YOUTHSTREAM MEDIA NETWORKS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT- 75,000 Shares
July 2, 2001
Youthstream Media Networks, Inc., a Delaware corporation with its principal
office at 28 West 23rd Street, 6th Floor, New York, N.Y. 10010 (the "Company"),
hereby grants to Xxxxx X. Xxxxxxxx, residing at 00 Xxxx 00xx Xxxxxx, Xxx. 00X,
Xxx Xxxx, X.X. 00000 (the "Executive"), an option under the Company's 2000 Stock
Incentive Plan (the "Plan") to purchase up to 75,000 shares of the Company's
common stock, par value $.01 per share, at the price of $1.55 per share, on the
terms and conditions set forth in this agreement and in the Plan. Defined terms
in the Plan mean the same in this agreement.
The Company and the Executive intend this not to be an incentive stock
option within the meaning of section 422 of the Internal Revenue Code.
1. VESTING.
(a) This option shall become exercisable (i.e., shall vest) on June 30,
2007 with respect to all of the shares subject to the option, provided that the
Executive is employed by the Company or any Affiliate on that date, but if the
consolidated net revenues of the Company and its subsidiaries for the fiscal
year ending June 30, 2002 equal or exceed $40 million (excluding revenues with
respect to any business or operations acquired by the Company from a third party
at any time after the date of this agreement), this option shall become
exercisable on September 30, 2002 with respect to all of the shares subject to
the option, provided that the Executive is employed by the Company or any
Affiliate on June 30, 2002. If this option is not vested at the time of
termination of the Executive's employment by the Company and its Affiliates,
upon termination of the Executive's employment (regardless of the reason for
termination), the option shall be non-exercisable and shall be canceled. There
shall be no proportionate or partial vesting with respect to periods prior to
termination of employment. This option shall expire on, and may not be exercised
after, June 1, 2011 ("Termination Date").
(b) If there is any dispute with respect to the amount of the consolidated
net revenues of the Company and its subsidiaries for the fiscal year ending June
30, 2002 (including, but not limited to, a dispute regarding the allocation of
revenues with respect to any business or operations acquired by the Company from
a third party after the date of this agreement), the dispute shall be submitted
to the Company's independent certified public accountants and their
determination of the matter in dispute shall be final and binding on the
parties. The Company shall bear the fees of the accountants in connection with
their determination.
2. EXERCISE.
(a) This option shall be exercisable (to the extent vested) during the
continuance of the Executive's employment and shall be exercisable after
termination of the Executive's employment only as follows:
(i) if the Executive's employment by the Company and its Affiliates is
terminated for any reason other than termination by the Company for cause (as
defined in the Employment Agreement) or termination by the Executive in breach
of the Employment Agreement, this option may be exercised by the Executive (or,
following the Executive's death, by the person or persons to whom his rights
under this option pass by will or by the laws of descent and distribution), to
the extent that it was exercisable at the date of termination of employment,
within twenty four months after the effective date of termination of employment,
but not later than the Termination Date; and
(ii) if the Executive's employment is terminated by the Company for
cause or is terminated by the Executive in breach of the Employment Agreement,
this option and all rights under it, to the extent those rights have not been
exercised, shall thereupon terminate. The determination by the Company's board
of directors of the reason for termination of the Executive's employment shall
be binding and conclusive on the Executive.
(b) This option may be exercised, in whole or in part, at any time or from
time to time prior to expiration of the time for exercise of the option as
provided in section 2(a). The option may be exercised only in accordance with
the procedure specified in section 6.3(d) of the Plan. If a registration
statement under the Securities Act of 1933 is not then in effect with respect to
the shares subject to the option, upon exercise of the option the Executive must
furnish the Company with such representations and agreements as the Company may
require to prevent disposition of the shares in violation of the Securities Act
of 1933; in that event, the Company may place upon any stock certificate an
appropriate legend referring to the restriction on disposition under the
Securities Act of 1933.
3. Restriction on Transfer of Option. Except as otherwise provided below,
this option may not be transferred other than by will or by the laws of descent
and distribution and, during the lifetime of the Executive, may be exercised
only by him. In addition, this option may not be assigned, negotiated, pledged
or hypothecated in any way and shall not be subject to execution, attachment or
similar process. Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate the option or in the event of any levy upon the option by reason of
any execution, attachment or similar process contrary to the provisions of this
option agreement and the Plan, the option shall immediately become null and
void.
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4. CERTAIN RIGHTS NOT CONFERRED BY OPTION.
(a) Nothing in this agreement or in the Plan shall (i) give the Executive
any right to continue in the employ of the Company or any Affiliate or interfere
in any way with the right of the Company or any Affiliate to terminate the
Executive's employment at any time, (ii) limit the right of the Company's board
of directors to manage the Company's business and affairs (including the
authorization of the issuance of additional shares and the determination of the
nature and amount of liabilities and obligations incurred by the Company or its
Affiliates) without regard for the effect of any action upon the Executive or
upon the value of the shares subject to, or acquired upon exercise of, this
option, or (iii) give the Executive any claim against the Company or any of its
officers or directors with respect to any action or omission relating to the
Company's business or affairs, whether or not that action or omission affects
the value of the shares subject to, or acquired upon exercise of, this option.
(b) The Executive shall not, by virtue of holding this option, be entitled
to any rights of a stockholder in the Company. The Executive shall not be
considered a record holder of any shares purchased upon exercise of the option
until the date on which he is actually recorded as a holder of the shares upon
the Company's stock records.
5. EXPENSES. The Company shall pay all fees and expenses necessarily
incurred by the Company in connection with the issuance of the Company's shares
pursuant to this option. If the Company shall be required to withhold any
amounts by reason of any federal, state or local tax rules or regulations in
respect of the issuance of shares pursuant to the exercise of this option, the
Executive shall make available to the Company sufficient funds to meet the
withholding requirements and the Company shall be entitled to take and authorize
any steps it deems advisable in order to have those funds made available to the
Company out of any funds or property due or to become due to the Executive.
6. ACCEPTANCE OF PROVISIONS OF PLAN. This agreement is subject to all of
the provisions of the Plan, and the Executive agrees to, and shall be bound by,
all of the terms and conditions of the Plan. The Executive acknowledges having
received and read a copy of the Plan.
7. NOTICES. Any notice or other communication under this agreement shall be
in writing and shall be considered given when delivered personally or three days
after being mailed by registered mail, return receipt requested, to the parties
at their respective addresses set forth above (or at such address as a party may
specify by notice to the other). Any notice to the Company shall be addressed to
the attention of the Company's Chief Financial Officer.
8. COMPLETE AGREEMENT; GOVERNING LAW; AMENDMENT. This agreement, the
Employment Agreement and the Plan contain a complete statement of all of the
arrangements between the parties with respect to the option provided for in this
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agreement. This agreement shall be governed by and construed in accordance with
the law of the State of New York applicable to agreements made and to be
performed in New York and cannot be changed or terminated orally.
9. HEADINGS. The headings in this agreement are solely for convenience of
reference and shall not affect its interpretation.
Youthstream Media Networks, Inc.
By: /s/ XXXXXX X. XXXXX
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AGREED:
/s/ XXXXX X. XXXXXXXX
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Xxxxx X. Xxxxxxxx
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