AGREEMENT
Exhibit 99.1
THIS AGREEMENT dated as of
March 2, 2010 (the “Effective Date”) is by and among MakeMusic, Inc., a
Minnesota corporation (the “Company”), LaunchEquity Partners, LLC, an Arizona
limited liability company (“LEP”), and LaunchEquity Acquisition Partners, LLC
Designated Series Education Partners, a designated series of a Delaware series
limited liability company (“LEAP”) (LEP and LEAP are herein referred to
collectively as “LaunchEquity”).
WHEREAS,
LEP is the sole manager of LEAP, the Company’s largest shareholder;
WHEREAS,
LEP filed a Schedule 13D dated March 6, 2006 with regard to securities of the
Company as subsequently amended on December 13, 2006, January 30, 2007, November
7, 2007, November 17, 2008 and December 15, 2008, and as may be amended
hereafter (as amended, the “LEP Schedule 13D”), in which it indicated it may
engage in certain transactions with the purpose or effect of acquiring or
influencing control of the Company; and
WHEREAS,
in view of the LEP Schedule 13D, recent communications between LaunchEquity and
the Company regarding LaunchEquity’s representation on the Company’s Board of
Directors (the “Board”), and the Board’s determination that it is in the
Company’s interests to involve its largest shareholder in decisions regarding
the strategic direction of the Company, the Board believes it is in the best
interests of the shareholders of the Company to enter into the following
agreement with LaunchEquity.
NOW,
THEREFORE, the parties hereto agree as follows:
1. Size of Board of
Directors. To the extent it has not taken such action prior to
the execution of this Agreement, the Company shall, promptly
following the execution of this Agreement, cause the Board to take all action as
is required under applicable state law and the Company’s articles of
incorporation and bylaws to increase the size of the Board to nine (9)
members.
2. Vacancies. As
promptly as reasonably practicable following execution of this Agreement, Xxxxxx
X. Xxxxxxxx (“Xx. Xxxxxxxx”) and Xxxxxx X’Xxxxx (“Xx. X’Xxxxx”) shall be
appointed by the Board to fill the vacancies on the Board created by the
increase in the number of directors, with terms expiring at the Company’s 2010
Annual Meeting of Shareholders (the “2010 Annual Meeting”) or at such time as
their successors shall have been duly elected and qualified.
3. Nominations for Board of
Directors.
(a) Subject
to the Company’s existing policies and the directors’ fiduciary duties, the
Company shall cause the Board to nominate for election to the Board by the
shareholders at the 2010 Annual Meeting, publicly recommend that the Company’s
shareholders elect and solicit proxies for the election of, Xxxx X. Xxxx (“Xx.
Xxxx”), Xx. Xxxxxxxx and Xx. X’Xxxxx (the “LaunchEquity Nominees”).
(b) The
Company agrees that, from the Effective Date until immediately prior to the
Company’s 2011 Annual Meeting of Shareholders (the “2011 Annual Meeting”), it
shall not, (i) increase the size of the Board to more than nine (9) directors,
(ii) call any special meetings of shareholders for the purpose of removing any
of the LaunchEquity Nominees, or taking any action which would have the effect
of disqualifying or curtailing the term of any of the LaunchEquity Nominees, or
(iii) recommend in favor of or implement any proposal, consent or any other
action seeking the removal of any LaunchEquity Nominee then serving as a
director, or which would have the effect of disqualifying or curtailing the term
of any of the LaunchEquity Nominees.
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(c) LaunchEquity
agrees that, from the Effective Date until immediately after the conclusion of
the 2011 Annual Meeting, it shall not, and shall cause the LaunchEquity Nominees
not to, call any special meetings of the Company’s shareholders for the purpose
of removing any incumbent member of the Board or take any action which would
have the effect of disqualifying or curtailing the term of any incumbent member
of the Board.
4. Successor
Designees. At any time prior to the 2011 Annual Meeting, if
any of the LaunchEquity Nominees (or any successor designee appointed pursuant
to this Section 4) ceases for any reason to serve as a director of the Company,
LaunchEquity shall be entitled to designate a replacement for such LaunchEquity
Nominee, who is reasonably deemed qualified by the Company’s Board and
Governance Committee in accordance with the Company’s policies and the
directors’ fiduciary duties, to hold office for the remaining unexpired term of
such LaunchEquity Nominee (or any successor designee appointed pursuant to this
Section 4). The Company shall take all necessary action to cause the
Board to appoint such successor designee to the Board as promptly as
practicable. Any such successor designee who becomes a Board member
pursuant to this Section 4 shall be deemed to be a “LaunchEquity Nominee” for
all purposes under this Agreement.
5. Shareholder
Meeting. The Company agrees to hold the 2010 Annual Meeting on
or about August 25, 2010.
6. Committee
Representation. For so long as LaunchEquity continues to be
the beneficial owner of more than 20% of the outstanding shares of the Company’s
common stock (the “Common Stock”) (which such percentage ownership shall be
calculated based on the number of shares of Common Stock outstanding as of the
Effective Date), LaunchEquity shall be entitled to proportionate representation
by LaunchEquity Nominees on all standing and special committees of the Board
except where such representation would violate applicable director independence
or other rules or regulations of the Securities Exchange Commission or Nasdaq
Stock Market. For purposes of clarification, proportionate
representation shall mean one (1) LaunchEquity Nominee on a three (3)-member
committee, or as close to such ratio as possible on committees with fewer or
more members, but in any event at least one (1) LaunchEquity Nominee shall serve
on any given committee. For purposes of this Agreement, the
term “beneficial owner” shall have the same meaning as set forth in Rule 13d-3
of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Subject to the provisions of this Section 6, Launch Equity
shall select the Launch Equity Nominee(s) that will serve on any given
committee.
7. Standstill
Agreement. From the Effective Date until immediately prior to
the 2011 Annual Meeting, neither LaunchEquity, Xx. Xxxx, Xx. Xxxxxxxx nor Xx.
X’Xxxxx, nor any of their affiliates or associates (as those terms are defined
in Rule 12b-2 under the Exchange Act) (collectively, the “Interested Parties”),
will, and they will not assist or encourage others (including by providing
financing) to, directly or indirectly, (a) nominate a competing slate of
directors at any meeting of the Company’s shareholders, (b) solicit votes of the
shareholders of the Company in opposition to the slate of directors nominated by
the Company or any other item of business recommended by the Board to be voted
on at any meeting of the Company’s shareholders or (c) engage in, or participate
in any way in, any transaction regarding control of the Company that has not
been approved by the Board. Notwithstanding anything to the contrary
contained in this Section 7, the Interested Parties shall be permitted to
nominate a competing slate of directors at the 2011 Annual Meeting and solicit
votes of the shareholders of the Company in opposition to the slate of directors
nominated by the Company or any other item of business recommended by the Board
to be voted on at the 2011 Annual Meeting, provided, however, that in the event
any Interested Party nominates a competing slate of directors at the 2011 Annual
Meeting, the Board’s nomination and recommendation of, and solicitation of votes
for, the Board’s slate of directors shall not be deemed a violation of any of
the Company’s obligations in this Agreement.
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8. Representations and
Warranties.
(a) Each
of the Company and LaunchEquity makes the following representations and
warranties to the other party:
(i) Authority. It
has the full legal right and power and all authority and approval required to
enter into, execute and deliver this Agreement and to perform fully its
obligations hereunder. This Agreement has been duly authorized, executed and
delivered by it and this Agreement constitutes the valid and binding obligation
of it enforceable against it in accordance with the terms hereof.
(ii) Absence of
Conflicts. Its execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and its performance
hereunder in accordance with the terms and conditions hereof do not and will
not: (i) require the approval of any third party, including its
shareholders or investors, (ii) violate, conflict with or result in a
breach of any provision of its articles of incorporation, by-laws or comparable
governing documents, or (iii) violate any judgment, ruling, order, writ,
injunction, award, decree, statute, law, ordinance, code, rule or regulation of
any court or foreign, federal, state, county or local government or any other
governmental, regulatory or administrative agency or authority that is
applicable to it.
(b) LaunchEquity
represents and warrants to the Company that LaunchEquity and each of the
LaunchEquity Nominees are acting independently of any third party, and not
pursuant to an agreement, arrangement, relationship, understanding or otherwise
for the purpose of acquiring, owning, holding, voting or disposing of any shares
of the Company, and the LaunchEquity parties, including the LaunchEquity
Nominees do not constitute a single person with any third party for purposes of
the definition of an “Acquiring Person” in Section 302A.011 Subd. 37 of the
Minnesota Business Corporation Act or “Beneficial Ownership” in
Section 302A.011 Subd. 41(c) of the Minnesota Business Corporation Act and
do not constitute a “group” with any third party within the meaning of Rule
13d-5 under the Exchange Act.
9. LaunchEquity
Expenses. The Company shall promptly reimburse LaunchEquity
for its reasonable out-of-pocket fees and expenses, including attorneys’ fees,
incurred through the date of the execution and performance of this Agreement in
connection with its discussions and negotiations with the Company with respect
to its evaluation of Board representation, its investment in the Company and the
negotiation and execution of this Agreement, provided such reimbursement shall
not exceed $30,000 in the aggregate.
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10. Further
Assurances. Each party agrees to take or cause to be taken
such further actions, and to execute, deliver and file or cause to be executed,
delivered and filed such further documents and instruments, and to obtain such
consents, as may be reasonably required or requested by the other party in order
to effectuate fully the purposes, terms and conditions of this
Agreement.
11. Amendment. No
amendment or waiver of any provision of this Agreement shall be effective unless
in writing and signed by all of the parties hereto.
12. Severability. Wherever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
13. Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of each party.
14. Notice. All
notices, requests and demands to or upon a party hereto, to be effective, shall
be in writing, and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly provided herein, shall be deemed to
have been validly served, given, delivered or received immediately when
delivered against receipt, three (3) business days’ after deposit in the mail,
postage prepaid, one (1) business day after deposit with an overnight courier
or, in the case of facsimile notice, when sent with respect to machine
confirmed, addressed as follows:
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If
to Company:
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MakeMusic,
Inc.
0000
Xxxxxx Xxxxxxxx Xxxxx, Xxxxx X
Xxxx
Xxxxxxx, XX 00000-0000
Attention: Xxx
Xxxx
Fax:
(000) 000-0000
Email:
xxxxx@xxxxxxxxx.xxx
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With
a copy to:
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Xxxxxxxxxx &
Xxxxx, P.A.
000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx,
XX 00000-0000
Attention: Xxxxxxx
X. Xxxx
Fax.: (000) 000-0000
Email:
xxxxx@xxxxxxx.xxx
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If
to LaunchEquity:
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LaunchEquity
Partners, LLC
0000
X. Xxxxxxx Xxxxxx #000
Xxxxxxxxx,
XX 00000-0000
Attention:
Xxxxxx X. Xxxxxxxx
Fax: (000)
000-0000
E-mail:
xxxx.xxxxxxxx@xxxxxxxxxxxxxxx.xxx
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With
a copy to:
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Xxxxxx
Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park
Avenue Tower
00
Xxxx 00xx
Xxxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxx Xxxxxxx
Phone:
(000) 000-0000
Fax:
(000) 000-0000
E-mail:
xxxxxxxx@xxxxxxxxx.xxx
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or to
such other address as each party may designate for itself by notice given in
accordance with this Section 14.
15. Third Party
Beneficiaries. Except for the provisions of Sections 2
and 3, which are intended in part for the benefit of, and shall be
enforceable by, the LaunchEquity Nominees described therein, nothing contained
in this Agreement shall create any rights in, or be deemed to have been executed
for the benefit of, any person or entity that is not a party hereto or a
successor or permitted assign of such a party.
16. Publicity; Public
Announcements. Any public announcement or similar publicity
regarding the subject matter of this Agreement by LaunchEquity or the Company,
including by either party’s affiliates, associates or advisors, shall be made
only at such time and in such manner as the parties shall agree in advance;
provided, however, that
LaunchEquity shall be permitted to amend the LEP Schedule 13D to disclose this
Agreement or otherwise, and to make any other disclosure required by applicable
law and the Company shall be permitted to disclose this Agreement on a Current
Report on Form 8-K, and to make any other disclosure required by applicable
law.
17. Entire
Agreement. This Agreement embodies the entire understanding
and agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, understandings and inducements,
whether express or implied, oral or written.
18. Interpretation. No
provision of this Agreement shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
dictated such provision.
19. Governing Law; Consent to
Forum. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA (WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE). EACH PARTY HEREBY
CONSENTS AND AGREES THAT ANY FEDERAL OR STATE COURT LOCATED IN MINNEAPOLIS,
MINNESOTA SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR
DISPUTES BETWEEN THE COMPANY ON THE ONE HAND AND LAUNCHEQUITY ON THE OTHER HAND
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. LAUNCHEQUITY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO
SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
LAUNCHEQUITY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH PARTY HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET
FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY
ANY PARTY OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY
ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
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20. Injunctive
Relief. Each of the parties acknowledges that the other party
will suffer irreparable harm if the first party breaches this
Agreement. Accordingly, each party shall be entitled, in addition to
any other rights and remedies that it may have, at law or at equity, to an
injunction, without the posting of a bond or other security, enjoining or
restraining the other party from any violation of this
Agreement. Each party hereby consents to the other party’s right to
the issuance of such injunction.
21. Waiver of Jury
Trial. Each party hereby irrevocably and unconditionally
waives any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of or relating to this Agreement or any of
the actions contemplated hereby.
22. Execution in
Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute one and the same
instrument.
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the remainder of this page intentionally left blank—signature page to
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IN
WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
AGREEMENT to be duly executed and delivered as of the date first above
written.
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MAKEMUSIC,
INC.
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By:
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/s/
Xxxxx X. XxxXxxXxxxx
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Name:
Xxxxx X. XxxXxxXxxxx
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Title:
Chief Financial Officer
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LAUNCHEQUITY
PARTNERS,
LLC
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By:
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/s/
Xxxxxx X. Xxxxxxxx
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Name:
Xxxxxx X. Xxxxxxxx
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Title:
Managing Member
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| LAUNCHEQUITY ACQUISITION PARTNERS, LLC DESIGNATED SERIES EDUCATION PARTNERS | |||
| By: |
LaunchEquity
Partners, LLC
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its
Manager
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By:
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/s/
Xxxxxx X. Xxxxxxxx
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Name:
Xxxxxx X. Xxxxxxxx
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Title:
Managing Member
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