Exhibit (a)(9)
OPTION CASH-OUT AGREEMENT
THIS OPTION CASH-OUT AGREEMENT (this "Agreement") is made and entered into
by and among XXxxxx.XXX INC., a Delaware corporation ("EMusic") and the person
listed on Exhibit A hereto ("Holder") as of the last date set forth on the
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signature page hereof.
BACKGROUND
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A. EMusic has granted Holder one or more options referenced on Exhibit A
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to this Agreement (collectively, the "Options"), under the XXxxxx.xxx Inc. 1998
Stock Option Plan, the XXxxxx.xxx Inc. 1998 Nonstatutory Stock Option Plan, the
Xxxxx.xxx Inc. 1997 Stock Option Plan and/or the Amended and Restated Stock
Option Plan of Group K Inc. d/b/a Cductive (together, the "Option Plans"),
pursuant to which Holder has certain rights to purchase a specified number of
shares of common stock, $0.001 par value, of EMusic ("EMusic Common Stock");
B. EMusic, Universal Music Group, Inc., a California Corporation
("Universal"), and Universal Acquisition Corp., Inc., a Delaware corporation and
wholly owned subsidiary of Universal ("Sub"), have entered into an Agreement and
Plan of Merger, dated as of April 6, 2001, (the "Merger Agreement"), pursuant to
which (i) Universal will, on the conditions set forth in the Merger Agreement,
make a tender offer for all of the outstanding shares of EMusic Common Stock
(the "Tender Offer") at a price of $0.57 per share (such amount, or any greater
amount per share paid pursuant to the Tender Offer, being hereinafter referred
to as the "Offer Price"), net to the seller in cash, and (ii) upon completion of
the Tender Offer, Universal, Sub, and EMusic have agreed to effect a merger of
Sub with and into EMusic upon the satisfaction or waiver of certain conditions
set forth in the Merger Agreement;
C. Upon the consummation of the merger contemplated by the Merger
Agreement (the "Merger"), each outstanding share of EMusic Common Stock (subject
to certain exceptions described in the Merger Agreement) shall be cancelled and
extinguished and be converted automatically into the right to receive the Offer
Price. The parties to this Agreement desire that upon the consummation of the
Tender Offer each outstanding Option with an exercise price below the Offer
Price be converted into the right to receive the cash amount equal to the
product of (A) the number of shares of EMusic Common Stock subject to such
Option (including Options not then exercisable, subject to Holder not
voluntarily terminating his or her employment with EMusic prior to the
consummation of the Tender Offer) and (B) the amount, if any, by which the Offer
Price exceeds the exercise price per share of EMusic Common Stock subject to
such Option immediately prior to the consummation of the Tender Offer, subject
to the terms and conditions of this Agreement; and
D. The parties to this Agreement desire that contingent upon the
consummation of the Tender Offer and in consideration for the total cash
consideration set forth on Exhibit A to this Agreement (such cash consideration,
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net of applicable withholdings, and as appropriately
adjusted to reflect any increase in the Offer Price and to exclude any options
exercised prior to the consummation of the Tender Offer being the "Option Merger
Consideration") Holder relinquishes Holder's rights under the Options and the
agreements evidencing those Options (the "Option Agreements") and release all
existing or potential claims under the Options, the Option Agreements and the
Option Plans.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree, subject to the consummation of the
Tender Offer, as follows:
1. Payment; Relinquishment.
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EMusic hereby agrees that it shall cause the Option Merger Consideration to
be paid to Holder as soon as practicable after the consummation of the Tender
Offer, subject to the terms and conditions of this Agreement. In consideration
for the receipt by Holder of the Option Merger Consideration, Holder hereby
irrevocably relinquishes any and all rights of Holder under the Options, the
Option Agreements and the Option Plans, such relinquishment to be conditioned
upon and to occur simultaneously at the occurrence of the consummation of the
Tender Offer. Holder acknowledges and agrees that during Holder's continuing
employment with EMusic, Holder will not exercise any vested Options prior to the
earlier of the consummation of the Tender Offer or receipt of notification that
the Merger has been cancelled. The receipt by Holder of the Option Merger
Consideration at or after the consummation of the Tender Offer shall constitute
complete and full payment for the relinquishment of all rights of Holder under
the Options, the Option Agreements and the Option Plans. Holder hereby
represents and warrants to EMusic that the Options and the Option Agreements are
the only agreements or understandings between Holder and EMusic or any affiliate
of EMusic pertaining to the grant by EMusic (or any affiliate of EMusic) of any
right, option or warrant to acquire (i) EMusic Common Stock or (ii) any other
equity security of EMusic.
2. Termination of Employment Prior to Consummation of the Tender Offer.
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Holder acknowledges and agrees that if Holder voluntarily terminates his or
her employment with EMusic prior to the consummation of the Tender Offer, (i)
Holder's rights to receive the Option Merger Consideration with respect to
Holder's unvested Options shall then be terminated and Holder's unvested Options
as of the effective date of the termination shall immediately terminate and be
of no further value, and (ii) Holder's rights to receive the Option Merger
Consideration with respect to Holder's Options that are vested as of the date of
such termination will expire if the consummation of the Tender Offer does not
occur within 90 days after the date of employment termination and, in that
event, Holder must exercise such vested Options prior to the expiration of such
90-day period to realize the economic value, if any, of such Options and to the
extent not exercised such vested Options shall terminate and be of no further
value. As used in this section, voluntary termination does not include failure
to accept a job offered with Universal so long as Holder does not voluntarily
terminate Holder's employment with EMusic effective prior to the consummation of
the Tender Offer.
3. Release.
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Holder for himself or herself and his or her successors and assigns hereby
releases, acquits, and forever discharges EMusic and EMusic's respective past
and future subsidiaries, affiliates, employees, officers, directors,
stockholders, agents, representatives, successors and assigns (collectively, the
"Released Parties") of and from any and all actions, causes of action, suits,
claims, demands, judgments, damages, obligations and liabilities of any kind, at
law or in equity, known or unknown, which Holder had, now has, or hereafter may
have against the Released Parties, or any of them, under the Options, the Option
Agreements or the Option Plans subject to the consummation of the Tender Offer.
4. Civil Code 1542 Waiver
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Holder acknowledges that he or she has read all of the foregoing release
and the Civil Code section below and that he or she fully understands both the
release and the Civil Code section. Holder waives any benefits and rights
granted to him or her pursuant to Civil Code section 1542. California Civil
Code section 1542 states:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OF OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT
WITH THE DEBTOR.
5. Separate Representation.
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Holder hereby acknowledges that (i) Holder has not been represented by Xxxx
Xxxx Xxxx & Freidenrich LLP (counsel to the Company) or Xxxxxx Xxxxxx & Xxxxx
LLP (counsel to Universal and Universal Acquisition Corp.) in connection with
this Agreement or any other agreements or issues related to the transactions
contemplated in the Merger Agreement, (ii) Holder has had sufficient time and
opportunity to review this Agreement and all other documents affecting his or
her interests in connection with the transactions contemplated in the Merger
Agreement, and (iii) Holder has been advised that Holder has the right to engage
and consult separate counsel at Holder's expense in connection with this
Agreement and all other agreements or issues related to the transactions
contemplated in the Merger Agreement and Holder acknowledges that Holder has
either retained such counsel or chosen not to do so prior to execution of this
Agreement.
5. CHOICE OF LAW.
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THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION OF ITS TERMS AND THE
DETERMINATION OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THERETO.
6. Jurisdiction and Venue.
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Any judicial proceeding brought by or against any of the parties to this
Agreement on any dispute arising out of this Agreement shall be brought in the
state or federal courts of San Mateo County, California, and by execution and
delivery of this Agreement, each of the parties hereto accepts the exclusive
jurisdiction and venue of the aforesaid courts and agrees to be bound by any
judgment rendered thereby in connection with this Agreement after exhaustion of
all appeals (or by the appropriate appellate court if such appellate court
renders judgment).
7. Binding Nature.
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This Agreement shall bind and inure to the benefit of the parties hereto
and their respective legal representatives, successors and assigns.
8. Counterparts.
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This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original for all purposes and all of which shall be deemed
collectively to be one agreement, but in making proof hereof it shall only be
necessary to exhibit one such counterpart.
9. Tax Withholding.
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Holder acknowledges and agrees that EMusic may withhold from any amount to
be paid hereunder any taxes or other amounts required by law.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed effective as of the last date on which any of the
parties execute this Agreement.
Date:_____________________ XXXXXX.XXX INC.
By:___________________________
Name:_________________________
Title:________________________
Date:_____________________ HOLDER:
______________________________
Name:_________________________
Address where Holder wants any
notice sent and, if different, where
Option Merger Consideration or any
other consideration under this
Agreement should be sent:
NOTICE:
______________________________
______________________________
______________________________
CONSIDERATION:
______________________________
______________________________
______________________________
SPOUSAL RELEASE
I, _______________________________, am the spouse of Holder. I have
read and understand this Release and the documents referred to herein, and I
hereby release any and all claims that I may have against the Released Parties,
EMusic, or any affiliate thereof arising from the Option Agreements or the
Option Plans to acquire (i) EMusic Common Stock or (ii) any other equity
interest in EMusic or any affiliate thereof.
SPOUSE:
___________________________________
(If not married, please xxxx
"Not Applicable" on this line)
EXHIBIT A
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Name of Holder:
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Date of Number of Options Exercise Consideration Payable to Holder
Grant Outstanding Price Assuming an Offer Price of $0.57
per Share
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$ $
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$ $
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$ $
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$ $
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$ $
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$ $
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$ $
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$ $
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$ $
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$ $
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TOTAL* $
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* To be reduced by applicable tax withholding.
