AGREEMENT
THIS AGREEMENT is entered into this 9th day of July, 1997, by and among
RENTRAK CORPORATION, an Oregon corporation ("Rentrak"), VIDEO UPDATE, INC., a
Delaware corporation ("VU"), and MOOVIES, INC., a Delaware corporation
("Moovies").
RECITALS
WHEREAS, Moovies is a participant in Rentrak's pay-per-transaction
("PPT") system pursuant to a Rentrak National Account Agreement, dated March 8,
1995, as modified by a First Addendum to Rentrak National Account Agreement, of
even date therewith, as further modified by a Second Addendum to Rentrak
National Account Agreement, dated May 18, 1995, and an Amendment to First
Addendum to Rentrak National Account Agreement, dated June 16, 1995
(collectively, the "PPT Agreement");
WHEREAS, VU desires to acquire Moovies and Moovies desires to be
acquired by VU through a merger transaction in which Moovies will be merged into
a wholly owned subsidiary of VU and Moovies will be the surviving corporation
(the "Acquisition");
WHEREAS, Pursuant to Section 37 of the PPT Agreement, VU and Moovies
cannot consummate the Acquisition without Rentrak's consent, which consent may
be withheld in Rentrak's sole discretion;
WHEREAS, VU and Rentrak have simultaneously herewith entered into a
Rentrak National Account Agreement, as modified by a First Addendum to Rentrak
National Account Agreement, of even date (together, the "VU PPT Agreement"),
which VU PPT Agreement shall become effective and legally binding upon VU and
Rentrak in accordance with the terms thereof on the closing and effectiveness of
the Acquisition (the "Effective Time");
WHEREAS, Rentrak desires to consent to the Acquisition subject to the
terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Page 1 - AGREEMENT
1. ACKNOWLEDGEMENT OF MOOVIES OBLIGATIONS. Rentrak and Moovies
acknowledge and agree that, as of July 7, 1997 (taking into account invoices
dated as of July 7, 1997 and payments by Moovies received through July 7, 1997),
Moovies owes Rentrak the following amounts under the PPT Agreement: (i)
$1,685,567.71 in accounts receivable, of which $354,698.32 is past due. The
parties further acknowledge that between the date of this Agreement and the
Effective Time Moovies will continue to incur fees and/or other amounts due
Rentrak under the PPT Agreement.
2. CONSENT TO ACQUISITION. Rentrak hereby consents to the Acquisition;
provided, however, that such consent shall not be effective or legally binding
upon Rentrak until and unless all of the following conditions precedent are
fully satisfied on or before the earlier of the Effective Time or March 31,
1998:
A. EXECUTION OF MERGER AGREEMENT. VU and Moovies shall have
executed a definitive merger agreement pursuant to which VU will
acquire Moovies;
B. FULL PAYMENT OF ALL PAST DUE MOOVIES OBLIGATIONS. All
accounts due and payable by Moovies to Rentrak under the PPT Agreement
as of 10 business days prior to the Effective Time and all other
amounts then owed to Rentrak by Moovies, including without limitation,
audit fees and other costs, shall be paid in full to Rentrak on or
before the Effective Time. In this regard, Rentrak shall submit an
invoice to Moovies at least 10 business days prior to the Effective
Time setting forth the past due accounts payable owed by Moovies and
such other amounts then owed. In the event that there is a dispute in
respect of the invoice, Rentrak and Moovies will attempt in good faith
to resolve such dispute, and, if resolved, any payments shall be paid
by Moovies prior to the Effective Time. If any such dispute is not
resolved by Rentrak and Moovies within 5 business days after Moovies
receives a written copy of such invoice from Rentrak, then (a) Moovies
will pay Rentrak prior to the Effective Time all undisputed amounts and
(b) the specific matters or amounts on the invoice in dispute shall be
resolved exclusively through submission by either Moovies or Rentrak to
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, in Portland, Oregon,
before a single arbitrator selected in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in
effect. Moovies's payment to Rentrak prior to the Effective Time of all
undisputed amounts and submission of any disputed amounts to
arbitration in accordance with this Section 2(b) shall be deemed to
satisfy the condition precedent of this Section 2(b). Rentrak and
Moovies agree that the arbitrator's award shall be final and binding
upon them with respect to the dispute. All costs and expenses incurred
by the parties hereto in connection with the arbitration (including
reasonable legal expenses of all parties) shall be borne by the party
against whom the arbitrator's award is directed. Such costs and
expenses shall be prorated in the event the arbitrator splits the award
between the parties in proportion to the amounts awarded
Page 2 - AGREEMENT
(e.g. if Rentrak is awarded 70% of the disputed amount and Moovies is
awarded 30%, Moovies would pay 70% of Rentrak's costs, expenses and
reasonable legal fees and Rentrak would pay 30% of Moovies' costs,
expenses and reasonable legal fees). In the event an award of the
disputed amount is made to Rentrak such award shall include interest
which shall accrue at the rate of 1.0% per month from the Effective
Time until the date such award is fully paid. If the arbitrator
determines that a party has not acted in good faith in connection with
the matters presented in the invoice or in disputing such matters or
that the matters presented in the invoice are frivolous or that in
challenging or maintaining its challenge throughout the arbitration
with respect to the matter in dispute that such dispute is frivolous or
designed to delay payment, the arbitrator shall award the other party
an additional amount, if any, as determined by the arbitrator in his
discretion as he deems appropriate under the circumstances, up to 50%
of the amount awarded to such party. Rentrak and Moovies agree to
cooperate in good faith with each other, each other's authorized
representatives and any arbitrator selected pursuant hereto in order
that any and all matters in dispute may be resolved as soon as
practicable;
C. CLOSING OF THE ACQUISITION. The Acquisition shall have
closed and become effective and the VU PPT Agreement shall have become
effective and legally binding upon VU and Rentrak;
D. PAYMENT OF RENTRAK LEGAL FEES. VU shall have paid the
reasonable attorneys' fees and costs and other out of pocket expenses
and costs incurred by Rentrak in the VU PPT Agreement in accordance
with the Legal Fees Agreement, dated June 3, 1997 by and between
Rentrak and VU.
3. AMENDMENT TO PPT AGREEMENT. As an inducement to and consideration
for Rentrak providing its conditional consent as set forth in Section 2 above,
Rentrak and Moovies agree to amend the PPT Agreement, effective as of the date
of this Agreement, as follows:
A. Section 36 - Term of Agreement. The last two sentences of
Section 36 beginning with the words "In the event Xxx
Xxxxxx..." are deleted from the PPT Agreement in their
entirety and shall have no further force or effect whatsoever.
B. Section 41 - Alternate Terms. Section 41 is hereby deleted in
its entirety and shall have no further force or effect
whatsoever.
Page 3 - AGREEMENT
Except as amended above and subject to Section 9 below, all terms and
conditions of the PPT Agreement are unchanged and shall remain in full
force and effect. The amendments contained in this Section 3 shall be
legally binding and shall be given full force and effect whether or not
VU acquires Moovies or the conditions precedent for Rentrak's consent
set forth in Section 2 are satisfied.
4. GUARANTEE OF VU. Upon the closing and effectiveness of the
Acquisition, VU hereby unconditionally guarantees to Rentrak (i) the prompt
payment by Moovies to Rentrak of all accounts payable owed by Moovies but not
yet due and payable to Rentrak as of the closing date of the Acquisition, which
amount shall be paid in the ordinary course of business pursuant to the payment
terms contained in Section 2(b) of the PPT Agreement and (ii) the payment by
Moovies of the amounts, if any, awarded to Rentrak by the arbitrator pursuant to
Section 2(b) above. In no event shall Rentrak have any obligation (although it
is entitled, at its option) to proceed or take enforcement action against
Moovies before seeking satisfaction from VU pursuant to said guaranty.
5. RELEASE BY RENTRAK. Except as provided herein, Rentrak, for itself
and its assigns, hereby remises, releases, acquits, satisfies and forever
discharges Moovies and its affiliates, assigns, employees, agents and
representatives, of and from all past or present claims, demands, obligations,
actions, causes of action, rights, damages, costs, expenses, profits or any
other compensation of any nature whatsoever, whether based in contract, tort or
any other theory of recovery, whether at law or in equity and whether for
compensatory, punitive or other damages which Rentrak ever had, for, on or by
reason of any matter, cause or thing whatsoever arising out of events occurring
on or prior to the date hereof, provided, however, notwithstanding the above,
Rentrak specifically does not and Moovies specifically acknowledges that Rentrak
does not, release Moovies in any respect from any and all claims, obligations,
causes of action, damages, costs, expenses or any other compensation whatsoever
arising from or connected with (i) Rentrak's audit of Moovies conducted in 1997
or (ii) accounts payable owed by Moovies to Rentrak under the PPT Agreement
described in Section 1 of the Agreement or that arise based on events that occur
on or after the date hereof.
6. RELEASE BY MOOVIES. Except as provided herein, Moovies, for itself
and its assigns, hereby remises, releases, acquits, satisfies and forever
discharges Rentrak and its affiliates, assigns, employees, agents and
representatives, of and from all past or present claims, demands, obligations,
actions, causes of action, rights, damages, costs, expenses, profits or any
other compensation of any nature whatsoever, whether based in contract, tort or
any other theory of recovery, whether at law or in equity and whether for
compensatory, punitive or other damages which Moovies ever had, for, on or by
reason of any matter, cause or thing whatsoever arising out of events occurring
on or prior to the date hereof, provided, however, notwithstanding the above,
Moovies specifically does not and Rentrak specifically acknowledges that Moovies
does not, release Rentrak in any respect from any and all claims, obligations,
causes of action, damages, costs, expenses or any other
Page 4 - AGREEMENT
compensation whatsoever arising from or connected with (i) Rentrak's audit of
Moovies conducted in 1997 or (ii) accounts payable owed by Moovies to Rentrak
under the PPT Agreement described in Section 1 of the Agreement or that arise
based on events that occur on or after the date hereof.
7. NO ADMISSION OF LIABILITY. It is understood and agreed by Rentrak
and Moovies that this Agreement is a compromise and settlement of doubtful and
disputed claims and that the execution of this Agreement is not to be construed
as an admission of liability whatsoever on the part of either party hereto.
8. VOLUNTARY CHOICE. In entering into this Agreement, the undersigned
each represent that: (a) they have authority to enter into this Agreement; (b)
the terms of this Agreement have been read in their entirety and are fully
understood; (c) they have proceeded upon the advice of an attorney of their own
choice or have had the opportunity to do so; and (d) the terms of this Agreement
are knowingly and voluntarily accepted.
9. EFFECTIVENESS OF PPT AGREEMENT. The parties hereto acknowledge and
agree that upon the closing and effectiveness of the Acquisition and provided
that Moovies pays Rentrak in full the undisputed amounts specified under Section
2(b) above and any disputed amounts have been submitted to arbitration in
accordance with Section 2(b), except for VU's guarantee of all the amounts which
at the Effective Time were outstanding but not yet due from Moovies as provided
in Section 4 above or as otherwise agreed in writing between VU and Rentrak, the
PPT Agreement with Moovies shall no longer be legally binding on or apply to the
parties thereto and such PPT Agreement as of the Effective Time shall otherwise
be of no further force and effect and shall be superseded by the VU PPT
Agreement.
10. WAIVERS AND AMENDMENTS. This Agreement may not be amended,
superseded, or cancelled, and the terms hereof may not be waived, except by a
written instrument signed by the parties hereto or, in the case of a waiver, by
the party waiving compliance. No delay on the part of any party in exercising
any right, power, or privilege hereunder shall operate as a waiver thereof.
11. PARTIES IN INTEREST. All the terms, covenants, and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not.
12. CHOICE OF LAW. It is the intention of the parties hereto that the
laws of the State of Oregon shall govern the validity of this Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the parties. This Agreement is and shall be deemed accepted in Oregon and
interpreted and enforced in accordance with the laws of the State of Oregon
applicable to contracts to be made and performed entirely within this state.
Page 5 - AGREEMENT
13. JURISDICTION; VENUE; WAIVER OF JURY TRIAL. For any action related
to the judicial enforcement or interpretation of this Agreement, and all other
agreements or documents contemplated in or by this Agreement, the parties hereto
expressly consent to the exclusive jurisdiction of the Circuit Court for the
County of Multnomah, State of Oregon, or the Federal Court for the District of
Oregon, and irrevocably waive, to the fullest extent permitted by law, any
objection they may now have or hereafter have to the venue of any such suit or
action in any such court and any claim that any suit or action has been brought
in an inconvenient forum. The parties hereby waive their respective right to a
jury trial of any claim or cause of action based upon or arising out of this
Agreement or any dealings between VU and Rentrak relating to this Agreement.
14. RECITALS AS PART OF AGREEMENT. The recitals to this Agreement are
hereby incorporated into and made a legally binding part of this Agreement.
15. SEVERABILITY. If any provision of this Agreement shall be deemed or
declared to be unenforceable, invalid or void, the same shall not impair any of
the other provisions of this Agreement, which shall be enforced in accordance
with their respective terms.
16. ASSIGNABILITY. Except in respect of the Acquisition, this Agreement
shall not be assignable by operation of law or otherwise without the prior
written consent of Rentrak, which consent may be withheld in Rentrak's sole and
absolute discretion.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
///
///
///
///
///
///
///
Page 6 - AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MOOVIES, INC. RENTRAK CORPORATION
By:/s/ Xxxx Xxxxxx By:/s/ Xxx Xxxxxx
----------------------------- --------------------------------
Xxxx Xxxxxx, Chief Executive Xxx Xxxxxx, Chief Executive
Officer and President Officer and President
VIDEO UPDATE, INC.
By:/s/ Xxxxxx X. Xxxxxx
----------------------------
Xxxxxx X. Xxxxxx, Chief
Executive Officer
Page 7 - AGREEMENT
