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EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
YAHOO! INC.
JEWEL ACQUISITION CORPORATION
AND
LAUNCH MEDIA, INC.
Dated as of June 27, 2001
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TABLE OF CONTENTS
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ARTICLE I THE MERGER..............................................................................................2
1.1 The Offer.........................................................................................2
1.2 Rocket Actions....................................................................................3
1.3 Directors.........................................................................................4
1.4 The Merger........................................................................................6
1.5 Effective Time....................................................................................6
1.6 Closing...........................................................................................6
1.7 Directors and Officers of the Surviving Corporation...............................................7
1.8 Subsequent Actions................................................................................7
1.9 Stockholders' Meeting.............................................................................7
1.10 Merger Without Meeting of Stockholders............................................................8
ARTICLE II CONVERSION OF SECURITIES..............................................................................8
2.1 Conversion of Capital Stock.......................................................................8
2.2 Exchange of Certificates..........................................................................9
2.3 Dissenting Shares................................................................................10
2.4 Rocket Option Plans; Employee Stock Purchase Plan; Warrants......................................10
2.5 Withholding......................................................................................11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ROCKET.............................................................12
3.1 Organization of Rocket...........................................................................12
3.2 Rocket Capital Structure.........................................................................13
3.3 Obligations With Respect to Capital Stock........................................................14
3.4 Authority........................................................................................14
3.5 SEC Filings; Rocket Financial Statements.........................................................16
3.6 Absence of Certain Changes or Events.............................................................17
3.7 Taxes............................................................................................17
3.8 Title to Properties; Absence of Liens and Encumbrances...........................................17
3.9 Intellectual Property............................................................................19
3.10 Compliance; Permits; Restrictions................................................................20
3.11 Litigation.......................................................................................22
3.12 Employee Benefit Plans...........................................................................23
3.13 Environmental Matters............................................................................23
3.14 Agreements, Contracts and Commitments............................................................27
3.15 Information in the Proxy Statement...............................................................28
3.16 Information in the Offer Documents and the Schedule 14D-9........................................29
3.17 Section 203 Not Applicable.......................................................................29
3.18 Board Approval...................................................................................30
3.19 Brokers' and Finders' Fees.......................................................................30
3.20 Opinion of Financial Advisor.....................................................................30
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TABLE OF CONTENTS
(continued)
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF YAHOO! AND PURCHASER................................................31
4.1 Organization of Yahoo! and Purchaser.............................................................31
4.2 Authority........................................................................................31
4.3 Information in the Proxy Statement...............................................................32
4.4 Information in the Offer Documents...............................................................32
4.5 Financing........................................................................................32
4.6 Stock Ownership..................................................................................33
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME....................................................................33
5.1 Conduct of Business by Rocket....................................................................33
5.2 No Solicitation..................................................................................35
ARTICLE VI ADDITIONAL AGREEMENTS.................................................................................38
6.1 Proxy Statement..................................................................................38
6.2 Meeting of Stockholders of the Rocket............................................................38
6.3 Additional Agreements............................................................................38
6.4 Confidentiality: Access to Information..........................................................38
6.5 Public Disclosure................................................................................39
6.6 Reasonable Efforts; Notification.................................................................39
6.7 Third Party Consents.............................................................................40
6.8 Certain Employee Benefit Matters.................................................................40
6.9 Indemnification..................................................................................41
6.10 Interim Directors................................................................................41
6.11 Option to Acquire Additional Shares..............................................................42
ARTICLE VI CONDITIONS............................................................................................42
7.1 Conditions to Obligations of Each Party to Effect the Merger.....................................42
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER...................................................................43
8.1 Termination......................................................................................43
8.2 Effect of Termination............................................................................44
8.3 Fees and Expenses................................................................................45
8.4 Amendment........................................................................................45
8.5 Extension; Waiver................................................................................45
ARTICLE IX GENERAL PROVISIONS....................................................................................45
9.1 Non-Survival of Representations and Warranties...................................................45
9.2 Notices..........................................................................................45
9.3 Interpretation; Certain Defined Terms............................................................47
9.4 Counterparts.....................................................................................47
9.5 Entire Agreement; Third Party Beneficiaries......................................................47
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TABLE OF CONTENTS
(continued)
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9.6 Severability.....................................................................................48
9.7 Other Remedies; Specific Performance.............................................................48
9.8 Governing Law....................................................................................48
9.9 Rules of Construction............................................................................48
9.10 Assignment.......................................................................................48
9.11 No Waiver; Remedies Cumulative...................................................................48
9.12 Waiver of Jury Trial.............................................................................49
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INDEX OF EXHIBITS
Exhibit A Form of Stockholders Agreement
Exhibit B Form of Noncompetition Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered into as of June 27, 2001 (this
"AGREEMENT"), by and among Yahoo! Inc. a Delaware corporation ("YAHOO!"), Jewel
Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of
Yahoo! ("PURCHASER"), and Launch Media, Inc., a Delaware corporation ("LAUNCH").
RECITALS
A. The Board of Directors of each of Yahoo!, Purchaser and Launch has
approved, and deems it advisable and in the best interests of its respective
stockholders to consummate, the acquisition of Launch by Yahoo! upon the terms
and subject to the conditions set forth herein.
B. In furtherance thereof, it is proposed that Purchaser make a cash tender
offer (the "OFFER") to acquire all shares of the issued and outstanding common
stock, par value $0.001, of Launch (the "SHARES"), for $0.92 per share, net to
the seller in cash (such price, or any such higher price per Share as may be
paid in the Offer, referred to herein as the "OFFER PRICE").
C. The Board of Directors of each of Yahoo!, Purchaser and Launch has
approved this Agreement and the Merger (as defined in Section 1.4) following the
Offer in accordance with the Delaware General Corporation Law ("DELAWARE LAW")
and upon the terms and subject to the conditions set forth herein.
D. The Board of Directors of Launch (the "LAUNCH BOARD OF DIRECTORS") has
determined that the consideration to be paid for each Share in the Offer and the
Merger is fair to the holders of such Shares and has resolved to recommend that
the holders of such Shares accept the Offer and adopt this Agreement and each of
the transactions contemplated by this Agreement upon the terms and subject to
the conditions set forth herein.
E. Contemporaneously with the execution and delivery of this Agreement, and
as a condition and inducement to Yahoo!'s willingness to enter into this
Agreement, certain stockholders of Launch (each, a "STOCKHOLDER") are entering
into a Stockholders Agreement (the "STOCKHOLDERS AGREEMENT") in substantially
the form attached hereto as Exhibit A, pursuant to which each such Stockholder
has agreed, among other things, to tender his Shares in the Offer, to grant to
Yahoo! the right to purchase his Shares upon payment by Yahoo! of the Offer
Price following the occurrence of certain events, and to grant Yahoo! a proxy
with respect to the voting of such Shares in favor of the Merger upon the terms
and subject to the conditions set forth therein.
F. In addition, contemporaneously with the execution and delivery of this
Agreement, and as a condition and inducement to Yahoo!'s willingness to enter
into this Agreement, certain employees of Launch are entering into
Noncompetition Agreements with Yahoo! in the form attached hereto a Exhibit B.
G. Launch, Yahoo! and Purchaser desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and Merger.
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NOW, THEREFORE, in consideration of the foregoing and the respective
covenants, agreements, representations and warranties set forth herein, the
parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.1 and none of the events set forth in Annex I hereto
shall have occurred and be continuing, Purchaser shall commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT")) the Offer as promptly as practicable (and in any event not
later than ten (10) business days) following the date hereof. The obligations of
Purchaser to accept for payment and to pay for any Shares validly tendered on or
prior to the expiration of the Offer and not withdrawn shall be subject only to
(i) there being validly tendered and not withdrawn prior to the expiration of
the Offer that number of Shares which, together with the Shares then actually
owned by Yahoo! or Purchaser or any direct or indirect wholly owned subsidiary
of Yahoo!, represents at least a majority of the Shares outstanding on a Fully
Diluted Basis (the "MINIMUM CONDITION"); and (ii) the other conditions set forth
in Annex I hereto. For purposes of the foregoing, "FULLY DILUTED BASIS" shall
refer to the number of Shares issued and outstanding at any time after taking
into account all Shares issuable upon the conversion of Launch convertible
securities or upon the exercise of any options, warrants or rights to purchase
shares of Launch capital stock that could vest within 90 days of the time of
determination and in each case that have a conversion or exercise price per
share less than the Offer Price. Subject to the prior satisfaction or waiver by
Yahoo! or Purchaser of the Minimum Condition and the other conditions of the
Offer set forth in Annex I hereto, Purchaser shall consummate the Offer in
accordance with its terms and accept for payment and pay for all Shares tendered
and not withdrawn promptly following the acceptance of Shares for payment
pursuant to the Offer. The Offer shall be made by means of an offer to purchase
(the "OFFER TO PURCHASE") that contains the terms set forth in this Agreement,
the Minimum Condition and the other conditions set forth in Annex I hereto.
Purchaser shall not, and Yahoo! shall cause Purchaser not to, decrease the Offer
Price, change the form of consideration payable in the Offer, decrease the
number of Shares sought in the Offer, impose additional conditions to the Offer,
extend the offer beyond the date that is twenty (20) business days after
commencement of the Offer (the "INITIAL EXPIRATION DATE") except as set forth
below, or amend any other condition of the Offer in any manner adverse to the
holders of the Shares, in each case without the prior written consent of Launch
(such consent to be authorized by Launch's Board of Directors or a duly
authorized committee thereof). Notwithstanding the foregoing, Purchaser may,
without the consent of the Launch, (i) extend the Offer beyond the Initial
Expiration Date for the shortest time periods which it reasonably believes are
necessary, in one or more such periods, but in no event more than an additional
fifteen (15) business days, if, at the scheduled expiration of the Offer, Yahoo!
and Purchaser shall not be in material breach of this Agreement
and any of the conditions to Purchaser's obligation to accept Shares for
payment, shall not be satisfied or waived and such condition is reasonably
capable of being satisfied, or (ii) extend the Offer for any period required by
any rule, regulation or interpretation of the United States Securities and
Exchange Commission ("SEC"), or the staff thereof, applicable to the
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Offer. Purchaser may, without the consent of Launch, extend the Offer for a
subsequent offering period of up to twenty (20) business days in accordance with
Rule 14d-11 under the Exchange Act. In addition, the Offer Price may be
increased and the Offer may be extended to the extent required by law in
connection with such increase, in each case without the consent of Launch.
(b) On the date the Offer is commenced, Yahoo! and Purchaser shall
file with the SEC, pursuant to Regulation M-A under the Exchange Act
("REGULATION M-A"), a Tender Offer Statement on Schedule TO with respect to the
Offer (together with all amendments, supplements and exhibits thereto, the
"SCHEDULE TO"). The Schedule TO shall include the summary term sheet required
under Regulation M-A and, as exhibits, the Offer to Purchase and a form of
letter of transmittal and summary advertisement (collectively, together with any
amendments and supplements thereto, the "OFFER DOCUMENTS"). Yahoo! and Purchaser
agree to take all steps necessary to cause the Offer Documents to be filed with
the SEC and disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Yahoo! and Purchaser agree to
take all steps necessary to ensure that (i) the Offer Documents will comply in
all material respects with the provisions of the Exchange Act, the rules and
regulations thereunder and other applicable federal securities laws; and (ii)
the Offer Documents shall not contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, except that no representation is made by Yahoo!
or Purchaser with respect to information furnished by Launch expressly for
inclusion in the Offer Documents. Yahoo! and Purchaser, on the one hand, and
Launch, on the other hand, agree to promptly correct any information provided by
it for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect or as otherwise required by law.
Yahoo! and Purchaser further agree to take all steps necessary to cause the
Offer Documents as so corrected to be filed with the SEC and disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Launch and its counsel shall be given a reasonable
opportunity to review and comment upon the Schedule TO before it is filed with
the SEC. In addition, Yahoo! and Purchaser agree to provide Launch and its
counsel with any comments, whether written or oral, that Yahoo!, Purchaser or
their counsel may receive from time to time from the SEC or its staff with
respect to the Offer Documents promptly after Yahoo!'s or Purchaser's, as the
case may be, receipt of such comments, and any written or oral responses
thereto.
1.2 Launch Actions.
(a) As soon as practicable after the commencement of the Offer,
Launch shall, in a manner that complies with Rule 14d-9 under the Exchange Act,
file with the SEC a Tender Offer Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments, supplements and exhibits thereto,
the "SCHEDULE 14D-9") which shall, subject to the provisions of Section 5.2(c),
contain the recommendation referred to in clause (iii) of
Section 3.18. Launch further agrees to take all steps necessary to cause the
Schedule 14D-9 to be filed with the SEC and disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Launch, on the one hand, and Yahoo! and Purchaser, on the other hand,
agree to promptly correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
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material respect or as otherwise required by law. Launch agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and disseminated to holders of the Shares, in each case as and to the extent
required by applicable federal securities laws. Yahoo!, Purchaser and their
counsel shall be given the opportunity to review and comment upon the Schedule
14D-9 before it is filed with the SEC. In addition, Launch agrees to provide
Yahoo!, Purchaser and their counsel in writing with any comments, whether
written or oral, that Launch or its counsel may receive from time to time from
the SEC or its staff with respect to the Schedule 14D-9 promptly after Launch's
receipt of such comments, and any written or oral responses thereto.
(b) In connection with the Offer, Launch shall promptly furnish or
cause to be furnished to Yahoo! or Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
promptly furnish or cause to be furnished to Yahoo! or Purchaser with such
information and assistance (including, but not limited to, lists of holders of
the Shares, updated periodically, and their addresses, mailing labels and lists
of security positions) as Yahoo! or Purchaser or its agent(s) may reasonably
request for the purpose of communicating the Offer to the record and beneficial
holders of the Shares. Except for such steps as are necessary to disseminate the
Offer Documents, Yahoo! and Purchaser shall hold in confidence the information
contained in any of such labels and lists and the additional information
referred to in the preceding sentence, shall use such information only in
connection with the Offer, and the transactions contemplated hereby, and, if
this Agreement is terminated, will deliver or cause to be delivered to Launch
all copies and any summaries of such information then in its possession or the
possession of its agents or representatives.
1.3 Directors.
(a) Promptly upon the purchase of and payment for any Shares by
Yahoo! or Purchaser which represents at least a majority of the outstanding
Shares (on a Fully Diluted Basis), Yahoo! shall be entitled to elect or
designate such number of directors, rounded up to the next whole number, on
Launch's Board of Directors as is equal to the product of the total number of
directors on Launch's Board of Directors (giving effect to the directors elected
or designated by Yahoo! pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares beneficially owned by Purchaser, Yahoo! and
any of their affiliates bears to the total number of Shares then outstanding
(including for purposes of this Section 1.3 such Shares as are accepted for
payment pursuant to the Offer, but excluding Shares subject to purchase under
the Stockholders Agreement and Shares owned by Launch or any of its
subsidiaries). Launch shall, upon Yahoo!'s request, use its reasonable efforts
either to promptly increase the size of Launch's Board of Directors, including
by amending the Bylaws of Launch if necessary so as to increase the size of
Launch's Board of Directors, or promptly secure the resignations of such number
of its incumbent directors, or both, as is necessary to enable Yahoo!'s
designees to be so elected or designated to Launch's Board of Directors, and
shall use its reasonable best efforts to cause Yahoo!'s designees to be so
elected or designated at such time. At such time, Launch shall, upon Yahoo!'s
request, also cause persons elected or designated by Yahoo! to constitute the
same percentage (rounded up to the next whole number) as is on Launch's Board of
Directors of (i) each committee of Launch's Board of Directors; (ii) each board
of directors (or similar body) of
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each Launch subsidiary; and (iii) each committee (or similar body) of each such
board, in each case only to the extent permitted by applicable law or the rules
of any stock exchange or trading market on which Launch's common stock is listed
or traded. Launch's obligations under this Section 1.3(a) shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Launch
shall promptly upon execution of this Agreement take all actions required
pursuant to such Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 1.3(a), including, but not limited to, mailing to
stockholders (together with the Schedule 14D-9) the information required by
Section 14(f) and Rule 14f-1 as is necessary to enable Yahoo!'s designees to be
elected or designated to Launch's Board of Directors. Yahoo! or Purchaser shall
supply Launch in writing and be solely responsible for any information with
respect to either of them and their nominees, officers, directors and affiliates
to the extent required by Section 14(f) and Rule 14f-1. The provisions of this
Section 1.3(a) are in addition to and shall not limit any rights that any of
Purchaser, Yahoo! or any of their respective affiliates may have as a holder or
beneficial owner of Shares as a matter of law with respect to the election of
directors or otherwise.
(b) In the event that Yahoo!'s designees are elected or designated to
Launch's Board of Directors as contemplated by Section 1.3(a), then, until the
Effective Time (as defined in Section 1.5), Launch shall cause Launch's Board of
Directors to have at least two (2) non-employee directors who are directors on
the date hereof (the "INDEPENDENT DIRECTORS"), provided, however, that if any
Independent Director is unable to serve due to death or disability, the
remaining Independent Director(s) shall be entitled to elect or designate
another person (or persons) who serves as a director on the date hereof to fill
such vacancy, and such person (or persons) shall be deemed to be an Independent
Director for purposes of this Agreement. If no Independent Director then
remains, the other directors shall designate two persons who are directors on
the date hereof (or, in the event there shall be less than two directors
available to fill such vacancies as a result of such persons' deaths,
disabilities or refusals to serve, such smaller number of persons who are
directors on the date hereof) to fill such vacancies and such persons shall be
deemed Independent Directors for purposes of this Agreement. Notwithstanding
anything in this Agreement to the contrary, if Yahoo!'s designees constitute a
majority of Launch's Board of Directors during the period after the election of
such directors designated by Yahoo! pursuant to this Section 1.3 but prior to
the Effective Time, the Board of Directors of Launch shall delegate to a
committee of the Board of Directors of Launch comprised solely of the
Independent Directors (the "COMMITTEE") the sole responsibility for (i) the
amendment or termination of this Agreement (in either case in accordance with
this Agreement) on behalf of Launch, (ii) the waiver of any of Launch's rights
or remedies hereunder, (iii) the extension of the time for performance of
Yahoo!'s or Purchaser's obligations hereunder, or (iv) the assertion or
enforcement of Launch's rights under this Agreement to object to a termination
of this Agreement under Section 8.1(e). In addition, if Yahoo!'s designees
constitute a majority of Launch's Board of Directors after the acceptance for
payment of Shares pursuant to the Offer and prior to the Effective Time, then,
in addition to the foregoing, the affirmative vote of a majority of the
Independent Directors (or, if there shall be only one Independent Director, the
affirmative vote of the single Independent Director) shall be required to (i)
amend the Certificate of Incorporation or Bylaws of Launch if such action would
materially and adversely affect holders of Shares other than Yahoo! or
Purchaser; or (ii) take any other action of Launch's Board of Directors under or
in connection with this Agreement if such action would materially and
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adversely affect holders of Shares other than Yahoo! or Purchaser; provided,
however, that if there shall be no Independent Directors as a result of such
persons' deaths, disabilities or refusal to serve, then such actions and the
actions referenced in the immediately prior sentence may be effected by majority
vote of the entire Launch Board of Directors.
1.4 The Merger.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time, Launch and Purchaser shall consummate a merger (the "MERGER")
pursuant to which (i) Purchaser shall be merged with and into Launch and the
separate corporate existence of Purchaser shall thereupon cease; (ii) Launch
shall be the successor or surviving corporation in the Merger and shall continue
to be governed by the laws of the State of Delaware; and (iii) the separate
corporate existence of Launch with all its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. The corporation
surviving the Merger is sometimes hereinafter referred to as the "SURVIVING
CORPORATION." The Merger shall have the effects set forth in the Delaware Law.
(b) At the Effective Time, the Certificate of Incorporation of the
Surviving Corporation shall be amended so as to read substantially the same as
the Certificate of Incorporation of Purchaser, as in effect immediately prior to
the Effective Time, except as to the name of the Surviving Corporation which
shall remain "Launch Media Inc.", until thereafter amended as provided by law
and such Certificate of Incorporation.
(c) At the Effective Time, the Bylaws of the Surviving Corporation
shall be amended so as to read substantially the same as the Bylaws of
Purchaser, as in effect immediately prior to the Effective Time, except as to
the name of the Surviving Corporation which shall remain "Launch Media Inc.",
until thereafter amended as provided by law, the Certificate of Incorporation of
the Surviving Corporation and such Bylaws.
1.5 Effective Time. Yahoo!, Purchaser and Launch shall cause an
appropriate Certificate of Merger or Certificate of Ownership and Merger, as
applicable (in either case, a "CERTIFICATE OF MERGER") to be executed and filed
on the Closing Date (as defined in Section 1.6) (or on such other date as Yahoo!
and Launch may agree) with the Secretary of State of the State of Delaware as
provided in the Delaware Law. The Merger shall become effective on the date on
which the Certificate of Merger has been duly filed with the Secretary of State
of the State of Delaware or such time as is agreed upon by the parties and
specified in the Certificate of Merger, such time hereinafter referred to as the
"EFFECTIVE TIME."
1.6 Closing. The closing of the Merger (the "CLOSING") will take place at
9:00 a.m. (California time) on a date to be specified by the parties, such date
to be no later than the second business day after satisfaction or waiver of all
of the conditions set forth in Article VII (the "CLOSING DATE"), at the offices
of Venture Law Group, A Professional Corporation, 0000 Xxxx Xxxx Xxxx, Xxxxx
Xxxx, Xxxxxxxxxx 00000, unless another date or place is agreed to in writing by
the parties hereto.
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1.7 Directors and Officers of the Surviving Corporation. The directors of
Purchaser immediately prior to the Effective Time shall, from and after the
Effective Time, be the directors of the Surviving Corporation, and the officers
of Purchaser immediately prior to the Effective Time shall, from and after the
Effective Time, be the officers of the Surviving Corporation, in each case until
their respective successors shall have been duly elected, designated or
qualified, or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Certificate of Incorporation and Bylaws.
1.8 Subsequent Actions. If at any time after the Effective Time the
Surviving Corporation shall determine, in its sole discretion, or shall be
advised, that any deeds, bills of sale, assignments, assurances or any other
actions or things are necessary or desirable to vest, perfect or confirm of
record or otherwise in the Surviving Corporation its right, title or interest
in, to or under any of the rights, properties or assets of either of Launch or
Purchaser acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger or otherwise to carry out this Agreement,
then the officers and directors of the Surviving Corporation shall be authorized
to execute and deliver, in the name and on behalf of either Launch or Purchaser,
all such deeds, bills of sale, instruments of conveyance, assignments and
assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title or interest
in, to and under such rights, properties or assets in the Surviving Corporation
or otherwise to carry out this Agreement.
1.9 Stockholders' Meeting.
(a) If required by applicable law in order to consummate the Merger,
Launch, acting through Launch's Board of Directors, shall, in accordance with
applicable law and Launch's certificate of incorporation and bylaws:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders to consider the approval and adoption of this
Agreement and the approval of the Merger (the "SPECIAL MEETING") as soon as
reasonably practicable following the acceptance for payment and purchase of
Shares by Purchaser pursuant to the Offer and, if later, the expiration of any
subsequent offering period under Section 1.1(a) hereof, for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and use its
reasonable efforts to obtain and furnish the information required to be included
by the SEC in the Proxy Statement (as hereinafter defined) and, after
consultation with Yahoo!, respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and cause a definitive
proxy or information statement (the "PROXY STATEMENT") to be mailed to its
stockholders;
(iii) include in the Proxy Statement the recommendation of
Launch's Board of Directors that stockholders of Launch vote in favor of the
approval of the Merger and the adoption of this Agreement; and
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(iv) use its reasonable efforts to solicit from holders of Shares
proxies in favor of the Merger and take all other action reasonably necessary or
advisable to secure the approval of stockholders required by the Delaware Law
and any other applicable law and Launch's certificate of incorporation and
bylaws (if applicable) to effect the Merger; provided that the obligations set
forth in clauses (iii) and (iv) of this Section 1.9(a) shall be subject to
Sections 1.10 and 5.2(c).
(b) Yahoo! agrees to vote, or cause to be voted, all of the Shares
then owned by it, Purchaser or any of its other subsidiaries and affiliates in
favor of the approval of the Merger and the adoption of this Agreement.
1.10 Merger Without Meeting of Stockholders. Notwithstanding Section 1.9,
in the event that Yahoo!, Purchaser or any other subsidiary of Yahoo! shall
acquire at least 90% of the outstanding shares of each class of capital stock of
Launch entitled to vote on the Merger, pursuant to the Offer or otherwise, the
parties hereto agree, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of stockholders of Launch,
in accordance with Section 253 of the Delaware Law.
ARTICLE II
CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holders of any Shares or
common stock, par value $0.001 per share, of Purchaser ("PURCHASER COMMON
STOCK"):
(a) Purchaser Common Stock. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Yahoo!-Owned Stock. All Shares
that are owned by Launch as treasury stock and any Shares owned by Yahoo!,
Purchaser or any other wholly owned subsidiary of Yahoo! shall be cancelled and
retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Shares. Each issued and outstanding Share (other
than Shares to be cancelled in accordance with Section 2.1(b) and other than
Dissenting Shares (as defined in Section 2.3)) shall be converted into the right
to receive the Offer Price, payable to the holder thereof in cash, without
interest (the "MERGER CONSIDERATION"). From and after the Effective Time, all
such Shares shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.2, without interest
thereon.
2.2 Exchange of Certificates.
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(a) Paying Agent. Yahoo! shall designate a bank or trust company
reasonably acceptable to Launch to act as agent for the holders of Shares in
connection with the Merger (the "PAYING AGENT") and to receive the funds to
which holders of Shares shall become entitled pursuant to Section 2.1(c). Prior
to the Effective Time, Yahoo! or Purchaser shall deposit, or cause to be
deposited, with the Paying Agent the aggregate Merger Consideration. For
purposes of determining the amount of Merger Consideration to be so deposited,
Yahoo! and Purchaser shall assume that no stockholder of Launch will perfect any
right to appraisal of his, her or its Shares. Such funds shall be invested by
the Paying Agent as directed by Yahoo! or the Surviving Corporation, in its sole
discretion, pending payment thereof by the Paying Agent to the holders of the
Shares. Earnings from such investments shall be the sole and exclusive property
of Yahoo! and the Surviving Corporation, and no part of such earnings shall
accrue to the benefit of holders of Shares.
(b) Exchange Procedures. Promptly after the Effective Time, the
Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "CERTIFICATES"), whose shares were converted pursuant to
Section 2.1 into the right to receive the Merger Consideration (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Yahoo! may reasonably specify); and (ii) instructions for
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Yahoo!,
together with such letter of transmittal, duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration for each Share formerly represented by such Certificate and the
Certificate so surrendered shall forthwith be cancelled. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition
precedent of payment that (x) the Certificate so surrendered shall be properly
endorsed or shall be otherwise in proper form for transfer; and (y) the person
requesting such payment shall have paid any transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered or shall have established to
the satisfaction of the Surviving Corporation that such tax either has been paid
or is not required to be paid. Until surrendered as contemplated by this Section
2.2, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive the Merger Consideration in cash as
contemplated by this Section 2.2, without interest thereon.
(c) Transfer Books; No Further Ownership Rights in Shares. At the
Effective Time, the stock transfer books of Launch shall be closed and
thereafter there shall be no further registration of transfers of Shares on the
records of Launch. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be cancelled and exchanged as provided in this Article II.
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(d) Termination of Fund; No Liability. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) made available to the Paying Agent and not
disbursed (or for which disbursement is pending subject only to the Paying
Agent's routine administrative procedures) to holders of Certificates, and
thereafter such holders shall be entitled to look only to the Surviving
Corporation (subject to abandoned property, escheat or other similar laws) only
as general creditors thereof with respect to the Merger Consideration payable
upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.3 Dissenting Shares.
(a) Notwithstanding anything in this Agreement to the contrary,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has complied with Section 262 of the Delaware Law ("DISSENTING SHARES") shall
not be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses his or her right to
appraisal. A holder of Dissenting Shares shall be entitled to receive payment of
the appraised value of such Shares held by him or her in accordance with Section
262 of the Delaware Law, unless, after the Effective Time, such holder fails to
perfect or withdraws or loses his or her right to appraisal, in which case such
Shares shall be converted into and represent only the right to receive the
Merger Consideration, without interest thereon, upon surrender of the
Certificate or Certificates representing such Shares pursuant to Section 2.2.
(b) Launch shall give Yahoo! (i) prompt notice of any written demands
for appraisal of any Shares, attempted withdrawals of such demands and any other
instruments served pursuant to the Delaware Law and received by Launch relating
to rights of appraisal; and (ii) the opportunity to participate in the conduct
of all negotiations and proceedings with respect to demands for appraisal under
the Delaware Law. Except with the prior written consent of Yahoo!, Launch shall
not voluntarily make any payment with respect to any demands for appraisal or
settle or offer to settle any such demands for appraisal.
2.4 Launch Option Plans; Employee Stock Purchase Plan; Warrants.
(a) Effective as of the Effective Time, each outstanding stock
option, stock equivalent right or right to acquire Shares (a "LAUNCH OPTION" or
"LAUNCH OPTIONS") granted under Launch's 1994 Stock Option Plan (the "1994
OPTION PLAN") and Launch's 1998 Stock Option Plan (the "1998 OPTION PLAN," and
collectively with the 1994 Option Plan, the "OPTION PLANS"), whether or not then
exercisable or vested, shall be (a) deemed to be 100% vested and exercisable
immediately prior to the Effective Time; and (b) immediately prior to the
Effective Time, cancelled and, in consideration of such cancellation, Yahoo!
shall, or shall cause the Surviving Corporation to, pay to such holders of
Options, an amount in respect thereof equal to the product of (x) the excess, if
any, of the Offer Price over the exercise price of each such Option and (y) the
number of Shares subject thereto (such payment, if any, to be net of
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applicable withholding and excise taxes); provided, however, that with respect
to any person subject to Section 16(a) of the Exchange Act, any such amount
shall be paid as soon as practicable after the first date payment can be made
without liability to such person under Section 16(b) of the Exchange Act. As of
the Effective Time, the Option Plans shall terminate and all rights under any
provision of any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of Launch or any
Launch subsidiary shall be cancelled. Launch shall use its best efforts to
effectuate the foregoing, including, but not limited to, obtaining all consents
necessary to cash out and cancel all Options necessary to ensure that, after the
Effective Time, no person shall have any right under the Option Plans or any
other plan, program or arrangement with respect to equity securities of the
Surviving Corporation or any subsidiary thereof.
(b) The Board of Directors of Launch shall take all action necessary
to cause (i) any "Purchase Periods" (as defined in Launch's 1999 Employee Stock
Purchase Plan (the "ESPP")) then in progress to be shortened setting a new
"Purchase Date" (as defined in the ESPP) as of a date prior to the acceptance
for payment by Yahoo! of Shares pursuant to the Offer, and any Purchase Periods
then in progress shall end on such new Purchase Date, and (ii) the termination
of the ESPP effective as of a time following such new Purchase Date but at or
prior to the Effective Time of the Merger, as may be requested by Yahoo!.
(c) Effective at the Effective Time, each outstanding Launch Warrant
(as defined in Section 3.2), whether or not exercisable or vested, shall be (a)
deemed to be 100% vested and exercisable immediately prior to the Effective
Time; and (b) immediately prior to the Effective Time, cancelled and, in
consideration of such cancellation, Yahoo! shall, or shall cause the Surviving
Corporation to, pay to the holders of such Launch Warrants, an amount in respect
thereof equal to the product of (x) the excess, if any of the Offer Price over
the exercise price of each such Launch Warrant and (y) the number of Shares
subject thereto (such payment, if any, to be net of applicable withholding and
excise taxes). As of the Effective Time, the Launch Warrants shall terminate and
all rights under any provision of any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of Launch or any Launch subsidiary shall be cancelled. Launch
shall use its best efforts to effectuate the foregoing, including, but not
limited to, obtaining all consents necessary to accelerate, cash out and
terminate all Launch Warrants necessary to ensure that, after the Effective
Time, no person shall have any right under any Launch Warrant or any other plan,
program or arrangement with respect equity securities of the Surviving
Corporation or any subsidiary thereof.
Section 2.5 Withholding. Each of the Paying Agent, Yahoo!, and the
Surviving Corporation shall be entitled to deduct and withhold from any amounts
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Launch Common Stock or Launch Options such amounts as may be
required to be deducted or withheld therefrom under the Internal Revenue Code
(the "CODE") or any provision of state, local or foreign tax law or under any
other applicable legal requirement. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the person to whom such amounts would otherwise have been
paid.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ROCKET
Launch represents and warrants to Yahoo! and Purchaser, subject to the
exceptions specifically disclosed in writing in the disclosure schedules
delivered by Launch to Yahoo! dated as of the date hereof and certified by a
duly authorized officer of Launch (the "LAUNCH DISCLOSURE SCHEDULES"), as
follows:
3.1 Organization of Launch.
(a) Launch and each of its subsidiaries (i) is a corporation or other
legal entity duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized; (ii) has the corporate or
other power and authority to own, lease and operate its assets and property and
to carry on its business as now being conducted; and (iii) except as would not
have or be reasonably expected to have a Material Adverse Effect on Launch, is
duly qualified or licensed to do business in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary.
(b) Launch has set forth in the Launch Disclosure Schedules a true
and complete list of all of Launch's subsidiaries as of the date of this
Agreement, together with a list of each partnership, joint venture or other
business entity in which Launch holds an interest, whether voting, equity or
otherwise (collectively, the "JOINT VENTURES" ), indicating the jurisdiction of
organization of each such entity and Launch's equity interest therein. Except as
set forth on such list, neither Launch nor any of its subsidiaries owns any
equity interest in any corporation, partnership or joint venture arrangement or
other business entity that is material to Launch.
(c) Launch has delivered or made available to Yahoo! a true and
correct copy of the Certificate of Incorporation and Bylaws of Launch and
similar governing instruments of each of its subsidiaries and each Joint
Venture, each as amended to date, and each such instrument is in full force and
effect. Neither Launch nor any of its subsidiaries nor, to the knowledge of
Launch, any Joint Venture is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws or equivalent governing instruments.
(d) As used in this Agreement, the term "MATERIAL ADVERSE EFFECT"
shall mean any change, effect, event, occurrence, state of facts or development
(each a "Development") that is materially adverse to the business, assets,
liabilities, condition (financial or otherwise) or results of operations of
Launch and its subsidiaries, taken together as a whole; provided, however, that
none of the following shall be deemed in themselves, either alone or in
combination, to constitute, and none of the following shall be taken into
account in determining whether there has been or will be, a Material Adverse
Effect: (a) any change in the market price or trading volume of Launch's common
stock after the date of this Agreement; (b) provided that Launch shall have
otherwise complied with the terms of this Agreement, including without
limitation Section 5.1 hereof, any failure by Launch to meet internal
projections or forecasts or published revenue or earnings predictions for any
period ending (or for which revenues or
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earning are released) on or after the date of this Agreement; (c) any
Development that is the direct effect of, or proximately caused by, the public
announcement or pendency of the transactions contemplated by this Agreement; (d)
any Development attributable to conditions affecting the U.S. economy as a whole
or foreign economies where Launch or any of its subsidiaries has material
operations; (e) any Development attributable or relating to (i) out-of-pocket
fees and expenses (including legal, accounting, investment banking and other
fees and expenses) incurred in connection with the transactions contemplate by
this Agreement; provided that such out-of-pocket fees and expenses do not
substantially vary from those identified in Section 3.1(e) of the Launch
Disclosure Schedule, or (ii) the payment of any amounts due to, or the provision
of any other benefits (including benefits relating to acceleration of stock
options) to, any officers or employees under employment contracts,
non-competition agreements, employee benefit plans, severance arrangements or
other arrangements in existence as of the date of this Agreement and identified
in the Launch Disclosure Schedule; (f) any Development directly resulting from
or proximately caused by compliance by Launch with the terms of, or the taking
of any action required by, this Agreement; or (g) any Development directly
resulting from or proximately caused by any claim, suit, action or proceeding,
whether pending on the date hereof or brought following the date hereof, by any
recording label or similar organization against Launch or its subsidiaries
alleging copyright infringement in connection with the operation of Launch's or
its subsidiaries' business; provided, however, that with respect to clause (c)
of this sentence, Launch shall bear the burden of proof in any proceeding with
regard to establishing that any change, event, circumstance or effect is
attributable to or results from the public announcement or pendency of the
transactions contemplated by this Agreement. Notwithstanding the foregoing, the
parties acknowledge that any material deterioration in Launch's commercial
arrangements and licensing arrangements with the various recording labels and
similar organizations following the date hereof, which would not otherwise be
deemed a matter covered by clause (g) above and/or which shall not have been the
direct result of or proximately caused by an action taken by Launch at the
express direction of or with the express written consent of Yahoo! or Purchaser
or a failure to take an action by Launch at the express direction of or with the
express written consent of Yahoo! or Purchaser, shall remain relevant for
purposes of the foregoing determination.
3.2 Launch Capital Structure. The authorized capital stock of Launch
consists of 75,000,000 shares of Common Stock, par value $0.001 per share
("LAUNCH COMMON STOCK"), of which there were 13,531,058 shares issued and
outstanding as of June 21, 2001 (none of which were held by Launch in its
treasury). All outstanding shares of Launch Common Stock are duly authorized,
validly issued, fully paid and nonassessable and are not subject to preemptive
rights created by statute, the Certificate of Incorporation or Bylaws of Launch
or any agreement or document to which Launch is a party or by which it or its
assets is bound. As of June 21, 2001, (i) Launch had reserved an aggregate of
50,851 shares of Launch Common Stock for issuance pursuant to the 1994 Option
Plan and an aggregate of 3,765,797 shares of Launch Common Stock for issuance
pursuant to the 1998 Option Plan, and (ii) there were Launch Options outstanding
to purchase an aggregate of 41,451 shares of Launch Common Stock pursuant to the
1994 Option Plan and an aggregate of 2,195,004 shares of Launch Common Stock
pursuant to the 1998 Option Plan. As of June 21, 2001, there are warrants
("LAUNCH WARRANTS") outstanding to purchase 946,496 shares of Launch Common
Stock. As of June 21, 2001, Launch had reserved an aggregate of 124,747 shares
of Launch Common Stock for
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issuance pursuant to the ESPP. All shares of Launch Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, would be duly authorized,
validly issued, fully paid and nonassessable. The Launch Disclosure Schedules
list for each person who held Launch Options or Launch Warrants to acquire
shares of Launch Common Stock as of June 21, 2001, the name of the holder of
such option or warrant, the exercise price of such option or warrant and the
number of shares subject to such option or warrant.
3.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 3.2, there are no equity securities, partnership interests or similar
ownership interests of any class of Launch equity security, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except for securities Launch owns free and clear of all
claims and encumbrances, directly or indirectly through one or more
subsidiaries, there are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any subsidiary of Launch
or any Joint Venture, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as set
forth in Section 3.2, there are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Launch or any of its subsidiaries or, to the knowledge of Launch, any
Joint Venture is a party or by which it is bound obligating Launch or any of its
subsidiaries or, the knowledge of Launch, any Joint Venture to issue, deliver or
sell, or cause to be issued, delivered or sold, or repurchase, redeem or
otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, partnership interests or similar ownership interests of
Launch or any of its subsidiaries or any Joint Venture or obligating Launch or
any of its subsidiaries or any Joint Venture to grant, extend, accelerate the
vesting of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. There are no registration rights
and, except as otherwise contemplated by the Stockholders Agreement, there is no
voting trust, proxy, rights plan, antitakeover plan or other agreement or
understanding to which Launch is a party or by which it is bound with respect to
any equity security of any class of Launch or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries or any Joint Venture.
3.4 Authority.
(a) Launch has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Launch, subject only to the approval and
adoption of this Agreement and the approval of the Merger by Launch's
stockholders and the filing of the Certificate of Merger pursuant to Delaware
Law. A vote of the holders of a majority of the outstanding shares of Launch
Common Stock is sufficient for Launch's stockholders to approve and adopt this
Agreement and approve the Merger. This Agreement has been duly executed and
delivered by Launch and, assuming the due execution and delivery by Yahoo! and
Purchaser, constitutes the valid and binding obligation of Launch,
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enforceable against Launch in accordance with its terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally and
(ii) general principals of equity. The execution and delivery of this Agreement
by Launch does not, and the performance of this Agreement by Launch will not,
(i) conflict with or violate the Certificate of Incorporation or Bylaws of
Launch or the equivalent organizational documents of any of its subsidiaries,
(ii) subject to obtaining the approval and adoption of this Agreement and the
approval of the Merger by Launch's stockholders at the Special Meeting (if
required by applicable law in order to consummate the Merger) and compliance
with the requirements set forth in Section 3.4(b) below, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
Launch or any of its subsidiaries or by which Launch or any of its subsidiaries
or any of their respective properties is bound or affected, or (iii) result in
any material breach of or constitute a material default (or an event that with
notice or lapse of time or both would become a material default) under, or
impair Launch's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a material lien or encumbrance on
any of the material properties or assets of Launch or any of its subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, concession, or other instrument or obligation, in
each case that is material to Launch, to which Launch or any of its subsidiaries
is a party or by which Launch or any of its subsidiaries or its or any of their
respective assets are bound or affected. The Launch Disclosure Schedules list
all consents, waivers and approvals under any of Launch's or any of its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby,
which, if individually or in the aggregate not obtained, would result in a loss
of benefits to Launch, Yahoo! or the Surviving Corporation as a result of the
Merger that would be reasonably likely to result in a Material Adverse Effect
with respect to Launch, Yahoo! or the Surviving Corporation.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("GOVERNMENTAL ENTITY"), is required to be obtained or made by Launch in
connection with the execution and delivery of this Agreement or the consummation
of the Merger, except for (i) compliance with any applicable requirements of the
Exchange Act, (ii) any filings that may be required under the Delaware law in
connection with the Merger, (iii) the filing with the SEC and/or the Nasdaq
Stock Market, Inc. of (A) the Schedule 14D-9, (B) the Proxy Statement if
stockholder approval is required by law and (C) such reported under Section
13(a) of the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated thereby, (iv) such filings and approvals as
may be required by any applicable state securities, blue sky or takeover laws or
(v) such other consents, authorizations, filings, approvals and registrations
which if not obtained or made would not be material to Launch or Yahoo! or have
a material adverse effect on the ability of the parties hereto to consummate the
Merger.
3.5 SEC Filings; Launch Financial Statements.
(a) Launch has filed all forms, reports and documents required to be
filed by Launch with the SEC since April 23, 1999, and has made available to
Yahoo! such forms, reports
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and documents in the form filed with the SEC. All such required forms, reports
and documents (including those that Launch may file subsequent to the date
hereof) are referred to herein as the "LAUNCH SEC REPORTS." As of their
respective dates, the Launch SEC Reports (i) were prepared in accordance with
the requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable to such Launch SEC Reports and (ii) did not and
will not at the time they were or will be filed (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of Launch's subsidiaries or Joint Ventures is required to file
any forms, reports or other documents with the SEC or similar regulatory body.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Launch SEC Reports (the
"LAUNCH FINANCIALS"), including each Launch SEC Reports filed after the date
hereof until the Closing, (i) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (ii) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (iii) fairly presented the consolidated
financial position of Launch and its subsidiaries as at the respective dates
thereof and the consolidated results of Launch's operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
may not contain footnotes and were or are subject to normal and recurring
year-end adjustments. The balance sheet of Launch contained in Launch SEC
Reports as of March 31, 2001 is hereinafter referred to as the "LAUNCH BALANCE
SHEET." Except as disclosed in the Launch Financials, since the date of the
Launch Balance Sheet neither Launch nor any of its subsidiaries has any
liabilities required under GAAP to be set forth on a balance sheet (absolute,
accrued, contingent or otherwise) which are, individually or in the aggregate,
material to the business, results of operations or financial condition of Launch
and its subsidiaries taken as a whole, except for liabilities incurred since the
date of the Launch Balance Sheet in the ordinary course of business consistent
with past practices and liabilities under this Agreement or incurred in
connection with the transactions contemplated hereby.
(c) Launch has heretofore furnished to Yahoo! a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to forms, reports, agreements, documents
or other instruments which previously had been filed by Launch with the SEC
pursuant to the Securities Act or the Exchange Act.
3.6 Absence of Certain Changes or Events. Since the date of the Launch
Balance Sheet there has not been: (i) any Material Adverse Effect with respect
to Launch and its subsidiaries and Joint Ventures, taken as a whole, (ii) any
declaration, setting aside or payment of any dividend on, or other distribution
(whether in cash, stock or property) in respect of, any of Launch's capital
stock, or any purchase, redemption or other acquisition by Launch of any of
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Launch's capital stock or any other securities of Launch or any options,
warrants, calls or rights to acquire any such shares or other securities except
for repurchases from employees following their termination pursuant to the terms
of their pre-existing stock option or purchase agreements, (iii) any split,
combination or reclassification of any of Launch's capital stock, (iv) any
granting by Launch or any of its subsidiaries of any increase in compensation or
fringe benefits to any of their officers, directors or managers or employees who
earn more than $50,000 per year, or any payment by Launch or any of its
subsidiaries of any bonus to any of their officers, directors or managers or
employees who earn more than $50,000 per year, or any granting by Launch or any
of its subsidiaries of any increase in severance or termination pay or any entry
by Launch or any of its subsidiaries into, or material modification or amendment
of, any currently effective employment, severance, termination or
indemnification agreement or any agreement the benefits of which are contingent
or the terms of which are materially altered upon the occurrence of a
transaction involving Launch of the nature contemplated hereby, (v) any material
change or alteration in the policy of Launch relating to the granting of stock
options to its employees and consultants, (vi) entry by Launch or any of its
subsidiaries or, to the knowledge of Launch, any Joint Venture into, or material
modification, amendment or cancellation of, any licensing, distribution,
sponsorship, advertising, merchant program or other similar agreement or which
either is not terminable by Launch or its subsidiaries or Joint Venture, as the
case may be, without penalty upon no more than 30 days' prior notice or provides
for payments by Launch or its subsidiaries or a Joint Venture in an amount in
excess of $25,000 over the term of the agreement or to Launch or its
subsidiaries or a Joint Venture in an amount in excess of $100,000 over the term
of the agreement, (vii) any material change by Launch in its accounting methods,
principles or practices, except as required by concurrent changes in GAAP,
(viii) any communication from The Nasdaq National Market with respect to the
de-listing of Launch's common stock, or (ix) any revaluation by Launch of any of
its assets, including, without limitation, writing off notes or accounts
receivable other than in the ordinary course of business. The aggregate
obligations of Launch and any of its subsidiaries due following the date hereof
under all agreements to which Launch or any of its subsidiaries is a party which
(A) are not disclosed on Schedule 3.6(vi) of the Launch Disclosure Schedules and
individually involve obligations of greater than $25,000 or (B) are not
disclosed on Schedule 3.14(f) of the Launch Disclosure Schedules and
individually involve obligations of greater than $10,000, do not exceed
$250,000.
3.7 Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "TAX" or
"TAXES" refers to (i) any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts, (ii) any liability for payment of any amounts of the
type described in clause (i) as a result of being a member of an affiliated
consolidated, combined or unitary group, and (iii) any liability for amounts of
the type described in clauses (i) and (ii) as a result of any express or implied
obligation to indemnify another person or as a result of any obligations under
any agreements or
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arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) Launch and each of its subsidiaries have timely filed all
material federal, state, local and foreign returns, estimates, information
statements and reports ("RETURNS") relating to Taxes required to be filed by or
on behalf of Launch and each of its subsidiaries with any Tax authority, such
Returns are true, correct and complete in all material respects, and Launch and
each of its subsidiaries have paid (where required by law or otherwise accrued)
all Taxes shown to be due on such Returns.
(ii) Launch and each of its subsidiaries have withheld with
respect to its employees all federal and state income Taxes, Taxes pursuant to
the Federal Insurance Contribution Act, Taxes pursuant to the Federal
Unemployment Tax Act and other Taxes required to be withheld.
(iii) There is no material Tax deficiency outstanding, proposed
or assessed against Launch or any of its subsidiaries, nor has Launch or any of
its subsidiaries executed any unexpired waiver of any statute of limitations on
or extending the period for the assessment or collection of any Tax that is
still in effect.
(iv) No audit or other examination of any Return of Launch or any
of its subsidiaries by any Tax authority is presently in progress, nor has
Launch or any of its subsidiaries been notified of any request for such an audit
or other examination.
(v) No adjustment of Tax relating to any Returns filed by Launch
or any of its subsidiaries has been proposed in writing formally or informally
by any Tax authority to Launch or any of its subsidiaries or any representative
thereof.
(vi) Neither Launch nor any of its subsidiaries has any liability
for unpaid Taxes which has not been accrued for or reserved on the Launch
Balance Sheet, whether asserted or unasserted, contingent or otherwise, which is
material to Launch, other than any liability for unpaid Taxes that may have
accrued since the date of the Launch Balance Sheet in connection with the
operation of the business of Launch and its subsidiaries in the ordinary course.
(vii) There is no contract, agreement, plan or arrangement to
which Launch is a party, including but not limited to the provisions of this
Agreement and the agreements entered into in connection with this Agreement,
covering any employee or former employee of Launch or any of its subsidiaries
that, individually or collectively, would be reasonably likely to give rise to
the payment of any amount that would not be deductible pursuant to Sections
280G, 404 or 162(m) of the Code.
(viii) Neither Launch nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code
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apply to any disposition of a subsection (f) asset (as defined in Section
341(f)(4) of the Code) owned by Launch.
(ix) Neither Launch nor any of its subsidiaries is party to or
has any obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement. Since April 16, 1997, neither Launch nor any of its
subsidiaries has been a distributing corporation or a controlled corporation in
a transaction described in Section 355(a) of the Code.
(x) Except as may be required as a result of the Merger, Launch
and its subsidiaries have not been and will not be required to include any
material adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or Section 263A of the Code or any comparable provision
under state or foreign Tax laws as a result of transactions, events or
accounting methods employed prior to the Closing.
(xi) Launch has made available to Yahoo! or its legal or
accounting representatives copies of all foreign, federal and state income tax
and all state sales and use tax Returns for Launch and each of its subsidiaries
filed for all periods since its inception.
(xii) There are no liens, pledges, charges, claims, restrictions
on transfer, mortgages, security interests or other encumbrances of any sort
(collectively, "LIENS") on the assets of Launch or any of its subsidiaries
relating to or attributable to Taxes, other than Liens for Taxes not yet due and
payable.
3.8 Title to Properties; Absence of Liens and Encumbrances.
(a) Launch owns no real property interests. The Launch Disclosure
Schedules list all real property leases to which Launch is a party and each
amendment thereto that is in effect as of the date of this Agreement. All such
current leases are in full force and effect, are valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event of default (or event which with notice or
lapse of time, or both, would constitute a default) that would give rise to a
claim against Launch in an amount greater than $10,000.
(b) Launch has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any Liens, except as reflected in the Launch
Financials and except for Liens for Taxes not yet due and payable and such Liens
or other imperfections of title and encumbrances, if any, which are not material
in character, amount or extent, and which do not materially detract from the
value, or materially interfere with the present use, of the property subject
thereto or affected thereby.
3.9 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising out of or associated therewith: (i) all United
States, international and foreign patents and applications therefor
and all reissues, divisions, renewals,
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extensions, provisionals, continuations and continuations-in-part
thereof; (ii) all inventions (whether patentable or not), invention
disclosures, improvements, trade secrets, proprietary information,
know how, technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) all copyrights,
copyrights registrations and applications therefor, and all other
rights corresponding thereto throughout the world; (iv) all industrial
designs and any registrations and applications therefor throughout the
world; (v) all trade names, logos, common law trademarks and service
marks, trademark and service xxxx registrations and applications
therefor throughout the world; (vi) all databases and data collections
and all rights therein throughout the world; (vii) all moral and
economic rights of authors and inventors, however denominated,
throughout the world; and (viii) any similar or equivalent rights to
any of the foregoing anywhere in the world.
"LAUNCH INTELLECTUAL PROPERTY" shall mean any Intellectual Property
that is owned by Launch or one of its subsidiaries.
"REGISTERED INTELLECTUAL PROPERTY" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration; and
(iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other
public legal authority.
"LAUNCH REGISTERED INTELLECTUAL PROPERTY" means all of the Registered
Intellectual Property owned by, or filed in the name of, Launch or one
of its subsidiaries.
(a) No Launch Intellectual Property or product or service of Launch
is subject to any proceeding or outstanding decree, order, judgment, agreement,
or stipulation restricting in any manner the use, transfer, or licensing thereof
by Launch, or which may affect the validity, use or enforceability of such
Launch Intellectual Property, which in any such case would be reasonably likely
to have a Material Adverse Effect on Launch.
(b) Each material item of Launch Registered Intellectual Property is
valid and subsisting. All necessary registration, maintenance and renewal fees
currently due in connection with such Registered Intellectual Property have been
made and all necessary documents, recordations and certificates in connection
with such Registered Intellectual Property have been filed with the relevant
patent, copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of maintaining such
Registered Intellectual Property, except where the failure to do so would not be
reasonably likely to have a Material Adverse Effect on Launch.
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(c) Launch or one of its subsidiaries owns and has good and exclusive
title to, or has license sufficient for the conduct of its business as currently
conducted and as currently proposed to be conducted to, each material item of
Launch Intellectual Property used in connection with the conduct of its business
as currently conducted and as proposed to be conducted free and clear of any
lien or encumbrance (excluding licenses and related restrictions); and Launch or
one of its subsidiaries is the exclusive owner of all trademarks and trade names
used in connection with and material to the operation or conduct of the business
of Launch and its subsidiaries, including the sale of any products or the
provision of any services by Launch and its subsidiaries.
(d) Launch or one of its subsidiaries owns exclusively, and has good
title to, all copyrighted works that are Launch products or which Launch
otherwise expressly purports to own.
(e) To the extent that any material Intellectual Property has been
developed or created by a third party for Launch or any of its subsidiaries,
Launch or its subsidiaries, as the case may be, has a written agreement with
such third party with respect thereto and Launch or its subsidiary thereby
either (i) has obtained ownership of and is the exclusive owner of, or (ii) has
obtained a license sufficient for the conduct of its business as currently
conducted and as currently proposed to be conducted to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
(f) The Launch Disclosure Schedules list all material contracts,
licenses and agreements to which Launch is a party (i) with respect to Launch
Intellectual Property licensed or transferred to any third party (other than
end-user licenses in the ordinary course); or (ii) pursuant to which a third
party has licensed or transferred any material Intellectual Property to Launch.
(g) All material contracts, licenses and agreements relating to the
Launch Intellectual Property are in full force and effect. The consummation of
the transactions contemplated by this Agreement will neither violate nor result
in the breach, modification, cancellation, termination, or suspension of such
contracts, licenses and agreements in accordance with its terms, the effect of
which would have a material adverse effect on Launch. Launch is in material
compliance with, and has not materially breached any term of any of such
contracts, licenses and agreements and, to the knowledge of Launch, all other
parties to such contracts, licenses and agreements are in compliance in all
material respects with, and have not materially breached any term of, such
contracts, licenses and agreements. Following the Closing Date, the Surviving
Corporation will be permitted to exercise all of Launch's rights under such
contracts, licenses and agreements to the same extent Launch would have been
able to had the transactions contemplated by this Agreement not occurred and
without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which Launch would otherwise be required to
pay.
(h) The operation of the business of Launch as such business
currently is conducted, including Launch's design, development, marketing and
sale of the products or services of Launch (including with respect to products
currently under active development) has
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not, and does not infringe or misappropriate in any material manner the
Intellectual Property of any third party or, to the knowledge of Launch,
constitute unfair competition or trade practices under the laws of any
jurisdiction.
(i) Launch has not received written notice from any third party, and
to the knowledge of Launch, no other overt threat from any third party, that the
operation of the business of Launch or any act, product or service of Launch,
infringes or misappropriates the Intellectual Property of any third party or
constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(j) To the knowledge of Launch, no person has infringed or is
infringing or misappropriating any Launch Intellectual Property.
(k) Launch and its subsidiaries have taken reasonable steps to
protect Launch's and its subsidiaries' rights in Launch's and such subsidiaries'
confidential information and trade secrets that they wish to protect or any
trade secrets or confidential information of third parties provided to Launch or
such subsidiaries, and, without limiting the foregoing, Launch and its
subsidiaries have and enforce a policy requiring each employee and contractor to
execute a proprietary information/confidentiality agreement in substantially the
form provided to Yahoo!, and except under confidentiality obligations, there has
not been disclosure by Launch or one of its subsidiaries of any such trade
secrets or confidential information.
3.10 Compliance with Laws; Permits; Restrictions.
(a) Neither Launch nor any of its subsidiaries nor, to the knowledge
of Launch, any Joint Venture is in any material respect in conflict with, or in
default or in violation of (i) any law, rule, regulation, order, judgment or
decree applicable to Launch or any of its subsidiaries or any Joint Venture or
by which Launch or any of its subsidiaries or any Joint Venture or any of their
respective properties is bound or affected, or (ii) any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Launch or any of its subsidiaries or any
Joint Venture is a party or by which Launch or any of its subsidiaries or any
Joint Venture or its or any of their respective properties is bound or affected,
except for conflicts, violations and defaults that (individually or in the
aggregate) would not be reasonably likely to result in a Material Adverse Effect
on Launch. No investigation or review by any Governmental Entity is pending or,
to Launch's knowledge, has been threatened in a writing delivered to Launch
against Launch or any of its subsidiaries or, to the knowledge of Launch, any
Joint Venture, nor, to the knowledge of Launch, has any Governmental Entity
indicated an intention to conduct an investigation of Launch or any of its
subsidiaries or any Joint Venture. There is no material agreement, judgment,
injunction, order or decree binding upon Launch or any of its subsidiaries or,
to the knowledge of Launch, any Joint Venture which has or could reasonably be
expected to have the effect of prohibiting or materially impairing any business
practice of Launch or any of its subsidiaries or any Joint Venture, any
acquisition of material property by Launch or any of its subsidiaries or any
Joint Venture or the conduct of business by Launch as currently conducted.
Launch has complied in all material respects with all applicable federal, state
and local laws and regulations relating to the collection and use of user
information gathered in the course of Launch's operations, and Launch has at all
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times complied with the rules, policies and procedures established by Launch
from time to time with respect to the foregoing. All content distributed through
Launch's website is being distributed in compliance in all material respects
with applicable law.
(b) Launch and its subsidiaries and, to the knowledge of Launch, the
Joint Ventures hold, to the extent legally required, all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities that
are material to and required for the operation of the business of Launch and its
subsidiaries and the Joint Ventures as currently conducted (collectively, the
"LAUNCH PERMITS"). Launch and its subsidiaries and, to the knowledge of Launch,
the Joint Ventures are in compliance in all material respects with the terms of
the Launch Permits.
3.11 Litigation. There are no claims, suits, actions or proceedings pending
or, to the knowledge of Launch, threatened against, relating to or affecting
Launch or any of its subsidiaries or any Joint Venture, before any Governmental
Entity or any arbitrator that seek to restrain or enjoin the consummation of the
transactions contemplated by this Agreement or which could reasonably be
expected, either singularly or in the aggregate with all such claims, actions or
proceedings, to have a Material Adverse Effect on Launch or the Surviving
Corporation following the Merger or have a Material Adverse Effect on the
ability of the parties hereto to consummate the Merger. No Governmental Entity
has at any time challenged or questioned in a writing delivered to Launch the
legal right of Launch to design, offer or sell any of its services or products
in the present manner or style thereof.
3.12 Employee Benefit Plans.
(a) Definitions. With the exception of the definition of "Affiliate"
set forth in Section 2.12(a)(i) below (which definition shall apply only to this
Section 2.12), for purposes of this Agreement, the following terms shall have
the meanings set forth below:
(i) "AFFILIATE" shall mean any other person or entity under
common control with Launch within the meaning of Section 414(b), (c), (m) or (o)
of the Code and the regulations issued thereunder;
(ii) "LAUNCH EMPLOYEE PLAN" shall mean any plan, program, policy,
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits or remuneration of any kind, whether
written or unwritten or otherwise, funded or unfunded, including without
limitation, each "EMPLOYEE BENEFIT PLAN," within the meaning of Section 3(3) of
ERISA which is or has been maintained, contributed to, or required to be
contributed to, by Launch or any Affiliate for the benefit of any Employee and
pursuant to which Launch or any Affiliate has any material liability;
(iii) "COBRA" shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
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(v) "EMPLOYEE" shall mean any current, former, or retired
employee, officer, or director of Launch or any Affiliate;
(vi) "EMPLOYEE AGREEMENT" shall mean each management, employment,
severance, consulting, relocation, repatriation, expatriation, visas, work
permit or similar agreement or contract between Launch or any Affiliate and any
Employee or consultant;
(vii) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended;
(viii) "FMLA" shall mean the Family Medical Leave Act of 1993, as
amended;
(ix) "HIPPA" shall mean the Health Insurance Portability
Amendments Act of 1996, as amended.
(x) "IRS" shall mean the Internal Revenue Service;
(xi) "MULTIEMPLOYER PLAN" shall mean any "PENSION PLAN" (as
defined below) which is a "multiemployer plan," as defined in Section 3(37) of
ERISA;
(xii) "MULTIPLE EMPLOYER PLAN" shall mean a "PENSION PLAN" (as
defined below) maintained by more than one employer as described in Section
413(c) of the Code and Sections 4063 and 4064 of ERISA.
(xiii) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xiv) "PENSION PLAN" shall mean each Launch Employee Plan which
is an "employee pension benefit plan," within the meaning of Section 3(2) of
ERISA;
(xv) "WHCRA" shall mean the Women's Health and Cancer Rights Act
of 1998, as amended.
(b) Schedule. The Launch Disclosure Schedules contain an accurate and
complete list of each Launch Employee Plan and each Employee Agreement. Launch
does not have any intention or commitment to establish any new Launch Employee
Plan, to modify any Launch Employee Plan or Employee Agreement (except to the
extent required by law or to conform any such Launch Employee Plan or Employee
Agreement to the requirements of any applicable law, in each case as previously
disclosed to Yahoo! in writing, or as required by this Agreement), or to adopt
any Launch Employee Plan or Employee Agreement, nor does it have any intention
or commitment to do any of the foregoing. The Launch Disclosure Schedules also
contain a list of all Launch employees as of the date hereof, each such person's
date of hire and each such person's annual compensation.
(c) Documents. Launch has provided or made available to Yahoo!: (i)
correct and complete copies of all material documents embodying or relating to
each Launch
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Employee Plan and each Employee Agreement including all amendments thereto and
written interpretations thereof; (ii) the most recent annual actuarial
valuations, if any, prepared for each Launch Employee Plan; (iii) the three (3)
most recent annual reports (Form Series 5500 and all schedules and financial
statements attached thereto), if any, required under ERISA or the Code in
connection with each Launch Employee Plan or related trust; (iv) if the Launch
Employee Plan is funded, the most recent annual and periodic accounting of
Launch Employee Plan assets; (v) the most recent summary plan description
together with the summary of material modifications thereto, if any, required
under ERISA with respect to each Launch Employee Plan; (vi) all IRS
determination, opinion, notification and advisory letters, and rulings relating
to Launch Employee Plans and copies of all applications and correspondence to or
from the IRS or the DOL with respect to any Launch Employee Plan; (vii) all
material written agreements and contracts relating to each Launch Employee Plan,
including, but not limited to, administrative service agreements, group annuity
contracts and group insurance contracts; (viii) all communications material to
any Employee or Employees relating to any Launch Employee Plan and any proposed
Launch Employee Plans, in each case, relating to any amendments, terminations,
establishments, increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any material liability
to Launch; and (ix) all registration statements and prospectuses prepared in
connection with each Launch Employee Plan.
(d) Employee Plan Compliance. (i) Launch has performed in all
material respects all obligations required to be performed by it under, is not
in default or violation of; and has no knowledge of any material default or
violation by any other party to each Launch Employee Plan, and each Launch
Employee Plan has been established and maintained in all material respects in
accordance with its terms and in compliance with all applicable laws, statutes,
orders, rules and regulations, including but not limited to ERISA or the Code;
(ii) each Launch Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is
qualified, and has either received a favorable determination letter from the IRS
with respect to each such Plan as to its qualified status under the Code or has
remaining a period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a determination letter and make any
amendments necessary to obtain a favorable determination applicable for all
periods beginning with the adoption of such Launch Employee Plan and no event
has occurred which would adversely affect the status of such determination
letter or the qualified status of such Plan; (iii) no "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 408 of ERISA, has occurred with respect
to any Launch Employee Plan; (iv) there are no actions, suits or claims pending,
or, to the knowledge of Launch, threatened or reasonably anticipated (other than
routine claims for benefits) against any Launch Employee Plan or against the
assets of any Launch Employee Plan; (v) each Launch Employee Plan can be
amended, terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to Yahoo!, Launch or any of its
Affiliates (other than ordinary administration expenses typically incurred in a
termination event); (vi) there are no audits, inquiries or proceedings pending
or, to the knowledge of Launch, threatened by the IRS or DOL with respect to any
Launch Employee Plan; and (vii) neither Launch nor any Affiliate is subject to
any penalty or tax with respect to any Launch Employee Plan under Section 402(i)
of ERISA or Sections 4975 through 4980 of the Code.
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(e) Pension Plans. Launch does not now, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any Pension Plan
which is subject to Title IV of ERISA or Section 412 of the Code.
(f) Multiemployer Plans. At no time has Launch contributed to or been
obligated to contribute to any Multiemployer Plan or any Multiple Employer Plan.
(g) No Post-Employment Obligations. No Launch Employee Plan provides,
or has any liability to provide, retiree life insurance, retiree health or other
retiree employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and Launch has never represented,
promised or contracted (whether in oral or written form) to any Employee (either
individually or to Employees as a group) or any other person that such
Employee(s) or other person would be provided with retiree life insurance,
retiree health or other retiree employee welfare benefit, except to the extent
required by statute.
(h) COBRA; FMLA. Neither Launch nor any Affiliate has, prior to the
Effective Time, and in any material respect, violated any of the health care
continuation requirements of COBRA, the requirements of WHCRA, the requirements
of FMLA or any similar provisions of state law applicable to its Employees.
(i) Effect of Transaction.
(i) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under any Launch
Employee Plan, Employee Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee, except as may be required by Section 6.8
of this Agreement.
(ii) No payment or benefit which will or may be made by Launch or
its Affiliates with respect to any Employee as a result of the transactions
contemplated by this Agreement will be characterized as an "excess parachute
payment," within the meaning of Section 280G(b)(1) of the Code or will be
treated as a nondeductible expense within the meaning of Section 162 of the
Code.
(j) Employment Matters. Launch: (i) is in compliance in all material
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment and wages and hours, in each case, with respect to Employees; (ii)
has withheld all amounts required by law or by agreement to be withheld from the
wages, salaries and other payments to Employees; (iii) is not liable in any
material respect for any arrears of wages or any taxes or any penalty for
failure to comply with any of the foregoing; and (iv) is not liable for any
material payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
social security or other benefits or obligations for Employees (other than
routine payments to be made in the normal course of business and consistent with
past practice).
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There are no pending, or, to Launch's knowledge, threatened or reasonably
anticipated claims or actions against Launch under any worker's compensation
policy or long-term disability policy which would be reasonably likely to have a
material adverse effect on Launch. To Launch's knowledge, no Employee of Launch
has violated any employment contract, nondisclosure agreement or noncompetition
agreement by which such Employee is bound due to such Employee being employed by
Launch and disclosing to Launch or using trade secrets or proprietary
information of any other person or entity.
(k) Labor. No work stoppage or labor strike against Launch is
pending, or to Launch's knowledge, threatened or reasonably anticipated. Launch
does not know of or have reason to know of any activities or proceedings of any
labor union to organize any Employees. There are no actions, suits, claims,
labor disputes or grievances pending, or, to the knowledge of Launch, threatened
or reasonably anticipated relating to any labor, safety or discrimination
matters involving any Employee, including, without limitation, charges of unfair
labor practices or discrimination complaints, which, if adversely determined,
would, individually or in the aggregate, result in any material liability to
Launch. Neither Launch nor any of its subsidiaries has engaged in any unfair
labor practices within the meaning of the National Labor Relations Act. Launch
is not presently, nor has it been in the past, a party to, or bound by, any
collective bargaining agreement or union contract with respect to Employees and
no collective bargaining agreement is being negotiated by Launch.
(l) International Employee Plan. No Employee Plan has been adopted or
maintained by Launch, whether informally or formally, for the benefit of
Employees outside the United States.
(m) Change of Control Payments. The Launch Disclosure Schedules sets
forth each plan or agreement pursuant to which any amounts may become payable
(whether currently or in the future) to current or former employees of Launch as
a result of or in connection with the Merger or the transactions contemplated by
this Agreement, including the Offer.
3.13 Environmental Matters.
(a) Hazardous Material. Except as would not result in material
liability to Launch, no underground storage tanks and no amount of any substance
that has been designated by any Governmental Entity or by applicable federal,
state or local law to be radioactive, toxic, hazardous or otherwise a danger to
health or the environment, including, without limitation, PCBs, asbestos,
petroleum, urea-formaldehyde and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to
the United States Resource Conservation and Recovery Act of 1976, as amended,
and the regulations promulgated pursuant to said laws, but excluding office and
janitorial supplies, (a "HAZARDOUS MATERIAL") are present, as a result of the
actions of Launch or any of its subsidiaries or any affiliate of Launch, or, to
Launch's knowledge, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements, ground
water and surface water thereof that Launch or any of its subsidiaries has at
any time owned, operated, occupied or leased.
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(b) Hazardous Materials Activities. Except as would not result in a
material liability to Launch (in any individual case or in the aggregate) (i)
neither Launch nor any of its subsidiaries has transported, stored, used,
manufactured, disposed of released or exposed its employees or others to
Hazardous Materials in violation of any law, and (ii) neither Launch nor any of
its subsidiaries has disposed of; transported, sold, used, released, exposed its
employees or others to or manufactured any product containing a Hazardous
Material (collectively "HAZARDOUS MATERIALS ACTIVITIES") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Launch and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "LAUNCH
ENVIRONMENTAL PERMITS") material to and necessary for the conduct of Launch's
and its subsidiaries' Hazardous Material Activities and other businesses of
Launch and its subsidiaries as such activities and businesses are currently
being conducted.
3.14 Agreements, Contracts and Commitments. Except as otherwise set forth
in the Launch Disclosure Schedules, neither Launch nor any of its subsidiaries
is a party to or is bound by:
(a) any employment agreement, contract or commitment with any
employee or member of Launch's Board of Directors, other than those that are
terminable by Launch or any of its subsidiaries on no more than 30 days' notice
without liability or financial obligation, except to the extent general
principles of wrongful termination law may limit Launch's or any of its
subsidiaries' ability to terminate employees at will, or any consulting
agreement;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification outside the ordinary course of
Launch's business or any guaranty;
(d) any agreement, contract or commitment containing any covenant
limiting in any respect the right of Launch or any of its subsidiaries or a
Joint Venture to engage in any line of business or to compete with any person or
granting any exclusive distribution rights;
(e) any agreement, contract or commitment currently in force relating
to the disposition or acquisition by Launch or any of its subsidiaries or a
Joint Venture after the date of this Agreement of a material amount of assets
not in the ordinary course of business or pursuant to which Launch has any
material ownership interest in any corporation, partnership, joint venture or
other business enterprise other than Launch's subsidiaries or a Joint Venture;
(f) any licensing, distribution, sponsorship, advertising, merchant
program, encoding services, hosting or other similar agreement to which Launch
or one of its subsidiaries or a Joint Venture is a party which may not be
canceled by Launch or its subsidiaries
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or a Joint Venture, as the case may be, without penalty in excess of $10,000
upon notice of 30 days or less or which provides for payments by Launch or its
subsidiaries or a Joint Venture in an amount in excess of $10,000 over the term
of the agreement or to Launch or its subsidiaries or a Joint Venture in an
amount in excess of $100,000 over the term of the agreement;
(g) any agreement, contract or commitment currently in force to
license or provide source code to any third party for any product or technology;
or
(h) any other agreement, contract or commitment currently in effect
that is material to Launch's business as presently conducted.
Neither Launch nor any of its subsidiaries, nor to Launch's knowledge any
Joint Venture or any other party to a Launch Contract (as defined below), is in
breach, violation or default under, and neither Launch nor any of its
subsidiaries nor, to the knowledge of Launch, any Joint Venture has received
written notice (or to its knowledge, any other form of notice) that it has
breached, violated or defaulted under, any of the material terms or conditions
of any of the agreements, contracts or commitments to which Launch or any of its
subsidiaries or a Joint Venture is a party or by which it is bound that are
required to be disclosed in the Launch Disclosure Schedules pursuant to clauses
(a) through (h) above or pursuant to Section 3.9 hereof (any such agreement,
contract or commitment, a "LAUNCH CONTRACT") in such a manner as would permit
any other party to cancel or terminate any such Launch Contract or seek damages
or other remedies the effect of which would have a Material Adverse Effect on
Launch.
3.15 Information in the Proxy Statement. The Proxy Statement, if any (and
any amendment thereof or supplement thereto), at the date mailed to Launch's
stockholders and at the time of any meeting of Launch stockholders to be held in
connection with the Merger, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading, except that no representation is made
by Launch with respect to statements made therein based on information supplied
in writing by Yahoo! or Purchaser expressly for inclusion in the Proxy
Statement. The Proxy Statement will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
3.16 Information in the Offer Documents and the Schedule 14D-9. The
information supplied by Launch expressly for inclusion in the Offer Documents
and the Schedule 14D-9 will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The Schedule 14D-9 will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published or sent or
given to Launch's stockholders, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except that Launch
makes no
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representation or warranty with respect to statements made in the Schedule 14D-9
based on information furnished by Yahoo! or Purchaser for inclusion therein.
3.17 Section 203 Not Applicable. The Board of Directors of Launch has taken
all actions, which actions are conditioned on the truth and accuracy of the
representation of Yahoo! and Purchaser contained in Section 4.6 of this
Agreement, so that the restrictions contained in Section 203 of the Delaware
General Corporation Law applicable to a "business combination" (as defined in
such Section 203) will not apply to the execution, delivery or performance of
this Agreement or the Stockholders Agreement or to the consummation of the
Merger or the other transactions contemplated by this Agreement and the
Stockholders Agreement.
3.18 Board Approval. The Board of Directors of Launch has, as of the date
of this Agreement, unanimously (i) approved this Agreement and the transactions
contemplated hereby, (ii) determined that the Offer and Merger are advisable and
fair to, and in the best interests of Launch and its stockholders and (iii)
determined to recommend that the stockholders of Launch accept the Offer, tender
their Shares to Purchaser pursuant to the Offer, and approve and adopt this
Agreement and approve the Merger.
3.19 Brokers' and Finders' Fees. Except for fees payable to Credit Suisse
First Boston Corporation ("CSFB"), Launch has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby. A copy of the CSFB engagement letter with
Launch has been previously provided to Yahoo!.
3.20 Opinion of Financial Advisor. Launch has received an opinion of CSFB
dated the date hereof, to the effect that, as of such date, the consideration to
be received in the Offer and the Merger by Launch's stockholders is fair to
Launch's stockholders from a financial point of view, and a copy of such opinion
has been delivered to Yahoo! and Purchaser, a copy of the written form of which
shall be delivered to Yahoo! as soon as practicable following the date hereof
and in event within three business days hereof. Launch has been authorized by
CSFB to permit the inclusion of such opinion in its entirety without
modification in the Offer Documents, the Schedule 14D-9 and the Proxy Statement,
provided that CSFB shall have the right to review and approve in advance of
filing the form and content of such opinion and any reference thereto contained
in the Offer Documents and the Schedule 14D-9.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF YAHOO! AND PURCHASER
Yahoo! and Purchaser represent and warrant to Launch, subject to the
exceptions specifically disclosed in writing in the Disclosure Schedules
delivered by Yahoo! to Launch dated as of the date hereof and certified by a
duly authorized officer of Yahoo! (the "YAHOO! DISCLOSURE SCHEDULES"), as
follows:
4.1 Organization of Yahoo! and Purchaser.
(a) Each of Yahoo! and Purchaser (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized; (ii) has
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the corporate or other power and authority to own, lease and operate its assets
and property and to carry on its business as now being conducted; and (iii)
except as would not have or be reasonably likely to have a material adverse
effect on Yahoo!, is duly qualified or licensed to do business in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary.
(b) Yahoo! has delivered or made available to Launch a true and
correct copy of the Certificate of Incorporation and Bylaws of Yahoo!, each as
amended to date, and each such instrument is in full force and effect.
(c) Purchaser has not engaged in any business activities or conducted
any operations other than in connection with the transactions contemplated
hereby nor will it have done so prior to the consummation of the Offer.
4.2 Authority.
(a) Each of Yahoo! and Purchaser has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Yahoo! and Purchaser, subject
only to the filing of the Certificate of Merger pursuant to Delaware Law. This
Agreement has been duly executed and delivered by each of Yahoo! and Purchaser
and, assuming the due authorization, execution and delivery by Launch,
constitutes the valid and binding obligation of Yahoo! and Purchaser,
enforceable against Yahoo! and Purchaser in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors' rights
generally and (ii) general principles of equity. The execution and delivery of
this Agreement by each of Yahoo! and Purchaser does not, and the performance of
this Agreement by each of Yahoo! and Purchaser will not, (i) conflict with or
violate the Certificate of Incorporation or Bylaws of Yahoo! or Purchaser, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to Yahoo! or Purchaser or by which any of their respective properties
is bound or affected, or (iii) result in any material breach of or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, or impair Yahoo!'s rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of; or result in the
creation of a material lien or encumbrance on any of the material properties or
assets of Yahoo! or Purchaser pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation, in each case that is material to Yahoo!, to which Yahoo! or
Purchaser is a party or by which Yahoo! or Purchaser or any of their respective
properties are bound or affected.
(b) No consent, approval, order or authorization of; or registration,
declaration or filing with any Governmental Entity is required to be obtained or
made by Yahoo! or Purchaser in connection with the execution and delivery of
this Agreement or the consummation of the Merger, except for (i) compliance with
any applicable requirements of the Exchange Act, (ii) any filing pursuant to the
Delaware Law, (iii) the filing or deemed filing with the SEC and/or
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the Nasdaq Stock Market, Inc. of (A) the Schedule TO, (B) the Proxy Statement,
if stockholder approval is required by law and (C) such reports under Section
13(a) of the Exchange Act as may be required in connection with this Agreement
and the transactions contemplated by this Agreement; (iv) such filings and
approvals as may be required by any applicable state securities, blue sky or
takeover laws, and (v) such other consents, authorizations, filings, approvals
and registrations which if not obtained or made would not be material to Yahoo!
or have a material adverse effect on the ability of the parties hereto to
consummate the Merger.
4.3 Information in the Proxy Statement. None of the information supplied by
Yahoo! or Purchaser in writing expressly for inclusion or incorporation by
reference in the Proxy Statement (or any amendment thereof or supplement
thereto) will, at the date mailed to stockholders and at the time of the meeting
of stockholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they are made, not misleading.
4.4 Information in the Offer Documents. The Offer Documents will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published or sent or
given to Launch's stockholders, will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except that no
representation is made by Yahoo! or Purchaser with respect to information
furnished by Launch expressly for inclusion in the Offer Documents.
4.5 Financing. Purchaser has, and will have available to it upon the
consummation of the Offer, sufficient funds to consummate the transactions
contemplated by this Agreement, including payment in full for all Shares validly
tendered into the Offer or outstanding at the Effective Time (and all related
fees and expenses), subject to the terms and conditions of the Offer and this
Agreement.
4.6 Stock Ownership. As of the date hereof, neither Yahoo! nor the
Purchaser beneficially owns any Shares.
ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business by Launch. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Launch and each of its subsidiaries
shall, except to the extent that Yahoo! shall otherwise consent in writing,
carry on its business in the usual, regular and ordinary course, in
substantially the same manner as heretofore conducted and in compliance in all
material respects with all applicable laws and regulations, pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, pay or
perform other material obligations when due, and use its commercially reasonable
efforts consistent with past practices and policies to (i) preserve intact its
present business organization, (ii) keep available the services of its
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present officers and employees and (iii) preserve its relationships with
customers, suppliers, licensors, licensees, and others with which it has
business dealings.
In addition, except as permitted by the terms of this Agreement, without
the prior written consent of Yahoo!, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Launch shall not do any of the
following and shall not permit its subsidiaries to do, and shall use its
commercially reasonable efforts to prevent any Joint Venture from doing, any of
the following (except as may be contemplated by this Agreement or Schedule 5.1
of the Launch Disclosure Schedules):
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or employee
except pursuant to written agreements in effect, or policies existing, on the
date hereof and as previously disclosed in writing to Yahoo!, or adopt any new
severance plan;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the Launch Intellectual
Property, other than pursuant to non-exclusive licenses in the ordinary course
of business and consistent with past practice;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of Launch or its subsidiaries, except repurchases of
unvested shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase agreements
in effect on the date hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities, other than the issuance
delivery and/or sale of (i) shares of Launch Common Stock pursuant to the
exercise of stock options or warrants therefor, and (ii) shares of Launch Common
Stock issuable to participants in the ESPP consistent with the terms thereof;
(g) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents (or similar governing
instruments of any of its subsidiaries);
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(h) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof; or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of Launch or enter into any joint ventures, strategic partnerships or
alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate, to
the business of Launch;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Launch, enter
into any "keep well" or other agreement to maintain any financial statement
condition or enter into any arrangement having the economic effect of any of the
foregoing other than (i) in connection with the financing of ordinary course
trade payables consistent with past practice or (ii) pursuant to existing credit
facilities in the ordinary course of business;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
or fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants other than in the ordinary course
of business, consistent with past practice;
(l) Modify, amend or terminate any material contract or agreement to
which Launch or any subsidiary thereof is a party, including any joint venture
agreement, or waive, release or assign any material rights or claims thereunder;
(m) Enter into any licensing, distribution, sponsorship, advertising,
merchant program, encoding services, hosting or other similar contracts,
agreements, or obligations which may not be canceled without penalty by Launch
or its subsidiaries upon notice of 30 days or less or which provide for payments
by or to Launch or its subsidiaries in an amount in excess of $25,000 over the
term of the agreement or which involve any exclusive terms of any kind;
(n) Revalue any of its assets or, except as required by GAAP, make
any change in accounting methods, principles or practices;
(o) Take any action, or omit to take any action, that would
constitute an Event of Default under that certain Loan and Security Agreement,
dated as of May 25, 2001, between Yahoo! and Launch;
(p) Fail to make in a timely manner any filings with the SEC required
under the Securities Act or the Exchange Act or the rules and regulations
promulgated thereunder;
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(q) Take any action, or omit to take any action, that would be
reasonably likely to constitute a breach of the letter agreement dated June 26,
2001 (the "UMG Letter Agreement") between Launch and UMG Recordings, Inc.
("UMG") or would be reasonably be expected to result in the termination of such
agreement or permit the exercise by UMG of any right of rescission thereunder;
(r) Engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(s) Agree in writing or otherwise to take any of the actions
described in Section 5.1 (a) through (r) above.
5.2 No Solicitation.
(a) Launch agrees that it shall immediately cease and cause to be
terminated all existing discussions, negotiations and communications with any
persons or entities with respect to any offer or proposal relating to any
transaction or series of related transactions other than the transactions
contemplated by this Agreement involving: (A) any acquisition or purchase from
Launch by any person or "group" (as defined under Section 13(d) of the Exchange
Act and the rules and regulations thereunder) of more than a 15% interest in the
total outstanding voting securities of Launch or any of its subsidiaries or any
tender offer or exchange offer that if consummated would result in any person or
"group" (as defined under Section 13(d) of the Exchange Act and the rules and
regulations thereunder) beneficially owning 15% or more of the total outstanding
voting securities of Launch or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving Launch
pursuant to which the stockholders of Launch immediately preceding such
transaction hold less than 85% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 50% of the
assets of Launch; or (C) any liquidation or dissolution of Launch (each, an
"ACQUISITION PROPOSAL"). Except as provided in Section 5.2(b), from the date of
this Agreement until the earlier of termination of this Agreement or the
Effective Time, Launch shall not and shall not authorize or permit its officers,
directors, employees, investment bankers, attorneys, accountants or other agents
(collectively, "REPRESENTATIVES") to directly or indirectly (i) initiate,
solicit or knowingly encourage, or knowingly take any action to facilitate the
making of, any offer or proposal which constitutes or is reasonably likely to
lead to any Acquisition Proposal, (ii) enter into any agreement with respect to
any Acquisition Proposal, or (iii) in the event of an unsolicited Acquisition
Proposal for Launch, engage in negotiations or discussions with, or provide any
information or data to, any Person (other than Yahoo! or any of its affiliates
or representatives) relating to any Acquisition Proposal. Any violation of the
foregoing restrictions by any of Launch's Representatives shall be deemed to be
a breach of this Agreement by Launch. Notwithstanding the foregoing, nothing
contained in this Section 5.2 or any other provision hereof shall prohibit
Launch or Launch's Board of Directors from (x) taking and disclosing to Launch's
stockholders its position with respect to any tender or exchange offer by a
third party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange
Act, or (y) making such disclosure to Launch's stockholders as in the good faith
judgment of Launch's Board of Directors, only after receipt of
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advice from outside legal counsel to Launch that such disclosure is required
under applicable law and that the failure to make such disclosure is reasonably
likely to cause Launch's Board of Directors to violate its disclosure
obligations to Launch's stockholders under applicable law, is required.
(b) Notwithstanding the foregoing, prior to the acceptance of Shares
pursuant to the Offer, Launch may furnish information concerning its business,
properties or assets to any person or entity pursuant to a confidentiality
agreement with terms no less favorable to Launch than those contained in the
confidentiality agreement previously entered into between Yahoo! and Launch (the
"CONFIDENTIALITY AGREEMENT"), including customary standstill provisions, and may
negotiate and participate in discussions and negotiations with such person or
entity concerning an Acquisition Proposal if, but only if, (x) such Acquisition
Proposal provides for consideration to be received by the holders of all, but
not less than all, of the issued and outstanding Shares; (y) such person or
entity has on an unsolicited basis, and in the absence of any violation of this
Section 5.2 by Launch, submitted a bona fide written proposal to Launch relating
to any such transaction which the Board of Directors determines in good faith,
after receiving advice from CSFB or another nationally recognized investment
banking firm, involves consideration to the holders of the Shares that is
superior to the consideration offered pursuant to the Offer and otherwise
represents, or is reasonably likely to result in, a superior transaction to the
Offer and the Merger and for which any necessary financing is committed or, in
the reasonable judgment of the Board of Directors, reasonably likely to be
obtained, and (z) in the good faith opinion of Launch's Board of Directors,
after consultation with outside legal counsel to Launch, the failure to provide
such information or access or to engage in such discussions or negotiations
would cause Launch's Board of Directors to violate its fiduciary duties to
Launch's stockholders under applicable law (an Acquisition Proposal which
satisfies clauses (x), (y) and (z) being referred to herein as a "SUPERIOR
PROPOSAL"). Launch shall promptly, and in any event within 24 hours following
receipt of a Superior Proposal and prior to providing any such party with any
material non-public information, notify Yahoo! of such Superior Proposal, which
notice shall include the identity of the other party and the terms of such
Superior Proposal. Launch shall promptly provide to Yahoo! any material
non-public information regarding Launch provided to any other party which was
not previously provided to Yahoo!, such additional information to be provided no
later than the date of provision of such information to such other party.
(c) Except as set forth herein, neither Launch's Board of Directors
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to the transactions contemplated by this
Agreement, to Yahoo! or to Purchaser, the approval or recommendation by Launch's
Board of Directors or any such committee of the Offer, this Agreement or the
Merger, (ii) approve or recommend or propose to approve or recommend, any
Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, prior to the time of
acceptance for payment of Shares in the Offer, Launch's Board of Directors may
(subject to the terms of this and the following sentence) withdraw or modify its
approval or recommendation of the Offer, this Agreement or the Merger, approve
or recommend a Superior Proposal, or enter into an Acquisition Agreement (as
defined in Section 5.2(d) below) with respect to a Superior Proposal (other than
a confidentiality agreement entered into in compliance with the terms of Section
5.2(b)), in each
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case at any time after the fifth business day following Launch's delivery to
Yahoo! of written notice advising Yahoo! that Launch's Board of Directors has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal and identifying the Person making such Superior Proposal;
provided, however, that Launch shall not enter into an Acquisition Agreement
with respect to a Superior Proposal unless Launch shall also have terminated
this Agreement in compliance with Section 5.2(d). Any such withdrawal,
modification or change of the recommendation of Launch's Board of Directors, the
approval or recommendation or proposed approval or recommendation of any
Superior Proposal or the entry by Launch into any agreement with respect to any
Superior Proposal shall not change the approval of Launch's Board of Directors
for purposes of causing any state takeover statute or other state law to be
inapplicable to the transactions contemplated by this Agreement, including each
of the Offer, the Merger and the Stockholders Agreement.
(d) Launch may terminate this Agreement and simultaneously therewith
enter into a letter of intent, agreement-in-principle, acquisition agreement or
other similar agreement (each, an "ACQUISITION AGREEMENT") with respect to such
Superior Proposal, provided that, prior to any such termination, (i) Launch has
provided Yahoo! written notice that it intends to terminate this Agreement
pursuant to this Section 5.2(d), identifying the Superior Proposal then
determined to be more favorable and the parties thereto and delivering a copy of
the Acquisition Agreement for such Superior Proposal in the form to be entered
into, (ii) during the period following the delivery of the notice referred to in
clause (i) above, during which Yahoo! shall have the right to propose
adjustments in the terms and conditions of this Agreement and Launch shall have
caused its financial and legal advisors to negotiate with Yahoo! in good faith
such proposed adjustments in the terms and conditions of this Agreement, (iii)
at least five full days after Launch has provided the notice referred to in
clause (i) above, Launch delivers to Yahoo! (A) a written notice of termination
of this Agreement pursuant to this Section 5.2(d), and (B) a cashier's check or
wire transfer in the amount of the Termination Fee (as defined in Section
8.2(b)).
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Proxy Statement. As promptly as practicable after the consummation of
the Offer and if required by the Exchange Act, Launch shall prepare and file
with the SEC, and shall use its reasonable efforts to respond promptly to any
comments made by the SEC, and promptly thereafter shall mail to stockholders,
the Proxy Statement. In such event, the Proxy Statement shall contain the
recommendation of Launch's Board of Directors in favor of the Merger.
6.2 Meeting of Stockholders of Launch. In connection with the Special
Meeting, if any, Launch shall use its reasonable efforts to solicit from
stockholders of Launch proxies in favor of the Merger, and shall take all other
action necessary or, in the reasonable opinion of Purchaser, advisable to secure
any vote or consent of such stockholders required by the Delaware Law and
Launch's Certificate of Incorporation to effect the Merger. Purchaser agrees
that it shall vote, or cause to be voted, in favor of the Merger all Shares
directly or indirectly beneficially owned by it.
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6.3 Additional Agreements. Subject to the terms and conditions as herein
provided, Launch, Yahoo! and Purchaser shall each comply in all material
respects with all applicable laws and with all applicable rules and regulations
of any Governmental Entity to achieve the satisfaction of the Minimum Condition
and all conditions set forth in Annex I attached hereto and in Article VII, and
to consummate and make effective the Merger and the other transactions
contemplated by this Agreement. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of Launch, Yahoo! and Purchaser
shall use all commercially reasonable efforts to take, or cause to be taken, all
such necessary actions.
6.4 Confidentiality; Access to Information.
(a) The parties acknowledge that Launch and Yahoo! have previously
executed the Confidentiality Agreement, which Confidentiality Agreement will
continue in full force and effect in accordance with its terms.
(b) Launch will afford Yahoo! and its accountants, counsel and other
representatives reasonable access during normal business hours to the
properties, books, records and personnel of Launch during the period prior to
the Effective Time to obtain all information concerning the business, including
the status of product development efforts, properties, results of operations and
personnel of Launch, as Yahoo! may reasonably request. Yahoo! will afford Launch
and its representatives reasonable access to information concerning Yahoo!'s
business that Launch may reasonably request in order to permit, and solely for
the purpose of permitting, Launch to confirm the accuracy of the representations
and warranties made by Yahoo! in Article IV. No information or knowledge
obtained by Yahoo! or Launch in any investigation pursuant to this Section 6.4
will affect or be deemed to modify any representation or warranty contained
herein or the conditions to the obligations of the parties to consummate the
Merger.
6.5 Public Disclosure. The initial press release concerning the Offer and
the Merger shall be a joint press release and, thereafter, neither Yahoo!,
Purchaser nor Launch will disseminate any press release or other announcement
concerning the Merger, the Offer or this Agreement or the transactions
contemplated by this Agreement to any third party without prior written consent
of each of the other parties hereto, which consent shall not be unreasonably
withheld. The parties have agreed to the text of the joint press release
announcing the execution of this Agreement.
6.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by this
Agreement, including using commercially reasonable efforts to accomplish the
following: (i) the taking of all reasonable acts necessary to cause the
conditions precedent set forth in Article VI to be satisfied, (ii) the obtaining
of all necessary actions or nonactions, waivers, consents,
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approvals, orders and authorizations from Governmental Entities and the making
of all necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities, if any) and
the taking of all reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (v) the execution or delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement; provided that
nothing contained in this Section 6.6 shall require any party to waive of
exercise any right hereunder which is waivable or exercisable in the sole
discretion of such party. In connection with and without limiting the foregoing,
Launch and its Board of Directors shall, if any state takeover statute or
similar statute or regulation is or becomes applicable to the Merger, this
Agreement or any of the transactions contemplated by this Agreement, use all
reasonable efforts to ensure that the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Merger, this Agreement and the transactions
contemplated hereby. Notwithstanding anything herein to the contrary, nothing in
this Agreement shall be deemed to require Yahoo! or any of its affiliates to
make proposals, execute or carry out agreements or submit to orders providing
for the sale or other disposition or holding separate (through the establishment
of a trust or otherwise) of any assets or categories of assets of Yahoo!, any of
its affiliates or Launch or the holding separate of the shares of Launch Common
Stock or imposing or seeking to impose any limitation on the ability of Yahoo!
or any of its subsidiaries or affiliates to conduct their business or own such
assets or to acquire, hold or exercise full rights of ownership of the shares of
Launch Common Stock.
(b) Launch shall give prompt notice to Yahoo! of any representation
or warranty made by it contained in this Agreement becoming untrue or
inaccurate, or any failure of Launch to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it under this Agreement, in each case, such that the events set forth in
paragraphs (d) or (f) of Annex I hereto would occur; provided, however, that no
such notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
6.7 Third Party Consents. As soon as practicable following the date
hereof, Yahoo! and Launch will each use its commercially reasonable efforts to
obtain any consents, waivers and approvals under any of its or its subsidiaries'
respective agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby.
6.8 Certain Employee Benefit Matters.
(a) To the extent requested by Parent, (i) Launch shall take all
necessary action to cause any 401(k) plan sponsored or maintained by Launch to
be terminated at least one
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day prior to the date that Parent and Launch become members of a controlled
group of corporations as described in Code section 414(b) or become under common
control as described in Code section 414(c) and (ii) Launch shall provide Yahoo!
with a copy of resolutions duly adopted by Launch's Board of Directors amending
any 401(k) plan sponsored or maintained by Launch so as to assure its continued
qualified status under Code section 401(a) on termination and terminating such
plan effective at least one day prior to the Closing Date.
(b) Individuals who continue employment with Yahoo!, Launch, or the
Surviving Corporation from and after the Effective Time shall be referred to
herein as "AFFECTED EMPLOYEES." Each Affected Employee will be eligible to
participate in the benefit programs, plans, arrangements, payroll practices
(including vacation or paid time off entitlement) offered to employees of Yahoo!
or maintained or established by the Surviving Corporation from time to time (the
"YAHOO! EMPLOYEE BENEFIT PLANS") pursuant to the terms of each such Plan, or in
the absence of plan terms or provisions, in accordance with the regularly
established policies or procedures of Yahoo! or the Surviving Corporation. In
the period prior to the Effective Time the respective human resources
departments of Yahoo! and Launch shall work together to establish a employee
benefits transition plan for the Surviving Corporation following the
consummation of the Merger.
(c) Yahoo! will, or will cause the Surviving Corporation to,
recognize the employment service of each Affected Employee with Launch for
purposes of eligibility and vesting (but not benefit accrual) under any Yahoo!
Employee Benefit Plan. Each Affected Employee's years of service with Launch
shall be otherwise recognized for all general employment purposes including,
without limitation, vacation, personal time and similar general employment
purposes, provided, that any vacation time offered by Yahoo! or Surviving
Corporation in the calendar year of the Effective Time to any Affected Employee
shall be offset by any vacation time used by or paid to an Affected Employee by
Launch in the calendar year of the Effective Time.
6.9 Indemnification.
(a) From and after the time that Purchaser shall acquire shares
satisfying the Minimum Condition, Yahoo! will cause Launch to fulfill and honor
in all respects the obligations of Launch pursuant to any indemnification
agreements between Launch and its directors and officers as of the Effective
Time (the "INDEMNIFIED PARTIES") and any indemnification provisions under
Launch's Certificate of Incorporation or Bylaws as in effect on the date hereof.
The Certificate of Incorporation and Bylaws of the Surviving Corporation will
contain provisions with respect to exculpation and indemnification that are at
least as favorable to the Indemnified Parties as those contained in the
Certificate of Incorporation and Bylaws of Launch as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified for
a period of six years from the Effective Time in any manner that would adversely
affect the rights thereunder of individuals who, immediately prior to the
Effective Time, were directors, officers, employees or agents of Launch, unless
such modification is required by law.
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(b) For a period of six years after the Effective Time, Yahoo! will
cause the Surviving Corporation to use its commercially reasonable efforts to
maintain in effect, if available, directors' and officers' liability insurance
covering those persons who are currently covered by Launch's directors' and
officers' liability insurance policy on terms comparable to those applicable to
the current directors and officers of Launch; provided, however, that if the
aggregate annual premiums for such insurance at any time during such period
exceed 150% of the annual premium currently paid by Launch for such coverage
(the "CURRENT ANNUAL PREMIUM AMOUNT"), then Yahoo! or the Surviving Corporation
will provide the maximum coverage then available at 150% of the Current Annual
Premium Amount. The Current Annual Premium Amount is set forth on Schedule 6.9
of the Launch Disclosure Schedules.
(c) This Section 6.9 shall survive the consummation of the Merger, is
intended to benefit Launch, the Surviving Corporation and each indemnified
party, shall be binding on all successors and assigns of the Surviving
Corporation and Yahoo!, and shall be enforceable by the indemnified parties. The
provisions of this Section 6.9 are intended to be for the benefit o, and will be
enforceable by, each indemnified party, his or her heirs, and his or her
representatives and are in addition, to, and not in substitution for, any other
rights to indemnification or contribution that any such person may have by
contract or otherwise.
6.10 Interim Directors. Pursuant to Section 1.3(b), Launch shall use its
reasonable best efforts to cause a sufficient number of its current directors to
continue as Independent Directors of Launch until the Effective Time.
6.11 Option to Acquire Additional Shares.
(a) Launch hereby grants to Yahoo! and Purchaser an irrevocable
option (the "PURCHASER OPTION") to purchase up to that number of newly issued
shares of Launch Common Stock (the "PURCHASER OPTION Shares") equal to the
number of shares of Launch Common Stock that, when added to the number of shares
of Launch Common Stock owned by Yahoo!, Purchaser and the other direct and
indirect wholly owned subsidiaries of Yahoo! immediately following the
consummation of the Offer, shall constitute one share more than ninety percent
(90%) of the shares of Launch Common Stock then outstanding on a fully diluted
basis (after giving effect to the issuance of the Purchaser Option Shares) for a
consideration per Purchaser Option Share equal to the Offer Price.
(b) Such Purchaser Option shall be exercisable only after the
purchase of and payment for shares of Launch Common Stock pursuant to the Offer
by Yahoo! or Purchaser as a result of which Yahoo!, Purchaser and the other
direct and indirect wholly owned subsidiaries of Yahoo! own at least
seventy-five percent (75%) of the outstanding shares of Launch Common Stock.
Such Purchaser Option shall not be exercisable if the number of shares of Launch
Common Stock subject thereto exceeds the number of authorized shares of Launch
Common Stock available for issuance.
(c) In the event Yahoo! and Purchaser wish to exercise the Purchaser
Option, Purchaser shall give Launch one day's prior written notice specifying
the number of shares of Launch Common Stock that are or will be owned by Yahoo!,
Purchaser and the other direct and
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indirect wholly owned subsidiaries of Yahoo! immediately following the
consummation of the Offer and specifying a place and a time for the closing of
such purchase. Launch shall, as soon as practicable following receipt of such
notice, deliver written notice to Yahoo! and Purchaser specifying the number of
Purchaser Option Shares. At the closing of the purchase of the Purchaser Option
Shares, the portion of the purchase price owing upon exercise of such Purchaser
Option which equals the product of (x) the number of shares of Launch Common
Stock purchased pursuant to such Purchaser Option, multiplied by (y) the Offer
Price, shall be paid to Launch in cash by wire transfer or cashier's check.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Stockholder Approval. The Merger and this Agreement shall have
been approved and adopted by the requisite vote of the holders of the Shares, to
the extent required pursuant to the requirements of the Certificate of
Incorporation and Delaware Law.
(b) Statutes; Court Orders. No statute, rule or regulation shall have
been enacted or promulgated by any Governmental Entity which prohibits the
consummation of the Merger, and there shall be no order or injunction of a court
of competent jurisdiction in effect preventing consummation of the Merger.
(c) Purchase of Shares in Offer. Purchaser shall have purchased, or
caused to be purchased, all Shares validly tendered in the Offer and not
withdrawn; provided, however, that this condition shall be deemed to have been
satisfied with respect to the obligation of Yahoo! and Purchaser to effect the
Merger if Purchaser fails to accept for payment or pay for Shares validly
tendered pursuant to the Offer in violation of the terms of the Offer or of this
Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned at any time before the Effective
Time, whether before or after stockholder approval thereof:
(a) By mutual written consent of Yahoo! and Launch duly authorized by
the Board of Directors of Yahoo! and Launch; or
(b) By either Yahoo! or Launch if a court of competent jurisdiction
or other Governmental Entity shall have issued an order, decree or ruling or
taken any other action, in each case permanently restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement or
the Stockholders Agreement; or
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(c) By Yahoo! if due to an occurrence or circumstance that would
result in a failure to satisfy any condition set forth in Annex I hereto,
Purchaser shall have (i) failed to commence the Offer within 10 business days
following the date of this Agreement, (ii) terminated the Offer without having
accepted any Shares for payment thereunder or (iii) failed to accept Shares for
payment pursuant to the Offer within 90 days following commencement of the
Offer, unless such action or inaction under clauses (i), (ii) or (iii) shall
have been caused by or resulted from the failure of Yahoo! or Purchaser to
perform, in any material respect, any of their material covenants or agreements
contained in this Agreement, or the material breach by Yahoo! or Purchaser of
any of their material representations or warranties contained in this Agreement.
(d) By Launch if Purchaser shall have (i) failed to commence the
Offer within 10 business days following the date of this Agreement, (ii)
terminated the Offer without having accepted any Shares for payment thereunder
or (iii) failed to accept Shares for payment pursuant to the Offer within 90
days following commencement of the Offer, unless such action or inaction under
clauses (i), (ii) or (iii) shall have been caused by or resulted from the
failure of Launch to perform, in any material respect, any of its material
covenants or agreements contained in this Agreement, or the material breach by
Launch of any of its material representations or warranties contained in this
Agreement.
(e) By Yahoo!, at any time prior to the purchase of the Shares
pursuant to the Offer, if (i) Launch's Board of Directors shall have withdrawn,
modified, or changed its recommendation in respect of this Agreement or the
Offer in a manner adverse to the transactions contemplated by this Agreement, to
the Yahoo! or to Purchaser, (ii) Launch's Board of Directors shall have
recommended any proposal other than by Yahoo! or Purchaser in respect of an
Acquisition Proposal, (iii) Launch shall have exercised a right with respect to
a Superior Proposal referenced in Section 5.2(b) and shall, directly or through
its representatives, continue discussions with any third party concerning a
Superior Proposal for more than ten days after the date of receipt of such
Superior Proposal, (iv) an Acquisition Proposal shall have been commenced,
publicly proposed or communicated to Launch or its stockholders and Launch shall
not have rejected such proposal within ten business days of its receipt or, if
sooner, within ten business days of the date its existence first becomes
publicly disclosed, or (v) Launch shall have violated or breached any of its
obligations under Section 5.2 in any material respect; or
(f) By Launch pursuant to Section 5.2(d).
8.2 Effect of Termination.
(a) In the event of the termination of this Agreement as provided in
Section 8.1, written notice thereof shall forthwith be given to the other party
or parties specifying the provision hereof pursuant to which such termination is
made, and this Agreement shall forthwith become null and void and there shall be
no liability on the part of Yahoo!, Purchaser or Launch, except (i) as set forth
in this Section 8.2 and (ii) nothing herein shall relieve any party from
liability for any breach of this Agreement.
(b) If (i) Yahoo! shall have terminated this Agreement pursuant to
Section 8.1(e), or (ii) Launch shall have terminated this Agreement pursuant to
Section 8.1(f), then
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Launch shall pay to Yahoo! a termination fee (the "TERMINATION FEE") of
$480,000. Payment of Termination Fee shall be a condition to the effectiveness
of a termination by Launch pursuant to Section 8.1(f). In the case of a
termination by Yahoo! pursuant to Section 8.1(e), such Termination Fee shall be
due and payable promptly, but in no event later than two business days after
such termination.
(c) If each of the following shall occur: (i) Yahoo! shall have
terminated this Agreement pursuant to Section 8.1(c) (but only if such
termination is the result of the failure of the Minimum Condition or the
occurrence of an event set forth in subsections (d) or (f) of Annex I hereto);
(ii) following the date hereof but prior to such termination an Acquisition
Proposal shall have been commenced, publicly proposed or communicated to Launch
or its stockholders; and (iii) within nine months following such termination of
this Agreement, Launch shall have entered into an Acquisition Agreement with
respect to an Acquisition Proposal or shall have consummated the transaction
contemplated by an Acquisition Proposal, then immediately upon the occurrence of
the first to occur of the events identified in clause (iii) Launch shall pay to
Yahoo! the Termination Fee.
(d) All amounts payable under this Section 8.2 shall be payable by
cashier's check or wire transfer to such account as Yahoo! may designate in
writing to Launch. Launch shall not withhold any United States withholding taxes
on any payment under this Section 8.2.
8.3 Fees and Expenses. All fees and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses whether or not the Merger is consummated;
provided, however, that Yahoo! and Launch shall share equally all fees and
expenses, other than attorneys' and accountants fees and expenses, incurred in
relation to the printing and filing with the SEC of the Offering Documents,
14D-9 and Proxy Statement (including any preliminary materials related thereto)
and any amendments or supplements thereto.
8.4 Amendment. Subject to applicable law, this Agreement may be amended by
the parties hereto at any time by execution of an instrument in writing signed
on behalf of each of Yahoo!, Purchaser and Launch.
8.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE IX
GENERAL PROVISIONS
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9.1 Non-Survival of Representations and Warranties. The representations
and warranties of Launch, Yahoo! and Purchaser contained in this Agreement shall
terminate at the Effective Time, and only the covenants that by their terms
survive the Effective Time shall survive the Effective Time.
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Yahoo! or Purchaser:
Yahoo! Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Vice President, Corporate Development
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy at the same address to the attention of
the General Counsel and Secretary and with a copy to:
Venture Law Group
A Professional Corporation
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to Launch:
Launch Media, Inc.
0000 Xxxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxx Xxxx Xxxx & Freidenrich
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
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9.3 Interpretation; Certain Defined Terms.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "INCLUDE,"
"includes" and "INCLUDING" when used herein shall be deemed in each case to be
followed by the words "WITHOUT LIMITATIONS." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "THE BUSINESS OF" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity.
(b) For purposes of this Agreement the term "KNOWLEDGE" means with
respect to a party hereto, with respect to any matter in question, that any of
the executive officers of such party has actual knowledge of such matter.
(c) For purposes of this Agreement, the term "PERSON" shall mean any
individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
(d) For purposes of this Agreement, "SUBSIDIARY" of a specified
entity will be any corporation, partnership, limited liability company, joint
venture or other legal entity of which the specified entity (either alone or
through or together with any other subsidiary) owns, directly or indirectly,
fifty percent (50%) or more of the stock or other equity or partnership
interests the holders of which are generally entitled to vote for the election
of the Board of Directors or other governing body of such corporation or other
legal entity.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, and by facsimile, all of which shall be considered one and the
same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
9.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Launch Disclosure Schedules
and the Yahoo! Disclosure Schedules (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, it being understood that the
Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this
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Agreement; and (b) are not intended to confer upon any other person any rights
or remedies hereunder, except as specifically provided in Section 6.9.
9.6 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
9.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
9.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
9.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Any attempt to make any such assignment without such
consent shall be null and void. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
9.11 No Waiver; Remedies Cumulative. No failure or delay on the part of any
party hereto in the exercise of any right hereunder will impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor will any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive to, and not exclusive of, any rights or
remedies otherwise available.
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9.12 Waiver of Jury Trial. EACH OF YAHOO!, ROCKET AND PURCHASER HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF YAHOO!, ROCKET OR PURCHASER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
YAHOO! INC.
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxx
----------------------------------
Title: President & COO
----------------------------------
JEWEL ACQUISITION CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxx
----------------------------------
Title:
----------------------------------
LAUNCH MEDIA, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Name: Xxxxxx Xxxxxx
----------------------------------
Title: President
----------------------------------
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ANNEX I
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Purchaser's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restriction referred to
above, the payment for, any validly tendered Shares unless the Minimum Condition
shall have been satisfied. Furthermore, notwithstanding any other provisions of
the Offer, Purchaser shall not be required to accept for payment or pay for any
validly tendered Shares if, at the scheduled expiration date any of the
following events shall occur and be continuing:
(a) there shall be threatened or pending any suit, action or proceeding by
any Governmental Entity against Purchaser, Yahoo!, Launch or any Launch
subsidiary (i) seeking to prohibit or impose any material limitations on
Yahoo!'s or Purchaser's ownership or operation (or that of any of their
respective subsidiaries or affiliates) of all or any portion of their or
Launch's and Launch subsidiaries' businesses or assets, taken as a whole, or to
compel Yahoo! or Purchaser or their respective subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets of
Launch or Yahoo! and their respective subsidiaries, in each case taken as a
whole, (ii) challenging the acquisition by Yahoo! or Purchaser of any Shares
under the Offer, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger or the performance of any of the other transactions
contemplated by this Agreement, or seeking to obtain from Launch, Yahoo! or
Purchaser any damages that are material in relation to Launch and Launch's
subsidiaries taken as a whole, (iii) seeking to impose material limitations on
the ability of Purchaser, or render Purchaser unable, to accept for payment, pay
for or purchase some or all of the Shares pursuant to the Offer and the Merger,
or (iv) seeking to impose material limitations on the ability of Purchaser or
Yahoo! effectively to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote the Shares purchased by it on
all matters properly presented to Launch's stockholders;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable,
pursuant to an authoritative interpretation by or on behalf of a Government
Entity, to the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, that is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through (iv)
of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq Stock Market for a period in excess of
three hours (excluding suspensions or limitations resulting solely from physical
damage or interference with such exchanges not related to market conditions),
(ii) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory),
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(iii) a commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States, (iv) any
limitation (whether or not mandatory) by any Governmental Entity on the
extension of credit generally by banks or other financial institutions;
(d) any of the representations and warranties of Launch contained in this
Agreement shall not be true and correct in all material respects as of the date
of such determination, except for representations and warranties that relate to
a specific date or time (which need only be true and correct in all material
respects as of such date or time); provided, however, that except with respect
to a willful breach of any representation and warranties by Launch (in which
case this proviso shall not apply), the condition contained in this paragraph
(d) shall not be deemed to have failed unless Launch fails to cure such breach
within ten (10) days after receiving written notice of same from Purchaser or
Yahoo! and the failure of any such representations or warranties, whether
individually or in the aggregate, has resulted in a Material Adverse Effect on
Launch;
(e) Launch's Board of Directors or any committee thereof shall have (i)
withdrawn, or modified or changed in a manner adverse to the transactions
contemplated by this Agreement, to the Yahoo! or to Purchaser (including by
amendment of the Schedule 14D-9), its recommendation of the Offer, the Merger
Agreement, or the Merger, (ii) recommended any Acquisition Proposal, (iii)
resolved to do any of the foregoing or (iv) taken a neutral position or made no
recommendation with respect to another proposal or offer (other than by Yahoo!
or Purchaser) after 10 business days following receipt thereof has elapsed;
(f) Launch shall have materially breached or failed, in any material
respect, to perform or to comply with any material agreement or material
covenant to be performed or complied with by it under this Agreement; provided,
however, that the condition contained in this paragraph (f) shall not be deemed
to have failed if (i) such breach is curable and (ii) Launch has cured such
breach within ten (10) days after receiving written notice of same from
Purchaser or Yahoo!;
(g) Purchaser shall have failed to receive a certificate executed by
Launch's Chief Executive Officer or President of Launch on behalf of Launch,
dated as of the scheduled expiration of the Offer, to the effect that the
conditions set forth in paragraphs (d), (e), (f) and (i) of this Annex I have
not occurred;
(h) the fees and expenses paid or payable to Launch's financial, legal and
accounting advisors for services performed and to be performed in connection
with the transactions contemplated by this Agreement (including, without
limitation, the Merger) shall exceed $2,700,000 in the aggregate;
(i) UMG shall have exercised its rescission right under Section 2.C. of the
UMG Letter Agreement, or any event or circumstance shall have occurred or failed
to occur that would give UMG the right under such Section 2.C. to exercise such
rescission right and the ten- business day period for the exercise of such right
by UMG shall not have lapsed or expired (provided that this condition shall be
deemed waived in the event that the rescission of the
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UMG Letter Agreement or the event or circumstance giving rise to the right of
UMG to exercise such rescission right shall have been the direct result of or
proximately caused by an action taken by Launch at the express direction of or
with the express written consent of Yahoo! or Purchaser or a failure to take an
action by Launch at the express direction of or with the express written consent
of Yahoo! or Purchaser);or
(j) the Merger Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Yahoo! and Purchaser,
may be asserted by Yahoo! or Purchaser regardless of the circumstances giving
rise to such condition, and may be waived by Yahoo! or Purchaser in whole or in
part at any time and from time to time and in the sole discretion of Yahoo! or
Purchaser, subject in each case to the terms of this Agreement. The failure by
Yahoo! or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and, each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
annexed.
3
