There is now pending in the San Francisco County Superior Court an action entitled Katherine D. Chamberlin v. Napster, Inc., et al., Case No. 05-445900 (the “Class Action”).

WHAT THIS CLASS ACTION IS ABOUT

Katherine D. Chamberlin, appointed Class Representative Plaintiff (“Class Representative” or “Chamberlin”) filed a class action lawsuit against Napster, LLC and Napster, Inc. (collectively, “Defendants”) on behalf of herself and the class described above (the “Plaintiff Class”). In her Complaint, Chamberlin alleges that Defendants sold Napster Cards that contain the following alternative language: “[c]ard carries its value for 1 year from day of activation,” or “[c]ard carries its value for 1-year [sic] from date of purchase.” The Complaint further alleges that Defendants violated California Civil Code section 1749.5 and state laws set forth in the Consumers Legal Remedies Act by selling these Napster Cards.

While Defendants deny any wrongdoing and any liability whatsoever, they have concluded it is in their best interests to settle the Class Action on the terms generally set forth herein in order to avoid expense, inconvenience, and interference with ongoing business operations.

As a result, the parties have negotiated a proposed settlement. The San Francisco County Superior Court has determined that this action should proceed as a class action, for purposes of settlement only, with Plaintiff Chamberlin as the representative of the Plaintiff Class, and has granted preliminary approval of the settlement, subject to a Final Settlement Hearing discussed below.

This notice explains the nature of the lawsuit and the general terms of the settlement, and informs you of your legal rights and obligations. This Notice of Class Action and Proposed Settlement is dated February 6, 2007.

THE PROPOSED SETTLEMENT

THE PARTIES HAVE AGREED TO THE PROPOSED SETTLEMENT GENERALLY DESCRIBED BELOW. IF THE COURT APPROVES THE PARTIES’ PROPOSED SETTLEMENT, THE FOLLOWING BENEFITS WILL RESULT:

1. Defendants will be enjoined from distributing or selling Napster Cards that contain any language stating that Napster Cards carry their value for only a specified period of time, unless application of the restrictive language to residents of California is explicitly excepted. Defendants may petition the Court for relief from this provision, however, should any future statute, appellate decision, or other source of law or authority enact or hold that gift certificates that have some variation of “card carries its value for 1 year from date of activation,” or “card carries its value for 1-year from date of purchase” are not illegal under California law.
2. Any Napster Cards sold in California will not lose their value over time and will continue to carry their value until they are redeemed. Defendants shall not expire or otherwise cancel the value of Napster Cards in jurisdictions where doing so is prohibited by law; provided, however, that nothing contained herein shall bar Defendants from expiring or otherwise canceling the value of Napster Cards in jurisdictions where doing so is not prohibited by law.
3. For so long as any outstanding Napster Card containing expiration language remains unredeemed, or until one (1) year after the end of the Class Action, whichever first occurs, Defendants will post a notice on the Napster internet website (www.napster.com) that all Napster Cards sold in California will not lose their value over time and will continue to carry their value until they are redeemed.

If the Court approves the proposed settlement, it will enter a judgment dismissing the Class Action on the merits and with prejudice as to all members of the Plaintiff Class. All members of the Plaintiff Class who do not validly and timely request to be excluded from the proposed settlement shall be forever barred from prosecuting their own lawsuits and shall be deemed to have released Defendants and all other persons from all claims, causes of action or losses of any kind whatsoever that any member of the Plaintiff Class has or may claim to have against such persons which are based upon, arising out of, or in any way relating to any of the acts, omissions or other conduct that has been alleged or otherwise referred to in the Class Action.

ATTORNEYS’ FEES, COURT COSTS, AND LITIGATION EXPENSES

At or following final approval of the settlement herein, counsel for the Plaintiff Class will move the Court for an award of attorneys’ fees, litigation expenses, and costs.

FINAL SETTLEMENT HEARING

On May 14, 2007, at , a Final Settlement Hearing will be held on the fairness of the proposed settlement. At the Final Settlement Hearing, the Court will be available to hear any objections and arguments concerning the fairness of the proposed settlement. The May 14, 2007 Final Settlement Hearing will take place before the San Francisco County Superior Court, located at 400 McAllister Street, San Francisco, California, 94102.

WHAT YOU CAN DO

You have the right to exclude yourself from both the Class Action and the Proposed Settlement. If you wish to be excluded from the Plaintiff Class, you must submit a letter or postcard postmarked no later than April 24, 2007, with your name, address, and telephone number. TO BE CONSIDERED VALID, A REQUEST FOR EXCLUSION MUST SET FORTH ALL OF THIS INFORMATION AND MUST BE TIMELY RECEIVED. Your request must be sent to Class Counsel at the following address:

Robert B. Hancock, Esq.
LAW OFFICES OF ROBERT B. HANCOCK
Post Office Box 570/1639 Scenic Drive
Trinidad, CA 95570

If you timely request exclusion from the Plaintiff Class you will be excluded from the Plaintiff Class; you will not be bound by the judgment entered in the Class Action; and you will not be precluded from otherwise prosecuting any individual claim, if timely, against the Defendants based on the transactions complained of in the Class Action. Unless you plan to bring your own lawsuit, there is no benefit to excluding yourself.

If you object to the settlement, but do not wish to simply exclude yourself from the Class Action, you may intervene in the Class Action and/or object to the terms of the settlement under the procedures set forth below. If your objection is rejected you will be bound by the final judgment just as if you had not objected. If you have not timely and validly requested exclusion, you may appear at the Final Settlement Hearing scheduled on May 14, 2007, to show cause why the settlement should not be approved by the Court, provided that you have, by April 24, 2007, filed with the Court a written notice of your intention to appear, all supporting papers, and a statement under penalty of perjury that you are in fact a member of the Plaintiff Class, and have served such notice and papers upon counsel for Plaintiff and counsel for Defendants at the following addresses:

To be considered, the notice and papers must be received by the Court and delivered or postmarked to Plaintiff’s counsel and Defendants’ counsel no later than April 24, 2007. CLASS MEMBERS WHO DO NOT TIMELY MAKE THEIR OBJECTIONS IN THIS MANNER WILL BE DEEMED TO HAVE WAIVED ALL OBJECTIONS AND SHALL NOT BE ENTITLED TO BE HEARD AT THE FINAL SETTLEMENT HEARING.

You may, but need not, enter an appearance through counsel of your choice. If you do, you will be responsible for your personal attorney’s fees and costs.

This description of the case is general and does not cover all of the issues and proceedings thus far. In order to see the complete file, including the individual terms of the settlement in the Class Action, you should visit the office of the Clerk of the Court of the San Francisco County Superior Court, located at 400 McAllister Street, San Francisco, California, 94102. The Clerk will make the file relating to this lawsuit available to you for inspection and copying at your own expense.

DO NOT ADDRESS ANY QUESTIONS ABOUT THE SETTLEMENT OR THE LITIGATION TO THE CLERK OF THE COURT OR TO THE JUDGE.