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EXHIBIT 10.26
EXECUTION COPY
AMENDED AND RESTATED LETTER AGREEMENT
TO: representatives of Creative Artists Agency, LLC, Codikow & Xxxxxxx, P.C., 4
Fini Inc., and Vans, Inc.
This amended and restated letter agreement by and between Launch Media,
Inc., a Delaware corporation ("Launch") which owns C.C.R.L., LLC, a California
limited liability company ("CCRL") which operates the Warped Tour (the "Tour"),
on the one hand, and Creative Artists Agency, LLC ("CAA"), Codikow & Xxxxxxx,
P.C. ("Codikow"), 4 Fini Inc. ("4 Fini"), and Vans, Inc. ("Vans")(collectively,
the "Buyers") on the other hand, sets forth the terms upon which Buyers will
acquire all of the ownership interests in CCRL (the "Transaction"). This amended
and restated letter agreement amends and restates in its entirety the letter
agreement previously entered into between Launch and Buyers with respect to the
Transaction. Subject to the provisions hereof, the Transaction will be upon the
following terms, conditions and structure:
1. Terms of Sale.
a. Purchase Price and Transfer of Ownership. On September 3,
2001, or as soon thereafter as is practicable, subject to
the terms and conditions set forth herein (the "Closing"),
in exchange for one hundred percent (100%) of Launch's
ownership interest in CCRL, Buyers will, subject to the
provisions of Sections 1(e) and 1(f) hereof, terminate
Launch's obligations (1) as described in the Membership
Interest Purchase Agreement, dated June 12, 2000
("MIPA")(including, but not limited to, the Terms and
Conditions of the Earn-Out Payment that is Exhibit B to the
MIPA (the "Terms and Conditions of the Earn-Out Payment"))
and (2) pursuant to the Services Agreements (as described
in Section 1(f) hereof). The CCRL ownership interest shall
transfer to Buyers concurrently with the termination of the
obligations contemplated by the previous sentence. Launch's
right, title and interest in CCRL shall vest with the
Buyers in proportion to the ownership interests set forth
in Schedule 11.3 of the MIPA, specifically 28.33% to CAA,
28.34% to Codikow, 28.33% to 4 Fini and 15% to Vans. Launch
shall retain all rights, duties and obligations for all
accounts receivable, accounts payable and liabilities in
connection with the Warped Summer Tour 2000 and 2001 and
shall retain the right to operate and control the Warped
Summer Tour 2001. Concurrent with the transfer of ownership
in CCRL, Buyers shall grant to Launch an exclusive,
irrevocable, royalty free, worldwide license to use the
trademark "Warped Tour" in connection with the operation of
the 2001 Tour according to, and consistent with, past
practices ("Operational License"). The term of the
Operational License shall expire on December 31, 2001.
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b. Warped Inside. Buyers acknowledge that Launch shall have
the right to continue to use the "Warped" xxxx in
connection with its operation of the "Warped Inside"
concert series for fall 2001, spring, 2002 and fall 2002,
and shall be responsible for all costs and shall make no
payment to Buyers in connection with its operation of the
"Warped Inside" concert series, except that if Launch
determines to operate the "Warped Inside" concert series
for spring 2002 and fall 2002, Launch shall remit to Buyers
15% of the gross revenue generated with respect thereto.
Launch shall have no right to use the "Warped Inside" xxxx
other than in connection with its operation of the "Warped
Inside" concert series through fall 2002.
c. Launch as Sponsorship Sales Agent. Notwithstanding the
foregoing transfer of ownership, Launch shall retain the
exclusive right to act as sponsorship sales agent for the
Tour for the next two (2) Warped tours performed subsequent
to the 2001 Tour, specifically Warped Summer Tours 2002 and
2003 (the "Sponsorship Term"). During the Sponsorship Term,
Launch will continue to manage existing sponsor
relationships and promote the Tour, subject to Buyers'
commercially reasonable direction and control, and shall
receive a percentage of sponsorship revenues for each of
these tours as provided in section 1(c) below. During the
Sponsorship Term, Launch will make good faith efforts to
promote the Tour on both xxx.xxxxxx.xxx and
xxx.xxxxxxxxxx.xxx (subject to the terms of Section 1(f)).
Concurrent with the transfer of ownership in the Tour,
Buyers shall grant to Launch an exclusive, irrevocable,
royalty free, worldwide license to use the trademark
"Warped Tour" in connection with Launch's role as
sponsorship sales agent, including, without limitation, in
connection with Launch's ownership and operation of the
website xxx.xxxxxxxxxx.xxx (subject to the terms of Section
1(f)), according to, and consistent with, past practices
("Promotional License"). The term of the Promotional
License shall expire on the expiration of the Sponsorship
Term.
d. Allocation of Sponsorship Revenues. All sponsorship
agreements entered into during the Sponsorship Term shall
be between the third party sponsor and Launch and all
payments in connection therewith shall be made payable to
Launch. Launch shall pay 100% of the first $1,500,000 of
gross sponsorship revenues received for each Tour to Buyers
or, if there are less than 20 dates for a year's Tour, 100%
of the first $1,000,000 of gross sponsorship revenue.
Launch shall retain 75%, and pay to Buyers 25%, of the next
$1,500,000 of gross sponsorship revenues received for each
Tour (or $1,500,001 to $3,000,000) or, if there are less
than 20 dates for a year's Tour, 75%/25% of the next
$1,000,000. Launch shall then pay Buyers fifty percent
(50%) of the gross sponsorship revenues received in excess
of $3,000,000 in connection with each Tour during the
Sponsorship Term or, if there are less than 20 dates for a
year's Tour,
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50%/50% for amounts in excess of $2,000,000. If verbal and
verifiable expressions of interest for $1,000,000 of
sponsorships are not obtained by December 15, 2001, for the
2002 Tour, or by December 15, 2002, for the 2003 Tour, or
if sponsorship letters of intent (or binding term sheets)
in the amount of $1,000,000 are not obtained by February 1,
2002 for the 2002 Tour, or by February 1, 2003 for the 2003
Tour, Launch's exclusive right to act as sponsorship sales
agent shall terminate and the Sponsorship Term shall
expire. If gross sponsorship revenues for the 2002 Tour are
less than $1,500,000, Launch's exclusive right to act as
sponsorship sales agent shall terminate, and the
Sponsorship Term shall expire. All payments made by Launch
to Buyers pursuant to this section shall be made within 5
business days of Launch's receipt of sponsorship revenues.
If Launch fails to remit Buyers' monies on a timely basis
(other than a single inadvertent failure, which shall be
excused), monies shall thereafter be collected by Buyers,
with Launch's share remitted to Launch. In such event,
Launch shall instruct sponsors accordingly.
e. Earn Out Payment and Other Payment Obligations. Subject to
the following sentence, Launch acknowledges its obligation
to pay Buyers the "earn-out" payment only for Warped Tour
2001 (the "2001 Earn-Out") pursuant to the terms of the
Terms and Conditions of the Earn-Out Payment. The full
amount of the 2001 Earn-Out, less the Tender Amount (as
hereinafter defined), shall be paid in cash by October 1,
2001. If Launch fails to pay the 2001 Earn-Out, less the
Tender Amount, by January 1, 2002 (unless January 1 is a
holiday, in which case, payment shall be due the next
business day after January 1), Launch's exclusive right to
act as sponsorship sales agent shall terminate, and the
Sponsorship Term shall expire, without extinguishing
Launch's obligation for the 2001 Earn Out payment. Buyers
acknowledge that, upon Closing, all other payment
obligations on behalf of Launch (except for those contained
in Section 1(e) and 1(f) hereof) shall terminate,
including, without limitation, the balloon payment referred
to in the Terms and Conditions of the Earn-Out Payment. For
purposes of this amended and restated letter agreement, the
term "Tender Amount" shall mean the aggregate amount
received by Buyers in connection with the tender by Buyers
of the shares of Common Stock of Launch set forth on
EXHIBIT A attached hereto (the "Tender Shares")
into the tender offer (the "Tender Offer") made by Jewel
Acquisition Corporation, a wholly owned subsidiary of
Yahoo! Inc. ("Yahoo"), for all of the outstanding shares of
Common Stock of Launch pursuant to an Offer to Purchase
dated July 12, 2001. Buyers agree to tender (and not
withdraw) the Tender Shares into the Tender Offer prior to
the expiration thereof (it being understood that nothing
contained in this amended and restated letter agreement
shall prohibit any Buyer from tendering into the Tender
Offer shares of Launch Common Stock owned by such Buyer
that are in addition to the Tender Shares).
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f. Services Agreements. Subject to the Closing, the Services
Agreements entered into between Launch and each of CAA,
Codikow and 4 Fini shall terminate on December 31, 2001.
Launch shall make its final payments in connection with
each Services Agreement on August 31, 2001 and shall have
no obligation to make any further payments in connection
therewith.
g. Intellectual Property Retained By Launch. During the
Sponsorship Term, Buyers shall have the option of either
having Launch continue to own the URL "Xxxxxxxxxx.xxx" (the
"URL") and operating the website located at
xxx.xxxxxxxxxx.xxx (the "Website"), or requesting Launch to
transfer the ownership of the URL and the Website to the
Buyers (with Buyers paying all reasonable costs in
connection with such transfer) and operating the Website
themselves, in which case, Launch shall reasonably comply
and assist with such transfer. In either case, the party
operating the site shall be responsible for all costs
associated therewith. If Launch is operating the Website,
it will do so substantially consistent with past practices.
h. Buyers' Buyout. Buyers shall have the option at any time to
buyout ("Buyout") Launch's exclusive right to act as
sponsorship sales agent during the Sponsorship Term,
whether in connection with a change in control or
otherwise, if they pay to Launch $1,200,000 for each
remaining year ("Remaining Year") of the Sponsorship Term.
For purposes of the Buyout, each year of the Sponsorship
Term shall be considered a Remaining Year if Buyers notify
Launch of their option to proceed with the Buyout on or
before March 1 of that Sponsorship Term year. If Buyers
notify Launch of their intention to proceed with the Buyout
after March 1 of any Sponsorship Term year, Launch shall
have the right to continue to act as exclusive sponsorship
sales agent for that year's Tour and sponsorship revenues
shall be allocated in accordance with Section 1 (c) hereof
and Buyers shall pay to Launch $1,200,000 for the
subsequent Tour (if any).
i. Condition to Closing. Buyers' obligations to close the
transactions contemplated hereby shall be subject to Yahoo
obtaining a majority of the outstanding shares of Launch.
This condition is for the benefit of Buyers and may be
waived by them. If Yahoo does not obtain a majority of the
outstanding shares of Launch by October 15, 2001, Buyers
may elect to terminate this amended and restated letter
agreement at any time thereafter; in which event, all the
agreements currently existing between Launch and Buyers
shall remain in full force and effect.
j. Non-Competition. During the Sponsorship Term, Launch shall
not own, sponsor or sell sponsorships in a summer tour
which combines punk rock music with extreme sports. During
the Sponsorship Term, the
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Buyers (other than Vans) shall not own, sponsor or sell
sponsorships in a summer tour which combines punk rock
music with extreme sports.
2. No Public Announcement. The parties shall make no public
announcement concerning this letter agreement, their discussions
or any other memoranda, letters or agreements between the parties
relating to the Transaction. Either party may, at any time, make
such a disclosure to a potential investor or if it is advised by
legal counsel that such disclosure is required under applicable
law or regulatory authority, after consulting with the other.
3. Governing Law. This letter agreement shall be governed by and
construed in accordance with the laws of the State of California.
4. Arbitration. Any dispute arising under this letter agreement shall
be referred to arbitration according to the rules of the American
Arbitration Association (the "AAA Rules") in Los Angeles, CA.
Prior to any such arbitration, the parties agree to use all
reasonable good faith efforts to reach satisfactory resolution
among themselves. A panel of three (3) arbitrators shall be formed
in the following manner (the "Arbitration Panel"): Launch shall
appoint one (1) arbitrator and Buyers shall appoint one (1)
arbitrator, and those two (2) arbitrators shall choose the third
(3rd) arbitrator. All of the arbitrators shall be unaffiliated in
any manner with any of the parties. The prevailing party shall be
entitled to recover its reasonable attorneys' fees.
Although it is understood and agreed that the long form agreements,
containing such terms, provisions, representations, warranties, covenants and
conditions (in addition to those set forth herein) as are customary in
transactions of this nature, shall be hereafter prepared and delivered, this
letter agreement constitutes a contractual commitment and binding agreement of
the parties. Subject to Closing, this letter agreement shall supercede and
replace the MIPA and, except as otherwise provided for herein, all terms
contained in that agreement thereupon shall be null and void.
When countersigned by you below, this shall create a binding agreement to
the terms contained herein.
Very truly yours,
BY: /s/ XXXXX X. XXXXXXXX
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Name: Xxxxx X. Xxxxxxxx
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Title: CEO
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Launch Media, Inc.
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Agreed & Accepted by "Buyers:"
/s/ XXXXXXX X. XXXXX
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Name: Xxxxxxx X. Xxxxx
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Title: General Counsel
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Creative Artists Agency, LLC
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Name:
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Title:
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& Xxxxxxx, P.C.
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Name:
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Title:
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4 Fini, Inc.
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Name:
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Title:
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Vans, Inc.
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Agreed & Accepted by "Buyers:"
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Name:
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Title:
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Creative Artists Agency, LLC
/s/ XXXXX XXXXXXX
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Name: Xxxxx Xxxxxxx
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Title: Partner
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Codikow & Xxxxxxx, P.C.
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Name:
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Title:
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4 Fini, Inc.
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Name:
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Title:
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Vans, Inc.
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Agreed & Accepted by "Buyers:"
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Name:
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Title:
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Creative Artists Agency, LLC
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Name:
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Title:
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Codikow & Xxxxxxx, P.C.
/s/ XXXXX XXXXX
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Name: Xxxxx Xxxxx
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Title: President
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4 Fini, Inc.
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Name:
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Title:
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Vans, Inc.
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Agreed & Accepted by "Buyers:"
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Name:
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Title:
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Creative Artists Agency, LLC
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Name:
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Title:
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Codikow & Xxxxxxx, P.C.
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Name:
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Title:
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4 Fini, Inc.
/s/ XXXXX X. XXXXXXXX
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Name: Xxxxx X. Xxxxxxxx
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Title: Vice President & Counsel
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Vans, Inc.
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EXHIBIT A -- TENDER SHARES
BUYER FUND II SHARES ESCROW SHARES TENDER SHARES
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Creative Arts 50,779 60,921 111,700
Agency, LLC
Codikow & 50,779 60,921 111,700
Xxxxxxx, P.C.
4 Fini, Inc. 50,779 60,921 111,700
Vans, Inc. 26,883 32,252 59,135
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TOTAL TENDER SHARES: 394,235
