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                                                                   EXHIBIT 10.34

MILBERG WEISS BERSHAD
  HYNES & LERACH LLP
WILLIAM S. LERACH (68581)
KEITH F. PARK (54275)
TRAVIS E. DOWNS, III (148274)
AMBER L. ECK (177882)
600 WEST BROADWAY, SUITE 1800
SAN DIEGO, CA  92101
TELEPHONE:  619/231-1058

JEFFREY & DREHER, LLP
ROBERT SCOTT DREHER (120527)
225 BROADWAY, 19TH FLOOR
SAN DIEGO, CA  92101
TELEPHONE:  619/230-8828

CO-LEAD COUNSEL FOR LEAD PLAINTIFFS


                          UNITED STATES DISTRICT COURT

                         SOUTHERN DISTRICT OF CALIFORNIA


---------------------------------
IN RE MP3.COM, INC. SECURITIES   )   MASTER FILE NO.
LITIGATION                       )     00-CV-1873-K(NLS)
                                 )
                                 )   STIPULATION OF SETTLEMENT
THIS DOCUMENT RELATES TO:        )
                                 )
        ALL ACTIONS.             )
                                 )
                                 )



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        THIS STIPULATION OF SETTLEMENT DATED AS OF MARCH 20, 2001 (THE
"STIPULATION"), IS MADE AND ENTERED INTO BY AND AMONG THE FOLLOWING SETTLING
PARTIES (AS DEFINED FURTHER IN SECTION IV HEREOF): (i) THE REPRESENTATIVE
PLAINTIFFS (ON BEHALF OF THEMSELVES AND EACH OF THE CLASS MEMBERS), BY AND
THROUGH THEIR COUNSEL OF RECORD IN THE ACTIONS; AND (ii) THE DEFENDANTS
IDENTIFIED BELOW, BY AND THROUGH THEIR COUNSEL OF RECORD IN THE ACTIONS. THE
STIPULATION IS INTENDED BY THE SETTLING PARTIES TO FULLY, FINALLY AND FOREVER
RESOLVE, DISCHARGE AND SETTLE THE RELEASED CLAIMS (AS DEFINED IN P. 1.16), UPON
AND SUBJECT TO THE TERMS AND CONDITIONS HEREOF.

1.      THE LITIGATION


        On and after September 19, 2000, actions were filed in the United States
District Court for the Southern District of California (the "Court") as
securities class actions on behalf of persons who purchased the common stock of
MP3.com, Inc. ("MP3.com").

        By Order dated October 31, 2000, these actions were consolidated for all
purposes as In re MP3.com, Inc. Securities Litigation, Master File No.
00-CV-1873-K(NLS) (the "Litigation").

        The complaints allege violations of Sections 10(b), 20(a) and 20A of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The
Litigation is brought on behalf of a class consisting of all persons who
purchased the common stock of MP3.com between January 13, 2000 and September 7,
2000.



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        On or after September 14, 2000, derivative actions were filed in the
Superior Court of the State of California for the County of San Diego on behalf
of MP3.com. These actions (the "Derivative Actions") were consolidated by Order
dated November 15, 2000 under the caption Larret v. Robertson, et al., Lead Case
No. GIC 754696.

        The Litigation and the Derivative Actions are hereinafter referred to
collectively as the "Actions."

2.      DEFENDANTS' DENIALS OF WRONGDOING AND LIABILITY


        The Defendants have denied and continue to deny each and all of the
claims and contentions alleged by the Representative Plaintiffs in the
Litigation. The Defendants expressly have denied and continue to deny all
charges of wrongdoing or liability against them arising out of any of the
conduct, statements, acts or omissions alleged, or that could have been alleged,
in the Litigation. The Defendants also have denied and continue to deny, inter
alia, the allegations that the Representative Plaintiffs or the Class Members
have suffered damage, that the price of MP3.com stock was artificially inflated
by reasons of alleged misrepresentations, non-disclosures or otherwise, or that
the Representative Plaintiffs or the Class were harmed by the conduct alleged in
the Litigation.

        Nonetheless, the Defendants have concluded that further conduct of the
Litigation would be protracted and expensive, and that it is desirable that the
Litigation be fully and finally settled in the manner and upon the terms and
conditions set forth



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in this Stipulation. The Defendants also have taken into account the
uncertainty and risks inherent in any litigation, especially in complex cases
like the Litigation. The Defendants have, therefore, determined that it is
desirable and beneficial that the Litigation be settled in the manner and upon
the terms and conditions set forth in this Stipulation.

3.      CLAIMS OF THE REPRESENTATIVE PLAINTIFFS AND BENEFITS OF SETTLEMENT


        The Representative Plaintiffs believe that the claims asserted in the
Litigation have merit. However, counsel for the Representative Plaintiffs
recognize and acknowledge the expense and length of continued proceedings
necessary to prosecute the Litigation against the Defendants through trial and
through appeals. Counsel for the Representative Plaintiffs also have taken into
account the uncertain outcome and the risk of any litigation, especially in
complex actions such as the Litigation, as well as the difficulties and delays
inherent in such litigation. Counsel for the Representative Plaintiffs also are
mindful of the inherent problems of proof under and possible defenses to the
violations asserted in the Litigation. Counsel for the Representative Plaintiffs
believe that the settlement set forth in this Stipulation confers substantial
benefits upon the Class. Based on their evaluation, counsel for the
Representative Plaintiffs have determined that the settlement set forth in the
Stipulation is in the best interests of the Representative Plaintiffs and the
Class.



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4.      TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT


        NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the
Representative Plaintiffs (for themselves and the Class Members) and the
Defendants, by and through their respective counsel or attorneys of record,
that, subject to the approval of the Court, the Litigation and the Released
Claims shall be finally and fully compromised, settled and released, and the
Litigation shall be dismissed with prejudice, as to all Settling Parties, upon
and subject to the terms and conditions of the Stipulation, as follows:

        1.      Definitions


        As used in the Stipulation the following terms have the meanings
        specified below:

        0.1 "Authorized Claimant" means any Class Member whose claim for
recovery has been allowed pursuant to the terms of the Stipulation.

        0.2 "Claimant" means any Class Member who files a Proof of Claim in such
form and manner, and within such time, as the Court shall prescribe.

        0.3 "Claims Administrator" means the firm of Gilardi & Co. LLC.

        0.4 "Class" means a class consisting of all Persons (other than those
Persons who timely and validly request exclusion from the Class) who purchased
the common stock of MP3.com during the



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period January 13, 2000 through September 7, 2000. Excluded from the Class are
Defendants and the Released Persons ("Excluded Persons"), members of the
immediate families of the Excluded Persons, any entity in which any Excluded
Person has or had a controlling interest, present or former directors and
officers of MP3.com, and the legal representatives, heirs, successors, or
assigns of any such Excluded Person or entity.

        0.5 "Class Period" means the period commencing on January 13, 2000
through and including September 7, 2000.

        0.6 "Class Member" or "Member of the Class" mean a Person who falls
within the definition of the Class as set forth in P. 1.4 of the Stipulation.

        0.7 "Defendants" means MP3.com, Inc., and any of its subsidiaries,
Michael L. Robertson, Robin D. Richards and Paul H. Ouyang.

        0.8 "Effective Date" means the first date by which all of the events and
conditions specified in P. 8.1 of the Stipulation have been met and have
occurred.

        0.9 "Escrow Agent" means the law firm of Milberg Weiss Bershad Hynes &
Lerach LLP or its successor(s). 0.10 "Final" means: (a) the date of final
affirmance on an appeal of the Judgment, the expiration of the time for a
petition for or a denial of a writ of certiorari to review the Judgment and, if
certiorari is granted, the date of final affirmance of the Judgment following
review pursuant to that grant; or (b) the date of final dismissal of any appeal
from the Judgment or the final



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dismissal of any proceeding on certiorari to review the Judgment; or (c) if no
appeal is filed, the expiration date of the time for the filing or noticing of
any appeal from the Court's Judgment approving the Stipulation substantially in
the form of Exhibit B attached hereto; i.e., thirty (30) days after entry of the
Judgment. Any proceeding or order, or any appeal or petition for a writ of
certiorari pertaining solely to any plan of allocation and/or application for
attorneys' fees or expenses, shall not in any way delay or preclude the Judgment
from becoming Final.

        0.11 "Judgment" means the judgment to be rendered by the Court,
substantially in the form attached hereto as Exhibit B.

        0.12 "Person" means an individual, corporation, limited liability
corporation, professional corporation, limited liability partnership,
partnership, limited partnership, association, joint stock company, estate,
legal representative, trust, unincorporated association, government or any
political subdivision or agency thereof, and any business or legal entity and
their spouses, heirs, predecessors, successors, representatives, or assignees.

        0.13 "Plaintiffs' Settlement Counsel" means Co-Lead Counsel for
plaintiffs in the Litigation: Milberg Weiss Bershad Hynes & Lerach LLP, William
S. Lerach, Keith F. Park, Travis E. Downs, III, 600 West Broadway, Suite 1800,
San Diego, California, 92101-5050, Telephone (619) 231-1058; and Jeffrey &
Dreher, Scott Dreher, 225 Broadway, 19th Floor, San Diego, California, 92101,
Telephone (619) 230-8828.



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        0.14 "Plan of Allocation" means a plan or formula of allocation of the
Settlement Fund whereby the Settlement Fund shall be distributed to Authorized
Claimants after payment of expenses of notice and administration of the
settlement, Taxes and Tax Expenses and such attorneys' fees, expenses and
interest as may be awarded by the Court. Any Plan of Allocation is not part of
the Stipulation and Defendants shall have no responsibility or liability with
respect thereto.

        0.15 "Related Persons" means each of a Defendant's past or present
directors, officers, managers, employees, partners, members, principals, agents,
underwriters, controlling shareholders, attorneys, accountants or auditors,
banks or investment banks, associates, personal or legal representatives,
predecessors, successors, parents, subsidiaries, divisions, joint ventures,
assigns, spouses, heirs, related or affiliated entities, any entity in which a
Defendant has a controlling interest, any members of their immediate families,
or any trust of which any Defendant is the settlor or which is for the benefit
of any Defendant and/or member(s) of his or her family.

        0.16 "Released Claims" shall collectively mean all claims (including
"Unknown Claims" as defined in P. 1.22 hereof), demands, rights, liabilities and
causes of action of every nature and description whatsoever, known or unknown,
whether or not concealed or hidden, asserted or that might have been asserted,
including, without limitation, claims for negligence, gross negligence, breach
of duty of care and/or breach of duty of loyalty, fraud, breach of



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fiduciary duty, or violations of any state or federal statutes, rules or
regulations, by any Representative Plaintiff or Class Member against any
Defendants and/or Released Persons arising out of, based upon or related to both
the purchase of MP3.com, Inc. common stock between January 13, 2000 and
September 7, 2000, and the facts, transactions, events, occurrences, acts,
disclosures, statements, omissions or failures to act which were or could have
been alleged in the Litigation.

        0.17 "Released Persons" means each and all of the Defendants, and the
Related Persons.

        0.18 "Representative Plaintiffs" means each of the plaintiffs who filed
a complaint in the Litigation.

        0.19 "Representative Plaintiffs' Counsel" means counsel who have
appeared for any of the Representative Plaintiffs in the Litigation.

        0.20 "Settlement Fund" means the principal amount of (a) Thirty Four
Million One Hundred Thousand Dollars ($34,100,000) in cash (plus any accrued
interest), and (b) Two Million Five Hundred Thousand (2,500,000) shares of
freely tradeable MP3.com common stock as further described in P. 3.1(b) below,
plus any accrued interest on the cash portion of the Settlement Fund.

        0.21 "Settling Parties" means, collectively, each of the Defendants and
the Representative Plaintiffs on behalf of themselves and the Members of the
Class.

        0.22 "Unknown Claims" means any Released Claims which any Representative
Plaintiff or Class Member does not know or suspect



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to exist in his, her or its favor at the time of the release of the Released
Persons which, if known by him, her or it, might have affected his, her or its
settlement with and release of the Released Persons, or might have affected his,
her or its decision not to object to this settlement or not to exclude himself,
herself, or itself from the Class. With respect to any and all Released Claims,
the Settling Parties stipulate and agree that, upon the Effective Date, the
Representative Plaintiffs shall expressly and each of the Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly waived,
the provisions, rights and benefits of California Civil Code Section 1542, which
provides:

                A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
        DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING
        THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
        SETTLEMENT WITH THE DEBTOR.

The Representative Plaintiffs shall expressly and each of the Class Members
shall be deemed to have, and by operation of the Judgment shall have, expressly
waived any and all provisions, rights and benefits conferred by any law of any
state or territory of the United States, or principle of common law, which is
similar, comparable or equivalent to California Civil Code Section 1542. The
Representative Plaintiffs and Class Members may hereafter discover facts in
addition to or different from those which he, she or it now knows or believes to
be true with respect to the subject matter of the Released Claims, but each
Representative Plaintiff shall expressly and each Class Member, upon the
Effective Date, shall be



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deemed to have, and by operation of the Judgment shall have, fully, finally, and
forever settled and released any and all Released Claims, known or unknown,
suspected or unsuspected, contingent or non-contingent, whether or not concealed
or hidden, which now exist, or heretofore have existed upon any theory of law or
equity now existing or coming into existence in the future, including, but not
limited to, conduct which is negligent, intentional, with or without malice, or
a breach of any duty, law or rule, without regard to the subsequent discovery or
existence of such different or additional facts. The Representative Plaintiffs
acknowledge, and the Class Members shall be deemed by operation of the Judgment
to have acknowledged, that the foregoing waiver was separately bargained for and
a key element of the settlement of which this release is a part.

        2.      Consent to Jurisdiction of Magistrate Judge


        0.1 The Settling Parties consent, pursuant to 28 U.S.C. Section 63(c)
and Rule 73 of the Federal Rules of Civil Procedure, to exercise by the
Honorable Nita L. Stormes, United States Magistrate Judge of the Southern
District of California, of jurisdiction over this case and to the conduct of all
proceedings relating to this settlement and the entry of such orders and
judgments as are necessary or required to approve, implement and act upon the
Stipulation, the Plan of Allocation, the Fee and Expense Application and all
related matters.

        3.      The Settlement


                a.      THE SETTLEMENT FUND



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        0.1 The principal amount of Thirty Four Million One Hundred Thousand
Dollars ($34,100,000) in cash (plus any accrued interest) and Two Million Five
Hundred Thousand (2,500,000) freely tradeable shares of MP3.com common stock
shall constitute the Settlement Fund and shall be transferred as follows:

                (a) The cash amount of $34,100,000 million has been paid by
MP3.com into an interest bearing account maintained by the Escrow Agent.

                (b) Two Million Five Hundred Thousand (2,500,000) shares of
freely tradeable MP3.com Common Stock (the "Settlement Stock"), which will be
registered or exempt from registration under the Securities Act of 1933, to be
provided by MP3.com to be distributed to Class Members and plaintiffs' counsel
as described in Section 3.1(b)(i)-(vii), below.

                        (i) Unless the Settling Parties otherwise agree,
distribution of the Settlement Fund to Class Members shall not occur prior to
March 31, 2002, and only then upon sixty (60) days notice by the Claims
Administrator to MP3.com. Ten (10) days before the distribution contemplated by
this paragraph, MP3.com shall provide plaintiffs' Co-Lead Counsel with the
written opinion of outside counsel substantially to the effect: (a) that the
Settlement Stock will be issued in compliance with the registration requirements
of Section 5 of the Securities Act of 1933 or will be issued in reliance upon an
exemption therefrom; (b) that the Settlement Stock is fully tradeable without
any restriction after



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distribution; and (c) that such shares are otherwise fully paid, non-assessable
and free from all liens and encumbrances created by MP3.com.

                        (ii) To the extent that the Court authorizes the
distribution of the Settlement Stock as payment of any portion of the attorneys'
fees to counsel for Representative Plaintiffs, Defendants shall direct MP3.com's
stock transfer agent to issue and distribute such stock on or before the fifth
(5th) business day following the execution and service of an order awarding said
attorneys' fees.

                        (iii) If MP3.com is sold or otherwise acquired prior to
the distribution of the Settlement Stock, the stock or any undistributed portion
thereof shall be treated equally with all other outstanding shares of MP3.com
common stock.

                        (iv) The total number of shares to be contributed to the
settlement shall be adjusted to reflect any change due to stock splits, stock
dividends, reverse stock splits or recapitalizations that occur from March 20,
2001 until the time of the distribution(s).

                        (v) The risk that the stock shall decrease in value, or
have no value, and the risk of bankruptcy by MP3.com and any resulting impact on
the value of the stock or the contemplated distributions, is to be bourne by the
recipients of the stock; i.e., the Class and plaintiffs' counsel.

                        (vi) The individual Defendants shall have no
responsibility for the payment of any of the Settlement Fund.



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                        (vii) All costs, including those of MP3.com's transfer
agent, incurred in issuing and distributing any Settlement Stock to the
recipients shall be borne by MP3.com.

                b.      THE ESCROW AGENT


        0.2 The Escrow Agent shall invest the cash portion of the Settlement
Fund deposited pursuant to P. 3.1(a) above in instruments backed by the full
faith and credit of the United States Government or fully insured by the United
States Government or an agency thereof and shall reinvest the proceeds of these
instruments as they mature in similar instruments at their then current market
rates. The Escrow Agent shall bear all risks related to investment of the
Settlement Fund.

        0.3 The Escrow Agent shall not disburse the Settlement Fund except as
provided in the Stipulation, by an order of the Court, or with the written
agreement of counsel for Defendants and Plaintiffs' Settlement Counsel.

        0.4 Subject to further order and/or direction as may be made by the
Court, the Escrow Agent is authorized to execute such transactions on behalf of
the Class Members as are consistent with the terms of the Stipulation.

        0.5 All funds held by the Escrow Agent shall be deemed and considered to
be in custodia legis of the Court, and shall remain subject to the jurisdiction
of the Court, until such time as such funds shall be distributed pursuant to the
Stipulation and/or further order(s) of the Court.



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        0.6 Within ten (10) days after payment of the cash portion of the
Settlement Fund to the Escrow Agent pursuant to P. 3.1, the Escrow Agent may
establish a "Notice and Administration Fund," and may deposit up to $50,000 from
the Settlement Fund in it. The Notice and Administration Fund may be used by
Plaintiffs' Settlement Counsel to pay costs and expenses reasonably and actually
incurred in connection with providing notice to the Class, and in the Derivative
Actions, current holders of MP3.com common stock, locating Class Members,
soliciting Class claims, assisting with the filing of claims, administering and
distributing the Settlement Fund to Authorized Claimants, processing Proof of
Claim and Release forms and paying escrow fees and costs, if any. The Notice and
Administration Fund may also be invested and earn interest as provided for in P.
3.2 of this Stipulation.

                c.     TAXES


        0.7 Settling Parties and the Escrow Agent agree to treat the Settlement
Fund as being at all times a "qualified settlement fund" within the meaning of
Treas. Reg. Section 1.468B-1. In addition, the Escrow Agent shall timely make
such elections as necessary or advisable to carry out the provisions of this P.
3.7, including the "relation-back election" (as defined in Treas. Reg. Section
1.468B-1) back to the earliest permitted date. Such elections shall be made in
compliance with the procedures and requirements contained in such regulations.
It shall be the responsibility of the Escrow Agent to timely and properly
prepare and deliver the necessary documentation



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for signature by all necessary parties, and thereafter to cause the appropriate
filing to occur.

                (a) For the purpose of Section 468B of the Internal Revenue Code
of 1986, as amended, and the regulations promulgated thereunder, the
"administrator" shall be the Escrow Agent. The Escrow Agent shall timely and
properly file all informational and other tax returns necessary or advisable
with respect to the Settlement Fund (including without limitation the returns
described in Treas. Reg. Section 1.468B-2(k)(l)). Such returns (as well as the
election described in P. 3.7) shall be consistent with this P. 3.7 and in all
events shall reflect that all Taxes (including any estimated Taxes, interest or
penalties) on the income earned by the cash portion of the Settlement Fund shall
be paid out of the Settlement Fund as provided in P. 3.7(b) hereof.

                (b) All (a) Taxes (including any estimated Taxes, interest or
penalties) arising with respect to the income earned by the Settlement Fund,
including any Taxes or tax detriments that may be imposed upon the Defendants or
their counsel with respect to any income earned by the Settlement Fund for any
period during which the Settlement Fund does not qualify as a "qualified
settlement fund" for federal or state income tax purposes ("Taxes"), and (b)
expenses and costs incurred in connection with the operation and implementation
of this P. 3.7 (including, without limitation, expenses of tax attorneys and/or
accountants and mailing and distribution costs and expenses relating to filing
(or failing to file) the returns described in this P. 3.7) ("Tax Expenses"),
shall



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be paid out of the Settlement Fund; in all events neither the Defendants nor
their counsel shall have any liability or responsibility for the Taxes or the
Tax Expenses. The Escrow Agent shall indemnify and hold each of the Defendants
and their counsel harmless for Taxes and Tax Expenses (including, without
limitation, Taxes payable by reason of any such indemnification). Further, Taxes
and Tax Expenses shall be treated as, and considered to be, a cost of
administration of the Settlement Fund and shall be timely paid by the Escrow
Agent out of the Settlement Fund without prior order from the Court and the
Escrow Agent shall be obligated (notwithstanding anything herein to the
contrary) to withhold from distribution to Authorized Claimants any funds
necessary to pay such amounts including the establishment of adequate reserves
for any Taxes and Tax Expenses (as well as any amounts that may be required to
be withheld under Treas. Reg. Section 1.468B-2(1)(2)); neither the Defendants
nor their counsel are responsible nor shall they have any liability therefor.
The parties hereto agree to cooperate with the Escrow Agent, each other, and
their tax attorneys and accountants to the extent reasonably necessary to carry
out the provisions of this P. 3.7.

                (c) For the purpose of this P. 3.7, references to the Settlement
Fund shall include both the Settlement Fund and the Notice and Administration
Fund and shall also include any earnings thereon.

                d.      TERMINATION OF SETTLEMENT



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        0.8 In the event that the Stipulation is not approved, or is terminated,
cancelled, or fails to become effective for any reason, the Settlement Fund
(including accrued interest) less expenses actually incurred or due and owing in
connection with the settlement provided for herein, shall be refunded to
Defendants as described in P. 8.4 below.

        4.      Notice Order and Settlement Hearing


        0.1 Promptly after execution of the Stipulation, Plaintiffs' Settlement
Counsel shall submit the Stipulation together with its Exhibits to the Court and
shall apply for entry of an order (the "Notice Order"), substantially in the
form of Exhibit A attached hereto, requesting, inter alia, the preliminary
approval of the settlement set forth in the Stipulation, and approval for the
mailing and publication of a settlement notice (the "Notice"), substantially in
the form of Exhibits A-1 and A-3 attached hereto, which shall include the
general terms of the settlement set forth in the Stipulation, the proposed Plan
of Allocation, the general terms of the Fee and Expense Application as defined
in P. 7.1 below and the date of the Settlement Hearing as defined below.

        0.2 Plaintiffs' Settlement Counsel shall request that after Notice is
given, the Court hold a hearing (the "Settlement Hearing") and approve the
settlement of the Litigation as set forth herein. At or after the Settlement
Hearing, Plaintiffs' Settlement Counsel also will request that the Court approve
the proposed Plan of Allocation and the Fee and Expense Application.

        5.      Releases



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        0.1 Upon the Effective Date, as defined in P. 1.8, the Representative
Plaintiffs and each of the Class Members shall be deemed to have, and by
operation of the Judgment shall have, fully, finally, and forever released,
relinquished and discharged all Released Claims and any and all claims arising
out of, relating to, or in connection with the settlement or resolution of the
Litigation against the Released Persons, whether or not such Class Member
executes and delivers the Proof of Claim and Release.

        0.2 The Proof of Claim and Release to be executed by Class Members shall
release all Released Claims against the Released Persons and shall be
substantially in the form contained in Exhibit A-2 attached hereto.

        0.3 Upon the Effective Date, as defined in P. 1.8, each of the Released
Persons shall be deemed to have, and by operation of the Judgment shall have,
fully, finally, and forever released, relinquished and discharged each and all
of the Class Members and counsel to the Representative Plaintiffs from all
claims (including Unknown Claims), arising out of, relating to, or in connection
with the institution, prosecution, assertion, settlement or resolution of the
Litigation or the Released Claims.

        6.      Administration and Calculation of Claims, Final Awards and
                Supervision and Distribution of Settlement Fund


        0.1 Plaintiffs' Settlement Counsel, or their authorized agents, acting
on behalf of the Class, and subject to such supervision and direction of the
Court as may be necessary or as



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circumstances may require, shall administer and calculate the claims submitted
by Class Members and shall oversee distribution of the Net Settlement Fund
(defined below) to Authorized Claimants. The Settlement Fund shall be applied as
follows:

                (a) to pay all the costs and expenses reasonably and actually
incurred in connection with providing Notice, locating Class Members, soliciting
Class claims, assisting with the filing of claims, administering and
distributing the Settlement Fund to Authorized Claimants, processing Proof of
Claim and Release forms and paying escrow fees and costs, if any;

                (b) to pay the Taxes and Tax Expenses described in P. 3.7 above;

                (c) to pay to Representative Plaintiffs' Counsel attorneys'
fees, expenses and costs with interest thereon (the "Fee and Expense Award"), if
and to the extent allowed by the Court; and

                (d) to distribute the balance of the Settlement Fund (the "Net
Settlement Fund") to Authorized Claimants as allowed by the Stipulation, the
Plan of Allocation, or the Court.

        0.2 Upon the Effective Date and thereafter, and in accordance with the
terms of the Stipulation, the Plan of Allocation, or such further approval and
further order(s) of the Court as may be necessary or as circumstances may
require, the Net Settlement Fund shall be distributed to Authorized Claimants,
subject to and in accordance with the following:

                (a) Within ninety (90) days after the mailing of the Notice or
such other time as may be set by the Court, each Person



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claiming to be an Authorized Claimant shall be required to submit to the Claims
Administrator a completed Proof of Claim and Release, substantially in the form
of Exhibit A-2 attached hereto, signed under penalty of perjury and supported by
such documents as specified in the Proof of Claim and Release and as are
reasonably available to the Authorized Claimant.

                (b) Except as otherwise ordered by the Court, all Class Members
who fail to timely submit a Proof of Claim and Release within such period, or
such other period as may be ordered by the Court, or otherwise allowed, shall be
forever barred from receiving any payments pursuant to this Stipulation and the
settlement set forth herein, but will in all other respects be subject to and
bound by the provisions of this Stipulation, the releases contained herein, and
the Judgment.

                (c) The Net Settlement Fund shall be distributed to the
Authorized Claimants substantially in accordance with a Plan of Allocation to be
described in the Notice and approved by the Court.

                (d) On the appropriate date, the Claims Administrator shall
inform MP3.com's counsel that claims processing has been completed and that all
or a portion of the Settlement Stock shall be distributed to the Class. The
Claims Administrator also shall provide MP3.com's transfer agent with a list (in
the form required by the transfer agent) identifying each Class Member who is
entitled to receive stock and the number of shares of Settlement Stock to be
issued to each such person. MP3.com shall direct its stock transfer agent to
issue and distribute the Settlement Stock



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remaining in the Settlement Fund within five (5) business days of receipt of the
list of the persons and in the amounts shown on said list.

        0.3 The Defendants shall have no responsibility for, interest in, or
liability whatsoever with respect to the investment or distribution of the cash
portion of the Net Settlement Fund, the Plan of Allocation, the determination,
administration, or calculation of claims, the payment or withholding of Taxes,
or any losses incurred in connection therewith.

        0.4 No Person shall have any claim against Plaintiffs' Settlement
Counsel or any claims administrator, or other agent designated by Plaintiffs'
Settlement Counsel, or Defendants or their counsel based on the distributions
made substantially in accordance with this Stipulation and the settlement
contained herein, the Plan of Allocation, or further orders of the Court.

        0.5 It is understood and agreed by the Settling Parties that any
proposed Plan of Allocation of the Net Settlement Fund including, but not
limited to, any adjustments to an Authorized Claimant's claim set forth therein,
is not a part of the Stipulation and is to be considered by the Court separately
from the Court's consideration of the fairness, reasonableness and adequacy of
the settlement set forth in the Stipulation, and any order or proceeding
relating to the Plan of Allocation shall not operate to terminate or cancel the
Stipulation or affect the finality of the Court's Judgment approving the
Stipulation and the



                                      -21-
<PAGE>   23

settlement set forth therein, or any other orders entered pursuant to the
Stipulation.

        7.      Representative Plaintiffs' Counsel's Attorneys' Fees and
                Reimbursement of Expenses


        0.1 Representative Plaintiffs' Counsel may submit an application or
applications (the "Fee and Expense Application") for distributions to them from
the Settlement Fund for: (a) an award of attorneys' fees; plus (b) reimbursement
of expenses incurred in connection with prosecuting the Litigation, plus any
interest on such attorneys' fees and expenses at the same rate and for the same
periods as earned by the cash portion of the Settlement Fund (until paid) as may
be awarded by the Court. Representative Plaintiffs' Counsel reserve the right to
make additional applications for fees and expenses incurred.

        0.2 The attorneys' fees and expenses, including the fees of experts and
consultants, as awarded by the Court, shall be paid to Plaintiffs' Settlement
Counsel from the Settlement Fund, as ordered, immediately after the Court
executes an order awarding such fees and expenses. Plaintiffs' Settlement
Counsel shall thereafter allocate the attorneys' fees amongst Representative
Plaintiffs' Counsel in a manner in which they in good faith believe reflects the
contributions of such counsel to the prosecution and settlement of the
Litigation. In the event that the Effective Date does not occur, or the Judgment
or the order making the Fee and Expense Award is reversed or modified, or the
Stipulation is cancelled or terminated for any other reason, and in the event
that



                                      -22-
<PAGE>   24

the Fee and Expense Award has been paid to any extent, then Representative
Plaintiffs' Counsel shall within five (5) business days from receiving notice
from Defendants' counsel or from a court of appropriate jurisdiction, refund to
the Settlement Fund, the fees and expenses previously paid to them from the
Settlement Fund plus interest thereon at the same rate as earned on the
Settlement Fund in an amount consistent with such reversal or modification. Each
such Representative Plaintiffs' Counsel's law firm, as a condition of receiving
such fees and expenses, on behalf of itself and each partner and/or shareholder
of it, agrees that the law firm and its partners and/or shareholders are subject
to the jurisdiction of the Court for the purpose of enforcing the provisions of
this paragraph.

        0.3 Any adjustments to the stock portion of any attorneys' fees awarded
by the Court shall be made in accordance with Section IV.3.1(b) hereof.

        0.4 The procedure for and the allowance or disallowance by the Court of
any applications by any of the counsel to the Representative Plaintiffs for
attorneys' fees and expenses to be paid out of the Settlement Fund, are not part
of the settlement set forth in the Stipulation, and are to be considered by the
Court separately from the Court's consideration of the fairness, reasonableness
and adequacy of the settlement set forth in the Stipulation, and any order or
proceeding relating to the Fee and Expense Application, or any appeal from any
order relating thereto or reversal or modification thereof, shall not operate to
terminate



                                      -23-
<PAGE>   25

or cancel the Stipulation, or affect or delay the finality of the Judgment
approving the Stipulation and the settlement of the Litigation set forth herein.

        0.5 Defendants and their Related Persons shall have no responsibility
for, and no liability whatsoever with respect to, any payment to Plaintiffs'
Settlement Counsel from the Settlement Fund.

        0.6 Defendants and their Related Persons shall have no responsibility
for, and no liability whatsoever with respect to the allocation among
Representative Plaintiffs' Counsel, and/or any other Person who may assert some
claim thereto, of any Fee and Expense Award that the Court may make in the
Litigation.

        8.      Conditions of Settlement, Effect of Disapproval, Cancellation or
                Termination


        0.1 The Effective Date of the Stipulation shall be conditioned on the
occurrence of all of the following events:

                (a) Defendants have timely made their contributions to the
Settlement Fund as required by P. 3.1(a) above;

                (b) the Court has entered the Notice Order, as required by P.
4.1, above;

                (c) Defendants have not exercised their option to terminate the
Stipulation pursuant to P. 8.3 hereof;

                (d) the Court has entered the Judgment, or a judgment
substantially in the form of Exhibit B attached hereto;

                (e) the Judgment has become Final, as defined in P. 1.10, above;
and



                                      -24-
<PAGE>   26

                (f) the Derivative Actions entitled Larrett v. Robertson, et
al., Lead Case No. GIC 754696, has been dismissed with prejudice and that
dismissal has become final and no longer subject to appeal.

        0.2 If all of the conditions specified in P. 8.1 are not met, then the
Stipulation shall be cancelled and terminated subject to P. 8.4 unless
Plaintiffs' Settlement Counsel and counsel for Defendants mutually agree in
writing to proceed with the settlement.

        0.3 Defendants shall have the option to terminate the settlement in the
event that putative Class Members who purchased more than a certain number of
shares of MP3.com during the Class Period choose to exclude themselves from the
Class, as set forth in a separate agreement executed among plaintiffs and
Defendants (the "Supplemental Agreement").

        0.4 Unless otherwise ordered by the Court, in the event the Stipulation
shall terminate, or be cancelled, or shall not become effective for any reason,
within five (5) business days after written notification of such event is sent
by counsel for Defendants or Plaintiffs' Settlement Counsel to the Escrow Agent,
the Settlement Fund (including accrued interest), plus any amount then remaining
in the Notice and Administration Fund (including accrued interest), less
expenses and any costs which have either been disbursed pursuant to P. P. 3.6 or
3.7 hereto, or are determined to be chargeable to the Notice and Administration
Fund, shall be refunded by the Escrow Agent pursuant to written instructions
from



                                      -25-
<PAGE>   27

counsel for MP3.com. At the request of counsel for MP3.com, the Escrow Agent or
its designee shall apply for any tax refund owed to the Settlement Fund and pay
the proceeds, after deduction of any fees or expenses incurred in connection
with such application(s) for refund, to MP3.com.

        0.5 In the event that the Stipulation is not approved by the Court or
the settlement set forth in the Stipulation is terminated or fails to become
effective in accordance with its terms, the Settling Parties shall be restored
to their respective positions in the Litigation as of March 19, 2001. In such
event, the terms and provisions of the Stipulation, with the exception of P. P.
1.1-1.22, 3.2-3.7, 8.3-8.5, 9.2-9.4, 9.9-9.13 herein, shall have no further
force and effect with respect to the Settling Parties and shall not be used in
the Actions or in any other proceeding for any purpose, and any Judgment or
order entered by the Court in accordance with the terms of the Stipulation shall
be treated as vacated, nunc pro tunc. No order of the Court or modification or
reversal on appeal of any order of the Court concerning the Plan of Allocation
or the amount of any attorneys' fees, expenses and interest awarded by the Court
to the Representative Plaintiffs or any of their counsel shall constitute
grounds for cancellation or termination of the Stipulation.

        0.6 If the Effective Date does not occur, or if the Stipulation is
terminated pursuant to its terms, neither the Representative Plaintiffs nor any
of their counsel shall have any obligation to repay any amounts actually and
properly disbursed



                                      -26-
<PAGE>   28

from the Notice and Administration Fund. In addition, any expenses already
incurred and properly chargeable to the Notice and Administration Fund pursuant
to P. 3.6 hereof at the time of such termination or cancellation but which have
not been paid, shall be paid by the Escrow Agent in accordance with the terms of
the Stipulation prior to the balance being refunded to Defendants.

        0.7 The parties agree that, with respect to any Defendant, in the event
of a final order of a court of competent jurisdiction determining the transfer
of the cash portion of the Settlement Fund, or any portion thereof, by such
Defendant to be a preference, voidable transfer, fraudulent transfer or similar
transaction under Title 11 of the United States Code (Bankruptcy) or applicable
state law, then, as to such Defendant, the release given and the judgment
entered in favor of such Defendant pursuant to the Stipulation shall be null and
void. The release given and the judgment entered in favor of other Defendants
shall remain in effect.

        9.      Miscellaneous Provisions


        0.1 The Settling Parties (a) acknowledge that it is their intent to
consummate this agreement; and (b) agree to cooperate to the extent reasonably
necessary to effectuate and implement all terms and conditions of the
Stipulation and to exercise their best efforts to accomplish the foregoing terms
and conditions of the Stipulation.

        0.2 Each Defendant warrants as to himself, herself, or itself that, at
the time any of the payments provided for herein are made on behalf of himself,
herself, or itself, he, she or it is not



                                      -27-
<PAGE>   29

insolvent and the payment will not render him, her or it insolvent. This
representation is made by each Defendant as to himself, herself or itself and is
not made by counsel for the Defendants.

        0.3 The parties intend this settlement to be a final and complete
resolution of all disputes between them with respect to the Litigation. The
settlement compromises claims which are contested and shall not be deemed an
admission by any Settling Party as to the merits of any claim or defense. While
retaining their right to deny that the claims advanced in the Litigation were
meritorious, Defendants in any statement made to any media representative
(whether or not for attribution) will not deny that the Litigation was filed in
good faith and is being settled voluntarily after consultation with competent
legal counsel. The Final Judgment will contain a statement that during the
course of the Litigation, the parties and their respective counsel at all times
complied with the requirements of Federal Rule of Civil Procedure 11. The
Settling Parties agree that the amount paid to the Settlement Fund and the other
terms of the settlement were negotiated in good faith by the Settling Parties,
and reflect a settlement that was reached voluntarily after consultation with
competent legal counsel. The Settling Parties reserve their right to rebut, in a
manner that such party determines to be appropriate, any contention made in any
public forum that the Litigation was brought or defended in bad faith or without
a reasonable basis.

        0.4 Neither the Stipulation nor the settlement, nor any act performed or
document executed pursuant to or in furtherance of the



                                      -28-
<PAGE>   30

Stipulation or the settlement: (a) is or may be deemed to be or may be used as
an admission of, or evidence of, the validity of any Released Claim, or of any
wrongdoing or liability of the Defendants and the Released Persons; or (b) is or
may be deemed to be or may be used as an admission of, or evidence of, any fault
or omission of any of the Defendants and the Released Persons in any civil,
criminal or administrative proceeding in any court, administrative agency or
other tribunal. Defendants and the Released Persons may file the Stipulation
and/or the Judgment in any action that may be brought against them in order to
support a defense or counterclaim based on principles of res judicata,
collateral estoppel, release, good faith settlement, judgment bar or reduction
or any other theory of claim preclusion or issue preclusion or similar defense
or counterclaim.

        0.5 All agreements made and orders entered during the course of the
Litigation relating to the confidentiality of information shall survive this
Stipulation.

        0.6 All of the Exhibits to this Stipulation are material and integral
parts hereof and are fully incorporated herein by this reference.

        0.7 This Stipulation may be amended or modified only by a written
instrument signed by or on behalf of all Settling Parties or their respective
successors-in-interest.

        0.8 This Stipulation and the Exhibits attached hereto and the
Supplemental Agreement constitute the entire agreement between Representative
Plaintiffs and Defendants and no representations,



                                      -29-
<PAGE>   31

warranties or inducements have been made to any party concerning the Stipulation
or its Exhibits or the Supplemental Agreement other than the representations,
warranties and covenants contained and memorialized in such documents. Except as
otherwise provided herein, each party shall bear its own costs.

        0.9 Plaintiffs' Settlement Counsel, on behalf of the Class, are
expressly authorized by the Representative Plaintiffs to take all appropriate
actions required or permitted to be taken by the Class pursuant to the
Stipulation to effectuate its terms and also are expressly authorized to enter
into any modifications or amendments to the Stipulation on behalf of the Class
which they deem appropriate.

        0.10 Each counsel or other Person executing this Stipulation or any of
its Exhibits on behalf of any party hereto hereby warrants that such Person has
the full authority to do so.

        0.11 The Stipulation may be executed in one or more counterparts. All
executed counterparts and each of them shall be deemed to be one and the same
instrument. A complete set of original executed counterparts shall be filed with
the Court.

        0.12 This Stipulation shall be binding upon, and inure to the benefit
of, the successors and assigns of the parties hereto.

        0.13 The Court shall retain jurisdiction with respect to implementation
and enforcement of the terms of the Stipulation, and all parties hereto submit
to the jurisdiction of the Court for purposes of implementing and enforcing the
settlement embodied in the Stipulation.



                                      -30-
<PAGE>   32

        0.14 This Stipulation and the Exhibits hereto shall be considered to
have been negotiated, executed and delivered, and to be wholly performed, in the
State of California, and the rights and obligations of the parties to the
Stipulation shall be construed and enforced in accordance with, and governed by,
the internal, substantive laws of the State of California without giving effect
to that State's choice of law principles.

        IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be
executed, by their duly authorized attorneys, dated as of March 20, 2001.

                                            ------------------------------------
                                            MILBERG WEISS BERSHAD
                                              HYNES & LERACH LLP
                                            WILLIAM S. LERACH
                                            KEITH F. PARK
                                            TRAVIS E. DOWNS, III
                                            AMBER L. ECK


                                            /s/         KEITH F. PARK
                                            ------------------------------------
                                                        KEITH F. PARK

                                            600 West Broadway, Suite 1800
                                            San Diego, CA 92101
                                            Telephone: 619/231-1058

                                            JEFFREY & DREHER, LLP
                                            ROBERT SCOTT DREHER
                                            225 Broadway, 19th Floor
                                            San Diego, CA 92101
                                            Telephone: 619/230-8828

                                            Co-Lead Counsel for Lead Plaintiffs


                                            WASSERMAN, COMDEN & CASSELMAN LLP
                                            CLIFFORD H. PEARSON
                                            GARY S. SOTER


                                            /s/       CLIFFORD H. PEARSON
                                            ------------------------------------
                                                      CLIFFORD H. PEARSON



                                      -31-
<PAGE>   33

                                            5567 Reseda Blvd., Suite 330
                                            Tarzana, CA 91357-7033
                                            Telephone: 818/705-6800

                                            Attorneys for Defendant MP3.com,Inc.

                                            ------------------------------------
                                            LATHAM & WATKINS
                                            HUGH STEVEN WILSON
                                            MICHAEL J. WEAVER
                                            JULIA E. PARRY

                                            /s/       MICHAEL J. WEAVER
                                            ------------------------------------
                                                      MICHAEL J. WEAVER

                                            701 B Street, Suite 2000
                                            San Diego, CA 92101
                                            Telephone: 619/236-1234

                                            Attorneys for Defendants
                                            Michael L. Robertson,
                                            Robin D. Richards, Paul H. Ouyang



                                      -32-