EMPLOYMENT AGREEMENT
June 20, 2000
The parties to this agreement are Xxxxx X. Xxxxxxxx, residing at 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Executive"), and YouthStream Media
Networks, Inc., a Delaware corporation with its principal office at 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company").
The parties have agreed upon the employment of the Executive as its
President and Chief Executive Officer on the terms set forth in this agreement.
It is therefore agreed as follows:
1. Employment.
During the term of the Executive's employment under this agreement, the
Company shall employ the Executive, and the Executive shall serve the Company,
as the Company's President and Chief Executive Officer. The Executive shall have
all of the duties, responsibilities and powers customarily associated with the
position of chief executive officer of a publicly held company, shall report to
the Company's board of directors, and shall devote substantially all his
business time to the performance of his duties under this agreement. The
Executive shall serve on the Company's board of directors.
2. Term of Employment.
The term of the Executive's employment under this agreement shall commence
on the date of this agreement and, subject to earlier termination upon the
Executive's death or disability pursuant to section 5.1 or pursuant to section
6, shall continue until the close of business on June 30, 2002.
3. Compensation.
3.1 Cash Compensation. As compensation for his services under this
agreement, the Executive shall be entitled to (a) a "sign-on bonus" in the
amount of $50,000, payable simultaneously with the execution and delivery of
this agreement, and (b) a salary at the rate of $350,000 a year, payable in
equal installments in accordance with the Company's customary payroll practices
for its employees. The Company's board of directors shall review the Executive's
performance annually (either prior to or within a reasonable period after the
end of each fiscal year) and, in its sole discretion, may grant the Executive a
bonus based on the Executive's performance during that fiscal year and may
increase the Executive's basic compensation for the following year.
3.2 Stock Options. On the date of this agreement, the Company is
granting to the Executive, pursuant to the Company's 2000 Stock Incentive Plan
(the "Plan"), in consideration of the services to be rendered by the Executive
under this agreement, the option (which shall not be an incentive stock option)
to purchase an aggregate of 300,000 shares of the Company's Common Stock at an
exercise price of $5.75 a share (the fair market value of the Company's Common
Stock on this date); in July 2000, the Company will grant to the Executive
non-incentive options to purchase an additional 300,000 shares at the fair
market value of the Company's stock on the date of grant and otherwise on the
same terms as the options granted on this date. The terms of the option are set
forth in a separate agreement that is being executed by the Company and the
Executive simultaneously with the execution of this agreement.
4. Reimbursement of Expenses; Fringe Benefits.
4.1 Expenses. The Company shall reimburse the Executive for all
reasonable expenses incurred by the Executive in connection with the performance
of his duties, upon presentation of appropriate vouchers covering the expenses.
4.2 Fringe Benefits. The Executive (and his immediate family) shall be
entitled to participate in all medical, dental, disability, life insurance and
other fringe benefits and executive perquisites generally provided to the
Company's senior executives.
5. Disability or Death.1
5.1 Disability. If, as the result of any physical or mental disability,
the Executive shall fail or be unable to perform his duties for a total of 120
days in any 12-month period, the Company may, by notice to the Executive,
terminate his employment under this agreement as of the date of the notice.
5.2 Payments on Disability. If the Executive's employment is terminated
under section 5.1, the Executive shall be paid, in full discharge of all the
Company's obligations to the Executive, (a) the Executive's full salary under
section 3.1 for a period of six months following the date of termination (or, if
a shorter period, the remainder of the term), less the amount of any disability
payments received by him under any disability insurance coverage provided to him
by the Company, and (b) the amount of all expense reimbursements due for periods
prior to termination. If the Executive shall request, for the six-month period
during which his salary is payable (or, if shorter, the balance of the term),
the Company shall, at the Executive's expense, keep the Executive and his
immediate family on all medical, dental and other plans previously provided to
the Executive under this agreement.
5.3 Payments on Death. The Executive's employment under this agreement
shall be terminated upon his death and the Executive's estate shall be paid, in
full discharge of all the Company's obligations to the Executive, the
Executive's full salary under section 3 for a period of six months following the
date of termination (or, if a shorter period, the remainder of the term) and the
amount of all expense reimbursements due for periods prior to termination. If
the Executive's immediate family shall request, for that six-month period (or,
if shorter, the
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balance of the term), the Company shall, at the expense of the Executive's
immediate family, keep them on all medical, dental and other plans previously
provided to the Executive under this agreement.
6. Termination.
6.1 Payments Upon Termination for Cause or Voluntary Termination. The
Company may terminate the Executive's employment under this agreement for cause
(as defined in section 6.3). If the Executive's employment under this agreement
is terminated for cause pursuant to this section 6.1 or by the Executive
voluntarily (other than for Good Reason, as defined in section 6.3), the Company
shall pay to the Executive, in full discharge of its obligations to the
Executive under this agreement, the accrued amount of the salary and benefits
due to him through the date of termination and the amount of all expense
reimbursements due for periods prior to termination.
6.2 Payments Upon Termination for Other Reasons. If the Executive's
employment under this agreement is terminated by the Company prior to the
expiration of the term for any reason other than for cause or as a result of the
Executive's death or disability, or if the Executive's employment under this
agreement is terminated by the Executive for Good Reason, (a) all of the
Executive's stock options shall then become fully vested and (b) the Company
shall continue to pay to the Executive through the remainder of the term the
salary payable pursuant to section 3.1 and shall pay to the Executive any unpaid
bonus previously authorized by the Company's board of directors. In addition,
upon the Executive's request, the Company shall, at its expense, keep the
Executive and his immediate family on all medical, dental and other plans for
the remainder of the term. None of the payments provided for in this section 6.2
shall be reduced by any amounts earned or received by the Executive from any
third party at any time. Without limiting the generality of the foregoing, if
the Executive's employment under this agreement is terminated for any reason
other than termination by the Company for cause or termination by the Executive
without Good Reason, the Executive shall not have any obligation to mitigate
damages.
6.3 Definitions. As used in this agreement:
(a) the term "cause" shall be limited to mean: (i) the conviction of the
Executive of a felony, (ii) the conviction of the Executive of a crime involving
any financial impropriety or that would materially interfere with the
Executive's ability to perform his services required under this agreement or
otherwise be materially injurious to the Company or (iii) the willful breach by
the Executive in a material respect of his obligations under this agreement
after ten days notice and an opportunity to cure and after a hearing before the
board; and
(b) the term "Good Reason" shall be limited to mean the occurrence,
without the express written consent of the Executive, of any of the following
circumstances: (i) a significant adverse alteration in the Executive's status in
the Company, in the nature of the Executive's responsibilities, or in the
material conditions of the Executive's employment; (ii) a reduction by the
Company in the Executive's annual basic salary or benefits as provided for in
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this agreement; (iii) the Company requiring that the Executive be based at a
location more than 50 miles from his residence on the date of this agreement,
except for required travel on the Company's business; (iv) the Company's breach
of any of its material obligations under this agreement and the continuation of
that breach for 10 days after written notice by the Executive to the Company;
and (v) a Change in Control (as defined in section 13.2 of the Plan) of the
Company.
6.4 Time of Payments After Termination. Any amounts payable to the
Executive or his estate after termination of his employment shall be paid
periodically in the same amounts and at the same intervals as they would have
been paid if the Executive's employment had not terminated.
7. Confidential Information.
The Executive shall not, directly or indirectly, either during his
employment by the Company or at any time thereafter, disclose to anyone or use
(except as authorized in the regular course of the Company's business) any
information acquired by him during his employment with respect to any of the
Company's trade secrets or other confidential information. For this purpose,
information generally known to the public shall not be considered a trade secret
or confidential information.
8. Non-Competition, etc
8.1 Non-Competition. For a period of one year after the termination of
the Executive's employment under this agreement, the Executive shall not
directly or indirectly engage or be interested in any business or entity that
engages, anywhere in the world, in any business competitive with any material
segment of the business in which the Company is engaged at the time of
termination of the Executive's employment or with any business activity that the
Company then has under active consideration. The restriction provided for in the
previous sentence shall apply regardless of the reason for termination of the
Executive's employment, except that it shall not apply after termination of the
Executive's employment if the Executive's employment is terminated prior to the
expiration of the two-year term due to the Executive's termination of his
employment for Good Reason or due to termination by the Company without cause.
For the purpose of this section 8.1, the Executive shall be deemed to be
directly or indirectly interested in a business or entity if he is engaged or
interested in that business or entity as a stockholder, director, officer,
employee, salesman, sales representative, agent, broker, partner, individual
proprietor, lender, consultant or otherwise, but not if his interest is limited
solely to the ownership of 5% or less of any class of the equity or debt
securities of a corporation whose shares are publicly traded.
8.2 Non-Solicitation. The Executive shall not, for a period of 18 months
after termination of his employment (regardless of the reason for termination),
directly or indirectly employ or retain, solicit the employment or retention of,
or be associated with any entity that employs or retains or solicits the
employment or retention of, any person who was an employee of the Company or any
of its subsidiaries at any time during the twelve months preceding the
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termination of the Executive's employment. After termination of his employment,
the Executive may be associated with any entity that employs any former employee
of the Company whose employment terminated at least six months prior to
termination of the Executive's employment.
8.3 Injunction. The Executive acknowledges that the remedy at law for
breach of the provisions of sections 8.1 or 8.2 will be inadequate and that, in
addition to any other remedy the Company may have, it shall be entitled to an
injunction restraining any breach or threatened breach, without any bond or
other security being required and without the necessity of showing actual
damages. The provisions of section 10 shall not apply with respect to this
section 8.
9. Merger or Sale of Assets.
If the Company shall merge or consolidate with another corporation or shall
transfer all or substantially all of its assets, this agreement shall be
assigned to the successor in the merger or consolidation or the transferee of
the assets, the Company shall cause the successor or transferee to assume all of
the Company's obligations under this agreement, and the Executive shall
thereafter be employed by the successor or transferee in accordance with the
terms of this agreement. The Company's failure to obtain such assumption prior
to the effectiveness of any such transaction shall be a breach of this agreement
by the Company.
10. Arbitration.
Except as otherwise provided in section 8.3, any controversy or claim
arising out of, resulting from or relating to this agreement shall be settled
exclusively by arbitration conducted in New York, New York in accordance with
the Commercial Arbitration Rules of the American Arbitration Association (or
organization which is the successor thereto). Service of process or notice of
motion or other application in connection with any arbitration may be served by
the means by which notices are to be given under this agreement, provided that a
reasonable time for appearance is allowed. Any award in such arbitration may be
enforced on application of either party by the order or judgment of any Federal
or state court in the State of New York as the party making such application
shall elect. Each of the parties submits itself to the jurisdiction of any such
court and agrees that service of process on it in any such action, suit or
proceeding may be effected by the means by which notices are to be given to it
under this agreement. The fees and expenses of any arbitration (including
attorneys and experts fees and expenses and the additional expenses of
presenting proof) shall be borne by the non-prevailing party.
11. Miscellaneous.
11.1 Headings. The section headings of this agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this agreement.
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11.2 Notices. All notices and other communications under this agreement
shall be in writing and shall be deemed given when delivered personally or
mailed by registered mail, return receipt requested, to the parties at their
respective addresses set forth above (or to such other address as a party may
have specified by notice given to the other party pursuant to this provision).
11.3 Separability. The invalidity or unenforceability of any provision
of this agreement shall not affect the validity or enforceability of any other
provision of this agreement, which shall remain in full force and effect.
11.4 Waiver. Either party may waive compliance by the other party with
any provision of this agreement. The failure of a party to insist on strict
adherence to any term of this agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this agreement. No waiver of any
provision shall be construed as a waiver of any other provision. Any waiver must
be in writing.
11.5 Assignment. Neither party may assign any of its rights or delegate
any of its duties under this agreement (other than as contemplated by section 9
of this agreement) without the prior consent of the other and any assignment or
delegation in violation of this prohibition shall be void.
11.6 Governing Law. This agreement shall be governed by and in
accordance with the substantive law of the state of New York applicable to
agreements made and to be performed in New York.
11.7 Entire Agreement; Nor Oral Change. This agreement and the stock
option agreement being executed and delivered simultaneously with the execution
and delivery of this agreement contain, and are intended as, a complete
statement of all the terms of the arrangements between the parties, supersede
any previous agreements and understandings between the parties, and cannot be
changed or terminated orally.
YOUTHSTREAM MEDIA NETWORKS, INC.
By: /s/ XXXXXX XXXXX
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/s/ XXXXX X. XXXXXXXX
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Xxxxx X Xxxxxxxx
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