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EXHIBIT 10.4
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED BASED UPON A REQUEST TO THE
COMMISSION FOR CONFIDENTIAL TREATMENT. SUCH OMITTED PORTIONS HAVE BEEN
SEPARATELY FILED WITH THE COMMISSION.
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STORE NUMBER OR COC:
RENTRAK NATIONAL ACCOUNT AGREEMENT
INSTRUCTIONS
All shaded areas of this AGREEMENT must be completed. Processing fees are:
U.S. FEE
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First store:................................... $1,995.00
Multiple stores owned by the same Retailer:
a) Additional stores signed at the same time
as first store..................... $995.00
b) Additional stores signed at a later date $1,995.00
Retailer's check in the amount of $ is attached.
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AGREEMENT
This AGREEMENT by and between Rentrak Corporation ("Rentrak") and Video
Update, Inc. ("Retailer") is made effective as of the date executed by Rentrak
below.
Retailer operates retail locations. This Agreement shall cover the retail
establishments ("Location(s)") listed on Exhibit A hereto and will also cover
future stores defined in Section 3 P. In addition, Retailer operates the central
office (Office) and/or warehouse facility (Warehouse) listed on Exhibit A.
Rentrak distributes prerecorded videocassettes and other media (hereinafter
referred to as "Cassettes" or "PPT Product") pursuant to a lease arrangement
known as Pay-Per-Transaction(SM) ("PPT(R)" or the PPT(R) System"). Retailer
desires to participate in the PPT System.
In consideration of the mutual promises and agreements contained herein,
the parties agree as follows:
1. THE PARTIES INTEND THAT THIS AGREEMENT CONSTITUTES A TRUE LEASE OF
CASSETTES BETWEEN RETAILER AS LESSEE AND RENTRAK AS LESSOR. OWNERSHIP AND LEGAL
TITLE TO THE CASSETTES SHALL NOT TRANSFER OR OTHERWISE PASS FROM RENTRAK TO
RETAILER DURING OR FOLLOWING THE LEASE TERM UNLESS RETAILER HAS PROPERLY
ACCOUNTED FOR THE PURCHASE OF THE CASSETTES IN ACCORDANCE WITH THE TERMS HEREOF
AND PAID RENTRAK THE APPLICABLE SELL-THROUGH OR END-OF-TERM BUYOUT FEE.
2. In the event Retailer does not meet Rentrak's credit minimum, annual
rental volume and/or automated reporting requirements prior to receiving a
Cassette from Rentrak, the processing fee, if any, will be refunded. In the
event Retailer meets such requirements, Cassettes offered for lease by Rentrak
and ordered by Retailer, subject to any ordering limitations which may be
imposed, will be shipped "FOB Destination" to Retailer's Warehouse or at
Retailer's request, to each Location. Retailer's last order accepted and
confirmed by Rentrak shall be final. Rentrak will use its best efforts to assure
delivery of Cassettes to Retailer on or before the street date. If Retailer's
order or any portion thereof cannot be shipped, Rentrak or Retailer may cancel
the unfilled order upon notice and without further liability to the other.
3. Retailer agrees to:
A) Use Rentrak-approved computer hardware and Point-of-Sale ("POS") system
software. Retailer shall, prior to ordering Cassettes, complete, to Rentrak's
sole satisfaction, a test of Retailer's computer system and communication
ability. Retailer shall also install Rentrak's proprietary Rentrak Profit Maker
Software ("RPM") on its computer system (which inclusive with the hardware, RPM,
and POS system software are collectively referred to as the "POS System"). The
RPM shall, at all times, remain the exclusive property of Rentrak.
B) Timely remit all amounts due Rentrak.
C) Comply with the reporting system established by Rentrak. Rentrak may
modify the reporting system from time to time, and Retailer must comply with
such modification within ninety (90) days of notice from Rentrak. Retailer shall
provide Rentrak with and otherwise permit Rentrak to obtain all reports required
pursuant to this Agreement from each Location's POS System and at Rentrak's
request from Retailer's central computer (meaning the computer to which all
Locations are reporting their rental and sale information, such computer being
hereinafter referred to as the "Host Computer") daily. If Retailer cannot
deliver the required reporting to Rentrak within seven (7) days of the due date,
Rentrak may, at its sole election, cancel orders and refuse to accept additional
orders in process until the required reporting is received.
D) Honor the designated street date for, and all copyrights applicable to,
Cassettes leased.
E) Pay all sale, use, property or other taxes of any kind or nature
assessed or levied by any taxing authority with respect to Cassettes acquired or
leased pursuant hereto, except for income taxes of Rentrak.
F) At the time of ordering, designate the number of Cassettes being ordered
by each individual Location.
G) Within forty-eight (48) hours of receipt at its Warehouse or at its
Locations, whichever occurs first and prior to any rental thereof, bar-code the
Cassettes, enter them into both the designated Location's POS System and the
Host Computer and except as limited by paragraph 3(D), hereof, make them
available for immediate rental. Cassettes retained at Retailer's Warehouse may
not be so retained longer than five (5) days after the street date. Retailer
shall use the identification codes and title spellings provided by Rentrak.
H) Process through the appropriate Location's POS System, at the time of
the transaction, the rental and sale of all Cassettes. Notwithstanding the
foregoing sentence, Retailer may utilize a processing system other than the POS
System for a period not to exceed two (2) business days in the event the
Retailer's POS System is nonfunctioning. Retailer shall immediately give Rentrak
telephone notice if Retailer's POS System is nonfunctioning. All rental and sale
transactions occurring during the nonoperational period will be processed
through Retailer's POS System as soon as it is again operational.
I) Not remove the Cassettes from the Location except pursuant to paragraph
20 or paragraph 21 hereof.
J) Use its best efforts to rent Cassettes at rates it determines
appropriate and prominently display the Cassettes supplied through Rentrak.
Retailer shall not rent the Cassettes for a period of longer than seven (7) days
in any single transaction to any customer or permit the Cassettes to be leased
to or by other video retailers.
K) Not order quantities of Cassettes in excess of those required to meet
anticipated rental demand.
L) Not disassemble, decompile, or in any manner tamper with or alter, copy,
or use any hardware or software provided by Rentrak
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except for the specific purpose described in this Agreement and in the Rentrak
Profit Maker Manual, which by this reference is incorporated into this
Agreement. Retailer agrees that it will not divulge or disclose or otherwise
make available to any third party whatsoever, or make any use whatsoever, copy,
or in any way replicate the RPM or allow any third party to do the same. Except
as directed by Rentrak, the POS System, including the RPM, shall not be utilized
to, in any manner, provide information on rental or sale activity of any
Cassettes at the Location, regardless of how the Cassettes were acquired, to any
provider of Cassettes under any form of revenue-sharing plan or leasing system.
M) Maintain the Cassettes in good condition and repair.
N) Not use for any purpose, and not be licensed to use, any names,
trademarks, service marks, logos or commercial symbols that belong to or are
used by Rentrak or by any owner or supplier of Cassettes to Rentrak ("Program
Suppliers") without the express written consent of Rentrak, or the Program
Suppliers.
O) Retain and reveal to Rentrak certain information with respect to its
business. Retailer agrees that the data and other information collected by
Rentrak under the PPT system may be used by Rentrak for the following purposes:
(i) in connection with Retailer audits and other internal purposes at Rentrak;
(ii) in aggregate form with data from other retailers provided that each
retailer is not individually identified; and (iii) for sale or provision to
others as long as such data is provided in aggregate form without disclosing the
identity of the Retailer. Retailer also acknowledges that accurate, verifiable
data as to rentals and sales of the Cassettes is imperative and that inaccurate
or incorrect reporting by Retailer will cause substantial damage to Rentrak.
P) Cause all of the Locations owned, controlled or operated by Retailer as
of the date of this Agreement to participate in the PPT System in accordance
with the terms hereof within six (6) months from receipt of Retailer's first
cassette at its first Location or for all Locations acquired (by ownership,
control or operation) after the date of this Agreement, to participate in the
PPT System within thirty (30) days of opening for business or acquisition.
Retailer understands and agrees that moving cassettes from a store participating
in the PPT System to a store not on the PPT System will constitute a material
breach of this Agreement. Retailer agrees to immediately notify Rentrak in
writing whenever Retailer acquires (by ownership, control or operation) a
Location or ceases ownership, control or operation of a Location.
Q) And hereby does acknowledge that the reporting system established by
Rentrak, including the use of the POS software and compatible hardware;
bar-coding the Cassettes; and processing the rental and sale of all Cassettes
through the POS System, is Rentrak's method of (i) determining the location of
Rentrak's property consisting of Cassettes leased by Retailer pursuant to the
Agreement; and (ii) calculating that portion of the revenue-sharing proceeds
which Retailer shall be holding in trust on Rentrak's behalf. Retailer's failure
to comply with the reporting requirements under this Agreement, without
notifying Rentrak of such noncompliance, shall constitute a knowing,
intentional, deliberate and material breach on the part of Retailer which will
result in substantial injury to Rentrak.
4. With respect to certain titles offered for lease hereunder, unique
credit, pricing terms and/or minimum/maximum ordering requirements may be
established. When ordering Cassettes, Retailer shall comply with such
minimum/maximum requirements. If the Retailer elects to order such a title and
fails to honor the terms. Rentrak, in its sole discretion, shall have the right
to reduce or increase the number of Cassettes ordered by Retailer. Program
Suppliers, in their sole discretion, respectively, shall have the right to
refuse to supply Retailer with PPT Product.
5. The rights granted to Retailer hereunder with respect to the leasing of
Cassettes are dependent upon the rights granted to Rentrak by the Program
Suppliers. In the event that Rentrak's PPT rights in and to certain Cassettes
terminate for any reason, Retailer's rights to certain Cassettes granted
pursuant to this Agreement shall be affected in the following manner. In
consideration of Retailer compensating Program Suppliers directly, or returning
Program Supplier(s)'s property (i.e., the Cassettes) directly to the Program
Supplier(s), which choice Retailer may be given the option of selecting, certain
Program Supplier(s) have agreed to permit Retailer to own some or all of those
Program Supplier(s)'s Cassettes in Retailer's possession after compensating
those Program Supplier(s) in accordance with a "purchase formula" or returning
the Cassettes Retailer elects not to purchase directly to that Program Supplier.
If Rentrak's rights to lease a Program Supplier(s)'s Cassettes terminate,
Retailer may be notified in writing by the Program Supplier and instructed on
the choices and procedures to follow. In such event of termination, Rentrak may
at that time assign all of its rights as the lessor of Cassettes to the Program
Supplier, and Retailer will become a lessee of the Program Supplier.
6. Retailer is under no obligation to lease any Cassette offered hereto and
Rentrak is under no obligation to offer any Cassette to any particular Retailer
even if available to other Retailers. Retailer may order Cassettes of a title
for one or more of the other Locations and not order Cassettes of the same title
for one or more of the other Locations. If a Retailer rents Cassettes to the
public at a store which was designated in Retailer's order as a PPT
participating store with respect to that title and which were obtained by means
other than this Agreement, and are of the same title as Cassettes obtained under
this Agreement, Retailer agrees that rentals of all Cassettes of such title,
regardless of how obtained, shall be reflected, reported and revenue sharing
paid as if the Cassettes were obtained under this Agreement. Notwithstanding the
above, with regard to certain Program Suppliers, Retailer shall be required to
order a given title released by such Program Suppliers for each Location of
similar or larger size if Retailer orders the same title for one Location (i.e.,
if Location A, a store with average monthly revenues of $10,000 from the rental
and sale of Cassettes orders a title from a certain Program Supplier, Retailer
may be required to order the same title for all of Retailer's Locations of
similar or larger size to Location A.). Cassettes shall be obtained by Retailer
in full compliance with any Program Supplier or Rentrak established
minimum/maximum ordering requirements as more fully set forth in paragraph 4 of
this Agreement. With respect to Cassettes leased hereunder, Retailer may not
purchase the Cassette and use it as rental inventory, remove the title from
rental availability except as provided herein, or take any other steps to
deprive Rentrak of all available revenue under the established terms for the
title's lease term except to the extent that, once "used sell-through" is
permitted for a particular title by its terms, Retailer may remove Cassettes no
longer required for rental use to Retailer's Warehouse for subsequent sale by
recording the same as a sale and making the required remittance to Rentrak upon
transfer.
7. With respect to Cassettes which are offered pursuant hereto, Retailer
will be notified of the lease terms which may vary from title to title.
Generally, such terms will require the following:
A) Pay when due a "handling fee" for each Cassette leased, a portion of
which may represent sales, use or excise taxes.
B) Weekly payment of a "transaction fee" which may include a minimum fee
per transaction due regardless of the rental amount received by Retailer.
C) Weekly payment of a "sell-through fee" with respect to any Cassettes
leased pursuant hereto and sold by Retailer to the public.
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Rentrak may restrict the sale of any Cassettes leased pursuant hereto, or the
date of such sale. Retailer shall establish its own sales price for the
Cassettes sold pursuant to this Agreement. Retailer may not, however, sell more
than five (5) copies of any title to any one customer within any thirty (30) day
period. In all cases, Retailer must retain, display, and make available for
rental at least one of the Cassettes of a title leased pursuant hereto at each
Location designated as participating with respect to the particular title
throughout the term of the lease.
D) Pay, when due, and pursuant to the terms established, a "buy-out fee"
with respect to the purchase of some or all of the Cassettes leased pursuant
hereto and offered for sale by Rentrak at the end of the lease term, which shall
not exceed two years. Retailer must either purchase such Cassettes pursuant to
the terms provided, if any, or return the Cassettes to Rentrak.
E) Retailer shall have a fiduciary duty to Rentrak to hold and remit
revenue-sharing proceeds to Rentrak and to report to Rentrak in accordance with
the reporting requirements of paragraph 3. Rentrak's percentage of retail
proceeds received by Retailer shall be held by Retailer in trust for Rentrak.
8. Retailer shall pay Rentrak its then current monthly access/users fee.
Such fee is currently $36 per Location. Fees are subject to change without
notice. In the event Retailer elects to communicate for all of its locations
from one central Host Computer, Retailer shall be responsible for paying all
costs incurred to deliver the data to Rentrak on a daily basis in a form
acceptable to Rentrak.
9. Retailer shall maintain property damage or loss insurance on all
Cassettes in an amount at least equal to fifty percent (50%) of each Cassette's
then-current manufacturer's suggested retail price ("Replacement Value"), with
Rentrak Corporation named as the sole loss payee on said insurance policy. The
policy shall further contain a clause requiring the insurer to give Rentrak at
least 20 days prior written notice of any modification in the terms or
cancellation of the policy. Upon demand by Rentrak, Retailer must furnish proof
of insurance coverage for Rentrak's Cassettes, but Rentrak has no duty to
ascertain the existence of coverage, or to advise Retailer if the coverage does
not comply. If insurance proceeds are inadequate to cover the loss, Retailer
shall pay to Rentrak the Replacement Value for all cassettes which are lost,
stolen or destroyed subsequent to delivery to Retailer. The Replacement Value
shall be paid to Rentrak immediately upon the destruction, loss or theft of a
Cassette. Cassettes discovered missing in the ordinary course of business are to
be recorded and paid for when discovered as if they had been sold to the public.
Retailer shall notify Rentrak of any loss, theft or destruction of Cassettes
that occurs outside of the ordinary course of business at the time Retailer
discovers the same.
10. In the event Retailer receives defective Cassettes from Rentrak, it
may, within thirty (30) days of receipt, return them freight prepaid to Rentrak.
Rentrak will, at its election, replace the Cassettes, billing Retailer the
handling fee and/or after determining that the defect was not Retailer or
consumer related, issue credit for the handling fee. In no event will Rentrak be
otherwise liable for such Cassettes or any loss of any nature caused thereby.
Defective Cassettes not delivered to Rentrak within thirty (30) days of receipt
may not be returned for replacement or credit. RENTRAK MAKES NO WARRANTY WITH
RESPECT TO THE CASSETTES, EXPRESS OR IMPLIED, AND RENTRAK EXPRESSLY DISCLAIMS
ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE AND ANY
LIABILITY FOR CONSEQUENTIAL DAMAGES ARISING OUT OF USE OR INABILITY TO USE THE
CASSETTES.
11. Prior to Rentrak's approval of shipments to Retailer, Retailer shall
demonstrate to Rentrak's sole satisfaction that it has in operation a
comprehensive inventory tracking system which is able, on a demand basis
(meaning immediately upon Rentrak's request) to produce reports detailing the
information desired by Rentrak on a per Cassette basis and in a format
acceptable to Rentrak. Retailer agrees that Rentrak and/or any Program Suppliers
may employ shopping services and may, without prior notice to Retailer, conduct
during normal business hours, audits of Retailer's business operation and
records to verify compliance with the terms of this Agreement. Within
twenty-four (24) hours of Rentrak's request, Retailer will deliver to Rentrak at
its principal office (or if requested by Rentrak, to its on-site auditor) a list
of every title leased pursuant to this Agreement, the number of Cassettes of
each leased title, the location of each Cassette, including a list of the
customers to whom Cassettes are then on rental, and the location from which each
Cassette was rented. Retailer agrees to pay the higher of $2,000 multiplied by
the number of Locations or actual costs to conduct an audit in the event that an
audit or shopper's report indicates any breach of this Agreement.
In addition, and not in lieu of any other damages to which Rentrak may be
entitled, consequential or otherwise, Retailer agrees to pay Rentrak all costs
associated with processing, by Rentrak or any Program Supplier, rentals and/or
sales of Cassettes, if any, not properly transmitted or accounted for, together
with liquidated damages in an amount equal to the manufacturer's suggested
retail price published by Program Supplier at the time of distribution to the
Retailer ("Retail Price") for each and every Cassette not at the Location, or
properly rented out or properly sold at the time of the audit. Retailer may not
return Cassettes which were missing at the audit, in satisfaction of the
liquidated damages due under this paragraph. The liquidated damages may be
assessed by Rentrak against the Retailer, if, in Rentrak's or any Program
Supplier's sole discretion, the breach is intentional. This Agreement may be
immediately terminated by Rentrak prior to the Termination Date defined in
accordance with paragraph 17 herein, if any breach of this Agreement is
discovered by Rentrak or any Program Supplier at an audit of the Retail
Location.
12. As between Retailer and Rentrak, Retailer acknowledges that Rentrak
owns the RPM and that the RPM and the information collected is proprietary to
and a valuable asset of Rentrak and that any unauthorized use (as defined
herein) will cause Rentrak irreparable harm and loss. Retailer agrees: A) not to
adapt, duplicate, copy, recreate, and/or assimilate the RPM for use by Retailer
or any third party and B) to exercise the highest degree of care in safeguarding
the RPM against loss, theft, or inadvertent or purposeful transfer or disclosure
of the RPM to any third party. Any acts inconsistent with the above shall
constitute an unauthorized use. In the event of any unauthorized use of the RPM
by Retailer, Rentrak shall have the right of specific performance of Retailer's
obligations pursuant to this paragraph 12 in addition to all other rights and
remedies available to Rentrak in either law or equity.
13. Retailer acknowledges that it is imperative that Program Suppliers,
other customers of Rentrak, the parties to this Agreement, the titles involved,
the reporting system established by Rentrak and any obligations of Retailer
pursuant to the Agreement remain confidential. Retailer agrees that during the
term of this Agreement and all times thereafter, it will not disclose to any
individual or entity (including but not limited to, business associates, friends
or relatives), the participants in PPT, the reporting system, or any obligations
of Retailer pursuant to this Agreement. Notwithstanding the foregoing, Retailer
may reveal this Agreement to professional advisors for purposes of providing
Retailer with advice regarding
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execution of the Agreement, Retailer's obligations hereunder, or the performance
of Retailer's obligations pursuant to federal, state or local laws. Retailer
shall inform any such professional advisor of this confidentiality provision and
obtain his or her agreement to be bound by the terms contained herein.
14. "Rentrak", "PPT, "Pay-Per-Transaction", "Ontrak", RPM and "BudgetMaker"
are registered or pending trademarks of Rentrak (hereinafter collectively the
"Trademarks"). Retailer acknowledges and agrees that Rentrak is the exclusive
owner of the Trademarks and all goodwill associated therewith and that Retailer
is not authorized to use any of the Trademarks. Retailer further acknowledges
and agrees that any unauthorized use of the Trademarks is and shall be deemed to
be an infringement of the rights of Rentrak. Without limiting the generality of
the foregoing, Retailer shall not use any of the Trademarks as part of
Retailer's corporate, partnership, trade or other legal name of any corporation,
partnership or other entity in which the Retailer has a direct or indirect
interest, nor shall Retailer hold out or otherwise employ any of the Trademarks
to perform any activity, nor to incur any obligation or indebtedness in such
manner as could reasonably result in making Rentrak liable therefore. Retailer
shall not during the term of this Agreement, and after termination or expiration
of this Agreement for any reason whatsoever, dispute or contest for any reason,
the validity, ownership or enforceability of any of the Trademarks, nor attempt
to dilute the value of the goodwill attached to the Trademarks, nor counsel,
procure or assist anyone else to do any of the foregoing.
15. During the term of this Agreement, Retailer shall obtain all its leased
Cassettes exclusively from Rentrak and for this period and for a period of two
(2) years after the term of this Agreement, Retailer shall not obtain Cassettes
from any other source by lease, consignment, revenue sharing arrangement, or any
other manner which competes with, or is substantially similar to PPT, except
that during the two (2) year period after the Termination Date Retailer may
obtain Cassettes from a revenue sharing business if Retailer presents a
competitive written offer from such revenue sharing company on each title and
Rentrak fails or refuses to meet the terms of such offer. Notwithstanding the
above, Retailer has the absolute right in its sole discretion to purchase
Cassettes from any source.
16. Upon termination of a title's lease period, Retailer shall cause to be
delivered to Rentrak within fifteen (15) days, all Cassettes thereof not validly
purchased or otherwise properly disposed as provided herein. The returned
Cassettes shall be in good condition (normal wear and tear accepted) and shipped
in their original packaging. The term "normal wear and tear" is construed to
allow Retailer to return manufacturer's defectives and customer defectives. The
term "original packaging" shall be construed to include "cutbox" packaging or
with Retailer's labels affixed. Retailer shall ship the Cassettes with all
shipping and postage prepaid.
17. This Agreement shall expire on the last day of the lease term of all
Cassettes ordered by Retailer in its last order submitted to Rentrak on or prior
to December 31, 2011 ("Termination Date"), unless terminated prior thereto as
provided herein.
A) This Agreement may be terminated by Rentrak, prior to the Termination
Date, by notice of termination to the Retailer.
B) Upon a breach by Retailer of any provision of this Agreement, any
addendum to it, or any other agreement between Retailer and Rentrak, Rentrak may
in its sole discretion, in addition and not in lieu of any and all damages it
may otherwise be entitled to under the law, including without limitation
consequential damages: (i) terminate this Agreement and demand return of all
Cassettes leased pursuant hereto; (ii) suspend all Retailer's rights hereunder,
including ordering privileges, until thirty (30) days after such default has
been cured; or (iii) in the event Retailer's breach of this Agreement consists
of ordering quantities of Cassettes in excess of those required to meet
anticipated rental demand (a determination that such breach has occurred being
in Rentrak's sole discretion) then Rentrak may, without notice to Retailer,
reduce Retailer's orders of Cassettes to amounts Rentrak deems appropriate.
C) Retailer may terminate this Agreement if Rentrak has failed to cure, or
begun to cure, an event of default by Rentrak for which Retailer has given
Rentrak thirty (30) days written notice.
D) Upon the occurrence of the Termination Date or upon termination of this
Agreement by Rentrak, Retailer shall within ten (10) days deliver to Rentrak,
freight prepaid, all Cassettes leased hereunder that have not been validly
purchased or otherwise properly disposed prior to termination. The returned
Cassettes shall be in good condition (normal wear and tear accepted) and shipped
in their original packaging. Retailer shall pay the then current manufacturer's
suggested retail price for any Cassettes not returned to Rentrak within the time
allowed herein or any extension of such time granted in writing by Rentrak, and
shall pay all liabilities remaining due to Rentrak within seven (7) days of
termination. Cassettes with no manufacturer's suggested retail price shall be
valued at the wholesale price set by the Program Supplier divided by 0.63. Upon
receipt of the demand for the return of the Cassettes, Retailer shall no longer
be authorized to possess the Cassettes. Retailer's failure to return the
Cassettes to Rentrak within ten (10) days after receipt of the demand for return
of the Cassettes shall constitute a knowing, intentional and deliberate act on
the part of Retailer to retain the Cassettes for its own use, in derogation of
Rentrak's rights to possession. Under no circumstances shall Retailer be
entitled to or receive any refund or credit for any processing or ongoing fees
paid to Rentrak in connection with this Agreement, nor will Rentrak be held
liable for any costs associated with the Agreement incurred by Retailer.
E) If Retailer's breach consists of failure to report rental or sales
transactions, in addition to, and not in lieu of any other damages Rentrak may
be entitled, consequential or otherwise, Retailer agrees to pay liquidated
damages for lost revenue to Rentrak of $.0822 per Cassette multiplied by the
number of days that Retailer fails to report to Rentrak, together with a late
fee equivalent to five percent (5%) of Retailer's average weekly revenues during
the six (6) month period preceding Retailer's failure to report rental or sales
transactions multiplied by the number of weeks, or any part thereof. Retailer
has failed to report.
18. Rentrak has established, and will continue to establish from time to
time, minimum acceptable net worth requirements for Retailers and minimum
acceptable monthly rental revenues. In the event Retailer does not meet
Rentrak's established minimum acceptable net worth requirements, Retailer shall
provide Rentrak with a personal guarantee(s) satisfactory to Rentrak. In the
event Retailer does not meet Rentrak's minimum monthly rental revenue
requirements, Rentrak shall have the right, in its sole discretion, to terminate
this Agreement pursuant to paragraph 17, hereof.
19. Retailer shall not assign, sell, give, lease, sublease, encumber,
delegate or otherwise transfer (hereinafter collectively referred to as
"Transfer"), in whole or in part, directly or indirectly, whether voluntarily,
involuntarily or by operation of law, any rights or obligations under this
Agreement, or the Cassettes leased pursuant hereto, without the prior written
consent of Rentrak, which consent can be withheld in Rentrak's sole and
arbitrary discretion. Any attempted Transfer without Rentrak's prior written
consent shall be null and void and, at the option of Rentrak, will cause
termination of this Agreement. Neither the shareholders or directors of
Retailer, if
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Retailer is a corporation, the partners of Retailer, if Retailer is a
partnership, nor the members or managers of Retailer, if Retailer is a limited
liability company, shall authorize or approve any transfer of Retailer's rights
or obligations under this Agreement without Rentrak's prior written consent, or
take any other action that would cause Retailer to be in violation of this
Section 19. The merger or consolidation of Retailer with or into any other
entity, the sale by Retailer of all or substantially all of its property or
assets, or any change in control of Retailer (which shall mean any transfer of a
majority voting interest in the stock of Retailer, if Retailer is a corporation,
or in the partnership interest, or membership interest of Retailer, if Retailer
is a partnership or limited liability company), shall constitute an assignment
of rights in violation of this Section 19. Consent to any Transfer shall be in
Rentrak's sole discretion and shall be subject to such requirements, terms, and
conditions as may be established by Rentrak from time to time. Rentrak may
condition its consent, in its sole discretion, on the transferee executing a
National Account Agreement or other agreement satisfactory to Rentrak and/or
upon Retailer remaining obligated after the transfer. No consent in one instance
shall prevent this provision from applying in a subsequent instance.
20. Retailer may, during the term of this Agreement, desire to conduct
centralized sales of Cassettes leased hereunder. Retailer shall have the right
to move Cassettes from a Location for the purpose of conducting a sale from a
centralized location. Such removal must not last longer than five (5) days and
must be tracked by Retailer's previously approved inventory system on a same day
basis. A Cassette may not be moved for the purpose of a centralized sale more
than five (5) times during the lease term. With respect to any Cassettes sold,
such sales must be processed through the appropriate Location(s)'s POS System
within seventy-two (72) hours of any sale.
21. Retailer may, during the term of this Agreement, desire to relocate one
or more of its Locations. Prior to and during such relocation, Retailer must
comply with all of the following:
A) Retailer must deliver to Rentrak written notice of the intended move at
least fifteen (15) days prior to the Cassettes leased being not available for
rental as a result of such move:
B) The period during which the Cassettes leased are not available for
rental to the public must not exceed ten (10) days, and there may not be more
than one weekend (5PM Friday to the close of business on Sunday or 12:00 a.m.
Sunday, whichever occurs later) during such 10 day period; and
C) Retailer must comply with all other requirements which Rentrak may
impose with respect to the relocation of a Location.
22. All notices, consents and approvals ("Notice") permitted or required to
be given under this Agreement shall be in writing and shall be deemed to be
sufficiently and duly given if set forth in writing and delivered personally or,
in the case of Retailer, if left with an adult person working at Retailer's
business or in the case of either party, if sent by prepaid registered or
certified mail or transmitted by telecopier or other form of recorded
communication tested prior to transmission, if to Rentrak addressed as follows:
Rentrak Corporation, X.X. Xxx 00000, Xxxxxxxx, Xxxxxx 00000 Attention: Legal
Department and if to Retailer, [enter Retailer's address]
3100 World Trade Center
00 Xxxx Xxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Any Notice so given shall be deemed to have been given and
received on the date of delivery or on the third (3rd) business day following
the day of mailing of the same, or on the day of transmission by telecopier or
other form of recorded communication service of the same, as the case may be.
any party from time to time by notice in writing given pursuant to the terms of
this agreement may change its address for the purpose of this agreement. in the
event of actual or threatened disruption of postal service, notice shall be
delivered or sent by telecopier or other form of recorded communication.
23. Retailer acknowledges and agrees that no representation or warranty has
been made by Rentrak, its directors, officers, employees, shareholders, agents
or contractors regarding: the effect upon Retailer's revenues or profits of
participation in PPT; or the Program Suppliers or titles involved, or to be
involved, in PPT. Retailer acknowledges and agrees that:
(A) Rentrak's services under this Agreement are not, in any way or within
any geographical area, exclusive to Retailer;
(B) Retailer has not relied upon any representation or warranty except
those received in writing and contained herein and is relying solely upon his
own investigation and that of his advisors;
(C) PPT was created and promoted by Rentrak, not by any Program Supplier to
Rentrak;
(D) the terms of participation in PPT, to the extent that compliance with
them is required, are prescribed by Rentrak, not by any Program Supplier;
(E) PPT is a system of distribution of Cassettes to Retailer, and not a
marketing plan or system for distribution to the ultimate user;
(F) there is no substantial association between the operation of Retailer's
business and any trademark, service xxxx, trade name, logotype, advertising or
other commercial symbol designating Rentrak, any Program Supplier or PPT;
(G) to the extent Retailer may use promotional literature that contains a
trademark, service xxxx, trade name, logotype, advertising or other commercial
symbol of a Program Supplier, such use is merely to advertise the Cassettes
available whether or not acquired by Retailer as part of PPT and does not
designate in any way PPT or the fact that any entity is involved in or related
to PPT;
(H) nothing in this Agreement, the Rentrak Profit Maker Manual, or in PPT
affects how Retailer markets or promotes Cassettes to its customers;
(I) nothing in the reference guide entitled "Strategies for Success with
PPT" which will be provided to each Retailer affects how Retailer markets or
promotes Cassettes to its customers and that ideas therein are suggestions only,
not requirements; and
J) to the extent that this Agreement, or Rentrak through this Agreement,
imposes any requirements on how Retailer conducts its business, such
requirements shall be no broader than necessary, to allow Rentrak in the
exercise of its reasonable judgement to monitor Retailer's obligations under
this Agreement.
24. If any fees or costs are incurred to enforce this Agreement, or if any
suit or action is brought to enforce any provision of this Agreement, or for
damages for the breach of any of the terms of this Agreement, the prevailing
party shall be entitled, at trial and on appeal, if any, to reasonable attorney
fees as awarded by the court. 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 to be performed entirely within
this state. The parties hereto agree that any suit, dispute, or action brought
pursuant to this Agreement shall be brought in the Circuit or District Court for
the County of Multnomah, State of Oregon, or the Federal Court for the District
of Oregon.
7
25. In the event that Retailer brings an action or asserts any claim
against Rentrak for damages arising out of this Agreement or from Retailer
entering into this Agreement with Rentrak, Retailer agrees to limit any damages
claimed to no more than the following percentage of the processing fee, if any,
paid by the Retailer: 1st day through and including the 91st day following date
of Rentrak Agreement - 100%; 92nd day through and including the 183rd day
following date of Rentrak Agreement - 75%; 184th day through and including the
275th day following date of Rentrak Agreement - 50%; 275th day through each and
every day thereafter following date of Rentrak Agreement - 10%.
26. Should any term or provision of this Agreement be held to be
unenforceable as illegal or against public policy, that term shall be considered
severed from the rest of this Agreement and the remaining portions of this
Agreement shall not be affected. The rights and obligations of Retailer and
Rentrak shall be construed and determined, if possible, as if this Agreement did
not contain the provision or term held to be invalid. This Agreement, as
modified from time to time by authorized Rentrak materials, or written addenda,
constitutes the entire Agreement and understanding of the parties with respect
to the subject matter of this Agreement. Nothing in this Agreement creates a
franchise relationship, fiduciary relationship, joint venture, or partnership
relationship.
27. Retailer certifies that the information furnished to Rentrak, including
any financial statements furnished herewith and the "credit information"
attached hereto, is true and correct. Retailer authorizes Rentrak to check
Retailer's credit history and trade and bank references for customary credit
information, to confirm the information contained herein and to release
information to other creditors regarding Applicant's credit experience with
Rentrak. Retailer authorizes any individuals or entities listed in the attached
credit information to provide information regarding Retailer's credit history to
Rentrak.
28. This Agreement will be guaranteed by the Guarantor(s) listed below.
Each Guarantor agrees that if, now or later:
A) Retailer shall be or become insolvent; and
B) Any obligations under this Agreement shall not at all times, until paid
or performed, be fully secured by collateral pledged by Retailer, Guarantor
hereby forever waives and relinquishes in favor of Rentrak and Retailer, and
their respective successors, any claim or right to payment Guarantor may now
have or later have or acquire against Retailer, by subrogation or otherwise, so
that at no time shall Guarantor be or become a "creditor" of Retailer within the
meaning of 11 U.S.C. Section 547(b), or any successor provision of the
Bankruptcy Code.
ALL APPLICANTS MUST SIGN THEIR NAME IN THE APPROPRIATE BLOCK(S) ON THIS PAGE AND
IN SECTION II IN THE FINANCIAL STATEMENT.
SOLE OWNER SIGNATURE BLOCK
(COMPLETE THIS BLOCK IF YOU ARE THE SOLE OWNER OF YOUR BUSINESS AND NOT A
PARTNERSHIP OR CORPORATION.)
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
- BY: _____________________________
(Signature)
DATE: ___________________________
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
- BY: _____________________________
(Signature)
DATE: ___________________________
DO NOT COMPLETE THE COPY BLOCK BELOW IF YOU ARE A SOLE OWNER
PARTNERSHIP SIGNATURE BLOCK
(COMPLETE IF YOU ARE A PARTNERSHIP.)
_______________________________________________________
(Please Print Name of Partnership)
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
- BY: _____________________________
(Please Print Name)
_________________________________
(Signature)
TITLE: __________________________
(General or Limited Partner)
DATE: ___________________________
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
- BY: _____________________________
(Please Print Name)
_________________________________
(Signature)
TITLE: __________________________
(General or Limited Partner)
DATE: ___________________________
8
LIMITED LIABILITY COMPANY SIGNATURE BLOCK
(COMPLETE IF YOU ARE A LIMITED LIABILITY COMPANY.)
___________________________________________________
(Please Print Name of Limited Liability Company)
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
- BY: _____________________________
(Please Print Name)
__________________________________
(Manager Signature)
DATE: ____________________________
CORPORATE SIGNATURE BLOCK
(COMPLETE IF YOU ARE CORPORATION.)
Video Update, Inc.
(Please Print Full Name of Corporation)
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
- BY: Xxxxxx X. Xxxxxx
____________________________
(Please Print Name)
/s/ Xxxxxx X. Xxxxxx
_________________________________
(Signature)
TITLE: Chief Executive Officer
______________________________
DATE: July 9, 1997
______________________________
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
- BY: ________________________________
(Please Print Name)
____________________________________
(Signature)
TITLE: _____________________________
DATE: _____________________________
State of Incorporation: __________ Date of Incorporation: ___________
IF YOU SIGNED EITHER THE PARTNERSHIP, THE LIMITED LIABILITY COMPANY OR THE
CORPORATE SIGNATURE BLOCK, YOU MUST COMPLETE THE GUARANTEE BELOW:
GUARANTEE
The undersigned individuals, I order to induce Rentrak to enter into with
that certain Agreement of even
date herewith do jointly and severally unconditionally and irrevocably guarantee
to Rentrak, its successors and assigns, full and complete payment and
performance by Retailer of all of the provisions, conditions, covenants, and
agreements contained in the Agreement, do jointly and severally agree to the
terms of the Agreement, expressly including the terms set forth in paragraphs 22
and 23, and do waive all notice of default by the said Retailer, notice of the
acceptance of this guarantee by Rentrak and consent to any extension of time
which may be given by Rentrak to Retailer of time for payment or performance of
any of Retailer's obligations hereunder.
GUARANTOR
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
_________________________________________
(Print Guarantor's Name)
- BY: ________________________________
(Guarantor's Signature)
DATE: ______________________________
GUARANTOR
I have carefully read this Agreement. I sign this Agreement with a complete
understanding of its terms.
_________________________________________
(Print Guarantor's Name)
- BY: ________________________________
(Guarantor's Signature)
DATE: ______________________________
RENTRAK CORPORATION (Do not complete.)
Agreement accepted by: /s/ Xxx Xxxxxx
______________________
Title: President Date: 7/9/97
__________________________ __________
9
FIRST ADDENDUM TO
RENTRAK NATIONAL ACCOUNT AGREEMENT
This ADDENDUM is made as of this 9th day of July, 1997, by and among
Rentrak Corporation, an Oregon corporation ("Rentrak"), and Video Update, Inc.,
a Delaware corporation ("Retailer").
RECITALS
A. Retailer desires to participate in Rentrak's pay-per-transaction
("PPT") system and order video programming on prerecorded
videocassettes and any other media distributed by Rentrak on PPT (the
"Cassettes") pursuant to Rentrak's National Account Agreement, dated
July 9, 1997 (the "National Account Agreement"), a copy of which is
being executed as of the date hereof and the parties wish to modify and
supplement the National Account Agreement with the terms of this
addendum (this "Addendum"). The National Account Agreement and this
Addendum are sometimes referred to herein as this "Agreement." Rentrak,
Retailer and Moovies are also executing a side agreement in connection
herewith of even date.
B. The parties intend that all transactions between them on and after the
Effective Time (as defined herein) shall be governed by and subject to
this Agreement and that this Agreement shall apply to all Locations (as
defined herein) owned, managed, operated or controlled by Retailer and
its Affiliates except that Retailer shall and hereby does assume and
agrees to be obligated to honor and comply with the PPT System and the
lease and payment terms under the Prior PPT Agreement pertaining to the
Cassettes acquired from Moovies, Inc. ("Moovies") in connection with
the Acquisition, provided that no other terms or conditions of the
Prior PPT Agreement with Moovies shall be legally binding on or apply
to the parties hereto or thereto and such agreement as of the Effective
Time shall otherwise be of no further force or effect.
AGREEMENT
Accordingly, in consideration of the mutual promises and agreements
contained in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Effectiveness of Agreement. This Agreement is executed in
connection with and subject to Retailer's proposed acquisition
(currently intended to be done by merger ) of Moovies, a
publicly held Delaware corporation (the "Acquisition"), which
corporation is party to a National Account Agreement with
Rentrak dated March 8, 1995 as modified and supplemented by a
First Addendum thereto of even date, a Second Addendum dated
May 18, 1995 and an Amendment to First Addendum, dated June
16, 1995, (the "Prior PPT Agreement"). This Agreement shall be
effective and legally binding on the parties hereto only upon
the Acquisition's date of closing and effectiveness (the
"Effective Time"). Immediately following the Effective Time,
Retailer and Rentrak shall compile and agree upon a list of
Cassettes acquired by Moovies prior to the Effective Time for
purposes of confirming the lease and payment terms of
Cassettes acquired by Retailer in connection with the
Acquisition. Should the
10
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Acquisition, of which no assurance or undertaking is or can be
given, not be closed and effective on or before March 31,
1998, this Agreement shall be null and void and be of no force
or effect as to either Rentrak or Retailer; and neither party
shall have legal rights of any kind, character or nature as to
the other arising from the transactions contemplated herein.
Rentrak confirms that it is not owed any monies or debts of
any kind, character or nature by Retailer as of the date
hereof, except for payment of legal fees and other expenses
pursuant to the Legal Fees Agreement, dated June 3, 1997.
2. Effect of Addendum. Unless otherwise stated herein, to the
extent any term or provision of this Addendum expressly amends
or is in direct conflict with any term of the National Account
Agreement, this Addendum shall supersede and control any such
provision in the National Account Agreement. All terms and
conditions contained in the National Account Agreement unless
modified by or in direct conflict with this Addendum shall
remain in full force and effect.
3. Definitions. Any capitalized term used herein that is not
otherwise defined herein shall have the meaning set forth in
the National Account Agreement.
4. Amendments to National Account Agreement. The National Account
Agreement shall be amended as follows:
INSTRUCTIONS - Processing fees shall be revised as follows:
All initial processing fees to participate in PPT shall be
waived for all of Retailer's current Locations and all those
new Locations opened or acquired during the term of this
Agreement.
RECITALS - The first paragraph of the recitals section of the
National Account Agreement beginning with the words "Retailer
operates..." is deleted, amended in its entirety and shall
read as follows:
Retailer currently owns and operates a chain of three
hundred and fifty-eight (358) retail stores in the
United States and Canada identified on Exhibit A,
excluding franchised retail stores (the "Stores"). In
addition, Retailer operates the central office (Office)
and/or warehouse facility (Warehouse) listed on Exhibit
A. In connection with the Acquisition, Retailer will
own and operate the additional retail stores of Moovies
(the "Moovies Stores") identified on Exhibit A. This
Agreement shall apply to and be legally binding upon
(i) the Stores, (ii) the Moovies Stores and (iii)
subject to the terms and conditions set forth herein,
all future retail stores owned, operated, managed,
controlled or acquired by Retailer and/or any of
Retailer's Affiliates (as defined below in this
paragraph) that are located in the United States and
its territories and possessions and/or the provinces
and territories of Canada, that offer or otherwise make
available the rental or sale of Cassettes (the
"Locations") provided that this Agreement shall not be
binding on and shall exclude (i) any current or future
retail stores owned and operated by franchisees of
Retailer or franchisees of any of its Affiliates, and
(ii) any future retail stores owned or operated by
Retailer or any of its Affiliates that are located
00
-0-
xxxxxxx xx xxx Xxxxxx Xxxxxx, its territories or
possessions or the provinces and territories of Canada
(collectively, the "Locations"). Retailer warrants and
covenants to Rentrak that (i) Retailer's franchise
contracts in effect as of the date hereof do not afford
Retailer control over the videocassette purchasing of
or by any of Retailer's franchisees and (ii) Retailer
will not include contractual provisions relating to the
same in its future franchise contracts. Notwithstanding
that franchisees of Retailer are excluded from the
definition of Location under this Agreement, Retailer
agrees to actively promote the PPT System and PPT
concept to all franchisees of Retailer. Should Retailer
subsequently acquire the business or assets of any
franchisee that becomes a Rentrak customer after the
Effective Time, the terms of this Agreement shall
govern all Cassettes acquired by Retailer for those
acquired locations after such acquisition. An
"Affiliate" shall mean any individual or entity (a)
directly or indirectly controlling, controlled by, or
under common control with, Retailer; (b) directly or
indirectly owning or holding fifty percent (50%) or
more of an equity interest in Retailer; or (c) of which
ten percent (10%) or more of whose voting stock or
other equity interest is directly or indirectly owned
or held by Retailer; provided, however, that
notwithstanding anything to the contrary contained
herein, any third party acquiror of Retailer that is
not an Affiliate of Retailer at any time prior to the
acquisition of Retailer (the "Third Party Acquiror")
that acquires directly or indirectly all or
substantially all of the capital stock or assets of
Retailer (via merger, consolidation or otherwise) shall
not to the extent provided herein be deemed an
Affiliate of Retailer or otherwise be bound by the
terms of this Agreement with respect to the retail
stores owned and operated by the Third Party Acquiror
prior to the acquisition or in the future under the
Third Party Acquiror's then existing tradename or
tradenames provided, however, Retailer agrees to cause
such Third Party Acquiror in connection with the
acquisition of Retailer to expressly assume all
obligations under this Agreement with respect to
Retailer as this Agreement pertains to Locations
including future Locations owned and operated by the
Third Party Acquiror under a tradename other than the
Third Party Acquiror's then existing tradename or
tradenames as though the Third Party Acquiror was the
Retailer pursuant to an assumption agreement, in form
and substance reasonably satisfactory to Rentrak. (For
example, if XYZ Video, an entity not an Affiliate of
Retailer prior to a proposed acquisition of Retailer,
acquires directly or indirectly all or substantially
all of the capital stock or assets of Retailer, XYZ
Video shall be legally bound to honor all of the terms
of this Agreement with respect to Retailer's Locations
existing as of the date of the closing of the
acquisition and any future Locations of Retailer and/or
the Third Party Acquiror that operate under a tradename
other than XYZ Video (or such other tradenames then
used by XYZ Video) pursuant to an assumption agreement,
but XYZ Video would not be subject to this Agreement
with respect to current or new retail stores operated
as XYZ Video (or such other tradename then used by XYZ
Video.) "Affiliates" shall mean more than one
Affiliate. Retailer shall cause its Affiliates to
comply with the terms of this Agreement.
SECTION 2 - Section 2 of the National Account Agreement is
deleted, amended in its entirety and shall read:
12
-4-
2. Subject to the terms of this Agreement, Rentrak shall ship to
Retailer prerecorded Cassettes in such quantities and at such times as
Program Suppliers (as defined in Section 3(N) in this Agreement) make
available to the PPT System and which Retailer orders consistent with
its purchase obligations under this Agreement. All Cassettes will be
shipped "FOB Destination" to Retailer's Warehouse or at Retailer's
request, to each Retail Location. Subject to Section 6 below,
Retailer's last order accepted and confirmed by Rentrak shall be final.
Rentrak will use its best efforts to deliver Cassettes to Retailer on
or before the street date. If for any reason, Retailer's order cannot
be shipped, Rentrak or Retailer may cancel the unfilled order on notice
and without further liability to the other party.
SECTION 3 - The first line of Section 3 of the National Account
Agreement is deleted, amended in its entirety and shall read:
3. Retailer agrees to participate in the PPT System on the terms and
conditions established by this Agreement, any Rentrak PPT System Manual
delivered to Retailer (including any amendments or modifications
thereto) and any written notices delivered to Retailer by Rentrak from
time to time; provided, however, that this Agreement shall be
controlling to the extent that any term or provision in this Agreement
is inconsistent with any such amendment or modification. Retailer
agrees to:
SECTION 3(A) - Paragraph (A) of Section 3 of the National Account
Agreement is deleted, amended in its entirety and shall read:
3(A) Use Rentrak-approved computer hardware and Point of Sale ("POS")
system software which list of approved computer hardware and POS system
software is published by Rentrak from time to time, provided that
Rentrak hereby acknowledges and approves as a Rentrak approved POS
System the 5.2 UBS version of computer hardware and software when said
software incorporates the Rentrak conversion disk. Retailer shall,
prior to ordering Cassettes, complete, to Rentrak's reasonable
satisfaction a test of Retailer's computer system and communication
ability. Retailer shall also install Rentrak's proprietary Rentrak
Profit Maker Software ("RPM") on its computer system (which inclusive
with the hardware, RPM and POS system software are collectively
referred to as the "POS System"). The RPM shall at times remain the
exclusive property of Rentrak. Retailer shall be responsible for all
costs relating to computer hardware and software used in connection
with the Rentrak PPT System at its Locations. Once approved by Rentrak
as a Rentrak approved POS System, Retailer shall not change, modify or
alter the POS System or use a new version thereof without Rentrak's
prior written consent, in its reasonable discretion. Each Location
listed on Exhibit A shall not be Inactive and shall be in communication
with Rentrak and shall have placed its first order for Cassettes under
the PPT System on or before [ ]* days after the Effective Time,
all in strict compliance with Rentrak's specifications and the terms
and conditions of this Agreement (collectively, the "PPT Requirement").
In the event Retailer fails to satisfy the PPT Requirement with respect
to the Locations listed on Exhibit A, and/or any new Locations after
the applicable Transition Period or permits a Location to become
Inactive (as defined below) on the PPT System, such
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
13
-5-
event shall be deemed to be a breach of this Agreement. In addition to,
and not in lieu of any other damages suffered by Rentrak, the parties
agree that for each [ ]* that any Location fails to satisfy the
PPT Requirement or is or becomes Inactive, the term of this Agreement
and all of the obligations hereunder, including but not limited to all
of the ordering obligations provided in Section 6 hereunder shall be
irrevocably and automatically extended for that number of days equal to
[ ]* times the number of Locations that fail to satisfy the PPT
Requirement or are or become Inactive with respect to the PPT system on
such day (after the time permitted in this Agreement for going on-line
to PPT for newly acquired stores, the "Transition Period"). The term
"Inactive" shall mean (after the Transition Period) that the Location
has (i) failed to place its first order for Cassettes under the PPT
System using the POS Software, (ii) failed to install and/or properly
operate the POS Software, (iii) failed to meet Rentrak's computer
interface specifications or (iv) otherwise failed to comply with the
terms of this Agreement. For example, by way of illustration only, if
[ ]* Locations were Inactive on a given day, the term of this
Agreement, including, but not limited to the purchase obligations in
Section 6 of the Addendum would be automatically extended [ ]* days for
each day these Locations remained Inactive.
SECTION 3(B) - Paragraph (B) of Section 3 of the National Account
Agreement is deleted, amended in its entirety and shall read:
3(B) Timely remit all amounts due Rentrak. Rentrak and Retailer agree
that any "handling fee," "transaction fee," "sell-through fee," "end of
term buy-out fee" or other fees payable with respect to any Cassettes
leased pursuant hereto shall be payable within [ ]* days after the
last day of the month of the date of Rentrak's invoice, whichever is
later, provided, however, that, in the event Retailer does not make
timely remittance of any and all amounts due Rentrak, in addition to
Rentrak's other rights hereunder, under any other agreement between
Rentrak and Retailer and under applicable law, Rentrak may stop
shipment of Cassettes to Retailer or ship Cassettes on a COD basis with
the amount due for such Cassettes to include (i) Rentrak's reasonable
estimate of future payments likely to be due with respect thereto and
(ii) an amount covering a portion, determined in Rentrak's reasonable
discretion, of the amounts past due Rentrak. Retailer shall pay
interest of [ ]* per month on all accounts receivable not paid
pursuant to the terms of this Agreement. Unless (i) required by Program
Suppliers or (ii) Retailer has failed, after [ ]* days written
notice, to pay amounts due Rentrak on a timely basis, in no event will
Rentrak file or have any right to file any financing or other statement
under the uniform commercial code of any jurisdiction with respect to
the transactions described herein.
SECTION 3(O) - Paragraph (0) of Section 3 of the National Account
Agreement is deleted and amended in its entirety to read:
3(O). Retain and reveal to Rentrak certain information with respect to
its business, as is reasonably requested by Rentrak. Retailer and
Rentrak agree that the data and other information collected by Rentrak
under the PPT System may be used by Rentrak only for the following
purposes: (i) in connection with Retailer audits and other internal
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
14
-6-
purposes at Rentrak; provided that Rentrak will exercise commercially
reasonable efforts in the video business to ensure that it and its
employees, agents and representatives observe strict confidentiality
with respect to any and all confidential information revealed by
Retailer (ii) in aggregate form with data from other retailers provided
that each retailer is not individually identified and (iii) for sale or
provision to others so long as such data is provided in aggregate form
with data from other retailers and each retailer is not individually
identified. Rentrak acknowledges that it will be responsible for any
breach of the confidentiality obligations imposed in this Section 3(O)
by itself or any of its current or former employees, agents, and
representatives and that the same may be deemed by Retailer to be a
breach of this Agreement giving rise solely to monetary damages or
equitable remedies to prevent further disclosure and not giving rise to
any right to terminate the Agreement by Retailer. Retailer also
acknowledges that accurate, verifiable data as to rentals and sale of
the Cassettes is imperative and that inaccurate or incorrect reporting
by Retailer will cause substantial damage to Rentrak.
SECTION 3(P) - The first sentence of Paragraph (P) of Section 3 of the
National Account Agreement is deleted and amended in its entirety to
read:
3(P). Cause all of the Locations owned, controlled, managed or operated
by Retailer and its Affiliates to participate in the PPT System in
accordance with the terms hereof and not be Inactive within [ ]*
days from the Effective Time and for all Locations owned, controlled,
managed or operated by Retailer and its Affiliates after the Effective
Time, to participate in the PPT System and not be Inactive within
[ ]* days of opening for business or acquisition, provided that
with respect to any acquisitions by Retailer in Canada, such [ ]*
day period shall be deemed to commence only after such acquisition has
received all necessary Canadian regulatory approvals.
SECTION 6 - Section 6 of the National Account Agreement is deleted and
amended in its entirety and shall read:
6. Subject to being extended as provided herein, for a period of
[ ]* years commencing on the Effective Time, unless otherwise
terminated earlier in accordance with the terms hereof, Retailer
together with its Affiliates and their permitted legal representatives,
successors and assigns shall make aggregate transaction fee and
handling fee payments to Rentrak, for each twelve month period based on
Retailer's fiscal year, as it may be amended from time to time (a
"Fiscal Year"), relating to the leasing of Cassettes under PPT equal to
a minimum of (i) for the period ending on the twelve month anniversary
of the Effective Time, the greater of [ ]* for such period or
$[ ]* and (ii) after the twelve month anniversary of the Effective
Time, and for the remainder of the term of this Agreement, except as
adjusted as provided herein, the greater of [ ]* or $[ ]* (the
"Purchase Requirement") by ordering and obtaining from Rentrak rental
priced Cassettes offered under the PPT System. The Purchase Requirement
shall be prorated for partial Fiscal Years during which the Purchase
Requirement is in effect. Retailer's gross revenues shall be determined
using the Retailer's Fiscal Year end on a
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
15
-7-
consolidated basis in accordance with generally accepted accounting
principles, consistently applied and shall include all revenues from
all sources relating to the video rental/sale business, including
franchise royalty fees, but shall not include revenues for new
businesses (e.g. retail candy stores or movie theaters) unrelated to
the video rental/sale business.. The determination of Retailer's gross
revenues shall be based on audited financial statements certified by a
nationally recognized independent accounting firm. Subject to its
confidentiality obligations hereunder, Rentrak shall have the right,
upon ten business days' advance written notice, to independently audit
at its sole cost and expense, the books and records of Retailer in
order to verify and confirm Retailer's gross revenues. Retailer agrees
to satisfy at least $[ ]* dollars of the Purchase Requirement,
during the [ ]* month period following the Effective Time by
ordering and obtaining from Rentrak [ ]* Cassettes offered under
the PPT System. The term [ ]* shall mean only a video title that
had aggregate U.S. domestic theatrical box office gross receipts of
[ ]* or [ ]* theatrical box office receipts.
[
]* Retailer's
ordering and purchase of Cassettes shall be in
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
16
-8-
full compliance with all terms and conditions contained in this
Agreement and all Program Supplier or Rentrak established minimum and
maximum ordering limitations and/or requirements and monthly
communication charge requirements set forth in this Agreement including
but not limited to this Section 6 and as more fully set forth in
paragraph 4 of the National Account Agreement. "Rental priced"
Cassettes shall mean any and all Cassettes that have a manufacturer's
suggested retail price of $35 or more. With regard to ordering
limitation requirements imposed by certain Program Suppliers, if
Retailer elects to order Cassettes of a particular title in a Location
from Rentrak, Retailer shall be required to comply with such
requirements by ordering all Cassettes of the same title that Retailer
obtains from any source only from Rentrak offering such title for each
Location of similar or larger size (i.e. if Location A, a store with
average monthly revenues of $10,000 from the rental and sale of video
cassettes orders a certain title from a certain Program Supplier from
Rentrak, Retailer shall be required to order all Cassettes of the same
title for all of Retailer's Locations of similar or larger size to
Location A). Notwithstanding anything to the contrary contained herein,
Retailer shall have no obligation to order from Rentrak any Cassette
that is offered to Retailer under PPT that (i) has a revenue sharing
fee that exceeds [ ]* (ii) has a handling fee that exceeds [ ]*
of the manufacturer's suggested retail price or (iii) has a lease term
that exceeds [ ]* years. Rentrak shall have the right to adjust the
terms of any Cassette in order to satisfy the aforementioned
restrictions, in which event Retailer shall be required to order the
Cassette pursuant to the terms of this Agreement.
A. In the event Retailer fails to satisfy the Purchase Requirement in
any given year, Retailer agrees to pay Rentrak the amount equal to the
Purchase Requirement less the aggregate amount of [ ]* fee and
[ ]* fee payments made to Rentrak during the Fiscal Year (the
"Shortfall") along with an additional payment equal to [ ]* of the
Shortfall in any given Fiscal Year. For example, if Retailer had gross
revenues equal to $10,000,000 and Retailer paid Rentrak [ ]* fee
and [ ]* fee payments equal to $5,500,000 for Cassettes obtained
pursuant to this Agreement during a Fiscal Year in which the Purchase
Requirement was the greater of [ ]* of gross revenues or $[ ]*
the Shortfall would be [ ]* and the additional payment would be
[ ]*. The Shortfall and additional payment due, if any, shall be
paid to Rentrak on or before the 90th day after the end of the Fiscal
Year in which the Shortfall occurred.
B. With respect to Cassettes leased hereunder, Retailer may not
purchase the Cassettes or other media of such title and use them as
rental inventory, remove the title from rental availability except as
provided herein, or take any other steps to deprive Rentrak of all
available revenue under the established terms of the title's lease term
except to the extent that, once "used sell-through" is permitted for a
particular title by its terms, Retailer may remove Cassettes no longer
required for rental use to Retailer's Warehouse for subsequent sale by
recording the same as a sale and making the required remittance to
Rentrak upon transfer.
SECTION 7 - Section 7(C) of the National Account Agreement is amended
by deleting the following: "Retailer may not, however, sell more than
five (5) copies of any title to any one customer within any thirty (30)
day period."
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
00
-0-
XXXXXXX 0 - Section 8 of the National Account Agreement is deleted,
amended in its entirety and shall read as follows:
8. Retailer shall pay Rentrak a monthly data processing fee of $36
(U.S.) per individual Location per month, provided that such fee shall
be only $20 (U.S.) per each Location per month for those Locations, if
any, for which Rentrak is provided data by Retailer through Retailer's
central Host Computer on magnetic tape or electronic interface
acceptable to Rentrak in its sole discretion; provided, however, if the
data for a Location at any time during the month (i) has less than a
97% title matched accuracy (e.g. titles are not correctly identified)
or (ii) is delivered to Rentrak after 11:00 a.m. Pacific Standard Time
on the Monday immediately following the weekly reporting period ending
at 12:00 a.m. midnight Pacific Standard Time on the Thursday
immediately preceding such Monday, the data processing fee for such
Location shall be $36.00 (U.S.) for each such Location for that
particular month. For example, for illustration purposes only, the
applicable data processing rates are set forth opposite the described
situation: 10 Locations transmitting data to Rentrak from each Location
and 5 Locations not transmitting any data - $36 rate for the 15
Locations ($540 monthly fee); 15 Locations transmitting data through
Retailer's central Host Computer on magnetic tape and transmission is
timely and at least 97% matched title accurate - $20 rate for the 15
Locations ($300 monthly fee). In the event Retailer elects to
communicate for all of its Retail Locations from one central Host
Computer, Retailer shall be responsible for paying all costs incurred
to deliver the data to Rentrak on a weekly basis in a form acceptable
to Rentrak in its sole discretion. Provided that Rentrak has not
terminated this Agreement, as provided herein, Retailer shall pay the
data processing fees as set forth above whether or not Rentrak is in
the PPT business.
SECTION 9 - Section 9 of the National Account Agreement is hereby
deleted, amended in its entirety and shall read as follows:
9. Retailer shall be responsible for all property damage, theft or loss
stemming from a catastrophe with respect to the Cassettes (the "Loss").
In the event of a Loss, Retailer shall pay Rentrak 50% of each
Cassette's then-current manufacturer's suggested retail price that is
subject to or covered by the Loss within thirty days of such Loss.
Retailer may not substitute Cassettes from another source or Location
for the Cassettes covered by or subject to the Loss. For purposes of
this Agreement, Cassettes discovered missing in the ordinary course of
business are to be recorded and paid for when discovered as if they had
been sold to the public. Retailer shall notify Rentrak of any Loss that
occurs outside the ordinary course of business promptly at the time
Retailer discovers same.
SECTION 13 - Section 13 of the National Account Agreement is deleted,
amended in its entirety and shall read as follows:
13. Retailer acknowledges that it is imperative that Program Suppliers,
other customers of Rentrak, the parties to this Agreement, the titles
involved, the reporting system established by Rentrak, any obligations
of Retailer pursuant to this Agreement, and all other aspects of
execution, delivery and performance of this Agreement,
18
-10-
including the terms thereof, remain confidential. Retailer agrees that
during the term of this Agreement and for twenty-four (24) months
thereafter, it will not disclose to any individual or entity (including
but not limited to, business associates, friends or relatives), any of
the terms or conditions of this Agreement or any of the participants in
the PPT system, the titles offered pursuant to this Agreement, the
reporting system, or any obligations of Retailer and Rentrak pursuant
to this Agreement, unless such disclosure is required by court order,
federal or state securities laws or franchising laws, or to legal,
accounting and financial advisors for purposes of obtaining advice
regarding execution, delivery and performance of this Agreement, their
obligations hereunder or the performance of their obligations pursuant
to federal, state and local laws. Rentrak agrees that it will not
provide a copy of this Agreement to any third party (except Program
Suppliers or their auditors), unless such disclosure is required by
court order, federal or state securities laws or to legal accounting
and financial advisors for the purposes of obtaining advice regarding
the execution, delivery and performance of this Agreement, its
obligations hereunder or the performance of its obligations pursuant to
federal, state and local laws, provided that Rentrak also may provide a
copy of this Agreement to bona fide investors and its legal counsel and
accountants. Each of the parties shall inform its advisors of this
confidentiality provision and obtain from such professional advisor or
third party an agreement to comply with the terms hereof. With respect
to disclosures made under the securities laws pursuant to any filing
with the Securities and Exchange Commission or any state securities
commission, Retailer agrees to exercise its best efforts to maintain
the confidentiality of this Agreement, including its terms by
cooperating with Rentrak and seeking confidential treatment of the
contemplated disclosures from the SEC or state securities commission,
if requested in writing promptly by the other party. In the event that
Retailer desires to disclose any of the terms or conditions of this
Agreement including the existence of this Agreement, to a prospective
bonafide investor, acquiror, lender or underwriter, such party shall
reduce all of such proposed disclosures to writing and submit them to
the Rentrak for approval. No disclosure shall be made until Rentrak has
given its advance approval in writing, which approval shall not be
unreasonably withheld or delayed, provided, however, that to the extent
the person to whom disclosure is to be made is a present or potential
competitor, customer, vendor or supplier of Rentrak, Rentrak may
withhold its approval in its sole discretion. Retailer agrees that any
approval of a disclosure to a bonafide investor, acquiror, lender or
underwriter, shall be conditioned on such person executing a
confidentiality agreement, in form and substance, reasonably
satisfactory to Rentrak, requiring such investor, acquiror, lender or
underwriter to protect the confidentiality of this Agreement pursuant
to the terms hereof. Retailer agrees (on its own behalf and on behalf
of its officers and directors) to make positive truthful statements
concerning Rentrak and the PPT System and shall not in any way
disparage Rentrak to the press, trade, public, customers, vendors or
Program Suppliers of Rentrak or anyone else, except as may be required
by applicable law. These obligations contained in this Section 13 shall
survive the expiration and termination of this Agreement and continue
thereafter for a period of twenty-four (24) months. Notwithstanding the
foregoing, each party hereby agrees that it (and its officers and
directors) shall confirm the existence of this Agreement. In the event
of any unauthorized disclosure of any of the confidential terms stated
in this Section 13 by
19
-11-
Retailer, the term of this Agreement may, in Rentrak's sole discretion,
be extended for one year for each violation of this Section 13.
SECTION 17 - Section 17 of the National Account Agreement is hereby
amended and shall read as follows:
17. Subject to being extended as provided in this Agreement, this
Agreement shall expire on the last day of the lease term of all
Cassettes ordered by Retailer in its last order submitted to Rentrak on
or prior to the date that is the [ ]*anniversary of the Effective
Time (the "Termination Date"), unless terminated prior thereto as
provided herein.
(A) This Agreement may be terminated by Rentrak for no reason or any
reason, prior to the Termination Date, upon ten days prior written
notice of termination to Retailer.
(B) Section 17(B) shall be as set forth in the National Account
Agreement.
(C) Retailer may terminate this Agreement if Rentrak (i) intentionally
and willfully breaches this Agreement in any material respect that
substantially impairs the value of this Agreement as a whole, (ii) such
breach is capable of being cured at the time Rentrak receives such
notice of breach from Retailer, and (iii), after receiving written
notice from Retailer specifying the nature of the breach with
reasonable particularity, Rentrak has failed to cure such breach or
commence curative action to cure such breach within thirty (30) days of
such written notice, provided that nothing herein shall give Retailer
the right to terminate solely because Rentrak ceases to distribute
Cassettes through the PPT System. Retailer's termination right pursuant
to this Section 17(C) shall be the exclusive means by which Retailer
may terminate its obligations under this Agreement and shall be in lieu
of any and all other termination rights otherwise available to Retailer
under applicable law, including but not limited to ORS 72A. 508.
(D) Section 17(D) shall be as set forth in the National Account
Agreement.
(E) Section 17 (E) shall be as set forth in the National Account
Agreement.
SECTION 17(F) - The following paragraph shall be added to Section 17 of
the National Account Agreement and shall read as follows:
17(F). Upon expiration or termination of this Agreement and the
Addendum for any reason, Rentrak and Retailer agree that they shall not
make any derogatory, negative or otherwise disparaging remarks of any
nature whatsoever about each other, except as required under federal or
state securities laws in the opinion of counsel.
SECTION 18 -- Section 18 of the National Account Agreement is hereby
deleted in its entirety.
SECTION 19 -- Section 19 of the National Account Agreement is deleted,
amended in its entirety and shall read as follows:
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
20
-12-
Neither party shall assign, sell, give, lease, sublease, encumber,
delegate or otherwise transfer, in whole or in part by operation of law
or otherwise, any of its rights or obligations hereunder (an
"Assignment") without the prior written consent of the other (in such
other party's sole discretion), provided that, subject to any other
provision herein and provided that no such assignment shall be to a
competitor of Rentrak, the direct or indirect Assignment (by merger,
consolidation, asset acquisition or operation of law) of any rights or
obligations hereunder in whole or in part, by a party to any individual
or entity acquiring directly or indirectly all or substantially all of
the capital stock or assets of such party shall not be deemed an
Assignment for purposes of this Section.
SECTION 21(C) -- Section 21(C) of the National Account Agreement is
hereby deleted in its entirety.
SECTION 25 -- Section 25 of the National Account Agreement is hereby
deleted in its entirety.
SECTION 27 -- Section 27 of the National Account Agreement is hereby
deleted in its entirety.
SECTION 28 -- Section 28 of the National Account Agreement is hereby
deleted in its entirety.
5. Additional Terms of National Account Agreement. The following
additional terms shall be added to the National Account Agreement:
SECTION 29 - Recitals as Part of Agreement. The recitals to this
Agreement are hereby incorporated into and made a legally binding part
of the National Account Agreement and Retailer shall take no action,
directly or indirectly, to frustrate the purpose of this Agreement.
SECTION 30 - No Harm to Rentrak's Business. Retailer covenants and
agrees that throughout the entire term of this Agreement, Retailer
shall not, directly or indirectly, acting alone or in concert with
others, through its officers, directors, agents or employees, (i) take
any action intended to undermine or harm Rentrak's business
relationships with Program Suppliers, any motion picture studio,
Rentrak's customers, or vendors or otherwise harm Rentrak's business
(ii) take any action or do anything reasonably calculated to undermine
or harm Rentrak's business relationships with Program Suppliers, any
motion picture studios, Rentrak's customers or vendors or otherwise
harm Rentrak's business.
SECTION 31 - Advertising Credit. Subject to the terms and conditions
provided in this Section, Retailer shall receive a co-op advertising
credit from Rentrak equal to $[ ]*per Cassette ordered and
received by Retailer through the PPT System. Such co-op advertising
shall only be available to the extent that Retailer complies with all
the requirements imposed by the Program Supplier for such credit
including but not limited
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
21
-13-
to providing proof of performance, submission of tear sheets, invoices
and other requests. The Program Supplier's determination as to whether
this co-op advertising credit is available to Retailer shall be final
and binding and Rentrak shall not be obligated to provide any co-op
advertising credit in cases where a Program Supplier has rejected
Retailer's claim for such credit. Rentrak makes no representation,
warranty or assurance as to the availability of co-op advertising
credit and Retailer may not take a credit or deduction for any
advertising claims for which a credit has not been granted by Rentrak.
To the extent co-op advertising credit is not fully utilized by
Retailer within [ ]* months of shipment of the Cassettes for which
the co-op advertising credit was issued on a particular title, such
credit shall expire and no longer be of any value to Retailer. For the
term of this Agreement, and if requested by a Program Supplier, Rentrak
shall confirm Retailer shall be entitled to receive any Co-op monies
available to Retailer ("Co-op Monies") directly from such Program
Suppliers. In the alternative, if Rentrak receives such Co-op Monies
from a Program Supplier directly that the Program Supplier advises
Rentrak are for the account of Retailer, Rentrak shall immediately so
notify Retailer and, upon compliance by Retailer with all of such
Program Supplier's requirements, immediately forward all Co-op Monies
related to Retailer's purchase or order of Cassettes from that Program
Supplier directly to Retailer. The availability of such Co-op Monies,
if any, shall be subject to the same conditions, terms, and limitation
set forth in the preceding sentences of this Section 31.
SECTION 32 - Press Release. Retailer and Rentrak will prepare and
release a press release announcing the transaction contemplated herein
substantially in the form attached hereto as Exhibit B, which Press
Release is in a form mutually acceptable to the parties. Rentrak and
Retailer agree not to release the press release until the signing of
the definitive Merger Agreement pertaining to the Acquisition as
indicated on Exhibit B.
SECTION 33 - Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
SECTION 34 - Cooperation. Retailer agrees to cause either its Chief
Executive Officer or its President to accompany executive officers of
Rentrak to visit [ ]* Motion Picture Studios at a mutually
acceptable time or times but not to exceed the equivalent of two (2)
weeks during the first year term of this Agreement following the
Effective Time and in connection therewith to assist Rentrak in its
efforts to obtain the participation of the [ ]* Motion Picture
Studios on PPT.
SECTION 35 - Sale of a Location or Locations. Subject to the provisions
in the Recitals hereof relating to the sale of all or substantially all
of Retailer's capital stock or assets (via merger, consolidation or
otherwise) to a Third Party Acquiror (which circumstance shall not be
governed by this provision), Retailer agrees not to sell or transfer to
a person or an entity other than Retailer or its Affiliates (the
"Transferee") any Locations through merger, consolidation, sale of
assets, spin-off, or other means unless the Transferee or in the case
of a spin-off the person or entity owning the spun-off assets legally
assumes all obligations of Retailer remaining under this Agreement
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
22
-14-
with respect to such Location or Locations as though such person or
entity was the Retailer pursuant to an Assumption Agreement in form and
substance reasonably satisfactory to Rentrak. Retailer hereby
guarantees the performance by the Transferee of the assumed obligations
and shall remain liable therefor.
SECTION 36 - Acquisition of Business of Rentrak Customers. Should
Retailer or any of its Affiliates wish to acquire a retail video store
or retailer of video cassettes (an "Acquisition") that at the time of
acquisition is a customer of Rentrak, which customer is subject to a
designated purchase requirement with regard to Cassettes leased under
the PPT System (e.g., [ ]* of revenue or all requirements of leased
Cassettes)( the "Rentrak PPT Customer"), Retailer shall provide Rentrak
ten days' prior written notice of such proposed acquisition. Rentrak
shall then promptly provide Retailer a list of all material terms of
such Rentrak PPT Customer's agreement with Rentrak that are then in
effect (the "Terms") and Retailer will not consummate the Acquisition
unless Retailer has (i) assumed the Terms without modification, or (ii)
negotiated modifications to the Terms that are acceptable to Rentrak
(with each of Retailer and Rentrak agreeing to negotiate such
modifications in good faith), provided that this provision shall not
govern Retailer's acquisition of the business or assets of any of its
franchisees who become Rentrak PPT Customers after the Effective Time.
Retailer agrees that it will not directly or indirectly litigate the
validity of the Terms or the modified terms, except as agreed between
Retailer and Rentrak.
6. National Account Agreement. Except as amended and supplemented by this
Addendum, the National Account Agreement is otherwise confirmed in all
respects and shall be given full force and effect.
7. Counterparts. This Addendum 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.
IN WITNESS WHEREOF, the parties have caused this Addendum to be
executed as of the day and year first written above.
THIS SPACE INTENTIONALLY LEFT BLANK
___________________
* The bracketed information has been omitted from this exhibit and filed
separately with the Securities and Exchange Commission pursuant to Rule
406 under the Securities Act of 1933, as amended.
23
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RENTRAK CORPORATION
By: /s/ Xxx Xxxxxx
------------------------------
Xxx Xxxxxx, President
VIDEO UPDATE, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------
Xxxxxx Xxxxxx,
Chief Executive Officer
