Dated as of March 21, 2005
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:
Reference is made to that certain Securities Purchase Agreement dated
October 11, 2004 by and between MediaBay, Inc. (the "Company") and each of the
purchasers set forth on Schedule A thereto (each, a "Purchaser", and
collectively, the "Purchasers"), as amended on December 14, 2004 and February 8,
2005 (as amended, the "October Securities Purchase Agreement"). Capitalized
terms used but not otherwise defined herein shall have the meaning ascribed to
such term in the October Securities Purchase Agreement.
This letter agreement confirms the agreement of the parties that the
Purchasers shall return (i) an aggregate 1,800,000 shares of Common Stock (the
"Shares") and (ii) Warrants (the "Warrants") to purchase 400,000 shares of
Common Stock at an exercise price of $0.83 per share during the five (5) year
period commencing on October 11, 2004, issued pursuant to the October Securities
Purchase Agreement, and in lieu thereof shall receive $900,000 of securities to
be issued pursuant to that certain Securities Purchase Agreement dated the date
hereof (the "Preferred Stock Purchase Agreement"), by and among the Company and
each if the entities whose names appear on the signature pages thereof (the
"Investors"), a copy of which is attached hereto as Exhibit A.
1. Return of Shares and Warrants. On the date hereof, the Purchasers shall
return the stock certificates (the "Certificates") representing the Shares and
Warrants, which certificates shall have attached to them stock powers endorsed
in blank for transfer. Upon receipt of the Certificates, the Company shall (and
shall cause its transfer agent to) cancel them on its books and records.
2. Issuance of New Securities. In consideration for returning the Shares and
Warrants to the Company pursuant to Section 1, the Company shall credit the
Purchasers $900,000 (pro rata based on their initial investment), which shall be
applied towards the purchase of $900,000 of the Securities (as defined in the
Preferred Stock Purchase Agreement) pursuant to the Preferred Stock Purchase
Agreement. On the date hereof, the Purchasers shall execute and deliver to the
Company a signature page to the Preferred Stock Purchase Agreement reflecting
the investment set forth on Exhibit B and shall have all rights and obligations
of an Investor under the Preferred Stock Agreement.
3. December Warrants and January Shares. The Purchasers shall not return to the
Company the December Warrants or January Shares issued pursuant to the
amendments to the October Securities Purchase Agreement. The Company shall
register such January Shares and the shares underlying the December Warrants
with the securities registered pursuant to that certain Registration Rights
Agreement dated the date hereof by and between the Company and the Investors.
4. Miscellaneous.
4.1 All communications hereunder will be in writing and, except as
otherwise provided, will be delivered at, or mailed by certified mail, return
receipt requested, or telegraphed to, the following addresses: if to the
Purchasers, addressed to them c/o Forest Hill Capital, LLC, 000 Xxxxxx Xxxxxx
Xxxxx - Xxxxx 000, Xxxxxx Xxxx, Xxxxxxxx 00000, Attention: Xxxx X. Xxx, Manager;
if to the Company to: MediaBay, Inc., 0 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx
Xxxxxx 00000, Attention: Xx. Xxxx X. Xxxx, Chief Financial Officer, with a copy
to Blank Rome, LLP, Attention: Xxxxxx X. Xxxxxxx, Esq., 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
4.2 This Agreement shall be deemed to have been made and delivered in New
York City and shall be governed as to validity, interpretation, construction,
effect and in all other respects by the internal laws of the State of New York.
Each Purchaser and the Company (i) agrees that any legal suit, action or
proceeding arising out of or relating to this Agreement, shall be instituted
exclusively in New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, unless such
court shall have refused such jurisdiction, (ii) waives any objection which the
Purchaser or the Company may have now or hereafter to the venue of any such
suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction
of the New York State Supreme Court, County of New York, and the United States
District Court for the Southern District of New York in any such suit, action or
proceeding. Each Purchaser and the Company further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and
agrees that service of process upon the Purchaser or the Company, as the case
may be, mailed by certified mail to such Purchaser's address or the Company's
address, as the case may be, set forth in Section 4.1 of this Agreement shall be
deemed in every respect effective service of process upon such Purchaser or the
Company, as the case may be, in any such suit, action or proceeding.
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4.3 Each party hereto agrees to use its reasonable best efforts to
take any action which may be necessary or appropriate or reasonably requested by
the other party hereto in order to effectuate or implement the provisions of
this Agreement.
4.4 The rights and obligations of the parties under this Agreement
shall bind and inure to the benefit of the parties and their respective
successors and assigns.
4.5 Each Purchaser understands that the Company intends to issue a
press release regarding the terms of this Agreement as soon as practical after
the Closing Date and consents to the Company's issuance of a press release
relating to this Agreement; provided that the Purchasers' consent shall be
required for the use of their names or the name of their investment advisor.
4.6 This Agreement may be executed in separate counterparts, all of
which shall constitute one agreement.
4.7 All notices required or permitted to be given hereunder shall be
personally delivered, sent by courier service or mailed by certified or
registered mail, postage prepaid, to the respective parties at the addresses set
forth herein and shall be deemed given upon receipt.
- SIGNATURE PAGE FOLLOWS -
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
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
COMPANY:
MEDIABAY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
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EXHIBIT A
Preferred Stock Purchase Agreement
See Exhibit No. 10.1.
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EXHIBIT B
Purchase Purchase Price
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Forest Hill Select Offshore Ltd. $ 20,000
Forest Hill Select Fund, L.P. $700,000
Lone Oak Partners L.P. $180,000
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