EXHIBIT 10.34
SETTLEMENT AGREEMENT
This agreement ("Agreement") is made this 7th day of November 2003 by
and among MediaBay, Inc. (the "Company") and Xxxxxx Xxxxxxx ("Xxxxxxx")
(collectively, the "Parties").
WHEREAS:
A. The Company has made a claim (the "Claim") that it has a right under
Section 16(b) of the Securities Exchange Act of 1934 to recover from Xxxxxxx
profits allegedly realized by him as a result of various transactions by
Xxxxxxx, directly and indirectly, including various transactions engaged in by
third parties which are attributable to Xxxxxxx for Section 16(b) purposes,
occurring within less than six months of each other that involved the securities
of the Company.
X. Xxxxxxx has raised certain defenses that raise substantial doubt
about the possibility of a full recovery of the Claim.
C. The exact amount of Xxxxxxx'x liability under Section 16(b) is not
possible to determine because the Parties are unable to obtain information as to
certain of the transactions engaged in by third parties attributable for Xxxxxxx
for Section 16(b) purposes, however, such uncertainties have been resolved by
assuming date and price information that creates the highest possible liability
for Xxxxxxx.
D. The Parties desire to avoid the uncertainties, burdens, risks,
expenses and timing of litigating the Claim and therefore have agreed to resolve
the Claim on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and intending to be legally bound, the Parties, each of which represents
and warrants that it is authorized to execute this Agreement, agree as follows:
1. Xxxxxxx agrees to pay to the Company, in full satisfaction of the
Claim, the sum of $1,742,149 (the "Settlement Amount"), by the delivering to the
Company for cancellation within ten (10) days of the date of this Agreement,
shares of Common Stock of the Company (the "Shares") and/or warrants ("the
Warrants") to purchase shares of Common Stock of the Company with an aggregate
value equal to the Settlement Amount. The value of each Share delivered under
this Agreement shall be equal to the last sale price of the Company's Common
Stock on the trading day immediately prior to the date on which such Shares are
delivered to the Company (the "Market Price"). The value of any Warrant
delivered under this Agreement shall be equal to the Market Price less the
exercise price of the Warrant. The calculation of the Settlement Amount is set
forth on Exhibit A hereto.
2. The Parties agree that the Settlement Amount represents the full
amount of the Claim, and that the receipt and acceptance by the Company of the
Settlement Amount from Xxxxxxx represents full satisfaction of the Claim and all
fees, costs, and expenses relating to the Claim (including the Company's legal
costs).
3. The Parties acknowledge that payment of the Settlement Amount shall
be treated as a disgorgement of profits under Section 16(b) and that any legal
or other expenses that may be incurred by Xxxxxxx in defending against a claim
by a shareholder of the Company that additional amounts are owed by him under
Section 16(b) in connection with the transactions to which this Settlement
Agreement relates shall be the sole responsibility of Xxxxxxx and not
reimbursable by the Company.
4. The Parties, including their attorneys and advisors, shall maintain
in strict confidence this Agreement and all information relating thereto, except
to the extent disclosure is (i) required by law, (ii) necessary to inform a
shareholder who has asked the Company to recover profits from Xxxxxxx under
Section 16(b), or (iii) mutually agreed to by the parties.
5. This Agreement represents the entire agreement between the Parties
with respect to the subject matter hereof and supersedes all prior agreements,
written or oral.
6. This Agreement shall inure to the benefit of and be enforceable by
and against the Parties and each of their respective successors and assigns.
7. This Agreement may be executed by the parties in facsimile
transmission of signatures in counterparts, all of which taken together shall
constitute an original.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed on the date first set forth above.
MEDIABAY, INC.
By: /s/ Xxxx X. Xxxx
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Name: Xxxx X. Xxxx
Title: Executive Vice President and
Chief Financial Officer
/s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
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