Sample Business Contracts

Deferred Compensation Agreement - ARTISTdirect LLC and Keith Yokomoto

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                         Deferred Compensation Agreement

This Agreement is made as of the 1st day of April, 1998 between ArtistDirect,
LLC, a California limited liability company (the "Company") and Keith Yokomoto

         WHEREAS, the Company is operated under the terms and provisions of its
Operating Agreement (the "Operating Agreement"), as the same may be modified or
amended by its Members (the "Members") in accordance therewith;

         WHEREAS, the Company believes that the services of Employee will be
instrumental in stabilizing and increasing the value of the Company;

         WHEREAS, the Company believes that in order to induce Employee to
continue to provide services to the Company, additional variable compensation is

         WHEREAS, the Company desires to make a special one-time payment to
Employee of this additional variable compensation (the "Compensation") in the
amount, at the time, and upon the terms and conditions set forth in this
Agreement for the services of Employee to the Company and to defer the payment
of such amount as described herein; and

         WHEREAS, certain Members are willing to have their capital account (the
"Capital Account") determined under the Operating Agreement charged with the
payment of the Compensation.


<PAGE>   2

         NOW, THEREFORE, the parties agree as follows:

         1.    (a) Subject to the provisions of this Agreement, the amount of
the Compensation to be paid hereunder shall be equal to the product of (i) a
fraction, the numerator of which is the Fair Market Value (as defined below) of
the Company on the applicable Payment Date (as defined below) and the
denominator of which is $1,980,000 and (ii) $200,000; provided, however, that
the amount of the Compensation shall not exceed $200,000.

               (b) "Fair Market Value" means the value that would be obtained
for the assets of the Company, taking into account all liabilities and
restrictions against those assets, if those assets were available for sale on
the open market in an arm's length transaction for cash between an informed and
willing seller and an informed and willing purchaser, each with an adequate
understanding of the facts and under no compulsion to buy or sell. For purposes
hereof, Fair Market Value shall be determined as of the applicable Payment Date
(as defined below) by the Company, acting in good faith, taking into account all
relevant facts and circumstances, including any current appraisals. Fair Market
Value shall not give effect to the Compensation due hereunder or under other
similar agreements with Employees. Notwithstanding anything to the contrary
herein, upon the occurrence of a Capital Event (as defined below) with respect
to all or a portion of the assets of the Company, Fair Market Value shall not
exceed the amount of proceeds received by the Company from such Capital Event
(including the amount of any assumed liabilities) less a proportionate share of
the unassumed liabilities of the Company.

<PAGE>   3

         2. The payment to Employee of the Compensation shall be made upon the
first to occur of the following events (the "Payment Date");

               (a) Sale or redemption of Employee's entire membership interest
in the Company; provided that in the event of a sale or other disposition to a
party other than the Company (including a disposition to a corporation formed to
operate the business of the Company), Employee may sell or dispose of a
membership interest in the Company which includes a right, under the Operating
Agreement, of the transferee to a Capital Account equal to the then fair market
value of such membership interest, if, in such sale or other disposition, the
portion of the consideration which does not represent the amount of Capital
Account of such membership interest of Employee (up to the amount of the
Compensation due hereunder) shall be deemed paid first to the Company for the
benefit of the Members agreeing herein to have their Capital Accounts charged
for the Compensation hereunder, and then next being deemed paid as the
Compensation to Employee under the terms of this Agreement;

               (b) The occurrence of a Capital Event (as hereinafter defined);

               (c) On or after the seventh anniversary of this Agreement,
provided that Employee shall request payment at such time, and the Company shall
then consent to make such payment, which consent shall be in the sole discretion
of the Company.

               (d) As used herein, "Capital Event" shall mean an event giving
rise to the distribution to Members of proceeds received by the Company from the
following sources: (i) insurance proceeds or damage recoveries with respect to
the damage of destruction or

<PAGE>   4

condemnation of all or substantially all of the assets of the Company; (ii)
financing or refinancing proceeds for any indebtedness secured by any assets of
the Company; or (iii) proceeds from the sale or any exchange, transfer,
assignment or other disposition of all or substantially all of the assets of the

         3. In the event that payment of the Compensation is made pursuant to
Section 2(b), above, but the operations of the Company continue and subsequently
there is one or more additional Capital Events, or Employee's interest is
purchased or redeemed upon one of the events specified in Section 2(a), above,
additional payments of the Compensation shall be made to Employee hereunder. The
amount to be paid shall be equal to the applicable amount of the Compensation
determined in accordance with Section 1, above, with respect to such Capital
Event, sale or redemption (determined on an event-by-event basis), but in no
case shall the total aggregate amounts received hereunder for all such events
exceed the amount of the Compensation determined under Section 1 hereof as of
the respective Payment Date:

         4.    (a) The deduction in determining Net Profit and Net Loss under
the Operating Agreement (as defined under such Operating Agreement) for payment
of the Compensation or deemed payment under Section 1 shall be specially
allocated to the Members set forth on the signature page hereto as agreeing to
have their Capital Accounts so charged in the amounts and percentages as

               (b) The Compensation shall be paid in cash, except other forms of
consideration may be used by the Company if such form of consideration is used
in the sale or

<PAGE>   5

redemption or a Capital Event, as the case may be. All payments shall be
delivered in person or mailed to the last address of Employee (or, in the case
of the death of Employee, to that of Employee's estate or of Employee's
designated beneficiary, whichever is applicable). Employee shall be responsible
for furnishing the Company with his or her current address and that of his
beneficiary (if applicable).

               (c) Notwithstanding any other provision in this Agreement to the
contrary, no payment of the Compensation shall be made if such payment would
conflict with, or result in a breach of, any terms, conditions, restrictions, or
provisions of, or would constitute a default under, any bond, note, or other
evidence of indebtedness or any contract, lease, loan agreement or other credit
agreement or instrument to which the Company is a party or by which the Company
may be bound. In addition, the Company has the right to defer the date on which
any amount is payable or to modify the time or manner of the payment of the
amount as it deems necessary because of its operations (e.g., cash flow needs),
provided that any such determination shall be made in good faith by the Company.

               (d) Any amount of the Compensation payable under this Agreement
shall not be deemed salary or other compensation to Employee for the purpose of
computing benefits to which Employee may be entitled under any vacation,
disability, profit sharing, pension plan or other arrangement of the Company for
the benefit of its employees.

         5. In the event of Employee's death, all amounts which shall become due
hereunder to Employee shall be paid to the executors or administrators of his

<PAGE>   6

         6. Payments of the Compensation made or deemed made by Company
hereunder are subject to withholding or payroll taxes and to such other
deductions as shall, at the time of such payment, be required under any income
tax or other law, whether of the United States or any other jurisdiction, and
the amount of the Compensation paid shall be so reduced by such withholding,
payroll taxes or other deductions. In the case of payments to the executors or
administrators of the estate of Employee, payment of the Compensation is subject
to the delivery to the Company of all necessary tax waivers, letters
testamentary and other documents

         7. Nothing contained herein shall require the Company to continue
Employee in its employ, or require Employee to continue in the employ of the

         8. The sole interest of Employee hereunder shall be to receive the
benefits provided herein as and when the same shall become due and payable in
accordance with the terms hereof, and neither Employee nor the executors or
administrators of his estate shall have any right, title or interest in or to
any of the assets of the Company.

         9. All amounts payable hereunder with respect to Employee shall be
unfunded deferred compensation payable, when due, solely from the general assets
of the Company and no member of the Company shall be liable for the payment
thereof. The Company shall not maintain any legally separate fund or account to
provide any benefits provided hereunder.

         10. This Agreement shall inure to the benefit of, and be enforceable
only by the

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parties hereto, their heirs, executors, administrators, legal representatives,
successors and permitted assigns. The rights of Employee pursuant to this
Agreement shall not be assigned, transferred, pledged or hypothecated in any way
(whether by operation of law or otherwise) and any attempted disposition
contrary to the terms hereof shall be null and void and without effect. The
Company may assign its rights, together with its obligations, hereunder in
connection with any sale, transfer or other disposition of all or a substantial
portion of the assets of the Company.

         11. This Agreement shall be governed by and construed in accordance
with the laws of California.

         12. No modification, amendment, extension or alleged waiver of this
Agreement or any provision thereof will be binding upon Employee or the Company
unless in writing and signed by Employee and the Company; provided that any
amendment to Section 4(a) or the signature page hereof shall require the
approval of all Members. This Agreement constitutes the entire Agreement between
Employee and the Company relating to the subject matter hereof and, except as
otherwise specifically provided herein, supersedes and replaces any and all
prior agreements and understandings, written or oral, relative to such matters.

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


                                         /s/ Keith Yokomoto
                                        Keith Yokomoto

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                                        ARTISTdirect, LLC

                                        By:   /s/ Marc P. Geiger
                                             Marc P. Geiger
                                        Its: Member

                                        By:   /s/ Donald P. Muller
                                             Donald P. Muller
                                        Its: Member

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                  Charges to Capital Accounts of Other Members

                       Maximum Amount     Percentage of
                      of Compensation      Compensation
       Name            to be Charged      to be charged     Accepted and Agreed
       ----          -----------------  -----------------   -------------------
Marc P. Geiger            $100,000              50%        /s/ Marc P. Geiger
                                                           Marc P. Geiger

Donald P. Muller          $100,000              50%        /s/ Donald P. Muller
                                                           Donald P. Muller