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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. )*

Launch Media, Inc.
(Name of Issuer)

Common Stock, par value $0.001
(Title of Class of Securities)

518567 10 2
(CUSIP Number)

Susan L. Decker
Senior Vice President, Finance and Administration and Chief Financial Officer
Yahoo! Inc.
701 First Avenue,
Sunnyvale, California 94089
(408) 349-3300
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

June 27, 2001
(Date of Event which Requires Filing of this Statement)

    If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / /.

    Note: Schedules filed in paper format shall include a signed original and five copies of the Schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.

    *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

    The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Schedule 13D

CUSIP No. 518567 10 2   Page 1 of 9

1.
 
Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).

 
 
Yahoo! Inc.

2.
 
Check the Appropriate Box if a Member of a Group (See Instructions)
    (a) / /

 
 
(b) /X/

3.
 
SEC Use Only

4.
 
Source of Funds*  WC

5.
 
Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)

6.
 
Citizenship or Place of Organization  Delaware
NUMBER OF   7.   Sole Voting Power  0
SHARES  
BENEFICIALLY   8.   Shared Voting Power  3,657,912(1)
OWNED BY EACH  
REPORTING   9.   Sole Dispositive Power  0
PERSON WITH  
    10.   Shared Dispositive Power  0
11.   Aggregate Amount Beneficially Owned by Each Reporting Person
3,657,912(1)

12.
 
Check if the Aggregate Amount in Row (11) Excludes Certain Shares*
/ /

13.
 
Percent of Class Represented by Amount in Row (11)  Approximately 27% (2)

14.
 
Type of Reporting Person*
    CO

*SEE INSTRUCTIONS BEFORE FILLING OUT!

(1)
Yahoo! Inc. ("Yahoo!") and its wholly-owned subsidiary Jewel Acquisition Corporation ("Purchaser") have entered into Stockholders Agreements, each dated June 27, 2001 (together the "Stockholders Agreements"), with certain stockholders of Launch Media, Inc. ("Launch"), pursuant to which signatory stockholders have: (1) granted to Yahoo! and Purchaser an irrevocable option to purchase their shares of Launch common stock at a price per share equal to the Offer Price (as defined herein) or any higher price paid or to be paid by Yahoo! or Purchaser pursuant to the Offer (as defined herein) and the Merger (as defined herein) under the terms and on the conditions set forth in the Stockholders Agreements, (2) agreed to vote their shares of Launch common stock in favor of the Merger and against any competing transactions; and (3) granted to Yahoo! an irrevocable proxy to vote their shares of Launch common stock in favor of the Merger and against any competing transactions. Yahoo! does not have any rights as a stockholder of Launch pursuant to the Stockholders Agreements.

(2)
Based on 13,531,058 shares outstanding as of June 21, 2001.
CUSIP No. 518567 10 2   Page 2 of 9


Item 1—Security and Issuer

    This statement on Schedule 13D (the "Schedule 13D") relates to the common stock, par value $0.001 per share (the "Shares" or the "Launch Common Stock"), of Launch Media, Inc. a Delaware corporation ("Launch"). The principal executive office of Launch is located at 2700 Pennsylvania Avenue, Santa Monica, California 90404.


Item 2—Identity and Background

 (a)-(c) This Schedule 13D is filed by Yahoo! Inc., a Delaware corporation ("Yahoo!"). The address of the principal business and principal office of Yahoo! is 701 First Avenue, Sunnyvale, California 94089. Yahoo! is a global Internet communications, commerce and media company that offers a comprehensive branded network of services.

    As a result of entering into the Stockholders Agreements described in Items 3 and 4 below, Yahoo! may be deemed to have formed a "group" with each of the Stockholders (as defined in Item 3 below) for purposes of Section13(d)(3) of the Act and Rule 13d-5(b)(1) thereunder. Yahoo! expressly declares that the filing of this Schedule 13D shall not be construed as an admission by it that it has formed any such group.

    To the best of Yahoo!'s knowledge as of the date hereof, the name, business address, present principal occupation or employment and citizenship of each executive officer and director of Yahoo!, and the name, principal business and address of any corporation or other organization in which such employment is conducted is set forth in Schedule I hereto. The information contained in Schedule I is incorporated herein by reference.

 (d)-(e) During the last five years, neither Yahoo! nor, to the best knowledge of Yahoo!, any of the executive officers or directors of Yahoo!, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws.


Item 3—Source and Amount of Funds or Other Consideration

    The total amount of funds required by Purchaser to purchase all of the Shares pursuant to the Offer (as defined below) and the Merger (as defined below) is estimated to be approximately $12 million, plus any related transaction fees and expenses, including but not limited to, the fees due and payable to Credit Suisse First Boston Corporation, Launch's financial advisor. The Purchaser will acquire all such funds from Yahoo! out of Yahoo!'s working capital.


Item 4—Purpose of Transaction

    On June 27, 2001, Yahoo!, Purchaser and Launch entered into an Agreement and Plan of Merger (the "Merger Agreement"). The following is a summary of the Merger Agreement. This summary is not a complete description of the Merger Agreement and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 1 hereto and which is specifically incorporated herein by reference.

    The Merger Agreement provides for the commencement, as promptly as practicable, but in no event later than 10 business days after the execution of the Merger Agreement, by Purchaser of a cash tender offer (the "Offer") to purchase all of the Shares for $0.92 per Share (the "Offer Price"), net to the seller in cash, upon the terms and subject to the conditions set forth in the Merger Agreement. The purpose of the Offer is for Purchaser to acquire control of, and the entire equity interest in, Launch.

CUSIP No. 518567 10 2   Page 3 of 9

    Provided sufficient Shares are acquired by Purchaser, and subject to the terms and conditions set forth in the Merger Agreement, Purchaser will be merged with and into Launch (the "Merger"), with Launch continuing as the surviving corporation (the "Surviving Corporation") as a wholly owned subsidiary of Yahoo!. In the event Purchaser acquires at least 90% of the Shares, Purchaser will commence a short-form merger pursuant to Section 253 of the General Corporation Law of the State of Delaware in order to effect the Merger (a "Short-Form Merger"). To facilitate a Short-Form Merger, Launch has granted to Yahoo! and Purchaser an irrevocable option, exercisable if Yahoo! and Purchaser accept for payment pursuant to the Offer at least 75% but less than 90% of the Shares then outstanding, to purchase additional shares of Common Stock from Launch, at a price per share equal to the Offer Price, in order to exceed the 90% threshold by one Share. If Purchaser is unable to acquire 90% of the Shares, but acquires at least a majority of the outstanding Shares on a fully diluted basis in the Offer and the Merger Agreement has not been terminated in accordance with its terms, Launch will hold a stockholders meeting in order to obtain the approval necessary to effect the Merger. At any such stockholders meeting, all of the Shares then owned by Yahoo! and Purchaser and any of their subsidiaries and affiliates will be voted to approve the Merger. The purpose of the Merger is for Yahoo! to acquire all Shares not purchased pursuant to the Offer.

    Pursuant to the terms of the Merger Agreement, following the consummation of the Offer, and from time to time thereafter as Shares are acquired by Purchaser, Yahoo! or their affiliates, Yahoo! shall be entitled to designate such number of directors, rounded up to the next whole number, on the board of directors of Launch (the "Launch Board") as will give Purchaser, subject to compliance with Section 14(f) of the Exchange Act, representation on the Launch Board equal to that number of directors which equals the product of the total number of directors on the Launch Board (giving effect to the election or appointment of any additional directors pursuant to this paragraph and including current directors serving as officers of Launch) multiplied by the percentage that the aggregate number of Shares beneficially owned by Yahoo!, Purchaser or any of their affiliates (including 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) bears to the total number of Shares then issued and outstanding. Launch has agreed, upon request by Yahoo! to use its reasonable efforts to promptly increase the size of the Launch Board as is necessary to enable Yahoo!'s designees to be elected to the Launch Board and to cause Yahoo!'s designees to be so elected or designated. Also, under the Merger Agreement, the directors of Purchaser shall become the directors of the Surviving Corporation at the effective time of the Merger.

    In contemplation of entering into the Merger Agreement, and in order to increase the likelihood that greater than 50% of the Shares will be tendered in the Offer and the transactions contemplated by the Merger Agreement consummated, Yahoo! and Purchaser entered into Stockholders Agreements, each dated June 27, 2001 (the "Stockholders Agreements"), with certain current and former officers and directors of Launch and with certain major stockholders of Launch (each, a "Significant Holder"). The following summarizes the Stockholders Agreements. This summary is not a complete description of the Stockholders Agreements and is qualified in its entirety by reference to the Stockholders Agreements, which are filed as Exhibits 2 and 3 hereto and which are specifically incorporated herein by reference.

    Pursuant to the Stockholders Agreements, each Significant Holder has agreed to tender in the Offer all Shares owned beneficially and of record by him, her or it. Each Significant Holder has also agreed, among other things, to vote his or her Shares in favor of the Merger and the Merger Agreement and against any alternative takeover proposal. Each Significant Holder has also granted to Yahoo! or any of their nominees, an irrevocable proxy to vote such Significant Holder's Shares in respect of any matter related to the approval and adoption of the Merger and the Merger Agreement at every meeting of the stockholders of Launch, however called (the "Proxy").

CUSIP No. 518567 10 2   Page 4 of 9

    The Significant Holders have also each granted to Yahoo! an irrevocable option (the "Launch Securities Option") to purchase their Shares at a price per Share equal to the Offer Price or any higher price paid or to be paid by Yahoo! or Purchaser pursuant to the Offer or the Merger. Pursuant to the Launch Securities Option set forth in the Stockholders Agreement executed by the officers and directors of Launch, certain related entities of such officers and directors and certain other stockholders of Launch (but not including The Phoenix Partners III Liquidating Trust, The Phoenix Partners IV Limited Partnership and the Phoenix Partners IIIB Limited Partnership) a copy of which is attached hereto as Exhibit 2, such option becomes exercisable, in whole but not in part, for all Shares subject thereto (i) if such Shares were not tendered in the Offer pursuant to the terms of the Stockholders Agreement or (ii) in certain circumstances upon the termination of the Merger Agreement. Pursuant to the Launch Securities Option set forth in the Stockholders Agreement executed by The Phoenix Partners III Liquidating Trust, The Phoenix Partners IV Limited Partnership and The Phoenix Partners IIIB Limited Partnership, a copy of which is attached hereto as Exhibit 3, such option becomes exercisable, in whole but not in part, for all shares subject thereto if such shares were not tendered in the offer pursuant to the terms of the Stockholders Agreement.

    Identified below are the names of each Significant Holder, the number of Shares owned by each such Significant Holder in which the Purchaser Entities may be deemed to have beneficial ownership because of the Proxy and the form of Stockholders Agreement executed by each such Significant Holder:

Name/Entity
   Total Shares of Common Stock
David B. Goldberg(1)   1,000
Robert D. Roback(1)   224,488
Warren Littlefield(1)   20,000
Thomas Hoegh(1)   2,745
Richard Snyder(1)   2,740
James Koshland(1)   1,000
Avalon Technology LLC(1)   645,436
Goran Enterprises Limited(1)   623,561
Digital Ventures Holdings Limited(1)   410,586
Jeff Mickeal(1)   58,770
Spencer McClung(1)   32,289
Softbank Capital Partners LP(1)   146,131
Softbank Capital Advisors Fund LP(1)   4,204
Softbank Capital LP(1)   143,619
The Phoenix Partners III Liquidating Trust(2)   627,957
The Phoenix Partners IV Limited Partnership(2)   211,019
The Phoenix Partners IIIB Limited Partnership(2)   502,367
(1)
Executed the Stockholders Agreement attached hereto as Exhibit 2.

(2)
Executed the Stockholders Agreement attached hereto as Exhibit 3.

    Following the Merger, Yahoo! currently intends to operate Launch as a wholly owned subsidiary of Yahoo!. Yahoo! has begun, and intends to continue, a review of Launch and its assets, corporate structure, capitalization, operations, properties, policies, geographic locations, management and personnel to determine what changes would be desirable in order best to organize and integrate the activities of Launch with Yahoo! and its affiliates. Yahoo! expressly reserves the right to make any changes that it deems necessary, appropriate or desirable in light of its review or in light of future developments.

CUSIP No. 518567 10 2   Page 5 of 9

    Following the purchase of Shares in the Offer, Yahoo! and Purchaser expect to consummate the Merger. If the Merger takes place, Launch will no longer be publicly owned. Even if for some reason the Merger does not take place, if Purchaser purchases all of the tendered Shares, there may be so few remaining stockholders and publicly held shares that (i) the Shares may no longer be eligible to be quoted and traded on the Nasdaq Stock Market ("Nasdaq") or any other securities market or exchange, (ii) there may not be any public trading market for the Shares, and (iii) Launch may cease making filings with the Securities and Exchange Commission (the "SEC") or otherwise cease being required to comply with the SEC rules relating to publicly held companies. Launch has received a letter dated June 4, 2001 from Nasdaq notifying the Company of its failure to meet the minimum $1.00 per share trading bid price requirement for continued listing on Nasdaq's National Market System and providing that the Company has until September 3, 2001 to regain compliance. In any event, Yahoo! and Purchaser intend to cause Launch to seek delisting of the Shares from Nasdaq and to cause Launch to apply for termination of registration of the Shares under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as soon after the completion of the Offer as allowed. If registration of the Shares is not terminated prior to the Merger, then the Shares will cease to be quoted on Nasdaq and the registration under the Exchange Act will be terminated following completion of the Merger.

    Reference to and descriptions or, the Merger Agreement and the Stockholders Agreements set forth above in this Item 4, are qualified in their entirety by reference to the copies of the Merger Agreement and the Stockholders Agreements included as Exhibits 1, 2, and 3, respectively, to this Schedule 13D, and are incorporated in this Item 4 in their entirety where such references and descriptions appear.


Item 5—Interest in Securities of the Issuer

    (a) and (b) Pursuant to the Proxy contained in the Stockholders Agreements described in Item 4, Yahoo! possesses shared power to direct certain votes of 3,657,912 Shares held by the Significant Holders, and Yahoo! thus may be deemed to beneficially own such Shares, which constitute approximately 27% of the issued and outstanding Shares as of June 21, 2001. Yahoo! does not currently hold any outstanding Shares. Neither Yahoo! nor to the knowledge of Yahoo! any executive officer or director of Yahoo! is the "beneficial owner" of any Shares, as such term is defined in Rule 13d-3 under the Exchange Act.

    (c) Neither Yahoo! nor, to the knowledge of Yahoo! any executive officer or director of Yahoo! has engaged in any transaction in any Shares during the sixty day period immediately preceding the date hereof.

    (d) and (e) Not applicable.

    Reference to, and descriptions of, the Merger Agreement and the Stockholders Agreements set forth above in this Item 5, are qualified in their entirety by reference to the copies of the Merger Agreement and the Stockholders Agreements included as Exhibits 1, 2, and 3, respectively, to this Schedule 13D, and are incorporated in this Item 5 in their entirety where such references and descriptions appear.

CUSIP No. 518567 10 2   Page 6 of 9


Item 6—Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

    The information set forth, or incorporated by reference, in Items 3 through 5 is hereby incorporated herein by reference. Copies of the Merger Agreement and the Stockholders Agreements are included as Exhibits 1, 2 and 3, respectively, to this Schedule 13D. To the best of Yahoo!'s knowledge, except as described in this Schedule 13D, there are at present no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 above and between any such persons and any person with respect to any securities of Launch.


Item 7—Material to be Filed as Exhibits

Exhibit
   Description
1   Agreement and Plan of Merger dated as of June 27, 2001, by and among Yahoo! Inc., Jewel Acquisition Corporation and Launch Media, Inc.

2
 
Stockholders Agreement dated as of June 27, 2001, by and among Yahoo! Inc. and certain officers and directors of Launch, certain related or affiliated entities of such officers and directors and certain other stockholders of Launch (but not including The Phoenix Partners III Liquidating Trust, The Phoenix Partners IV Limited Partnership and The Phoenix Partners IIIB Limited Partnership).

3
 
Stockholders Agreement dated as of June 27, 2001, by and among Yahoo! Inc. and The Phoenix Partners III Liquidating Trust, The Phoenix Partners IV Limited Partnership and The Phoenix Partners IIIB Limited Partnership.
CUSIP No. 518567 10 2   Page 7 of 9

Signature

    After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.


Date: July 9, 2001
 
 
 
/s/ SUSAN L. DECKER   
Susan L. Decker
 Senior Vice President, Finance and Administration and Chief Financial Officer
CUSIP No. 518567 10 2   Page 8 of 9


SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF YAHOO! INC.

    The following table sets forth the name, business address and present principal occupation or employment of each director and executive officer of Yahoo!. Except as indicated below, each such person is a U.S. citizen, and the business address of each such person is 701 First Avenue, Sunnyvale, California 94089.

Name and Title
   Present Principal Occupation
Terry Semel, Chairman, Chief Executive Officer and Director   Chief Executive Officer of Yahoo! Inc.
Timothy Koogle, Vice Chairman and Director   Advisor to Yahoo! Inc.
Jeffrey Mallett, President, Chief Operating Officer and Director   President and Chief Operating Officer of Yahoo! Inc.
Jerry Yang, Co-Founder, Chief Yahoo! and Director   Co-Founder and Chief Yahoo! of Yahoo! Inc.
Gregory Coleman, Executive Vice President, North American Operations   Executive Vice President, North American Operations of Yahoo! Inc.
Susan L. Decker, Senior Vice President, Finance and Administration and Chief Financial Officer   Senior Vice President, Finance and Administration and Chief Financial Officer or Yahoo! Inc.
David Filo, Co-Founder and Chief Yahoo!   Co-Founder and Chief Yahoo! of Yahoo! Inc.
David Graves, Senior Vice President, Media   Senior Vice President, Media of Yahoo! Inc.
Farzad Nazem, Senior Vice President Communications and Technical Services and Chief Technical Officer   Senior Vice President Communications and Technical Services and Chief Technical Officer of Yahoo! Inc.
Ellen Siminoff, Senior Vice President, Entertainment and Small Business   Senior Vice President, Entertainment and Small Business of Yahoo! Inc.
Tim Brady, Senior Vice President, Commerce and Network Services   Senior Vice President, Commerce and Network Services of Yahoo! Inc.
Arthur Kern, Director
 C/o Yahoo! Inc.
 701 First Avenue
 Sunnyvale, California 94089		   Founder and Chairman of American Media
Michael Moritz, Director
 C/o Sequoia Capital
 3000 Sand Hill Road
 Suite 280, Building 4
 Menlo Park, California 94025		   General Partner of Sequoia Capital
Edward Kozel, Director
 C/o Yahoo! Inc.
 701 First Avenue
 Sunnyvale, California 94089		   Managing Partner of Open Range Ventures
Eric Hippeau, Director(1)
 C/o Softbank, Inc.
 28 East 28th Street
 New York, New York 10016		   President and Executive Managing Director of SOFTBANK International Ventures
(1)
Certain Softbank entities hold shares of Launch common stock as follows: 146,131 shares are held by Softbank Capital Partners LP, 4,204 shares are held by Softbank Capital Advisors Fund LP and 143,619 shares are held by Softbank Capital LP. Mr. Hippeau disclaims beneficial ownership of shares held by such Softbank entities, except to the extent of his proportionate interest therein.
CUSIP No. 518567 10 2   Page 9 of 9


EXHIBIT INDEX

Exhibit
   Description
1   Agreement and Plan of Merger dated as of June 27, 2001, by and among Yahoo! Inc., Jewel Acquisition Corporation and Launch Media, Inc.

2
 
Stockholders Agreement dated as of June 27, 2001, by and among Yahoo! Inc. and certain officers and directors of Launch, certain related or affiliated entities of such officers and directors and certain other stockholders of Launch (but not including The Phoenix Partners III Liquidating Trust, The Phoenix Partners IV Limited Partnership and The Phoenix Partners IIIB Limited Partnership).

3
 
Stockholders Agreement dated as of June 27, 2001, by and among Yahoo! Inc. and The Phoenix Partners III Liquidating Trust, The Phoenix Partners IV Limited Partnership and The Phoenix Partners IIIB Limited Partnership.


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SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF YAHOO! INC.
EXHIBIT INDEX
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AGREEMENT AND PLAN OF MERGER

BY AND AMONG

YAHOO! INC.

JEWEL ACQUISITION CORPORATION

AND

LAUNCH MEDIA, INC.

Dated as of June 27, 2001


TABLE OF CONTENTS

 
    
   Page
ARTICLE I THE MERGER   2
 
1.1
 
The Offer
 
2
  1.2   Rocket Actions   3
  1.3   Directors   4
  1.4   The Merger   5
  1.5   Effective Time   6
  1.6   Closing   6
  1.7   Directors and Officers of the Surviving Corporation   6
  1.8   Subsequent Actions   6
  1.9   Stockholders' Meeting   6
  1.10   Merger Without Meeting of Stockholders   7

ARTICLE II CONVERSION OF SECURITIES
 
7
 
2.1
 
Conversion of Capital Stock
 
7
  2.2   Exchange of Certificates   7
  2.3   Dissenting Shares   9
  2.4   Rocket Option Plans; Employee Stock Purchase Plan; Warrants   9
  2.5   Withholding   10

ARTICLE III REPRESENTATIONS AND WARRANTIES OF ROCKET
 
10
 
3.1
 
Organization of Rocket
 
10
  3.2   Rocket Capital Structure   11
  3.3   Obligations With Respect to Capital Stock   12
  3.4   Authority   12
  3.5   SEC Filings; Rocket Financial Statements   13
  3.6   Absence of Certain Changes or Events   14
  3.7   Taxes   15
  3.8   Title to Properties; Absence of Liens and Encumbrances   16
  3.9   Intellectual Property   17
  3.10   Compliance; Permits; Restrictions   19
  3.11   Litigation   19
  3.12   Employee Benefit Plans   20
  3.13   Environmental Matters   23
  3.14   Agreements, Contracts and Commitments   24
  3.15   Information in the Proxy Statement   25
  3.16   Information in the Offer Documents and the Schedule 14D-9   25
  3.17   Section 203 Not Applicable   25
  3.18   Board Approval   25
  3.19   Brokers' and Finders' Fees   25
  3.20   Opinion of Financial Advisor   25

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF YAHOO! AND PURCHASER
 
26
 
4.1
 
Organization of Yahoo! and Purchaser
 
26
  4.2   Authority   26
  4.3   Information in the Proxy Statement   27
  4.4   Information in the Offer Documents   27
  4.5   Financing   27

i

  4.6   Stock Ownership   27

ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME
 
27
 
5.1
 
Conduct of Business by Rocket
 
27
  5.2   No Solicitation   29

ARTICLE VI ADDITIONAL AGREEMENTS
 
31
 
6.1
 
Proxy Statement
 
31
  6.2   Meeting of Stockholders of the Rocket   31
  6.3   Additional Agreements   32
  6.4   Confidentiality: Access to Information   32
  6.5   Public Disclosure   32
  6.6   Reasonable Efforts; Notification   32
  6.7   Third Party Consents   33
  6.8   Certain Employee Benefit Matters   33
  6.9   Indemnification   34
  6.10   Interim Directors   35
  6.11   Option to Acquire Additional Shares   35

ARTICLE VI CONDITIONS
 
35
 
7.1
 
Conditions to Obligations of Each Party to Effect the Merger
 
35

ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
 
36
 
8.1
 
Termination
 
36
  8.2   Effect of Termination   37
  8.3   Fees and Expenses   37
  8.4   Amendment   37
  8.5   Extension; Waiver   37

ARTICLE IX GENERAL PROVISIONS
 
38
 
9.1
 
Non-Survival of Representations and Warranties
 
38
  9.2   Notices   38
  9.3   Interpretation; Certain Defined Terms   39
  9.4   Counterparts   39
  9.5   Entire Agreement; Third Party Beneficiaries   39
  9.6   Severability   39
  9.7   Other Remedies; Specific Performance   39
  9.8   Governing Law   40
  9.9   Rules of Construction   40
  9.10   Assignment   40
  9.11   No Waiver; Remedies Cumulative   40
  9.12   Waiver of Jury Trial   40


INDEX OF EXHIBITS

Exhibit A   Form of Stockholders Agreement
Exhibit B   Form of Noncompetition Agreement

ii


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.

    NOW, THEREFORE, in consideration of the foregoing and the respective covenants, agreements, representations and warranties set forth herein, the parties agree as follows:

1


ARTICLE I

THE MERGER

    1.1  The Offer.  

2

    1.2  Launch Actions.  

3

    1.3  Directors.  

4

    1.4  The Merger.  

5

    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, 2800 Sand Hill Road, Menlo Park, California 94025, unless another date or place is agreed to in writing by the parties hereto.

    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.  

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    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"):

    2.2  Exchange of Certificates.  

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    2.3  Dissenting Shares.  

    2.4  Launch Option Plans; Employee Stock Purchase Plan; Warrants.  

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    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.


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.  

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    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

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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 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.  

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    3.5  SEC Filings; Launch Financial Statements.  

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    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 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

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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.  

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    3.8  Title to Properties; Absence of Liens and Encumbrances.  

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    3.9  Intellectual Property.  For the purposes of this Agreement, the following terms have the following definitions:

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    3.10  Compliance with Laws; Permits; Restrictions.  

    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.

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    3.12  Employee Benefit Plans.  

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    3.13  Environmental Matters.  

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    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:

    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.

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    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 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.

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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.  

    4.2  Authority.  

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    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.  uring 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 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

27

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):

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    5.2  No Solicitation.  

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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

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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.

    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.  

    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.  

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    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.  

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    6.9  Indemnification.  

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    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.  


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:

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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:

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    8.2  Effect of Termination.  

    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.

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ARTICLE IX

GENERAL PROVISIONS

    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.
701 First Avenue
Sunnyvale, California 94089
Attention: Vice President, Corporate Development
Telephone No.: (408) 349-3300
Telecopy No.: (408) 349-3301

 
 
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
2800 Sand Hill Road
Menlo Park, California
94025 Attention: Steven J. Tonsfeldt
Telephone No.: (650) 854-4488
Telecopy No.: (650) 233-8386

(b)
 
if to Launch:

 
 
Launch Media, Inc.
2700 Pennsylvania Avenue
Santa Monica, California 90404
Attention: Chief Executive Officer
Telephone No.: (310) 526-4300
Telecopy No.: (310) 526-4401

 
 
with a copy to:
Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, CA 94301
Attention: James M. Koshland
Telephone No.: (650) 833-2000
Telecopy No.: (650) 327-3699

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    9.3  Interpretation; Certain Defined Terms.  

    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 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

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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.

    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.

* * * * *

40

    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/ JEFFREY MALLETT   
Name: Jeffrey Mallett
Title: President & COO

 
 
JEWEL ACQUISITION CORPORATION

 
 
By:
 
/s/ JEFFREY MALLETT   
Name: Jeffrey Mallett
Title: President

 
 
LAUNCH MEDIA, INC.

 
 
By:
 
/s/ ROBERT D. ROBACK   
Name: Robert D. Roback
Title: President


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:

41

    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.

42



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TABLE OF CONTENTS
INDEX OF EXHIBITS
AGREEMENT AND PLAN OF MERGER
RECITALS
ARTICLE I THE MERGER
ARTICLE II CONVERSION OF SECURITIES
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ROCKET
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF YAHOO! AND PURCHASER
ARTICLE V CONDUCT PRIOR TO THE EFFECTIVE TIME
ARTICLE VI ADDITIONAL AGREEMENTS
ARTICLE VII CONDITIONS
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
ARTICLE IX GENERAL PROVISIONS
ANNEX I
Prepared by MERRILL CORPORATION
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STOCKHOLDERS AGREEMENT

    THIS STOCKHOLDERS AGREEMENT (this "Agreement"), is entered into as of June 27, 2001, by and among Yahoo! Inc., a Delaware corporation ("Parent"), Jewel Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and certain stockholders of Launch Media, Inc., a Delaware corporation ("Launch") set forth on Schedule 1 hereto (each a "Stockholder" and collectively, the "Stockholders").

    A. Each Stockholder is, as of the date hereof, the record and beneficial owner of the number of shares of common stock, par value $0.001 (the "Launch Common Stock"), of Launch, set forth opposite the name of such Stockholder on Schedule 1 hereto;

    B. Parent, Purchaser and Launch have entered into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which provides, among other things, for Purchaser to conduct a tender offer for all of the issued and outstanding shares of the Launch Common Stock (the "Offer") and the merger of Purchaser with and into Launch with Launch continuing as the surviving corporation (the "Merger") upon the terms and subject to the conditions set forth in the Merger Agreement (capitalized terms used herein without definition shall have the respective meanings specified in the Merger Agreement); and

    C. As a condition to the willingness of Parent and Purchaser to enter into the Merger Agreement and as an inducement and in consideration therefor, the Stockholders have agreed to enter into this Agreement.

    NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein and in the Merger Agreement, and intending to be legally bound hereby, the parties hereto agree as follows:

    Section 1.  Representations and Warranties of the Stockholders.  Each Stockholder hereby represents and warrants to Parent and Purchaser, severally and not jointly, as follows:

1

    Section 2.  Representations and Warranties of Parent and Purchaser.  Each of Parent and Purchaser hereby, jointly and severally, represents and warrants to the Stockholders as follows:

    Section 3.  Tender of the Shares.  Each Stockholder hereby agrees that (a) he or it shall tender his or its Shares into the Offer as promptly as practicable, and in any event no later than the fifth business day, following the commencement of the Offer pursuant to Section 1.1 of the Merger Agreement, and (b) he or it shall not withdraw any Shares so tendered unless the Offer is terminated or has expired without Purchaser purchasing all shares of Launch Common Stock validly tendered in the Offer.

    Section 4.  Transfer of the Shares.  

2

    Section 5.  Voting Arrangements.  

3

    Section 6.  Option.  

4

    Section 7.  Certain Events.  

5

    Section 8.  Acquisition Proposals; Non-Solicitation.  

    Section 9.  Further Assurances.  Each Stockholder shall, upon request of Parent or Purchaser, execute and deliver any additional documents and take such further actions as may reasonably be

6

deemed by Parent or Purchaser to be necessary or desirable to carry out the provisions hereof and to vest in Parent the power to vote the Shares as contemplated by Section 5.

    Section 10.  Termination.  This Agreement, and all rights and obligations of the parties hereunder, shall terminate immediately upon the earlier of (a) (i) sixty (60) days following a Section 8.1(e) Termination, a Section 8.1(f) Termination or a Qualifying Section 8.1(c) Termination or (ii) contemporaneously with any termination of the Merger Agreement in accordance with its terms that is not a Section 8.1(e) Termination, a Section 8.1(f) Termination or a Qualifying Section 8.1(c) Termination, whichever of clauses (i) and (ii) as shall be applicable or (b) the Effective Time; provided, however, that in the event that, prior to the termination of this Agreement pursuant to the terms hereof, Parent has delivered a Notice to any Stockholder pursuant to Section 6(b)(ii), this Agreement shall not terminate until ten business days following the Closing Date specified in such Notice, as such Closing Date may be extended pursuant to Section 6(b)(ii); provided further, however, that Sections 9 and 11 shall survive any termination of this Agreement. In the event that Purchaser shall accept and pay for Shares in the Offer without a Stockholder tendering such Stockholder's Shares in accordance with Section 3 hereof, then the Option shall remain exercisable for a period of sixty (60) days following such acceptance for payment, irrespective of any other term of this Agreement.

    Section 11.  Expenses.  All fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs and expenses.

    Section 12.  Public Announcements.  Each of the Stockholders, the Parent and Purchaser agrees that it will not issue any press release or otherwise make any public statement with respect to this Agreement or the transactions contemplated hereby without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed; provided, however, that such disclosure may be made without obtaining such prior consent (a) if (i) the disclosure is required by law or is required by any regulatory authority, including but not limited to the Nasdaq National Stock Market and any other national securities exchange, trading market or inter-dealer quotation system on which the Shares trade and (ii) the party making such disclosure has first used its best efforts to consult with the other parties about the form and substance of such disclosure, or (b) by Parent and Purchaser in accordance with Section 6.7 of the Merger Agreement.

    Section 13.  Miscellaneous.  

7

    If to any of the Stockholders, at the address set forth opposite the name of such Stockholder on Schedule 1 hereto:

    with a copy to:

 
 
and

 
 
If to Parent or Purchaser, to:

 
 
Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089
Attention: Vice President, Corporate Development
Telephone No.: 408-349-3795

 
 
with a copy to:

 
 
Venture Law Group
2800 Sand Hill Road
Menlo park, California 94025
Attention: Steven J. Tonsfeldt
Telephone No: 650-254-4488

8

9

    IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused this Agreement to be duly executed and delivered as of the date first written above.

    YAHOO! INC.

 
 
By:
 
/s/ JEFFREY MALLETT   
    Name: Jeffrey Mallett
Title: President

 
 
JEWEL ACQUISITION CORPORATION

 
 
By:
 
/s/ JEFFREY MALLETT   
    Name: Jeffrey Mallett
Title: President

 
 
STOCKHOLDER

 
 
By:
 
/s/ DAVID B. GOLDBERG   
    Name: David B. Goldberg
Title: CEO

 
 
STOCKHOLDER

 
 
By:
 
/s/ ROBERT D. ROBACK   
    Name: Robert D. Roback
Title:

 
 
STOCKHOLDER

 
 
By:
 
/s/ JEFFREY M. MICKEAL   
    Name: Jeffrey M. Mckeal
Title: Chief Financial Officer

 
 
STOCKHOLDER

 
 
By:
 
/s/ SPENCER A. MCCLUNG, JR.   
    Name: Spencer A. McClung, Jr.
Title: EVP, Advertising & Business Dev.

 
 
STOCKHOLDER

 
 
By:
 
/s/ THOMAS HOEGH   
    Name: Thomas Hoegh
Title: Managing Director

 
 
STOCKHOLDER

 
 
By:
 
/s/ RICHARD A. SNYDER   
    Name: Richard A. Snyder
Title:

 
 
STOCKHOLDER

 
 
By:
 
/s/ WARREN LITTLEFIELD   
    Name: Warren Littlefield
Title: Director

 
 
STOCKHOLDER

 
 
By:
 
/s/ JAMES M. KOSHLAND   
    Name: James M. Koshland
Title:

 
 
STOCKHOLDER
Avalon Technology, LLC
By: Avalon Ventures, LLC, its managing member

 
 
By:
 
/s/ CHRISTOPHER L. RIZIK   
    Name: Christopher L. Rizik
Title: Member

 
 
STOCKHOLDER
Goron Enterprises Limited

 
 
By:
 
/s/ J.M. ROUGET   
    Name: J.M. Rouget
Title: Director

 
 
STOCKHOLDER
DIGITAL VENTURES HOLDINGS LIMITED

 
 
By:
 
/s/ J.M. ROUGET   
    Name: J.M. Rouget
Title: Director

 
 
STOCKHOLDER
SOFTBANK CAPITAL PARTNERS LP
SOFTBANK CAPITAL ADVISORS FUND LP SOFTBANK CAPITAL LP

 
 
By:
 
/s/ STEVEN J. MURRAY   
    Name: Steven J. Murray
Title: Admin. Member of SOFTBANK CAPITAL
          PARTNERS LLC (General Partner
          of all of the above entities)


Schedule 1

David B. Goldberg
Robert D. Roback
Jeffrey M. Mickeal
Spencer A. McClung, Jr.
Thomas Hoegh
Richard A. Snyder
Warren Littlefield
James M. Koshland
Avalon Technology, LLC
Goron Enterprises Limited
Digital Ventures Holdings Limited
Softbank Capital Partners LP
Softbank Capital Advisors Fund LP
Softbank Capital LP



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STOCKHOLDERS AGREEMENT
Schedule 1
Prepared by MERRILL CORPORATION
QuickLinks -- Click here to rapidly navigate through this document


STOCKHOLDERS AGREEMENT

    THIS STOCKHOLDERS AGREEMENT (this "Agreement"), is entered into as of June 27, 2001, by and among Yahoo! Inc., a Delaware corporation ("Parent"), Jewel Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and certain stockholders of Launch Media, Inc., a Delaware corporation ("Launch") set forth on Schedule 1 hereto (each a "Stockholder" and collectively, the "Stockholders").

    A. Each Stockholder is, as of the date hereof, the record and beneficial owner of the number of shares of common stock, par value $0.001 (the "Launch Common Stock"), of Launch, set forth opposite the name of such Stockholder on Schedule 1 hereto;

    B. Parent, Purchaser and Launch have entered into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which provides, among other things, for Purchaser to conduct a tender offer for all of the issued and outstanding shares of the Launch Common Stock (the "Offer") and the merger of Purchaser with and into Launch with Launch continuing as the surviving corporation (the "Merger") upon the terms and subject to the conditions set forth in the Merger Agreement (capitalized terms used herein without definition shall have the respective meanings specified in the Merger Agreement); and

    C. As a condition to the willingness of Parent and Purchaser to enter into the Merger Agreement and as an inducement and in consideration therefor, the Stockholders have agreed to enter into this Agreement.

    NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set forth herein and in the Merger Agreement, and intending to be legally bound hereby, the parties hereto agree as follows:

    Section 1.  Representations and Warranties of the Stockholders.  Each Stockholder hereby represents and warrants to Parent and Purchaser, severally and not jointly, as follows:

1

    Section 2.  Representations and Warranties of Parent and Purchaser.  Each of Parent and Purchaser hereby, jointly and severally, represents and warrants to the Stockholders as follows:

    Section 3.  Tender of the Shares.  Each Stockholder hereby agrees that (a) he or it shall tender his or its Shares into the Offer as promptly as practicable, and in any event no later than the fifth business day, following the commencement of the Offer pursuant to Section 1.1 of the Merger Agreement, and (b) he or it shall not withdraw any Shares so tendered unless the Offer is terminated or has expired without Purchaser purchasing all shares of Launch Common Stock validly tendered in the Offer.

    Section 4.  Transfer of the Shares.  

2

    Section 5.  Voting Arrangements.  

3

    Section 6.  Option.  

4

    Section 7.  Certain Events.  

5

    Section 8.  Acquisition Proposals; Non-Solicitation.  

    Section 9.  Further Assurances.  Each Stockholder shall, upon request of Parent or Purchaser, execute and deliver any additional documents and take such further actions as may reasonably be deemed by Parent or Purchaser to be necessary or desirable to carry out the provisions hereof and to vest in Parent the power to vote the Shares as contemplated by Section 5.

    Section 10.  Termination.  This Agreement, and all rights and obligations of the parties hereunder, shall terminate immediately upon the earlier of (a) (i) sixty (60) days following a Section 8.1(e) Termination, a Section 8.1(f) Termination or a Qualifying Section 8.1(c) Termination or (ii) contemporaneously with any termination of the Merger Agreement in accordance with its terms that is not a Section 8.1(e) Termination, a Section 8.1(f) Termination or a Qualifying Section 8.1(c) Termination, whichever of clauses (i) and (ii) as shall be applicable or (b) the Effective Time; provided, however, that in the event that, prior to the termination of this Agreement pursuant to the terms hereof, Parent has delivered a Notice to any Stockholder pursuant to Section 6(b)(ii), this Agreement shall not terminate until ten business days following the Closing Date specified in such Notice, as such Closing Date may be extended pursuant to Section 6(b)(ii); provided further, however, that Sections 9 and 11 shall survive any termination of this Agreement. In the event that Purchaser shall accept and

6

pay for Shares in the Offer without a Stockholder tendering such Stockholder's Shares in accordance with Section 3 hereof, then the Option shall remain exercisable for a period of sixty (60) days following such acceptance for payment, irrespective of any other term of this Agreement. For the purposes of the foregoing: (i) a "Section 8.1(e) Termination" shall mean any termination of the Merger Agreement by Parent upon the occurrence of any of the events described in Section 8.1(e) of the Merger Agreement that would allow Parent to terminate the Merger Agreement (but without the necessity of Parent having terminated the Merger Agreement) shall have occurred; (ii) a "Section 8.1(f) Termination" shall mean any termination of the Merger Agreement by Launch pursuant to Section 8.1(f) thereof shall have occurred; and (iii) a "Qualifying Section 8.1(c) Termination" shall mean any termination of the Merger Agreement by Parent pursuant to Section 8.1(c) thereof shall have occurred (but only by reason of the failure of the Minimum Condition or the occurrence of any event set forth at paragraphs (d) or (f) of Annex I to the Merger Agreement) and following the date hereof and prior to such termination an Acquisition Proposal shall have been commenced, publicly proposed or communicated to Launch or its stockholders.

    Section 11.  Expenses.  All fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs and expenses.

    Section 12.  Public Announcements.  Each of the Stockholders, the Parent and Purchaser agrees that it will not issue any press release or otherwise make any public statement with respect to this Agreement or the transactions contemplated hereby without the prior consent of the other party, which consent shall not be unreasonably withheld or delayed; provided, however, that such disclosure may be made without obtaining such prior consent (a) if (i) the disclosure is required by law or is required by any regulatory authority, including but not limited to the Nasdaq National Stock Market and any other national securities exchange, trading market or inter-dealer quotation system on which the Shares trade and (ii) the party making such disclosure has first used its best efforts to consult with the other parties about the form and substance of such disclosure, or (b) by Parent and Purchaser in accordance with Section 6.7 of the Merger Agreement.

    Section 13.  Miscellaneous.  

7

    If to any of the Stockholders, at the address set forth opposite the name of such Stockholder on Schedule 1 hereto:

    with a copy to:

 
 
and

 
 
If to Parent or Purchaser, to:

 
 
Yahoo! Inc.
701 First Avenue
Sunnyvale, California 94089
Attention: Vice President, Corporate Development
Telephone No.: 408-349-3795

 
 
with a copy to:

 
 
Venture Law Group
2800 Sand Hill Road
Menlo park, California 94025
Attention: Steven J. Tonsfeldt
Telephone No: 650-254-4488

8

9

    IN WITNESS WHEREOF, Parent, Purchaser and the Stockholders have caused this Agreement to be duly executed and delivered as of the date first written above.

    YAHOO! INC.

 
 
By:
 
/s/ JEFFREY MALLETT   
    Name: Jeffrey Mallett
Title: President & COO

 
 
JEWEL ACQUISITION CORPORATION

 
 
By:
 
/s/ JEFFREY MALLETT   
    Name: Jeffrey Mallett
Title: President

 
 
STOCKHOLDER
THE PHOENIX PARTNERS IV
LIMITED PARTNERSHIP

 
 
By:
 
Phoenix Management IV, LLC
its General Partner

 
 
By:
 
/s/ DAVID B. JOHNSTON   
    Name: David B. Johnston
Title: Member
Common Stock: 211,019 share

 
 
STOCKHOLDER
THE PHOENIX PARTNERS III
LIQUIDATING TRUST

 
 
By:
 
/s/ DAVID B. JOHNSTON   
    Name: David B. Johnston
Title: Trustee
Common Stock: 627,957 shares

10


 
 
STOCKHOLDER
THE PHOENIX PARTNERS IIIB
LIMITED PARTNERSHIP

 
 
By:
 
The Phoenix Management Partners III, LP its General Partner

 
 
By:
 
/s/ DAVID B. JOHNSTON   
    Name: David B. Johnston
Title: General Partner
Common Stock: 502,367 shares

11


Schedule 1

    The Phoenix Partners IIIB Partnership

    The Phoenix Partners III Liquidating Trust

    The Phoenix Partners IV Limited Partnership

12



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STOCKHOLDERS AGREEMENT
Schedule 1