THE TRANSFER OF THIS WARRANT IS RESTRICTED EXHIBIT 10.9
AS PROVIDED IN SECTIONS 7 AND 8
GRANT DATE: August 24, 1995
WARRANT CERTIFICATE
TO PURCHASE SHARES OF COMMON STOCK OF
XXX VIDEO CITY, INC.
In consideration of $10, certain amendments contained in the Second
Addendum to Rentrak National Account Agreement, dated August 24, 1995 and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties hereto, XXX VIDEO CITY, INC., a California
corporation (the "Company"), grants to RENTRAK CORPORATION, an Oregon
corporation ("Rentrak"), the right, subject to the terms and conditions of this
Warrant, to purchase at any time during the period commencing August 24, 1995
(the "Grant Date"), and ending on August 23, 2005 (the "Expiration Date"), for
an aggregate purchase price of $400,000 (the "Aggregate Exercise Price"), that
number of shares of the Company's Common Stock which, immediately following the
exercise hereof, will equal two percent (2%) of the fully diluted issued and
outstanding Common Stock of the Company calculated on a fully diluted basis
determined in accordance with generally accepted accounting principles in effect
on the date hereof.
Section 1. DEFINITIONS. As used in this Warrant, unless the context
otherwise requires:
1.1 "AGGREGATE EXERCISE PRICE" is defined in the first paragraph of
this Warrant.
1.2 "CALL NOTICE" is defined in Section 2.4.
1.3 "CALL PRICE" means the greater of (a) the Fair Market Price on
the date of the Call Notice multiplied by that number of shares of the Company's
Common Stock which, immediately after the exercise of this Warrant, would equal
two percent (2%) of the fully diluted issued and outstanding Common Stock of the
Company calculated on a fully diluted basis determined in accordance with
generally accepted accounting principles in effect on the date hereof; and (b)
twice the IPO Price multiplied by that number of shares
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of the Company's Common Stock which, immediately after the exercise of this
Warrant, would equal two percent (2%) of the fully diluted issued and
outstanding Common Stock of the Company calculated on a fully diluted basis
determined in accordance with generally accepted accounting principles in effect
on the date hereof
1.4 "CALL RIGHT" is defined in Section 2.4.
1.5 "COMMON STOCK" means the Common Stock (no par value) of the
Company.
1.6 "COMPANY" is defined in the first paragraph of this Warrant.
1.7 "EXERCISE DATE" means the date when this Warrant is
exercised in the manner indicated in Section 2.2.
1.8 "EXERCISE PERIOD" means the period commencing on the date on
which the Company closes its Initial Public Offering and ending on the
Expiration Date.
1.9 "EXERCISE PRICE" means the price per Warrant Share equal to the
quotient of (a) the Aggregate Exercise Price divided by (b) that number of
shares of the Company's Common Stock which, immediately following the exercise
hereof, will equal two percent (2%) of the fully diluted issued and outstanding
Common Stock of the Company calculated on a fully diluted basis determined in
accordance with generally accepted accounting principles in effect on the date
hereof.
1.10 "EXPIRATION DATE" is defined in the first paragraph of this
Warrant.
1.11 "FAIR MARKET PRICE" means, on any given date, (a) the average on
such date of the high and low prices of the IPO Stock on the principal national
U.S. securities exchange on which the IPO Stock is then traded, if the IPO Stock
is then traded on such an exchange; or (b) the last reported sale price on such
date of the IPO Stock on the NASDAQ National Market List, if the IPO Stock is
not then traded on a national U.S. securities exchange.
1.12 "GRANT DATE" is defined in the first paragraph of this Warrant.
1.13 "HOLDER" means initially Rentrak and its subsequent transferees.
1.14 "INITIAL PUBLIC OFFERING" means an initial public offering by the
Company of its Common Stock by filing a registration statement with the U.S.
Securities and Exchange Commission and causing such Common Stock to be traded on
a national U.S. stock exchange or listed on the NASDAQ National Market System.
1.15 "IPO PRICE" means the price at which each share of IPO Stock
was sold pursuant to the Initial Public Offering.
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1.16 "IPO STOCK" means the Common Stock sold pursuant to the Initial
Public Offering.
1.17 "MORTCO" means Mortco, Inc., an Oregon corporation and a
wholly-owned subsidiary of Rentrak.
1.18 "RELATED WARRANT" means any other Warrant executed and delivered
by the Company on terms identical with the terms of this Warrant (except as to
the identity of the Holder, number of Warrant Shares or execution date) that is
granted pursuant to Section 6 of this Agreement.
1.19 "RELATED WARRANT SHARES" means any shares of Common Stock or
other securities issued or issuable upon exercise of any Related Warrant.
1.20 "RENTRAK" is defined in the first paragraph of this Warrant.
1.21 "SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time, and all rules and regulations promulgated thereunder, or any
act, rules or regulations that replace the Securities Act or any such rules and
regulations.
1.22 "WARRANT" means this Common Stock Warrant and each previously
executed and cancelled Common Stock Warrant, if any, for which this Warrant has
been exchanged.
1.23 "WARRANT SHARES" means any shares of Common Stock or other
securities issued or subject to issuance upon exercise of this Warrant or upon
exchange of a Warrant Share for Warrant Shares of different denominations.
Section 2. DURATION AND EXERCISE OF WARRANT; COMPUTATION OF SHARES.
2.1 VESTING. This Warrant shall vest on the Grant Date, and expire on
the Expiration Date.
2.2 EXERCISE OF WARRANT. This Warrant shall be immediately
exercisable by Rentrak at any time during the Exercise Period.
This Warrant may be exercised by the Holder during the Exercise
Period, by (i) surrendering this Warrant to the Company, (ii) tendering to the
Company the payment due with regard to the Aggregate Exercise Price, and (iii)
executing and delivering to the Company the attached Exercise Form.
2.3 NUMBER OF SHARES. The number of shares for which this Warrant may
be exercised shall be that number of shares of the Company's Common Stock which,
immediately following the exercise hereof, will equal two percent (2%) of the
fully diluted issued and outstanding Common Stock of the Company calculated on a
fully diluted basis determined in accordance with generally accepted accounting
principles in effect on the date hereof.
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2.4 CALL RIGHT. At any time after which the Company has completed an
Initial Public Offering and the IPO Stock has traded at a price equal to or
greater than twice the IPO Price, the Company shall, after the expiration of ten
(10) days prior written notice delivered to the Holder (the "Call Notice"), have
the right (the "Call Right") to repurchase this Warrant at a price equal to the
Call Price; provided, however, that the Call Right shall terminate immediately
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upon the exercise of this Warrant by the Holder pursuant to Section 2.2, which
exercise may occur any time prior to the date of the repurchase of this Warrant
by the Company pursuant to the Call Right. Within ten (10) days of the Holder's
receipt of the Call Notice pursuant to this Section 2.4, the Holder shall either
exercise this Warrant pursuant to Section 2.2 or surrender this Warrant to the
Company whereupon the Company shall pay to the Holder, by check or wire
transfer, the Call Price.
2.5 CERTIFICATES. Within a reasonable time but no more than fifteen
(15) days after exercise, certificates for such Warrant Shares shall be
delivered to the Holder.
2.6 SECURITIES ACT COMPLIANCE. Unless the issuance or transfer of the
Warrant Shares shall have been registered under the Securities Act, as a
condition of its delivery of the certificates for the Warrant Shares, the
Company may require the Holder (including any transferee of the Warrant Shares
in whose name the Warrant Shares are to be registered) to deliver to the
Company, in writing, representations regarding the purchaser's sophistication,
investment intent, acquisition for its own account and such other matters as are
reasonable and customary for purchasers of securities in an unregistered private
offering, and the Company may place conspicuously upon each certificate
representing the Warrant Shares a legend substantially in the following form,
the terms of which are agreed to by the Holder (including such transferee):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ISSUED WITHOUT REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE BLUE SKY LAWS OF ANY
JURISDICTION. SUCH SECURITIES MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED OR OTHERWISE DISPOSED OF, BENEFICIALLY OR
ON THE RECORDS OF THE COMPANY, UNLESS THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED
OR QUALIFIED UNDER THE SECURITIES ACT AND APPLICABLE
BLUE SKY LAWS OR THERE HAS BEEN DELIVERED TO THE
COMPANY AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, TO THE EFFECT THAT SUCH REGISTRATION AND
QUALIFICATION IS NOT REQUIRED.
The Company need not register a transfer of this Warrant or the Warrant Share
unless the conditions specified in such legend and in Section 8 are satisfied.
Section 3. VALIDITY AND RESERVATION OF WARRANT SHARES. The Company
covenants that this Warrant and any Warrant Shares will be validly issued
fully paid, nonassessable
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and free of preemptive rights. The Company agrees that so long as this Warrant
may be exercised, the Company will have authorized and reserved for issuance
upon exercise of this Warrant a sufficient number of Warrant Shares to provide
for exercise in full.
Section 4. FRACTIONAL SHARES. No fractional Warrant Share shall be issued
upon the exercise of this Warrant. With respect to any fraction of a Warrant
Share otherwise issuable upon any such exercise, the Company shall pay to the
Holder an amount in cash equal to such fraction multiplied by the Exercise
Price.
Section 5. LIMITED RIGHTS OF THE WARRANT HOLDER. The Holder shall not,
solely by virtue of being the Holder of this Warrant, have any of the rights of
a holder of Common Stock of the Company, either at law or equity, until such
Warrant shall have been exercised and the Holder shall have been issued
certificates representing the Warrant Shares and the Holder shall be deemed to
be the holder of record of Warrant Shares as provided in this Warrant, at which
time the person or persons in whose name or names the certificate or
certificates for Warrant Shares being purchased are to be issued shall be deemed
the holder or holders of record of such shares for all purposes.
Section 6. ADJUSTMENTS UPON CERTAIN EVENTS.
(a) If this Warrant shall be exercised subsequent to any stock split,
stock dividend, recapitalization, combination of shares of the Company, or
other similar event, occurring after the date hereof, then the Holder
exercising this Warrant shall receive upon the exercise of this Warrant and
payment of no additional consideration other than the Aggregate Exercise
Price, the aggregate number and class of shares which such Holder would
have received if this Warrant had been exercised immediately prior to such
stock split, stock dividend, recapitalization, combination of shares, or
other similar event. If any adjustment under this Section 6(a), would
create a fractional share of Common Stock or a right to acquire a
fractional share subject to this Warrant shall be the next higher number of
shares, rounding all fractions upward. Whenever there shall be an
adjustment pursuant to this Section 6(a), the Company shall forthwith
notify the Holder or Holders of this Warrant of such adjustment, setting
forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated.
(b) If this Warrant shall be exercised subsequent to any merger,
consolidation, exchange of shares, separation, reorganization or
liquidation of the Company, or other similar event, occurring after the
Grant Date, as a result of which shares of Common Stock shall be changed
into the same or a different number of shares of the same or another class
or classes of securities of the Company or another entity, then the Holder
exercising this Warrant shall receive, upon the exercise of this Warrant
and payment of no additional consideration other than the Aggregate
Exercise Price, the aggregate number and class of shares which such Holder
would have received if this Warrant had been exercised immediately prior to
such merger, consolidation, exchange of shares, separation, reorganization
or liquidation, or other similar event. If any adjustment under this
Section 6(b) would create a fractional share of Common Stock or a right to
acquire a fractional share of
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Common Stock, such fractional share shall be disregarded and the number of
shares subject to this Warrant shall be the next higher number of shares,
rounding all fractions upward. Whenever there shall be an adjustment
pursuant to this Section 6(b), the Company shall forthwith notify the
Holder or Holders of this Warrant of such adjustment, setting forth in
reasonable detail the event requiring the adjustment and the method by
which such adjustment was calculated.
Section 7. EXCHANGE, TRANSFER OR LOSS OF WARRANT.
7.1 EXCHANGE. This Warrant is exchangeable, without expense to the
Holder and upon surrender hereof to the Company, for Related Warrants of
different denominations entitling the Holder to purchase Related Warrant Shares
equal in total number and identical in type to the Warrant Shares covered by
this Warrant.
7.2 TRANSFER. Subject to the provisions of Section 8, upon surrender
of this Warrant to the Company with the attached Assignment Form duly executed,
the Company shall, without charge, execute and deliver a Related Warrant to the
assignee named in such Assignment Form, and this Warrant shall promptly be
cancelled.
7.3 LOSS, THEFT, DESTRUCTION OR MUTILATION. Upon receipt by
the Company of satisfactory evidence of the loss, theft, destruction or
mutilation of this Warrant and either (in the case of loss, theft or
destruction) indemnification or bond in form and substance acceptable to the
Company, or (in the case of mutilation) the surrender of this Warrant for
cancellation, the Company will execute and deliver to the Holder, without
charge, a Related Warrant of like denomination. Any such Related Warrant
executed and delivered shall constitute an additional obligation of the Company,
whether or not this Warrant, reportedly lost, stolen, destroyed or mutilated,
shall be at any time presented by anyone to the Company for exercise.
Section 8. TRANSFER RESTRICTION.
8.1 GENERAL. Anything contained hereto to the contrary
notwithstanding, this Warrant may not be assigned, transferred (by operation of
law or otherwise), hypothecated or sold (other than to a wholly-owned subsidiary
of Rentrak), except as set forth in Section 8.2. Any such assignment or transfer
shall be made by surrender of this Warrant to the Company or at the office of
its transfer agent, if any, with the Form of Assignment annexed hereto duly
executed and funds sufficient to pay any transfer tax, whereupon the Company
shall, without charge, execute and deliver a Related Warrant in the name of the
assignee and this Warrant shall promptly be cancelled.
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8.2 SECURITIES LAW COMPLIANCE. Except pursuant to the requirements of
Rule 144 of the Securities Act, the Warrant and Warrant Shares may not be sold,
transferred, assigned or otherwise disposed of except as follows:
(a) to a person who, in the opinion of counsel satisfactory to
the Company and in the opinion of the Company's counsel, is a person to whom the
Warrant or Warrant Shares may legally be transferred without registration under
the Securities Act and without the delivery of a current prospectus with respect
thereto; or
(b) to any person upon delivery of a prospectus then meeting the
requirements of the Securities Act relating to such securities (as to which a
registration statement under the Securities Act shall then be in effect) and the
offering thereof for such sale or disposition.
The Holder agrees that it will not at any time offer to sell, sell,
transfer, pledge or otherwise dispose of this Warrant, or, upon receipt of the
Warrant Shares after exercise hereof, any of such Warrant Shares, except
pursuant to either (a) an effective registration statement under the Securities
Act or (b) an opinion of counsel satisfactory to the Company to the effect that
such registration is not required. The Holder acknowledges that, in taking this
unregistered Warrant, or in taking unregistered Warrant Shares upon exercise
hereof, the Holder must continue to bear the economic risk of such investments
for what may be an indefinite period of time. The Holder further agrees hereby
that, prior to any transfer of this Warrant or any Warrant Shares received upon
any exercise hereof (if such Warrant and/or Warrant Shares are not registered
under the Securities Act), it will give written notice to the Company of its
intention to effect such transfer. Upon receipt of such notice, the Company will
promptly present it to counsel for the Company and counsel for the Holder and if
the Company receives the opinion of such counsel, in form and substance
satisfactory to the Company, that the proposed transfer may be effected without
registration under the Securities Act and applicable state law, the Holder shall
be promptly notified and shall be entitled to effect the transfer of this
Warrant and/or the Warrant Shares in accordance with the terms specified in the
notice delivered to the Company. The provisions of this Section 8.2 shall be
binding upon all subsequent Holders of this Warrant and upon all subsequent
holders of the certificates for the Common Stock bearing the legend specified in
Section 2.6 hereof.
8.3 REPRESENTATIONS OF HOLDER. The Holder represents that it has
acquired this Warrant for investment purposes only, for its own account, and not
with any present view to, or any offer to sell in connection with, the
distribution thereof. The Holder represents that it is a "accredited investor"
as that term is defined under Regulation D of the Securities Act.
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Section 9. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to Rentrak the following:
9.1 AUTHORITY. The Company has full right, power and authority to
enter into this Agreement and to perform all of its obligations hereunder or
contemplated hereby; this Agreement has been duly authorized, executed and
delivered by the Company and is enforceable in accordance with its terms.
9.2 VALID AGREEMENT. This Warrant, and the issue and delivery thereof
has been duly and validly authorized, and this Warrant, when issued and
delivered as provided in this Agreement, will be duly and validly issued and
outstanding, and will constitute a valid and binding obligation of the Company.
Section 10. REGISTRATION RIGHTS. The Warrant Shares shall have all of the
registration rights granted to Mortco under that certain Registration Rights
Agreement, dated as of August 24, 1995 (the "Rights Agreement"), by and between
Mortco and the Company, the terms of which are incorporated herein by this
reference as if fully set forth herein; provided, however, that (a) the term
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"Shares" used in the Rights Agreement shall mean the Warrant Shares, (b) the
term "Holder" used in the Rights Agreement shall mean a Holder as defined
herein, (c) the term "Mortco" used in the Rights Agreement shall mean Rentrak as
defined herein, and (d) the term "Agreement" used in the Rights Agreement shall
mean this Warrant.
Section 11. MISCELLANEOUS.
11.1 SUCCESSORS AND ASSIGNS. All the covenants and provisions of this
Warrant that are by or for the benefit of the Company shall bind and inure to
the benefit of its successors and assigns hereunder.
11.2 NOTICE. Notice or demand pursuant to this Warrant to be given or
made by the Holder to or on the Company shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed, until another address is
designated in writing by the Company, as follows:
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Xxx Video City, Inc.
0000 XxXxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxx
Any notice or demand authorized by this Warrant to be given or made by the
Company to or on the Holder shall be given to the Holder by first-class mail,
postage prepaid, addressed, until another address is designated in writing by
the Company, as follows:
Rentrak Corporation
Attention: Xxx Xxxxxx
0000 X.X. 55th Ave.
Portland, OR 97218
and to any other Holder addressed at his last known address as it shall appear
on the books of the Company, until another address is designated in writing,
with a copy to Rentrak Corporation by like mail.
11.3 Applicable Law. The validity, interpretation and performance of
this Warrant shall be governed by the laws of the State of Oregon. For any
action related to the judicial enforcement or interpretation of this Agreement,
the parties hereby expressly submit themselves to the jurisdiction of the
Circuit Court for the County of Multnomah, State of Oregon or the Federal Court
for the District of Oregon.
11.4 Headings. The article headings herein are for convenience only
and are not part of this Warrant and shall not affect the interpretation
thereof.
This Warrant is executed as of August ____, 1995.
AGREED AND ACCEPTED:
COMPANY: RENTRAK:
Xxx Video City, Inc. Rentrak Corporation
By /s/ Xxxxxx X. Xxx By /s/ illegible Sr. V.P.
----------------------------- -----------------------------
Xxxxxx X. Xxx, President Xxx Xxxxxx, President
/s/ illegible Chief Accounting Officer
