Ex-10.32
AGREEMENT
This letter agreement confirms the agreement and understanding of
MediaBay, Inc. ("MBay") and Xxxxxx Xxxxxxx ("NH") relating to NH's
agreement to permit Xxxx Xxxx to serve as Co-Chairman of MBay and for NH to
relinquish certain duties as a result thereof. In addition, NH agrees to
resign as Chairman of MBay upon either the lenders under XXxx's existing
credit agreement consenting to NH's resignation as Chairman or MBay's
repayment of all outstanding obligations under the credit agreement. As
consideration for NH's agreement to resign as Chairman in the manner
contemplated above, permit Xxxx Xxxx to serve as Chairman of MBay,
relinquish certain duties and facilitate a transition of MBay's management,
XXxx agrees as follows:
(a) The Company shall amend its Bylaws in the form attached as
Exhibit A hereto.
(b) For as long as NH and/or his affiliates and family members
continue to beneficially own at least 20% of the outstanding shares of
common stock of the Company (calculated in accordance with Rule 13d-3(d)(i)
under the Securities Exchange Act of 1934): (i) NH will have the right to
designate up to four (4) nominees for election as members of the Company's
Board of Directors, and the Company shall use its best efforts to cause
such nominees to be elected (including recommending that the Company's
shareholders vote for such nominees and, at NH's request, promptly filling
a vacancy created by the resignation of a director nominated by NH) and
continued in office and (ii) the Company will not increase the size of its
Board of Directors to more than seven (7) members without the prior written
consent of NH, (iii) the Company's Board of Directors will not (and will
not recommend to the Company's shareholders to) amend Section 5 of Article
VII of the By-laws or the supermajority voting provision set forth in
Article XXII of the By-laws relating to Section 5 of Article VII without
the prior written consent of NH and (iv) the Company will not dismiss
counsel currently serving as corporate and securities counsel to the
Company ("Company Counsel") or employ counsel (other than Company Counsel)
for any corporate or securities matters. As long as the Company's Board of
Directors is classified into more than one class of directors, NH's
nominees shall be nominated as members of different class of directors.
NH's initial nominees shall be NH, Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx.
(c) The Company shall amend NH Option Agreements (defined below) by
deleting the phrase ", but subject to earlier termination as provided
herein or in the Plan" at the end of the sentence in the first paragraph of
Section 4 of each NH Option Agreement and deleting the second through fifth
paragraphs of Section 4 of each NH Option Agreement.
The term NH Option Agreement means:
(ii) Option Agreement dated as of February 9, 1998, as amended
on June 16, 1998, relating to the grant of options to
purchase 250,000 shares of Common Stock at an exercise
price of $3.50 per share.
(iii) Option Agreement dated as of September 10, 1998 relating
to the grant of options to purchase 750,000 shares of
Common Stock at an exercise price of $5.25 per share.
(iv) Option Agreement dated as of May 30, 2000 relating to the
grant of options to purchase 1,500,000 shares of Common
Stock at an exercise price of $4.00 per share.
MEDIABAY, INC.
By: /s/ Xxxx X. Xxxx
------------------------
Xxxx X. Xxxx,
Chief Financial Officer
AGREED AND ACCEPTED
/s/ Xxxxxx Xxxxxxx
---------------------------------
Xxxxxx Xxxxxxx, individually
SCHEDULE A
[INSERT AT END OF ARTICLE VII]
5. The following actions shall require the affirmative vote of at least
75% of the number of directors, in addition to any other approvals
which the Board may require:
(i) the execution of, amendment to, or modification of, an
employment agreement with any Chairman, Chief Executive
Officer, President, Chief Financial Officer or Executive Vice
President, Senior Vice President, Vice President (a "Listed
Officer") or any other agreement with a Listed Officer
compensating such Listed Officer for services rendered to the
Corporation or any affiliate of the Corporation; or
(ii) the grant of any stock option, restricted stock award, deferred
stock award or other stock-based award to any Listed Officer.
In the case of any vote by the Board of Directors in connection with
an action under clause (i) or (ii) above, the vote of the Listed
Officer shall not be counted as an affirmative vote.
[INSERT AT END OF ARTICLE XXII]
Notwithstanding the foregoing, the provisions of Section 5 of Article VII
may be altered, amended or repealed only by the affirmative vote of at
least 75% of the number of directors or by the majority vote of the
shareholders; and the supermajority of this sentence requirement with
respect to the Board of Directors may be altered, amended or repealed only
by the affirmative vote of at least 75% of the number of directors by the
majority vote of the shareholders.
