SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended: September
30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from
to
Commission file number: 0-15159
RENTRAK CORPORATION
(Exact name of registrant as specified in its charter)
OREGON 93-0780536
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification no.)
7700 NE Ambassador Place, Portland, Oregon 97220
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 284-
7581
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (x) No ( )
As of October 31, 1998, the Registrant had 10,674,868 shares of
Common Stock outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1998 and
March 31, 1998
Consolidated Statements of Income for the three month
periods ended September 30, 1998 and September 30, 1997
Consolidated Statements of Income for the six month
periods ended September 30, 1998 and September 30, 1997
Consolidated Statements of Cash Flows for the six month
periods ended September 30, 1998 and September 30, 1997
Notes to Consolidated Financial Statements
<TABLE>
RENTRAK CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
<CAPTION>
UNAUDITED
September 30, March 31,
<S> <C> <C>
1998 1998
CURRENT ASSETS:
Cash and cash equivalents $2,533,774 $6,361,680
Accounts receivable, net of allowance for doubtful
accounts of $206,505 and $586,641 22,954,602 24,395,143
Advances to program suppliers 3,705,707 431,975
Inventory 2,458,227 2,427,176
Deferred tax asset 999,880 1,217,950
Other current assets 6,511,539 4,582,337
Total current assets 39,163,729 39,416,261
PROPERTY AND EQUIPMENT, net 1,850,294 1,910,317
OTHER INVESTMENTS, net 574,592 887,884
DEFERRED TAX ASSET 4,087,812 4,087,292
OTHER ASSETS 7,181,808 5,306,943
TOTAL ASSETS $52,858,235 $51,608,697
The accompanying notes are an integral
part of these consolidated balance sheets.
</TABLE>
<TABLE>
RENTRAK CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
UNAUDITED
September 30, March 31,
1998 1998
<S> <C> <C>
CURRENT LIABILITIES:
Line of credit $5,115,000 $6,000,000
Accounts payable 25,090,955 23,333,656
Accrued liabilities 2,717,050 2,532,832
Accrued compensation 659,025 1,072,848
Deferred revenue 119,035 829,863
Net current liabilities of discontinued operations 4,585,373 4,585,373
Total current liabilities 38,286,438 38,354,572
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock $.001 par value;
Authorized: 10,000,000 shares 0 0
Common stock, $.001 par value;
Authorized: 30,000,000 shares
Issued and outstanding: 10,916,824 shares
at September 30, 1998 and 10,986,455 at
March 31, 1998 10,917 10,987
Capital in excess of par value 45,059,401 45,365,298
Net unrealized gain (loss) on investment securities (38,080) 54,645
Accumulated deficit (29,437,460) (30,794,263)
Less - Deferred charge - warrants (1,022,981) (1,382,542)
14,571,797 13,254,125
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $52,858,235 $51,608,697
The accompanying notes are an integral
part of these consolidated balance sheets.
</TABLE>
<TABLE>
RENTRAK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
(UNAUDITED)
Three Months Ended September 30,
1998 1997
<S> <C> <C>
REVENUES:
PPT $27,907,650 $26,721,000
Other 4,421,367 2,127,511
32,329,017 28,848,511
OPERATING COSTS AND EXPENSES:
Cost of sales 27,054,981 23,802,293
Selling, general, and administrative 5,200,923 3,156,183
32,255,904 26,958,476
INCOME FROM OPERATIONS 73,113 1,890,035
OTHER INCOME (EXPENSE):
Interest income 109,803 128,325
Interest expense (75,767) 0
34,036 128,325
INCOME BEFORE INCOME TAX PROVISION 107,149 2,018,360
INCOME TAX PROVISION 40,190 814,472
NET INCOME $66,959 $1,203,888
EARNINGS PER SHARE:
Basic $0.01 $0.11
Diluted $0.01 $0.10
The accompanying notes are an integral
part of these consolidated statements.
</TABLE>
<TABLE>
RENTRAK CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
(UNAUDITED)
Six Months Ended September 30,
1998 1997
<S> <C> <C>
REVENUES:
PPT $58,349,008 $55,492,168
Other 7,439,451 3,970,894
65,788,459 59,463,062
OPERATING COSTS AND EXPENSES:
Cost of sales 54,602,849 48,840,933
Selling, general, and administrative 8,962,865 6,575,920
63,565,714 55,416,853
INCOME FROM OPERATIONS 2,222,745 4,046,209
OTHER INCOME (EXPENSE):
Interest income 231,665 251,176
Interest expense (93,992) (5,000)
Other (117,768) 0
19,905 246,176
INCOME BEFORE INCOME TAX PROVISION 2,242,650 4,292,385
INCOME TAX PROVISION 885,847 1,777,363
NET INCOME $1,356,803 $2,515,022
EARNINGS PER SHARE:
Basic $0.12 $0.22
Diluted $0.12 $0.22
The accompanying notes are an integral
part of these consolidated statements.
</TABLE>
<TABLE>
RENTRAK CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
(Unaudited)
Six Months Ended September 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $1,356,803 $2,515,022
Adjustments to reconcile income to
net cash provided (used) in operations
Loss on investment / asset sales 220,607 0
Depreciation and Amortization 501,449 419,231
Amortization of warrants 359,561 303,396
Provision for doubtful accounts (5,840) (309,733)
Retailer financing reserves 0 (300,000)
Studio advance reserves 9,121 (17,852)
Deferred income taxes 274,382 534,768
Change in specific accounts:
Accounts receivable 1,489,050 (389,780)
Advances to program suppliers (3,282,853) (2,153,991)
Inventory (31,051) (328,946)
Other current assets (1,929,202) (589,460)
Accounts payable 1,757,299 4,223,011
Accrued liabilities & compensation (229,605) (421,064)
Deferred revenue (710,828) (1,195,376)
Net current liabilities of discontinued operations 0 (47,741)
Net cash provided (used) by operations (221,107) 2,241,485
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (285,475) (256,749)
Investments in retailer financing program (929,320) (750,000)
Proceeds from sale of investments 234,368 0
Purchase of other assets & intangibles (1,435,405) (581,332)
Net cash used by investing activities (2,415,832) (1,588,081)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments under line of credit, net (885,000) 0
Repurchase of common stock (388,547) (2,998,877)
Repurchase of Warrants 0 (250,000)
Issuance of common stock 82,580 28,219
Net cash used by financing activities (1,190,967) (3,220,658)
NET DECREASE IN CASH AND
CASH EQUIVALENTS (3,827,906) (2,567,254)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF THIS PERIOD 6,361,680 10,167,169
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,533,774 $7,599,915
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the period for -
Interest $93,992 $5,000
Income taxes, net of refunds 427,155 1,337,366
NON-CASH TRANSACTIONS
Decrease in net unrealized gain on
investment securities (92,725) (190,086)
Retailer Loan Program Investment through
conversion of accounts receivable 42,669 1,196,856
The accompanying notes are an integral
part of these consolidated statements.
</TABLE>
RENTRAK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A: Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial
Statements of RENTRAK CORPORATION (the "Company"), have been
prepared pursuant to the rules and regulations of the
Securities and Exchange Commission (SEC). Certain information
and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant
to such rules and regulations. The results of operations for
the three month and six month periods ended September 30, 1998
are not necessarily indicative of the results to be expected
for the entire fiscal year ending March 31, 1999. The
Condensed Consolidated Financial Statements should be read in
conjunction with the Consolidated Financial Statements and
footnotes thereto included in the Company's 1998 Annual Report
to Shareholders.
The Condensed Consolidated Financial Statements reflect, in the
opinion of management, all material adjustments (which include
only normal and recurring adjustments) necessary to present
fairly the Company's financial position and results of
operations.
The Condensed Consolidated Financial Statements include the
accounts of the Company, its majority owned subsidiaries, and
those subsidiaries in which the Company has a controlling
interest after elimination of all inter-company accounts and
transactions. Investments in affiliated companies owned 20 to
50 percent are accounted for by the equity method. Certain
amounts in the prior period's Condensed Consolidated Financial
Statements have been reclassified to conform to the current
period's presentation.
NOTE B: Net Income Per Share
Basic earnings per common shares is computed by dividing net
income by the weighted average number of shares of common stock
outstanding during the periods. Diluted earnings per common
share is computed on the basis of the weighted average shares
of common stock outstanding plus common equivalent shares
arising from dilutive stock options and warrants. In the
quarter ended December 31, 1997, the Company adopted SFAS No.
128, "Earnings per Share". As a result, the Company's reported
earnings per share for the three month and six month periods
ended September 30, 1998 were restated.
Three Months Ended Six Months Ended
Per Share Amounts September 30, 1997 September 30, 1997
Primary EPS as reported $0.10 $0.20
Effect of SFAS No. 128 0.01 0.02
Basic EPS as Restated $0.11 $0.22
Fully Diluted EPS as reported $0.10 $0.19
Effect of SFAS No. 128 - 0.03
Diluted EPS as Restated $0.10 $0.22
<TABLE>
Note B: Net Income Per Share
<CAPTION>
3-Months Ended 6-Months Ended 3-Months Ended 6-Months Ended
September 30, 1998 September 30, 1998 September 30, 1997 September 30, 1997
Basic Diluted Basic Diluted Basic Diluted Basic Diluted
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Weighted average
number of shares
of common stock
outstanding 10,988,466 10,988,466 10,996,400 10,996,400 11,369,295 11,369,295 11,533,504 11,533,504
Dilutive effect of
exercise of
stock options - 158,436 - 544,870 - 98,882 - 84,617
Weighted average
number of shares of
common stock and
common stock
equivalents 10,988,466 11,146,902 10,996,400 11,541,270 11,369,295 11,468,177 11,533,504 11,618,121
Net Income $66,959 $66,959 $1,356,803 $1,356,803 $1,203,888 $1,203,888 $2,515,022 $2,515,022
Net Income per
Share $0.01 $0.01 $0.12 $0.12 $0.11 $0.10 $0.22 $0.22
Warrants to purchase approximately 6.5 million shares of common stock
at prices ranging from $4.77-$9.78 per share were
outstanding during the year but were not included in the computation of
diluted EPS because the warrants' and options' exercise
prices were greater than the average market price of the common shares.
The warrants and options, which expire during fiscal
years 2000 through 2008 remain outstanding at September 30,1998.
</TABLE>
NOTE C: Major Suppliers
For the quarter ended September 30, 1998, the Company had
one program supplier whose product generated 34 percent, a
second that generated 23 percent, and a third that generated
an additional 17 percent of Rentrak revenues. For the six
month period ended September 30, 1998, the Company had one
program supplier whose product generated 32 percent, a
second that generated 28 percent, and a third that generated
an additional 17 percent of Rentrak revenues. No other
program supplier provided product which generated more than
10 percent of revenue for the three or six month periods
ended September 30, 1998.
For the quarter ended September 30, 1997, the Company had
one program supplier whose product generated 50 percent, a
second that generated 21 percent, and a third that generated
an additional 11 percent of Rentrak revenues. For the six
month period ended September 30, 1997, the Company had one
program supplier whose product generated 52 percent, a
second that generated 19 percent, and a third that generated
an additional 13 percent of Rentrak revenue. No other
program supplier provided product which generated more than
10 percent of revenue for the three or six month periods
ended September 30, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Forward Looking Statements
Information included in Management's Discussion and Analysis
of Financial Conditions and Results of Operations regarding
liquidity and capital resources constitute forward-looking
statements that involve a number of risks and uncertainties.
Forward looking statements can be identified by the uses of
forward-looking words such as "may", "will", "expects",
"intends", "anticipates", "estimates", or "continues" or the
negative thereof or variations thereon or comparable
terminology. The following factors are among the factors
that could cause actual results to differ materially from
the forward-looking statements: the Company's ability to
continue to market the Pay Per Transaction ("PPT") System
successfully, the financial stability of participating
retailers and their performance of their obligations under
the PPT System, non-renewal of the Company's line of credit,
business conditions and growth in the video industry and
general economics, both domestic and international;
competitive factors, including increased competition,
expansion of revenue sharing programs other than the PPT
System by Program Suppliers, new technology, the ability of
the Company and its suppliers and customers to address
potential Year 2000 problems, and the continued availability
of prerecorded videocassettes ("Cassettes") from Program
Suppliers. Such factors are discussed in more detail in the
Company's 1998 Annual Report to Shareholders.
Results of Operations
For the quarter ended September 30, 1998, total revenue
increased $3.5 million, or 12 percent, rising to $32.3
million from $28.8 million in the quarter ended September
30, 1997. For the six month period ended September 30,
1998, total revenue increased $6.3 million, or 10.6
percent, to $65.8 million from $59.5 million in the six
month period ended September 30, 1997. Total revenue
includes the following fees: application fees generated when
retailers are approved for participation in the PPT System;
order processing fees generated when Cassettes are ordered
by and distributed to retailers; transaction fees generated
when retailers rent Cassettes to consumers; sell-through
fees generated when retailers sell Cassettes to consumers;
buy out fees when retailers purchase Cassettes at the end of
the lease term; royalty payments from Rentrak Japan; and
sale of Cassettes.
The increase in total revenue and the increases described in
the following paragraph were primarily due to the growth in
(i) the total number of Cassettes leased under the PPT
System; (ii) the number of retailers approved to lease
Cassettes under the PPT System from the Company (the
"Participating Retailers"); (iii) the number of titles
released to the PPT System; and (iv) a one-time royalty of
$1 million from Rentrak Japan which was recorded in
September, 1998.
These increases in total revenue were offset in part by
weaker than expected rental turns on certain popular titles,
which in turn led to the Company recording additional costs
related to guarantee minimum payments to program suppliers.
For the quarter ending December 31, 1998, program suppliers
are offering more titles on a sell-through basis than
historical levels. The Company cannot predict the effect of
this added number of sell-through titles but they could have
an adverse impact on the results of operations for the
quarter ending December 31, 1998.
Cost of sales for the quarter ended September 30, 1998 rose
to $27.1 million from $23.8 million in the quarter ended
September 30, 1997, an increase of $3.3 million, or 13.7
percent. Cost of sales for the six month period ended
September 30, 1998 rose to $54.6 million from $48.8 million
the prior year, an increase of $5.8 million or 11.9
percent. These increases are due to the increases in
revenue noted above and additional costs which were recorded
in the quarter ended September 30, 1998 related to the
guarantee minimum payments due to program suppliers on
certain movie titles .
The gross profit margin decreased to 16.3 percent in the
quarter ended September 30, 1998 from 17.5 percent the
previous year. The gross profit margin decreased to 17.0
percent in the six month period ended September 30, 1998
from 17.9 percent in the six month period ended September
30, 1997. These decreases are primarily due to the increase
in cost of sales as noted above partially offset by the
increase in royalty revenue.
Selling, general and administrative expenses were $5.2
million for the quarter ended September 30, 1998 compared
to $3.2 million in the quarter ended September 30, 1997, an
increase of $2.0 million, or 64.8 percent. Selling general
and administrative expenses were $9.0 million in the six
month period ended September 30, 1998 compared to $6.6
million in the six month period ended September 30, 1997, an
increase of $2.4 million or 36.4 percent. The increase in
selling, general and administrative expenses is primarily
due to increased legal fees and marketing expenses. Also,
in the quarter ended September 30, 1997 the Company
recognized a reduction in selling, general and
administrative expenses due to the recovery of amounts which
were loaned under the retailer loan program and which had
been previously reserved.
For the quarter ended September 30, 1998, the Company
recorded net income of $.1 million , compared to net
income of $1.2 million in the quarter ended September 30,
1997. For the six month period ended September 30, 1998, the
Company recorded net income of $1.4 million , compared to
net income of $2.5 million, in the six month period ended
September 30, 1997. These decreases in pre-tax profits are
primarily due to the increases in selling, general and
administrative expenses as noted above.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1998, total assets were $52.9 million, an
increase of $1.3 million from the $51.6 million at March 31,
1998. As of September 30, 1998, cash decreased $3.9
million to $2.5 million from $6.4 million at March 31, 1998.
The decrease is primarily due to the increase in other
assets such as advances to program suppliers and advances to
retailers under the retailer loan program.
At September 30, 1998, the Company's current ratio (current
assets/current liabilities) remained unchanged from March
31, 1998 at 1.03.
The Company has an agreement for a line of credit with a
financial institution in an amount not to exceed the lesser
of (a) $12.5 million or (b) the sum of 80 percent of the net
amount of eligible accounts receivable as defined in the
agreement. The line of credit expires on December 18, 1999.
Interest is payable monthly at the bank's prime rate (8.5
percent at September 30, 1998). The line is secured by
substantially all of the Company's assets. The terms of the
agreement require, among other things, a minimum amount of
tangible net worth, minimum current ratio and minimum total
liabilities to tangible net worth. The agreement also
restricts the amount of net losses, loans and indebtedness
and limits the payment of dividends on the Company's stock.
As of September 30, 1998, the Company is in compliance with
these covenants. The Company had $5.1 million outstanding
under this line at September 30, 1998.
The Company has established a retailer financing program
whereby the Company will provide, on a selective basis,
financing to video retailers which the Company believes have
the potential for substantial growth in the industry. In
connection with these financings, the Company typically
makes a loan to and/or an equity investment in the retailer.
In some cases, a warrant to purchase stock may be obtained.
As part of such financing, the retailer typically agrees to
cause all of its current and future retail locations to
participate in the PPT System for a designated period of
time. Under these agreements, retailers are typically
required to obtain some or all of their requirements of
Cassettes from those offered under the PPT System or obtain
a minimum amount of Cassettes based on a percentage of the
retailer's revenues. Notwithstanding the long term nature
of such agreements, both the Company and the retailer may,
in some cases, retain the right to terminate such agreement
upon 30-90 days prior written notice. These financings are
highly speculative in nature and involve a high degree of
risk, and no assurance of a satisfactory return on
investment can be given. The amounts the Company could
ultimately receive could differ materially in the near term
from the amounts assumed in establishing reserves.
The Board of Directors has authorized up to $18 million to
be used in connection with the Company's retailer financing
program. As of September 30, 1998, the Company had invested
or loaned approximately $15 million in various retailers.
The investments individually range from $0.1 million to $4.7
million. Interest rates per annum on the various loans
range from nine percent to the prime rate plus 2 percent.
As each financing is made, and periodically throughout the
term of the agreement, the Company assesses the likelihood
of recoverability of the amount invested or loaned based on
the financial position of each retailer. This assessment
includes reviewing available financial statements and cash
flow projections of the retailer and discussions with
retailers' management. As of September 30, 1998, the
Company reserved approximately $9.2 million.
As noted in the Company's 1998 Annual Report to
Shareholders, the Company distributed to its Shareholders
shares of common stock of BlowOut Entertainment, Inc.
(BlowOut). The operations of BlowOut were reflected as
discontinued operations in the March 31, 1996 consolidated
financial statements. Net current liabilities of
discontinued operations include management's best estimates
of the anticipated losses from discontinued operations
through the final resolution of all contingencies related to
the disposition of BlowOut. The estimates are based on an
analysis of the costs which may be incurred to dispose of
the entity. The amounts the Company will ultimately incur
could differ materially in the near term from the amounts
assumed in arriving at the loss on disposal of the
discontinued operations.
BlowOut is an early stage company requiring additional
financing if it is to continue its expansion and support its
operations. The Company is the principal creditor to
BlowOut. Pursuant to a Financing Agreement, the Company
agreed to provide guarantees for up to $7 million of
indebtedness of BlowOut (the "Guarantee").
The obligations under the Guarantee are comprised
of the following:
(a) BlowOut has a credit facility (the Credit
Facility) in an aggregate principal amount of $2 million for
a five-year term. Amounts outstanding under the Credit
Facility bear interest at a fixed rate per annum equal to
14.525 percent. Pursuant to the terms of the Guarantee, the
Company agreed to guarantee any amounts outstanding under
the Credit Facility until the lender is satisfied, in its
sole discretion, that BlowOut's financial condition is
sufficient to justify the release of the Company's
guarantee. As of September 30, 1998, BlowOut had borrowed
approximately $1.5 million under the Credit Facility.
BlowOut has stated that at October 28, 1998, it was
delinquent with respect to the principal and interest
payment due on October 1, 1998, under the Credit Facility in
the amount of $46,379.
(b) BlowOut also has a revolving line of credit
(Line of Credit) in a maximum principal amount at one time
outstanding of $5 million. Under the Line of Credit,
BlowOut may only draw up to 80 percent of the Orderly
Liquidation Value (as defined in the Line of Credit) of
eligible new and used Cassette inventory. Advances under
the Line of Credit bear interest at a floating rate per
annum equal to the Bank of America Reference Rate plus 2.75
percent (11.25 percent as of September 30, 1998). The term
of the Line of Credit is three years. The Company has
agreed, pursuant to an Unconditional Repurchase Agreement,
to purchase under certain circumstances in the event of
default under the Line of Credit, BlowOut's Cassette
inventory at specified amounts up to a principal amount of
$5 million. In February 1998, the Company entered into an
agreement with BlowOut and Culture Convenience Club ("CCC")
(the "Tri-Party Agreement") under which BlowOut has agreed
not to draw down in excess of $4.0 million under the Line of
Credit. As of September 30, 1998, BlowOut had borrowed
approximately $3.6 million under the Line of Credit.
There can be no assurance that the Company will not have to
pay out under these guarantees or provide other
accommodations. During the term of the Guarantee, BlowOut
has agreed to pay the Company a weekly fee at a rate equal
to .02 percent per week of then-currently outstanding
indebtedness subject to the Guarantee.
In fiscal year 1997, BlowOut executed a $3.0 million note in
favor of the Company which accrues interest at 9 percent per
annum. As part of the Tri-Party Agreement, the Company
agreed to defer principal and interest payments on this note
by BlowOut until December 31, 2004 during which deferment
period no interest accrues. The Company also agreed to the
forgiveness of all or a portion of the $3.0 million note as
BlowOut is able to lower the Company's contingent
obligations under its guarantees. At September 30, 1998,
the total outstanding balance of the debt under such note,
including accrued interest, was $2.8 million.
BlowOut has stated that it is encountering severe financial
difficulties because of a decline in revenue, limited cash
resources, recent inability to obtain videocassettes for
rental on terms favorable to BlowOut and high fixed costs in
relation to its revenue, all of which may affect BlowOut's
continuing financial viability. BlowOut also stated that
unless it is able to obtain new equity and/or debt capital
or is able to refinance its existing debt (including trade
payables) to generate additional cash flows, BlowOut
management believes that BlowOut's existing sources of cash
will not be sufficient to meet BlowOut's operating needs
through calendar 1998. If BlowOut's financial condition
deteriorates further and/or if BlowOut seeks bankruptcy
protection, the Company may be obligated to make payments
under the Guarantee (including pursuant to the Repurchase
Agreement), the Company may not be able to collect its
outstanding receivables owed by BlowOut, the Company could
be subject to other claims and the Company's claims could be
subject to defenses arising under applicable bankruptcy law.
On November 26, 1996, the Board authorized the re-purchase
of up to two million shares of Common Stock in open market
and negotiated purchases. During the quarter ended
September 30, 1998, the Company acquired 91,800 shares for
an aggregate amount of approximately $369,000. As of
September 30, 1998, the Company acquired 1,528,100 shares
for an aggregate amount of approximately $5,818,000. These
purchases were funded through cash flows from operations.
The Company's sources of liquidity include its cash balance,
cash generated from operations and its available credit
facility. These sources are expected to be sufficient to
fund the Company's operations for the year ending March 31,
1999.
Year 2000
Many computer software programs, as well as hardware with
embedded software, use a two-digit date field to track and
refer to any given year. After, and in some cases prior to,
January 1, 2000, these software and hardware systems may
interpret the year "00" as "1900," which will cause them to
perform faulty calculations or shut down altogether. To the
extent that this "Year 2000" problem is present in the
Company's internal software and hardware systems, or those
of its suppliers or customers, there could be material
disruptions in such important functions as the ordering and
delivery of Cassettes, the reporting and tracking of
Cassette rental and sale transactions, and billing and
payment systems. Such difficulties could result in a number
of adverse consequences, including but not limited to
delayed or lost revenue, diversion of resources, damages to
the Company's reputation, increased administrative and
processing costs, and liability to suppliers or customers.
Any one or a combination of such consequences could have a
material adverse effect on the Company's business, operating
results, and financial condition.
Accordingly, the Company began assessing the scope of the
Year 2000 problem both internally and among its suppliers
and customers as far back as March 1997, and began
implementing remedial measures soon thereafter. The Company
is conducting extensive tests of all software and hardware
systems used internally in the Company's business to
determine whether they are Year 2000 compliant. The
Company's internal assessment, testing, and remediation
program is expected to be completed by March 31, 1999.
Although the Company believes that these corrective measures
will adequately address the Year 2000 problem, there can be
no assurance that every Year 2000 problem will be discovered
and addressed, or that every remedial measure will be
effective. To the extent that Year 2000 problems persist,
the Company could experience the adverse consequences
described above, some or all of which could be material.
The Company has initiated formal communications with its POS
system software vendors, and certain of the Company's larger
individual customers that have developed their own POS
system software, to determine the extent to which their
software and hardware systems are Year 2000 compliant. In
addition, the Company has completed the required programming
of the Company's proprietary Rentrak Profit Maker ("RPM")
software and is taking steps to have this upgrade installed
on its customers' computer systems. The Company has also
initiated formal contact with the vendors involved in the
Cassette distribution process to determine whether the Year
2000 problem may adversely affect the Company's ability to
timely deliver Cassettes to its customers. The Company has
and will continue to work with all of its vendors,
suppliers, and customers to resolve any potential Year 2000
problems. As a follow-up measure, the Company plans to
evaluate and test the software of its POS vendors and test
communications with its customers by March 31, 1999, to
determine which are in fact Year 2000 compliant. However,
the Company has no direct control over these third parties
and cannot provide any assurance that such third party
software and hardware systems will be timely converted. The
failure of certain individual vendors, suppliers, and
customers, or a combination of vendors, suppliers, and
customers, to make their systems Year 2000 compliant could
have a material adverse effect on the Company's performance.
The Company expects the total cost of its assessments,
corrective measures, and testing to be less than $250,000 of
which approximately $150,000 has already been incurred.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCOLUSRES ABOUT
MARKET RISK
None.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
In April 1998, the Company filed a complaint (the "Hollywood
Complaint") against Hollywood Entertainment, Inc.
("Hollywood"), entitled Rentrak Corporation v. Hollywood
Entertainment et al., case no. 98-04-02811, in the Circuit
Court of the State of Oregon for the County of Multnomah,
Portland, Oregon. There have been no material changes in
this litigation since it was reported in the Company's 10-Q
for quarter ended June 30, 1998.
On November 21, 1997, Merle Harmon, individually and as
assignee for Merle Harmon Enterprises and Fan Fair
Corporation, sued the Company and two of its officers in
relation to the Company's attempt to negotiate the purchase
of Merle Harmon Enterprises and Fan Fair Corporation. The
case is pending in the U.S. District Court for the Eastern
District of Wisconsin. There have been no material changes
in this litigation since it was reported in the Company's 10-
Q for quarter ended June 30, 1998.
As previously reported in the Company's 1998 Annual Report
and in its Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998, in June 1998, Video Update, Inc.
("Video Update") filed a complaint (the "Video Update
Complaint") against the Company entitled Video Update, Inc.
v. Rentrak Corp., Civil Action No. 98-286, in the United
States District Court for the District of Delaware. The
Video Update Complaint alleges various violations of the
antitrust laws, including that the Company has attempted to
monopolize the market for videocassettes leased to retail
video stores in violations of Section 2 of the Sherman Act.
Video Update further alleges that the Company's negotiation
and execution of an exclusive, long-term revenue sharing
agreement with Video Update violates Section 1 of the
Sherman Act and Section 3 of the Clayton Act. Video Update
is seeking unspecified monetary relief, including treble
damages and attorney's fees, and equitable relief, including
an injunction prohibiting the Company from enforcing its
agreement with Video Update or any exclusivity provision
against videocassette suppliers and video retailers. In
August 1998, the Court granted the Company's motion to
dismiss the Video Update Complaint pursuant to Federal Rules
of Civil Procedure Rule 12(b)(3) on the basis of improper
venue.
In August 1998, Video Update filed a new complaint against
the Company in the United States District Court for the
District of Oregon (the "Re-Filed Complaint"), Case No. 98-
1013 HA. The Re-Filed Complaint is substantially the same
as the previous complaint. The Company believes the Re-
Filed Complaint lacks merit and intends to vigorously defend
against the allegations in the Complaint. The Company has
answered the Re-Filed Complaint denying its material
allegations and asserting several affirmative defenses. The
Company also has counterclaimed against Video Update
alleging, among other things, breach of contract, breach of
the covenant of good faith and fair dealing, promissory
fraud, breach of fiduciary duty, breach of trust,
constructive fraud, negligent misrepresentation and
intentional interference with business advantage, and seeks
damages and equitable relief.
In August 1998, the Company filed a complaint (the "Movie
Buffs Complaint") against Susan Janae Kingston d/b/a Movie
Buffs ("Movie Buffs"), entitled Rentrak Corporation v. Susan
Janae Kingston, an individual, d/b/a Movie Buffs, Case No.
CV 98-1004 HA, in the United States District Court for the
District of Oregon. The Movie Buffs Complaint alleges
breach of contract and conversion claims and seeks damages
in the amount of at least $3.3 million and punitive damages
of $500,000. In September 1998, Movie Buffs filed
counterclaims against the Company and Third Party Claims
against Hollywood Entertainment Corp. (the "Movie Buffs
Counterclaims"). The Movie Buffs Counterclaims allege that
the Company violated the antitrust laws, including the
Sherman, Clayton and Robinson-Patman Acts. The Counterclaim
also seeks declaratory relief, an accounting and alleges
fraud and conspiracy to defraud, breach of contract, breach
of the implied covenant of good faith, and unfair trade
practices. Movie Buffs seeks an unspecified amount of
damages (at least $10 million), treble damages, general and
consequential damages, punitive damages, attorneys' fees and
court costs. In September 1998, Roadrunner Video
("Roadrunner Video") filed a third party complaint in
intervention against the Company and Hollywood Entertainment
Corp. ("the "Roadrunner Complaint"). The Roadrunner
Complaint alleges the same claims as the Movie Buffs
Counterclaims. The Company believes the Movie Buffs
Counterclaims and the Roadrunner Complaint lack merit and
the Company intends to vigorously defend against all of the
allegations therein. The Company has filed a motion to
dismiss the Robinson-Patman Act claims pursuant to Federal
Rule of Civil Procedure 12(b)(6).
The following are registered trademarks of Rentrak
Corporation:
Rentrak, Pay Per Transaction, PPT, Rentrak Profit Maker
and RPM
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
On August 24, 1998, the Company conducted its Annual Meeting
of Shareholders. The matters voted on were as follows:
1. Voting for Directors was as follows:
Nominees For: Percentage:* Withheld: Percentage:
Pradeep Batra 8,364,524 88.23% 1,115,569 11.77%
Ron Berger 8,398,234 88.59% 1,081,859 11.41%
Skipper Baumgarten 8,488,476 89.54% 991,617 10.46%
* Percentage of votes cast at the meeting by Proxy
2.
Proposal to Approve an Amendment to the 1997 Equity
Participation Plan of Rentrak Corporation to increase the
aggregate number of common shares that may be
issued thereunder:
For: Against: Abstain: Broker Non-Votes:
7,051,629 2,383,364 45,100 0
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10.1 - The Amendment to the 1997 Equity
Participation Plan of Rentrak Corporation. (1)
Exhibit 10.2- Employment Agreement with F. Kim Cox
dated April 1, 1998.
Exhibit 27 - Financial Data Schedule
(1) Incorporated by reference to the Company's
Proxy Statement dated July 1, 1998 for the
Company's 1998 Annual Meeting of
Shareholders.
(b) Reports on Form 8-K - None
SIGNATURE
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 thereunto duly
authorized.
Dated this 9th day of November, 1998
RENTRAK CORPORATION:
/s/ Carolyn A. Pihl
Carolyn A. Pihl
Chief Accounting Officer
Signing on behalf of the registrant
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as the
"Agreement") is made and entered into effective this 1st day of
April, 1998, by and between RENTRAK CORPORATION, an Oregon
corporation (hereinafter referred to as "Employer"), and F. KIM
COX (hereinafter referred to as "Employee").
W I T N E S S E T H:
WHEREAS, Employer currently employs Employee in the capacity
of Executive Vice President and Employee is one of the key
executives of the Employer;
WHEREAS, Employer and Employee have entered into an
Employment Agreement dated as of April 20, 1995 (the "Employment
Agreement"), and Employer and Employee desire to modify the terms
of the Employment Agreement upon the terms and subject to the
conditions of this Agreement;
WHEREAS, the terms of this Agreement shall supersede in its
entirety the terms of the Employment Agreement;
WHEREAS, Employer considers it essential to the best
interests of its shareholders to foster the continuous employment
of Employee;
NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements herein contained, the recitals set forth
hereinabove which by this reference are incorporated herein, and
other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereby agree as follows:
SECTION 1. EMPLOYMENT
1.01. Position and Title. Employer shall employ and
engage the services of Employee, in the position of Executive
Vice President for the term of this Agreement as defined in
Section 2, infra, pursuant to the terms and conditions set forth
in this Agreement.
1.02. Duties and Place of Employment. Employee shall be
responsible for, and perform duties associated with his position
as Executive Vice President and other duties as may be directed
by the Employer, from time to time. Employee shall: (i) devote
his full business time during normal business hours to the
business and affairs of Employer; (ii) use his best efforts to
promote the interests of Employer; and (iii) perform faithfully
and efficiently his responsibilities. Employee shall perform his
duties at the Employer's principal executive offices which are
currently located at One Airport Center, 7700 N.E. Ambassador
Place, Portland, Oregon 97220, or such other locations as may be
reasonably directed by Employer from time to time. Subject to
the terms of this Agreement, Employee shall comply promptly and
faithfully with all of Employer's policies, instructions,
directions, requests, rules and regulations.
SECTION 2. TERM AND TERMINATION
2.01. Stated Term. Employment shall commence on the
effective date of this Agreement and shall continue for a period
of four (4) years ending on March 31, 2002 or until Employee's
employment under this Agreement is terminated pursuant to
Section 2.02, Section 2.03, or Section 2.04, infra ("Term").
2.02. At Will Termination. Notwithstanding anything
herein to the contrary, Employee's employment may be terminated
at any time with our without reason, by Employer upon thirty (30)
days written notice to Employee, or by Employee upon thirty (30)
days written notice to Employer.
2.03. For Cause Termination. Employee's employment may
be terminated by Employer without notice for "cause."
Termination for "cause" is defined for purposes of this
subsection as termination upon: (i) the final conviction of
Employee for a felony involving willful conduct materially
injurious, harmful or detrimental to Employer; or (ii) the final
adjudication of Employee in a civil proceeding for acts or
omissions to act involving willful conduct materially injurious,
harmful or detrimental to Employer. For the purposes of this
subsection, "final conviction" and "final adjudication" shall be
and mean a conviction or and adjudication, as the case may be,
that is no longer appealable due to the passage of time or
otherwise, and with respect to which a final judgment has been
entered on the judgment roles of the court in which the action
was commenced. Further, for the purposes of this subsection, no
act or omission to act on Employee's part shall be considered
"willful" unless done, or omitted to be dome, by Employee in bad
faith and without reasonable belief that Employee's act of
omission was in the best interest of Employer.
2.04. Disability or Death. Employee's employment shall
be terminable immediately upon Employee's death or disability.
"Disability" is defined for purposes of this subsection as
absence from Employee's full time duties with Employer as a
result of Employee's incapacity due to physical or mental illness
for ninety (90) days calculated on a cumulative basis during any
two (2) year period during the term of this Agreement. Nothing
in this Section 2.04 is intended to violate any Oregon State law
regarding parental or family leave policies or any other
applicable law.
SECTION 3. COMPENSATION
3.01. Base Salary. Commencing April 1, 1998 through
March 31, 1999, Employee shall be paid an annual base salary in
the amount of one hundred seventy-eight thousand five hundred
dollars ($178,500); commencing April 1, 1999 through March 31,
2000, Employee shall be paid an annual base salary in the amount
of one hundred eighty-seven thousand four hundred twenty-five
dollars ($187,425); commencing April 1, 2000 through March 31,
2001, Employee shall be paid an annual base salary in the amount
of one hundred ninety-six thousand seven hundred ninety-six
dollars ($196,796); and commencing April 1, 2002 through March
31, 2002, Employee shall be paid an annual base salary in the
amount of two hundred six thousand six hundred thirty-six dollars
($206,636) ("Base Salary"). The Base Salary shall be paid to
Employee in equal semi-monthly installments in arrears on the
seventh (7th) and twenty-second (n) day of each month, commencing
as of the first semi-monthly pay period following the effective
date of this Agreement. Should the seventh (7th) or the twenty-
second (n) day of any month not be a business day, Employee's
semi-monthly installment of the Base Salary otherwise due on such
date shall be paid to Employee on the business day closest to the
date such semi-monthly installment is due (i.e., if the seventh
(7th) day of the month falls on a Saturday, the semi-monthly
installment shall be paid on the preceding business day or if the
seventh (7th) day of the month falls on a Sunday, the semi-
monthly installment shall be paid on the next following business
day). Employee's Base Salary may be increased in the discretion
of Employer during the Term of this Agreement.
3.02. Bonus Compensation. Nothing herein shall preclude
the Employer from authorizing the payment of additional
compensation to Employee over and above the Base Salary at any
time payable to him under his Agreement, whether as a bonus or
otherwise. The payment of such additional compensation shall not
operate as an amendment obligating Employer to make any similar
payment or to pay additional compensation at any future time or
for any future period, or be deemed to affect Employee's Base
Salary in any manner. Employee will participate in whatever
bonus plan is adopted by Employer including any cash bonus pools
established from time to time by Employer for Corporate
Executives.
3.03. Stock Options. Upon execution of this Agreement,
Employer shall grant Employee one hundred thousand (100,000)
options for Employer's stock. To the extent allowed under the
Internal Revenue Code of 1986 ("Code"), the stock options will be
granted pursuant to that certain Incentive Stock Option
Agreement, a copy of which is attached to this Agreement as
Exhibit A. The remaining options, if any, not allowed as
incentive stock options under the Code will be granted as
nonqualified options, copies of which are attached hereto as
Exhibit B. Said options shall be priced on the date of execution
of this Agreement and shall vest according to the following
schedule:
Date Number of Options Vested
March 31, 2000 33,333
March 31, 2001 33,333
March 31, 2002 33,334
3.04. Benefits.
3.04A Vacation and Holiday Pay. As of the
effective date of this Agreement, Employee
will be entitled to: (i) accrue vacation
time at the rate of four (4) weeks of paid
vacation during each year of employment; and
(ii) will be eligible to receive pay for
Employer-paid holidays.
3.04B Insurance. Employee shall be entitled
to medical, life, worker's compensation,
social security and state unemployment
insurance benefits as provided under
Employer's then current terms, policies and
procedures, except that the ninety day
waiting period for such insurance benefits
shall be waived.
3.04C Tuition Reimbursement. Employee shall
be entitled to reimbursement for all tuition,
enrollment fees, and books pursuant to
Employers education assistance program.
Employee shall comply with all Employer's
terms, policies and procedures regarding its
education assistance program.
3.04D Miscellaneous Benefits. In addition
to any other compensation or benefits to be
received by Employee pursuant to the terms of
this Agreement, Employee shall be entitled to
participate in any employee benefits which
Employer may from time to time provide its
employees or its corporate officers
generally.
SECTION 4. PAYMENTS UPON TERMINATION OF EMPLOYMENT
4.01. Termination for Cause. In the event of the
termination of Employee's employment by Employer for cause as
defined in Section 2.03, supra, or in the event of termination of
Employee's employment by Employee, Employer shall pay to Employee
only the amount of compensation accrued pursuant to Section 3.01,
supra, through and including the date of termination.
4.02. Termination for Death or Disability. In the
event of the termination of Employee's employment due to his
death or disability, Employer shall pay to Employee or Employee's
estate or legal representative, as the case may be, the amount of
compensation accrued pursuant to Section 3.01, supra, as of the
date of termination plus a lump sum severance payment equal to
one hundred eighty (180) days Base Salary in effect as of the
date of termination.
4.03. Other Termination. In the event of termination of
Employee's employment by Employer other than as provided in
Section 4.01 or 4.02, supra, Employer shall pay Employee the
amount of compensation accrued pursuant to Section 3.01, supra,
as of the date of termination plus severance payments in an
amount equal to one year's Base Salary in effect as of the date
of termination, payable in installments as if still employed;
subject however, to Employee demonstrating that he is using his
best efforts to find employment of comparable status within one
hundred (100) miles of wherever last located. For purposes of
this Agreement, "employment" shall be defined to include self-
employment and the offering of consulting services. In the event
Employee does not use, or cannot demonstrate that he is using his
best efforts to obtain other employment severance payments shall
cease. If Employee does use his best efforts to obtain other
employment and is successful in obtaining such employment,
severance payments shall be reduced by the amount of any
remuneration received from such employment. For the purposes of
this Agreement, "remuneration" shall be defined to include cash
payments, the face value of any promissory notes issued to
Employee regardless of the terms of payment or whether payments
are ever received, stock or stock options valued as of the day
granted, or any other compensation given in any form whatsoever.
4.04. Other Compensation. In the event of a termination
of Employee's employment, all stock options held by Employee as
described in Section 3.03 of this Agreement shall vest
immediately. Except as set forth in this Section 4, no other
compensation shall be due or payable to Employee upon termination
of his employment.
SECTION 5. PERSONAL NATURE
This Agreement is personal, and is being entered into based
upon the singular skill, qualifications and experience of
Employee. Employee shall not assign this Agreement or any rights
hereunder without the express written consent of Employer which
may be withheld with or without reason. Employee hereby grants
to Employer the right to use Employee's name, likeness and/or
biography in connection with the services performed by Employee
hereunder and in connection with the advertising or exploitation
of any project with respect to which Employee performs services
hereunder.
SECTION 6. NOTICES
Any and all notices or other or other communications
required or permitted by this Agreement or by law shall be deemed
duly served and given when personally delivered to the party to
whom such notice or communication is directed or, in lieu of such
personal service, when deposited in the United States mail,
certified, return receipt requested, first class postage prepaid,
addressed as follows:
EMPLOYER: Rentrak Corporation
One Airport Center
7700 N.E. Ambassador Place
Portland, Oregon 97220
Attn: Ron Berger
COPY TO: Dana Campbell
Corporate Director of Legal and Business
Affairs
7227 N.E. 55th Avenue
P.O. Box 18888
Portland, Oregon 97218
EMPLOYEE: F. Kim Cox
8036 S.E. 141st Court
Portland, Oregon 97236
Each party may change its address for purposes of this
Section by giving written notice of such change in the manner
provided for in this Section.
SECTION 7. MISCELLANEOUS PROVISIONS
7.01. Attorneys' Fees. In the event that it should be
become necessary for any party to bring an action, including
arbitration, either at law or in equity, to enforce or interpret
the terms of this Agreement, each party shall pay its own
attorneys' fees including those incurred in resolving the dispute
prior to initiation of any litigation and at trial and on any
appeal.
7.02. Applicable Law and Venue. This Agreement is
executed and intended to be performed in the State of Oregon and
the laws of such State shall govern its interpretation and
effect. If suit is instituted by any party hereto or by any
other party for any cause or matter arising from or in connection
with the respective rights or obligations of the parties
hereunder, the sole jurisdiction and venue for such action shall
be the Circuit Court of the State of Oregon in and for the County
of Multnomah.
7.03. Integration. Employee has simultaneously executed
an Incentive Stock Option Agreement (a copy of which is attached
hereto as Exhibit A), a Nonqualified Stock Option Agreement (a
copy of which is attached hereto as Exhibit B) and has previously
executed an Employee Confidentiality and Noncompetition Agreement
( a copy of which is attached hereto as Exhibit C) which remain
in effect and are incorporated into the terms and conditions of
employment under this Agreement. Except as set forth in the
preceding sentence, this Agreement constitutes the entire
agreement of the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements, negotiations,
or understandings, whether oral or written, between the parties
with respect thereto.
7.04. Heirs and Assigns. Subject to any restriction on
assignment contained herein, this Agreement shall be binding upon
and shall inure to the benefit of the respective party's heirs,
successors and assigns.
7.05. Severability. Any provision in this Agreement
which is, by competent judicial authority, declared illegal,
invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without invalidating the remaining
provisions hereof or affecting the legality, validity or
enforceability of such provision in any other jurisdiction. The
parties hereto agree to negotiate in good faith to replace any
illegal, invalid or unenforceable provision that, to the extent
possible, will preserve the economic bargain of this Agreement,
or otherwise to amend this Agreement.
7.06. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, and the
counterparts shall together constitute one and the same
agreement, notwithstanding that all of the parties are not
signatory to the original or the same counterpart.
7.07. Captions. The headings and captions herein are
inserted solely for the purpose of convenience of reference and
are not intended to govern, any term or provision hereof.
7.08. Execution. Each of the parties hereto shall
execute, acknowledge and deliver any instrument necessary to
carry out the provisions of this Agreement.
7.09. Construction. This Agreement has been prepared by
legal counsel for Employer. Employee has been advised and by his
execution hereof acknowledges, that he has the right to and
should have this Agreement reviewed by his own separate legal
counsel. This Agreement has been negotiated at arms' length with
the benefit of or opportunity to seek legal counsel and,
accordingly, shall not be construed against any of the parties.
7.10 Indemnification. Employer shall indemnify
Employee to the fullest extent permitted by law for and against
any and all cost, loss, expense and liability including, without
limitation, attorneys' fees, incurred by Employee as a result of
the performance of his duties for Employer. Such obligation to
indemnify shall include, without limitation, indemnification
against any and all claims arising out of the Non-Disparagement
Agreement entered into on July 10, 1997 between Employer,
Employee, Kim Cox and Michael R. Lightbourne.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
EMPLOYER:
RENTRAK CORPORATION,
an Oregon Corporation
_____________________________________
By: Ron Berger, President
EMPLOYEE:
I acknowledge that I have read and agree to the foregoing
Agreement including, without limitation, the provision allowing
termination of my employment "at will" by Employer in Section
2.01, supra.
_________________________________
F. Kim Cox
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