NON-QUALIFIED STOCK OPTION AGREEMENT
MEDIABAY, INC.
AGREEMENT made as of this 5th day of October 2004 (the "Grant Date")
between MediaBay, Inc. (the "Company"), a Florida corporation, having a
principal place of business in Boca Raton, Florida, and Xxxxxxx X. Xxxxxx (the
"Grantee") residing at 000 Xxx Xxxx Xxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000.
WHEREAS, the Company desires to grant to the Grantee a Non-Qualified Stock
Option to purchase Three Hundred Fifty Thousand (350,000) shares of its common
stock, no par value (the "Shares"), under and for the purposes of the 1999 Stock
Option Plan of the Company (the "Plan"), pursuant to the terms thereof;
WHEREAS, the Company and the Grantee understand and agree that unless
otherwise defined herein any terms used herein have the same meanings as in the
Plan.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. Grant of Option. The Company hereby grants to the Grantee the right and
option (the "Option") to purchase all or any part of an aggregate of Three
Hundred Fifty Thousand (350,000) shares of its common stock, no par value, on
the terms and conditions and subject to all the limitations set forth herein and
in the Plan, which is incorporated herein by reference. The Grantee acknowledges
receipt of a copy of the Plan.
2. Purchase Price. The purchase price of the Shares covered by the Option
shall be $0.60 per share.
3. Exercise of Option. The Option granted hereby shall be exercisable as
to (i) One Hundred Seventy Five Thousand (175,000) Shares commencing on October
5, 2005, and (ii) the remaining One Hundred Seventy Five Thousand (175,000)
Shares commencing on October 5, 2006.
4. Term of Option. The Option shall terminate on October 5, 2009, but
shall be subject to earlier termination as provided herein.
If the Grantee ceases to be employed by the Company for any reason other
than death, disability, termination of employment for "Cause" (as defined in the
Plan or in any employment agreement) or voluntary termination of employment, the
Option may be exercised within ninety (90) days after the date the Grantee
ceases to be an employee of the Company, or the originally prescribed terms of
the Option, whichever is earlier, but may not be exercised thereafter. In such
event, the Option shall be exercisable only to the extent that the right to
purchase Shares under the Plan has accrued and is in effect at the date of such
cessation of employment.
In the event the Grantee's employment is terminated by the Company for
"Cause" (as defined in the Plan), or voluntarily by the Grantee, the Grantee's
right to exercise any unexercised portion of this Option shall cease forthwith,
and this Option shall thereupon terminate.
In the event of Disability of the Grantee (as determined by the Board of
Directors of the Company or the Plan Committee of the Company, as the case may
be, and as to the fact and date of which the Grantee is notified by the Board or
that Committee, as the case may be, in writing), the Option shall be exercisable
within one (1) year after the date of such Disability or, if earlier, the term
originally prescribed by this Agreement. In such event, the Option shall be
exercisable to the extent that the right to purchase the Shares hereunder has
accrued on the date the Grantee becomes Disabled and is in effect as of such
determination date.
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In the event of the death of the Grantee while an employee of the Company
or within thirty (30) days after the termination of employment (other than
termination for Cause or without consent of the Company), the Option shall be
exercisable to the extent exercisable but not exercised as of the date of death
and in such event, the Option must be exercised, if at all, within one (1) year
after the date of death of the Grantee or, if earlier, within the originally
prescribed term of the Option.
5. Non-Assignability. The Option shall not be transferable by the Grantee
otherwise than by will or by the laws of descent and distribution and shall be
exercisable, during the Grantee's lifetime, only by the Grantee. The Option
shall not be assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) and shall not be subject to execution, attachment or
similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of the Option or of any rights granted hereunder contrary to
the provisions of this Section 5, or the levy of any attachment or similar
process upon the Option or such right, shall be null and void.
6. Exercise of Option and Issue of Shares. The Option may be exercised in
whole or in part (to the extent that it is exercisable in accordance with its
terms) by giving written notice to the Company, together with the tender of the
Option price. Such written notice shall be signed by the person exercising the
Option, shall state the number of Shares with respect to which the Option is
being exercised, shall contain any warranty required by Section 7 below and
shall otherwise comply with the terms and conditions of this Agreement and the
Plan. Except as specifically set forth herein, the holder acknowledges that any
income or other taxes due from him with respect to this Option or the Shares
issuable pursuant to this Option shall be the responsibility of the holder. The
holder of this Option shall have rights as a shareholder only with respect to
any Shares covered by the Option after due exercise of the Option and tender of
the full exercise price for the Shares being purchased pursuant to such
exercise.
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7. Purchase for Investment; Restrictions on Transfer. Unless the offering
and sale of the Shares to be issued upon the particular exercise of the Option
shall have been effectively registered under the Securities Act of 1933, as now
in force or hereafter amended, or any successor legislation (the "Act"), the
Company shall be under no obligation to issue the Shares covered by such
exercise unless and until the following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are acquiring such
Shares for his or her own account, for investment and not with a view to, or for
sale in connection with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s) evidencing
their option Shares issued pursuant to such exercise:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"). Such shares may not be
sold, transferred or otherwise disposed of unless they have first been
registered under the Act or, unless, in the opinion of counsel
satisfactory to the Company's counsel, such registration is not required."
(b) The Company shall have received an opinion of its counsel that
the Shares may be issued upon such particular exercise in compliance with the
Act without registration thereunder. Without limiting the generality of the
foregoing, the Company may delay issuance of the Shares until completion of any
action or obtaining of any consent, which the Company deems necessary under any
applicable law (including without limitation state securities or "blue sky"
laws).
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(c) The Grantee agrees that in the event of a public offering of the
Company's securities, the Grantee will not sell, contract to sell, sell or grant
any option, right, warrant or option to purchase, purchase any option or
contract to sell, pledge, hypothecate or otherwise transfer or dispose of (each,
a "Transfer") any of the Shares during the Lock-Up Period (as defined below).
The "Lock-Up Period" means the period commencing on the date that the
registration statement relating to an underwritten public offering is filed with
the Securities and Exchange Commission (the "SEC") and ending on the date agreed
to by the Underwriter of such offering and the Company with respect to the
Shares, but in no event later than 120 days following the date such registration
statement is declared effective by the SEC. The Grantee acknowledges that upon
exercise of this Option, the Company will instruct its transfer agent to place
an appropriate legend on the certificate representing the Shares. The Grantee
agrees to execute a lock-up agreement as aforesaid with the Company and/or any
such underwriter, if requested.
8. Notices. Any notices required or permitted by the terms of this
Agreement or the Plan shall be given by registered or certified mail, return
receipt requested, addressed as follows:
To the Company: MediaBay, Inc.
0 Xxxxxxxxx Xxxxxx - Xxxxx 000
Xxxxx Xxxxxx, XX 00000
To the Grantee: Xxxxxxx X. Xxxxxx
000 Xxx Xxxx Xxxx
Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given when
mailed in accordance with the foregoing provisions. Either party hereto may
change the address of which notices shall be given by providing the other party
hereto with written notice of such change.
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9. Governing Law. This Agreement shall be construed and enforced in
accordance with the law of the State of Florida.
10. Benefit of Agreement. This Agreement shall be for the benefit of and
shall be binding upon the heirs, executors, administrators and successors of the
parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and the Grantee has hereunto set his hand, all
as of the day and year first above written.
MEDIABAY, INC.
By: /s/ Xxxx Xxxx
---------------------------------------------
Name: Xxxx Xxxx
Title: Vice Chairman and Chief Financial
Officer
/s/ Xxxxxxx X. Xxxxxx
-------------------------------------------------
Xxxxxxx X. Xxxxxx, Grantee
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