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                                                                   EXHIBIT 10.26

        THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND
        HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
        THESE SECURITIES MAY NOT BE OFFERED, SOLD OR TRANSFERRED ABSENT SUCH
        REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.

                        PLANET POLYMER TECHNOLOGIES, INC.
                     WARRANT TO PURCHASE UP TO A MAXIMUM OF
                          50,000 SHARES OF COMMON STOCK

        In consideration of the sum of good and valuable consideration, the
receipt of which is hereby acknowledged by PLANET POLYMER TECHNOLOGIES, INC., a
California corporation (the "Company"), LBC CAPITAL RESOURCES, INC., (the
"Holder"), is hereby granted the right to purchase at any time from the date
hereof until 5:00 p.m., Pacific Standard Time, on March 3, 2005 (the "First
Expiration Date") up to all or any part of Fifty Thousand (50,000) fully paid
and non-assessable shares of the Company's common stock, without par value
("Common Stock").

        1. EXERCISE OF WARRANT. This Warrant is exercisable at a price of
$4.1625 per share of Common Stock issuable hereunder (the "Exercise Price")
payable in cash or by certified or official bank check. Upon surrender of this
Warrant, together with a subscription form substantially in the form of "Exhibit
A" hereto duly executed, together with payment of the Exercise Price for the
shares of Common Stock purchased, at the principal executive offices of the
Company, 9985 Business Park Avenue, Suite A, San Diego, California, 92131, or at
such other office as the Company may designate by notice in writing, the Holder
shall be entitled to receive, as promptly as practicable after surrender of the
Warrant, a certificate or certificates for the shares of Common Stock so
purchased. Upon exercise of this Warrant as set forth in the preceding sentence,
the Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise.

The purchase rights represented by this Warrant are exercisable at the option of
the Holder hereof, in whole or in part (but not as to fractional shares of the
Common Stock), during any period in which this Warrant may be exercised as set
forth above. In the case of the purchase of less than all the shares of Common
Stock purchasable under this Warrant, the Company shall cancel this Warrant upon
the surrender hereof and shall execute and deliver a new Warrant of like kind
for the balance of the shares of Common Stock purchasable hereunder.

        2. ISSUANCE OF STOCK CERTIFICATES. The issuance of certificates for
shares of Common Stock upon the exercise of this Warrant shall be made without
charge to the Holder hereof of any tax which may be payable in respect to the
issuance thereof, and such certificates shall (subject to the provisions of
Sections 3 and 5 hereof) be issued in the name of, or in such names as may be
directed by, the Holder hereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect to any transfer involved
in the issuance and delivery of any such certificate in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or

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persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid, and provided that the issuance of certificates for
such shares of Common Stock shall not violate the securities laws.

        3. TRANSFER, DIVISION AND COMBINATION.

               3.1 Transfer. Subject to compliance with Section 8, the Holder of
this Warrant may transfer this Warrant at any time to any subsidiary or
affiliate of the Holder. Transfer of this Warrant and all rights hereunder, in
whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company or the office or agency designated by the Company,
together with a written assignment of this Warrant substantially in the form of
Exhibit B hereto duly executed by Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to Section 8, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned in compliance with Section 8, may be exercised by
a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued.

               3.2 Division and Combination. Subject to Section 8, this Warrant
may be divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 8, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

               3.3 Expenses. The Company shall prepare, issue and deliver at its
own expense (other than transfer taxes) the new Warrant or Warrants under this
Section.

               3.4 Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.

        4. EXERCISE PRICE. The exercise price of this Warrant shall be $4.1625
per share of Common Stock.

        5. REGISTRATION AND REGISTRATION RIGHTS.

               5.1 Restricted Securities. The shares of Common Stock issuable
upon exercise of this Warrant (the "Warrant Shares") have not been registered
under the Securities Act of 1933, as amended (the "Securities Act").

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        Except as otherwise provided in this Section, upon exercise, in part or
in whole, of this Warrant, the Warrant Shares shall bear the following legend:

               "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
               REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR
               APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
               ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
               TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
               REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
               ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
               AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY
               ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
               SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD
               PURSUANT TO RULE 144 UNDER SAID ACT. ANY SUCH OFFER, SALE,
               ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH APPLICABLE STATE
               SECURITIES LAWS."

               5.2 Definitions. For purposes of Section 5.

                      (a) The term "Commission" means the Securities and
Exchange Commission;

                      (b) The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended;

                      (c) The term "register," "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and the declaration or ordering
of effectiveness of such registration statement;

                      (d) The term "Registrable Securities" means Common Stock
issuable or issued upon exercise of Warrants to purchase Common Stock of the
Company outstanding as of the filing of any registration statement subject to
the provisions of Section 5.3;

                      (e) The term "Holder" means any investor holding
Registrable Securities and any other person holding Registrable Securities to
whom these registration rights have been transferred pursuant to Sections 3 and
5; and

                      (f) The term "Securities Act" means the Securities Act of
1933, as amended.

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               5.3 Company Registration.

                      (a) If the Company at any time proposes to file on its
behalf and/or on behalf of any of its security holders (the "demanding security
holders") a registration statement under the Securities Act on any form (other
than a Registration Statement on Form S-4 or S-8 or any successor form for
securities to be offered in a transaction of the type referred to in Rule 145
under the Securities Act or to employees of the Company pursuant to any employee
benefit plan, respectively) for the general registration of securities to be
sold for cash with respect to its Common Stock or any other class of equity
security (as defined in Section 3(a)(11) of the Exchange Act) of the Company, it
will give written notice to all holders of Warrants or Warrant Stock at least
ten (10) days before the initial filing with the Commission of such registration
statement, which notice shall set forth the intended method of disposition of
the securities proposed to be registered by the Company. The notice shall offer
to include in such filing the aggregate number of shares of Warrant Stock, and
the number of shares of Common Stock for which this Warrant is exercisable, as
such holders may request.

                      (b) Each holder of any such Warrants or any such Warrant
Stock desiring to have Warrant Stock registered under this Section 5.3 shall
advise the Company in writing within ten (10) days after the date of receipt of
such offer from the Company, setting forth the amount of such Warrant Stock for
which registration is requested. The Company shall thereupon include in such
filing the number of shares of Warrant Stock for which registration is so
requested, subject to the paragraph 5.3 (c) below, and shall use its best
efforts to effect registration under the Securities Act of such shares.

                      (c) If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so indicate in the notice given pursuant to Section 5.3(a). In such event the
right of any Holder to registration pursuant to this Section 5.3 shall be
conditioned upon such Holder's agreeing to participate in such underwriting and
in the inclusion of the securities of the Holder to be so registered in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding any
other provision of this Section 5.3, if the underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may exclude some or all of the securities of the
Holders from such registration and underwriting (hereinafter an "Underwriter
Cutback"). In the event of an Underwriter Cutback, the Company shall so advise
the Holders distributing their securities through such underwriting, and the
number of Registrable Securities that may be included in the registration and
underwriting shall be allocated among the Holder in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement; provided that in no
event shall the Company be required to include in the registration less than one
thousand (1,000) shares held by any Holder. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company and the underwriter. Any securities excluded or
withdrawn from such underwriting

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shall be withdrawn from such registration. Except as otherwise provided in
Section 5.5, all expenses of such registration shall be borne by the Company.

               5.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 5 that the
Holders shall furnish to the Company such information regarding them, the
Registrable Securities held by them, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be required
in connection with the action to be taken by the Company.

               5.5 Company Registration Expenses. All expenses incurred in
complying with Section 5, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel for the
Company, the reasonable fees and expenses of one counsel for the selling
security holders (selected by those holding a majority of the shares being
registered), expenses of any special audits incident to or required by any such
registration and expenses of complying with the securities or blue sky laws of
any jurisdictions pursuant of Section 5, shall be paid by the Company, except
that the Company shall not be liable for any fees, discounts or commissions to
any underwriter or any fees or disbursements of counsel for any underwriter in
respect of the securities sold by such Holder of Warrant Stock.

               5.6 Delay of Registration. No Holder shall have any right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 5.

               5.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under Section 5:

                      (a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, each of such Holder's directors and
officers and each other person who is requesting or joining in a registration,
any underwriter (as defined in the Securities Act) for it, and each other
person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act, against any losses, claims, damages, or liabilities, joint
or several, to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based on any untrue or alleged untrue
statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained herein or any
amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated herein, or necessary to make the statements therein not misleading or
arise out of any violation by the Company of any rule or regulation promulgated
under the Securities Act applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration; and
will reimburse each such Holder, director, officer, participating person,
underwriter, or controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 5.7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company nor shall the Company
be liable in any such case for any

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such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus, or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, director,
officer, other participating person, underwriter, or controlling person. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Holder or such director, officer participating
person underwriter or controlling person, and shall survive the transfer of such
Securities by such Holder.

                      (b) To the extent permitted by law, each Holder requesting
or joining in a registration will indemnify and hold harmless the Company, each
of its directors each of its officers who has signed the registration statement,
each person, if any, who controls the Company within the meaning of the
Securities Act, and each agent and any underwriter for the Company (within the
meaning of the Securities Act) against any losses, claims, damages, or
liabilities to which the Company or any such director, officer, controlling
person, agent, or underwriter may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
herein or any amendments or supplements thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
agent, or underwriter in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 5.7 (b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld).

                      (c) Promptly after receipt by an indemnified party under
this section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this section, notify the indemnifying party in writing of the commencement
thereof and the indemnifying party shall have the right to participate in and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties. The failure to notify an indemnifying
party promptly of the commencement of any such action, if prejudicial to his
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this section, but the omission so to
notify the indemnifying party will not relieve him of any liability that he may
have to any indemnified party otherwise than under this section.

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               5.8 Reports Under the Exchange Act. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the Commission that may at
any time permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:

                      (a) make and keep public information available, as those
terms are understood and defined in Rule 144, at all times subsequent to the
date hereof;

                      (b) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act; and

                      (c) furnish to any Holder so long as such Holder owns any
of the Registrable Securities forthwith upon request a written statement of the
Company that it has complied with the reporting requirements of rule 144, and of
the Securities Act and the Exchange Act (at any time after it has become subject
to such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by the
Company as may be reasonably requested in availing any Holder of any rule or
regulation of the Commission permitting the selling of any such securities
without registration.

               5.9 Lockup Agreement. In consideration for the Company agreeing
to its obligations under this Section 5, each Holder agrees in connection with
any registration of the Company's securities that, upon the request of the
Company or the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Warrants or Warrant Stock (other than
those included in the registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time (not
to exceed one hundred eighty (180) days) from the effective date of such
registration as the Company or the underwriters may specify.

        6. ADJUSTMENTS OF PURCHASE PRICE AND NUMBER OF SHARES.

               6.1 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.

               6.2 Adjustment in Number of Shares. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 6 (including 6.4
through 6.7 below), the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted to the nearest full share of
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of shares of Common Stock issuable upon exercise of the Warrant
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Exercise Price.

               6.3 Anti-Dilution Provisions. The Exercise Price in effect at any
time and the number and kind of securities purchasable upon the exercise of this
Warrant shall also be subject

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to adjustment from time to time upon the happening of any of the events set
forth in Sections 6.4 through 6.7.

               6.4 In the event the Company shall issue or sell any shares of
Common Stock (except as provided in Section 6.7) for a consideration per share
less than the Exercise Price in effect immediately prior to such issue or sale,
then the Exercise Price in effect immediately prior to such issue or sale shall
be reduced to such lesser price (calculated to the nearest cent) as shall be
determined by multiplying the Exercise Price in effect immediately prior thereto
by a fraction, the numerator of which shall be the sum of: (i) the number of
shares of Common Stock outstanding immediately prior to the issuance or sale of
such additional share; and (ii) the number of shares of Common Stock which the
aggregate consideration received for the issuance or sale of such additional
shares would purchase at the Exercise Price then in effect, and the denominator
of which shall be the number of shares of Common Stock outstanding immediately
after the issuance or sale of such additional shares. For purposes of this
Section, all shares of Common Stock issuable upon exercise of outstanding
options and warrants, and all shares of Common Stock issuable upon exercise of
this Warrant, shall be deemed to be outstanding.

               6.5 For the purposes of Section 6.4 above, the following
subparagraphs (a) to (d), inclusive, shall be applicable:

                      (a) If at any time the Company shall issue or sell any
rights to subscribe for, or any rights or options to purchase, Common Stock or
any stock or other securities convertible into or exchangeable for Common Stock
(such convertible or exchangeable stock or securities being hereinafter called
"Convertible Securities"), whether or not such rights or options or the right to
convert or exchange any such Convertible Securities shall be immediately
exercisable, and the price per share for which Common Stock shall be issuable
upon the exercise of such rights or options or upon conversion or exchange of
such Convertible Securities (determined by dividing: (1) the total amount, if
any, received or receivable by the Company as consideration for the granting of
such rights or options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such rights or
options, plus, in the case of any such rights or options which shall relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the issue or sale of such Convertible
Securities and upon the conversion or exchange thereof, by (2) the total number
of shares of Common Stock issuable upon the exercise of such rights or options
or upon the conversion or exchange of all such Convertible Securities issuable
upon the exercise of such rights or options) shall be less than the Exercise
Price in effect immediately prior to the time of the issue or sale of such
rights or options, then the total number of shares of Common Stock issuable upon
the exercise of such rights or options or upon conversion or exchange of the
total amount of such Convertible Securities issuable upon the exercise of such
rights or options shall (as of the date of granting of such rights or options)
be deemed to be outstanding and to have been issued for such price per share,
and except as provided in Section 6.6, no further adjustments of the Exercise
price shall be made upon the actual issue of such Common Stock or of such
Convertible Securities, upon the exercise of such rights or upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities.

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                      (b) If at any time the Company shall issue or sell or any
Convertible Securities, whether or not the rights to exchange or convert
thereunder shall be immediately exercisable, and the price per share for which
Common Stock shall be issuable upon such conversion or exchange (determined by
dividing (1) the total amount received or receivable by the Company as
consideration for the issue and sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any payable to the
Company upon the conversion or exchange thereof, by (2) the total number of
shares of Common Stock distributable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Exercise Price in effect
immediately prior to the time of such issue or sale, and the total number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been issued for
such price per share, and, except as provided in Section 6.6 no further
adjustments of the Exercise Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities. In
addition, if any issue or sale of such Convertible Securities shall be made upon
exercise of any rights to subscribe for or to purchase or any option to purchase
any such Convertible Securities for which adjustments of the Exercise Price
shall have been or shall be made pursuant to other provisions of this Section
6.5, no further adjustments with the Exercise Price shall be made by reason of
such issue or sale.

                      (c) If at any time any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefore shall be deemed to be the amount actually
received by the Company therefore, after deduction therefrom of any expenses
incurred or any underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith. In case any shares of Common
Stock or Convertible Securities or any rights or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration other than cash
actually received by the Company shall be deemed to be the fair value of such
consideration as determined by the Board of Directors, after deduction therefrom
of any expenses incurred or any underwriting commission or concessions or
discounts paid or allowed by the Company in connection therewith. In case any
shares of Common Stock or Convertible Securities or any rights or options to
purchase any such Common Stock or Convertible Securities shall be issued in
connection with any merger or another corporation into the Company, the amount
of consideration therefore shall be deemed to be the greater of the fair market
value of the shares issued in connection with the merger after taking into
account the effects of the merger or the fair market value of the net assets of
such merged corporation as determined by the Board of Directors after deducting
therefrom all cash and other consideration (if any) paid by the Company in
connection with such merger.

                      (c) The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Company, provided that such shares are neither issued, sold or otherwise
distributed by the Company.

               6.6 If the purchase or exercise price provided for in any right
or option referred to in Section 6.5, or the rate at which any Convertible
Securities referred to in

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Section 6.5(a) or (b) shall be convertible into or exchangeable for Common
Stock, shall change or a different purchase or exercise price or rate shall
become effective at any time or from time to time (including any change
resulting from termination of such right, option or convertible security), the,
upon such change becoming effective, the Exercise Price then in effect hereunder
shall forthwith be increased or decreased to such Exercise Price as would have
been obtained had the adjustments made upon the granting or issuance of such
rights or options or Convertible Securities been made upon the basis of: (a) the
issuance of the number of shares of Common Stock theretofore actually delivered
upon the exercise of such options or rights or upon the conversion or exchange
of such Convertible Securities for the considerations received therefore; and
(b) the granting or issuance at the time of such change of any such options,
rights or Convertible Securities then still outstanding for the consideration,
if any, received by the Company therefor and to be received on the basis of such
changed price.

               6.7 The Company shall not be required to make any adjustment to
the Exercise Price in the case of:

                      (a) the granting, after the date hereof, by the Company of
stock options under the Company's 1995 Stock Option Plan, so long as the shares
of Common Stock underlying such options are covered by the Five Hundred Thousand
(500,000) shares currently reserved for issuance under such Plan as of the date
hereof; or

                      (b) the issuance of shares of Common Stock, pursuant to
the exercise of the options referred to in Section 6.7 (a) above; and

                      (c) shares of Common Stock issued upon the exercise or
conversion, as the case may be, or under the dividend provisions thereof, if
any, of any options, warrants, preferred stock, convertible securities or other
rights to purchase Common Stock which options, warrants, preferred stock,
convertible securities or other rights are issued and outstanding on the date
hereof.

               6.8 Reclassification, Consolidation, Merger, Etc., In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the case of any consolidation
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or conveyance to another corporation of the property
of the Company as an entirety), the Holder of this Warrant shall thereafter have
the right to purchase the kind and number of shares of stock and other
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance at an aggregate price equal to the
product of: (x) the number of shares issuable upon exercise of this Warrant and
(y) the Exercise Price in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, sale or conveyance as if such
Holder had exercised this Warrant prior to such record date.

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               6.9 Approval and Notice of Adjustment in Exercise Price. Any
adjustment of the Exercise Price made pursuant to this Section 6 shall be made
or approved by the Company's independent public accountants at the time of such
adjustment.

        7. FINANCIAL AND BUSINESS INFORMATION.

               7.1 Annual Information. The Company will deliver to each Holder
as soon as practicable after the end of fiscal year of the Company, and in any
event within ninety (90) days thereafter, (a) one copy of an unaudited
consolidated balance sheet of the Company and its subsidiaries as at the end of
such year, and (b) unaudited consolidated statements of income, retained
earnings and changes in financial position of the Company and its subsidiaries
for such year; setting forth in each case in comparative form the figures for
the corresponding periods in the previous fiscal year; all prepared in
accordance with GAAP, and which audited financial statements shall be
accompanied by: (i) an opinion thereon of the independent certified public
accountants regularly retained by the Company, or any other form of independent
certified public accountants of recognized national standing selected by the
Company; and (ii) a report of such independent certified public accountants
confirming any adjustment made pursuant to Section 6 during such year.

        8. REPRESENTATIONS OF HOLDER.

               8.1 Acquisition of Warrant for Personal Account. The Holder
represents and warrants that it is acquiring the Warrant solely for its account
for investment and not with a view to or for sale or distribution of said
Warrant for any part thereof. The Holder also represents that the entire legal
and beneficial interests of the Warrant and Warrant Stock is being acquired for,
and will be held for, its account only.

               8.2 Securities Are Not Registered.

                      (a) The Holder recognizes that this Warrant and Warrant
Stock being acquired by it must be held indefinitely unless they are
subsequently registered under the Act or an exemption from such registration is
available. The Holder recognizes that, except as set forth in Section 5 hereof,
the Company does not have any obligation to register this Warrant or the Warrant
Stock or to comply with any exemption from such registration.

                      (b) The Holder is aware that neither this Warrant nor the
Warrant Stock may be sold pursuant to Rule 144 adopted under the Act unless
certain conditions are met and until the Holder has held the Warrant Stock for
at least one year. Among the conditions for use of rule 144 is the availability
of current information to the public about the Company. The Holder understands
that the Company has not made such information available and has no present
plans to do so.

                      (c) The Holder represents and warrants that it is an
"accredited

                                       11
<PAGE>   12

investor" as such term is defined in rule 501(a) under the Act. Specifically,
the Holder represents and warrants that it is either a corporation or
partnership, not formed for the specific purpose of acquiring securities of the
Company, with total assets in excess of $5,000,000.

               8.3 Disposition of Warrant and Warrant Stock. The Holder further
agrees not to make any disposition of all or any part of this Warrant or the
Warrant Shares in any event unless and until:

                      (a) The Company shall have received a letter secured by
the Holder from the Securities and Exchange Commission stating that no action
will be recommended to the Commission with respect to the proposed proposition;
or

                      (b) There is then in effect a registration statement under
the Act covering such proposed disposition and such disposition is made in
accordance with said registration statement; or

                      (c) The Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, the Holder
shall have furnished the Company with an opinion of counsel for the Holder to
the effect that such disposition will not require registration of such Warrant
or shares under the Act, and such opinion of counsel for the Holder shall have
been concurred in by the Company's counsel and the Company's counsel and the
Company shall advise the Holder of such concurrence; or

                      (d) Notwithstanding the provisions of paragraphs (a), (b)
and (c) above, no such Securities and Exchange Commission letter, registration
statement or opinion of counsel shall be required: (i) for any transfer of this
Warrant or any shares issuable upon exercise of this Warrant in compliance with
SEC Rule 144 or 144A; or (ii) for any transfer of this Warrant or shares
issuable upon exercise of this Warrant by a Holder that is a partnership or a
corporation to (A) a partner of such partnership or corporation; (B) a retired
partner or shareholder; or (iii) the transfer by gift, will or intestate
succession by any Holder to his or her spouse or lineal descendents or ancestors
or any trust for any of the foregoing.

        9. EXCHANGE AND REPLACEMENT OF WARRANT. This Warrant is exchangeable
without expense, upon the surrender hereof by the registered Holder at the
principal executive office of the Company, for a new Warrant of like kind and
date representing in the aggregate the right to purchase the same number of
shares as are purchasable hereunder in such denominations and in the name(s) of
such assignee(s) as shall be designated by the registered Holder hereof at the
time of such surrender.

        Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft or destruction of this Warrant, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like kind, in lieu of this Warrant.

                                       12
<PAGE>   13

        10. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called upon any exercise thereof, the Company
shall pay to the Holder an amount in equal to such fraction multiplied by the
current market value of a share of Common Stock, as determined in good faith by
the Board of Directors of the Company.

        11. RESERVATION AND LISTING OF SHARES. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of this Warrant, such number of
shares of Common Stock as shall be issuable upon the exercise hereof. The
Company covenants and agrees that, upon exercise of this Warrant and payment of
the Exercise Price therefore, all shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully paid and non-assessable,
provided that the Exercise Price per share shall equal or exceed the par value
of the Common Stock. As long as the Warrant shall be outstanding, the Company
shall use its best efforts to cause all shares of Common Stock issuable upon the
exercise of the Warrant to be listed (subject to official notice of issuance) on
all securities exchanges on which the Common Stock may then be listed.

        12. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Exercise Price, the Company, at its expense,
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and prepare and furnish to the Holder a certificate of the chief
financial officer of the Company setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The Company shall, upon the written request at any time of the Holder,
furnish to the Holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the exercise of this Warrant.

        13. RIGHTS OF WARRANT HOLDERS. Nothing contained in this Warrant shall
be construed as conferring upon the Holder hereof the right to vote or to
consent or to receive notice as a shareholder in respect of any meetings or
shareholders for the election of directors or any other matter, or as having any
rights whatsoever as a shareholder of the Company.

        14. NOTICES. All notices, requests, consents and other communications
hereunder shall be deemed to have been duly made when delivered in person, or
mailed by registered or certified mail, return receipt requested:

               (a) If to the registered Holder or Holders of this Warrant, to
the address of such Holder as shown on the books of the Company; or

               (b) If to the Company, to the address set forth on the first page
of this Warrant or to such other address as the Company may designate by notice
to the Holders.

        15. REMEDIES. Each holder of Warrant and Warrant Shares, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under Section 5
of this Warrant. The Company agrees that

                                       13
<PAGE>   14

monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of Section 5 of this Warrant and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.

        16. AMENDMENT. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Holder or Holders, provided that no such Warrant may be modified or
amended to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.

        17. SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.

        18. SUCCESSORS. All the covenants, agreements, representations and
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.

        19. HEADINGS. The Section headings in this Warrant are inserted for
purposes of convenience only and shall have no substantive effect.

        20. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the laws of the State of California.

        WITNESS the seal of the Company and the signature of its duly authorized
officer.

                                          PLANET POLYMER TECHNOLOGIES, INC.

DATED:  March  9, 2000                    By:
                                             -----------------------------------
                                             Robert J. Petcavich
                                             Chief Executive Officer

                                       14
<PAGE>   15

                                    EXHIBIT A

                                SUBSCRIPTION FORM

                    (To be Executed by the Registered Holder
                        in Order to Exercise the Warrant)

        The undersigned hereby irrevocably elects to exercise the right to
purchase ______ shares of Common Stock of Planet Polymer Technologies, Inc.
covered by the Warrant to which this Exhibit A is attached, according to the
conditions of such Warrant, and herewith makes payment of the Exercise Price of
such shares in full.

                     INSTRUCTIONS FOR REGISTRATION OF STOCK

NAME
    ---------------------------------
ADDRESS
       ------------------------------

                                         ---------------------------------------
                                         Signature

DATED:
      --------------------

                                       1
<PAGE>   16

                                     ANNEX B

                                 ASSIGNMENT FORM

        FOR VALUE RECEIVED, the undersigned registered owner of the Warrant to
which this Exhibit B is attached hereby sells, assigns and transfers unto the
Assignee named below all of the rights of the undersigned under such Warrant,
with respect to the number of shares of Common Stock set forth below.

Name and Address of Assignee               No. of Shares of Common Stock
----------------------------               -----------------------------

and does hereby irrevocably constitute and appoint ________________
attorney-in-fact to register such transfer on the books of Planet Polymer
Technologies Inc. maintained for the purpose, with full power of substitution in
the premises.

Dated:                                          --------------------------------
      --------------------                      Signature

                                       1<PAGE>   1
                                                                   EXHIBIT 10.20

                                           ***TEXT OMITTED AND FILED SEPARATELY
                                             CONFIDENTIAL TREATMENT REQUESTED
                                          UNDER 17 C.F.R. SECTIONS 200.80(b)(4),
                                                   200.83 AND 240.24b-2

                MANUFACTURING AND FULFILLMENT SERVICES AGREEMENT

        THIS MANUFACTURING AND FULFILLMENT SERVICES AGREEMENT (the "Agreement")
is made and entered into as of November 4, 1999 (the "Effective Date"), by and
between MP3.COM, INC., a Delaware corporation ("MP3.com"), and CINRAM, INC., a
Delaware corporation ("Cinram").

                                    RECITALS

        A. MP3.com is an on-line distributor and promoter of music and is
engaged in electronic commerce and the distribution of Digital Automatic Music
(DAM) CDs, Compilation CDs (as defined below) and other merchandise.

        B. Cinram is an international manufacturer of CDs, DVDs, audiocassettes
and videocassettes, and provides various fulfillment services to its customers.

        C. The parties desire by this Agreement to set forth the terms and
conditions for the engagement of Cinram as MP3.com's exclusive, worldwide
manufacturer of certain products, including DAM CDs and Compilation CDs, and as
MP3.com's exclusive, worldwide provider of fulfillment services for certain
merchandise sold by MP3.com.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties agree as follows:

1.      DEFINITIONS.  As used in this Agreement, the terms set forth below have
the following meanings:

        1.1 "AFFILIATE" means any corporation or other entity which controls, is
controlled by, or is under common control with, a party. A corporation or other
entity will be regarded as in control of another corporation or entity if it
owns or directly or indirectly controls more than 50% of the voting securities
or other ownership interest of the other corporation or entity.

        1.2 "BONA FIDE MANUFACTURER" has the meaning set forth in Section
7.2(b).

        1.3 "BUSINESS DAY" means any day other than a Saturday or Sunday on
which banks are not authorized or required to close in San Diego County,
California.

        1.4 "CD" means a digital audio compact disc.

        1.5 "CD-R" means a CD that is capable of being recorded upon.

        1.6 "CHANGE IN CONTROL" means (a) a sale, lease or other disposition of
all or substantially all of the assets of Cinram or Cinram's parent, Cinram
International ("CINRAM INTERNATIONAL") to any Third Party, (b) a merger, reverse
merger, consolidation or reorganization of Cinram or Cinram International with
or into a Third Party unless, immediately following any

                                       1.
<PAGE>   2

such transaction, the Persons who were the stockholders of Cinram or Cinram
International, as applicable, immediately prior to such transaction, together
with their Affiliates, possess, directly or indirectly, at least 50% of the
voting power of the surviving entity in the merger, reverse merger,
consolidation or reorganization, (c) the acquisition by a Third Party of
securities of Cinram or Cinram International representing fifty percent (50%) or
more of the combined voting power of the then-outstanding securities of Cinram
or Cinram International, or (d) the individuals who at the beginning of any
period of two (2) consecutive years constitute the Board of Directors of Cinram
International, cease for any reason during such period to constitute at least a
majority of the Board of Directors of Cinram International.

        1.7 "COMPILATION CDS" means CDs compiled featuring works of one or more
artists. Compilation CDs may include multi-media content, as well as audio
files.

        1.8 "CONFIDENTIAL INFORMATION" means any confidential or proprietary
information of a party, including without limitation, names of customers, e-mail
addresses, terms of contracts, technical know-how, processes, methods of
operation, marketing methods, pricing policies, works in process, future
developments, and engineering, manufacturing, marketing and business plans
relating to such party, its present or future products, sales, suppliers,
customers, employees, investors or business, whether in oral, written, graphic
or electronic form. Notwithstanding the foregoing, Confidential Information will
not include any information which the receiving party can prove by competent
written evidence:

               (a) is now, or hereafter becomes, through no act or failure to
act on the part of the receiving party, generally known or available;

               (b) is known by the receiving party at the time of receiving such
information, as evidenced by its records;

               (c) is hereafter furnished to the receiving party by a Third
Party, as a matter of right and without restriction on disclosure; or

               (d) is the subject of a written permission to disclose provided
by the disclosing party.

        1.9 "CONTENT SOFTWARE" means software owned by or licensed (with a right
to sublicense) to MP3.com that is required to take MP3.com's content (including
but not limited to redbook and MP3 audio formats as well as video, graphics and
music and/or video software players) and proprietary aesthetic design and
incorporate it into a comprehensive file that can then be burned onto a CD-R or
other tangible media utilizing a just-in-time manufacturing process.

        1.10 "CONTROLLED AFFILIATE" means an Affiliate of MP3.com that is
majority-owned by MP3.com or as to which MP3.com is expressly authorized to
select the manufacturer of products or the provider of fulfillment services for
such Affiliate.

        1.11 "DAMAGES" has the meaning set forth in Section 14.1.

                                       2.
<PAGE>   3

        1.12 "DAM CDS" means fully-packaged CDs, which contain multiple songs
and which may contain multimedia features, including graphics, video, song
lyrics and artist biographical information, as well as an embedded music and/or
video player. Content contained on each DAM CD may be in multiple digital
formats.

        1.13 "DVD" means digital versatile disc.

        1.14 "EQUIPMENT" means the hardware required to manufacture DAM CDs.

        1.15 "FULFILLMENT PRODUCTS" means the products set forth on Exhibit A,
as amended from time to time upon the mutual written agreement of the parties
pursuant to Section 3.3.

        1.16 "FULFILLMENT SERVICES" means (a) the picking, packaging and
shipping of all orders for Products, and (b) the performance of the related
services, all as set forth on Exhibits B and B-1, each as amended from time to
time upon the mutual written agreement of the parties.

        1.17 "FULLY OPERATIONAL" means, with respect to Cinram, that Cinram is
meeting its performance obligations under this Agreement, including the Service
Levels, the Specifications and manufacturing of Manufactured Products all at a
volume per day which meets the forecast levels provided by MP3.com.

        1.18 "IMPROVEMENTS" means all improvements, enhancements, modifications,
alterations, translations or derivative works of the Manufacturing Software
and/or the Content Software made or developed by or on behalf of Cinram or
MP3.com during the Term.

        1.19 "MAJOR LABELS" means any record company owned or distributed by or
affiliated with any of BMG Entertainment, EMI Records, Sony Music Entertainment,
Inc., Universal Music Group and Warner/Elektra/Atlantic Corporation.

        1.20 "MANUFACTURED PRODUCTS" means the products set forth on Exhibit A,
as amended from time to time upon the mutual written agreement of the parties
pursuant to Section 3.3, which are to be manufactured according to the
Specifications by Cinram for MP3.com hereunder.

        1.21 "MANUFACTURING AND FULFILLMENT FEES" has the meaning set forth in
Section 7.1.

        1.22 "MANUFACTURING PLAN" means the plan set forth on Exhibit C for the
scale-up of Cinram's facilities to enable the performance of Manufacturing
Services and Fulfillment Services, as amended from time to time upon the mutual
written agreement of the parties.

        1.23 "MANUFACTURING SERVICES" means the manufacturing of Manufactured
Products in accordance with the terms of this Agreement, including the services
set forth on Exhibits B and B-1, each as amended from time to time upon the
mutual written agreement of the parties.

        1.24 "MANUFACTURING SOFTWARE" means software owned by or licensed (with
a right to sublicense) to MP3.com that is required to take content, from MP3.com
or any other customer (including but not limited to redbook and MP3 audio
formats as well as video, graphics and music and/or video software players), and
"burn" such content onto a CD-R or other tangible

                                       3.
<PAGE>   4

media utilizing a just-in-time manufacturing process, but shall not include any
software that constitutes Content Software.

        1.25 "NEW PRODUCT" has the meaning set forth in Section 3.3.

        1.26 "PERSON" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including, without limitation, any governmental entity or
department, bureau or agency thereof.

        1.27 "PROBLEM PRODUCTS" means Fulfillment Products shipped to Cinram
which cannot be processed by Cinram without imposing an unreasonable hardship on
Cinram, including Fulfillment Products which arrive with insufficient paperwork
or are faulty or damaged.

        1.28 "PRODUCTS" means the Fulfillment Products and the Manufactured
Products.

        1.29 "SERVICE LEVELS" means the service levels set forth in Exhibits B
and B-1, each as amended from time to time upon the mutual written agreement of
the parties.

        1.30 "SPECIAL SERVICE FEES" has the meaning set forth in Section 7.3.

        1.31 "SPECIAL SERVICES" has the meaning set forth in Section 6.3.

        1.32 "SPECIFICATIONS" means the specifications set forth on Exhibit D,
as amended from time to time upon the mutual written agreement of the parties.

        1.33 "TERM" has the meaning set forth in Section 10.

        1.34 "THIRD PARTY" means any Person other than MP3.com or Cinram or an
Affiliate of MP3.com or Cinram.

2.      MANUFACTURING PLAN; PURCHASE AND SALE OF EQUIPMENT. The parties agree
that as soon as practicable after the Effective Date, the parties will work to
develop a detailed project plan setting forth the rights and responsibilities of
each party with respect to getting Cinram Fully Operational. The parties agree
that such project plan will be generally consistent with the Manufacturing Plan.
To the extent Cinram purchases any Equipment from MP3.com, Cinram will purchase
such Equipment at its then current book value.

3.      EXCLUSIVE RIGHTS; JOINT MARKETING.

        3.1 MANUFACTURING RIGHTS. Subject to the terms and conditions of this
Agreement and during the Term, except as set forth in the Manufacturing Plan,
(a) Cinram will have the exclusive, world-wide right and obligation to provide
Manufacturing Services for MP3.com and its Controlled Affiliates, and (b)
MP3.com agrees that it will purchase all of its and its Controlled Affiliates'
requirements for Manufacturing Services exclusively from Cinram and that, except
for such purchases from Cinram, neither MP3.com nor any of its Controlled
Affiliates will perform, purchase, order or solicit bids from (except as set
forth in Sections 5.4, 7.2(b) and 16.1(b)) any Third Party for Manufacturing
Services; provided, however, that MP3.com and its

                                       4.
<PAGE>   5

Controlled Affiliates shall retain the right to perform, purchase, order or
solicit bids for Manufacturing Services for research, development and testing
purposes to the extent that such Manufacturing Services do not result in
production of more than [***] units per day of each item so produced.

        3.2 FULFILLMENT RIGHTS. Subject to the terms and conditions of this
Agreement and during the Term, (a) Cinram will have the exclusive, world-wide
right and obligation to provide all Fulfillment Services for MP3.com and its
Controlled Affiliates, and (b) MP3.com agrees that it and its Controlled
Affiliates will purchase Fulfillment Services exclusively from Cinram and that
neither MP3.com nor its Controlled Affiliates will contract or have any
arrangements with, or solicit bids from (except as set forth in Sections 5.4,
7.2(b) and 16.1(b)), any Third Party for Fulfillment Services; provided,
however, that MP3.com and its Controlled Affiliates shall retain the right to
perform and/or contract or have any arrangements with, or solicit bids from, any
Third Party for Fulfillment Services for research, development and testing
purposes to the extent that such Fulfillment Services do not result in
fulfillment of services for more than [***] units per day of each item so
provided.

        3.3 [***]

        3.4 [***]

*** CONFIDENTIAL TREATMENT REQUESTED

                                       5.
<PAGE>   6

4.      GRANT OF LICENSES.

        4.1 MANUFACTURING SOFTWARE AND CONTENT SOFTWARE. Subject to the terms
and conditions of this Agreement, MP3.com hereby grants to Cinram (a) a
non-exclusive, non-transferable, worldwide, irrevocable, fully-paid license
(without the right to sublicense) to use the Manufacturing Software owned by
MP3.com and, to the extent sublicensing is permitted under any applicable
licenses, licensed to MP3.com, and (b) during the Term, a non-exclusive,
non-transferable, worldwide, fully-paid license (without the right to
sublicense) to use the Content Software owned by MP3.com and, to the extent
sublicensing is permitted under any applicable licenses, licensed to MP3.com,
solely to perform Manufacturing Services and Fulfillment Services for MP3.com
and its Affiliates in accordance with this Agreement. Notwithstanding the
foregoing, Cinram will have no right to use the Content Software for or on
behalf of any Third Party. Except as set forth in this Section 4.1, MP3.com
reserves all other rights in the Manufacturing Software and the Content
Software.

        4.2 IMPROVEMENTS. Subject to the terms and conditions of this Agreement,
each party hereby grants to the other party a non-exclusive, non-transferable,
worldwide, irrevocable (except as set forth in Section 11 hereof), fully-paid
license to use, without the right to sublicense, solely for its internal
business purposes, any Improvements created during the Term. Every six (6)
months during the Term, each party will provide to the other party (a) a report
which sets forth in reasonable detail all Improvements made or developed by or
on behalf of such party during such six (6) month period, and (b) all supporting
documentation related thereto.

5.      MANUFACTURING SERVICES.

        5.1 PLACE OF PERFORMANCE. The Manufacturing Services will be performed
by Cinram at Cinram's place of business in Anaheim, California, and/or at such
other business locations in the 48 contiguous United States as Cinram may
maintain from time to time, or such other location as mutually agreed by Cinram
and MP3.com; provided, however, that Cinram may out-source certain Manufacturing
Services to a Third Party on a temporary basis, subject to the prior written
consent of MP3.com, so long as Cinram remains primarily responsible for
providing such out-sourced Manufacturing Services.

        5.2 SERVICE LEVELS. The Service Levels define certain minimum standards
of performance which Cinram will maintain in rendering the Manufacturing
Services. Cinram will use commercially reasonable efforts to provide
Manufacturing Services in accordance with the Service Levels. In circumstances
in which this Agreement does not stipulate certain Service Levels with respect
to a particular Manufacturing Service, Cinram and MP3.com will mutually agree in
writing upon the Service Levels with respect to such Manufacturing Service, and
Cinram will use commercially reasonable efforts to provide such Manufacturing
Service in

                                       6.
<PAGE>   7

accordance with such agreed upon Service Levels. Cinram's failure to perform the
Manufacturing Services in accordance with the Service Levels will be subject to
the default and cure provisions set forth in Exhibit B-1.

        5.3 SPECIFICATIONS. Cinram will perform the Manufacturing Services in
accordance with the Specifications. If Exhibit D does not set forth the
Specifications with respect to certain Manufacturing Services, Cinram and
MP3.com will mutually agree in writing upon the Specifications for such
Manufacturing Services, and Cinram will use commercially reasonable efforts to
perform such Manufacturing Services in accordance with such Specifications.
Cinram's failure to perform the Manufacturing Services in accordance with the
Specifications will be subject to the default and cure provisions set forth in
Exhibit B-1.

        5.4 MUSICAL CONTENT AND GRAPHICS MATERIAL. MP3.com will make all content
with respect to the Manufactured Products available to Cinram in accordance with
the Manufacturing Plan, but in all cases in a manner so as to permit Cinram to
manufacture the Manufactured Products within the Specifications. Cinram retains
the right, in its sole reasonable discretion, to decline to produce any
Manufactured Product if it has been notified of or reasonably believes any
content or other components of such Manufactured Product infringe any
trademarks, service marks, trade names, copyrights, trade secrets or other
intellectual property rights of any Third Party. In order to assist Cinram in
complying with the requirements set forth under the International Recording
Media Association ("IRMA") Anti-Piracy Compliance Program, MP3.com acknowledges
and agrees that (a) Cinram will incorporate a code in all audio and video glass
masters and any CD, DVD or other similar product indicating the location of
production of such product, (b) except as provided in clause (d) hereof and in
Section 11.3(e), Cinram will maintain one source copy of each CD, DVD or other
similar product forwarded to it by MP3.com for one year, (c) Cinram may in its
sole discretion investigate the ownership of any and all materials provided to
it for duplication or reproduction, and (d) if Cinram reasonably determines, or
in its sole reasonable discretion has reason to believe, that MP3.com does not
possess the power or authority to duplicate or reproduce a product or materials,
Cinram may quarantine such product or materials forwarded to Cinram and, within
ten (10) Business Days, return such product or materials to MP3.com at MP3.com's
sole cost and expense; provided, however, if Cinram refuses to duplicate or
reproduce a product or materials pursuant to clause (d) hereof, Cinram thereby
waives its rights to exclusivity under Section 3 with respect to such product or
materials.

        5.5 WARRANTY. Cinram represents and warrants, for a period of one (1)
year from the date of delivery with respect to each Manufactured Product
supplied under this Agreement, that such Manufactured Product will be free from
material defects in materials and workmanship and will materially conform to the
Specifications.

6.      FULFILLMENT SERVICES.

        6.1 PLACE OF PERFORMANCE. The Fulfillment Services will be performed by
Cinram at Cinram's place of business in Anaheim, California, and/or at such
other business locations in the 48 contiguous United States as Cinram may
maintain from time to time, or such other location as mutually agreed by Cinram
and MP3.com; provided, however, that Cinram may out-source to a Third Party
certain Fulfillment Services on a temporary basis, subject to the prior written
consent

                                       7.
<PAGE>   8

of MP3.com, so long as Cinram remains primarily responsible for providing such
out-sourced Fulfillment Services.

        6.2 SERVICE LEVELS. The Service Levels define certain minimum standards
of performance which Cinram will maintain in rendering the Fulfillment Services.
Cinram will use commercially reasonable efforts to provide Fulfillment Services
in accordance with the Service Levels. In circumstances in which this Agreement
does not stipulate certain Service Levels with respect to a particular
Fulfillment Service, Cinram and MP3.com will mutually agree in writing upon the
Service Levels with respect to such Fulfillment Service, and Cinram will use
commercially reasonable efforts to provide such Fulfillment Service in
accordance with such agreed upon Service Levels. Cinram's failure to perform the
Fulfillment Services in accordance with the Service Levels will be subject to
the default and cure provisions set forth in Exhibit B-1.

        6.3 SPECIAL SERVICES. MP3.com may from time to time during the Term
request Cinram to perform Fulfillment Services on its behalf not covered by this
Agreement or to change any Service Level ("Special Services"). MP3.com will
notify Cinram in writing of its particular requirements with respect to any
Special Services, and Cinram will use commercially reasonable efforts to comply
with such requirements provided that the written notification is given in a
timely manner and the requirements and procedures are reasonable and not
economically burdensome. Cinram will promptly notify MP3.com in writing if
Cinram cannot perform any Special Services.

        6.4 FORECASTS. MP3.com recognizes and understands the importance of
keeping Cinram informed at all times of forecasted order volumes, schedule
changes, fast and slow selling Products or vendor problems and all other
material business issues which might have an effect on the performance by Cinram
of its obligations hereunder. MP3.com will use commercially reasonable efforts
to provide Cinram with non-binding forecasts and other information, including
new artist signings, upcoming release dates and promotional and sale items, so
as to assist Cinram in meeting the Service Levels provided herein, and will
deliver to Cinram revised non-binding forecasts whenever it believes that any
business condition of which it is aware may have the effect of materially
changing any item of a previous forecast furnished to Cinram. If actual order
volumes vary by more than 50% from forecasted levels, or if MP3.com has not
advised Cinram of any material business issues of which it is aware at the time
of forecast which affect the performance by Cinram of its obligations hereunder,
Cinram shall be deemed to comply with Section 6.2 with respect to Service Levels
directly or indirectly affected by such variance or such business issues if it
uses reasonable commercial efforts to achieve such Service Levels.

        6.5 COLLECTION RISKS. Notwithstanding anything contained herein to the
contrary, the parties acknowledge that Cinram will not be required to make any
collection efforts on behalf of MP3.com and will share no risk with respect to
any failure of MP3.com to collect on any order.

7.      FEES AND CHARGES. In consideration for performing the Manufacturing
Services and Fulfillment Services during the Term, MP3.com will pay to Cinram
the following fees and charges:

                                       8.
<PAGE>   9

        7.1 MANUFACTURING AND FULFILLMENT FEES. During the period commencing on
the Effective Date and ending six (6) months after the date Cinram becomes Fully
Operational, MP3.com will pay to Cinram fees for the Manufacturing Services and
Fulfillment Services provided hereunder (the "Manufacturing and Fulfillment
Fees") at the rates set forth in Exhibit E. Upon the six (6) month anniversary
of the date Cinram becomes Fully Operational, the parties will adjust the
Manufacturing and Fulfillment Fees, as necessary, upon mutual written agreement
of the parties taking into account Cinram's experience in providing the
Manufacturing Services and Fulfillment Services; provided, however, that in no
event will the unit cost of DAM CDs and Compilation CDs exceed the applicable
unit cost (as determined by volume) of DAM CDs and Compilation CDs set forth on
Exhibit E as of the Effective Date. The parties agree to negotiate in good faith
with respect to any adjustment of the Manufacturing and Fulfillment Fees.

        7.2 [***]

        7.3 SPECIAL SERVICES FEES. If MP3.com requests that Cinram provide any
Special Services, MP3.com will pay Cinram such amount with respect to such
Special Services as will

*** CONFIDENTIAL TREATMENT REQUESTED

                                       9.
<PAGE>   10

be agreed between the parties, which amount may include charges for setting up
the required Special Service as well as the performance of the Special Service
(the "Special Service Fees").

        7.4 SHIPPING COSTS. All UPS, U.S.P.S., common carrier and other delivery
service shipping costs, insurance, brokerage fees, taxes and other similar
expenses related to the shipping to Cinram of Products and the shipping by
Cinram of Products to customers in accordance with the Specifications and
Service Levels are the sole responsibility of MP3.com. To the extent
practicable, Cinram will cause all shipping charges to be billed directly to
MP3.com by the carrier. If through Cinram's buying power Cinram can effectively
reduce MP3.com's freight expense, then upon the mutual written agreement of the
parties Cinram will prepay and bill the freight to MP3.com with a [***]
markup.

        7.5 PAYMENT TERMS. Cinram will provide to MP3.com on a weekly basis an
invoice (in hard copy form) indicating all Manufacturing and Fulfillment Fees
and Special Service Fees incurred during such week. Cinram will provide to
MP3.com on a weekly basis an invoice (in hard copy form) indicating all shipping
fees and other shipping and handling charges incurred with respect to shipments
of Products during such week. All invoices and other charges payable hereunder
will be paid solely in United States Dollars. If conversion from other
currencies is required for any purpose, the mid-market, midday rate as posted by
Reuters will apply. All invoices will be due and payable in full within thirty
(30) days after receipt, except invoices for shipping fees and other shipping
and handling charges, which will be due and payable in full within seven (7)
days after receipt. Any amounts disputed in good faith by MP3.com and the
reasons therefor will be reported to Cinram within fifteen (15) days after
receipt of the applicable invoice, and MP3.com and Cinram agree to work
diligently to resolve the dispute within thirty (30) days of the receipt of the
notice of dispute from MP3.com. Invoices that are not paid within thirty (30)
days, other than those for which a dispute has been reported by MP3.com, shall
be assessed a late payment charge at the rate of 1.5% per month on the unpaid
balance, retroactive to the date of the invoice.

        7.6 ACCOUNTING INFORMATION. Cinram will provide to MP3.com the
accounting information required in the project plan to be created and agreed
upon by the parties pursuant to Section 2.

8.      INVENTORY. Fulfillment Product inventory will be handled and
processed as follows:

        8.1 INVENTORY REQUIREMENTS. The parties will establish inventory
management procedures on a product-by-product basis. Cinram will use
commercially reasonable efforts to preserve and maintain Fulfillment Products
received for MP3.com in good and marketable condition. At least one (1) Business
Day prior to the expected delivery of Fulfillment Products to Cinram, MP3.com
will supply Cinram with a copy of the purchase order by which MP3.com ordered
such Fulfillment Products, or all requisite details of the purchase order to
permit Cinram to identify MP3.com's Fulfillment Products. Cinram will provide to
MP3.com a monthly report (in hard copy form) which sets forth an accurate
accounting of Fulfillment Products held in inventory by Cinram. Cinram will keep
complete and accurate records in sufficient detail to permit MP3.com to confirm
the inventory of Fulfillment Products held by Cinram. MP3.com will have the
right to audit such records during normal business hours upon reasonable prior
written notice to Cinram.

*** CONFIDENTIAL TREATMENT REQUESTED

                                      10.
<PAGE>   11

        8.2 INVENTORY SHIPMENTS. For inbound shipments of Fulfillment Products,
MP3.com will advise its vendors that motor carriers must contact Cinram at least
one (1) Business Day prior to delivery and make a delivery appointment prior to
arrival. Cinram will use commercially reasonable efforts to promptly notify
MP3.com in writing if any of its vendors fails to contact Cinram prior to
delivery. Inbound shipments arriving at Cinram's warehouse without one Business
Day's prior notice may be delayed depending on the space and manpower available
at the time of arrival. Each inbound shipment must have a packing slip and each
carton must be marked with the order number.

        8.3 PROBLEM PRODUCTS. Cinram will use its reasonable commercial efforts
to comply with MP3.com's written instruction regarding handling and disposing of
Problem Products and will use its reasonable commercial efforts to submit a
report of Problem Products within five (5) Business Days of having become aware
of its status as Problem Products. Cinram will not include Problem Products in
the inventory of items available for shipment to customers. MP3.com acknowledges
that Problem Products cannot be stored indefinitely and that all Problem
Products will be removed within sixty (60) days of Cinram notifying MP3.com of
all specific details relevant to the classification of the Fulfillment Products
as Problem Products. Cinram has the right to dispose of Problem Products by
returning the Problem Products to MP3.com on a freight collect basis (provided
MP3.com has not provided Cinram with other directions within the earlier of the
60-day period or the date of shipment) or taking any other actions which are
reasonable under the circumstances.

        8.4 REJECTION OF INVENTORY. Cinram reserves the right to refuse, without
liability of any kind, acceptance of Fulfillment Products which, because of its
condition, might cause, in Cinram's sole reasonable judgment, infestation,
contamination or damage to the warehouse facility or to other goods in the
custody of Cinram. Cinram will notify MP3.com of its refusal to accept any such
Fulfillment Products and the reason for its refusal within forty-eight (48)
hours of such refusal. If Cinram believes that any Fulfillment Products have
caused or may cause damage to its warehouse facility or to any other goods in
the custody of Cinram or has characteristics which make its storage illegal,
Cinram, after giving reasonable notice to MP3.com, may dispose of the
Fulfillment Products in any lawful manner, will incur no liability by reason of
such disposal and MP3.com will pay Cinram any costs incurred by Cinram in
connection with such disposal.

        8.5 TITLE TO INVENTORY. All Fulfillment Products in the possession of
Cinram will be and remain the exclusive property of MP3.com, and Cinram
acknowledges and agrees that it will acquire no right, title or interest in or
to any Fulfillment Products by reason of this Agreement except as set forth in
Section 11.3(a). Except in the course of carrying out its Fulfillment Services
hereunder, Cinram will not transfer, assign, exchange, lease, encumber, pledge,
create a security interest in or otherwise dispose of the Fulfillment Products
and will not subject the Fulfillment Products to attachment, levy or seizure by
or on behalf of any creditor of Cinram. MP3.com may file any financing
statements(s) with respect to the Fulfillment Products in the possession of
Cinram.

        8.6 RISK OF LOSS. All risk of loss and damage to Fulfillment Products
from any cause prior to receipt by Cinram into, and from and after the removal
by common carrier from, the inventory at Cinram's facility will be borne by
MP3.com (or its customer, if applicable). Cinram

                                      11.
<PAGE>   12

will make reasonable efforts to take reasonable care of the Fulfillment Products
inventory while in Cinram's possession.

        8.7 INSPECTION OF INVENTORY. During the Term, MP3.com, during normal
business hours and on at least twenty-four (24) hours prior telephonic or
electronic notice, will have access to Cinram's warehouse for the purpose of
conducting a physical inventory of the Fulfillment Products and verifying
security measures and proper processing. Cinram will maintain actual perpetual
inventory records for all Fulfillment Products in its possession.

9.      TAXES. All fees, costs, charges and other amounts payable to Cinram
hereunder are exclusive of applicable taxes, if any, which are the
responsibility of MP3.com. In addition, MP3.com will be responsible for the
collection and payment of all sales taxes, the preparation and filing of all
sales tax documentation and the compliance with all sales tax laws. Cinram will
have no responsibility for payment or collection of any such taxes. MP3.com
shall indemnify and hold Cinram harmless from and against any and all claims,
suits, actions, debts, damages, costs, charges and expenses, including court
costs and attorneys' fees, incurred by Cinram due to MP3.com's failure to
properly file and pay applicable sales, use and tangible personal property
taxes.

10.     TERM. The term of this Agreement will commence as of the date hereof
and will continue for a period of ten (10) years thereafter, unless terminated
earlier in accordance with the provisions of Section 11 or Section 7.2(b) (the
"Term").

11.     TERMINATION.

        11.1 TERMINATION BY MP3.COM. MP3.com, at its option and without any
prejudice to any other rights it may have, may, by providing written notice,
terminate this Agreement pursuant to Exhibit B-1 or upon the occurrence of any
of the following events:

               (a) The failure of Cinram to perform any material term, condition
or covenant contained in this Agreement on its part to be performed or observed,
where such failure continues for a period of thirty (30) days after written
notice of the failure to Cinram;

               (b) The ninety-day anniversary of the event causing the delay or
failure under Section 16.1 if not cured to the reasonable satisfaction of
MP3.com prior to such anniversary;

               (c) The filing of a voluntary or involuntary petition for
bankruptcy, insolvency proceeding, liquidation or assignment for the benefit of
creditors by or against Cinram or its parent, Cinram International, or the
placement in the hands of a receiver, liquidator or trustee of a substantial
portion the assets of Cinram or Cinram International; or

               (d) A Change in Control.

        11.2 TERMINATION BY CINRAM. Cinram, at its option and without any
prejudice to any other rights it may have, may, by providing written notice,
terminate this Agreement upon the occurrence of any of the following events:

                                      12.
<PAGE>   13

               (a) The failure of MP3.com to cure a breach of any of its payment
obligations under this Agreement during the fifteen (15) day period following
receipt of written notice of such breach;

               (b) The failure of MP3.com to perform any material term,
condition or covenant contained in this Agreement on its part to be performed or
observed (other than a payment obligation), where such failure continues for a
period of thirty (30) days after written notice of the failure to MP3.com; or

               (c) The filing of a voluntary or involuntary petition for
bankruptcy, insolvency proceeding, liquidation or assignment for the benefit of
creditors by or against MP3.com, or the placement in the hands of a receiver,
liquidator or trustee of a substantial portion of MP3.com's assets.

        11.3 EFFECTS OF TERMINATION OR EXPIRATION.

               (a) Upon the termination of this Agreement by Cinram under
Section 11.2, Cinram will be entitled to all amounts owing to it under this
Agreement and may hold the Products in its possession until all sums owed to
Cinram by MP3.com pursuant to this Agreement are paid in full; provided,
however, that MP3.com will be allowed to substitute collateral acceptable to
Cinram in place of the Products in Cinram's possession.

               (b) Upon termination of this Agreement by MP3.com under Section
11.1, within the first two (2) years following the Effective Date, MP3.com will
have the right to use any enhancements, improvements, trade secrets and know-how
associated with the Equipment for MP3.com's internal operations.

               (c) Upon expiration or termination of this Agreement, except to
the extent necessary for Cinram to comply with Section 11.3(d), Cinram will have
no right to use the Content Software or any Improvements thereof, and all rights
in and to the Content Software and any Improvements thereof will revert to
MP3.com.

               (d) Upon receipt of notice of the termination of this Agreement
by MP3.com pursuant to Section 11.1, Cinram hereby (i) agrees to continue to
provide the Manufacturing Services and Fulfillment Services described in this
Agreement to the extent requested by MP3.com for a period of up to 180 days
(except to the extent Cinram is unable to perform such services pursuant to
Section 16.1) and (ii) waives its rights to exclusivity under Section 3 for such
180-day period.

               (e) Except as reasonably necessary for MP3.com to exercise its
rights under Section 11.3(b) or (d) or Section 4.2, within 30 days following the
expiration or termination of this Agreement, each party will return to the other
party, or destroy, upon the written request of the other party, any and all
Confidential Information of the other party in its possession.

               (f) Expiration or termination of this Agreement will not relieve
the parties of any obligation accruing prior to such expiration or termination.
The provisions of Sections 1, 4.1 (except as provided in Section 11.3(c)), 4.2
(first sentence only and except as provided in Section

                                      13.
<PAGE>   14

11.3(c)), 5.5 (to the extent such warranty period extends beyond the date of
expiration of termination), 7.5, 8.5, 8.6, 9, 11.3, 14, 15 and 16 will survive
expiration or termination of this Agreement.

12.     REPRESENTATIONS AND WARRANTIES.

        12.1 MP3.COM AND CINRAM. MP3.com and Cinram each hereby represents and
warrants to the other as follows:

               (a) It has the full authority and legal right to carry out the
terms of this Agreement;

               (b) The terms of this Agreement will not violate the terms of any
agreement, contract or other instrument to which it is a party and no consent or
authorization of any other Third Party is required in order to enter into and
carry out the terms of this Agreement;

               (c) It has taken all corporate and other action necessary to
authorize the execution and delivery of this Agreement; and

               (d) This Agreement is a legal, valid and binding obligation of
MP3.com and Cinram, as the case may be, enforceable against it in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application relating to or affecting the enforcement of the rights of creditors
or by equitable principles, whether enforcement is sought in equity or at law.

        12.2 [***]

        12.3 CINRAM. Cinram hereby represents and warrants to MP3.com that
Cinram's plant is protected by premises alarm systems governing human entry/exit
points; motion detectors are in place in the ship staging and finished goods
holding areas; photo I.D. or other security badges are required to be displayed
by all staff, visitors and employees of any outside firm performing audit or
inventory services; employees use controlled access to the premises; and
full-time 24-hour security guards are on duty who monitor exterior perimeter and
surrounding acreage, as well as random plant locations.

*** CONFIDENTIAL TREATMENT REQUESTED

                                      14.
<PAGE>   15

        12.4 DISCLAIMER. Except as expressly set forth in this Agreement,
neither party makes any representation and extends no warranty of any kind,
either express or implied, including warranties as to merchantability or fitness
for a particular purpose.

13.     INSURANCE.

        13.1 MP3.COM. MP3.com will, at its sole cost and expense maintain in
force the following policies of insurance during the Term, with each such policy
naming Cinram as an additional insured thereunder, providing that it will be the
primary insurance with respect to the coverage provided thereunder and being
underwritten insurance carriers reasonably acceptable to Cinram:

               (a) A policy of comprehensive general liability insurance
(including, without limitation, product liability) insuring against claims of
personal injury or property damage arising out of any Products or the use of any
Products, with such policy having a minimum combined liability limit of not less
than [***]; and

               (b) One or more policies of liability insurance insuring against
advertising liability or trademark or service mark, patent or copyright
infringement, with such policy or policies having a minimum combined liability
limit of not less than [***].

        13.2 CINRAM. Cinram will, at its sole cost and expense maintain in force
the following policies of insurance during the Term, with each such policy
naming MP3.com as an additional insured thereunder and being underwritten by
insurance carriers reasonably acceptable to MP3.com:

               (a) A policy of comprehensive general liability insurance
(including, without limitation, product liability) insuring against claims of
personal injury or property damage arising out of Cinram's performance of its
obligations under this Agreement, or use of the Manufactured Products
manufactured by Cinram hereunder, with such policy having a minimum combined
liability limit of not less than [***].

14.     INDEMNITY.

        14.1 INDEMNITY BY MP3.COM. MP3.com will defend, indemnify and hold
harmless Cinram and its respective directors, officers, employees, agents,
distributors, customers, assignees and licensees (each a "Cinram Party") from
and against any and all costs, claims, harm, damages, liabilities, losses and
expenses (including, without limitation all reasonable attorneys' fees,
professional fees and disbursements) of any and every nature and kind whatsoever
(collectively, "Damages") actually incurred, suffered or sustained by any Cinram
Party arising from, or otherwise attributable to, MP3.com's breach of or
non-compliance with, any of its representations, warranties, covenants and
agreements contained in or arising under the terms of this Agreement except to
the extent that such Damages result from the gross negligence or willful
misconduct of a Cinram Party.

        14.2 INDEMNITY BY CINRAM. Cinram will defend, indemnify and hold
harmless MP3.com and its respective directors, officers, employees, agents,
distributors, customers, assignees and licensees (each an "MP3.com Party") from
and against any and all Damages actually incurred, suffered or sustained by any
MP3.com Party arising from, or otherwise

*** CONFIDENTIAL TREATMENT REQUESTED

                                      15.
<PAGE>   16

attributable to, Cinram's breach of or non-compliance with, any of its
representations, warranties, covenants and agreements contained in or arising
under the terms of this Agreement except to the extent that such Damages result
from the gross negligence or willful misconduct of an MP3.com Party.

        14.3 INDEMNIFICATION PROCEDURES. No party will be required to indemnify
another pursuant hereto unless the party seeking indemnification (the
"Indemnitee") will, with reasonable promptness, provide the other party (the
"Indemnitor") with copies of any claims or other documents received and will
otherwise make available to the Indemnitor all material relevant information.
The Indemnitor will have the right to defend any such claim at its expense, with
counsel of its choosing, and the Indemnitee will have the right, at its expense,
using counsel of its choosing, to join in the defense of any such claim. The
Indemnitee's failure to give prompt notice or to provide copies of documents or
to furnish relevant data will not constitute a defense in whole or in part to
any claim by the Indemnitee against the Indemnitor except to the extent that
such failure by the Indemnitee will result in a material prejudice to the
Indemnitor. Except as hereinafter provided, neither party will settle or
compromise any such claim unless it will first obtain the written consent of the
other, which will not be unreasonably withheld. The foregoing notwithstanding,
if suit will have been instituted against the Indemnitee and the Indemnitor will
have failed, after the lapse of a reasonable time after written notice to it of
such suit, to take action to defend the same, the Indemnitee will have the right
to defend the claim (without limiting the right of the Indemnitor to participate
in the defense) and to charge the Indemnitor with the reasonable cost of any
such defense, including reasonable attorneys' fees, and the Indemnitee will have
the right, after notifying but without consulting the Indemnitor, to settle or
compromise such claim on any terms reasonably approved by the Indemnitee. Fees
of attorneys and other professionals and related costs will be payable as and
when incurred. Neither party will have any liability to the other party under
this Section 14 or otherwise except to the extent of any Damages in excess of
any insurance proceeds actually paid with respect to such Damages.

        14.4 LIMITATION OF LIABILITY. Cinram will not be liable to any MP3.com
Party, or to any Third Party claiming through any MP3.com Party, for loss,
theft, disappearance, damage to or destruction of any Products to the extent
caused by the negligence, gross negligence or willful misconduct of a person
other than Cinram, its servants, agents or employees. Notwithstanding any other
provision of this Agreement to the contrary, in no event shall either (i) Cinram
be liable to any MP3.com Party or (ii) MP3.com be liable to any Cinram Party, in
excess of [***] per claim hereunder, in either contract or tort, for any
consequential, special, incidental or indirect damages, including, but not
limited to, the loss of anticipated profits or goodwill, resulting from Cinram's
or MP3.com's, as applicable, performance or nonperformance under this Agreement,
even if Cinram or MP3.com, as applicable, has been advised of the possibility of
such damages.

15.     CONFIDENTIALITY; OWNERSHIP OF CUSTOMER INFORMATION. During the Term
and for a period of five years thereafter, each party will maintain all
Confidential Information of the other party as confidential and will not
disclose any Confidential Information of the other party to any Third Party or
use any Confidential Information of the other party for any purpose, except (a)
as expressly authorized by this Agreement, (b) as required by law, rule,
regulation or court order (provided that the disclosing party will use
commercially reasonable efforts to obtain confidential treatment of any such
information required to be disclosed), or (c) to its Affiliates,

*** CONFIDENTIAL TREATMENT REQUESTED

                                      16.
<PAGE>   17

employees, agents, consultants and other representatives to accomplish the
purposes of this Agreement so long as such persons are under an obligation of
confidentiality no less stringent than as set forth herein. Each party may use
such Confidential Information only to the extent required to accomplish the
purposes of this Agreement. Each party will use at least the same standard of
care as it uses to protect its own Confidential Information to ensure that its
Affiliates, employees, agents, consultants and other representatives do not
disclose or make any unauthorized use of Confidential Information of the other
party. Each party will promptly notify the other party upon discovery of any
unauthorized use or disclosure of Confidential Information of the other party.
All customer information provided to Cinram under this Agreement will be deemed
to be Confidential Information of MP3.com.

16.     GENERAL.

        16.1 FORCE MAJEURE.

               (a) Neither Cinram nor MP3.com shall be liable for failures or
delays in delivery or in performance due to causes beyond its reasonable
control, including but not limited to acts of God or civil or military
authority, epidemics, war, riot, delays in transportation or shortages of
transportation vehicles, strikes or labor stoppages. In the event of any such
delay or failure, the party affected shall promptly notify the other party in
writing and use all commercially reasonable efforts to overcome the event or
circumstance causing the delay or failure as soon as practicable.

               (b) In the event of any delay or failure by Cinram pursuant to
this Section 16.1, during such delay or failure MP3.com may take any steps
deemed reasonably necessary by MP3.com to secure the services of a Third Party
to replace the services previously provided by Cinram. MP3.com and Cinram
acknowledge and agree that such services may continue for a reasonable period of
time beyond the failure or delay.

        16.2 INDEPENDENT CONTRACTOR. Each party hereto is an independent
contractor, and nothing contained herein will be deemed to create between the
parties the relationship of partners or joint venturers, and no party will have
any power to obligate any other party in any manner whatsoever, except as
expressly provided herein.

        16.3 ASSIGNMENT. Except as expressly provided hereunder, neither this
Agreement nor any rights or obligations hereunder may be assigned or otherwise
transferred by either party without the prior written consent of the other party
(which consent will not be unreasonably withheld); provided, however, that
MP3.com may assign this Agreement and its rights and obligations hereunder
without the consent of Cinram (a) in connection with the transfer or sale to a
Third Party of all or substantially all of the business of MP3.com to which this
Agreement relates, whether by merger, sale of stock, sale of assets or
otherwise, or (b) to an Affiliate, provided, that such Third Party or Affiliate
expressly agrees to be bound by all of the terms and conditions of this
Agreement; provided, however, that in no event shall the assignment of its
rights and obligations under this Agreement to any of its Affiliates relieve
MP3.com of any obligations or liability hereunder. Subject to the foregoing,
this Agreement will be binding upon and inure to the benefit of the parties
hereto and their permitted successors and assigns. Except

                                      17.
<PAGE>   18

as otherwise specifically provided herein, this Agreement does not create, and
will not be construed as creating, any rights enforceable by any Third Party.

        16.4 NOTICES. All notices, request, demands, waivers, consents and other
communications hereunder will be in writing, will be delivered either in person,
by telegraphic, facsimile or other electronic means, by overnight air courier or
by mail, and will be deemed to have been duly given and to have become effective
(a) upon receipt if delivered in person or by telegraphic, facsimile or other
electronic means calculated to arrive on any business day prior to 5:00 p.m.,
local time, (b) one business day after having been delivered to an air courier
for overnight delivery, or (c) three business days after having been deposited
in the mails as certified or registered mail, return receipt requested, all fees
prepaid, directed to the parties or their assignees at the following addresses
(or at such other address as will be given in writing by a party hereto):

        If to MP3.com:  MP3.com, Inc.
                        4790 Eastgate Mall
                        San Diego, CA 92121
                        Attn: Steven M. Przesmicki, Esq.
                        Director of Legal Affairs
                        Facsimile: (858) 623-7010
                        Email: przes@mp3.com

        If to Cinram:   Cinram, Inc.
                        3400 La Palma Avenue
                        Anaheim, CA 92806
                        Attn: David Rubenstein
                        President and CEO
                        Facsimile: (714) 238-7116
                        Email: daverubenstein@cinram.com

        Notwithstanding the foregoing, all notices, requests, demands or other
communications delivered hereunder will only be effective if sent by facsimile,
with confirmation of receipt, overnight courier or by registered or certified
mail, and, with respect to notices required under Section 11 hereof, with copies
to the following:

        If to MP3.com:  Frederick T. Muto, Esq.
                        Cooley Godward LLP
                        4365 Executive Drive, Suite 1100
                        San Diego, CA 92121-2128
                        Facsimile: (858) 453-3555

        If to Cinram:   Howard Z. Berman, Esq.
                        Ervin, Cohen & Jessup LLP
                        9401 Wilshire Blvd. 9th Floor
                        Beverly Hills, CA 90212
                        Facsimile: (310) 859-2325

                                      18.
<PAGE>   19

        16.5 REMEDIES NOT EXCLUSIVE. Except as specifically provided for
elsewhere in this Agreement, no remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy will be cumulative and will be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. The election of any one or more remedies by a party
will not constitute a waiver of the right to pursue other available remedies.

        16.6 ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or any agreements or instruments relating hereto or in
connection herewith, or the transactions contemplated hereby or thereby, will at
the request of any party be determined by binding arbitration before the
American Arbitration Association (AAA) under their then-prevailing commercial
arbitration rules. The arbitration will be held in San Diego County, California,
unless the parties mutually select another venue, and judgment upon the
arbitrator's award may be entered in any court having jurisdiction.
Notwithstanding the foregoing, either party may seek equitable relief by court
action, before or after instituting arbitration, including without limitation
seeking and obtaining temporary restraining orders, injunctions, or other
provisional or ancillary remedies, and the institution and maintenance of any
such action will not constitute a waiver of the right to arbitrate the
controversy or claim.

        16.7 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
in one or more counterparts, each of which will be deemed an original, but all
of which together will constitute one and the same instrument. This Agreement
may be executed by any party by delivery of a facsimile signature, which
signature will have the same force and effect as an original signature. Any
party which delivers a facsimile signature will promptly thereafter deliver an
originally executed signature to the other party(ies); provided, however, that
the failure to deliver an original signature page will not affect the validity
of any signature delivered by facsimile.

        16.8 GOVERNING LAW; VENUE. This Agreement will be governed by and
construed, interpreted and enforced under the laws of the State of California.
Subject to Section 16.5, all actions and proceedings arising in any manner out
of or from this Agreement will be litigated only in courts within Orange County,
California, and each party hereby consents and submits to the jurisdiction of
any local, state or federal court located within said county and state, hereby
irrevocably waiving any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding relating to this Agreement in
said county and state and further irrevocably waiving any claim that said county
and state is not a convenient forum of any such suit, action or proceeding.

        16.9 GENERAL. This Agreement contains the entire understanding between
the parties concerning the subject matter of this Agreement and supersedes all
prior understandings and agreements, whether oral or written, between them
representing the subject matter hereof. This Agreement may be modified only by
an agreement in writing signed by all parties hereto. If any of the provisions
of this Agreement are determined to be illegal, invalid or otherwise
unenforceable, in whole or in part, they will be deemed severable from, and will
in no way affect the validity or enforceability of, the remaining provisions of
this Agreement. Captions and section headings used herein are for convenience
only and are not a part of this Agreement and will not be used in construing it.

                                      19.
<PAGE>   20

        IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.

                                       MP3.COM, INC.

                                       By:________________________________
                                       Name: Robin Richards
                                       Title: President COO

                                       CINRAM, INC.

                                       By:________________________________
                                       Name: David Rubenstein
                                       Title: President CEO

                MANUFACTURING AND FULFILLMENT SERVICES AGREEMENT

<PAGE>   21

                                    EXHIBIT A

                   MANUFACTURED PRODUCTS; FULFILLMENT PRODUCTS

MANUFACTURED PRODUCTS

1.  DAM CDs

2.  Compilation CDs

FULFILLMENT PRODUCTS

None as of the Effective Date

<PAGE>   22

                                    EXHIBIT B

                           SERVICES AND SERVICE LEVELS

[***]

*** CONFIDENTIAL TREATMENT REQUESTED

<PAGE>   23

                                   EXHIBIT B-1

                           DEFAULT AND CURE PROVISIONS

[***]

*** CONFIDENTIAL TREATMENT REQUESTED

<PAGE>   24

                                    EXHIBIT C

                               MANUFACTURING PLAN

[***]

*** CONFIDENTIAL TREATMENT REQUESTED

<PAGE>   25

                                    EXHIBIT D

                                 SPECIFICATIONS

[***]

*** CONFIDENTIAL TREATMENT REQUESTED
<PAGE>   26

                                    EXHIBIT E

                       MANUFACTURING AND FULFILLMENT FEES

[***]

*** CONFIDENTIAL TREATMENT REQUESTED

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