SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 25, 1995
Rentrak Corporation
(Exact Name of Registrant as Specified in its Charter)
Oregon 0-15159 93-0780536
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
7227 N.E. 55th Avenue,
Portland, Oregon 97218
(Address of Principal Executive (Zip Code)
Offices)
(503) 284-7581
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Index to Exhibits appears at page 5.
Item 5. Other Events
The Asset Purchase Agreement. On August 25, 1995, Rentrak Corporation (the
"Company"), Supercenter Entertainment Corporation ("SCE") and Jack Silverman
(the "Shareholder") entered into an Asset Purchase Agreement (the "Agreement")
pursuant to which the Company has agreed to acquire certain assets of SCE
which constitute SCE's retail video business. Jack Silverman is the principal
shareholder of SCE. The transaction is expected to close on or before
September 15, 1995, and is subject to customary consents and conditions. A
copy of the Agreement is filed herewith as Exhibit 1 and is incorporated
herein by reference.
The Supercenter Video Retail Business. SCE's retail video business
operates 45 video rental and sale stores inside Wal-Mart stores and 25 video
rental and sale stores inside Kmart stores. Annual revenues of the business
are approximately $10 million. As a result of its rapid expansion during the
past year, the supercenter operations have been unprofitable to date.
Entertainment One, which is 57% owned by the Company, currently
operates 51 video rental and sale stores inside Wal-Mart SuperCenters. After
the acquisition, the Company and Entertainment One will be the sole video
rental vendor in Wal-Mart stores with 96 stores, and the largest video rental
vendor in Kmart stores. The Company has announced that it is committed to
further the expansion of the "store within a store" concept, and has committed
to Wal-Mart to open an additional 33 stores in 1995.
Consideration. As consideration for the acquisition, the Company has
agreed to issue SCE 878,000 shares of Common Stock of the Company (the
"Purchase Shares").
Registration Rights. The Company has agreed to file on or before
December 31, 1995 a registration statement covering the Purchase Shares, and
to use its best efforts to keep such registration statement effective for at
least two years from the effective date of the registration statement. The
Company will pay all expenses in connection with such registration statements,
other than certain underwriting discounts and commissions and fees of counsel
for the Shareholder and SCE.
Conditions. Consummation of the transactions contemplated by the
Agreement is subject to the satisfaction or waiver or certain conditions,
including the accuracy of representations and warranties, compliance with
certain agreements, obtaining applicable consents, absence of governmental
orders and actions seeking to prohibit the transactions, delivery of related
agreements and absence of material adverse change.
Indemnification. The Agreement contains certain representations and
warranties of, and certain covenants by, the Shareholder and SCE, and certain
representations and warranties of, and certain covenants by, the Company.
Pursuant to the Agreement, the representations and warranties of the
Shareholder, SCE and the Company generally will survive the Closing through
December 31, 1995. Pursuant to the Agreement, the Shareholder and SCE have
agreed to indemnify the Company, and the Company has agreed to indemnify the
Shareholder and SCE, for damages arising out of or resulting from, among other
things, misrepresentations or breaches of warranty contained in the Agreement,
breaches of covenants contained in the Agreement, or certain acts or omissions
in connection with the sale of Purchase Shares issued pursuant to the
Agreement. The parties' indemnification rights are subject to certain
limitations set forth in the Agreement.
Other Agreements. In connection with the consummation of the Agreement,
the Company, the Shareholder and SCE have agreed to enter into certain other
agreements.
a) Non-Compete and Confidentiality Agreement. The Shareholder and
SCE have agreed to enter into a Non-Compete and Confidentiality Agreement
pursuant to which the Shareholder and SCE will agree, among other things, not
to compete with, and to maintain the confidentiality of information with
respect to, SCE's business for five years following the Closing. The form of
Non-Compete and Confidentiality Agreement is filed herewith as Exhibit B to
the Agreement and is incorporated herein by reference.
a) Voting Agreement. The Shareholder and SCE have agreed to enter
into a Voting Agreement pursuant to which the Shareholder and SCE will agree,
among other things, to vote all of their shares of Common Stock in accordance
with the recommendations of the Company's Board of Directors on any and all
matters on which holders of Common Stock are entitled to vote, including, but
not limited to, the election of members of the Board of Directors of the
Company. The Voting Agreement will continue in effect for the earlier of (i)
five years after Closing or (ii) with respect to the shares of Common Stock
which are sold to a party other than the Shareholder or an affiliate of the
Shareholder (including his children), the date of such sale of such Common
Stock.
Source of Consideration. All shares of Common Stock to be issued
pursuant to the Agreement will be newly issued shares.
Material Relationships. Other than the Agreement and the transactions
contemplated thereby, there are no material relationships between the Company
or any of its affiliates or any director or officer of the Company, or any
associate of any such director or officer, on the one hand; and SCE or the
Shareholder or any of their respective affiliates, on the other hand.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
The following exhibits are filed with this report:
(1) Asset Purchase Agreement dated as of August 25, 1995 among Rentrak
Corporation, Supercenter Entertainment Corporation and Jack
Silverman, and principal exhibits thereto, including the Non-
Compete and Confidentiality Agreement and Voting Agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, hereunto duly authorized.
RENTRAK CORPORATION
(Registrant)
Date: September 1, 1995 By: /s/ Karl D. Wetzel
Name: Karl D. Wetzel
Title: Chief Accounting Officer
Index to Exhibits
Sequential
Exhibit No. Description Page Number
1 Asset Purchase Agreement dated as of August 25, 6
1995 among Rentrak Corporation, Supercenter
Entertainment Corporation and Jack Silverman and
principal exhibits thereto, including Non-
Compete and Confidentiality Agreement and Voting
Agreement.
ASSET PURCHASE AGREEMENT
dated August 25, 1995
among
RENTRAK CORPORATION,
SUPERCENTER ENTERTAINMENT CORPORATION
and
JACK SILVERMAN
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into
as of August 25, 1995 by and among RENTRAK CORPORATION, an Oregon
corporation ("Rentrak"), SUPERCENTER ENTERTAINMENT CORPORATION, a
Delaware corporation (the "Company"), and Jack Silverman, the
principal shareholder of the Company (the "Shareholder").
Recitals
A. The Company owns certain assets which it uses in the conduct of
its business of operating 45 video rental outlets in Wal-Mart
("Wal-Mart") and 25 video rental outlets in Super K-Mart
("K-Mart") shopping centers (each a "Store") at the locations
listed in Schedule A (the "Business").
B. Rentrak desires to purchase from the Company, and the Company
desires to sell to Rentrak the Assets upon the terms, and subject
to the conditions, representations, warranties and covenants of
this Agreement.
Agreement
NOW, THEREFORE, in consideration of the foregoing recitals and
the mutual covenants herein contained, and other good and
valuable consideration, the receipt and sufficiency of which the
parties hereby acknowledge, the parties hereby agree as follows:
ARTICLE I PURCHASE AND SALE
Section 1.01 Certain Definitions.
"Assets" shall mean all of the Company's right, title and
interest in and to the business, properties, assets and rights of
any kind, whether tangible or intangible, real or personal and
constituting, or used in connection with, or related to, the
Business, wherever located, but excluding therefrom the Excluded
Assets. Assets shall include without limitation all of the
Company's right, title and interest in the following (other than
Excluded Assets):
(a) all Accounts Receivable;
(b) all Assumed Leases and Assumed Contracts;
(c) all Tangible Personal Property Assets;
(d) all Inventory;
(e) all Books and Records;
(f) all of the Company's rights to the Intellectual Property;
(g) all available supplies, sales literature, promotional
literature, customer, supplier lists, art work, display units,
telephone and fax numbers and purchasing records related to the
Business;
(h) all rights under or pursuant to all warranties,
representations and guarantees made by suppliers in connection
with the fixtures and equipment (including computers and computer
software) included in the Assets, and all rights arising out of
events or conditions occurring on and after the Closing Date
under or pursuant to all warranties, representations and
guarantees made by suppliers in connection with the Assets or
services furnished to the Company pertaining to the Business or
affecting the Assets;
(i) all deposits and prepaid expenses of the Company related to
the Business or the Assets;
(j) all claims, causes of action, chose in action, rights of
recovery and rights of set-off of any kind, against any person or
entity related to the Business or the Assets arising out of
events or conditions occurring on and after the Closing Date;
(k) all cash at the Stores; and
(l) all of the Company's Assets located at the Corporate
Office/Warehouse (the "Corporate Office/Warehouse Assets").
"Assumed Contracts" shall mean those Contracts listed on
Schedule 1.01 and those purchase orders of the Company
outstanding as of the Closing Date for the Company's purchased
cassettes from non-revenue sharing vendors which have been issued
in the ordinary course of business and in a manner substantially
consistent with past practice and which are listed on Schedule
1.01. Schedule 1.01 also identifies which Contracts and purchase
orders (or to what extent) relate to the Assets located at K-Mart
Stores and the Assets located at Wal-Mart Stores.
"Assumed Leases" shall mean the leases listed on Schedule 1.01A.
"Contract" shall mean any agreement, contract, note, loan,
evidence of indebtedness, purchase order, letter of credit,
indenture, security or pledge agreement, undertaking, covenant
not to compete, employment agreement, license, instrument,
obligation or commitment to which the Company is a party or is
bound, whether oral or written.
"Corporate Office/Warehouse" shall mean the Company's office and
warehouse located at 11420 Ferrell Road, Suite 307, Dallas, Texas
75234.
"Excluded Assets," notwithstanding any other provision of this
Agreement, shall mean the following assets of the Company which
are not to be acquired by Rentrak hereunder:
(a) all rights with respect to the Excluded Lease;
(b) all Licenses;
(c) all claims, causes of action, chose in action, rights of
recovery and rights of set-off of any kind against any person or
entity arising out of or relating to the Assets to the extent
related to the Excluded Liabilities or arising out of events or
conditions occurring prior to the Closing Date;
(d) all security deposits with respect to the Excluded Leases;
(e) all Assets used primarily in or attributable primarily to the
Company's wholesale videocassette business which are not located
at the Corporate Office/Warehouse;
(f) all Assets listed on Schedule 1.01C;
(g) all insurance policies;
(h) checks received by the Company prior to Closing which were not
paid because of insufficient funds and any proceeds from such
checks; and
(i) all rights arising out of events or conditions occurring prior
to the Closing Date under or pursuant to all warranties,
representations and guarantees made by suppliers in connection
with the Assets or services furnished to the Company pertaining
to the Business or affecting the Assets, other than such rights
in connection with fixtures and equipment (including computers
and computer software) included in the Assets.
"Excluded Lease" shall mean the lease relating to the Corporate
Office/Warehouse dated July 11, 1994 between Ware Tec, Ltd.
(landlord) and Silverman Entertainment Enterprises d/b/a CEVAXS
Corporation and Jack Silverman (tenant).
"Indebtedness" shall mean any indebtedness by the Company for
borrowed money, any commitment to borrow money entered into by
the Company which cannot be cancelled without penalty or payment,
or any indebtedness guaranteed by the Company.
"K-Mart Stores" shall mean those K-Mart stores at the locations
listed on Schedule A.
"Lien" shall mean any claim, security interest, lien, option,
subscription, call or encumbrance of any kind ("Lien").
"Unit" shall mean an individual videocassette, game module, or
similar piece of merchandise held by the Company.
"Wal-Mart Stores" shall mean those Wal-Mart stores at the
locations listed on Schedule A.
Section 1.02 List of Defined Terms. The following terms shall
have the meanings defined for such terms as set forth below:
Term Section
Accounts Receivable 2.08
Adjustment Period 1.06(b)(v)
Adjustment Shares 1.06(d)
Assumed Liabilities 1.04
Books and Records 2.06(a)
Business Recitals
Certificate 1.06(b)(iv)
Closing 1.09
Closing Date 1.09
Closing Inventory 1.06(b)(iii)
Code 1.07
Commission 1.06(c)(i)
Company Inventory Statement 1.06(b)(i)
Consents 2.04
Corporate Office/Warehouse Assets 1.01(l)
Default 2.04(e)
Disclosure Schedule 2.01
Employee Plans 2.18(a)(ii)
Environmental Laws 2.23(a)
Exchange Act 1.06(f)(vi)
Excluded Liabilities 1.05
Governmental Authority 2.04(b)
Governmental Order 2.04(b)
Hazardous Material 2.23(a)
Holder 1.06(c)(i)
Indemnitee 6.04(a)
Indemnitor 6.04(a)
Intellectual Property 2.16
Inventory 2.15
Inventory Escrow Shares 1.06(d)
Inventory Statement 1.06(d)
Lease Consents 4.03(b)
Liabilities 2.11
Licenses 2.13
Litigation 2.12
Losses 6.02
Outside Date 7.01
Permitted Liens 2.16(b)
Purchase Shares 1.06(a)
Purchaser Inventory Statement 1.06(b)(ii)
Registration Expenses 1.06(c)(v)
Rehired Employees 4.02(a)
Related Party 2.27
Rental Units 1.06(b)(i)
Rentrak Financial Statements 3.04
Rentrak Stock 3.05
Returns 2.20(a)
Securities Act 1.06(c)(i)
Store Recitals
SuperComm Agreement 2.16(b)
Tangible Personal Property Assets 2.17(a)
Taxes 2.20(i)
Third Party Claims 6.04(b)
Total Units 1.06(b)(i)
Section 1.03 Transfer of Assets.
(a) Upon the terms and subject to the conditions contained herein,
at the Closing, the Company will sell, convey, transfer, assign
and deliver to Rentrak, and Rentrak will acquire from the
Company, the Assets. The Assumed Leases and the Assumed
Contracts to be assigned pursuant to this Agreement shall be
assigned to Rentrak.
(b) Upon the terms and subject to the conditions contained herein,
at the Closing, the Company will sell, convey, transfer, assign
and deliver to Rentrak, and Rentrak will acquire from the
Company, the Corporate Office/Warehouse Assets.
Section 1.04 Assumption of Liabilities. Upon the terms and
subject to the conditions contained herein, at the Closing,
Rentrak, or a wholly owned subsidiary of Rentrak, shall assume
only the obligations and liabilities of the Company with respect
to the K-Mart Stores and the Wal-Mart Stores, respectively,
accruing, arising out of, or relating to the events or
occurrences happening after the Closing Date under the Assumed
Contracts and the Assumed Leases (the "Assumed Liabilities");
provided that neither Rentrak nor any subsidiary of Rentrak shall
assume any obligation or liability for any breach of any such
Assumed Contract or Assumed Lease occurring prior to the Closing
Date.
Section 1.05 Excluded Liabilities. Notwithstanding any other
provision of this Agreement, except for the Assumed Liabilities
expressly specified in Section 1.04, neither Rentrak nor any
subsidiary of Rentrak shall assume, or otherwise be responsible
for, any Liabilities of the Company, whether actual or
contingent, matured or unmatured, liquidated or unliquidated, or
known or unknown, whether arising out of occurrences prior to, at
or after the date hereof (the "Excluded Liabilities"), which
Excluded Liabilities include, without limitation:
(a) Any Liability to or in respect of any employees or former
employees of the Company (except with respect to accrued vacation
to the extent provided in Section 4.02(a)), including without
limitation (i) any employment agreement, whether or not written,
between the Company and any person, (ii) any liability under any
Employee Plan at any time maintained, contributed to or required
to be contributed to by or with respect to the Company or under
which the Company may incur liability, or any contributions,
benefits or liabilities therefor, or any liability with respect
to the Company's withdrawal or partial withdrawal from or
termination of any Employee Plan and (iii) any claim of an unfair
labor practice, or any claim under any state unemployment
compensation or worker's compensation law or regulation or under
any federal or state employment discrimination law or regulation,
which shall have been asserted on or prior to the Closing or is
based on acts or omissions which occurred on or prior to the
Closing;
(b) Any Liability of the Company in respect of any Taxes;
(c) Any Liability of the Company arising out of or related to any
Litigation against the Company or any Litigation which adversely
affects the Assets and which shall have been asserted on or prior
to the Closing or to the extent the basis of which shall have
arisen on or prior to the Closing;
(d) Any Liability of the Company resulting from entering into,
performing its obligations pursuant to or consummating the
transactions contemplated by, this Agreement (including without
limitation any Liability of the Company pursuant to Article VI
hereof);
(e) Any Liability related to any Excluded Lease (including month-
to-month arrangements in connection therewith) or Contract which
is not an Assumed Contract; and
(f) Any Liability related to any breach of any Assumed Contract or
Assumed Lease occurring prior to the Closing.
(g) Any Liability to SuperComm, Inc. ("SuperComm") or any other
person with respect to any revenue sharing, leasing or similar
arrangement with respect to the Units.
Section 1.06 Purchase Price for Assets.
(a) The Purchase Shares. As consideration for the Assets and the
Corporate Office/Warehouse Assets, at Closing, Rentrak shall
issue and deliver to the Company 890,000 shares of Rentrak Stock
(the "Purchase Shares").
(b) Determination of Inventory Adjustment Amount.
(i) On the third and fourth days preceding the Closing Date, the
Company shall take a physical inventory of the Stores and deliver
to Rentrak a statement of such inventory (the "Company Inventory
Statement") which identifies for each Store the number of VHS
pre-recorded videocassettes held for, or out on, rental ("Rental
Units"), VHS pre-recorded videocassettes held for sale and 16-bit
game Units held for, or out on, rental (collectively, "Total
Units").
(ii) On and after the day that is two days preceding the Closing
Date, Rentrak shall have the right to take a physical inventory
of the Stores and deliver to the Company a statement of such
inventory (the "Purchaser Inventory Statement"). The Purchaser
Inventory Statement shall contain the inventory results for all
Stores at which Rentrak took a physical inventory. Rentrak shall
use its best efforts to complete its inventory by 12:00 noon,
Dallas time, on the day immediately preceding the Closing Date.
After Rentrak has completed its inventory, the Company or Rentrak
may do a second inventory count to resolve questions which either
party might have. If Rentrak shall not have completed its
physical inventory by 12:00 noon, Dallas time, on the day before
the scheduled Closing Date, then the Company shall have the right
to delay the Closing by one business day, or to such other day as
the parties may mutually agree. If the Closing is delayed
pursuant to the preceding sentence, and if Rentrak shall not have
completed its physical inventory by 12:00 noon, Dallas time, on
the day before the re-scheduled Closing Date, then either party
shall have the right to terminate this Agreement (without
liability) or the Closing shall be re-scheduled to a date
mutually agreed upon by the parties. If, after completion of
Rentrak's physical inventory, the parties are unable to agree on
a Closing Inventory Statement (as defined below), then either the
Company or Rentrak shall have the right to delay the Closing by
one business day, or to such other day as the parties may
mutually agree. If the Closing is delayed pursuant to the
preceding sentence, and if the parties are unable to agree on the
Closing Inventory Statement prior to the Closing Date, then
either party shall have the right to terminate this Agreement
(without liability) or the Closing shall be re-scheduled to a
date mutually agreed upon by the parties.
(iii) In the event Rentrak takes a physical inventory of at least
15 Stores, Rentrak shall compare its inventory for such Stores as
reflected on the Purchaser Inventory Statement with the Company's
inventory for such Stores as reflected on the Company Inventory
Statement. Based on that comparison, the parties shall calculate
the Total Units and the Rental Units for all of the Stores (the
"Closing Inventory") in accordance with the following examples.
For example, if the aggregate number of Total Units reflected on
the Purchaser Inventory Statement for all of the Stores, the
inventory of which is reflected on the Purchaser Inventory
Statement, is 2% less than the number of Total Units reflected on
the Company Inventory Statement for such Stores, then the Closing
Inventory for Total Units for all Stores shall be deemed to equal
the number of Total Units for all Stores as reflected on the
Company Inventory Statement less 2%. Similarly, if the aggregate
number of Rental Units reflected on the Purchaser Inventory
Statement for such Stores is 5% more than the number of Rental
Units reflected on the Company Inventory Statement, then the
Closing Inventory for Rental Units for all Stores shall be deemed
to equal the number of Rental Units for all Stores as reflected
on the Company Inventory Statement plus 5%. In the event Rentrak
does not take an inventory of at least 15 Stores, then the
Company Inventory Statement shall be deemed to be the "Closing
Inventory." The Closing Inventory shall not include (i) Rental
Units which are out on Rental but have not been returned within
fourteen days after the date of rental or (ii) game Units which
are not 16-bit.
(iv) Promptly upon completing its physical inventory, Rentrak
shall deliver to the Shareholder a certificate in the form of
Schedule 1.06 (the "Certificate") setting forth the calculation
of the Inventory Shortfall (as defined on Schedule 1.06), if any,
based on the Closing Inventory. In the event that there is an
Inventory Shortfall, then prior to the Closing, the Company shall
deliver additional Rental Units to Rentrak in an amount equal to
the Inventory Shortfall; provided that such additional Rental
Units may not include more than fifteen copies of any one title;
provided further that if the Inventory Shortfall can not be made
up prior to the Closing, then at Closing the Company shall
deliver a certified check payable to Rentrak in an amount equal
to the Inventory Adjustment Amount (as calculated on the
Certificate). Rentrak shall hold, and not cash or deposit, the
check, and shall return, or cash or deposit, such check in
accordance with Section 1.06(b)(v).
(v) Within 10 calendar days after the Closing (the "Adjustment
Period"), the Company may deliver to Rentrak additional Rental
Units which will offset any or all of the Inventory Adjustment
Amount (based on a value of $15 per Unit) and with such
additional Rental Units not including more than fifteen copies of
any one title. After the conclusion of the Adjustment Period, if
there is no remaining Inventory Shortfall (i.e., if the Company
has made up the entire Inventory Shortfall), Rentrak shall return
the check to the Company, and if there remains an Inventory
Shortfall (i.e., if the Company has not made up the entire
Inventory Shortfall), Rentrak may cash or deposit the check in
its account and shall promptly refund to the Company any portion
of the Inventory Adjustment Amount which has been offset by the
delivery of additional Rental Units by the Company during the
Adjustment Period.
(c) Registration and Sale of Purchase Shares.
(i) As soon as practicable, but in any event no later than
December 31, 1995, Rentrak shall file with the Securities and
Exchange Commission (the "Commission") a post-effective amendment
or a new registration statement on any appropriate form under the
Securities Act of 1933, as amended (the "Securities Act") with
respect to the offering and sale or other disposition of the
Purchase Shares by the Shareholder or the Company (each, a
"Holder"). Rentrak agrees to use its best efforts to cause such
post-effective amendment or registration statement to become
effective. Each Holder agrees to cooperate with and provide
assistance to Rentrak, as Rentrak may reasonably request, in
connection with any registration and sale of shares of the
Purchase Shares.
(ii) No Holder shall sell or otherwise transfer ("Transfer")
more than 150,000 of the Purchase Shares in any one fiscal
quarter; provided, that no Purchase Shares shall be Transferred
prior to December 31, 1995 except for Transfers to Rita Brown,
the children of the Shareholder or trusts for the benefit of such
children (provided, that any such transferee shall be a "Holder"
for all purposes under this Agreement and shall agree in writing
to be bound by the provisions of this Section 1.06(c)).
(iii) Rentrak agrees that it will (A) prepare and file with the
Commission, any amendments or supplements to such registration
statement or prospectus which may be necessary to keep such
registration statement effective and to comply with the
provisions of the Securities Act with respect to the offer of the
Purchase Shares covered by such registration statement for a
period of two years from the effective date of the registration
statement or post-effective amendment; (B) prepare and promptly
file with the Commission and promptly notify the Holders of the
filing of such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any
statement therein or omission therefrom if, at any time when a
prospectus relating to such Purchase Shares is required to be
delivered under the Securities Act, any event with respect to
Rentrak shall have occurred as a result of which any prospectus
would include an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein
not misleading; (C) in case either Holder is required to deliver
a prospectus, prepare promptly such amendment or amendments to
such registration statement and such prospectus or prospectuses
as may be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Securities Act; (D) advise the Holders
promptly after Rentrak shall receive notice or obtain knowledge
of the issuance of any stop order by the Commission suspending
the effectiveness of any such registration statement or amendment
thereto or of the initiation or threatening of any proceedings
for that purpose, and promptly use its best efforts to prevent
the issuance of any stop order or to obtain its withdrawal if
such stop order should be issued; (E) use its best efforts to
qualify such Purchase Shares for sale under the securities or
"blue sky" laws of such states within the United States as each
Holder may reasonably designate, except that Rentrak shall not be
required in connection therewith or as a condition thereto to
qualify to do business in any such state or to take any action
which would subject it to general service of process in any such
jurisdiction where it is not then so subject; and (F) furnish to
the Holders, as soon as available, copies of any such
registration statement and each preliminary and final prospectus,
or supplement or amendment required to be prepared with respect
thereto, all in such quantities as they may from time to time
reasonably request.
(iv) Each Holder agrees that, upon receipt of any notice from
Rentrak of the happening of any event of the kind described in
clause (iii)(B) of this Section 1.06(c), such Holder will
forthwith discontinue disposition of the Purchase Shares until
such Holder has received copies of the supplemented or amended
prospectus contemplated by clause (iii)(B), or until such Holder
is advised in writing by Rentrak that the use of the prospectus
may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the
prospectus, and, if so directed by Rentrak, such Holder will
deliver to Rentrak all copies, other than permanent file copies,
then in such Holder's possession of the prospectus covering such
the Purchase Shares current at the time of receipt of such
notice.
(v) Rentrak shall pay all expenses (the "Registration Expenses")
incident to the registration of the Purchase Shares under this
Section 1.06(c), including, without limitation, all registration,
filing and NASD fees, all fees and expenses of complying with
securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and
disbursements of counsel for Rentrak and of its independent
public accountants, including the expenses of any special audits
or "cold comfort" letters required by or incident to such
performance and compliance, premiums and other costs of policies
of insurance purchased by Rentrak at its option against
liabilities arising out of the public offering of such Purchase
Shares and any fees and disbursements of underwriters customarily
paid by issuers or sellers of securities. With respect to sales
of Purchase Shares, the Holders shall pay all underwriting
discounts and commissions and fees of underwriters, selling
brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Purchase
Shares, the fees and disbursements of counsel retained by the
Holders and transfer taxes, if any.
(vi) Through the date which is three years after Closing,
provided that Rentrak has any securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), Rentrak will file the reports required to
be filed by it under the Exchange Act and the rules and
regulations adopted by the Commission thereunder (or, if Rentrak
is not required to file such reports, will upon the request of
any Holder, make publicly available, at Rentrak's own cost and
expense, other information for a period of up to four months) and
will take such further action as such Holder may reasonably
request, all to the extent required from time to time to enable
such Holder to sell the Purchase Shares without registration
under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission.
Section 1.07 Allocation of Purchase Shares
The value of the Purchase Shares shall be allocated among the
Assets in the manner required by Section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code") and regulations
thereunder. Schedule 1.07 attached hereto sets forth the amounts
allocable to the various Assets. Rentrak and the Company agree
to each prepare and file on a timely basis with the Internal
Revenue Service substantially identical initial and supplemental
Internal Revenue Service Forms 8594 "Asset Acquisition Statements
Under Section 1060" consistent with Schedule 1.07.
Section 1.08 Prorations
(a) Utilities; Taxes. On the Closing Date, or as promptly as
practicable following the Closing Date, the real and personal
property taxes, water, gas, electricity and other utilities,
common area maintenance reimbursements to lessors, local business
or other license fees or taxes, merchants' association dues and
other similar periodic charges payable with respect to the Assets
or the Business shall be prorated between Rentrak, on the one
hand, and the Company, on the other, effective as of the Closing
Date. If the real property tax rate for the current tax year is
not established by the Closing Date, the prorations shall be made
on the basis of the rate in effect for the preceding tax year and
shall be adjusted when the exact amounts are determined. All
such prorations shall be based upon the most recent available
assessed value of any Store prior to the Closing Date. Without
limiting the foregoing, if an expense is paid in cash at the
Store on or after the Closing Date and the expense relates to a
Liability arising prior to the Closing Date, the Company shall
reimburse Rentrak for such expense.
(b) Rents. The Company shall pay all rent under the Assumed
Leases through the end of the month in which the Closing occurs,
and Rentrak shall reimburse the Company for such rent accrued on
and after the Closing Date through the end of the month in which
the Closing occurs. Payments of percentage rent, if any, due
under the provisions of the Assumed Leases shall be adjusted to
the Closing Date as follows. Rentrak shall pay any percentage
rent due for periods expiring after the Closing Date under the
K-Mart Lease, and the Company shall reimburse Rentrak for that
portion of such percentage rent paid by Rentrak and due under the
K-Mart Lease based on sales from the commencement of the current
lease year through the Closing Date. Within seven (7) calendar
days after the Closing Date, the Company will furnish to Rentrak
records which evidence the gross sales of the Company at each
K-Mart Store to the extent necessary to enable Rentrak to comply
with the percentage rent provision of the K-Mart Lease. Rentrak
shall provide to the Company, within thirty (30) calendar days
before the annual settlement of percentage rent under the K-Mart
Lease for the partial year in which the Company was operating
such K-Mart Store, a statement showing the manner of computation
of all percentage rent due under the K-Mart Lease for such year.
Any reimbursement due Rentrak from the Company in respect of its
pro rata share of percentage rent shall be paid within fifteen
(15) calendar days after written demand therefor by Rentrak.
With respect to the Wal-Mart Lease, at the Closing, the Company
shall deliver to Rentrak a check in the amount equal to the
percentage rent due with respect to sales through a recent
practicable date preceding the Closing Date, which shall be no
earlier than three days prior to Closing. To the extent that
Rentrak is required to pay any percentage rent under the Wal-Mart
Lease with respect to sales occurring prior to the Closing Date,
the Company shall promptly reimburse Rentrak for any such
percentage rents, and to the extent that Rentrak receives any
refund with respect to percentage rents from Wal-Mart with
respect to sales occurring prior to Closing, Rentrak will remit
that refund to the Company.
Section 1.09 Closing. The closing of the transactions
contemplated in this Agreement (the "Closing") shall take place
on August 31, 1995 at the Corporate Office/Warehouse, or such
other date or place as shall be mutually acceptable to the
parties (the "Closing Date"); provided, however, that if either
party's conditions to Closing shall not have been satisfied or
waived on or before August 31, 1995, such party, by written
notice to the other party, may extend the Closing Date to the day
such party's conditions to Closing are satisfied or waived;
provided, further, that in no event will the Closing Date be so
extended beyond the Outside Date without the parties' mutual
written consent.
Section 1.10 Closing Costs; Transfer Taxes and Fees. The
Company and Rentrak each shall be responsible for one half of any
documentary and transfer taxes and any other taxes imposed by
reason of the transfer of the Assets provided hereunder and any
deficiency, interest or penalty asserted with respect thereto.
ARTICLE II REPRESENTATIONS AND WARRANTIES OF
SHAREHOLDER AND THE COMPANY
As an inducement to Rentrak to enter into this Agreement, each of
the Shareholder and the Company hereby makes the following
representations and warranties to Rentrak jointly and severally.
Section 2.01 Disclosure Schedule. The Shareholder and the
Company have heretofore delivered to Rentrak a schedule (the
"Disclosure Schedule") containing certain information regarding
the Shareholder and the Company as indicated at various places in
this Agreement. All information set forth in the Disclosure
Schedule is true, correct and complete in all material respects
as of the date of this Agreement, and shall be true, correct and
complete in all material respects on and as of the Closing Date,
and shall be deemed for all purposes of this Agreement to
constitute an integral part of this Agreement and of the
representations and warranties of the Shareholder and the Company
contained herein.
Section 2.02 Incorporation and Qualification of the Company and
Authority of the Company and the Shareholder.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware and has
all necessary corporate power and authority to own, operate or
lease the properties and assets now owned, operated or leased by
the Company and to carry on the Business.
(b) The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties owned, operated or leased or the
nature of its activities requires such qualification, except for
such jurisdictions where the failure to be so qualified would not
have a materially adverse effect upon the Business, condition,
results of operations, prospects or operations of the Company
taken as a whole. All jurisdictions in which the Company is
qualified to do business are set forth in Section 2.02 of the
Disclosure Schedule. Section 2.02 of the Disclosure Schedule
contains true, correct and complete copies of the Company's
Certificate of Incorporation and Bylaws, as amended through the
date hereof.
(c) The Company has all requisite power and authority to enter
into this Agreement, the Voting Agreement and the Non-Compete
Agreement, to carry out its obligations hereunder and thereunder,
and to consummate the transactions contemplated hereby and
thereby. No proceedings on the part of the Company are necessary
to authorize this Agreement, the Voting Agreement and the Non-
Compete Agreement, and the transactions contemplated hereby and
thereby, except such proceedings as have been completed. Upon
execution and delivery, each of this Agreement, the Voting
Agreement and the Non-Compete Agreement, will constitute a valid
and legally binding obligation of the Company, enforceable
against it in accordance with its terms.
(d) The Shareholder has all requisite power and authority to enter
into this Agreement, the Voting Agreement and the Non-Compete
Agreement, to carry out his obligations hereunder and thereunder,
and to consummate the transactions contemplated hereby and
thereby. No proceedings on the part of the Shareholder are
necessary to authorize this Agreement, the Voting Agreement and
the Non-Compete Agreement, and the transactions contemplated
hereby and thereby, except such proceedings as have been
completed. Upon execution and delivery, each of this Agreement,
the Voting Agreement and the Non-Compete Agreement, will
constitute a valid and legally binding obligation of the
Shareholder, enforceable against him in accordance with its
terms.
Section 2.03 Capital Stock of the Company. The Shareholder
owns, and at the Closing the Shareholder and his children and
Rita Brown will own, of record and beneficially all of the
outstanding common stock of the Company, which represents all of
the outstanding equity interest in the Company. There are no
options, warrants or rights of conversion or exchange or other
rights, agreements, arrangements or commitments obligating, or
which may obligate, directly or indirectly, the Shareholder, or
the Company to sell or issue any additional shares of the
Company's capital stock or other securities of the Company.
Section 2.04 No Conflict; Consents. Assuming all consents,
approvals, assignments, releases, estoppel certificates,
termination statements or similar authorizations ("Consents") and
other actions described in Section 2.04 of the Disclosure
Schedule have been obtained and all filings and notifications
listed in Section 2.04 of the Disclosure Schedule have been made,
the execution, delivery and performance of this Agreement, the
Voting Agreement and the Non-Compete Agreement, by the Share-
holder and the Company, and the consummation of the transactions
contemplated hereby and thereby, do not and will not:
(a) violate or conflict with the Certificate of Incorporation or
Bylaws of the Company;
(b) conflict with or violate any law, statute, ordinance, rule,
regulation, order, writ, judgment, injunction, decree, ruling,
stipulation, determination or award (collectively, a
"Governmental Order") entered by or with any federal, state or
local governmental authority, regulatory or administrative
agency, or governmental commission, court, tribunal or arbitral
body (collectively, the "Governmental Authority") applicable to
the Company or the Business or the Shareholder;
(c) conflict with, result in any breach of, or constitute a
Default (as defined below) under, any Assumed Contract or Assumed
Lease, or result in the creation of any Lien on the Company or
any of the Assets;
(d) require the Company, or the Shareholder to notify or obtain
any License or Consent from any Governmental Authority or other
person (except as described in Section 2.04 of the Disclosure
Schedule); or
(e) result in any other event that would, or is reasonably likely
to, affect the ability of the Shareholder or the Company to
consummate the transactions contemplated hereby.
"Default" with respect to any Contract shall mean (i) any breach
of or default under such Contract, (ii) the occurrence of an
event that with the passage of time or the giving of notice or
both would constitute a breach of or default under such Contract,
or (iii) the occurrence of an event that with or without the
passage of time or the giving of notice or both would give rise
to a right of termination, renegotiation or acceleration under
such Contract.
Section 2.05 No Subsidiaries or Other Business Entities. There
are no corporations, partnerships, joint ventures or other
entities in which the Company owns, of record or beneficially,
any direct or indirect equity interest or any right (contingent
or otherwise) to acquire the same.
Section 2.06 Corporate Records of the Company; Delivery of
Documents.
(a) The stock records and minute books of the Company heretofore
made available to Rentrak by the Shareholder fully reflect all
minutes of meetings, resolutions and other material actions and
proceedings of its shareholders and board of directors and all
committees thereof, all issuances, transfers and redemptions of
their capital stock of which the Company or the Shareholder is
aware, correctly show the total number of shares of their capital
stock issued and outstanding on the date hereof, and contain
true, correct and complete copies of the Company's Certificate of
Incorporation and Bylaws and all amendments thereto through the
date hereof. The Books and Records of the Company with respect
to the Assets or the Business fairly reflect, in accordance with
generally accepted accounting principles; (i) all material
transactions of the Company relating to the Assets or the
Business; and (ii) all material items of income and expense,
assets and liabilities and accruals relating to the Assets or the
Business. With respect to the Assets and the Business, the
Company has not engaged in any transaction, maintained any bank
account or used any corporate funds except for transactions, bank
accounts or funds which have been and are reflected in the
normally maintained Books and Records of the Company.
"Books and Records" shall mean (i) all records and lists of the
Company pertaining to the Assets or the Business, (ii) all
records and lists pertaining to the Assets, Business, customers,
suppliers or personnel of the Company, (iii) all product,
business and marketing plans of the Company relating to the
Assets or the Business and (iv) all books, ledgers, files,
reports, plans, drawings and operating records of every kind
maintained by the Company which relate to the Assets or the
Business, but excluding the originals, but not copies, of the
Company's minute books, stock books, accounting records (other
than accounting records which relate primarily to the Stores) and
Tax returns. The Books and Records shall not include any of the
foregoing insofar as such items do not relate to the Assets or
the Business.
(b) The Company has delivered to Rentrak true, correct and
complete copies of Assumed Contracts and Assumed Leases
(including all amendments, supplements, modifications or waivers
currently in effect). All documents made available to Rentrak by
or on behalf of the Shareholder are true, correct and complete
copies of the documents purported to be furnished.
Section 2.07 Financial Statements. On or prior to the date
hereof, the Shareholder has caused the Company to deliver to
Rentrak copies of the audited Balance Sheet of the Company as of
December 31, 1994, and the unaudited Statement of Operations for
the year then ended, and the Company's unaudited financial
statements as of July 31, 1995 and for the seven-month period
then ended. The Balance Sheet of the Company dated July 31, 1995
is hereinafter referred to as the "July Balance Sheet." All of
such financial statements are in accordance with the Books and
Records of the Company, have been prepared in accordance with
generally accepted accounting principles applied on a basis
consistent with prior years of the Company, except with respect
to the unaudited financial statements, the absence of notes and
subject to normal year-end adjustments, and present fairly and
accurately, in all material respects, the assets, liabilities
(including all reserves) and financial condition of the Company
as of the respective dates thereof and the consolidated results
of its operations for the periods then ended.
Section 2.08 Accounts Receivable. Section 2.08 of the
Disclosure Schedule lists all accounts and notes receivable
(whether current or noncurrent), refunds, deposits, prepayments
or prepaid expenses (including without limitation any prepaid
insurance premiums) of the Company arising from or relating to
the Business as of July 31, 1995 (the "Accounts Receivable").
All such Accounts Receivable, and all similar receivables arising
since July 31, 1995 held by the Company are valid obligations of
the respective makers thereof. The receivables reflected on the
July Balance Sheet which relate to the Business do not include
any material uncollectible receivables that are not properly
reserved for as set forth on the July Balance Sheet.
Section 2.09 Inventory.
(a) Subject to amounts reserved on the July Balance Sheet, the
values at which all Inventory are carried on the July Balance
Sheet reflect the historical inventory valuation policy of the
Company of stating such inventory at the lower of average cost or
market value with respect to merchandise Inventory and the lower
of amortized cost or market value with respect to rental
Inventory. The Inventory reflected on the July Balance Sheet was
acquired and has been maintained in accordance with the regular
business practices of the Company and is in a condition such that
it could be sold or rented in the ordinary course of the Business
consistent with past practice. "Inventory" shall mean all of
Company's Units held for resale or rental in connection with the
Business.
(b) Neither the Shareholder nor the Company is aware of any reason
that the Company Inventory Statement is inaccurate or incomplete
in any material way.
Section 2.10 Absence of Certain Changes or Events. Except as
described in the Disclosure Schedule, or as set forth on the
financial statements as of July 31, 1995 or the seven-month
period then ended, since December 31, 1994, with respect to the
Assets or the Business there has not been any:
(a) material adverse change in the financial condition, working
capital, shareholders' equity, assets, liabilities, reserves,
revenues, earnings or business of the Company relating to the
Business;
(b) change in accounting methods, principles or practices by the
Company;
(c) damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the Assets or the
Business;
(d) material increase in the rate of compensation payable or to
become payable to any director, officer or other employee of the
Company or any consultant or agent of the Company, including
without limitation the making of any loan to, or the payment,
grant or accrual of any bonus, incentive compensation, severance,
service award or other similar benefit to, any such person, or
the addition to, modification of, or contribution to any Employee
Plan, arrangement, or practice described in the Disclosure
Schedule other than (i) in accordance with the normal practices
of the Company or (ii) the extension of coverage to others who
become eligible after December 31, 1995;
(e) material amendment or cancellation or termination of any
Assumed Contract, Assumed Lease or License;
(f) mortgage, pledge or other encumbrance of any Assets, other
than Permitted Liens;
(g) sale, assignment or transfer of any Assets, other than in the
ordinary course of the Business, including any sale, assignment
or transfer of more than 50 Units in any one transaction or
series of transactions with the same buyer or related buyers;
(h) incurrence by the Company of Liabilities, except Liabilities
incurred in the ordinary course of the Business and consistent
with past practice, or increase or change in any assumptions
underlying or methods of calculating, any doubtful account
contingency or other reserves of the Company;
(i) payment, discharge or satisfaction of any Liabilities of the
Company other than the payment, discharge or satisfaction in the
ordinary course of the Business and consistent with past practice
of Liabilities reflected or reserved against in the Company's
financial statements as of December 31, 1994, or incurred in the
ordinary course of the Business;
(j) failure to pay or satisfy when due any obligation of the
Company, except where the failure would not have a materially
adverse effect on the Company taken as a whole;
(k) failure of the Company to carry on diligently the Business in
the ordinary course;
(l) disposition or lapsing of any Intellectual Property; or
(m) agreement by the Company to do any of the things described in
the preceding clauses (a) through (m) other than as expressly
provided for herein.
Section 2.11 Liabilities. Except (i) as reflected on Schedule
2.11, (ii) the July Balance Sheet (to the extent not paid or
discharged since the date thereof), or (iii) Liabilities incurred
in the ordinary course of the Business since the date of the July
Balance Sheet, there are no Liabilities of the Company with
respect to the Assets or the Business. "Liabilities" shall mean
any direct or indirect liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of or by any
person (other than endorsements of notes, bills and checks
presented to banks for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute,
contingent, matured, unmatured or other.
Section 2.12 Litigation. Except as set forth in Section 2.12 of
the Disclosure Schedule, there are no pending, or to the
Shareholder's or the Company's knowledge, threatened, claims,
actions, suits, criminal prosecutions, governmental audits or
investigations, arbitrations or proceedings ("Litigation") (a) by
or against (i) the Company or any of its respective assets or
properties, (ii) any officers or directors of the Company as
such, or (iii) the Shareholder in his capacity as a shareholder
of the Company, (b) seeking to delay, limit or enjoin the
transactions contemplated by this Agreement, (c) that involve the
risk of criminal liability or (d) in which the Company is a
plaintiff.
Section 2.13 Licenses. The Company is the holder of all
licenses, authorizations, permits and certificates (the
"Licenses") required by any Governmental Authority or any other
person to conduct the Business, except where the failure to hold
such License would not have a materially adverse effect upon the
Company's Business, Assets, condition, results of operation,
prospects or operations taken as a whole, and all of such
Licenses are now in full force and effect. Section 2.13 of the
Disclosure Schedule contains a list of all current Licenses and
applications for Licenses currently held by the Company with
respect to the Business or the Assets, which Schedule shall be
delivered at Closing. The Company is not in material Default,
nor has it received any notice of any claim of Default, with
respect to any such License. No present or former shareholder,
director, officer or employee of the Company any affiliates of
any of them, or any other person, firm, corporation or other
entity owns or has proprietary, financial or other interest
(direct or indirect) in any License which the Company owns,
possesses or uses.
Section 2.14 Compliance with Laws. The Company has conducted
the Business in accordance with each applicable Governmental
Order. The Company has not violated in any material respect any
Governmental Order applicable to the Business or by which any of
the Assets is subject, bound or affected. The Company has made
all filings or notifications required to be made by it under any
Governmental Order applicable to the Business. Section 2.14 of
the Disclosure Schedule lists all states and other U.S. or
foreign jurisdictions in which the Company has so registered or
filed. Neither the Company, nor any officer, employee or agent
of, nor any consultant to, the Company has unlawfully offered,
paid, or agreed to pay, directly or indirectly, any money or
anything of value to, or for the benefit of, any individual who
is or was a candidate for public office, or an official or
employee of any governmental or regulatory body or authority or
an officer or employee of any client, customer or supplier of the
Business.
Section 2.15 Intellectual Property. Section 2.15 of the
Disclosure Schedule lists all trademarks, service marks, trade
names and copyrights used in the conduct of the Business
(collectively, the "Intellectual Property"). Except as set forth
in Section 2.15 of the Disclosure Schedule, neither the Company
nor the Shareholder has received any notice of infringement of
the rights of others with respect to such Intellectual Property.
Section 2.16 Sufficiency of and Title to the Assets
(a) The Assets conveyed to Rentrak pursuant to this Agreement
constitute all of the assets owned or held for use by the Company
in the Business (other than the Excluded Assets).
(b) The Company owns and shall convey to Rentrak at Closing good
and marketable title to the Assets (other than the Assumed
Leases) owned by the Company, in each instance free and clear of
any and all Liens other than (i) landlord liens and (ii) liens
for current taxes not yet due ("Permitted Liens"). With respect
to the Business, the Company has no obligation or Contract with
SuperComm or any other person with respect to any revenue
sharing, leasing or similar arrangement with respect to the Units
other than an agreement with SuperComm (the "SuperComm
Agreement") which can be terminated in accordance with its terms
by the Company at the Closing.
(c) None of the Stores is subject to any ordering or reporting or
other requirements with respect to the Units except for the
SuperComm Agreement. To the extent that Inventory contains any
Units that the Company previously has obtained (through rental,
revenue-sharing agreement or otherwise) from SuperComm or any
other revenue-sharing provider, on and subsequent to the Closing
Date, Rentrak shall have no obligation or liability to Supercomm
or any such other revenue-sharing provider arising out of an
event or condition related to the Company prior to Closing.
(d) There are no Assets located at any location other than the
K-Mart Stores or the Wal-Mart Stores or the Corporate
Office/Warehouse. Except as set forth in Schedule A, all Stores
are located in K-Mart Stores or Wal-Mart Stores which are
SuperCenter locations which include grocery operations.
Section 2.17 Tangible Personal Property Assets, Real Property
and Assumed Leases.
(a) Tangible Personal Property Assets. "Tangible Personal
Property Assets" shall mean computers, computer software,
inventory systems, equipment, parts, supplies, furniture,
fixtures, and other tangible personal property. Each Store has a
fully operational point-of-sale computer system equipped with a
"Spectrum" point-of-sale system, or, with respect to the five (5)
Stores identified in Section 2.17(a) of the Disclosure Schedule,
a "UBS" point-of-sale system, and all necessary racks, cabinets
and shelving. Other than the Assumed Leases, the Company is not
a party or otherwise bound by any lease which relates in whole or
in part to the Tangible Personal Property Assets related to the
Business (other than a lease with respect to the credit card
machines that is an Assumed Contract). The Tangible Personal
Property Assets related to the Business are as a whole in good
operating condition and repair and are usable in the ordinary
course of the Business consistent with past practice and conform
in all material respects to all applicable Governmental Orders
relating to their use and operation. Except as set forth in
Section 2.17 of the Disclosure Schedule, the Company owns and has
good and marketable title to the Tangible Personal Property
Assets related to the Business free and clear of all Liens other
than Permitted Liens. Schedule A states the number of point-of-
sale workstations located at each Store location.
(b) Real Property. The Company does not own any real property or
hold any option to purchase any real property.
(c) Assumed Leases. The Company has valid leasehold interests in
the premises under the Assumed Leases, subject only to the rights
of the fee owners, any Liens upon the fee owners' interests in
the leased premises (and not subject to any Lien upon the
Company's leasehold interest therein) and the rights of Funcoland
with respect to three Stores. Section 2.17 of the Disclosure
Schedule contains with respect to each Assumed Lease the
location, rents and term, description of any relationship with
respect to the Assumed Lease or the premises which the Company or
the Shareholder has with the lessor (such as a management
contract or ownership interest) and which reflects any
modifications or amendments (whether in writing or otherwise)
that the Company has with the lessor under such Assumed Lease
with respect to rents (including rent concessions) and term of
the Assumed Lease. True, complete and correct copies of the
Assumed Leases together with all amendments thereto, have been
previously delivered to Rentrak. All of the Assumed Leases are
valid, binding, and enforceable against the Company in accordance
with their terms and the Company has fulfilled, or taken all
action necessary to enable it to fulfill when due, all of its
material obligations under each of such Assumed Leases. The
Company has not received any notice of Default under an Assumed
Lease which remains uncured or unwaived, there are no Defaults on
the part of the Company under an Assumed Lease which would give
the lessor thereunder the right to terminate the Assumed Lease
nor, to the knowledge of the Shareholder, does there exits any
event, condition or occurrence which, with the giving of notice
or the lapse of time or both would constitute any other Default
under any such Assumed Lease. As of the Closing Date, the
Excluded Lease shall have expired and the Company shall occupy
the Corporate Office/Warehouse pursuant to a month-to-month lease
with the landlord under the Excluded Lease.
(d) Stores.
(i) Each of the Stores is supplied with utilities (including
without limitation water, sewage, disposal, electricity, gas and
telephone) and other services necessary for the operation of such
Store as currently operated, and there is no condition which
would reasonably be expected to result in the termination of the
present access of the Store to such utilities.
(ii) There are no pending or, to the best knowledge of the Company
and the Shareholder, threatened condemnation proceedings or other
Litigation relating to any Store.
(iii) The Company has not received notice of any special
assessment relating to any Store or any portion thereof and there
is no pending or, to the best knowledge of the Company or the
Shareholder, threatened special assessment.
(iv) To the Shareholder's and the Company's knowledge, the
improvements located in or on the Stores are structurally sound
with no known material defects (in good operating condition and
repair) subject to ordinary wear and tear and not in need of
maintenance or repair except for ordinary routine maintenance and
repair, the cost of which would not be material.
Section 2.18 Employee Benefit Matters.
(a) Definitions. The following terms, when used in this
Section 2.18, shall have the following meanings:
(i) Benefit Arrangement. Benefit Arrangement shall mean any
employment, consulting, severance or other similar contract,
arrangement or policy and each plan, arrangement (written or
oral), program, agreement or commitment providing for insurance
coverage (including without limitation any self-insured
arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement
benefits, life, health, disability or accident benefits
(including without limitation any voluntary employees'
beneficiary association as defined in Section 501(c)(9) of the
Code providing for the same or other benefits) or for deferred
compensation, profit-sharing bonuses, stock options, stock
appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or
benefits which (A) is not a Welfare Plan or Pension Plan, (B) is
entered into, maintained, contributed to or required to be
contributed to, as the case may be, by the Company or an ERISA
Affiliate or under which the Company or any ERISA Affiliate may
incur any liability, and (C) covers any employee or former
employee of the Company or any ERISA Affiliate (with respect to
their relationship with such entities).
(ii) Employee Plans. Employee Plans shall mean all Benefit
Arrangements, Pension Plans and Welfare Plans.
(iii) ERISA. ERISA shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
(iv) ERISA Affiliate. ERISA Affiliate shall mean any entity
which is (or at any relevant time was) a member of a controlled
group of corporations with, under common control with, or a
member of an affiliated service group with, the Company as
defined in Section 414(b), (c), (m) or (o) of the Code.
(v) PBGC. PBGC shall mean the Pension Benefit Guaranty
Corporation.
(vi) Pension Plan. Pension Plan shall mean any employee
pension benefit plan as defined in Section 3(2) of ERISA (other
than a "multiemployer plan" as defined in Section 4001(a)(3) of
ERISA) (A) which the Company or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or,
within the six years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or
under which the Company or any ERISA Affiliate may incur any
liability and (B) which covers any employee or former employee of
the Company or any ERISA Affiliate (with respect to their
relationship with such entities).
(vii) Welfare Plan. Welfare Plan shall mean any employee
welfare benefit plan as defined in Section 3(1) of ERISA,
(A) which the Company or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or
under which the Company or any ERISA Affiliate may incur any
liability and (B) which covers any employee or former employee of
the Company or any ERISA Affiliate (with respect to their
relationship with such entities).
(b) Disclosure; Delivery of Copies of Relevant Documents and Other
Information. Section 2.18 of the Disclosure Schedule contains a
complete list of Employee Plans. True and complete copies of
each of the following documents have been delivered by the
Company to Buyer: (i) each Welfare Plan and Pension Plan (and,
if applicable, related trust agreements) and all amendments
thereto, all written interpretations thereof and written
descriptions thereof which have been distributed by the Company
or any ERISA Affiliate to the employees of the Company or any
ERISA Affiliate and all annuity Contracts or other funding
instruments, (ii) each Benefit Arrangement including written
interpretations thereof and written descriptions thereof which
have been distributed to the employees of the Company or any
ERISA Affiliate and a complete description of any Employee Plan
which is not in writing, (iii) the most recent determination or
opinion letter, if any, issued by the Internal Revenue Service
with respect to each Pension Plan and each Welfare Plan, (iv) for
the two most recent plan years, Annual Reports on Form 5500
Series required to be filed with any governmental agency for each
Pension Plan, and (v) a description setting forth the amount of
any liability of the Company or any ERISA Affiliate as of the
Closing Date for payments more than 30 days past due with respect
to each Welfare Plan. The Company is not, and has not been for
any of the last three plan years, required to prepare actuarial
reports for any Pension Plan. The Company's vacation policy
provides that employees will accrue vacation from and after the
first six months of employment with the Company. The Company
will deliver to Rentrak a list of all Store Employees who have
accrued vacation and the number of days of such accrued vacation
which they will have as of the Closing Date.
(c) Representations.
(i) Multiemployer Plans. Neither the Company nor any ERISA
Affiliate maintains, administers, contributes to or is required
to contribute to any "multiemployer welfare plan" as defined in
Section 3(37) of ERISA, "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Pension Plan, after September 25,
1980, maintained, administered, contributed to or was required to
contributed to any such plan.
(ii) Welfare Plans
a. Each Welfare Plan has been maintained in compliance with its
terms and, both as to form and operation, with the requirements
prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Welfare Plan, including without
limitation ERISA and the Code.
b. None of the Company, any ERISA Affiliate or any Welfare Plan
has any present or future obligation to make any payment to, or
with respect to any present or former employee of the Company or
any ERISA Affiliate pursuant to, any retiree medical benefit
plan, or other retiree Welfare Plan, and no condition exists
which would prevent the Company from amending or terminating any
such benefit plan or Welfare Plan.
c. Each Welfare Plan which is a group health plan, as defined in
Section 607(1) of ERISA has been operated in compliance with
provisions of Part 6 of Title I, Subtitle B of ERISA and Sections
162(k) (for plan years beginning before January 1, 1989) and
4980B of the Code at all times.
(iii) Benefit Arrangements. Each Benefit Arrangement has been
maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Benefit Arrangement, including
without limitation the Code.
(iv) At-Will Employment. Except as provided by applicable law,
the employment of all persons presently employed or retained by
the Company is terminable at will.
(v) Unrelated Business Taxable Income. No Employee Plan (or trust
or other funding vehicle pursuant thereto) is subject to any tax
under Code Section 511.
(vi) Deductibility of Payments. There is no contract, agreement,
plan or arrangement covering any employee or former employee of
the Company (with respect to their relationship with such
entities) that, individually or collectively, provides for the
payment by the Company of any amount (i) that is not deductible
under Section 162(a)(1) or 404 of the Code or (ii) that is an
excess parachute payment pursuant to Section 280G of the Code.
(vii) Fiduciary Duties and Prohibited Transactions. Neither the
Company nor any plan fiduciary of any Welfare Plan, has engaged
in any transaction in violation of Sections 404 or 406 of ERISA
or any prohibited transaction, as defined in Section 4975(c)(1)
of the Code, for which no exemption exists under Section 408 of
ERISA or Section 4975(c)(2) or (d) of the Code, or has otherwise
violated the provisions of Part 4 of Title I, Subtitle B of
ERISA. the Company has not knowingly participated in a violation
of Part 4 of Title I, Subtitle B of ERISA by any plan fiduciary
of any Welfare Plan and has not been assessed any civil penalty
under Section 502(l) of ERISA.
(viii) No Amendments. Neither the Company nor any ERISA Affiliate
has any announced plan or legally binding commitment to create
any additional Employee Plans or to amend or modify any existing
Employee Plan.
(ix) No Other Material Liability. No event has occurred in
connection with which the Company or any ERISA Affiliate or any
Employee Plan, directly or indirectly, could be subject to any
material liability in effect as of the date of this Agreement and
as of the Closing Date (A) under any statute, regulation or
governmental order relating to any Employee Plans or (B) pursuant
to any obligation of the Company or any ERISA Affiliate to
indemnify any person against liability incurred under any such
statute, regulation or order as they relate to the Employee
Plans.
(x) Insurance Contracts. Neither the Company nor any Employee
Plan holds as an asset of any Employee Plan any interest in any
annuity contract, guaranteed investment contract or any other
investment or insurance contract issued by an insurance company
that is the subject of bankruptcy, conservatorship or
rehabilitation proceedings.
(xi) No Acceleration or Creation of Rights. Neither the execution
and delivery of this Agreement by the Company nor the
consummation of the transactions contemplated hereby will result
in the acceleration or creation of any rights of any person to
benefits under any Employee Plan (other than accrued vacation
benefits).
Section 2.19 Labor Matters.
(a) The Company is not a party to any collective bargaining
agreement or other labor union contract applicable to persons
employed by the Company with respect to the Business. The
Company has not experienced any attempt by organized labor or its
representatives to make the Company conform to demands of
organized labor or enter into a binding agreement with organized
labor relating to the employees employed in the Business. No
strike, slowdown, picketing or work stoppage by any union or
other group of employees against the Company or its assets
wherever located, and no secondary boycott with respect to its
products, lockout by them of any of its employees or any other
labor trouble or concerted employee activity or other occurrence,
event or condition of a similar material character, has occurred
within the last year or, to the Company's knowledge, been
threatened with respect to the Business.
(b) There are no contracts of employment or employee compensation,
including, without limitation, (i) contracts to employ or
terminate executive officers or other personnel and other
contracts with present or former officers, directors or
shareholders of the Company with respect to the Business,
(ii) contracts that will result in the payment by, or the
creation of any commitment or obligation (absolute or contingent)
to pay on behalf of Rentrak or the Company any severance,
termination, "golden parachute," or other similar payments to any
present or former personnel following termination of employment
or otherwise as a result of the consummation of the transactions
contemplated by this Agreement, and (iii) contracts with
independent contractors or consultants to which the Company is a
party with respect to the Business (other than informal contracts
that can be terminated without any liability to the Company,
except for post-severance obligations set forth in Section
2.19(b) of the Disclosure Schedule, incurred in the ordinary
course of the Business).
Section 2.20 Taxes.
(a) Filing of Tax Returns. The Company has timely filed with the
appropriate taxing or other Governmental Authorities all returns,
reports, estimates, information returns and statements
(collectively, "Returns") required to be filed in respect of any
Taxes. The Returns filed are complete, correct and accurate in
all material respects.
(b) Payment of Taxes. Except as set forth in Schedule 2.20, all
Taxes of the Company, in respect of periods or portions thereof
ending on or before the Closing Date, have been paid, or, except
with respect to income taxes, an adequate reserve has been
established therefor, and the Company has no Liability for Taxes
in excess of the amounts so paid or reserves so established,
including any Liability for Taxes due or payable by the Company
pursuant to Treasury Reg. Section 1.1502-6 or any similar law, rule or
regulation administered by any taxing or other Governmental
Authority. All Taxes that the Company has been required to
collect or withhold have been duly collected or withheld and, to
the extent required when due, have been or will be duly paid to
the proper taxing authority.
(c) Audit History. Except as set forth in Schedule 2.20, no
deficiencies for Taxes of the Company have been claimed, proposed
or assessed by any taxing or other Governmental Authority.
Except as set forth in Schedule 2.20, there are no pending or, to
the Company's knowledge, threatened audits, investigations,
claims or assessments for or relating to any Liability in respect
of Taxes of the Company, and there are no matters under
discussion with any Governmental Authorities with respect to
Taxes that are likely to result in an additional Liability for
Taxes.
(d) Tax Elections. All elections with respect to Taxes affecting
the Company as of the date hereof are set forth on the Company's
latest Returns. The Company has not: (i) made or will make a
deemed dividend election under Reg. Section 1.1502-32(f)(2) or a
consent dividend election under Section 565 of the Internal
Revenue Code of 1986, as amended, and the rules and regulations
thereunder (the "Code"); (ii) consented at any time under
Section 341(f)(1) of the Code to have the provisions of
Section 341(f)(2) of the Code apply to any disposition of the
Company's assets; (iii) agreed, or is required, to make any
adjustment under Section 481(a) of the Code by reason of a change
in accounting method or otherwise; (iv) made an election, or is
required, to treat any asset of the Company as owned by another
person pursuant to the provisions of Section 168(f) of the Code
or as tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the Code; or
(v) made any of the foregoing elections or is required to apply
any of the foregoing rules under any comparable state or local
Tax provision.
(e) Prior Affiliated Groups. The Company has never been a member
of an affiliated group of corporations within the meaning of
Section 1504 of the Code.
(f) Tax Sharing Agreements. There are no, and at the Closing
there will be no, tax-sharing agreements or similar arrangements
with respect to or involving the Company, and, after the Closing
Date, the Company shall not be bound by any such tax-sharing
agreements or similar arrangements (entered into prior to the
Closing) or have any Liability thereunder for amounts due in
respect of periods prior to the Closing Date.
(g) Partnerships. The Company is not subject to any joint
venture, partnership, or other arrangement or contract which is
treated as a partnership for federal income tax purposes.
(h) Foreign Person. For purposes of withholding under
Section 1445 of the Code, neither the Shareholder nor the Company
is a "foreign person" as defined in Section 1445(f)(3) of the
Code.
(i) Definition of Taxes. For purposes of this Agreement, "Taxes"
shall mean all Federal, state, local, foreign and other taxes,
levies, imposts, assessments, impositions or other similar
government charges, including, without limitation, income,
estimated income, business, occupation, franchise, real property,
payroll, personal property, sales, transfer, stamp, use,
employment, commercial rent or withholding, occupancy, premium,
gross receipts, profits, windfall profits, deemed profits,
license, lease, severance, capital, production, corporation, ad
valorem, excise, duty or other taxes, including interest,
penalties and additions thereto.
Section 2.21 Insurance. The following information with respect
to each insurance policy to which the Company has been a party
with respect to the Business, a named insured, or otherwise, to
the knowledge of the Shareholder and the Company, the beneficiary
of coverage at any time within the past three years has made
available to Rentrak: (a) the name of the broker and insurer;
(b) the name of the policyholder and the name of each covered
insured; (c) the policy number and the period of coverage;
(d) the amount of coverage and the premium; and (e) a description
of the coverage provided by such policy.
The Company has provided to Rentrak accurate and complete lists,
for each of the lines of coverage identified on the Disclosure
Schedule with respect to the Business, of loss experience history
in excess of $10,000 for the past three years and a description
of all claims in excess of $25,000 for the past three years.
Such insurance is in full force and effect and provides, and
during such period provided, coverage to the extent and in the
manner which is (a) customary for the industry in which the
Business is operated and (b) as may be required by law and by any
and all Contracts to which the Company is a party with respect to
the Business. The Company is not in material Default under any
of such policies or binders, and the Company has not failed to
give any notice or to present any claim under any such policy or
binder in a due and timely fashion. No insurer has advised the
Company that it intends to reduce or cancel coverage, increase
premiums or fail to renew any existing policy or binder with
respect to the Business. There are no provisions in such
insurance policies for retroactive or retrospective premium
adjustments with respect to the Business. Except as set forth in
Section 2.21 of the Disclosure Schedule, there are no outstanding
performance bonds covering or issued for the benefit of the
Company with respect to the Business.
Section 2.22 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby, based upon
arrangements made by or on behalf of the Shareholder or the
Company.
Section 2.23 Environmental Legislation.
(a) For the purposes of this Agreement, the term "Environmental
Laws" shall mean all federal, state and local environmental
protection, occupational, health and safety or similar laws,
ordinances, restrictions, licenses, rules, regulations and permit
conditions, including but not limited to the Federal Water
Pollution Control Act, Resource Conservation & Recovery Act, Safe
Drinking Water Act, Toxic Substances Control Act, Clean Air Act,
Comprehensive Environmental Response, Compensation and Liability
Act, Emergency Planning and Community Right to Know or other U.S.
or Canadian federal, state, province, or local laws of similar
effect, each as amended as of the Closing Date, and the term
"Hazardous Materials" shall mean any hazardous or toxic
substances, wastes or materials, including without limitation
petroleum or petroleum products, defined as such or governed by
any applicable Environmental Law.
(b) Except as described in Section 2.23 of the Disclosure
Schedule, (i) throughout the period of the Company's ownership or
operation of the Stores, the Company has not received any written
notices, directives, violation reports, actions or claims from or
by (A) any local, state or federal governmental agency concerning
Environmental Laws or (B) any person alleging that, in connection
with Hazardous Materials, conditions at any of the Stores or the
Company's acts or omissions have resulted in or caused or
threatened to result in or cause injury or death to any person or
damage to any property, including without limitation, damage to
natural resources, and, to the best of the Shareholder's or the
Company's knowledge, no such notice, directive, violation report,
action, claim or allegation exists; and (ii) to the best of the
Shareholder's or the Company's knowledge during the time that the
Company has leased any of the Stores, the Stores have been in
material compliance with all applicable state, federal and local
Environmental Laws.
Section 2.24 Restrictions. The Company is not a party to any
Contract or subject to any restriction or any Governmental Order
which affects or restricts the ability of the Company or the
Shareholder to consummate the transactions contemplated by this
Agreement.
Section 2.25 Third-Party Options. There are no existing
contracts, options, commitments or rights with, to or in any
third party to acquire the Company, any Assets or any interest
therein or in the Business (other than sales of Inventory in the
ordinary course of business).
Section 2.26 Material Misstatements Or Omissions. No
representations or warranties by the Company or the Shareholder
in this Agreement, nor any document, exhibit, statement,
certificate or schedule furnished to Rentrak pursuant hereto,
including without limitation the Disclosure Schedule, contains or
will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary to make the
statements or facts contained therein not misleading.
Section 2.27 Transactions With Certain Persons. Except as
provided for in this Agreement, after the Closing, Rentrak shall
have no obligation or liability to any current or former
shareholder, officer, director or employee of the Company or any
member of any such person's immediate family or any entity in
which any such person has a direct or indirect ownership interest
(other than by ownership of less than five percent of the issued
and outstanding stock of a corporation whose stock is publicly
traded) (each, a "Related Party") including without limitation,
any Contract (a) providing for the furnishing of services by,
(b) providing for the rental of real or personal property from,
or (c) otherwise requiring payments to (other than for services
as officers, directors or employees of the Company or of Rentrak)
any such Related Party.
Section 2.28 Rentrak Stock. The Shareholder and the Company are
acquiring the shares of Rentrak Stock solely for the purpose of
investment and not with a view to, or for offer or sale in
connection with, any distribution thereof, except as contemplated
by this Agreement. The Shareholder and the Company acknowledge
that the shares of Rentrak Stock have not been registered under
the Securities Act or under the securities or "blue sky" laws of
any state. This Section 2.28 shall not affect Rentrak's
obligations under Section 1.06 with respect to the registration
of the Purchase Shares.
Section 2.29 Assumed Contracts. All of the Assumed Contracts
are valid, binding and enforceable against the Company in
accordance with their terms. The Company has fulfilled, or taken
all action necessary to enable it to fulfill when due, all of
their material obligations under each of such Assumed Contracts,
and (i) the Company has complied, and to the knowledge of the
Shareholder and the Company all other parties to such Assumed
Contracts have complied, in all material respects with the
provisions thereof, (ii) no party is in material Default
thereunder (other than a Default of a payment obligation which is
disclosed in the Disclosure Schedule), and (iii) no notice of any
claim of Default has been given to the Company. The Company is
not a party to any Contract with respect to the Assets or the
Business pursuant to which the Company has the right to receive
any revenue.
ARTICLE III REPRESENTATIONS AND WARRANTIES OF RENTRAK
As an inducement to the Shareholder to enter into this Agreement,
Rentrak represents and warrants to the Shareholder and the
Company as follows:
Section 3.01 Incorporation and Authority. Rentrak is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Oregon and has all
necessary corporate power and authority to enter into this
Agreement, to carry out its obligations hereunder and to
consummate the transactions contemplated hereby. The execution
and delivery of this Agreement, and the consummation of the
transactions contemplated hereby, have been duly authorized by
all necessary corporate action of Rentrak, and upon execution and
delivery of this Agreement this Agreement will be a valid and
legally binding agreement of Rentrak.
Section 3.02 No Conflict. The execution, delivery and
performance of this Agreement by Rentrak and the consummation of
the transactions contemplated hereby do not and will not
(a) violate or conflict with its Articles of Incorporation or
Bylaws (or other similar applicable documents), (b) conflict with
or violate any Governmental Order applicable to it, (c) conflict
with, result in any breach of, or constitute a Default under, any
Contract relating to its business or assets or to or by which it
is a party or is otherwise bound or affected, (d) require it to
notify or obtain any License or Consent from any Governmental
Authority or other person or (e) result in any other event that
would, or is reasonably likely to, affect its ability to
consummate the transactions contemplated hereby.
Section 3.03 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Rentrak.
Section 3.04 Financial Condition. Prior to the date hereof,
Rentrak has delivered to the Company and the Shareholder copies
of the consolidated Balance Sheet of Rentrak as of March 31, 1994
and March 31, 1995, the consolidated Statements of Operations,
Stockholders' Equity and Cash Flows for the years ended March 31,
1993, March 31, 1994 and March 31, 1995 and all related notes and
schedules, together with the report thereon of Arthur Andersen &
Co., independent certified public accountants, and its unaudited
financial statements as of June 30, 1995 and for the three-month
period then ended. All of such financial statements (including
any related notes and schedules) (collectively, the "Rentrak
Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied on a basis
consistent with prior years of Rentrak and present fairly, in all
material respects, the financial condition of Rentrak as of the
respective dates thereof and the results of its operations for
the periods then ended subject, in the case of the financial
statements as of, and for the three-month period ended June 30,
1995, to normal year-end audit adjustments. Rentrak has also
delivered to the Company and Shareholder copies of Rentrak's most
recent reports to the Commission on forms 10-K and 10-Q and all
of Rentrak's annual reports, definitive proxy materials and all
reports on form 8-K since the filing of the form 10-K with
respect to fiscal year ended March 31, 1995. Such reports are
accurate, complete and comply as to form in all material respects
with the requirements of the federal securities laws, and none of
such reports contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
Section 3.05 Capital Stock of Rentrak. The authorized capital
stock of Rentrak consists of 30,000,000 shares of common stock
(the "Rentrak Stock"), par value $.001 per share, and
10,000,000 shares of preferred stock, par value $.001 per share,
of which 11,220,067 shares of Rentrak Stock and no shares of
preferred stock were issued and outstanding as of August 4, 1995.
Except as disclosed in the Rentrak Financial Statements and as
contemplated by this Agreement, there are no options, warrants or
rights of conversion or exchange or other rights, agreements,
arrangements or commitments obligating, or which may obligate,
directly or indirectly, Rentrak to sell or issue additional
shares of its capital stock. Rentrak has reserved sufficient
shares of the authorized Rentrak Stock for issuance to the
Shareholder as required by the terms of this Agreement, and when
issued to the Shareholder hereunder, all of the shares, will be
validly issued, fully paid and nonassessable shares of Rentrak
Stock.
ARTICLE IV ADDITIONAL AGREEMENTS
Section 4.01 Legend. All share certificates representing shares
of Rentrak Stock to be delivered to the Shareholder hereunder
shall bear a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES LAWS (THE "STATE ACTS"), HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE ACTS
OR EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION
REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE
EXEMPTION AFFORDED BY RULE 144). UNLESS WAIVED BY RENTRAK
CORPORATION, RENTRAK CORPORATION SHALL BE FURNISHED WITH AN
OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF EXEMPTIONS
FROM SUCH REGISTRATION AND QUALIFICATION AS A PRECONDITION TO ANY
SUCH TRANSFER.
All such share certificates shall also bear the legend as set
forth in the Voting Agreement.
In connection with any transfers of Rentrak Stock delivered
pursuant to this Agreement which are made by or on behalf of the
Shareholder pursuant to an effective registration statement,
Rentrak will not require the Shareholder to provide the opinion
of counsel referred to in such legend. Upon the effectiveness of
a registration statement covering the Purchase Shares Rentrak,
upon the request of the Shareholder, shall instruct the transfer
agent to remove the foregoing legend.
Section 4.02 Employees
(a) Rentrak, or a wholly owned subsidiary of Rentrak, may extend
offers of employment to those of the Company's employees who are
employed at the Stores whom it desires to hire as of the Closing
Date (such employees are hereinafter referred to as the "Rehired
Employees"), which offers shall be on terms and conditions that
Rentrak shall determine in its sole discretion. The number of
the Store Employees that Rentrak will not offer to hire, if any,
will be less than 50. Immediately prior to the Closing, the
Company shall terminate the employment of all of its employees
employed at the Stores (the "Store Employees") as of the Closing
Date and shall pay all obligations with respect to such Store
Employees, and, except with respect to accrued vacation, fulfill
all obligations under the applicable employee benefit plans
(including any severance, wages and commissions, and other
benefits) in respect of periods prior to the Closing. With
respect to accrued vacation, at Closing, the Company shall pay
Rentrak cash equal to the amount of accrued vacation with respect
to the Rehired Employees (based on an amount of accrued vacation
which would have accrued from and after the first day of
employment with the Company), and after Closing, Rentrak will
honor all accrued vacation obligations with respect to such
Rehired Employees. The Company shall provide all Store Employees
and other necessary persons such notice and continuation coverage
rights as may be required under Section 4980B of the Code. Prior
to Closing, Rentrak agrees to treat all employee records in a
confidential manner and to take all steps reasonably required to
protect the rights of privacy of employees with respect to such
records. After Closing, in the event that a Rehired Employee is
terminated under circumstances in which he is not entitled to
receive all or a portion of the accrued vacation pay that was
paid by the Company to Rentrak pursuant to this Section 4.02(a)
(the "Unused Vacation Pay"), Rentrak shall reimburse the Company
in an amount equal to the Unused Vacation Pay.
(b) The Company shall be solely responsible for all of the
Company's employee benefit plans (whether with respect to the
Store Employees or otherwise) and all obligations and liabilities
thereunder and, except as provided in Section 4.02(a) with
respect to accrued vacation, Rentrak shall not assume any of such
employee benefit plans or any obligation or liability thereunder.
With respect to the Rehired Employees, the Company shall not have
obligation or liability for severance or any other benefit
arising after the Closing, except as required under Section 4980B
of the Code.
(c) Nothing contained in this Agreement (including, without
limitation, the reference to informal agreements in Section 2.19
(b)) shall confer upon any employee of the Company, including any
Store Employees or Rehired Employee, any right with respect to
continuance of employment by Rentrak, nor shall anything herein
interfere with the right of Rentrak to terminate the employment
of any of the Rehired Employees at any time, with or without
cause, or restrict Rentrak in the exercise of its independent
business judgment in modifying any of the terms and conditions of
the employment of the Rehired Employees.
(d) No provision of this Agreement shall create any third party
beneficiary rights in any Store Employee, any beneficiary or
dependents thereof, or any collective bargaining representative
thereof, with respect to the compensation, terms and conditions
of employment and benefits that may be provided to any Rehired
Employee by Rentrak or under any benefit plan which Rentrak may
maintain.
(e) Company and the Shareholder agree to comply in all respects
with the notice and other requirements of the Worker Adjustment
Retraining and Notification Act, 19 U.S.C. Section 2101 et seq., and
any similar applicable state statute. Rentrak shall have no
liability arising out of such statutes with respect to any
employee of the Company.
Section 4.03 Further Assurances.
(a) Upon the terms and subject to the conditions contained
herein, each of the parties hereto agrees, both before and after
the Closing, (i) to use all reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement, (ii)
to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any
of the transactions contemplated hereunder, and (iii) to
cooperate with each other in connection with the foregoing,
including using their respective reasonable efforts (A) to obtain
all necessary Consents from other parties to permit the
consummation of the transactions contemplated hereby; provided,
however, that neither Rentrak nor the Company or the Shareholder
shall be required to make any payments, commence litigation or
agree to modifications of the terms thereof in order to obtain
any such consents, (B) to obtain all necessary Consents as are
required to be obtained under any federal, state, local or
foreign law or regulations to permit the consummation of the
transactions contemplated hereby, (C) to defend all Litigation
challenging this Agreement or the consummation of the
transactions contemplated hereby, (D) to lift or rescind any
injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the
transactions contemplated hereby, (E) to effect all necessary
registrations and filings, including without limitation
submissions of information requested by governmental authorities,
and (F) to fulfill all conditions to this Agreement. In
addition, Rentrak, the Shareholder and the Company will promptly
commence all actions required under clauses (A) and (B) above by
a date which is early enough to allow the transactions
contemplated hereunder to be consummated by the Closing Date;
provided, that no liability shall result to any party hereto in
the event that all required Consents are not obtained so long as
such party shall have used its reasonable efforts to obtain such
Consents.
(b) Without limiting the foregoing:
(i) On or prior to Closing, the Company will use its reasonable
efforts to obtain the acknowledgements in the form attached as
Exhibits 4.03A and 4.03B (the "Lease Consents").
Section 4.04 No Solicitation. From the date hereof through the
Closing or the earlier termination of this Agreement, each of the
Company and the Shareholder shall not and the Company shall not
cause its shareholders, officers, directors, attorneys, agents
and affiliates to, and the Shareholder shall not cause its
attorneys, agents and affiliates to, directly or indirectly,
enter into, solicit, initiate or continue any discussions or
negotiations with, or encourage or respond to any inquiries or
proposals by, or participate in any negotiations with, or provide
any information to, or otherwise cooperate in any other way with,
any corporation, partnership, person or other entity or group,
other than Rentrak and its officers, directors, attorneys, agents
and affiliates, concerning any sale of all or a portion of the
Assets or the Business, or of any shares of capital stock of the
Company, or any merger, consolidation, liquidation, dissolution
or similar transaction involving the Company. The Shareholder
and the Company hereby represent that neither the Shareholder nor
the Company is engaged in discussions or negotiations with any
party other than Rentrak with respect to any of the foregoing.
The Shareholder and the Company agree not to release any third
party from, or waive any provision of, any confidentiality or
standstill agreement to which the Shareholder or the Company is a
party.
Section 4.05 Notification of Certain Matters. From the date
hereof through the Closing, the Shareholder and the Company shall
give prompt notice to Rentrak of (a) the occurrence, or failure
to occur, of any event which occurrence or failure would be
likely to cause any representation or warranty contained in this
Agreement or in any exhibit or schedule hereto to be untrue or
inaccurate in any material respect and (b) any material failure
of the Company or the Shareholder to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied
by it under this Agreement or any exhibit or schedule hereto;
provided, however, that such disclosure shall not be deemed to
cure any breach of a representation, warranty, covenant or
agreement or to satisfy any condition.
Section 4.06 Conduct of Business. From the date hereof through
the Closing, the Company shall, except as contemplated by this
Agreement, or as consented to by Rentrak in writing which consent
will not be unreasonably withheld, operate its business in the
ordinary course and in accordance with past practice and will not
take any action inconsistent with this Agreement or with the
consummation of the Closing. Without limiting the generality of
the foregoing, neither the Company nor the Shareholder shall,
except as specifically contemplated by this Agreement, or except
as specifically agreed to in writing by Rentrak (or as set forth
in Schedule 4.06) and the Shareholder:
(a) extend, materially modify, terminate or renew any Assumed
Contract or Assumed Lease or enter into any lease, or except in
the ordinary course of the Business, any Contract with respect to
the Business;
(b) sell, assign, transfer, convey, lease, mortgage, pledge or
otherwise dispose of or encumber any of the Assets, or any
interests therein, except in the ordinary course of the Business
and, without limiting the generality of the foregoing, the
Company will maintain, replenish and sell Inventory consistent
with its past practices, and the Company will not sell, assign or
transfer more than 50 Units in any one transaction or series of
transactions with the same buyer or related buyers;
(c)(i) take any action with respect to the grant of any bonus,
severance or termination pay or with respect to any increase of
benefits payable under its severance or termination pay policies
or agreements in effect on the date hereof or increase in any
manner the compensation or fringe benefits of any employee or pay
any benefit not required by any existing employee benefit plan or
policy;
(ii) except in the ordinary course of the Company's business,
adopt, enter into or amend any employee benefit plan, agreement
(including without limitation any collective bargaining or
employment agreement), trust, fund or other arrangement for the
benefit or welfare of any employee;
(d) fail to use its reasonable efforts to maintain existing
relationships with suppliers, customers, lessors and others
having business dealings with the Company or otherwise fail to
use its reasonable efforts to preserve the goodwill of the
business so that such relationships and goodwill will be
preserved;
(e) fail to maintain the Assets in good condition and working
order, excepting normal wear and tear or fail;
(f) fail to comply in all material respects with all laws
applicable to the Shareholder, the Company or the Assets;
(g) intentionally do any other act which would cause any
representation or warranty of the Company or the Shareholder in
this Agreement to be or become untrue in any material respect;
(h) fail to notify Rentrak of any threat or commencement of
Litigation, or any development that occurs before Closing that
could in any way materially and adversely affect the Business or
the Assets; or
(i) enter into any agreement, or otherwise become obligated, to do
any action prohibited hereunder.
Section 4.07 PPT System. Prior to Closing, the Company shall
use its reasonable efforts to install and/or upgrade the point-
of-sale system software at each Store with a Spectrum system so
that it has Rentrak-compatible and authorized Spectrum "Version
8.5RT." In connection with the Company's efforts to install
and/or upgrade such systems, the Company shall provide to Rentrak
personnel access to each Store at times which are mutually
agreeable to the parties and shall cooperate fully with such
personnel. Rentrak shall be responsible for the cost of its
personnel (payroll and travel expenses) and the Company shall be
solely responsible for additional costs, if any, associated with
or arising out such installation and/or upgrade, or actions taken
in connection therewith, including lost sales during the
installation and/or upgrade process; provided that the Company
shall not be obligated to expend out of pocket more than an
aggregate of $5,000 with respect to any such installation or
upgrade (exclusive of lost profits or salary and benefits of
Company personnel). Rentrak shall use its reasonable efforts to
assist the Company with respect to such installation and/or
upgrade. Prior to Closing, the Company shall use its reasonable
efforts to ensure that the UBS systems located in five Stores are
compatible with Rentrak's PPT system. At Closing, the Company
will pay Rentrak $8,750 in respect of the foregoing.
Section 4.08 SuperComm Agreement. At or prior to Closing, the
Company shall terminate the SuperComm Agreement.
Section 4.09 Cash at Stores. At 12:01 a.m. on the Closing Date,
the Company shall have at least $75 in cash in each cash drawer
in each Store. After 12:01 a.m. on the Closing Date, neither the
Company nor the Shareholder shall remove any cash from the
Stores, and neither the Company nor the Shareholder shall pay any
Company expenses with cash from the Stores.
Section 4.10 Corporate Office/Warehouse. For three weeks after
the Closing Date, Rentrak will provide Shareholder with his
current office at the Corporate Office/Warehouse for his use
during normal business hours (9:00 a.m. to 5:00 p.m. on business
days). Rentrak shall promptly reimburse the Company and the
Shareholder for rental expense paid by the them pursuant to the
Excluded Lease or any month-to-month arrangement thereunder
arising out of Rentrak's occupancy of the Corporate
Office/Warehouse on and after the Closing Date. After the
Closing, the Shareholder and the Company shall take such action
(including giving or refraining to give any notice) as Rentrak
may reasonably request with respect to the Excluded Lease (or any
such month-to-month arrangement). Without limiting the
foregoing, after the date of this Agreement, without Rentrak's
prior written consent, neither the Shareholder nor the Company
shall give the landlord under the Excluded Lease any notice of
termination or similar notice.
Section 4.11 Tax Reporting. The Company and the Shareholder
covenant and agree that in the event it or he receives any notice
or inquiry from the Internal Revenue Service with respect to the
characterization of any payments made under this Agreement or any
agreement contemplated hereby, the Company and the Shareholder
will give prompt written notice to Rentrak concerning such notice
or inquiry. The parties agree to report the consideration
delivered to the Shareholders under this Agreement as a taxable
transaction.
Section 4.12 Continued Corporate Existence. The Company and the
Shareholder agree that they will maintain the corporate existence
of the Company at least through June 30, 1997.
ARTICLE V CONDITIONS
Section 5.01 Conditions to the Obligations of the Company and
the Shareholder. The obligations of each of Company and the
Shareholder to consummate the transactions provided for hereby
are subject, in the discretion of such party, to the
satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by such party:
(a) Representations, Warranties and Covenants. All
representations and warranties of Rentrak contained in this
Agreement shall be true and correct in all material respects at
and as of the date of this Agreement and at and as of the Closing
Date. Rentrak shall have performed and satisfied all material
agreements and covenants required hereby to be performed by it
prior to or on the Closing Date.
(b) No Proceedings or Litigation. No Action by any governmental
authority or other person shall have been instituted or
threatened which questions the validity or legality of the
transactions contemplated hereby, including without limitation
any material adverse effect on the right or ability of Rentrak to
own, operate, possess or transfer the Assets after the Closing.
There shall not be any statute, rule or regulation that makes the
purchase and sale of the Assets contemplated hereby illegal or
otherwise prohibited or that would materially interfere with the
Company's and the Shareholder's ability to perform their
obligations hereunder.
(c) Certificates. Rentrak shall furnish the Company and the
Shareholder with a certificate of one of its officers to evidence
compliance with the conditions set forth in this Section 5.01.
(d) Consents. The Company shall have obtained executed copies of
each of the Lease Consents.
(e) Deliveries by Rentrak at Closing. Rentrak shall have
delivered the following items to the Company and the Shareholder
at Closing:
(i) Non-Compete Agreement. Rentrak shall have executed and
delivered to the Shareholder and the Company the Non-Compete
Agreement in the form attached hereto as Exhibit A;
(ii) Stock. Rentrak shall have delivered the Purchase Shares to
the Company;
(iii) Resolutions. Rentrak shall have delivered to the
Shareholder copies of resolutions of the board of directors of
the Rentrak, certified by Rentrak's corporate secretary or
assistant secretary, authorizing the transactions contemplated
hereby;
(iv) Assumption Document. Rentrak shall have executed and
delivered to the Company an instrument of assumption in the form
of Exhibit B evidencing Rentrak's assumption, pursuant to
Section 1.04, of the Assumed Liabilities;
(v) Assumption of Assumed Leases. Rentrak or a wholly owned
subsidiary of Rentrak shall have executed and delivered to the
Company an Assumption of Lease in the form attached as Exhibit C
for each of the Assumed Leases; and
(vi) Voting Agreement. Rentrak shall have executed and delivered
to the Company and the Shareholder a voting agreement in the form
attached as Exhibit F (the "Voting Agreement").
Section 5.02 Conditions to the Obligations of Rentrak. The
obligations of Rentrak to consummate the transactions provided
for hereby are subject, in the discretion of Rentrak, to the
satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by Rentrak:
(a) Representations, Warranties and Covenants. All
representations and warranties of the Company and the Shareholder
contained in this Agreement shall be true and correct in all
material respects at and as of the date of this Agreement and at
and as of the Closing Date. The Company and the Shareholder
shall have performed and satisfied all material agreements and
covenants required hereby to be performed by it prior to or on
the Closing Date.
(b) No Proceedings or Litigation. No Action by any governmental
authority or other person shall have been instituted or
threatened which questions the validity or legality of the
transactions contemplated hereby and which could reasonably be
expected to damage Rentrak, the Assets or the Business materially
if the transactions contemplated hereby are consummated,
including without limitation any material adverse effect on the
right or ability of Rentrak to own, operate, possess or transfer
the Assets after the Closing. There shall not be any statute,
rule or regulation that makes the purchase and sale of the Assets
contemplated hereby illegal or otherwise prohibited.
(c) Certificates. The Company and the Shareholder shall furnish
Rentrak with such certificate of the Shareholder and an officer
of the Company to evidence compliance with the conditions set
forth in this Section 5.02.
(d) Material Changes. Since December 31, 1994, there shall not
have been any material adverse change with respect to the
Business or the Assets.
(e) Due Diligence Review. Rentrak and its representatives shall
have conducted a due diligence review of the Company with respect
to the Business, the Books and Records and the Assets, and in the
sole discretion of Rentrak, Rentrak shall be satisfied with the
results of such review. Such review shall have no effect
whatsoever on the liability of the Company or the Shareholder to
Rentrak under this Agreement or otherwise for breach of any
representations, warranties, or covenants of the Company or the
Shareholder hereunder.
(f) Rentrak Board Approval. The Board of Directors of Rentrak
shall have approved this Agreement and the transactions
contemplated hereby.
(g) Deliveries by the Shareholder and the Company at Closing. The
Shareholder and the Company (as indicated) shall have delivered
the following items to Rentrak at the Closing:
(i) Non-Compete Agreement. The Shareholder and the Company shall
have executed and delivered to Rentrak the Non-Compete Agreement;
(ii) Consents. The Company shall have delivered to Rentrak
executed copies of each of the Consents (including Lease
Consents) necessary to consummate the transactions contemplated
hereby, which Consents are listed on Section 2.04 of the
Disclosure Schedule;
(iii) Resolutions. The Company shall have delivered to Rentrak
copies of the Company's board resolutions authorizing the
transactions contemplated hereby, certified by the Company's
corporate secretary;
(iv) Instruments and Possession. To effect the sale and transfer
of the Assets the Company will, at the Closing, have executed and
delivered to Rentrak:
A. one or more bills of sale, in the form attached hereto as
Exhibit D, conveying in the aggregate all of the Assets;
B. Assignments of Lease with respect to the Assumed Leases in the
form of Exhibit C;
C. Assignments of rights to the Intellectual Property in
recordable form to the extent necessary to assign such rights;
and,
D. such other instruments as shall be requested by Rentrak to vest
in Rentrak title in and to the Assets in accordance with the
provisions hereof.
(v) Release of Liens. Such documents necessary to release the
Assets from all Liens other than Permitted Liens, which documents
shall be in a form reasonably satisfactory to Rentrak and
Rentrak's counsel;
(vi) Voting Agreement. The Shareholder and the Company shall have
executed and delivered to Rentrak the Voting Agreement;
(vii) Books and Records. The Shareholder and the Company shall
have delivered copies or originals (as specified in Section 2.06)
of the Books and Records to Rentrak; and
(viii) Reimbursements. The Company shall have delivered to
Rentrak a check equal to (A) the amount of percentage rent due
under the Wal-Mart Lease as provided in Section 1.08, less (B)
$13,900 with respect to one month's rent for each of seven Wal-
Mart Stores that the Company has paid in advance and which will
be held by Wal-Mart for Rentrak's benefit after the Closing, plus
(C) the amount in respect of accrued vacation pay in accordance
with Section 4.02, plus (D) $8,750 in accordance with Section
4.07.
(h) Termination of SuperComm Agreement. The Company shall have
terminated the SuperComm Agreement.
ARTICLE VI INDEMNIFICATION
Section 6.01 Survival of Representations and Warranties. The
representations and warranties of the Shareholder in Article II
(including the Disclosure Schedule) (other than Section 2.20 and
2.23) and Rentrak in Article III, shall survive through December
31, 1996. The representations and warranties in Section 2.20
shall survive until the expiration of the applicable statute of
limitations period specified in the Code or in the laws of any
state or other taxing jurisdiction (domestic or foreign)
requiring the filing of a Return relating to the Tax in question,
as such statute of limitations period may be validly extended
pursuant to applicable Tax laws. The representations and
warranties in Section 2.23 shall survive until the expiration of
the applicable statute of limitation period with respect to the
matters set forth therein. If written notice of a claim meeting
the requirements of Section 6.04(b) has been given prior to the
expiration of the applicable representations and warranties by a
party in whose favor such representations and warranties have
been made to the party that made such representations and
warranties, then the relevant representations and warranties
shall survive as to such claim, until the claim has been finally
resolved.
Section 6.02 Indemnification by Shareholder and the Company.
Except as otherwise limited by this Article, Rentrak and its
affiliates, officers, directors, employees, agents, successors
and assigns shall be indemnified and held harmless by the
Shareholder and the Company (jointly and severally) for any and
all liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (whether or not arising
out of third-party claims) (including, without limitation, costs
of mitigation, losses in connection with any Environmental Law
and other losses resulting from any shutdown or curtailment of
operations, reasonable attorneys' fees and expenses and all
amounts paid in investigation, defense or settlement of any of
the foregoing) (hereinafter "Losses"), arising out of or
resulting from (a) any misrepresentation or breach of warranty by
the Shareholder or the Company contained herein, or in any
document delivered hereunder; (b) the breach of any covenant or
agreement contained herein, to be performed by the Shareholder or
the Company; (c) the breach of the Non-Compete Agreement; (d) any
Excluded Liabilities; or (e) the Shareholder's actual or alleged
wrongful or illegal acts or omissions in connection with the sale
of Rentrak Stock issued pursuant to this Agreement, including in
the event of any registration under the Securities Act of a
Shareholder's Rentrak Stock issued pursuant to this Agreement,
any statement or omission in any prospectus or registration
statement prepared by Rentrak and used in connection with the
sale of such Rentrak Stock if such statement or omission was made
in reliance upon and in conformity with written information
furnished to Rentrak by or on behalf of a Shareholder; provided,
however, neither the Company nor Shareholder shall be liable to
any person in any such case to the extent that any Loss arises
out of or results from Rentrak's actual or alleged wrongful or
illegal act or omission.
Section 6.03 Indemnification by Rentrak. Except as otherwise
limited by this Article, the Shareholder and the Company, and
their respective heirs, affiliates, officers, directors,
employees, agents, successors and assigns shall be indemnified
and held harmless by Rentrak for any and all Losses arising out
of or resulting from (a) any misrepresentation or breach of
warranty by Rentrak contained herein or in any document delivered
hereunder; (b) the breach of any covenant or agreement by Rentrak
contained herein or in any other agreement delivered pursuant
hereto; (c) any Assumed Liabilities; or (d) in the event of any
registration under the Securities Act of a Holder's Rentrak Stock
issued pursuant to this Agreement, any actual or alleged wrongful
or illegal acts or omissions by Rentrak in connection with the
sale of Rentrak Stock issued pursuant to this Agreement,
including, but not limited to any statement or omission in any
prospectus or registration statement prepared by Rentrak and used
in connection with the sale of such Rentrak Stock; provided that
Rentrak shall not be liable to any person in any such case to the
extent that any Loss arises out or results from any statement or
omission in such prospectus or registration statement in reliance
upon and in conformity with written information furnished to
Rentrak by or on behalf of a Holder; provided further Rentrak
shall not be liable to any person in any such case to the extent
that any such Loss arises out of or results from such person's
failure to send or give a copy of the final prospectus, as the
same may be supplemented or amended, to the person asserting a
misstatement or omission at or prior to written confirmation of
the sale of the Rentrak Stock issued pursuant to this Agreement
to such person if such statement or omission was corrected in
such final prospectus as amended or supplemented and such final
prospectus as amended or supplemented had been provided
previously to such Indemnitee; and provided further, Rentrak
shall not be liable to any person in any such case to the extent
that any Loss arises out of or results from the Holder's actual
or alleged wrongful or illegal act or omission.
Section 6.04 General Indemnification Provisions.
(a) For the purposes of this Agreement, the term "Indemnitee"
shall refer to the person or persons indemnified, or entitled, or
claiming to be entitled, to be indemnified, pursuant to the
provisions of this Article VI, as the case may be; and the term
"Indemnitor" shall refer to the person having the obligation to
indemnify pursuant to this Article VI. The term "Losses" is not
limited to matters asserted by third parties, but includes Losses
incurred or sustained by an Indemnitee in the absence of third
party claims, and payments by the Indemnitee shall not be a
condition precedent to recovery.
(b) An Indemnitee shall give the Indemnitor notice of any matter
which an Indemnitee has determined has given or could give rise
to a right of indemnification under this Agreement as soon as
practicable after the Indemnitee becomes aware of such matter,
stating the amount of Losses, if known, and the method of
computation thereof, all with reasonable particularity and
containing a reference to the provisions of this Agreement in
respect of which such right of indemnification is claimed or
arises. The obligations and liabilities of an Indemnitor under
this Article VI with respect to Losses arising from claims of any
third party that are subject to the indemnification provided for
in this Article ("Third Party Claims") shall be governed by and
contingent upon the following additional terms and conditions: if
an Indemnitee shall receive notice of any Third Party Claim, the
Indemnitee shall give the Indemnitor notice of such Third Party
Claim as promptly as practicable (and in any event within fifteen
(15) calendar days after receiving such notice) and shall permit
the Indemnitor, at its option, to participate in the defense of
such Third Party Claim with counsel of its own choice and at its
expense. The Indemnitor shall also be entitled, at its option,
to assume and control the defense of such Third Party Claim at
its cost, risk and expense and through counsel of its choice if
it gives notice, within fifteen (15) calendar days after
receiving notice of such claim from the Indemnitee, of his or its
intention to do so to the Indemnitee, unless the named parties to
such action or proceeding include both the Indemnitor and the
Indemnitee and the Indemnitee has been advised in writing by
counsel that there may be one or more legal defenses available to
such Indemnitee that are different from or additional to those
available to the Indemnitor. In the event the Indemnitor
exercises its right to undertake the defense against any such
Third Party Claim as provided above, the Indemnitee shall
cooperate with the Indemnitor in such defense and make available
to the Indemnitor, at the Indemnitor's expense, all witnesses,
pertinent records, materials and information in its possession or
under its control relating thereto as is reasonably required by
the Indemnitor. Similarly, in the event the Indemnitee is,
directly or indirectly, conducting the defense against any such
Third Party Claim, the Indemnitor shall cooperate with the
Indemnitee in such defense and make available to it all such
witnesses, records, materials and information in its possession
or under its control relating thereto as is reasonably required
by the Indemnitee. No such Third Party Claim, except the
settlement thereof which involves the payment of money only and
for which the Indemnitee is fully indemnified by the Indemnitor,
may be settled by the Indemnitor without the written consent of
the Indemnitee, which consent will not be unreasonably withheld.
Similarly, no Third Party Claim may be settled by the Indemnitee
without the written consent of the Indemnitor, which consent will
not be unreasonably withheld. If the Indemnitor fails to assume
the defense of such Third Party Claim within fifteen (15)
calendar days after receipt of the notice thereof, the Indemnitee
against which such claim has been asserted will (upon delivering
notice to such effect to the Indemnitor) have the right to
undertake, at the Indemnitor's cost and expense in accordance
with this Article VI, the defense, compromise or settlement of
such claim on behalf of and for the account and risk of the
Indemnitor in accordance with this Article VI; provided, however,
that such Third Party Claim shall not be compromised or settled
without the written consent of the Indemnitor, which consent
shall not be unreasonably withheld.
Section 6.05 Limits on Indemnification.
(a) No Indemnitee listed in Section 6.02 shall be entitled to
assert any right to indemnification under Section 6.02(a) unless
the aggregate of all claims for Losses with respect to
Section 6.02(a) exceeds $20,000 individually or in the aggregate.
Once such claims exceed the $20,000 deductible, such Indemnitee
will be entitled to the full amount of all indemnified claims in
excess of the $20,000 deductible.
(b) No Indemnitee listed in Section 6.03 shall be entitled to
assert any right to indemnification under Section 6.03(a) unless
the aggregate of all claims for Losses with respect to
Section 6.03(a) exceeds $20,000 individually or in the aggregate.
Once such claims exceed the $20,000 deductible, such Indemnitee
will be entitled to the full amount of all indemnified claims in
excess of the $20,000 deductible.
(c) Any claim for indemnification under this Article shall be net
of any tax benefit that will be received by the Indemnitee as a
result of payment of the claim.
(d) Rentrak may withhold and set off against any amounts otherwise
due the Company or the Shareholder any amount as to which such
party is obligated to indemnify Rentrak hereunder.
(e) The aggregate indemnification liability of the Company and the
Shareholder, on the one hand, or Rentrak on the other under
Section 6.02(a) or Section 6.03(a), as the case may be, shall not
exceed the product of (x) the number of Purchase Shares
multiplied by (y) the average of the closing prices for Rentrak
Stock quoted on the Nasdaq National Market as published by Nasdaq
with respect to the 30 trading days immediately preceding the
Closing Date (the "Closing Price").
ARTICLE VII GENERAL PROVISIONS
Section 7.01 Termination.
(a) This Agreement may be terminated at any time prior to Closing:
(i) By mutual written consent of Rentrak, the Company and the
Shareholder;
(ii) By Rentrak, the Company or the Shareholder if the Closing
shall not have occurred on or before September 15, 1995 (the
"Outside Date"), provided, however, that this provision shall not
be available to Rentrak if the Company has the right to terminate
this Agreement under clause (iv)(A) or (iv)(B) of this
Section 7.01, and this provision shall not be available to the
Company if Rentrak has the right to terminate this Agreement
under clauses (iii)(A) or (iii)(B) of this Section 7.01;
(iii) By Rentrak (A) if there is a material breach of any
representation or warranty set forth in Article II hereof, (B) if
there is a material breach of any covenant or agreement to be
complied with or performed by the Company or the Shareholder
pursuant to the terms of this Agreement, (C) upon the failure of
a condition set forth in Section 5.02 to be satisfied (and such
condition is not waived in writing by Rentrak) on or prior to the
Closing Date, or (D) upon the occurrence of any event which
results or would reasonably be expected to result in the failure
of a condition set forth in Section 5.02 to be satisfied on or
prior to the Closing Date, provided that Rentrak may not
terminate this Agreement prior to the Closing Date if the Company
and the Shareholder have not been provided prior written notice
thereof and had an adequate opportunity to cure such failure;
provided that after August 28, 1995 Rentrak shall not have the
right to terminate this Agreement pursuant to this Section
7.01(a)(iii) because of the failure of any of the conditions set
forth in Sections 5.02(e) and 5.02(f); or
(iv) By the Company or the Shareholder (A) if there is a material
breach of any representation or warranty set forth in Article III
hereof, (B) if there is a material breach of any covenant or
agreement to be complied with or performed by Rentrak pursuant to
the terms of this Agreement, (C) upon the failure of a condition
set forth in Section 5.01 to be satisfied (and such condition is
not waived in writing by the Company and the Shareholder) on or
prior to the Closing Date, or (D) upon the occurrence of any
event which results or would reasonably be expected to result in
the failure of a condition set forth in Section 5.01 to be
satisfied on or prior to the Closing Date; provided that, neither
the Company nor the Shareholder may terminate this Agreement
prior to the Closing Date if Rentrak has not been provided
written notice thereof and had an adequate opportunity to cure
such failure.
(b) In the Event of Termination. In the event of termination of
this Agreement no party hereto shall have any liability to any
other party to this Agreement, except for any willful breach of
this Agreement occurring prior to the proper termination of this
Agreement.
Section 7.02 Expenses. Each party shall pay its or his own
costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants
incurred in connection with this Agreement.
Section 7.03 Notices. All notices and other communications
given or made pursuant hereto shall be in writing, with all
postage and other delivery charges prepaid, and shall be deemed
to have been duly given or made (i) as of the date delivered, if
delivered personally, (ii) as of the day after being deposited
with a recognized overnight courier, or (iii) as of the second
day after being deposited with the U.S. Postal Service,
registered or certified mail, return receipt requested; provided
that all such notices and other communications must be addressed
to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice), and
provided further that notices after the giving of which there is
a designated period within which to perform an act and notices of
changes of address shall be effective only upon receipt:
(a) if to the Shareholder or the Company:
Jack Silverman
11420 Ferrell Road, Suite 307
Dallas, Texas 75234
with a copy to:
Jenkens & Gilchrist, P.C.
Attn: Steven Leshin
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
(b) if to Rentrak:
Rentrak Corporation
Attn: F. Kim Cox
7227 N.E. 55th Avenue
Portland, OR 97218
with a copy to:
Latham & Watkins
Attn: Scott R. Haber, Esq.
505 Montgomery Street
Suite 1900
San Francisco, CA 94111
Section 7.04 Public Announcements. Unless otherwise required by
law or compelled in any proceeding, neither the Company nor the
Shareholder nor any of their respective affiliates shall make any
public announcements (including, without limitation, any public
announcement to any employees, customers or suppliers) in respect
of this Agreement or otherwise communicate with any news media,
except that the parties agree that the Shareholder and Rentrak
shall make a joint press release upon execution of this Agreement
and joint announcements to employees. Nothing contained herein
shall limit Rentrak's right to make any announcements or
disclosures.
Section 7.05 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 7.06 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced
by any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the
greatest extent possible.
Section 7.07 Entire Agreement. This Agreement (including any
Exhibits and Schedules hereto) and the Disclosure Schedule
constitute the entire agreement among the parties and supersede
all prior agreements and undertakings with respect to the subject
matter hereof.
Section 7.08 Assignment. This Agreement may not be assigned by
any party hereto, provided, that Rentrak may, without the consent
of the Shareholder or the Company assign its rights under this
Agreement to any wholly owned subsidiary of Rentrak, provided,
however, that any such assignment shall not release Rentrak of
any of its obligations under this Agreement.
Section 7.09 Governing Law. This Agreement shall be construed
in accordance with, and governed by the substantive laws of, the
State of Oregon, without reference to principles governing choice
or conflicts of laws.
Section 7.10 No Third-Party Beneficiaries. This Agreement is
for the sole benefit of the parties hereto and nothing herein
expressed or implied shall give or be construed to give to any
person or entity, other than the parties hereto and such assigns,
any legal or equitable rights hereunder.
Section 7.11 Amendment/Waiver. This Agreement may not be
amended or modified except by an instrument in writing signed by
the Company, the Shareholder and Rentrak. No waiver of any right
arising out of a breach of any covenant, term or condition of
this Agreement shall be a waiver of any arising out of any other
or subsequent breach of the same or any other covenant, term or
condition or a waiver of the covenant, term or condition itself.
Section 7.12 Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall
constitute one and the same agreement.
Section 7.13 Knowledge. Where any representation or warranty
contained in this Agreement is expressly qualified by reference
to the knowledge of the Shareholder, the Shareholder confirms
that he has made due and diligent inquiry as to the matters that
are the subject of such representations and warranties. Where
any representation or warranty contained in this Agreement is
expressly qualified by reference to the knowledge of the Company,
it shall mean the knowledge of the store managers and
Corporate/Office Warehouse personnel and that the Company
confirms that such persons have made due and diligent inquiry as
to the matters that are the subject of any representations or
warranties; provided that Rentrak may make a claim for
indemnification based on the breach of a representation as to a
store manager's knowledge only for a period of 90 days after the
Closing.
Section 7.14 Arbitration. In the event that there shall be any
controversy, claim or dispute between the parties arising out of
or relating to this Agreement (which cannot be resolved
internally by the parties), the unresolved matter shall be
resolved by final and binding arbitration as provided herein.
(a) Initiation. Arbitration shall be initiated by one party
making a written demand on the other party and simultaneously
filing copies of the demand, together with the required fees,
with the office of the American Arbitration Association ("AAA")
in Los Angeles, California. In no event, however, may any demand
for arbitration be made after the date that institution of legal
or equitable proceedings based upon the claim, dispute or other
matter would be barred by the applicable statute of limitations
or otherwise barred by this Agreement.
(b) Rules. The arbitration proceeding shall be conducted by one
arbitrator who is a retired judge (the "Arbitrator") selected by
the parties in accordance with the Rules within 10 business days
of the filing of the demand. Arbitration shall be conducted
under the auspices of AAA, and the AAA's commercial arbitration
rules of practice then in effect (the "Rules") shall govern all
proceedings unless otherwise provided herein (or otherwise agreed
to by the parties). In case of conflict between the Rules and
this Agreement (or such other agreement), the provisions of this
Agreement (or such other agreement) shall govern.
(c) Hearings; Award. Within 60 days of the selection of the
Arbitrator, the parties involved in the dispute shall meet in
Portland, Oregon with such Arbitrator at a place and time
designated by the Arbitrator after consultation with the parties
and present their respective positions on the dispute. Each
party shall have no longer than two days to present its position,
the entire proceedings before the Arbitrator shall be on no more
than five (5) consecutive days in duration. The Arbitrator's
award, which may include equitable relief, shall be rendered
within ten (10) days following completion of the proceeding and
shall be a final and binding determination of the dispute and
shall be fully enforceable as an arbitration award in any court
having jurisdiction and venue over such parties. The prevailing
party (as determined by the Arbitrator) may in addition be
awarded by the Arbitrator such party's own attorneys' fees and
expenses in connection with such proceeding. The non-prevailing
party (as determined by the Arbitrator) shall pay the
Arbitrator's fees and expenses.
Section 7.15 Survival. In addition to the survival of
representations and warranties as provided in Article VI above,
the covenants of Rentrak, the Company and the Shareholder under
Articles I, IV, VI (to the extent provided therein) and VII and
under Section 4.03 of this Agreement shall survive the Closing.
Section 7.16 Books and Records. Each party agrees that it will
cooperate with and make available to the other parties, during
normal business hours, all Books and Records, information and
employees (without substantial disruption of employment) retained
and remaining in existence after the Closing which are necessary
or useful in connection with any accounting audit, tax inquiry,
audit, investigation or dispute, any litigation or investigation
or any other matter requiring any such Books and Records,
information or employees for any reasonable business purpose.
Without limiting the foregoing, Shareholder shall provide
assistance to Rentrak and its accountants in connection with the
accounting audit of the Company, and Shareholder will sign a
management representation letter reasonably requested by Rentrak
or its accountants. Each party agrees to retain the originals of
all Books and Records which are in such party's possession that
may be relevant for purposes of any accounting audit or tax
return until the expiration of the applicable statute (as such
may be extended) with respect to tax matters, and shall not
destroy or otherwise dispose of any such Books and Records
without first providing the other party with a reasonable
opportunity to review and copy the same. So long as Rentrak
remains in the Corporate Office/Warehouse, originals of all Books
and Records shall remain at that location. At least 30 days
prior to the time that Rentrak vacates the Corporate
Office/Warehouse, Rentrak shall so notify the Company. At the
time that Rentrak vacates such location, Rentrak may discard or
destroy all daily sales records from the Stores, unless the
Company shall have notified Rentrak that it desires to retain
such daily sales records, in which case the Company shall have
the right to remove such records prior to the date that Rentrak
vacates the premises. With respect to all other Books and
Records, upon vacating the premises, Rentrak agrees to store such
Books and Records, at Rentrak's cost, in a location in the Dallas
area (or such other location that the parties mutually agree
upon) through December 31, 1996, and the Company and the
Shareholder shall have access to such Books and Records during
normal business hours. After December 31, 1996, Rentrak may move
such Books and Records from the Dallas area; provided that the
Company and the Shareholder shall continue to have access rights
to such Books and Records during normal business hours.
Section 7.17 Name Change. Within 30 days following the Closing,
the Company shall have filed an amendment to its Articles of
Incorporation to change its corporate name so as not to include
the word "Supercenter" or any other name or mark that has such a
near resemblance thereto as may be likely to cause confusion or
mistake to the public.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first written above.
"RENTRAK"
RENTRAK CORPORATION, an Oregon corporation
/s/ Ron Berger
By:
Name: Ron Berger
Title: Presdient
"COMPANY"
SUPERCENTER ENTERTAINMENT CORPORATION
/s/ Jack Silverman
By:
Name: Jack Silverman
Title: President
"SHAREHOLDER"
/s/ Jack Silverman
By:
Jack Silverman
NON-COMPETE AND CONFIDENTIALITY AGREEMENT
THIS NON-COMPETE AND CONFIDENTIALITY AGREEMENT (this
"Agreement"), dated as of ____________________, 1995, is executed
and delivered by Jack Silverman ("Shareholder"), Supercenter
Entertainment Corporation, a Delaware corporation ("Company"),
and Rentrak Corporation, an Oregon corporation ("Rentrak").
RECITALS
A. Shareholder owns all of the outstanding shares of common
stock of Company ("Company Shares").
B. Each of Rentrak, Shareholder and Company is engaged in (i)
the business of operating retail outlets which either rent or
sell video recordings and games, on various media such as
videocassettes, laser discs, CD-Rom's, or cartridges, and related
products such as hardware, candies, and popcorn, and (ii) the
wholesale distribution of video recordings and games, on various
media such as videocassettes, laser discs, CD-Rom's, or
cartridges, and related products such as hardware, candies, and
popcorn. Rentrak is engaged in the business of developing,
marketing, and supporting point of sale computer systems, and of
operating, licensing, and franchising retail licensed sports
apparel stores. The businesses described in the preceding
sentences are collectively referred to herein as the "Business."
C. Concurrently with the execution and delivery hereof, Rentrak
is entering into the Asset Purchase Agreement (the "Purchase
Agreement") dated August 25, 1995, by and among Rentrak, Company,
Shareholder and certainly wholly-owned subsidiaries of Rentrak
(the "Subsidiaries"), pursuant to which the Subsidiaries are
acquiring from Company the Assets (as that term is defined
therein).
D. Shareholder and Company acknowledge the benefits which they
will realize in connection with the acquisition of the Assets
pursuant to the Purchase Agreement.
E. Shareholder and Company acknowledge and agree that if
Shareholder or Company competes with Rentrak in contravention of
this Agreement, Rentrak will be deprived of the benefits it has
bargained for pursuant to this Agreement and the Purchase
Agreement. Because Company and Shareholder have the ability to
compete with Rentrak in the operation of the Business, Rentrak
therefore desires that Company and Shareholder enter into this
Agreement. But for the entry into this Agreement by Company and
Shareholder, Rentrak and the Subsidiaries would not have entered
into the Purchase Agreement with Shareholder.
AGREEMENT
NOW THEREFORE, as a material inducement to Rentrak to enter into
the Purchase Agreement, and for other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:
1. Defined Terms. Capitalized terms used herein without
definition shall have the meanings ascribed to them in the
Purchase Agreement.
2. Non-Competition Term. As used in this Agreement, "Term" shall
mean the period commencing on the Closing Date and expiring on
the fifth anniversary of the Closing Date.
3. Covenant Not To Compete. During the Term, neither Company, nor
the Shareholder, nor any of its or his Affiliates (as defined
below), unless acting in accordance with Rentrak's prior written
consent, shall, directly or indirectly, own, manage, join,
operate or control, or participate in the ownership, management,
operation or control of, or be connected as a director, officer,
employee, partner or consultant with, or permit such party's name
to be used by or in connection with, any profit or non-profit
business or organization (a "Competing Business") which, directly
or indirectly, competes with the Business in any state of the
United States or any county thereof, or in Canada, Mexico, Japan
or any other countries in which Rentrak conducts the Business or
proposes to conduct the Business; it being understood that the
foregoing shall not limit Company and Shareholder from making
passive investments of less than an aggregate of 5% of the
outstanding equity securities in any entity listed for trading on
a national stock exchange or quoted on any recognized automatic
quotation system. "Affiliate" means, as to any party, another
corporation, partnership, joint venture, other entity or any type
or individual that directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common
control with, such party. Notwithstanding the foregoing, this
Agreement shall not prohibit Shareholder or Company from
continuing to operate the wholesale portion of Company's video
cassette distribution business (the "Wholesale Business") for a
period of six (6) months following the date hereof, provided,
that in its conduct of the Wholesale Business neither Shareholder
nor Company shall sell or distribute videocassettes to customers
other than those customers to which Company currently distributes
videocassettes, and provided further that Shareholder and Company
each agree to terminate any and all involvement with and interest
in the Wholesale Business as of the expiration of such period and
acknowledge that failure to do so shall constitute a breach of
this Agreement.
4. Confidentiality. Shareholder and the Company shall, and shall
cause their representatives to, keep confidential all information
concerning the transactions contemplated by this Agreement and
the Purchase Agreement and concerning Company or the Business,
including (a) the business operations or internal structure of
the business relating to the operation of the Assets (the
"Purchased Operations"); (b) the customers, vendors, licensors or
lessors of the Purchased Operations; (c) any products or services
developed or initiated by Company which relates to the Purchased
Operations; or (d) the financial, operational, legal, accounting
or managerial condition of Company relating to the Purchased
Operations; provided that Shareholder and Company may disclose
such information to the extent, and only to the extent, that
disclosure of such information is required by law, or disclosure
is compelled in any proceeding (provided that the Shareholder or
Company shall have given Rentrak prior notice sufficient to allow
Rentrak an opportunity to obtain a protective order), or such
information becomes generally available to the public other than
as a result of disclosure by the Shareholder, the Company or
their respective representatives.
5. No Solicitation of Employees and Others. During the Term, each
of Shareholder and the Company agree that such party will not,
directly or indirectly, (a) call on or solicit or divert or take
away from Rentrak or the Subsidiaries (including without
limitation by divulging to any competitor or potential competitor
of Rentrak or the Subsidiaries) any person, firm, corporation or
other entity who is or which at the Closing Date was a customer
or supplier of Company with respect to the Business or the
Assets; or (b) hire or offer employment to (or seek to hire or
offer employment to) any Rehired Employee or any employee of any
successor or affiliate of Rentrak which is engaged in the
Business, unless Rentrak first terminates the employment of such
Rehired Employee or gives its written consent to such employment
or offer of employment.
6. Severability of Provisions. In the event that the provisions
of Section 2, Section 3, Section 4 or Section 5 should ever be
adjudicated by a court of competent jurisdiction to exceed the
time or geographic or other limitations permitted by applicable
law, then such provisions shall be deemed reformed to the maximum
time or geographic or other limitations permitted by applicable
law, as determined by such court in such action. Without
limiting the foregoing, the covenants contained herein shall be
construed as separate covenants, covering their respective
subject matters, with respect to (a) each of the separate cities,
counties and states of the United States, and Canada, Mexico and
Japan and each other country, and political subdivision thereof,
in which any of Rentrak, its subsidiaries or their successors now
transacts the Business, (b) the Business now conducted by any of
Rentrak, its subsidiaries or their successors, and (c) Rentrak,
Company, Shareholder and their respective successors separately.
7. Injunctive Relief; Punitive Damages. Company and Shareholder
acknowledge that (a) the provisions of Section 3, Section 4 and
Section 5 are reasonable and necessary to protect the legitimate
interests of Rentrak, and (b) any violation of Section 3, Section
4 or Section 5 will result in irreparable injury to Rentrak, the
exact amount of which will be difficult to ascertain, and that
the remedies at law for any such violation would not be
reasonable or adequate compensation to Rentrak for such a
violation. Accordingly, Company and Shareholder agree that if
such party violates or threatens to violate the provisions of
Section 3, Section 4 or Section 5, in addition to any other
remedy which may be available at law or in equity, Rentrak shall
be entitled to specific performance and injunctive relief,
without posting bond or other security, and without the necessity
of proving actual damages. The provisions of this Section 7
shall be applicable to any breaches hereof, notwithstanding the
mandatory arbitration provisions otherwise imposed under this
Agreement. The parties expressly agree and acknowledge that the
value of the Purchase Shares allocated to this Agreement pursuant
to Section 1.07 of the Asset Purchase Agreement shall not limit
the amount of damages recoverable for a breach of this Agreement.
8. Notices. All notices, requests, demands and other
communications which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been
duly given if given in the manner and to the address(es) set
forth in Section 7.03 of the Purchase Agreement.
9. Shareholder Representations. Company and Shareholder represent
and warrant to Rentrak that (i) Company and Shareholder each has
the requisite power and authority to enter into and perform this
Agreement; and (ii) the performance of this Agreement by Company
and Shareholder will not require such party to obtain the
consent, waiver or approval of any person and will not, to the
best of such party's knowledge, violate, result in a breach of or
constitute a default under any statute, regulation, agreement,
judgment, consent, decree or restriction by which such party is
bound.
10. Entire Agreement; Amendments and Waivers. This Agreement and
the Purchase Agreement constitute the entire agreement among the
parties pertaining to the subject matter hereof and supersedes
all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties. No
amendment, supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the parties. No
waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a continuing waiver unless otherwise
expressly provided. The parties expressly acknowledge that they
have not relied upon any prior agreements, understandings,
negotiations and discussions, whether oral or written.
11. Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the
prior written consent of the other parties except that Rentrak
may, without such consent, assign all such rights and obligations
to a wholly-owned subsidiary (or a partnership controlled by
Rentrak) or subsidiaries of Rentrak or to a successor in interest
to Rentrak which shall assume all obligations and liabilities
hereunder.
12. Attorneys' Fees and Arbitration. In the event Company or
Shareholder shall fail to perform any of its or his obligations
under this Agreement, such party hereby agrees that all
reasonable expenses, including reasonable attorneys' fees, which
may be incurred by Rentrak in enforcing this Agreement shall be
paid by such party. Any dispute concerning this Agreement shall
be resolved in accordance with the provisions of Section 7.14 of
the Purchase Agreement.
13. Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the
laws of the State of Oregon (without reference to the choice of
law provisions of Oregon law).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on their respective behalf, by their
respective officers thereunto duly authorized, all as of the day
and year first above written.
RENTRAK CORPORATION SUPERCENTER ENTERTAINMENT,
an Oregon corporation INC.
a Delaware corporation
By By
SHAREHOLDER:
Jack Silverman
EXHIBIT F
SHAREHOLDER VOTING AGREEMENT
This SHAREHOLDER VOTING AGREEMENT (this "Agreement") is effective
this ____ day of _______________, 1995, among Supercenter
Entertainment Corporation, a Delaware corporation ("Supercenter"
or "Shareholder"), Jack Silverman, an individual ("Silverman")
and Rentrak Corporation, an Oregon corporation ("Rentrak").
WITNESSETH:
WHEREAS, Supercenter, Silverman, Rentrak and certain subsidiaries
of Rentrak have entered into that certain Asset Purchase
Agreement, dated as of August 25, 1995 (the "Asset Purchase
Agreement"), pursuant to which Rentrak purchased certain of the
assets of Supercenter.
WHEREAS, pursuant to the Asset Purchase Agreement, Supercenter
has received 875,000 shares of Common Stock, $.001 par value (the
"Common Stock"), of Rentrak.
[WHEREAS, Supercenter, Silverman, Rentrak and certain
subsidiaries of Rentrak have entered into that certain Office
Asset Purchase Agreement, dated as of August ___, 1995 (the
"Office Agreement"), pursuant to which Rentrak purchased certain
of the assets of Supercenter.]
[WHEREAS, pursuant to the Office Agreement Supercenter has
received or may receive up to 15,000 shares of Common Stock.]
WHEREAS, Silverman is the sole shareholder of Supercenter and
agrees to be bound by the terms of this agreement as a
"Shareholder" in the event Supercenter transfers any shares of
Common Stock to Silverman.
NOW, THEREFORE, as an inducement to Rentrak to enter into and to
perform and complete the transactions contemplated by the Asset
Purchase Agreement [and the Office Agreement] and in
consideration of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in
accordance with Section 60.257 of the Oregon Revised Statutes,
the parties hereto agree as follows:
1. Voting. During the term of this Agreement, Shareholder
agrees to vote all of the shares of Common Stock held by
Shareholder in accordance with the recommendations of the Board
of Directors on any and all matters on which holders of Common
Stock are entitled to vote, including, but not limited to, the
election of members of the Board of Directors of Rentrak. For
purposes of this Agreement, "vote" shall mean any vote or
consent, whether by writing or otherwise, on any and all
occasions, including, but not limited to, special and annual
meetings of the shareholders of Rentrak. With respect to any
vote, Shareholder agrees to grant a proxy to persons designated
by the Board of Directors.
2. Transfer to Silverman. In the event any shares of Common
Stock are transferred to Silverman by Supercenter, Silverman
shall be deemed a "Shareholder" for all purposes under this
Agreement. In addition, any Holder (as defined in Section
1.06(c) of the Asset Purchase Agreement) to whom or which
Silverman or the Company transfers any shares of Common Stock
pursuant to Section 1.06(c)(ii) of the Asset Purchase Agreement
shall be deemed a "Shareholder" for all purposes under this
Agreement, and shall execute any document to such effect as is
reasonably requested by Rentrak.
3. Termination. This Agreement and the obligations contained
herein shall continue in effect for the period commencing on the
date hereof and ending at the earlier of (i) August __, 2000 or
(ii) with respect to the shares of Common Stock which are sold by
Shareholder to a party other than another Shareholder or an
affiliate of a Shareholder, the date of such sale of such Common
Stock, at which time Rentrak agrees to issue share certificates
representing the Common Stock free of the legend referred to in
Section 3.
3. Legends on Certificates. Contemporaneously with the
execution hereof, the Shareholder shall surrender to Rentrak the
share certificates representing the Common Stock and such
certificates shall bear a legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF THE SHAREHOLDER VOTING AGREEMENT DATED AUGUST___,
1995, BETWEEN [NAME OF SHAREHOLDER] AND RENTRAK CORPORATION, A
COUNTERPART OF WHICH HAS BEEN DEPOSITED WITH RENTRAK CORPORATION
AT ITS PRINCIPAL OFFICE.
4. Miscellaneous.
a. Additional Representations. The Shareholder represents and
warrants to Rentrak that (i) the Shareholder has the requisite
power and authority to enter into and perform this Agreement; and
(ii) the performance of this Agreement by the Shareholder will
not require it to obtain the consent, waiver or approval of any
person and will not violate, result in a breach of or constitute
a default under any statute, regulation, agreement, judgment,
consent, decree or restriction by which it is bound.
b. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.
c. Amendments and Modification. This Agreement may not be
modified, amended, altered or supplemented except upon the
execution and delivery of a written agreement executed by the
parties hereto.
d. Equitable Relief. The Shareholder agrees with Rentrak that, if
for any reason the Shareholder shall have failed to perform its
obligations under this Agreement, then Rentrak shall be entitled
to specific performance and injunctive or other equitable relief,
and the Shareholder hereby further agrees with Rentrak to waive
any requirement for the securing or posting of any bond in
connection with the obtaining of any injunctive or other
equitable relief. This provision is without prejudice to any
other rights that Rentrak may have against the Shareholder for
any failure to perform its obligations under this Agreement.
e. Governing Law. This Agreement and the legal relations between
the parties hereto arising from this Agreement shall be governed
by and construed in accordance with the laws of the State of
Oregon, without reference to or application of any conflicts of
law principles.
f. Entire Agreement. This Agreement contains the entire
agreement and understanding of the parties hereto in respect of
the subject matter hereof, and supersedes all prior negotiations
and understandings between the parties with respect to such
subject matters.
g. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year above written.
RENTRAK CORPORATION
__________________________
Name:
Title:
SUPERCENTER ENTERTAINMENT
CORPORATION
__________________________
Name:
Title:
__________________________
Jack Silverman
