Exhibit 10.13
Forest Hill Select Offshore, Ltd.
Forest Hill Select Fund, L.P.
Lone Oak Partners, L.P.
c/o Forest Hill Capital, LLC
000 Xxxxxx Xxxxxx Xxxxx - Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. Xxx, Manager
Gentlemen:
This letter agreement confirms the agreement of the parties to amend
Section 4 of the Securities Purchase Agreement dated as of October 11, 2004 (the
"Agreement"), by and among MediaBay, Inc. (the "Company") and the Purchasers who
are signatories thereto and hereto as amended by letter agreement dated as of
December 14, 2004, by replacing "January 15, 2005" with "May 1, 2005".
As consideration for such amendment, the parties agree as follows:
1. Company shall issue to the Purchasers, in accordance with Schedule A
hereto, an aggregate number of shares of Common Stock (the "January Shares")
determined by dividing $100,000 by the last sale price of the Common Stock on
the last trading day immediately prior to the date hereof (the "Current Market
Price").
2. If the last sale price of the Common Stock is below $0.75 on the date
on which a registration statement (the "Registration Statement") covering the
Registrable Securities is declared effective by the Securities and Exchange
Commission (the "Effective Date"), the Company shall make a payment to the
Purchasers (the "Payment") in an aggregate amount equal to (i) $250,000 (pro
rata in proportion to the number of Shares initially purchased by them pursuant
to the Agreement) less (ii) the value of the January Shares on the effective
date based on the last sale price of the Common Stock on the Effective Date (the
"Effective Date Price"); such payment to be made in cash or in additional shares
of Common stock, at the Purchasers' option, provided, that the Company shall be
entitled to pay cash to the extent that any such issuance would cause the
Purchasers to become 10% or greater securityholders of the Company (as
determined in accordance with Rule 13(d)-1 under the Securities Exchange Act of
1934). Additionally, (i) the Company's obligation to make any such payment in
cash would be subject to the Company obtaining all necessary Consents (as
defined below) and (ii) to the extent the Company is unable to obtain any
Consent and is prohibited from making such payment in cash, the Purchasers shall
accept payment thorough the issuance of shares of Common Stock and the maximum
number of shares of Common Stock which the Company shall issue, when added to
the January Shares (in full satisfaction of its obligation) is 1,800,000 shares.
3. If, at any time prior to the Effective Date, the last sale price of the
Common Stock is above $4.00 per share (the "Target Price"), each Purchaser shall
have the right (the "Put Right"), exercisable in writing within five business
days after the first trading day on which the last sale price of the Common
Stock is above the Target Price, to require the Company to purchase the number
of its Shares set forth on Schedule B hereto at a price of $3.00 per share (the
"Put Price"), subject to the Company obtaining the Required Consents. If the
Company notifies the Purchasers that it must obtain one or more Consent, the Put
Right shall not be exercisable until such time as the Company obtains all such
Consents (and the Company shall use commercially reasonable efforts to obtain
the Consents) and shall be exercisable at the Put Price for a period of five
business days after the Company notifies the Purchasers that all Consents have
been obtained. Upon obtaining all Consents, the Company shall pay the Put Price
on the fifth business day thereafter (and if no Consents are required to be
obtained, after receipt of written notice of a Purchase's exercise of the Put
Right); provided, however, if the Company notifies the Purchasers in writing,
that it does not have adequate cash available to make such payment or, in its
reasonable judgment, if the payment was to be made at such time the Company
would not have adequate available cash for its ongoing operations over the
following six months, the Company may pay the Purchase Price in twelve equal
monthly installments, together with interest at the rate of 12% per annum.
4. The term "Consent" means any consent, approval, vote or waiver required
by the Company (i) under its existing credit agreement and outstanding
indebtedness, each as in effect as of the date hereof, and (ii) from the holders
of the existing series of preferred stock of the Company to (i) in the case of
paragraph 2 above, to make the Payment in cash or (ii) in the case of paragraph
3 above, to repurchase Shares and pay the Put Price therefore.
Please acknowledge your agreement to the foregoing by signing below.
MEDIABAY, INC.
By: /s/ Xxxx X. Xxxx
------------------------------------------------
Name: Xxxx X. Xxxx
Title: Vice Chairman and Chief Financial Officer
PURCHASERS:
FOREST HILL SELECT OFFSHORE, LTD.
By: /s/ Xxxx X. Xxx
------------------
Name: Xxxx X. Xxx
Title: Manager
FOREST HILL SELECT FUND, L.P.
By: /s/ Xxxx X. Xxx
------------------
Name: Xxxx X. Xxx
Title: Manager
LONE OAK PARTNERS L.P.
By: /s/ Xxxx X. Xxx
------------------
Name: Xxxx X. Xxx
Title: Manager
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SCHEDULE A
TO
LETTER AGREEMENT
Purchaser Number of Shares
----------------
Forest Hill Select Offshore Ltd. 2,645
Forest Hill Select Fund, L.P. 92,593
Lone Oak Partners L.P. 23,810
-3-
SCHEDULE B
TO
LETTER AGREEMENT
Purchaser Number of Shares Subject to Put Right
-------------------------------------
Forest Hill Select Offshore Ltd. 4,444
Forest Hill Select Fund, L.P. 155,556
Lone Oak Partners L.P. 40,000
-4-
