Document:

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                                                                   EXHIBIT 10.17
                                            ***TEXT OMITTED AND FILED SEPARATELY
                                                CONFIDENTIAL TREATMENT REQUESTED
                                          UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
                                                            200.83 AND 240.24B-2

                              AMENDED AND RESTATED

                        ADVERTISING, PROMOTION AND MARKETING AGREEMENT

        THIS AMENDED AND RESTATED ADVERTISING, PROMOTION AND MARKETING AGREEMENT
("AGREEMENT") is made and entered into as of September 29, 2000 ("EFFECTIVE
DATE"), by and among MP3.COM, INC., a Delaware corporation ("MP3.COM"), having
an address at 4790 Eastgate Mall, San Diego, CA 92121, and MONTAIGNE
PARTICIPATIONS ET GESTION, a French corporation (formerly named Groupe Arnault)
("BUYER"), having an address at 41 Avenue Montaigne, 75008 Paris, France.
MP3.com and Buyer may be referred to individually as a "PARTY" and collectively
as the "PARTIES." MP3.com owns and operates the website located at www.mp3.com
(the "WEBSITE").

                                    RECITALS

A.      WHEREAS, MP3.com and Buyer entered into an Advertising, Promotion and
        Marketing Agreement dated July 10, 1999 ("ORIGINAL AGREEMENT"); and

B.      WHEREAS, the Parties, pursuant to Section 14.2 of the Original
        Agreement, now wish to supersede and replace the Original Agreement in
        its entirety with this Agreement, which shall govern the future
        performance of the Parties as it relates thereto.

        NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and adequacy of which the Parties acknowledge, the Parties mutually
agree as follows:

        1.      PURPOSE OF THIS AGREEMENT.

               1.1 AMENDMENT AND RESTATEMENT OF ORIGINAL AGREEMENT. In
accordance with to Section 14.2 of the Original Agreement, the Original
Agreement is superseded and replaced in its entirety by this Agreement.
[...***...]

               1.2 ADVERTISING, PROMOTION AND MARKETING PURCHASE COMMITMENT.
This Agreement sets forth the terms and conditions under which Buyer will
purchase one hundred and twenty million US dollars ($120,000,000) of
advertising, promotion and marketing services to be provided by MP3.com.

        2.      ADVERTISING, PROMOTION AND MARKETING.

               2.1 MEDIA; PURCHASE COMMITMENT. Buyer agrees to purchase from
MP3.com various advertising, promotional and marketing items and services, in
the amounts and in the manner set forth in this SECTION 2. Such items and
services shall include, but not be

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limited to, banner ads, portals, graphical buttons, e-mail marketing
sponsorships, event and tour sponsorships, CD sampler sponsorships, webcast
sponsorships, co-branded media programs, artist acquisition programs, artist and
consumer education programs, other sponsorships and on- and off-line promotions
and related services (collectively, "MEDIA"). Subject to the payment conditions
in SECTION 2.4, Buyer further agrees that it shall purchase, on a prepaid basis
for each quarter during the Term (as defined in SECTION 15.1) (each, a
"QUARTER"), no less than the full dollar amount of Media for such Quarter as set
forth on EXHIBIT A attached hereto. Should Buyer (together with its Affiliates
and [...***...], each as defined below) not fully use any amount of Media that
it has paid for in any given Quarterly period (except as provided in SECTION 12
herein), all of Buyer's rights to such Media shall terminate, all payment
obligations of Buyer shall remain in effect and any advance payments for such
Quarter shall remain the sole property of MP3.com with no further obligations
whatsoever with respect to the Media scheduled for such Quarter.

               2.2 QUARTERLY MEDIA ALLOCATION; DEFAULT ALLOCATION [...***...] no
later than forty-five (45) days prior to the beginning of each Quarter, MP3.com
shall submit to Buyer [...***...]. The [...***...]. Buyer and MP3.com shall
initiate substantive discussions with each other no later than thirty (30) days
prior to the beginning of each Quarter to determine the allocation and location
of Buyer's quarterly payment obligation [...***...] At Buyer's request, MP3.com
will also meet with Buyer in person or telephonically, upon reasonable notice,
in advance of thirty (30) days prior to the beginning of a Quarter to discuss
the allocation and location of Buyer's quarterly payment obligation for that
Quarter. In addition, [...***...] If a mutually acceptable allocation and
location is not agreed upon and set forth in a written document signed by Buyer
and MP3.com no later than seven (7) days prior to the beginning of the
applicable Quarter, then (subject to the immediately following sentence) such
Quarter's Media shall be allocated and located by MP3.com [...***...] using
[...***...] (the "DEFAULT

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ALLOCATION"). If MP3.com (in its sole discretion) and Buyer (also in its sole
discretion) are able to agree on an allocation and location of a particular
Quarter's Media [...***...] then such agreed upon allocation and location
[...***...] The Media allocation finally agreed upon or established by MP3.com
in accordance with this Section may [...***...] MP3.com and Buyer agree to
negotiate in good faith with respect to the type, quantity, frequency and
placement of the Media to be purchased during each Quarter [...***...].

               2.3 PRICING FOR MEDIA. Notwithstanding anything in this Agreement
to the contrary, Buyer shall be required to pay, for any particular form of
Media to be delivered in any Quarter, a rate equal to the average price paid to
MP3.com by its three (3) largest purchasers (based on the aggregate price paid
for such particular type of Media, [...***...]) for such particular type of
Media (or, if there are less than three purchasers during such period, such
lesser number of purchasers) ("TOP 3 PURCHASERS") in the three (3) month period
encompassing the first two (2) months of the immediately preceding Quarter and
the last month of the Quarter prior to the immediately preceding Quarter (the
"MEASURING PERIOD"); provided, that in no event shall such rate exceed MP3.com's
standard published pricing rate for such type of Media. If there were no
purchasers of a particular type of Media in the Measuring Period, Buyer and
MP3.com shall negotiate in good faith to determine the appropriate rate for such
type of Media. For the purposes of determining the average price paid to MP3.com
by the Top 3 Purchasers, MP3.com may exclude [...***...] and [...***...].
Notwithstanding the foregoing, [...***...]. For the purposes of this Section
2.3, [...***...].

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               2.4 ADDITIONS TO MEDIA MENU. If Buyer desires to purchase Media
other than the products and services [...***...] Buyer shall submit a request
for the additional Media at least thirty (30) days prior to the beginning of the
applicable Quarter. MP3.com and Buyer shall negotiate in good faith to determine
the quantity, frequency, placement and price of the Media requested, as well as
whether such requests can reasonably be accommodated. If the Parties are unable
to reach agreement on the additional Media within fifteen (15) days prior to the
beginning of the applicable Quarter, the Media allocation process set forth in
SECTION 2.2 shall determine the allocation of Media for such Quarter.

               2.5 PAYMENT. MP3.com acknowledges that Buyer prepaid to MP3.com
forty-five million US dollars ($45,000,000) in connection with the execution of
the Original Agreement. Buyer's payment obligations from the fourth Quarter of
1999 through the third Quarter of 2000 accounted for thirty-one and one-half
million US dollars ($31,500,000) of that prepaid amount. Buyer's payment
obligation for the fourth Quarter of 2000 is thirteen and one-half million US
dollars ($13,500,000), which MP3.com shall deduct from the prepaid amount.
Beginning with the first Quarter of 2001 and for the remainder of the Term, on
the first day of the first month for each Quarter, Buyer shall pay MP3.com
scheduled payments in the exact amount listed on Exhibit A attached hereto by
way of (i) a wire transfer to MP3.com's account at the Imperial Bank, 701 "B"
Street, Suite 600, San Diego, CA 92101, Routing No. 122201444, Account No.
0038-51-008, or any other account previously approved in writing by MP3.com,
(ii) actual delivery of a certified or cashier's check, drawn on an account from
a bank located within the United States and reasonably acceptable to MP3.com, or
(iii) as otherwise agreed to in writing by MP3.com. In the event of the failure
of Buyer to so pay any such amount due, then three days after written notice
thereof from MP3.com to Buyer, MP3.com shall be entitled to draw-down against
the letter of credit described in SECTION 2.6 in an amount equal to such
scheduled payment.

               2.6 LATE PAYMENTS; TAXES. Any late payments under this Agreement
will be assessed a service fee of one and one-half percent (1.5%) per month, to
the extent allowed by law. All fees owed by Buyer to MP3.com are exclusive of,
and Buyer shall pay, all sales, use, excise and other taxes which may be levied
upon either Party in connection with this Agreement, except for taxes based on
MP3.com's net income.

               2.7 LETTER OF CREDIT. In connection with the execution of the
Original Agreement, to secure Buyer's payment obligations remaining after
deduction of the prepaid amount described in SECTION 2.5, Buyer caused to be
delivered to MP3.com an irrevocable letter of credit (the "LETTER OF CREDIT") in
the face amount of one hundred and five million US dollars ($105,000,000) naming
MP3.com as beneficiary thereunder and issued by Societe Generale. The Letter of
Credit provides for the drawing of funds upon receipt of a certificate from an
officer of MP3.com. Immediately following the execution of this Agreement, the
Parties shall amend the Letter of Credit (i) to reduce the face amount thereof
to seventy-five million US dollars ($75,000,000), which is the amount of Buyer's
payment obligations

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hereunder for the period commencing in the first Quarter of 2001 and continuing
for the remainder of the Term, (ii) provide that MP3.com may only draw thereon
an amount equal to any Quarterly payment, or part thereof, not made as provided
in SECTION 2.5 above and upon written certification from an officer of MP3.com
to Societe Generale that Buyer has not paid its Quarterly payment as required by
SECTION 2.5 and the amount of such delinquent payment, and (iii) provide that
the face amount thereof shall automatically be reduced Quarter by Quarter to the
extent Buyer so makes any Quarterly payment as provided in SECTION 2.5 above.

        3. [...***...] INCENTIVE FOR ADDITIONAL BRANDS [...***...]. From and
after January 1, 2001, for each new Brand (as defined below), MP3.com shall
[...***...]. Any such [...***...]. [...***...] shall not exceed a maximum amount
of [...***...].  For the purposes of this Section, [...***...]. Each Brand is
only eligible to be [...***...]. In addition to the foregoing [...***...]

        4. [...***...]

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        5.      ADVERTISERS.

               5.1 PERMITTED USES OF MEDIA. Buyer may use Media purchased under
this Agreement to advertise, promote or market any products, services or brands,
directly or indirectly, owned or sold by or affiliated with Buyer or any of its
Affiliates. [...***...]. The use of [...***...] Media is conditioned upon
[...***...] granting MP3.com written trademark and content licenses as set forth
in SECTION 7, and delivering its Advertiser Content (as defined in SECTION 6) to
MP3.com by the relevant Delivery Date pursuant to SECTION 6. The minimum amount
of [...***...] and [...***...]. [...***...]

               5.2 COORDINATION WITH MP3.COM [...***...].

                       [...***...]

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               5.3 DEDICATED REPRESENTATIVE. Within ninety (90) days of the
Effective Date, Buyer shall designate an individual who shall be dedicated to
discharging Buyer's obligations under this Agreement and coordinating all of the
Media [...***...] provided hereunder. Buyer shall maintain such a dedicated
representative hereunder at least through the end of 2002. Such dedicated
representative shall have the responsibility, among other responsibilities, of
assuring that the quarterly media allocation contemplated in SECTION 2.2 is
accomplished in a timely manner and that the requirements set forth in this
SECTION 5 [...***...] are satisfied in all respects.

        6. DELIVERY OF ADVERTISER CONTENT. Buyer, Buyer's Affiliate [...***...]
as applicable, will deliver to MP3.com their respective advertisements and such
other materials, logos and designs as may be reasonably requested by MP3.com in
connection with the performance of MP3.com's obligations under this Agreement.
Any and all such items so delivered are hereinafter collectively referred to as
"ADVERTISER CONTENT." In the event that any Advertiser Content as delivered does
not conform to the technical specifications required by MP3.com and such
deficiency is not corrected by the Delivery Date, or any Advertiser Content does
not arrive by the applicable Delivery Date, then MP3.com may, in its discretion:
(i) refuse such Advertiser Content and, if available, substitute any prior
Advertiser Content in MP3.com's possession, (ii) delay delivery of the related
Media until Buyer, Buyer's Affiliate [...***...] as applicable, shall have
delivered a corrected copy of such Advertiser Content or (iii) if MP3.com is not
in possession of any prior Advertiser Content, provide Buyer, Buyer's Affiliate
[...***...] as applicable, with written notification (which may be given via
email) of the non-delivery or deficiency, as applicable, in which event (X)
Buyer, Buyer's Affiliate [...***...] as applicable, shall have ten (10) days to
cure such non-delivery or deficiency and (Y) if such non-delivery or deficiency
remains uncured at the end of such 10 day period, Buyer's, Buyer's Affiliate's
[...***...] rights to the related Media, as applicable, shall terminate and
MP3.com shall have no further obligations with respect to such Media. At all
times, MP3.com will use its best efforts to emulate and display Advertiser
Content with a similar quality of presentation and an overall look-and-feel of
the Buyer, Buyer's Affiliates [...***...] brands to which the Advertiser Content
relates.

        7. LICENSE.

               7.1 ADVERTISER CONTENT LICENSE. MP3.com's obligation to deliver
Media under this Agreement is conditioned upon Buyer, Buyer's Affiliates
[...***...] as applicable, granting to MP3.com a non-exclusive,
non-transferable, royalty-free, worldwide license to use, reproduce, distribute,
create translations or other derivative works of, publicly perform, publicly
display and digitally perform Advertiser Content on or in conjunction with the
Website and the Media delivered hereunder, solely in connection with MP3.com's
implementation of this Agreement. Title to and ownership of all intellectual
property rights of the Advertiser Content shall remain with Buyer, Buyer's
Affiliates [...***...] as

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applicable, or their third party licensors. MP3.com hereby confirms that the
foregoing license shall be used solely in connection with the production and
delivery of Media under this Agreement.

               7.2 TRADEMARKS. MP3.com's obligation to deliver Media under this
Agreement is conditioned upon Buyer, Buyer's Affiliates [...***...] as
applicable, granting to MP3.com a non-exclusive, nontransferable, royalty-free,
worldwide license to use Buyer's, Buyer's Affiliates' [...***...] as applicable,
trademarks, service marks, trade names, logos, or other commercial or product
designations (collectively, "MARKS") on the Website for the purposes of
marketing, promotion, and content directories or indexes, and in electronic or
printed advertising, publicity, press releases, newsletters and mailings about
the Website or MP3.com. MP3.com shall not use Marks for any purpose whatsoever
without the prior written consent of the Marks' owner, which shall not be
unreasonably withheld or delayed.

        8. PROPRIETARY RIGHTS AND CONFIDENTIAL INFORMATION.

               8.1 CONFIDENTIAL INFORMATION. This Agreement creates a
confidential relationship between the Parties. Each Party acknowledges and
agrees that the terms of this Agreement and any information conveyed to or
obtained by one Party (the "RECIPIENT") from the other Party (the "DISCLOSING
PARTY") in connection with this Agreement, including trade secrets, know-how,
software, source code, information regarding each Party's customers, providers
or suppliers, business plans or operations, technical data, or other business or
financial information is confidential and proprietary to the Disclosing Party
(the "CONFIDENTIAL INFORMATION"). The Recipient agrees that in no event shall it
disclose, transfer, copy, duplicate, translate, or publish any Confidential
Information except as necessary for Recipient to implement this Agreement
[...***...]. The Recipient further agrees that it shall not use any Confidential
Information for any purpose whatsoever, whether for its own benefit or the
benefit of any third party, other than for performing its obligations under this
Agreement. The Recipient shall only make available the Confidential Information
to its employees, agents, affiliates and permitted subcontractors on a
need-to-know basis who contractually agree to abide by the restrictions herein
prior to any such disclosure. The Recipient shall be responsible for the
unauthorized use or disclosure of any Confidential Information by its employees,
agents, affiliates or subcontractors. Upon the termination or expiration of this
Agreement for any reason or upon the earlier written request of the Disclosing
Party, the Recipient will return all documents and other materials in
Recipient's control that contain or relate to Confidential Information. Upon the
written request of the Disclosing Party, the Recipient shall provide a written
certification to the Disclosing Party that it has returned to the Disclosing
Party or destroyed, at the Disclosing Party's option, all such Confidential
Information, and purged all Confidential Information from its electronic files
and systems. Recipient acknowledges and agrees that Disclosing Party owns all
copyright, trademark, trade secret, know-how, patent, data or other intellectual
property rights in Disclosing Party's Confidential Information.

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               8.2 EXCEPTIONS. The restrictions in SECTION 8.1 shall not apply
to any Confidential Information that: (i) was in the public domain before it was
disclosed or has entered the public domain through no fault of the Recipient;
(ii) was known to the Recipient, without restriction, prior to the time of
disclosure; (iii) was disclosed with the prior written approval of the
Disclosing Party; (iv) was entirely independently developed by the Recipient
without any use of the Confidential Information, or (v) was disclosed by a third
party to the Recipient without breach by such third party of any confidentiality
obligation to the Disclosing Party. In addition, Recipient may disclose the
Disclosing Party's Confidential Information as necessary to comply with
applicable laws and regulations (such as disclosure to the SEC or its foreign
equivalent), or to comply with a court or administrative order; provided,
however, that the Recipient shall provide prior written notice thereof to the
Disclosing Party and that the Recipient takes all reasonable and lawful actions
to obtain confidential treatment (if possible) for such disclosure, and, to
minimize the extent of such disclosure.

               8.3 IRREPARABLE HARM. Each Party acknowledges that the
Confidential Information is a valuable asset of the Disclosing Party and that
the breach of this SECTION 8 would cause the Disclosing Party irreparable harm
for which there is no adequate remedy at law. Accordingly, notwithstanding
SECTION 16.5, in the event of a breach or alleged breach of this SECTION 8, the
Disclosing Party shall be allowed to seek injunctive relief and any other
equitable remedies, wherever it deems appropriate, in addition to all other
remedies afforded to it by law. The obligations of the Parties pursuant to this
SECTION 8 shall survive the termination or expiration of this Agreement for a
period of eighteen (18) months.

        9. REPORTS. Within sixty (60) days of the end of each Quarter, MP3.com
will provide Buyer with reports summarizing the quantity, frequency, placement
and distribution of the Media delivered during the preceding Quarter. Buyer
acknowledges and agrees that any statistics or other information provided to
Buyer pursuant to this SECTION 9 shall be deemed the Confidential Information of
MP3.com and shall be subject to the provisions of SECTION 8.

        10. RECORDS AND AUDITS. MP3.com shall keep complete and accurate records
pertaining to the pricing and sale or other disposition of the Media in
sufficient detail to permit Buyer to confirm the accuracy of all purchases made,
and the satisfactory performance by MP3.com of all its obligations, hereunder.
Buyer shall have the right to cause an independent, certified public accountant
reasonably acceptable to MP3.com to audit such records to confirm the
determination of pricing, and the satisfactory performance by MP3.com of all its
obligations, hereunder for the preceding year. Such audits may be exercised
during normal business hours upon at least twenty-one (21) days' prior written
notice to MP3.com. Audits may be conducted no more than once in any calendar
Quarter. Buyer shall bear the full cost of any such audits.

        11. REPRESENTATIONS AND WARRANTIES.

               11.1 ADVERTISER MATERIAL. Buyer shall be solely responsible to
MP3.com for any legal liability arising out of or relating to any or all
Advertiser Content and any material to which users can link through the
Advertiser Content (collectively, the "ADVERTISER MATERIAL").

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Buyer represents and warrants that the Advertiser Material does not and will not
at any time during the Term: (a) infringe on any third party's copyright,
patent, trademark, trade secret or other proprietary right or right of publicity
or privacy; (b) violate any applicable law, statute, ordinance or regulation,
including laws and regulations governing export control, unfair competition,
antidiscrimination or false, misleading or deceptive advertising; (c) be
defamatory or trade libelous; (d) be harmful to minors, obscene or pornographic;
(e) be materially false, misleading, inaccurate or incapable of reasonably
prompt fulfillment, or (f) contain viruses, trojan horses, worms, time bombs,
cancelbots or other similar harmful or deleterious programming routines. Buyer
agrees to defend, indemnify and hold harmless MP3.com and its directors,
officers, agents and employees for any and all losses, costs, liabilities or
expenses (including reasonable attorneys' and expert witnesses' fees) which are
incurred or suffered by MP3.com in connection with: (i) the breach by Buyer of
any representation or warranty in this Agreement; (ii) any Advertiser Material;
(iii) any transaction involving Buyer's, Buyer's Affiliate's [...***...]
[...***...] as applicable, goods or services; or (iv) any other act, omission or
representation by Buyer, Buyer's Affiliates [...***...] as applicable,. MP3.com
may participate in the defense at its option and expense.

               11.2 USE OF ADVERTISER CONTENT. MP3.com represents and warrants
that it shall not place Advertiser Content next to, with or on the same Website
page as other content that: (a) infringes on any third party's copyright,
patent, trademark, trade secret or other proprietary rights or right of
publicity or privacy; (b) violates any applicable law, statute, ordinance or
regulation, including laws and regulations governing export control, unfair
competition, antidiscrimination or false, misleading or deceptive advertising;
(c) is defamatory or trade libelous; (d) is harmful to minors, obscene or
pornographic; (e) is materially false, misleading, inaccurate or incapable of
reasonably prompt fulfillment, or (f) contains viruses, trojan horses, worms,
time bombs, cancelbots or other similar harmful or deleterious programming
routines. MP3.com agrees to defend, indemnify and hold harmless Buyer and its
directors, officers, agents and employees for any and all losses, costs,
liabilities or expenses (including reasonable attorneys' and expert witnesses'
fees) which are incurred or suffered by Buyer, Buyer's Affiliates, [...***...]
as applicable, in connection with: (w) the breach by MP3.com of any
representation or warranty in this Agreement; (x) any content on the MP3.com
Website other than Advertiser Material; (y) any transaction involving MP3.com's
goods or services; or (z) any other act, omission or representation by MP3.com.
Buyer, Buyer's Affiliates, or any [...***...] as applicable, may participate in
the defense at its option and expense.

               11.3 MECHANICS OF INDEMNITY. The indemnifying party's obligations
hereunder are conditioned upon the indemnified party: (i) giving the
indemnifying party prompt written notice of any claim for which the indemnified
party is seeking indemnity; (ii) granting control of the defense and settlement
to the indemnifying party (except that the indemnifying party may not effect any
settlement or make any admission of fault, liability or similar admissions
without the consent of the indemnified party, other than for the payment of
money damages in a single lump sum); and (iii) reasonably cooperating with the
indemnifying party at the indemnifying party's expense.

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               11.4 DUE AUTHORIZATION. Each Party represents and warrants that
(i) it has all necessary corporate power and authority under all applicable
provisions of law to execute and deliver this Agreement and to carry out its
provisions; (ii) it has effectively taken all corporate action required for the
lawful execution and delivery of this Agreement; and (iii) upon its execution
and delivery, this Agreement will be a valid and binding obligation, enforceable
in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights and (b) general principles of equity
that restrict the availability of equitable remedies.

        12. DISCLAIMER OF WARRANTIES; LIMITED REMEDY. Except as set forth in
SECTION 11.2, MP3.com provides the Website and all services performed hereunder
"AS IS" and without any warranty of any kind. EXCEPT AS SET FORTH IN SECTION
11.2, MP3.COM MAKES NO REPRESENTATIONS, WARRANTIES OR GUARANTEES OF ANY KIND,
EITHER EXPRESS OR IMPLIED WITH RESPECT TO THE MEDIA PROVIDED, THE ADVERTISER
CONTENT, THE WEBSITE, OR THE FUNCTIONALITY, PERFORMANCE OR RESULTS OF USE
THEREOF, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OTHER WARRANTIES ARISING BY USAGE OF TRADE, COURSE OF DEALING OR
COURSE OF PERFORMANCE. MP3.com does not guarantee continuous or uninterrupted
display or distribution of any Advertiser Content. In the event of interruption
of display or distribution of the Advertiser Content, MP3.com's sole obligation
shall be to restore service as soon as commercially practicable (except as
provided in SECTION 15.3 below). If MP3.com does not deliver a specific Media
that it had previously agreed to deliver within a given Quarter, Buyer's sole
and exclusive remedy, in lieu of all others (except as provided in SECTION 15.3
below), shall be to receive a refund of an amount equal to the dollar amount
allocated for that specific Media in such Quarter; provided, however, that if
such failure to deliver specific Media is due to an interruption in service on
the Website, in lieu of such a refund, MP3.com agrees to deliver the specific
Media as soon as practicable after service is resumed, but in no event later
than in the following Quarter.

        13. CONSEQUENTIAL DAMAGES DISCLAIMER. IN NO EVENT SHALL ANY PARTY HERETO
BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING TO SUCH DAMAGES ARISING FROM BREACH OF CONTRACT OR WARRANTY OR FROM
NEGLIGENCE OR STRICT LIABILITY), OR FOR INTERRUPTED COMMUNICATIONS, LOSS OF USE,
LOST BUSINESS, LOST DATA OR LOST PROFITS, INCOME OR GOODWILL, THE REJECTION OR
REMOVAL OF ANY ADVERTISER CONTENT, OR ANY DELAY IN DISPLAYING OR THE FAILURE TO
DISPLAY ANY ADVERTISER CONTENT, ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.

        14. LIMITATION OF LIABILITY. NOTWITHSTANDING ANY OTHER PROVISIONS OF
THIS AGREEMENT, MP3.COM'S AGGREGATE LIABILITY TO BUYER AND/OR ANY THIRD PARTY
UNDER ANY CLAIMS RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL NOT EXCEED
AN AMOUNT GREATER

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THAN THE AMOUNTS RECEIVED UNDER THIS AGREEMENT DURING THE TWELVE (12) MONTH
PERIOD IMMEDIATELY PRECEDING SUCH CLAIM.

        15. TERM AND TERMINATION.

               15.1 TERM OF AGREEMENT. The term of this Agreement shall commence
on the Effective Date and shall remain in full force and effect until December
31, 2004 ("TERM"), unless earlier terminated in accordance with SECTION 15.2 or
15.3.

               15.2 TERMINATION FOR DEFAULT. Buyer or MP3.com may terminate this
Agreement pursuant to any of the following subsections:

                      (a) Immediately upon written notice if the other Party
breaches a material term or condition of the Agreement and does not cure such
breach (or commence a cure in a manner reasonably satisfactory to the
non-breaching party) within ninety (90) days (or ten (10) days in the event of
nonpayment of money) after written notice of such breach; or

                      (b) Immediately upon written notice if the other Party
ceases to do business, or otherwise terminates its business operations, except
as a result of a permitted assignment; or

                      (c) Immediately upon written notice if the other Party
fails to promptly secure or renew any license, registration, permit,
authorization or approval for the conduct of its business in the manner
contemplated by this Agreement or if any such license, registration, permit,
authorization or approval is revoked or suspended.

               15.3 [...***...]

               15.4 RIGHTS AND OBLIGATIONS UPON TERMINATION. In the event this
Agreement expires or is terminated, each Party shall cooperate with the other
Party to effect an orderly termination of the relationship created by this
Agreement, including each Party's prompt return of any Confidential Information.
Termination of this Agreement shall not limit any Party from pursuing other
remedies available to it, including injunctive relief. The Parties' rights and
obligations under SECTIONS 8 (for a period of eighteen (18) months), 11, 12, 13,
14, 15.4 and 16 shall survive any termination or expiration of this Agreement.

        16. GENERAL PROVISIONS.

               16.1 ENTIRE AGREEMENT. This Agreement, together with any Exhibits
attached hereto and incorporated herein, represents the sole, final and entire
agreement between the Parties with respect to the subject matter hereof and
shall supersede and terminate all prior or contemporaneous agreements and
communications of the Parties, oral or written, including the Original
Agreement, other than the IPO Agreement.

               16.2 NON-DISPARAGEMENT. Each Party agrees not to disparage the
other Party as to its products, services or business in any way.

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                       12
<PAGE>   13

               16.3 AMENDMENT AND WAIVER. No amendment to, or waiver of, any
provision of this Agreement shall be effective unless in writing and signed by
the Parties. The waiver by any Party of any breach or default shall not
constitute a waiver of any different or subsequent breach or default.

               16.4 CONSTRUCTION. Whenever used in this Agreement, the singular
shall include the plural and vice versa (where applicable), the use of the
masculine, feminine or neuter gender shall include the other genders (unless the
context otherwise requires), the words "hereof," "herein," "hereto," "hereby,"
"hereunder," and other words of similar import refer to this Agreement as a
whole (including all schedules and exhibits), the words "include," "includes,"
and "including" shall mean "include, without limitation," "includes, without
limitation," and "including, without limitation," respectively. Headings of
Sections and subsections are for convenience of reference only, and shall not be
construed as part of this Agreement, or as limiting or defining the scope of any
term or provision hereof.

               16.5 GOVERNING LAW. This Agreement shall be governed by,
interpreted and enforced solely and exclusively in accordance with the laws of
the State of California, USA, without giving effect to principles of conflicts
of laws. All Parties agree to submit to jurisdiction in the State of California,
USA, and further agree that any and all disputes which each Party determines
cannot be resolved amicably, arising under or related to this Agreement shall be
brought and resolved solely and exclusively in a court in San Diego County,
California, USA.

               16.6 [...***...]

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                       13
<PAGE>   14

               16.7 SUCCESSORS AND ASSIGNS. No Party shall assign its rights or
obligations under this Agreement without the prior written consent of the other
Party, which shall not unreasonably be withheld or delayed. Notwithstanding the
foregoing, (i) each Party may assign this Agreement to an entity who acquires
substantially all of the stock or assets of a Party to this Agreement and (ii)
[...***...] provided in each of (i) and (ii) above, that (x) in the event Buyer
is the assigning party, the Letter of Credit contemplated by Section 2.6 remains
in place or the assignee provides a substitute letter of credit acceptable to
MP3.com and (y) consent will be required in the event that the non-assigning
Party reasonably determines that the assignee will not have sufficient capital
or assets to perform its obligations hereunder, or that the assignee is a direct
competitor of the non-assigning Party. [...***...] All terms and provisions of
this Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their respective permitted transferees, successors and assigns.

               16.8 FORCE MAJEURE. No Party shall be liable for failure to
perform or delay in performing any obligation (other than the payment of money)
under this Agreement if such failure or delay is due to fire, flood, earthquake,
strike, war (declared or undeclared), embargo, blockade, legal prohibition,
governmental action, riot, insurrection, damage, destruction or any other
similar cause beyond the control of such Party.

               16.9 NOTICES. All notices, requests and other communications
called for by this Agreement shall be deemed to have been given (i) on the day
of delivery as evidenced by the courier's delivery records, when delivered by a
reputable international overnight courier service, or (ii) immediately if made
by telecopy or electronic mail (confirmed by concurrent written notice sent via
overnight courier for delivery by the next business day). Notices shall

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                       14
<PAGE>   15

be sent to MP3.com at 4790 Eastgate Mall, San Diego, CA 92121, attention
President (e-mail: [...***...], with a copy to its Vice President, Legal Affairs
(e-mail: [...***...] and to Buyer (with a copy to James Lieber) at the physical
addresses set forth on the signature page of this Agreement, or to such other
addresses as each Party shall specify to the other Party. Notice by any other
means shall be deemed made when actually received by the Party to which notice
is provided.

               16.10 COMPLIANCE WITH LAWS. Each Party shall, at its own expense,
comply with all applicable laws, regulations, ordinances, or rules relating to
its duties, obligations and performance under this Agreement and shall procure
all licenses and pay all fees and other charges required thereby.

               16.11 PUBLICITY. No press releases or publicity statements or
references to this Agreement may be made without the express prior approval of
the other Party.

               16.12 NO OTHER RIGHTS. This Agreement shall not be construed to
grant any rights by implication, estoppel, or otherwise, that are not granted
through the express provisions of this Agreement.

               16.13 INDEPENDENT CONTRACTORS. The relationship of the Parties is
solely and exclusively that of independent contractors, and nothing contained in
this Agreement shall be construed to (i) give either Party the power to direct
or control the activities of the other, (ii) constitute the Parties as partners,
joint venturers, agents, employees, co-owners or otherwise as participants in a
joint undertaking, or (iii) allow either Party to create or assume any
obligation on behalf of the other Party for any purpose whatsoever.

               16.14 SEVERABILITY. If one or more provisions in this Agreement
are ruled entirely or partly invalid or unenforceable by any court of competent
jurisdiction in any jurisdiction, then (a) the validity and enforceability of
all provisions not ruled to be invalid or unenforceable shall remain unaffected;
(b) the effect of such ruling shall be limited to the jurisdiction of the court
making the ruling; (c) the provision(s) held wholly or partly invalid or
unenforceable shall be deemed amended, and the Parties shall reform the
provision(s) to the minimum extent necessary to render them valid and
enforceable in conformity with the Parties' intent as manifested herein; and (d)
if the ruling, or the controlling principle of law or equity leading to the
ruling, is subsequently overruled, modified, or amended, then the provision(s)
in question, as originally set forth in this Agreement, shall be deemed valid
and enforceable to the maximum extent permitted by the new controlling principle
of law or equity.

               16.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which taken together shall constitute a single instrument.
Execution and delivery of this Agreement may be evidenced by facsimile
transmission.

               16.16 AUTHORITY. Each of the Parties represents and warrants that
the negotiation and entry of this Agreement will not violate, conflict with,
interfere with, result in a breach of, or constitute a default under any other
agreement to which they are a Party.

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                       15
<PAGE>   16

               16.17 ATTORNEYS' FEES. The prevailing Party in any action to
enforce this Agreement shall be entitled to reimbursement of its expenses,
including reasonable attorneys' fees.

        The Parties have caused this Agreement to be duly executed as of the
Effective Date.

MP3.COM, INC                             MONTAIGNE PARTICIPATIONS ET GESTION

By:  /S/ Robin Richards                  By:  /S/ Nicolas Bazire
   -------------------------------          -----------------------------------
   Robin Richards                           Nicolas Bazire
   President and Chief                      Its: Managing Director
   Operating Officer

Address:                                 Address:

4790 Eastgate Mall                       41, Avenue Montaigne
San Diego, CA  92121                     75008 Paris
email: legal@mp3.com                     France

                                         with a copy to:

                                         James Lieber
                                         30, Avenue Hoche
                                         75008 Paris
                                         France

                                       16
<PAGE>   17

                                    EXHIBIT A

                             MEDIA PURCHASE SCHEDULE

<TABLE>
<CAPTION>
          QUARTERLY PAYMENT SCHEDULE:                            PURCHASE AMOUNT:
          ---------------------------                            ----------------
<S>                                                              <C>
             1999          Q4                                       $5,000,000*

             2000          Q1                                       $6,500,000*
                           Q2                                       $8,500,000*
                           Q3                                      $11,500,000*
                           Q4                                      $13,500,000*

             2001          Q1                                      $15,000,000
                           Q2                                      $12,250,000
                           Q3                                      $12,250,000
                           Q4                                      $12,250,000

             2002          Q1                                       $6,000,000
                           Q2                                       $5,000,000
                           Q3                                       $5,000,000
                           Q4                                       $5,000,000

             2003          Q1                                         $300,000
                           Q2                                         $300,000
                           Q3                                         $275,000
                           Q4                                         $275,000

             2004          Q1                                         $275,000
                           Q2                                         $275,000
                           Q3                                         $275,000
                           Q4                                         $275,000
                                                                  ------------

                                       TOTAL:                     $120,000,000
</TABLE>

* -- Amounts prepaid prior to the Effective Date.<PAGE>   1

                                                                   EXHIBIT 10.28
                                            ***TEXT OMITTED AND FILED SEPARATELY
                                                CONFIDENTIAL TREATMENT REQUESTED
                                          UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
                                                            200.83 AND 240.24B-2

                              SETTLEMENT AGREEMENT

        This Settlement Agreement and Mutual Release (hereinafter "Settlement
Agreement") is entered into effective as of July 26, 2000 by and between
MP3.COM, INC. ("MP3" herein) on the one hand, and Capitol Records, Inc.
("Capitol") and all of its affiliated and related entities (collectively with
Capitol, "Company") on the other hand, both of which are sometimes collectively
referred to as the "Parties" and is made with reference to the following:

1.      RECITALS:

        a)      Capitol is a Plaintiff and MP3 is the defendant in the following
                litigation (the "Litigation") pending in the United States
                District Court for the Southern District of New York captioned
                UMG RECORDINGS, INC., SONY MUSIC ENTERTAINMENT INC., WARNER
                BROS. RECORDS INC., ARISTA RECORDS INC., ATLANTIC RECORDING
                CORPORATION, BMG MUSIC D/B/A THE RCA RECORDS LABEL, CAPITOL
                RECORDS, INC., ELEKTRA ENTERTAINMENT GROUP, INC., INTERSCOPE
                RECORDS, AND SIRE RECORDS GROUP INC., Plaintiffs, vs. MP3.COM,
                INC., Defendant, Case No. 00 Civ. 0472 (JSR). Each of the
                Parties to this Settlement Agreement desires to permanently
                settle and resolve any and all claims, disputes, issues or
                matters that exist between them as of the date of this
                Settlement Agreement as to the MyMP3.com service as set forth
                below and to dismiss with prejudice the Litigation.

        b)      NOW, THEREFORE, in consideration of the mutual promises,
                covenants and agreements set forth herein, and subject to the
                terms and conditions set forth below, the Parties desire to, and
                hereby do, resolve their differences and agree as follows:

2.      SETTLEMENT TERMS:

        a)      In consideration hereof, concurrently with the execution hereof
                and of the License Agreement referred to in subparagraph (e) of
                this Section 2 below, and the execution and filing of the
                Dismissal With Prejudice of the Litigation as described
                hereinbelow, MP3 will pay Company's Virgin Holdings, Inc.
                affiliate an amount equal to [...***...] (the "EMI Amount"),
                plus [...***...] by wire transfer of immediately available funds
                to an account designated by Company.

        b)      [...***...]

                                              * CONFIDENTIAL TREATMENT REQUESTED

                                       1
<PAGE>   2

                i)      [...***...]

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                       2
<PAGE>   3

                ii)     [...***...]

                        a)      BMG Entertainment, - [...***...];

                        b)      Warner Music Group, Inc. - [...***...];

                        c)      UMG Recordings, Inc. - [...***...]; and

                        d)      Sony Music Entertainment, Inc. - [...***...].

                iii)    [...***...]

                iv)     [...***...]

                                              * CONFIDENTIAL TREATMENT REQUESTED

                                       3
<PAGE>   4

                v)      [...***...]

                vi)     [...***...]

        c)      [...***...]

                                              * CONFIDENTIAL TREATMENT REQUESTED

                                       4
<PAGE>   5

        d)      [...***...]

        e)      Concurrently herewith, Company and MP3 are entering into a
                License Agreement with respect to, inter alia, the licensing to
                MP3 of the right to stream master recordings controlled by
                Company via the MyMP3 service(the "License Agreement").

3.      RELEASES

        a)      Company Release. Company, on behalf of itself and its agents,
                employees, representatives, partners, owners, officers, parents,
                shareholders, directors, subsidiaries, affiliates, attorneys,
                transferees, predecessors, successors, and assigns, solely to
                the extent it can legally bind such entities, does hereby
                irrevocably release, acquit and forever discharge MP3 and each
                of its agents, employees, representatives, partners, owners,
                related entities, officers, parents, shareholders, directors,
                subsidiaries, affiliates, attorneys, transferees, predecessors,
                successors, and assigns, jointly and severally (the "MP3
                Releasees"), of and from any and all debts, suits, claims,
                actions, causes of

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                       5

<PAGE>   6

                action, controversies, demands, rights, damages, losses,
                expenses, costs, attorneys' fees, compensation, liabilities and
                obligations whatsoever (hereinafter referred to collectively as
                "Claims"), suspected or unsuspected, known or unknown, foreseen
                or unforeseen, arising at any time up to and including the date
                of this Settlement Agreement, which Company may now have or at
                any time heretofore may have had, or which at any time hereafter
                may have or claim to have against the MP3 Releasees, solely to
                the extent they relate to, arise from, or concern the MyMP3.com
                service up to the date hereof, the Litigation or the subject
                matter thereof and with respect to the Compositions and sound
                recordings included in the MyMP3.com service as of the date
                hereof (hereinafter "Company's Released Claims"). Nothing
                contained in the Release is intended to release any claims for
                any activity of MP3 occurring after the date of this agreement
                nor for any Licensed Performances.

        b)      MP3 Release. MP3, on behalf of itself and its agents, employees,
                representatives, partners, owners, related entities, officers,
                parents, shareholders, directors, subsidiaries, affiliates,
                attorneys, transferees, predecessors, successors, and assigns,
                solely to the extent it can legally bind such entities, does
                hereby irrevocably release, acquit and forever discharge Company
                and each of its agents, employees, representatives, partners,
                owners, related entities, officers, parents, shareholders,
                directors, divisions, subsidiaries, affiliates, attorneys,
                transferees, predecessors, successors, and assigns, jointly and
                severally (the "Company Releasees"), of and from any and all
                Claims, suspected or unsuspected, known or unknown, foreseen or
                unforeseen, arising at any time up to and including the date of
                this Settlement Agreement, which MP3 may now have or at any time
                heretofore may have had, or which at any time hereafter may have
                or claim to have against the Company Releasees, relating to,
                arising from, or concerning the MyMP3 service, the Litigation or
                the subject matter thereof and any counter claims which MP3
                could have asserted in connection with the Litigation
                (hereinafter "MP3's Released Claims").

        c)      Statutory Waiver. Company's Released Claims and MP3's Released
                Claims are collectively defined as the "Released Claims". With
                respect to the Released Claims, all rights under California
                Civil Code Section 1542 (and any other law of similar effect),
                are hereby expressly waived by the Parties, and each of them,
                notwithstanding any provision to the contrary. Section 1542
                provides as follows:

                        "A general release does not extend to claims which the
                        creditor does not know or suspect to exist in his favor
                        at the time of executing the Release, which if known by
                        him must have materially

                                       6
<PAGE>   7

                        affected his settlement with the debtor."

        d)      The Parties, and each of them, and their representatives, and
                assigns expressly waive and release any right or benefit which
                they have or may have under Section 1542 of the Civil Code of
                the State of California, to the fullest extent that they may
                waive all such rights and benefits pertaining to the matters
                released herein. It is the intention of the Parties, and each of
                them, through this Settlement Agreement, and with the advice of
                counsel, to fully, finally and forever settle and release all
                such matters, and all claims relative thereto, in furtherance of
                such intention.

        e)      Dismissal With Prejudice. Company, concurrently with the
                execution and delivery hereof and payment of the EMI Amount and
                the Advance payable under the License Agreement shall execute
                and deliver to MP3 a Dismissal With Prejudice of the Litigation,
                which MP3 shall file, in the form annexed hereto as Exhibit A.

4.      NOTICES

        a)      Any notice, demand, request, consent, approval, or communication
                that either Party desires or is required to give to the other
                Party is to be addressed and served on or delivered to the other
                Party at the address set forth below. Any Party may change its
                address by notifying the other Party of its change of address in
                writing.

                i)    The addresses for MP3 are as follows:

                      MP3.com, Inc.
                      4790 Eastgate Mall
                      San Diego, CA 92121
                      Attn: General counsel and VP Legal

                      With simultaneous copies to:

                      Gary Stiffelman, Esq.
                      Ziffren, Brittenham, Branca & Fischer
                      1801 Century Park West
                      Los Angeles 90067

               ii)    The address for Company is as follows:

                      EMI Recorded Music - North America
                      1290 Avenue of the Americas
                      New York, NY 10104

                                       7
<PAGE>   8

                      Attn:  Alasdair McMullan, Vice President Legal Affairs

                      With simultaneous copy to:

                      EMI Recorded Music, New Media
                      1750 North Vine Street
                      YV Building
                      Los Angeles, CA 90028
                      Attn:  Robyn Glaser, Vice President, Business and
                             Legal Affairs

5.      MISCELLANEOUS PROVISIONS

        a)      By entering into this Settlement Agreement, no Party admits or
                acknowledges that they committed any wrongdoing on their part.

        b)      This Settlement Agreement and any controversy which might arise
                therefrom shall in all respects be interpreted, enforced and
                governed by the laws of the State of New York applicable to
                agreements made and to be fully performed therein. All parties
                consent to the sole and exclusive personal jurisdiction and
                venue in the United States District Court for the SDNY, or if
                federal jurisdiction is unavailable, in the Supreme Court of the
                State of New York located in New York County, and agree that all
                disputes or litigation regarding this Settlement Agreement shall
                be submitted to and determined by said court, which shall have
                sole and exclusive jurisdiction. Subsequent changes in New York
                law or federal law through legislation or judicial
                interpretation that creates or finds additional or different
                rights and obligations of the Parties shall not affect this
                Settlement Agreement.

        c)      This Settlement Agreement, together with the License Agreement,
                is the entire agreement between the Parties with respect to the
                Released Claims or subject matter of this Settlement Agreement
                and supersedes all prior and contemporaneous oral and written
                agreements and discussions pertaining to the Released Claims or
                subject matter of this Settlement Agreement. This Settlement
                Agreement may be amended only by a written agreement executed by
                each of the Parties hereto. No breach of the License Agreement
                may or shall be deemed a breach of this Settlement Agreement
                other than failure to pay the advance due thereunder.

        d)      No breach of any provision, representation or warranty
                ("Provision") hereof can be waived unless in writing signed by
                the party to be charged with such a waiver. Waiver of any one
                breach of any Provision hereof shall not be deemed to be a
                waiver of any other breach of the same or any other Provision
                hereof.

        e)      This Settlement Agreement shall be binding upon and inure to the
                benefit of

                                       8
<PAGE>   9

                the Parties hereto and its respective agents, employees,
                representatives, partners, parents, subsidiaries, divisions,
                affiliates, officers, related entities, licensees, directors,
                shareholders, investors, attorneys, transferors, transferees,
                predecessors, successors, trustees in bankruptcy, and assigns
                and each and every entity or person which now or during the
                pendency of the Litigation was a division, parent, successor,
                predecessor, division, affiliate, officer, director,
                shareholder, investor, employee, attorney, transferor,
                transferee, or subsidiary for each Party and its respective
                legal successors and assigns, to the extent each party can bind
                such parties.

        f)      The Parties represent and warrant that each of them have not
                assigned all or any portion of any claim pertaining to the
                Released Claims to any person or entity. In the event any claims
                are made by any third persons or entities based upon any
                purported assignment or any such liens or claims are asserted in
                connection with the Released Claims or proceeds of the
                Settlement Agreement, then the Party who has breached his
                representation or warranty contained in this Section 5(f) agrees
                to indemnify and hold harmless the other Party from any said
                claims being made.

        g)      In the event that any covenant, condition or other provision
                herein contained is held to be invalid, void or illegal by any
                court of competent jurisdiction, the same shall be deemed
                severable from the remainder of this Settlement Agreement and
                shall in no way affect, impair or invalidate any other covenant,
                condition or other provision herein contained. If such
                condition, covenant or other provisions shall be deemed invalid
                due to its scope or breadth, such covenant, condition or other
                provision shall be deemed valid to the extent of the scope or
                breadth permitted by law.

        h)      Each of the Parties hereto represent and declare that in
                executing this Settlement Agreement, it has relied solely upon
                its own judgment, belief and knowledge, and on the advice and
                recommendations of its own independently selected counsel,
                concerning the nature, extent and duration of its rights and
                claims and that it has not been influenced to any extent
                whatsoever in executing the same by any representations or
                statements covering any matters made by the other Party hereto
                or by any person representing it.

        i)      The Parties hereto and each of them, further represent and
                warrant that they have carefully read this Settlement Agreement
                and know and understand the contents hereof, and that they
                signed this Settlement Agreement freely and voluntarily and have
                had the benefit of the advice of legal counsel before executing
                this Settlement Agreement. Each of the representatives executing
                this Settlement Agreement on behalf of their respective
                corporations or partnerships is empowered to do so and thereby
                binds his respective corporation or partnership. The Parties
                hereto acknowledge and agree that

                                       9
<PAGE>   10

                this Settlement Agreement shall be deemed to have been drafted
                jointly by the Parties hereto. Ambiguities shall not be
                construed against the interest of either party by reason of it
                having drafted all or any part of this Settlement Agreement.

        j)      This Settlement Agreement may be executed in counterparts and
                when each Party has signed and delivered at least one such
                counterpart to the other Party, each counterpart shall be deemed
                an original, and all counterparts taken together shall
                constitute one and the same agreement, which shall be binding
                and effective as to all Parties. This Settlement Agreement may
                be executed via facsimile signatures, which shall have the same
                force and effect as if they were original signatures to be
                followed by executed originals.

        k)      Each party hereto represents and warrants that it has all
                necessary right, title, and authority to enter into this
                Settlement Agreement, to grant the rights and interests herein
                granted, and to perform all of its obligations under this
                Settlement Agreement.

        l)      The provisions and existence of this Settlement Agreement (a)
                may not be cited by any party hereto as an admission of any
                issue of fact or law; and (b) shall not be disclosed to any
                third party or entity, except (i) as required by law or
                regulation or to enforce the terms hereof, (ii) to the parties
                respective professional advisors and executives on a "need to
                know" basis, provided that such parties agree to be bound by
                these confidentiality provisions, and (iii) to the Internal
                Revenue Service, or any state or municipal taxing authority or
                other regulatory body having jurisdiction. The parties may also
                disclose these terms as required in connection with stock
                exchange, shareholder, internal, governmental or regulatory
                requirements, or external audit or similar disclosure
                requirements. [...***...] It is understood and agreed that if
                the foregoing provision is breached by any party hereto, the
                non-breaching party may be entitled to injunctive or other
                equitable relief to prevent such a breach. Any non-breaching
                party seeking such injunctive relief will not be obligated to
                secure any bond or give any security in connection with the
                application for such relief. The right to seek injunctive relief
                under this paragraph shall be in addition to all other rights,
                remedies and forms of relief which may be available. In
                furtherance of the foregoing, any and all press releases
                relating to the subject matter hereof shall not be released
                until the timing and contents of such press release has been
                approved in writing by Company's Vice President, Legal Affairs;
                provided, the parties agree that a press release with respect to
                this Settlement Agreement shall be mutually agreed and issued
                within a reasonable period after execution hereof, and in any
                event within any time frame required by law or regulation.

                                              * CONFIDENTIAL TREATMENT REQUESTED
                                       10
<PAGE>   11

        IN WITNESS WHEREOF, the Parties hereto have executed this Settlement
Agreement on the date(s) written beside its name, respectively.

                                    Capitol Records, Inc.

Dated: 26 July 2000                 By: /s/ Signature Illegible
                                          Its: Secretary

Dated: 26 July 2000                 MP3.com, Inc.

                                    By: /s/ Paul Ouyang
                                    Its: EVP & CFO

                                       11
<PAGE>   12

UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK

------------------------------------------

UMG RECORDINGS, INC., SONY MUSIC
ENTERTAINMENT INC., CAPITOL RECORDS, INC.,        Case No.: 00 Civ. 0472 (JSR)
and INTERSCOPE RECORDS,

                  Plaintiffs,
        v.

MP3.COM, INC.,

                  Defendant.

------------------------------------------

                   STIPULATION OF DISMISSAL WITH PREJUDICE OF
                         PLAINTIFF CAPITOL RECORDS, INC.

Plaintiff Capital Records, Inc. and Defendant MP3.com, Inc. hereby stipulate
that all claims of plaintiff Capital Records, Inc. herein are dismissed with
prejudice, pursuant to rule 41 of the Federal Rules of Civil Procedure.
Plaintiff Capitol Records, Inc. and defendant MP3.com, Inc. shall bear their own
costs and expenses, including attorneys' fees.

Dated:  New York, New York
July 28, 2000
                                            ARNOLD & PORTER

                                            By: /s/ Robert A. Goodman
                                               --------------------------------
                                               Robert A. Goodman
                                               399 Park Avenue
                                               New York, NY  10022
                                               (212) 715-1000

                                       12
<PAGE>   13

                                               - and -

                                               Hadrian R. Katz
                                               555 Twelfth Street, N.W.
                                               Washington, D.C. 20004
                                               (202) 942-5000

                                               Counsel for Plaintiffs
                                               Capitol Records, Inc.

                                               COOLEY GODWARD LLP

                                            By: /s/ Michael G. Rhodes
                                               --------------------------------
                                               Michael G. Rhodes (MR-0426)
                                               4365 Executive Drive
                                               Suite 1100
                                               San Diego, CA 92121-2128
                                               Tel: (858) 550-6000
                                               Fax: (858) 453-3555

                                                    -and-

                                            ORRICK, HERRINGTON & SUTCLIFFE LLP

                                            By: /s/ Jeffrey A. Conciatori
                                               --------------------------------
                                               Jeffrey A. Conciatori (MC-6858)
                                               666 Fifth Avenue
                                               Suite 1100
                                               San Diego, CA  92121
                                               (212) 506-5000

                                               Counsel for Defendant
                                               MP3.com, Inc.

SO ORDERED.

 Jed /s/ Rakoff
----------------------------------------
Hon. Jed Rakoff
7-28-00

                                       13

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