Exhibit 99
November 15, 2002
Rentrak Corporation
One Airport Center
0000 XX Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Chief Executive Officer
Gentlemen:
This letter sets forth the terms of our agreement with respect to the
cancellation of the warrant (the "Warrant") to purchase shares of common stock
of Rentrak Corporation (the "Company") issued to Disney Enterprises, Inc.
("DEI," formerly known as The Xxxx Disney Company) pursuant to the Warrant
Agreement dated as of July 22, 1994, between the Company and DEI (the "Warrant
Agreement"). The Warrant is evidenced by Warrant Certificate No. 1, dated July
22, 1994 (the "Certificate"), and following the missing of certain milestones,
the triggering of certain antidilution provisions, and the expiration of certain
exercise periods, relates to the right to purchase up to 925,921 shares of
Company common stock at a price of $6.58 per share.
1. CANCELLATION OF THE WARRANT; CONSIDERATION. On the terms and subject
to the conditions set forth herein, DEI hereby agrees to the cancellation,
without replacement, of the Warrant, effective as of the Closing, as defined
below. In consideration of such cancellation, the Company agrees to pay DEI (a)
$300,000, to be delivered at the Closing (the "Closing Consideration"); and (b)
any additional amount required by the terms of Section 3 below, to be delivered
as provided in such section (the "Supplemental Consideration").
2. CLOSING. The closing of the transactions contemplated by this
letter agreement shall take place at a closing to take place at the offices of
the Company at 10:00 a.m. on Friday, November 15, 2002, or at such other place
and time as the parties may hereafter agree in writing (the "Closing"). At the
Closing,
(a) DEI shall redeliver the Certificate, free and clear of any claims
or encumbrances, to the Company for cancellation;
Rentrak Corporation
November 15, 2002
Page 2
(b) the Company shall transmit the Closing Consideration to DEI by wire
transfer of immediately available funds to such account as DEI shall have
designated not less than 48 hours prior to the Closing; and
(c) the Warrant Agreement shall be terminated and have no further force
or effect.
3. CERTAIN TRANSACTIONS. In the event that the Company or some or all of
its shareholders enter into any binding agreement that constitutes, or that upon
the closing of the transactions contemplated therein would constitute, a Change
of Control as defined below (the execution of any such agreement being a
"Transaction"), the Company shall (a) give prompt written notice thereof to DEI
and (b) conditional upon the Change of Control becoming effective, pay the
applicable Supplemental Consideration, as specified below, to DEI, by wire
transfer of immediately available funds to such account as DEI shall have
designated in response to such notice. The payment of such Supplemental
Consideration shall be made within two business days following the effectiveness
of the Change of Control specified or contemplated by the Transaction. For
purposes of this provision,
(i) The term "Change of Control" shall mean (A) any acquisition by any person
(including any individual or any corporation, partnership or other entity)
or group of persons acting in concert (individually or collectively, an
"Acquiror") of shares of common stock or other securities of the Company
representing in the aggregate the right to cast a majority of votes for the
election of the board of directors or other governing body of the Company;
or (B) any acquisition by an Acquiror of assets of the Company constituting
more than 50% in fair market value of the total assets of the Company; or
(C) any merger, consolidation, recapitalization, joint venture or other
transaction pursuant to which any Acquiror acquires, directly or
indirectly, the right to cast a majority of votes for the election of the
board of directors or other governing body of the Company.
(ii) The applicable amount of "Supplemental Consideration" shall be determined
by reference to the "Per Share Value" of the Transaction, which shall be
deemed to be equal to the actual (or, in the event the Transaction takes a
form other than the acquisition of shares of the Company's common stock,
the implied) per share consideration to be received by the Company or its
shareholders in the Transaction, calculated based on the number of shares
of Company common stock outstanding on the date the Change of Control
becomes effective; provided that appropriate adjustment shall be made to
the applicable Per Share Value in the event shares of the Company's common
stock are changed into a different number or class of shares by reason of a
reclassification, recapitalization, split-up, combination, exchange of
shares, stock dividend, or comparable event.
Rentrak Corporation
November 15, 2002
Page 3
If the Transaction and the Per Share the Total Supplemental
occurs: Value is: Consideration shall be:
--------------------------------- -------------------------- -------------------------------
On or prior to 11/15/03 $10.00 - $12.00 $ 1,200,000
" $12.01 - $15.00 $ 1,600,000
" over $15.00 $ 2,000,000
After 11/15/03 but
On or prior to 11/15/04 $10.00 - $12.00 $ 600,000
" $12.01 - $15.00 $ 800,000
" over $15.00 $ 1,000,000
after 11/15/04 but
on or prior to 11/15/05 $10.00 - $12.00 $ 300,000
" $12.01 - $15.00 $ 400,000
" over $15.00 $ 500,000
4. COVENANTS.
(a) The Company covenants and agrees that it shall not enter into any
Transaction without making express provision for the Acquiror to cause the
Company to fully and timely discharge its obligations hereunder, or for the
Acquiror to fully and timely discharge such obligations directly upon any
default with respect thereto by the Company. The Company shall make DEI a
designated third-party beneficiary of the foregoing undertaking by any Acquiror.
(b) Except as required by law, rules of the Securities and Exchange
Commission ("SEC"), or regulations of any securities exchange or quotation
system, each party agrees not to disclose publicly the terms of this letter
agreement or the transactions contemplated hereby. In the event either party
determines that such disclosure is required by law, SEC rules or regulations of
a securities exchange or quotation system, it shall give the other party prior
written notice of its proposed disclosure, provide such other party with
reasonable opportunity to review and comment on such proposed disclosure, and
not unreasonably reject such other party's comments thereon.
5. OTHER CONTINUING RELATIONSHIPS. Neither anything herein nor the
consummation of the transactions contemplated hereby shall affect in any manner
any existing output and/or distribution agreements or any other business
relationships between the Company or its affiliates and DEI or its affiliates.
Rentrak Corporation
November 15, 2002
Page 4
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) ORGANIZATION AND EXISTENCE; AUTHORIZATION. The Company is a
corporation duly organized and validly existing under the laws of the State of
Oregon. The execution and delivery by the Company of this letter agreement and
the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of the Company.
This letter agreement constitutes a valid and binding agreement and obligation
of the Company, enforceable against the Company in accordance with its terms,
except as the enforceability hereof may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or court applied equitable
remedies.
(b) NO CONFLICT OR BREACH. The execution and delivery of this letter
agreement and the consummation of the transactions contemplated hereby will not:
(i) conflict with or result in a breach of or constitute a default under any
provisions of the articles of incorporation or bylaws of the Company; (ii)
conflict with or violate (with or without the giving of notice or the lapse of
time or both) any law, ordinance, regulation, order, award, judgment, injunction
or decree of any legislative body, court, governmental or regulatory authority
or arbitrator applicable to the Company; (iii) violate or conflict with,
constitute a default under or result in a breach of any contract, agreement,
commitment, indenture or other obligation to which the Company is a party or by
which the Company is bound, or (iv) require the consent of any third party.
(c) NO TRANSACTION PENDING OR CURRENTLY PLANNED. Neither the Company
nor, to the knowledge of the Company, any of its officers, directors or
shareholders, is currently engaged in any conversations, discussions or
negotiations with respect to a potential Transaction, and no such conversations,
discussions or negotiations are contemplated as of the date hereof.
7. REPRESENTATIONS AND WARRANTIES OF DEI.
(a) ORGANIZATION AND STANDING; AUTHORIZATION. DEI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The execution and delivery by DEI of this letter agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of DEI. This letter
agreement constitutes a valid and binding agreement and obligation of DEI,
enforceable against DEI in accordance with its terms, except as the
enforceability hereof may be affected by bankruptcy, insolvency or similar laws
affecting creditors' rights generally or court applied equitable remedies.
(b) NO CONFLICT OR BREACH. The execution and delivery of this letter
agreement and the consummation of the transactions contemplated hereby will not:
(i) conflict with or result in a breach of or constitute a default under any
provisions of the
Rentrak Corporation
November 15, 2002
Page 5
certificate of incorporation or bylaws of DEI; (ii) conflict with or violate
(with or without the giving of notice or the lapse of time or both) any law,
ordinance, regulation, order, award, judgment, injunction or decree of any
legislative body, court, governmental or regulatory authority or arbitrator
applicable to DEI; (iii) violate or conflict with, constitute a default under or
result in a breach of any contract, agreement, commitment, indenture or other
obligation to which DEI is a party or by which DEI is bound, or (iv) require the
consent of any third party.
(c) ABSENCE OF CLAIMS. The Warrant is, and will at the Closing be, held
by DEI free and clear of all claims and encumbrances and DEI has not, and will
not as of the Closing have, entered into any agreement, understanding or
commitment with any third party with respect to the Warrant or the shares
underlying the Warrant.
8. NOTICE. All notices or other communications with respect to this letter
agreement shall be in writing and shall be (i) delivered by first-class,
registered, certified or express mail, return receipt requested, postage
prepaid, (ii) hand-delivered (including via a nationally recognized overnight
courier service) or (iii) transmitted by facsimile transmission, in any case,
addressed as follows:
(a) If to DEI:
Disney Enterprises, Inc.
000 Xxxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0931
Attention: Xxxxx X. Xxxxxxxx
Senior Vice President- Assistant General Xxxxxxx
Xxxxxxxxx: (000) 000-0000
(b) If to the Company:
One Airport Center
0000 XX Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Chief Executive Officer
Facsimile: (000) 000-0000
or such other address or facsimile number as the respective addressee may
indicate by written notice. Each notice, demand, request or communication which
shall be given or made in the manner described above shall be deemed
sufficiently given or made for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a facsimile transmission) the machine generated
transmission report being deemed conclusive but not exclusive
Rentrak Corporation
November 15, 2002
Page 6
evidence of such delivery) or at such time as delivery is intentionally refused
by the named addressee upon presentation.
9. WAIVER. Except as otherwise provided in this letter agreement, no delay
or failure on the part of any party hereto in exercising any right, power or
privilege under this letter agreement or under any other instrument or document
given in connection with or pursuant to this letter agreement shall impair any
such right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of any such right, power or
privilege, or the exercise of any other right, power or privilege. No waiver
shall be valid against either party unless in writing and signed by the party
against whom enforcement of such waiver is sought and then only to the extent
expressly specified therein.
10. BENEFIT AND ASSIGNMENT. Neither party shall assign this letter
agreement, in whole or in part, whether by operation of law or otherwise,
without the prior written consent of the other. This letter agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns as permitted hereunder.
11. ENTIRE AGREEMENT; AMENDMENT. This letter agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements, commitments or understandings
with respect to such matters. No amendment, modification or discharge of this
letter agreement shall be valid or binding unless set forth in writing and duly
executed by the party against which enforcement of the amendment, modification
or discharge is sought.
12. SIGNATURE IN COUNTERPARTS. This letter agreement may be executed in
separate counterparts, none of which need contain the signature of all parties,
each of which shall be deemed to be an original, and all of which taken together
constitute one and the same instrument.
13. CONSTRUCTION. This letter agreement shall be construed and enforced in
accordance with the laws of the State of California, excluding the conflicts of
law principles thereof.
Rentrak Corporation
November 15, 2002
Page 7
If the foregoing correctly states your understanding of our agreement, please
countersign this letter agreement in the space provided below, whereupon this
letter agreement shall constitute a binding agreement between us, enforceable in
accordance with its terms.
Very truly yours,
DISNEY ENTERPRISES, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President-
Assistant General Counsel
Xxxxxx and acknowledged as of the date first above written.
RENTRAK CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Chairman and Chief Executive Officer
