shall be obligated only for the performance of such duties as are expressly
and specifically set forth in this Agreement on its part to be performed, each
of which is ministerial (and shall not be construed to be fiduciary) in nature,
and no implied duties or obligations of any kind shall be read into this
Agreement against or on the part of the Escrow

                                      -3-
<PAGE>

Agent, (iii) shall not be obligated to take any legal or other action hereunder
which might in its judgment involve or cause it to incur any expense or
liability unless it shall have been furnished with acceptable indemnification,
(iv) may rely on and shall be protected in acting or refraining from acting upon
any written notice, instruction (including, without limitation, wire transfer
instructions, whether incorporated herein or provided in a separate written
instruction), instrument, statement, certificate, request or other document
furnished to it hereunder and believed by it in good faith to be genuine and to
have been signed or presented by the proper person, and shall have no
responsibility or duty to make inquiry as to or to determine the genuineness,
accuracy or validity thereof (or any signature appearing thereon), or of the
authority of the person signing or presenting the same, and (v) may consult
counsel satisfactory to it, including in-house counsel, and the opinion or
advice of such counsel in any instance shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or advice of such
counsel.

            (b)   The Escrow Agent shall not be liable to anyone for any action
taken or omitted to be taken by it hereunder except in the case of the Escrow
Agent's gross negligence, willful misconduct or fraud in breach of the terms of
this Agreement. In no event shall the Escrow Agent be liable for indirect,
punitive, special or consequential damage or loss (including but not limited to
lost profits) whatsoever, even if the Escrow Agent has been informed of the
likelihood of such loss or damage and regardless of the form of action, unless
due to the Escrow Agent's willful misconduct or fraud.

            (c)   The Escrow Agent shall have no more or less responsibility or
liability on account of any action or omission of any book-entry depository,
securities intermediary or other subescrow agent employed by the Escrow Agent
than any such book-entry depository, securities intermediary or other subescrow
agent has to the Escrow Agent, except to the extent that such action or omission
of any book-entry depository, securities intermediary or other subescrow agent
was caused by the Escrow Agent's own gross negligence or willful misconduct in
breach of this Agreement.

            (d)   The Escrow Agent is hereby authorized, in making or disposing
of any investment permitted by this Agreement, to deal with itself (in its
individual capacity) or with any one or more of its affiliates, whether it or
such affiliate is acting as a subagent of the Escrow Agent or for any third
person or dealing as principal for its own account.

            (e)   Notwithstanding any term appearing in this Agreement to the
contrary, in no instance shall the Escrow Agent be required or obligated to
distribute any of the Escrowed Funds (or take other action that may be called
for hereunder to be taken by the Escrow Agent) sooner than two (2) Business Days
after (i) it has received the applicable documents required under this Agreement
in good form, or (ii) passage of the applicable time period (or both, as
applicable under the terms of this Agreement), as the case may be.

      8.    Compensation and Reimbursement of Expenses.

            (a)   The Company agrees (i) to pay or reimburse the Escrow Agent
for its reasonable attorney's fees and expenses incurred in connection with the
preparation of this Agreement (which shall not exceed $4,000) and (ii) to pay
the Escrow Agent's compensation for

                                      -4-
<PAGE>

its normal services hereunder in accordance with the fee schedule attached
hereto as Exhibit 2 and made a part hereof, which may be subject to change
hereafter by the Escrow Agent on an annual basis.

            (b)   The Company agrees to reimburse the Escrow Agent on demand for
all reasonable out-of-pocket costs and expenses incurred in connection with the
administration of this Agreement or the escrow created hereby or the performance
or observance of its duties hereunder which are in excess of its compensation
for services hereunder, including without limitation, payment of any reasonable
legal fees and expenses incurred by the Escrow Agent in connection with
resolution of any claim by any party hereunder.

            (c)   Each of the Interested Parties covenants and agrees, jointly
and severally, to indemnify the Escrow Agent (and its directors, officers and
employees) and hold it (and such directors, officers and employees) harmless
from and against any loss, liability, damage, cost and expense of any nature
incurred by the Escrow Agent arising out of or in connection with this Agreement
or with the administration of its duties hereunder, including but not limited to
reasonable attorney's fees, tax liabilities (other than income tax liabilities
associated with the Escrow Agent's fees), any liabilities or damages that may
result from any inaccuracy or misrepresentation made in any tax certification
provided to the Escrow Agent, and other costs and expenses of defending or
preparing to defend against any claim of liability unless and except to the
extent such loss, liability, damage, cost and expense shall be caused by the
Escrow Agent's gross negligence, or willful misconduct. The foregoing
indemnification and agreement to hold harmless shall survive the termination of
this Agreement.

      9.    Resignation. The Escrow Agent may at any time resign as Escrow Agent
hereunder by giving thirty (30) days prior written notice of resignation to each
of the Interested Parties. Prior to the effective date of the resignation as
specified in such notice, the Company and CCM will issue to the Escrow Agent a
written instruction authorizing redelivery of the Escrowed Funds to a bank or
trust company that they have selected as successor to the Escrow Agent
hereunder. If no successor escrow agent is named by the Company and CCM within
twenty (20) days after notice of resignation is received, the Escrow Agent shall
automatically return the CCM Deposit, plus any applicable accrued interest or
other income, to CCM via wire transfer.

      10.   No Third Party Beneficiaries. This Agreement is for the exclusive
benefit of the parties hereto and their respective permitted successors
hereunder, and shall not be deemed to give, either express or implied, any legal
or equitable right, remedy, or claim to any other entity or person whatsoever
except as provided herein.

      11.   Assignment. No party may assign any of its rights or obligations
under this Agreement without the written consent of the other parties hereto.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns.

      12.   Governing Law; Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such state.
Each party hereby irrevocably and

                                      -5-
<PAGE>

unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York or the courts of the United States of America located
in New York City for any actions, suits, or proceedings arising out of or
relating to this Agreement (and the parties agree not to commence any action,
suit, or proceeding relating thereto except in such courts), and further agrees
that service of any process, summons, notice, or document by U.S. registered
mail to the respective addresses set forth above shall be effective service of
process for any action, suit, or proceeding brought against the parties in any
such court. Each party hereby irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit, or proceeding arising out
of this Agreement, in the courts of the State of New York or the United States
of America located in New York City, and hereby further irrevocably and
unconditionally waives its right and agrees not to plead or claim in any such
court that any such action, suit, or proceeding brought in any such court has
been brought in an inconvenient forum.

      13.   Waiver of Jury Trial. THE ESCROW AGENT AND THE INTERESTED PARTIES
HEREBY WAIVE A TRIAL BY JURY OF ANY AND ALL ISSUES ARISING IN ANY ACTION OR
PROCEEDING BETWEEN THEM OR THEIR SUCCESSORS OR ASSIGNS, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OF ITS PROVISIONS OR ANY NEGOTIATIONS IN CONNECTION
HEREWITH.

      14.   Force Majeure. The Escrow Agent shall not be responsible for delays
or failures in performance resulting from acts beyond its reasonable control.
Such acts shall include but not be limited to acts of God, strikes, lockouts,
riots, acts of war, epidemics, governmental regulations superimposed after the
fact, fire, communication line failures, computer viruses, power failures,
earthquakes or other disasters.

      15.   Waivers. No waiver by any party hereto of any condition or of any
breach of any provision of this Agreement shall be effective unless in writing
and signed by a duly authorized representative of the party granting such
waiver. No waiver by any party of any such condition or breach in any one
instance shall be deemed to be a further or continuing waiver of such condition
or breach or a waiver of any other condition or breach of any other provision
contained herein.

      16.   Amendment. This Agreement may only be amended by the written
agreement of the Company, CCM and the Escrow Agent.

      17.   Severability. The invalidity, illegality, or unenforceability of any
provision of this Agreement shall in no way effect the validity, legality, or
enforceability of any other provision; and if any provision is held to be
unenforceable as a matter of law, the other provisions shall not be affected
thereby and shall remain in full force and effect.

      18.   Headings. The headings contained in this Agreement are for
convenience of reference only and shall have no effect on the interpretation or
operation hereof.

      19.   Reproduction of Documents. This Agreement and all documents relating
thereto, including, without limitation, (a) consents, waivers and modifications
which may hereafter be executed, and (b) certificates and other information
previously or hereafter furnished, may be reproduced by any photographic,
photostatic, microfilm, optical disk, micro-card, miniature

                                      -6-
<PAGE>

photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

      20.   Customer Identification Program. Each of the Interested Parties
acknowledge receipt of the notice set forth on Exhibit 3 attached hereto and
made part hereof that information that may be requested to verify their
identities.

      21.   Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

      22.   Entire Agreement. This Agreement constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings, written or
oral, between the parties hereto with respect to the subject matter hereof.

                       [REST OF PAGE INTENTIONALLY BLANK]

                                      -7-
<PAGE>

      IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by a duly authorized officer as of the day and year first written
above.

THE COMPANY:                              ARTISTDIRECT, INC.

                                          By: /s/ Robert Weingarten
                                              ----------------------------------

                                          Name: Robert Weingarten
                                                --------------------------------

                                          Title: Chief Financial Officer
                                                 -------------------------------

CCM:                                      CCM MASTER QUALIFIED FUND, LTD.

                                          By: /s/ Clint D. Coghill
                                              ----------------------------------

                                          Name: Clint D. Coghill
                                                --------------------------------

                                          Title: Director
                                                 -------------------------------

THE ESCROW AGENT:                         U.S. BANK NATIONAL ASSOCIATION

                                          By: /s/ Brad E. Scarbrough
                                              ----------------------------------

                                          Name: Brad E. Scarbrough
                                                --------------------------------

                                          Title: Vice President
                                                 -------------------------------

                                      -8-Exhibit 10.1

 

Exhibit 10.1

May 25, 2005

PERSONAL AND CONFIDENTIAL

Robert B. McKnight, Jr.

Quiksilver, Inc.

15202 Graham Street

Huntington Beach, CA 92649

Re:     Employment at Quiksilver, Inc.

Dear Bob:

     This letter (“Agreement”) will confirm our understanding and agreement regarding your
continued employment with Quiksilver, Inc. (“Quiksilver” or the “Company”). This Agreement is
effective May 25, 2005 and completely supersedes and replaces any existing or previous oral or
written understandings or agreements, express or implied, between you and the Company regarding
your employment, including, without limitation, the August 1, 2004 agreement.

	 	1.  	Position; Exclusivity. The Company hereby agrees to
employ you as its Chief Executive Officer. During your employment with
Quiksilver, you will devote your full professional and business time, interest,
abilities and energies to the Company and will not render any services to any
other person or entity, whether for compensation or otherwise, or engage in any
business activities competitive with or adverse to the Company’s business or
welfare, whether alone, as an employee, as a partner, as a member, or as a
shareholder, officer or director of any other corporation, or as a trustee,
fiduciary or in any other similar representative capacity of any other entity.
	 
	 	2.  	Base Salary. Your base salary, retroactive to November
1, 2004, will be $73,333.33 per month ($880,000 on an annualized basis), less
applicable withholdings and deductions, paid on the Company’s regular payroll
dates. Your salary will be reviewed at the time management salaries are
reviewed periodically and may be adjusted (but not below $73,333.33 per month)
at the Company’s discretion in light of the Company’s performance, your
performance, market conditions and other factors deemed relevant by the
Company.

-1-

 

	 	3.  	Bonus. For the fiscal year ending October 31, 2005 and
each fiscal year thereafter so long as such plans remain in effect and the
requisite stockholder approval of such plans under Section 162(m) of the
Internal Revenue Code has been obtained to ensure the deductibility of payments
made pursuant thereto, you shall be eligible to receive a bonus under the
Company’s stockholder approved Annual Incentive Plan and/or Long-Term Incentive
Plan of up to 300% of your original base salary hereunder based on achievement
of certain incentive goals established by the Compensation Committee of the
Board of Directors. Any bonus earned pursuant to the Annual Incentive Plan
shall be paid within thirty (30) days following the date the Company publicly
releases its annual audited financial statements (the “Bonus Payment Date”).
In the event that your employment with the Company terminates prior to the end
of the applicable fiscal year for any reason other than termination for Cause
(as defined in Paragraph 9(b), but excluding subparagraphs (i) and (ii)
thereof), you shall be entitled to receive a pro rata portion of the bonus
otherwise payable to you under the Annual Incentive Plan based upon the actual
number of days which you were actively employed by the Company during the
applicable fiscal year, which shall be paid on the Bonus Payment Date. Payment
of any bonus earned under the Long-Term Incentive Plan and proration thereof on
termination of your employment shall be governed by the terms of the Long-Term
Incentive Plan. Any bonus payments shall be less applicable withholdings and
deductions.
	 
	 	4.  	Vacation. Since Quiksilver does not have a vacation
policy for executives of your level, no vacation days will be treated as earned
or accrued.
	 
	 	5.  	Health and Disability Insurance. You (and any eligible
dependents you elect) will be covered by the Company’s group health insurance
programs on the same terms and conditions applicable to comparable employees.
You will also be covered by the long-term disability plan for senior executives
on the same terms and conditions applicable to comparable employees. The
Company reserves the right to change, modify, or eliminate such coverages in
its discretion.
	 
	 	6.  	Clothing Allowance. You will be provided a clothing
allowance of $4,000 per year at the Company’s wholesale prices.
	 
	 	7.  	Stock Options. You shall continue to be a participant
in Quiksilver’s Stock Incentive Plan, or any successor equity plan. The amount
and terms of any restricted stock, stock options, stock appreciation rights or
other interests to be granted to you will be determined by the Board of
Directors in its discretion and covered in separate agreements, but shall be
substantially similar to those granted to other senior executives of Quiksilver
of equivalent level. Stock options granted to you after the date hereof
through the termination of your employment shall provide that if you are
terminated by the Company without Cause (as hereinafter defined), as a result
of your death or permanent disability, or you terminate your employment for
Good Reason (as hereinafter defined), any

-2-

 

	 	   	such options outstanding will automatically vest in full on an accelerated
basis so that the options will immediately prior to such termination become
exercisable for all option shares and remain exercisable until the earlier
to occur of (i) the first anniversary of such termination, (ii) the end of
the option term, or (iii) termination pursuant to other provisions of the
applicable option plan or agreement (e.g., a corporate transaction).
	 
	 	8.  	Life Insurance. The Company will pay the premium on a
term life insurance policy on your life with a company and policy of our
choice, and a beneficiary of your choice, in the face amount determined by the
Company of not less than $2,000,000. Our obligation to obtain and maintain
this insurance is contingent upon your establishing and maintaining
insurability, and we are not required to pay premiums for such a policy in
excess of $5,000 annually.
	 
	 	9.  	Unspecified Term; At Will Employment; Termination.
	 
	 	   	(a) Notwithstanding anything to the contrary in this Agreement or in your
prior employment relationship with the Company, express or implied, your
employment is for an unspecified term and either you or Quiksilver may
terminate your employment at will and with or without Cause (as defined
below) or notice at any time for any reason; provided, however, that you
agree to provide the Company with thirty (30) days advance written notice of
your resignation (during which time the Company may elect, in its
discretion, to relieve you of all duties and responsibilities). This
at-will aspect of your employment relationship can only be changed by an
individualized written agreement signed by both you and an authorized
officer of the Company.
	 
	 	   	(b) The Company may also terminate your employment immediately, without
notice, for Cause, which shall include, but not be limited to, (i) your
death, (ii) your permanent disability which renders you unable to perform
your duties and responsibilities for a period in excess of three consecutive
months, (iii) willful misconduct in the performance of your duties, (iv)
commission of a felony or violation of law involving moral turpitude or
dishonesty, (v) self-dealing, (vi) willful breach of duty, (vii) habitual
neglect of duty, or (viii) a material breach by you of your obligations
under this Agreement. If the Company terminates your employment for Cause,
or you terminate your employment other than for Good Reason (as defined
below), you (or your estate or beneficiaries in the case of your death)
shall receive your base salary and other benefits earned and accrued prior
to the termination of your employment and, in the case of a termination
pursuant to subparagraphs (i) or (ii) only, a pro rata portion of your
bonus, if any, as provided in Paragraph 3 for the fiscal year in which such
termination occurs, less applicable withholdings and deductions, and you
shall have no further rights to any other compensation or benefits hereunder
on or after the termination of your employment.

-3-

 

	 	   	(c) If Quiksilver elects to terminate your employment without Cause, or if
you terminate your employment with the Company for Good Reason within six
(6) months of the action constituting Good Reason, the Company will (i)
continue to pay your base salary (but not any employment benefits) on its
regular payroll dates for a period of twenty-four (24) months, (ii) pay you
a pro rata portion of your bonus, if any, as provided by Paragraph 3 for the
fiscal year in which such termination occurs, less applicable withholdings
and deductions and (iii) pay you an amount equal to two (2) times the
average annual bonus earned by you pursuant to Paragraph 3 during the two
(2) most recently completed fiscal years of the Company payable over a
two-year period following termination in equal installments on the Company’s
regular payroll dates, less applicable withholdings and deductions.
Notwithstanding the foregoing, if such termination without Cause or for Good
Reason occurs within twelve (12) months immediately following a Change of
Control (as defined in Addendum “A”) the Company will instead (i) continue
to pay your base salary (but not any employment benefits) on its regular
payroll dates for a period of thirty-six (36) months, (ii) pay you a pro
rata portion of your bonus, if any, as provided by Paragraph 3 for the
fiscal year in which such termination occurs, less applicable withholdings
and deductions, and (iii) pay you an amount equal to three (3) times the
average annual bonus earned by you pursuant to Paragraph 3 during the two
(2) most recently completed fiscal years of the Company payable over a three
year period following termination in equal installments on the Company’s
regular payroll dates, less applicable withholdings and deductions. In
order for you to be eligible to receive the payments specified in this
Paragraph 9(c), you must execute a general release of claims in a form
reasonably acceptable to the Company. You shall have no further rights to
any other compensation or benefits hereunder on or after the termination of
your employment. You shall not have a duty to seek substitute employment
and the Company shall not have the right to offset any compensation due you
against any compensation or income received by you after the date of such
termination.
	 
	 	   	“Good Reason” for you to terminate employment means a voluntary termination
as a result of (i) the assignment to you of duties materially inconsistent
with your position as set forth above without your consent, (ii) a material
change in your reporting level from that set forth in this Agreement without
your consent, (iii) a material diminution of your authority without your
consent, (iv) a material breach by the Company of its obligations under this
Agreement, (v) a failure by the Company to obtain from any successor, before
the succession takes place, an agreement to assume and perform the
obligations contained in this Agreement, or (vi) the Company requiring you
to be based (other than temporarily) at any office or location outside of
the Southern California area without your consent. Notwithstanding the
foregoing, Good Reason shall not exist unless you provide the Company notice
of termination on account thereof and, if such event or condition is
curable, the Company fails to cure such event or condition within thirty
(30) days of such notice.

-4-

 

	 	   	(d) In the event that any payment or benefit received or to be received by
you (collectively, the “Payments”) would constitute a parachute payment
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), then the following limitation shall apply:
	 
	 	   	The aggregate present value of those Payments shall be limited in amount to
the greater of the following dollar amounts (the “Benefit Limit”):
	 
	 	   	(i) 2.99 times your Average Compensation (as defined below),
or (ii) the amount which yields you the greatest after-tax amount of Payments
under this Agreement after taking into account any excise tax imposed under
Code Section 4999 on those Payments.
	 
	 	   	The present value of the Payments will be measured as of the date of the
Change in Control and determined in accordance with the provisions of Code
Section 280G(d)(4).
	 
	 	   	Average Compensation means the average of your W-2 wages from the Company
for the five (5) calendar years completed immediately prior to the calendar
year in which the Change in Control is effected. Any W-2 wages for a
partial year of employment will be annualized, in accordance with the
frequency which such wages are paid during such partial year, before
inclusion in Average Compensation.
	 
	 	10.  	Trade Secrets; Confidential and/or Proprietary
Information. The Company owns certain trade secrets and other confidential
and/or proprietary information which constitute valuable property rights, which
it has developed through a substantial expenditure of time and money, which are
and will continue to be utilized in the Company’s business and which are not
generally known in the trade. This proprietary information includes the list
of names of the customers and suppliers of Quiksilver, and other particularized
information concerning the products, finances, processes, material preferences,
fabrics, designs, material sources, pricing information, production schedules,
sales and marketing strategies, sales commission formulae, merchandising
strategies, order forms and other types of proprietary information relating to
our products, customers and suppliers. You agree that you will not disclose
and will keep strictly secret and confidential all trade secrets and
proprietary information of the Company, including, but not limited to, those
items specifically mentioned above.
	 
	 	11.  	Expense Reimbursement. The Company will reimburse you
for documented reasonable and necessary business expenses incurred by you while
engaged in business activities for the Company’s benefit on such terms and
conditions as shall be generally available to other executives of the Company.

-5-

 

	 	12.  	Compliance With Business Policies. You will devote
your full business time and attention to Quiksilver and will not be involved in
other business ventures without written authorization from the Company’s Board
of Directors. You will be required to observe the Company’s personnel and
business policies and procedures as they are in effect from time to time. In
the event of any conflicts, the terms of this Agreement will control.
	 
	 	13.  	Entire Agreement. This Agreement, its addenda, and any
stock option agreements the Company may enter into with you contain the entire
integrated agreement between us regarding these issues, and no modification or
amendment to this Agreement will be valid unless set forth in writing and
signed by both you and an authorized officer of the Company.
	 
	 	14.  	Arbitration as Exclusive Remedy. To the fullest extent
allowed by law, any controversy, claim or dispute between you and the Company
(and/or any of its affiliates, owners, shareholders, directors, officers,
employees, volunteers or agents) relating to or arising out of your employment
or the cessation of that employment will be submitted to final and binding
arbitration in Orange County, California, for determination in accordance with
the American Arbitration Association’s (“AAA”) National Rules for the
Resolution of Employment Disputes, as the exclusive remedy for such
controversy, claim or dispute. In any such arbitration, the parties may
conduct discovery to the same extent as would be permitted in a court of law.
The arbitrator shall issue a written decision, and shall have full authority to
award all remedies which would be available in court. The Company shall pay
the arbitrator’s fees and any AAA administrative expenses. Any judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Possible disputes covered by the above include (but are
not limited to) unpaid wages, breach of contract, torts, violation of public
policy, discrimination, harassment, or any other employment-related claims
under laws including but not limited to, Title VII of the Civil Rights Act of
1964, the Americans With Disabilities Act, the Age Discrimination in Employment
Act, the California Fair Employment and Housing Act, the California Labor Code
and any other statutes or laws relating to an employee’s relationship with
his/her employer, regardless of whether such dispute is initiated by the
employee or the Company. Thus, this bilateral arbitration agreement fully
applies to any and all claims that the Company may have against you, including
(but not limited to) claims for misappropriation of Company property,
disclosure of proprietary information or trade secrets, interference with
contract, trade libel, gross negligence, or any other claim for alleged
wrongful conduct or breach of the duty of loyalty. Nevertheless, claims for
workers’ compensation benefits or unemployment insurance, those arising under
the National Labor Relations Act, and any other claims where mandatory
arbitration is prohibited by law, are not covered by this arbitration
agreement, and such claims may be presented by either the Company or you to the
appropriate court or government agency. BY AGREEING TO THIS BINDING
ARBITRATION PROVISION, BOTH YOU AND THE COMPANY GIVE UP ALL RIGHTS TO TRIAL BY
JURY. This mutual arbitration

-6-

 

	 	   	agreement is to be construed as broadly as is permissible under applicable
law.
	 
	 	15.  	Successors and Assigns. This Agreement will be
assignable by the Company to any successor or to any other company owned or
controlled by the Company, and will be binding upon any successor to the
business of the Company, whether direct or indirect, by purchase of securities,
merger, consolidation, purchase of all or substantially all of the assets of
the Company or otherwise.

Please sign and return the enclosed copy of this letter to me for our files to acknowledge your
agreement with the above.

	 	 	 
	 

	 	Very truly yours,
	 
	 
	 	 
	

	 	/s/ Bernard Mariette
	

	 	Bernard Mariette

President

Enclosure

ACKNOWLEDGED AND AGREED:

	 	 	 
	/s/ Robert B. McKnight, Jr.

	 	 
	Robert B. McKnight, Jr.
	 	 

-7-

 

ADDENDUM A

DEFINITION OF CHANGE IN CONTROL

     “Change in Control” means the occurrence of one or more of the following events: (i) any
corporation, partnership, person, other entity, or group (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) (collectively, a “Person”) acquires shares of capital
stock of the Company representing more than 50% of the total number of shares of capital stock that
may be voted for the election of directors of the Company, (ii) a merger, consolidation, or other
business combination of the Company with or into another Person is consummated, or all or
substantially all of the assets of the Company are acquired by another Person, as a result of which
the stockholders of the Company immediately prior to the consummation of such transaction own,
immediately after consummation of such transaction equity securities possessing less than 50% of
the voting power of the surviving or acquiring Person (or any Person in control of the surviving or
acquiring Person, the equity securities of which are issued or transferred in such transaction), or
(iii) the stockholders of the Company approve a plan of complete liquidation, dissolution or
winding up of the Company.

-Addendum A-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]