UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
October 8, 2014
Date of Report (Date of earliest event reported)
Rentrak Corporation
(Exact name of Registrant as specified in its charter)
Oregon | 000-15159 | 93-0780536 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
7700 NE Ambassador Place
Portland, Oregon 97220
(Address of Principal Executive Offices and Zip Code)
503-284-7581
(Registrants telephone number, including area code)
N/A
(Former Name or Former Address, if changed since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On October 8, 2014, Rentrak Corporation, an Oregon corporation (the Company), entered into an asset purchase agreement (the Asset Purchase Agreement) with Competitive Media Reporting, LLC, a Delaware limited liability company, (Seller or CMR), an affiliate of WPP plc, to acquire (the Asset Purchase) the United States television measurement business of WPPs Kantar business unit (the Business). Pursuant to the Asset Purchase Agreement, the Company agreed to purchase Kantars customer contracts and customer relationships in the United States television measurement market (the Purchased Assets).
In consideration for the purchase of the Purchased Assets, the Company agreed to assume specified liabilities of the Seller, and to issue 1,526,790 shares of its unregistered common stock (the Stock Consideration) to CMR. Based on the closing price of the Companys common stock on October 8, 2014, the Stock Consideration has an approximate value of $98.5 million. The Company will issue the Stock Consideration pursuant to an exemption from registration under Regulation D under the Securities Act of 1933, as amended (the Act), based in part on the Sellers representation to the Company that it is an accredited investor as that term is defined under Rule 501(a) under the Act.
The Asset Purchase Agreement contains various representations, warranties, covenants, indemnification obligations and other provisions customary for a transaction of this nature, including, among others, Sellers covenant not to solicit employees of the Business transferred to the Company and not to compete with the Business in the United States for a period of four years, subject to certain limitations.
The closing of the Asset Purchase is subject to customary closing conditions, including, among others, (i) the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and (ii) the absence of legal restraints preventing the consummation of the Asset Purchase.
Investor Rights Agreement
Also on October 8, 2014, the Company entered into an investor rights agreement (the Investor Rights Agreement) with CMR and WPP Luxembourg Gamma Three S.à r.l., also an affiliate of WPP plc ( WPP Luxembourg). Pursuant to the Investor Rights Agreement, CMR and WPP Luxembourg (collectively, the Investor) agreed to specified restrictions on the transfer and acquisition of additional shares of the Companys common stock. The Investor Rights Agreement also grants the Investor the right to request the Company to register the shares of the Companys common stock it holds in various circumstances and the right to appoint a board observer, who will be authorized to attend all meetings of the Companys board of directors except in specified circumstances.
The foregoing description of the Asset Purchase Agreement and Investor Rights Agreement (collectively, the Agreements), and the transactions they contemplate, does not purport to be complete, and is qualified in its entirety by reference to the copies of the Agreements, which are filed as exhibits hereto and are incorporated by reference herein. The representations, warranties and covenants contained in the Agreements were made only for purposes of each particular agreement and as of specific dates; were solely for the benefit of the parties to the Agreements; and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by each contracting party to the other for the purposes of allocating contractual risk between them that differ from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of the Company, CMR, WPP Luxembourg or any of their respective subsidiaries, affiliates or businesses. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the date of the Agreements, which subsequent information may or may not be fully reflected in public disclosures. Accordingly, investors should read the representations and warranties in the Agreements not in isolation but only in conjunction with the other information about the Company, CMR or WPP Luxembourg that the respective companies include in reports, statements and other filings the Company makes with the Securities and Exchange Commission.
Amendment No. 1 to Rights Agreement
On October 8, 2014, the Company and Computershare Trust Company, N.A., successor rights agent to U.S. Stock Transfer Corporation (the Rights Agent), entered into Amendment No. 1 (the Amendment) to that certain Rights Agreement (the Rights Agreement) dated as of May 18, 2005, by and between the Company and U.S. Stock Transfer Corporation. The Amendment changes the definition of Acquiring Person in the Rights Agreement so that, so long as they collectively hold no more than twenty percent (20%) of the then-outstanding shares of the Companys common stock, CMR, WPP Luxembourg and certain of their affiliates are deemed not to be an Acquiring Person under the Rights Agreement with respect to shares of the Companys common stock they acquire or may acquire pursuant to the Stock Purchase Agreement, Asset Purchase Agreement and certain open market stock acquisitions.
The foregoing summary of the Amendment does not purport to be complete and is subject and qualified in its entirety by reference to the Amendment, which is attached hereto as Exhibit 4.2 and is incorporated herein by reference. A copy of the Rights Agreement as originally executed is attached as Exhibit 4.2 to the Current Report on Form 8-K filed by the Company on May 18, 2005, and is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The description of the Stock Consideration in the Asset Purchase set forth in Item 1.01 is incorporated herein by reference.
On October 8, 2014, the Company entered into a stock purchase agreement (the Stock Purchase Agreement) with WPP Luxembourg. Pursuant to the Stock Purchase Agreement, the Company agreed to issue and sell to WPP Luxembourg, at the time of and contingent upon the closing of the Asset Purchase, 943,834 shares of the Companys unregistered common stock (the Stock Purchase Shares) in exchange for $55,846,653 cash. The Company will issue the Stock Purchase Shares pursuant to an exemption from registration under Regulation D under the Act, based in part on WPP Luxembourgs representation to the Company that it is an accredited investor as that term is defined under Rule 501(a) under the Act.
Item 3.03 Material Modification to Rights of Security Holders.
The information set forth under the heading Amendment No. 1 to Rights Agreement in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. |
Exhibit 2.1 | Asset Purchase Agreement, dated as of October 8, 2014, by and between Rentrak Corporation and Competitive Media Reporting, LLC. | |
Exhibit 4.1 | Investor Rights Agreement, dated as of October 8, 2014, by and among Rentrak Corporation, Competitive Media Reporting, LLC and WPP Luxembourg Gamma Three S.à r.l. | |
Exhibit 4.2 | Amendment No. 1, dated as of October 8, 2014, to Rights Agreement, dated as of May 18, 2005, by and between Rentrak Corporation and Computershare Trust Company, N.A., successor rights agent to U.S. Stock Transfer Corporation, as Rights Agent. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: October 14, 2014
RENTRAK CORPORATION | ||||
By: | /s/ David I. Chemerow | |||
Name: | David I. Chemerow | |||
Title: | Chief Operating Officer, Chief Financial Officer and Secretary |
Exhibit 2.1
ASSET PURCHASE AGREEMENT
by and between
RENTRAK CORPORATION
and
COMPETITIVE MEDIA REPORTING, LLC
Dated as of October 8, 2014
TABLE OF CONTENTS
Page | ||||||
ARTICLE I |
PURCHASE AND SALE OF ASSETS |
2 | ||||
1.1 |
Purchase and Sale of Assets |
2 | ||||
1.2 |
Liabilities |
4 | ||||
1.3 |
Procedure for Assumed Contracts not Transferable |
4 | ||||
1.4 |
Closing |
5 | ||||
ARTICLE II |
STOCK CONSIDERATION |
5 | ||||
2.1 |
Stock Consideration |
5 | ||||
2.2 |
Working Capital Adjustment |
5 | ||||
2.3 |
Transfer Taxes |
7 | ||||
2.4 |
Allocation |
7 | ||||
ARTICLE III |
REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
7 | ||||
3.1 |
Organization and Good Standing |
7 | ||||
3.2 |
Authority and Enforceability |
8 | ||||
3.3 |
Capitalization |
8 | ||||
3.4 |
Subsidiaries and Affiliates |
8 | ||||
3.5 |
No Approvals; No Conflicts |
8 | ||||
3.6 |
Financial Statements |
9 | ||||
3.7 |
Absence of Certain Changes or Events |
10 | ||||
3.8 |
Taxes |
11 | ||||
3.9 |
Real Property |
12 | ||||
3.10 |
Material Contracts |
12 | ||||
3.11 |
Suppliers and Customers |
13 | ||||
3.12 |
Insider Interests |
13 | ||||
3.13 |
Claims |
14 | ||||
3.14 |
Labor and Employment Matters |
14 | ||||
3.15 |
Employee Benefit Plans |
16 | ||||
3.16 |
Intellectual Property |
18 | ||||
3.17 |
Corporate Books and Records |
21 | ||||
3.18 |
Compliance with Laws |
21 |
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3.19 |
Insurance |
22 | ||||
3.20 |
Title to Transferred Assets |
22 | ||||
3.21 |
Environmental Matters |
22 | ||||
3.22 |
Permits |
23 | ||||
3.23 |
Absence of Questionable Payments |
23 | ||||
3.24 |
Accounts and Other Receivables |
23 | ||||
3.25 |
Brokers or Finders |
24 | ||||
3.26 |
Common Stock of Buyer |
24 | ||||
3.27 |
No Other Representations or Warranties |
26 | ||||
ARTICLE IV |
REPRESENTATIONS AND WARRANTIES OF BUYER |
26 | ||||
4.1 |
Organization and Good Standing |
26 | ||||
4.2 |
Authority and Enforceability |
26 | ||||
4.3 |
No Approvals; No Conflicts |
26 | ||||
4.4 |
Issuance of the Stock Consideration |
27 | ||||
4.5 |
Capitalization |
27 | ||||
4.6 |
SEC Reports |
28 | ||||
4.7 |
Buyer Financial Statements |
28 | ||||
4.8 |
Absence of Certain Changes or Events |
28 | ||||
4.9 |
Brokers or Finders |
29 | ||||
4.10 |
No Reliance |
29 | ||||
ARTICLE V |
COVENANTS |
29 | ||||
5.1 |
Closing Efforts |
29 | ||||
5.2 |
Consents |
30 | ||||
5.3 |
Operation of the Business |
30 | ||||
5.4 |
Access to Information |
30 | ||||
5.5 |
Further Assurances |
31 | ||||
5.6 |
Confidentiality |
31 | ||||
5.7 |
Tax Matters |
31 | ||||
5.8 |
Customer and Supplier Inquiries; Accounts Receivable |
32 | ||||
5.9 |
Press Releases and Public Announcements |
32 | ||||
5.10 |
No Bonuses |
32 | ||||
5.11 |
Employees |
32 |
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5.12 |
Non-Solicitation and Non-Competition |
34 | ||||
5.13 |
Post-Closing Cooperation |
35 | ||||
ARTICLE VI |
CONDITIONS TO CLOSING |
36 | ||||
6.1 |
Conditions to the Obligations of All Parties |
36 | ||||
6.2 |
Additional Conditions to the Obligations of Buyer |
36 | ||||
6.3 |
Additional Conditions to the Obligations the Company |
37 | ||||
ARTICLE VII |
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS |
38 | ||||
7.1 |
Indemnification |
38 | ||||
7.2 |
Claims Procedure |
38 | ||||
7.3 |
Third Party Claims |
39 | ||||
7.4 |
Survival |
39 | ||||
7.5 |
Limitations; Exclusive Remedy |
40 | ||||
ARTICLE VIII |
TERMINATION |
41 | ||||
8.1 |
Termination |
41 | ||||
8.2 |
Effect of Termination |
41 | ||||
ARTICLE IX |
GENERAL |
42 | ||||
9.1 |
Expenses |
42 | ||||
9.2 |
Notices |
42 | ||||
9.3 |
Severability |
43 | ||||
9.4 |
Entire Agreement; Incorporation of Exhibits and Schedules |
43 | ||||
9.5 |
Assignment |
43 | ||||
9.6 |
Parties in Interest |
43 | ||||
9.7 |
Governing Law; Jurisdiction |
44 | ||||
9.8 |
Headings; Construction |
44 | ||||
9.9 |
Counterparts |
44 | ||||
9.10 |
Waiver of Jury Trial |
45 | ||||
9.11 |
Specific Performance |
45 | ||||
9.12 |
Amendment |
45 | ||||
9.13 |
Waiver |
45 | ||||
ANNEX A: Definitions |
A-1 |
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EXHIBITS
A | Form of Bill of Sale |
B | Form of Guarantee |
DISCLOSURE MEMORANDUM
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this Agreement) is made and entered into as of October 8, 2014, by and between Rentrak Corporation, an Oregon corporation (Buyer), and Competitive Media Reporting, LLC, a Delaware limited liability company (the Company). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in Annex A attached hereto.
RECITALS
WHEREAS, the Company owns and, through its Audiences Division, operates the Business;
WHEREAS, (a) WPP Luxembourg Gamma Three S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg (WPP Luxembourg), and Buyer are entering into that certain stock purchase agreement, dated as of the date hereof (the Stock Purchase Agreement); (b) Millward Brown, LLC, a Delaware limited liability company doing business as The Kantar Group (Millward Brown), and Buyer are entering into that certain joint marketing memorandum of understanding, dated as of the date hereof (the Joint Marketing Agreement MOU); (c) Group M Worldwide, LLC, a Delaware limited liability company (Group M), and Buyer are entering into that certain Rentrak TV Essentials Service Agreement, dated as of the date hereof (the Advertising Agreement); (d) the Company and Buyer are entering into that certain transition services agreement, dated as of the date hereof (the Transition Services Agreement); (e) Millward Brown and Buyer are entering into that certain Rentrak Corporation License Agreement, dated as of the date hereof (the Data License Agreement); (f) the Company, Group M, Millward Brown and Buyer are entering into that certain fee adjustment agreement, dated as of the date hereof (the Fee Adjustment Agreement); and (g) the Company, WPP Luxembourg and Buyer are entering into that certain investor rights agreement, dated as of the date hereof (the Investor Rights Agreement; the Investor Rights Agreement together with this Agreement, the Stock Purchase Agreement, the Joint Marketing Agreement MOU, the Advertising Agreement, the Transition Services Agreement, the Data License Agreement and the Fee Adjustment Agreement, are collectively referred to herein as, the Transaction Documents);
WHEREAS, the Company desires to sell, and Buyer desires to purchase, substantially all of the assets of the Audiences Division to the extent relating to the Business, on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Buyer is willing to assume the liabilities of the Audiences Division, on the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, as an inducement to entering into the other Transaction Documents, each party hereto desires that the other parties hereto enter into, and each party hereto is willing to enter into, this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 | Purchase and Sale of Assets |
(a) On the terms and subject to the conditions of this Agreement, effective as of the Closing, the Company will sell, assign, transfer, convey and deliver to Buyer, and Buyer will purchase and acquire from the Company, free and clear of any Encumbrances, other than Permitted Encumbrances, all of the Companys right, title, and interest in and to all rights, properties and assets of every kind owned, held, used, developed, conceived, licensed or offered by the Company, in each case, solely to the extent related to the Business and as set forth in clauses (i) through (x) below, except Excluded Assets (collectively, the Transferred Assets):
(i) all Contracts relating to the Business, which Contracts are set forth on Schedule 1.1(a)(i) to the Disclosure Memorandum (the Assumed Contracts);
(ii) all Inbound Licenses set forth on Schedule 1.1(a)(ii) to the Disclosure Memorandum;
(iii) all of the Companys rights, claims, credits, causes of action or rights of set-off against third parties relating to the Transferred Assets, including rights under warranties, except for any of the foregoing to the extent they relate to Excluded Assets or Excluded Liabilities;
(iv) all inventory;
(v) to the extent assignable, all Permits (if any) relating to the Business that are necessary to Buyers operation of the Business, including any Permits set forth on Schedules 3.21 and 3.22 to the Disclosure Memorandum;
(vi) deposits, advances, pre-paid expenses and credits under the Assumed Contracts, except for any of the foregoing to the extent they relate to Excluded Assets or Excluded Liabilities;
(vii) all accounts receivable, notes receivable, and other receivables of the Company with respect to sales of goods or services prior to the Closing Date, in each case, relating to the Business;
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(viii) all express or implied guarantees, warranties, representations, covenants, indemnities and similar rights under the Assumed Contracts, except to the extent they relate to Excluded Assets or Excluded Liabilities;
(ix) all goodwill associated with the Transferred Assets; and
(x) all books, records and files of the Company used exclusively in, or related exclusively to, the Business, other than those described in Section 1.1(b)(v), in electronic or intangible form, including customer lists and information, and employee files related to the Transferred Employees (except as prohibited by applicable law).
(b) Notwithstanding anything to the contrary set forth herein, the Transferred Assets will not include the following assets, properties and rights of the Company (collectively, the Excluded Assets), which are expressly excluded from the purchase and sale contemplated hereby:
(i) all cash and cash equivalents, securities and short-term investments held by the Company;
(ii) the banks accounts of the Company;
(iii) payments made or to be made to the Company pursuant to this Agreement and other rights of the Company hereunder;
(iv) any rights to federal, state, local, or foreign refunds or recoupment related to any Tax;
(v) all books, records, files, and data of the Company unrelated to either the Transferred Assets or the Transferred Employees, including the Companys minute books and other business entity records and Tax records;
(vi) all Employee Benefit Plans;
(vii) all rights to insurance policies and claims, refunds and proceeds;
(viii) all rights to any action, suit or claim of any nature available to or being pursued by the Company against third parties, whether arising by way of counterclaim or otherwise;
(ix) all IP Rights, other than the Inbound Licenses described in Section 1.1(a)(ii);
(x) all agreements to which the Company is a party that are not Assumed Contracts (including, without limitation, all leases to, or subleases by, the Company for real property used in the Business (the Real Property)); and
(xi) all such assets expressly set forth on Schedule 1.1(b)(xi) to the Disclosure Memorandum.
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1.2 | Liabilities |
(a) Effective as of the Closing, Buyer will assume and agree to perform and discharge when due: (i) all Liabilities arising after the Closing under the Assumed Contracts and to be performed following the Closing; and (ii) all Liabilities existing on the Closing Date relating to the Business to the extent and in the amount duly reflected on the Company Balance Sheet, as modified or changed in the ordinary course of business between the Company Balance Sheet Date and the Closing Date; and (iii) all Liabilities of the Company not otherwise included in the immediately preceding clause (a)(ii), if any, relating to the Business arising before the Closing Date that are included in, and only to the extent included in, the calculation of Net Working Capital, as finally determined pursuant to Section 2.2 (collectively, the Assumed Liabilities).
(b) Other than the Assumed Liabilities, Buyer will not assume, perform or discharge any Liability of the Company relating to the Business, whether or not arising before or after, or maturing before or after, the Closing (collectively, the Excluded Liabilities), including: (i) any Liability under or related to the Excluded Assets; (ii) any Liability for any Taxes (A) of the Company, or otherwise relating to the ownership, possession, operation, or use of the Transferred Assets at or prior to the Closing, or (B) arising from or in connection with the sale, assignment, and transfer of the Transferred Assets to Buyer pursuant to this Agreement (excluding any Transfer Taxes, the responsibility for which shall be governed by Section 2.3 of this Agreement); (iii) any Liability arising or incurred in connection with the negotiation, preparation and execution of this Agreement and the Transactions by or on behalf of the Company and any fees or disbursements of legal counsel, accountants, brokers, financial advisors or other Representatives of the Company; (iv) any Liability with respect to either the continuation or the termination by the Company of any Employee Benefit Plan for the benefit of the Company Employees; and (vii) any Liability with respect to accrued payroll, workers compensation liability, vacation pay, sick pay, fringe benefits and severance or other employee benefits with respect to or that relate to periods of employment of Company Employees by the Company at or prior to the Closing, solely to the extent such liability is not reserved for in the Closing Balance Sheet, as finally determined pursuant to Section 2.2.
1.3 | Procedure for Assumed Contracts not Transferable |
Anything in this Agreement to the contrary notwithstanding, in the event that (a) an assignment or purported assignment to Buyer of any Assumed Contract required to be assigned to Buyer pursuant to this Agreement, or any claim, right or benefit arising thereunder or resulting therefrom, without the consent of other parties thereto, would constitute a breach thereof or would not result in Buyer receiving all of the rights of the Company thereunder, and (b) such consent shall not have been obtained prior to the Closing, then such Assumed Contract shall nevertheless, as between Buyer and the Company, be deemed to have been assigned by the Company to Buyer. In those circumstances, if requested by Buyer, the Company will, at the sole cost and expense of Buyer, cooperate with Buyer to obtain any such consent as soon as practicable after the Closing. If such consent is not obtained, the Company shall cooperate with Buyer in any reasonable arrangement to provide Buyer with the full claims, rights and benefits under any such Assumed Contract, including enforcement of such Assumed Contract, at the cost and for the benefit of Buyer, of any and all rights of the Company against a third party thereto
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arising out of the breach or cancellation by such third party or otherwise, and any amount received by the Company in respect thereof shall be held for and paid over to Buyer at Buyers expense.
1.4 | Closing |
Subject to the terms and conditions of this Agreement and unless otherwise agreed by the parties, the closing of the Transactions (the Closing) will take place in person or via email or facsimile at the offices of Perkins Coie LLP, 1120 NW Couch Street, Tenth Floor, Portland, Oregon 97209, or at such other place as the parties agree, at 10:00 a.m. Pacific Time on the date that is no later than two Business Days following satisfaction or waiver of all the conditions precedent under this Agreement (such date being the Closing Date). For purposes of this Agreement, the Closing shall be deemed to have occurred at 12:01 a.m. on the Closing Date.
ARTICLE II
STOCK CONSIDERATION
2.1 | Stock Consideration |
In consideration for the purchase of the Transferred Assets, and subject to Section 2.2 and the other terms and conditions of this Agreement, at the Closing, Buyer will issue 1,526,790 shares of Common Stock to the Company (the Stock Consideration).
2.2 | Working Capital Adjustment |
(a) Notwithstanding the Stock Consideration to be paid at the Closing, (i) in the event that the Estimated Net Working Capital Adjustment Amount is a positive dollar amount, Buyer shall pay such positive amount to the Company at the Closing, and (ii) in the event that the Estimated Net Working Capital Adjustment Amount is a negative dollar amount, the Company shall pay the absolute value of such amount to Buyer, and in either case such dollar amount shall be paid in immediately available funds to an account designated by the recipient of such funds.
(b) At least five Business Days prior to the Closing, the Company shall deliver to Buyer a statement (the Preliminary Report), setting forth (i) an estimated balance sheet of the Company as of the Closing Date with respect to those current assets and Liabilities of the Company related to the Transferred Assets and Assumed Liabilities (the Estimated Closing Balance Sheet), and (ii) a worksheet showing the difference, if any, between the Net Working Capital shown on the Estimated Closing Balance Sheet (the Estimated Net Working Capital) and the Target Net Working Capital (such difference, the Estimated Net Working Capital Adjustment Amount).
(c) Within 90 days after the Closing Date, Buyer shall deliver to the Company a statement (the Working Capital Report), setting forth (i) a balance sheet of the Company as of the Closing Date with respect to those current assets and Liabilities of the Company related to the Transferred Assets and Assumed Liabilities (the Closing Balance Sheet), and (ii) a worksheet, together with reasonable supporting documentation, setting forth in reasonable detail Buyers good faith calculation of Net Working Capital, and the difference, if any, between the
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Net Working Capital shown on the Closing Balance Sheet and the Estimated Net Working Capital. If the Company disputes any matter or item set forth in the Working Capital Report, then the Company may, within 30 days after receipt of the Working Capital Report, provide to Buyer a written statement of such disputes (such written statement, a Dispute Notice), stating a reasonable description of the Companys differences with the Working Capital Report and setting forth in reasonable detail the Companys good faith proposed revisions to the Working Capital Report. If the Company does not submit a Dispute Notice prior to the expiration of such 30-day period, the Working Capital Report and the calculation of the Net Working Capital therein shall be final, conclusive and binding upon the Company and Buyer. Buyer and the Company shall use good faith efforts to jointly resolve such disputes within 30 days after Buyers receipt of the Dispute Notice, which resolution, if achieved with respect to any or all disputed items, shall be deemed final, conclusive and binding upon the Company and Buyer. If Buyer and the Company cannot resolve all of their disputes within such 30-day period, then the items in dispute shall be submitted to a mutually acceptable nationally recognized accounting firm (the Accounting Firm) for final determination. The Accounting Firm shall only consider and have authority to resolve those accounting matters specifically referred to it for resolution. The Accounting Firm is not to make any other determination, including any determination as to whether the Preliminary Report is or was correct.
(d) The Accounting Firms decisions shall be based solely on presentations by Buyer and the Company and their respective Representatives, and not by independent review, and the Accounting Firm shall only address those issues in dispute specifically set forth in the Dispute Notice. In resolving any disputed item, in no event shall the Accounting Firms determination be higher or lower than the respective amount therefor proposed by Buyer and the Company. The determination of the Accounting Firm shall be in writing and include a reasonable description of the basis thereof and shall be accompanied by a certificate of such firm that its determination was prepared in accordance with this Agreement with respect to such dispute. The Accounting Firm shall be instructed by Buyer and the Company to deliver its determination with respect to the items set forth in the Dispute Notice and its calculation, based on such determination (together with all items in the Working Capital Report that were not included in the Dispute Notice), of the Net Working Capital, no later than 30 days after it is engaged by the Company and Buyer. The Accounting Firms determination of the Net Working Capital shall be final, conclusive and binding on the Company and Buyer and not subject to further dispute or judicial review. The costs, fees and expenses (including any indemnity obligations to the Accounting Firm) of the Accounting Firm shall be evenly split between Buyer and the Company.
(e) After the final determination of the Net Working Capital amount in accordance with clauses (b), (c) and (d) of this Section 2.2, (i) if the Net Working Capital is greater than the Estimated Net Working Capital, then Buyer shall pay to the Company an amount equal to the positive difference between the Net Working Capital and the Estimated Net Working Capital, and (ii) if the Net Working Capital is less than the Estimated Net Working Capital, then the Company shall pay to Buyer the amount of such shortfall, and in either case such dollar amount shall be paid in immediately available funds to an account designated by the recipient of such funds. Any such payment by Buyer or the Company shall be made within five Business Days after the final determination of the Net Working Capital.
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(f) During the preparation of the Preliminary Report and the Working Capital Report and the period of review or dispute as set forth in clauses (c) and (d) of this Section 2.2, Buyer on the one hand, and the Company on the other hand, shall provide the other and its Representatives reasonable access to any materials or information in its possession or under its control as requested by the other.
(g) The Preliminary Report and the Working Capital Report (including the balance sheets that form of part of such reports) and any determination by the Accounting Firm with respect to any disputed amount set forth in a Dispute Notice shall be (i) prepared in accordance with GAAP and the principles governing the determination of the Net Working Capital as set forth in this Agreement, as applicable, and (ii) based on the books and records of the Company.
2.3 | Transfer Taxes |
The Company and Buyer will each be responsible for and timely pay (without adjustment to the Stock Consideration) 50% of any sales, use, or transfer Taxes, documentary charges, recording fees, or similar Taxes, charges, or fees (collectively, the Transfer Taxes) arising from or in connection with the sale, assignment, and transfer of the Transferred Assets to Buyer pursuant to this Agreement, any other Transaction Document and any other agreements, instruments, or documents executed by or delivered to the Company in connection with this Agreement, or the transactions contemplated by the Transaction Documents (collectively, the Transactions). The Company and Buyer will each properly prepare and timely file, at its own expense, all Returns it is required to file with respect to such Transfer Taxes.
2.4 | Allocation |
Schedule 2.4 to the Disclosure Memorandum sets forth the methodology for allocating the Stock Consideration and the Assumed Liabilities among the Transferred Assets in accordance with Section 1060 of the Code. The Company and Buyer will report the allocation of the Stock Consideration and the Assumed Liabilities in a manner consistent with such Schedule 2.4 to the Disclosure Memorandum in all Returns (including Form 8594 filed with Buyers and the Companys respective federal income Tax Returns for the taxable year that includes the Closing Date) and in the course of any Tax Contest relating thereto. The Company and Buyer shall cooperate with each other to prepare the Forms 8594 in the manner required by this Section 2.4. The Company and Buyer shall each deliver to the other a copy of the Form 8594 it files with its respective federal income Tax Return.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to the exceptions set forth in the attached Disclosure Memorandum, the Company makes to Buyer the representations and warranties set forth in this Article III.
3.1 | Organization and Good Standing |
The Company is a limited liability company duly organized and validly existing under the laws of the State of Delaware. The Company has all requisite power and authority to own,
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operate and lease its properties and assets and to carry on the Business as now conducted. The Company is duly qualified or has been duly licensed, and is authorized to do business and is in good standing in each state in the United States and in each other jurisdiction (each such state and jurisdiction is listed on Schedule 3.1 to the Disclosure Memorandum) where it is required due to the ownership or lease of real or personal property for use in the operation of the Business, except where the failure to be so qualified, licensed, authorized or in good standing would not reasonably be expected to result in a Company Material Adverse Effect.
3.2 | Authority and Enforceability |
The Company has the full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder. All action on the Company necessary for the authorization, execution, delivery and performance by it of this Agreement and the other Transaction Documents to which it is a party has been taken. This Agreement and each of the Transaction Documents to which the Company is a party, when executed and delivered by the Company and the other parties hereto and thereto, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with the respective terms of such agreements, except, in each such case, as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws relating to or limiting creditors rights generally and by equitable principles.
3.3 | Capitalization |
TNS North America LLC, a Delaware limited liability company and an indirect wholly-owned subsidiary of WPP Group USA, Inc., a Delaware corporation (GUSA), is the sole member of the Company. There are no outstanding options or other agreements to acquire membership interests in the Company.
3.4 | Subsidiaries and Affiliates |
Except as set forth on Schedule 3.4 to the Disclosure Memorandum, the Company does not own, directly or indirectly, any ownership, equity, voting or other interest in any Person, and has no agreement or commitment to purchase any such interest.
3.5 | No Approvals; No Conflicts |
(a) The execution and delivery by the Company of this Agreement and the other Transaction Documents to which it is a party do not, and the performance by the Company of its obligations under this Agreement and the other Transaction Documents to which it is a party and the consummation of the Transactions will not: (i) subject to the receipt of the Required Government Approvals or the termination or expiration of any waiting period under applicable law constitute a violation (with or without the giving of notice or lapse of time, or both) of any law or any Judgment applicable to the Company; (ii) subject to obtaining consent with respect to the assignment by the Company to Buyer of the Assumed Contracts set forth on Schedule 3.5(a) to the Disclosure Memorandum, violate, conflict with, result in any breach of, or result in a default (with or without the giving of notice or lapse of time, or both) under, result in the creation
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of any Encumbrance (other than a Permitted Encumbrance) upon any properties or assets of the Company used in the Business, or create in any Person the right to accelerate, terminate, modify or cancel (or automatically do any of the foregoing) any Contract to which the Company is a party or by which it is bound or to which any of its assets are subject; (iii) conflict with or result in a breach of or constitute a default under any provision of its governing documents; or (iv) invalidate or adversely affect any material Permit or authorization used in the conduct of the Companys business, except in the case of clause (a)(ii) above to the extent such violations, conflicts, breaches, defaults or other matters would not reasonably be expected to prevent or prohibit the Company from performing its obligations under, and completing the transactions contemplated by, the Transaction Documents.
(b) Except as set forth on Schedule 3.5(b) to the Disclosure Memorandum (the Required Governmental Approvals) and any notice filings that are not material to the conduct of the Business, no consent, approval or authorization of, or notice to, or filing by the Company with, any Governmental Body is required for the execution, delivery and performance by the Company of this Agreement and the Transaction Documents to which it is or will be a party and the completion by the Company of the Transactions.
3.6 | Financial Statements |
(a) The Company has delivered to Buyer the following financial statements (collectively, the Financial Statements): (i) an unaudited balance sheet as of December 31, 2012 and related statement of operations of the Audiences Division for the 12 months then ended, prepared by the Company; (ii) an unaudited balance sheet as of December 31, 2013 and related statement of operations of the Audiences Division for the 12 months then ended, prepared by the Company; and (iii) an unaudited balance sheet as of September 30, 2014 (the Company Balance Sheet Date) and related statement of operations of the Audiences Division for the nine months then ended, prepared by the Company (the unaudited balance sheet of the Audiences Division as of the Company Balance Sheet Date is herein referred to as the Company Balance Sheet).
(b) The Financial Statements (i) are accurate, complete and consistent, in all material respects, with the books and records of the Company, (ii) have been prepared in conformity with IFRS on a basis consistent with prior accounting periods and (iii) fairly present in all material respects the financial position and results of operations of the Business as of the dates and for the periods indicated in accordance with IFRS, other than the omission of accompanying notes and schedules and, in the case of the Financial Statements referenced in Section 3.6(a)(iii), subject to normal recurring period-end adjustments.
(c) The Company has no Liabilities with respect to the Business that are required by IFRS to be fully reflected or reserved against in the Company Balance Sheet, except (i) Liabilities incurred since the date of the Company Balance Sheet in the ordinary course of business and (ii) Liabilities reflected, reserved against or accrued on the Company Balance Sheet.
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3.7 | Absence of Certain Changes or Events |
Except for transactions specifically contemplated in this Agreement and as otherwise set forth on Schedule 3.7 to the Disclosure Memorandum, since the Company Balance Sheet Date until the date of this Agreement:
(a) the Business of the Company has been conducted only in, and the Company has not taken any action with respect to the Business except in, the ordinary course of business;
(b) there has not occurred any Company Material Adverse Effect;
(c) there has been no material damage, destruction or loss affecting the Business or the assets or properties used by the Company in the Business; and
(d) the Company has not taken, or agreed or committed to take, any of the following actions in respect of the Business:
(i) authorized any single capital expenditure that is in excess of $60,000 or capital expenditures that are, in the aggregate, in excess of $120,000;
(ii) other than in the ordinary course of business consistent with past practice, there has not been any (A) grant of severance or termination pay (unless required by law or Contract) to any manager, officer, or employee of the Company engaged in or otherwise relating to the Business; (B) entry into any employment, deferred compensation, Employee Benefit Plan or other similar Contract (or any amendment to any such existing agreement or Employee Benefit Plan) with any officer, or employee of the Company engaged in or otherwise relating to the Business; (C) increase in benefits payable under any existing severance or termination pay policies or employment Contract relating to the Business; or (D) increase in compensation, bonus, or other benefits payable to officers, or employees of the Company relating to the Business, in each case other than those required by written contractual agreements entered into prior to the Company Balance Sheet Date;
(iii) made any material change with respect to accounting methods, practices or procedures, or internal accounting control, inventory, investment, credit, or allowance;
(iv) paid, discharged or satisfied any material Claim or material Liability, other than the payment, discharge or satisfaction in the ordinary course of business of material Claims and material Liabilities reflected or reserved against in the Company Balance Sheet or incurred in the ordinary course of business;
(v) forgiven, cancelled or deferred any material indebtedness or waived any Claims or rights of material value;
(vi) purchased or sold, transferred, licensed or otherwise disposed of any material properties or assets (real, personal or mixed, tangible or intangible), except in the ordinary course of business;
(vii) modified or amended any Assumed Contract;
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(viii) disposed of, permitted to lapse, or instructed or consented to a lapse of, any Registered IP, except in the ordinary course of business; or
(ix) made or approved any material write-off or material write-down or any determination to materially write-off or write-down any of its assets or properties, other than in the ordinary course of business.
3.8 | Taxes |
(a) The Company has timely filed all Returns required to be filed by it, and all such Returns (i) were prepared in compliance with all applicable laws; and (ii) are true, correct, and complete in all material respects. The Company is not currently the beneficiary of any extension of time to file any Return that the Company is required to file but that has not been filed.
(b) The Company has timely paid all Taxes due and payable by the Company (whether or not such Taxes were reflected on any Return). The unpaid Taxes of the Company (i) did not, as of the Company Balance Sheet date, exceed the amount accrued for Tax liability (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Company Balance Sheet (rather than in any notes thereto); and (ii) do not exceed such amount accrued for Tax liability (other than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) as adjusted for the passage of time since the Company Balance Sheet date, in accordance with the past custom and practice of the Company in filing its Returns. Since the Company Balance Sheet date, the Company has not incurred any Liability for Taxes, except in the ordinary course of business.
(c) The Company has (i) withheld all Taxes required to be withheld by it in respect of all payments to employees, officers, directors, and any other Persons; and (ii) timely remitted all such Taxes withheld to the appropriate Governmental Body in accordance with applicable laws.
(d) The Company has (i) collected all sales, use, value added, goods and services, and similar Taxes required to be collected by it; and (ii) timely remitted all such Taxes collected to the appropriate Governmental Body in accordance with applicable laws.
(e) There are no liens for Taxes upon any asset of the Company, except for Taxes not yet due and payable. There are no claimed, proposed, or asserted Tax deficiencies or assessments of Tax with respect to the Company that have not been fully paid.
(f) There are no Tax Contests pending or being conducted with respect to Taxes. The Company has not received from any Governmental Body any: (i) notice indicating an intent to commence any Tax Contest; (ii) notice of deficiency, proposed adjustment, notice of assessment, or notice of lien with respect to Taxes (whether claimed, proposed, asserted, or assessed); or (iii) request for information with respect to Taxes. No Governmental Body in a jurisdiction where the Company does not file Returns has made any claim that the Company is or may be subject to Tax in that jurisdiction.
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(g) Except as set forth on Schedule 3.8(g) to the Disclosure Memorandum, the Company is not a member of any Tax Group (other than a Tax Group of which the Company currently is the common parent). The Company has no Liability for Taxes of any other Person (i) as a result of being or ceasing to be a member of any Tax Group (including any Liability under Treasury Regulation Section 1.1502-6 or any comparable provision of state, local, or foreign law); or (ii) arising under contract, by operation of law, by reason of being a successor or transferee, or otherwise.
(h) None of the Assumed Liabilities are obligations to make any payments that would not be deductible or on which a penalty or excise tax could be imposed pursuant to Sections 280G, 409A or 4999 of the Code (or any comparable provision of state, local or foreign law).
(i) Accurate and complete copies of the Companys Returns for the past three years have been made available or delivered to Buyer.
(j) For federal and applicable state and local income Tax purposes, each of TNS North America LLC and the Company has properly been classified as an entity disregarded as an entity separate from its indirect owner, GUSA, under Treasury Regulations Sections 301.7701-2 and 301.7701-3 since its formation through the date of this Agreement, and will properly be so classified through the Closing Date.
3.9 | Real Property |
The Company does not own the Real Property.
3.10 | Material Contracts |
Schedule 3.10 to the Disclosure Memorandum contains an accurate and complete list of the following agreements by which the Company or any of the Transferred Assets are bound, in each case, with respect to the Business, including any amendment, supplement, or modification thereto or thereof (each, a Material Contract):
(a) all Contracts for the purchase or sale by the Company of services or products, supplies, equipment, or other tangible or intangible property, in each case, in connection with the operation of the Business (i) that provide for potential payments by or to the Company in excess of $20,000 annually, (ii) for which the Company paid or received in excess of $20,000 during the 12-month period ended September 30, 2014 or (iii) have a term of greater than one year and involve the payment or receipt by the Company of $20,000 or more over the unexpired term thereof and cannot be canceled by the Company with no more than 30 days notice without Liability, penalty or premium;
(b) all Contracts providing for the services of consultants or independent contractors for the Business;
(c) all Contracts related to the employment of any Company Employee who is employed on behalf of the Business and whose aggregate annual compensation exceeds $100,000;
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(d) loan or credit agreements, pledge agreements, notes, security agreements, mortgages, debentures, indentures, factoring agreements or letters of credit, in each case relating to indebtedness in excess of $50,000, excluding any inter-company debt obligations;
(e) all Contracts granting any interest in or to material Company IP;
(f) all Contracts limiting the freedom of the Company to engage in any line of business, to compete with any other Person, or conduct any business, in each case, if and to the extent related to the Business; and
(g) all Contracts with any Governmental Body.
All Material Contracts to which the Company is a party or by which the Company is bound are valid, binding and enforceable in accordance with their terms against the Company and, to the Companys Knowledge, each other party thereto, and are in full force and effect. The Company has performed all material obligations imposed on it under such Contracts. The Company has not received written notice that it is in material default under any such Contract and, to the Companys Knowledge, no other party to any such Contract is in material default thereunder. Accurate and complete copies of each Material Contract have been made available to Buyer. Except as set forth on Schedule 3.10 to the Disclosure Memorandum, the Company has not received any written notification that any party to a Material Contract intends to cancel, terminate, materially and adversely modify the terms of, refuse to perform or refuse to renew, such Contract (if such Contract is renewable).
3.11 | Suppliers and Customers |
Except as set forth on Schedule 3.11 to the Disclosure Memorandum, the Company has not received any written notice that any material customer or material supplier of the Company relating to the Business (determined as of the date of this Agreement) intends to terminate or materially and adversely modify its relationship with the Company. Except as set forth on Schedule 3.11 to the Disclosure Memorandum, no material supplier of the Company relating to the Business has, since June 1, 2014, to the Companys Knowledge, threatened in writing to decrease or limit materially, its supply of materials or services to the Company. Schedule 3.11 to the Disclosure Memorandum lists each customer of the Company who accounted for 10% or more of the revenues of the Business during the Companys most recently completed fiscal year, and the dollar and volume amount of products or services sold to each such customer during such period. Schedule 3.11 to the Disclosure Memorandum also lists each supplier of the Company who accounted for 10% or more of the expenses of the Business for materials or services purchased during such period, and the dollar and volume amount of the materials and services purchased from each such supplier during such period.
3.12 | Insider Interests |
(a) Except as set forth in Schedule 3.12(a) to the Disclosure Memorandum, no director, manager, officer, employee, consultant or Affiliate (or any Affiliate of the foregoing) of the Company has any interest (i) in any property used in the Business; or (ii) in any Material Contract.
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(b) Except as set forth in Schedule 3.12(b) to the Disclosure Memorandum, the Company and the directors, managers, officers, employees and consultants of the Company have no interest, either directly or indirectly, in any Person (whether as an employee, officer, manager, partner, member, agent, independent contractor, security holder, creditor, consultant or otherwise), other than ownership of capital stock comprising less than 1% of any publicly held entity, that presently (i) provides any services, produces and/or sells any products or product lines, or engages in any activity that is the same, similar to or competitive with any activity or business in which the Company is now engaged with respect to the Business; (ii) is a supplier, customer or creditor of the Company with respect to the Business; or (iii) has any interest in any asset or property that is necessary for the present conduct of the Business.
3.13 | Claims |
Except as set forth in Schedule 3.13 to the Disclosure Memorandum, as of the date of this Agreement, there are no Claims pending or, to the Companys Knowledge, threatened against the Company relating to the Business before or by any Governmental Body or other Person (including any that would have the effect of preventing, delaying, making illegal or otherwise materially interfering with the Transactions). There are no outstanding or unsatisfied Judgments to which the Company is a party or by which it is bound, in each case, related to the Business. To the Companys Knowledge, there is no proposed Judgment against the Company that would have the effect of preventing, delaying, making illegal or otherwise materially interfering with the Transactions.
3.14 | Labor and Employment Matters |
(a) With respect to the Audiences Division, in the prior three years, the Company (or any predecessor entity, if applicable): (i) has been in material compliance with all then applicable laws and regulations, codes of practice, customs and practices respecting employment and employment practices, including hiring, termination of employment, nondiscrimination in employment, terms and conditions of employment, the Fair Labor Standards Act and its state, local or foreign law equivalents, and occupational safety and health; (ii) has not engaged in any unfair labor practices; (iii) has withheld all amounts required by law or by agreement to be withheld from the wages, salaries, and other payments to its employees, including any common law employees, and is not liable for any material arrears of wages (including commissions, bonuses, overtime, or other compensation) or any Taxes (in each case, other than routine payments to be made in the ordinary course of business), or any penalty for failure to comply with any of the foregoing (or, if any arrears, penalty, or interest were assessed against the Company regarding the foregoing, all of them have been fully satisfied); and (iv) has not incurred any Liability for breach of any contract of service or for fees, or for compensation for wrongful dismissal, unfair dismissal or for failure to comply with any order for the reinstatement or re-engagement of any employee or for any other Liability accruing from the termination of any contract of employment or for services.
(b) The Company has provided to Buyer a true, correct and complete list of (i) the names, titles and current compensation amounts of all Company Employees; (ii) the names and current compensation packages of all currently engaged independent contractors and consultants of the Company relating to the Business; (iii) each employment or consulting Contract to which
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the Company is a party or other Contract to which the Company is a party pursuant to which any Person is entitled to compensation or other payments from the Company in respect of past or future services to be provided to the Company by any such Person; and (iv) each state in which the Company employs any Person or engages the services of any consultant in each case relating to the Business. To the Companys Knowledge, no officer or key employee of the Company engaged in the Business as of the date hereof intends to terminate his or her involvement with the Business.
(c) Except as specifically set forth on Schedule 3.14(c) to the Disclosure Memorandum, the employment of all the Company Employees is terminable at will without any penalty or severance obligation of any kind on the part of the Company or any successor thereto. All sums due for employee compensation and benefits and all vacation time owing to any Company Employee have been duly and adequately accrued on the accounting records of the Company. To the Companys Knowledge, all Company Employees are authorized to engage in employment in the United States in accordance with all applicable law.
(d) To the extent the Company obtains or has obtained any services for the Business through independent contractors, each Person providing such services to the Company has executed a nondisclosure agreement in the form provided to Buyer.
(e) The Company is not liable for any payment to any trust or other fund or to any Governmental Body with respect to unemployment compensation, social security, or other similar benefits or obligations for employees (other than routine payments to be made in the ordinary course of business) with respect to the Audiences Division.
(f) There are no pending claims against the Company under any workers compensation plan or policy or for long-term disability with respect to the Audiences Division. No past employee of the Company relating to the Business has a right to return to work.
(g) With respect to the Audiences Division, there are no Claims pending or, to the Companys Knowledge, threatened, between the Company and any of its current or former employees, or independent contractors, or any trade or labor union, works council or similar body, which controversies have resulted in, or could reasonably be expected to result in, a Claim or other charge or grievance before any Governmental Body, including claims for compensation, severance, benefits, vacation time or pay, pension benefits, damages, or any other claim from any current or former employee or any other Person arising out of the Companys status as employer or purported employer or any workplace practices or policies, whether in the form of claims for discrimination, sexual or other harassment, equal pay, unfair labor practices, grievances, wage and hour violations, wrongful discharge, as a whistleblower, or otherwise.
(h) With respect to the Audiences Division, the Company is not a party to any collective bargaining agreement or other labor union contract, nor, to the Companys Knowledge, are there any activities or proceedings of any labor union or other employee organization to organize any employees of the Company relating to the Business.
(i) With respect to the Audiences Division, to the Companys Knowledge, no employees of the Company are, or in the prior three years have been, in violation of any term of
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any employment contract, noncompetition agreement, or any restrictive covenant with a former employer relating to the right of any such employee to be employed by the Company because of the nature of the business conducted by the Company, work performed by the employee, or use of trade secrets or proprietary information of others.
(j) With respect to the Audiences Division, all releases of employment claims in favor of the Company obtained from employees during the three-year period preceding the Closing Date are effective and binding to release all employment claims for each such employee except for those claims that may not be released as a matter of law.
3.15 | Employee Benefit Plans |
(a) Schedule 3.15(a) to the Disclosure Memorandum contains a complete and accurate list of all Employee Benefit Plans. The Company does not have any agreement, commitment or obligation, to create, enter into or contribute to any additional Employee Benefit Plan, or to modify or amend any existing Employee Benefit Plan.
(b) The Company has delivered to Buyer, with respect to each Employee Benefit Plan (to the extent applicable thereto) true, correct and complete copies of: (i) all documents embodying such Employee Benefit Plan (including all amendments thereto and all trust agreements, insurance contracts and other funding vehicles related thereto) or, if such Employee Benefit Plan is not in writing, a written description of such Employee Benefit Plan; (ii) the most recent summary plan description, and all summaries of material modifications related thereto, distributed with respect to such Employee Benefit Plan; (iii) the most recent determination letter issued by the IRS with respect to such Employee Benefit Plan or, if reliance is permitted under applicable IRS guidance, the favorable opinion letter or advisory letter of the master and prototype or volume submitter plan sponsor of such Employee Benefit Plan; (iv) all material correspondence to or from a Governmental Body within the preceding five years relating to such Employee Benefit Plan; and (v) all coverage, nondiscrimination, top heavy and Code Section 415 tests performed with respect to such Employee Benefit Plan for the three most recently completed plan years.
(c) With respect to each Employee Benefit Plan: (i) such Employee Benefit Plan is, and at all times since inception has been, established, maintained, administered, operated and funded in all material respects in accordance with its terms and in compliance with all applicable laws, including the Code and ERISA; (ii) the Company and each other Person (including each fiduciary) has, at all times, properly performed all of its duties and obligations (whether arising by operation of law, by contract or otherwise) under or with respect to such Employee Benefit Plan, including all fiduciary, reporting, disclosure, and notification duties and obligations; (iii) no transaction or event has occurred or, to the Companys Knowledge, is threatened or about to occur (including any of the Transactions) that constitutes or could constitute a prohibited transaction under ERISA Section 406 or 407 or under Code Section 4975 for which an exemption is not available; (iv) all contributions, premiums and other payments due or required to be paid to (or with respect to) such Employee Benefit Plan have been paid on or before their respective due dates and within the applicable time period prescribed by ERISA, if any, or, if not yet due, have been accrued as a liability in the Financial Statements; and (v) the Company has not incurred, and there exists no condition or set of circumstances in connection with which the
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Company or Buyer could incur, directly or indirectly, any Liability or expense under ERISA, the Code or any other applicable law, or pursuant to any indemnification or similar agreement with respect to such Employee Benefit Plan.
(d) Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code is so qualified and its related trust or group annuity contract is exempt from taxation under Section 501(a) of the Code. Each such Employee Benefit Plan (i) is the subject of an unrevoked favorable determination letter from the IRS with respect to such Employee Benefit Plans qualified status under the Code, which determination letter covers all law changes for which such a determination letter may be sought; (ii) has a timely filed request for such a letter pending with the IRS or has remaining a period of time under the Code or applicable Treasury Regulations or IRS pronouncements in which to request, and make any amendments necessary to obtain, such a letter from the IRS; or (iii) is a prototype or volume submitter plan entitled, under applicable IRS guidance, to rely on the favorable opinion or advisory letter issued by the IRS to the sponsor of such prototype or volume submitter plan. Nothing has occurred, or could reasonably be expected to occur, that could adversely affect the qualification or exemption of any such Employee Benefit Plan or its related trust or group annuity contract or require the filing of a submission under the IRSs employee plans compliance resolution system or the taking of any corrective action pursuant to such system in order to maintain the qualified status of such Employee Benefit Plan.
(e) There are no litigation or claims (other than routine claims for benefits) pending or, to the Companys Knowledge, threatened with respect to (or against the assets of) any Employee Benefit Plan, nor is there a basis for any such litigation or claim. No Employee Benefit Plan is currently under investigation, audit or review, directly or indirectly, by any Governmental Body, and, to the Companys Knowledge, no such action is contemplated or under consideration.
(f) The Company does not sponsor, maintain or contribute to, nor has it ever sponsored, maintained or contributed to (or been obligated to sponsor, maintain or contribute to), and no current or former employee of the Company has ever participated in (while providing services to, or with respect to, the Business): (i) a multiemployer plan, as defined in ERISA Section 3(37) or 4001(a)(3); (ii) a multiple employer plan within the meaning of ERISA Section 4063 or 4064 or Code Section 413; (iii) an employee benefit plan that is subject to ERISA Section 302, Title IV of ERISA or Code Section 412; or (iv) a multiple employer welfare arrangement, as defined in ERISA Section 3(40).
(g) Each Employee Benefit Plan that is subject to COBRA has been administered, at all times since inception, in compliance with such requirements. None of the Employee Benefit Plans provides severance, life insurance, medical or other welfare benefits (within the meaning of Section 3(1) of ERISA) to any current or former employee, officer, director or manager of the Company after his or her retirement or other termination of employment or service, and the Company has never represented, promised or contracted (whether in written or oral form) to any such employee or former employee, officer, director or manager that such benefits would be provided, except to the extent required by COBRA or any similar state law. The Company and the selling group (as defined in Treasury Regulation Section 54.4980B-9, Q&A-3(a)) of which it
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is a part (the Selling Group) will continue to sponsor and maintain group medical, dental and vision plans after the Closing, which plans will not be terminated in connection with the transactions contemplated in or by this Agreement (within the meaning of Treasury Regulation Section 54.4980B-9, Q&A-8(c)).
(h) Each Employee Benefit Plan that provides deferred compensation subject to Section 409A of the Code satisfies in form and operation the requirements of Sections 409A(a)(2), 409A(a)(3) and 409A(a)(4) of the Code and the guidance thereunder (and has satisfied such requirements for the entire period during which Section 409A of the Code has applied to such Employee Benefit Plan). None of the Transactions will constitute or result in a violation of Section 409A(a)(2), 409A(a)(3) or 409A(a)(4) of the Code (or otherwise violate Section 409A of the Code).
(i) Except as set forth on Schedule 3.15(i) to the Disclosure Memorandum, neither the execution and delivery of this Agreement nor the completion of the Transactions (either alone or upon the occurrence of any additional or subsequent event(s)) will (i) entitle any individual to severance pay, unemployment compensation or any other payment from the Company, an ERISA Affiliate, Buyer or any Employee Benefit Plan; (ii) otherwise increase the amount of compensation due to any individual or forgive indebtedness owed by any individual; (iii) result in any benefit or right becoming established or increased, or accelerate the time of payment or vesting of any benefit, under any Employee Benefit Plan; (iv) require the Company, any ERISA Affiliate or Buyer or any of their respective affiliates to transfer or set aside any assets to fund or otherwise provide for any benefits for any individual; or (v) impair in any way the rights of the Company under any Employee Benefit Plan.
3.16 | Intellectual Property |
(a) Schedule 3.16(a) to the Disclosure Memorandum sets forth a complete and correct list, as of the date of this Agreement, of all: (i) Registered IP used in the Business, reflecting dates of filing and dates of issuance, if applicable, and as applicable, all upcoming due dates and filing deadlines as of the Closing Date up to and including the date that is six months after the date hereof; (ii) unregistered trade names, trademarks and service marks that are used in the Business to promote the Business; and (iii) any other Company IP material to the conduct of the Business. All Registered IP is in full force and effect; is valid and subsisting; and has been prosecuted in compliance with all applicable rules, policies and procedures of the applicable Governmental Bodies. There is no pending or, to the Companys Knowledge, threatened Claim alleging any defect in or invalidity, misuse or unenforceability of, or challenging the ownership or use of or the Companys rights with respect to, any of the Owned IP; and, to the Companys Knowledge, there is no basis for any such Claim. None of the Owned IP is subject to any Judgment.
(b) The Company solely and exclusively owns all right, title and interest in and to the Owned IP. All Owned IP is free and clear of all Encumbrances (with the exception of Outbound Licenses and Permitted Encumbrances). The Company lawfully owns, or otherwise has sufficient rights to all Company IP for the conduct of the Business as currently conducted. The Company IP constitutes all the IP Rights that are required to conduct the Business in the manner in which it is currently being conducted, except as would not reasonably be expected to result in
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a Company Material Adverse Effect. All Owned IP, to the extent included as a Transferred Asset hereunder, is fully transferable, alienable and licensable by the Company without restriction and without payment of any kind to any third party and without consent of any third party.
(c) Except as set forth on Schedule 3.16(c) to the Disclosure Memorandum, the execution of the Transaction Documents and the consummation of the Transactions: (i) will transfer all of the Company IP included in the Transferred Assets to Buyer; and (ii) will not alter or result in the loss or impairment of any of the Company IP, or give rise to any right of any Person to terminate any rights under any License or exercise any new or additional rights under any Company IP. Except as set forth on Schedule 3.16(c) to the Disclosure Memorandum, neither the execution of this Agreement nor the consummation of the Transactions will cause or result in Buyer, the Company, or any of their respective subsidiaries or affiliates (x) granting to any third party any right to or with respect to any IP Rights; (y) being bound by, or subject to, any non-compete or other material restriction on the operation or scope of their respective businesses; or (z) being obligated to pay any royalties or other fees or consideration in excess of those payable by the Company in the absence of this Agreement and the transactions contemplated hereby.
(d) To the Companys Knowledge, no Person is infringing, misappropriating or otherwise violating any Owned IP included in the Transferred Assets, or has previously done so.
(e) The Owned IP included in the Transferred Assets and the conduct of the Business as currently conducted do not violate, infringe (directly, contributorily, by inducement, or otherwise) misappropriate any IP Rights or other rights of any Person (and have not previously done so). The Company has not received written notice of any, and to the Companys Knowledge, there is no pending or threatened Claim or an offer of a license involving any Owned IP or the conduct of the Business or alleging that any of the foregoing infringes, misappropriates, violates with any IP Rights or other rights of any Person.
(f) Except for Outbound Licenses set forth on Schedule 3.16(f), the Company has no options, licenses or agreements of any kind relating to the Owned IP by which the Company is bound or to which it is a party.
(g) Except as set forth on Schedule 3.16(g) to the Disclosure Memorandum, the Company is not obligated to pay any royalties or other payments to third parties with respect to the license or use of any Company IP.
(h) No funding, facilities or personnel of any educational institution or Governmental Body were used, directly or indirectly, to develop or create, in whole or in part, any Owned IP. The Company is not and has never been a member or promoter of, or a contributor to, any industry standards body or similar organization that could compel the Company to grant or offer to any third party any license or right to any Company IP included in the Transferred Assets.
(i) The Company has: (i) taken all reasonable measures to protect and preserve its rights in the Owned IP and the confidentiality of all Trade Secrets owned or held by the Company in connection with the Business; and (ii) only disclosed any such Trade Secrets
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pursuant to the terms of a written agreement or other obligation that requires the Person receiving such Trade Secrets to reasonably protect and not disclose such Trade Secrets. To the Companys Knowledge, neither the Company nor any of its officers, employees, agents or contractors has done, or failed to do, any act or thing which may, prejudice the validity or enforceability of any of the Company IP. The Company has not (y) transferred full or partial ownership of, or granted any exclusive license to any third Person with respect to any Owned IP or (z) permitted the rights of the Company in any Owned IP to enter into the public domain.
(j) Except as set forth on Schedule 3.16(j) of the Disclosure Memorandum, each current or former officer and employee of the Company and each current or former consultant to the Company who is or has been involved in the development (alone or with others) of any Owned IP or has had access to Trade Secrets owned or held by the Company in connection with the Business has executed and delivered to the Company a written and enforceable Contract or was under a binding obligation or by operation of law that: (i) assigns to the Company, without any obligation of payment, all right, title and interest in and to any such IP Rights, and (ii) reasonably protects such Trade Secrets. To the Companys Knowledge, no such officer, employee or consultant is in violation thereof.
(k) Schedule 3.16(k) to the Disclosure Memorandum sets forth a complete and correct list of all (i) Inbound Licenses material to the Business, other than any Off-the-Shelf Software Agreement; and (ii) Outbound Licenses. To the Companys Knowledge, all such Licenses are valid, binding and enforceable on all parties thereto; and, to the Companys Knowledge, there exists no event or condition that violates or breaches or otherwise constitutes (with or without due notice or lapse of time or both) a default by any party thereunder.
(l) To the Companys Knowledge, the execution of the Transaction Documents and the completion of the Transactions do not violate any Company privacy policy or applicable laws relating to the use, dissemination, or transfer of any PII.
(m) No current or former director, officer, employee, agent or distributor of the Company or any of its predecessors in interest will, after the completion of the Transactions, own or retain any rights in, to, or under any of the Owned IP included in the Transferred Assets.
(n) Schedule 3.16(n) to the Disclosure Memorandum sets forth all Software owned by the Company and included in the Transferred Assets.
(o) No Person (other than the Company) has an interest or right in or to any improvements, modifications, enhancements, customization or derivatives of any Owned IP that are part of the Transferred Assets.
(p) To the Companys Knowledge, except as set forth on Schedule 3.16(p) to the Disclosure Memorandum, there are no Critical Problems with any service offering currently provided by the Company with respect to the Business. For the purposes of the foregoing, Critical Problem means a problem, defect, malfunction, nonconformity or error that has been (or should reasonably be) assigned by the Company the most critical level of error for the Companys internal tracking and reporting systems, in a manner consistent with the Companys current business practices.
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(q) The computer, information technology and data processing systems, facilities, and services included in the Transferred Assets used by the Company in connection with the Business, including all Software, hardware, networks, communications facilities, platforms and related systems and services used or planned to be used by the Company in connection with the Business (collectively, the Systems), are reasonably sufficient for the existing needs of the Business. The Systems are in good working condition, subject to reasonable wear and tear, to effectively perform all computing, information technology, and data processing operations necessary for the operation of the Business in the manner it is currently being conducted and as currently proposed to be conducted. All Systems, other than Software that is duly and validly licensed to the Company, are owned and operated by and are under the control of the Company.
(r) To the Companys Knowledge, the Software that is part of the Owned IP used by the Company in connection with the Business and which is included in the Transferred Assets is substantially free of any material defects, bugs and errors, and does not contain or make available any disabling codes or instructions, spyware, Trojan horses, worms, viruses or other software routines that would have permit or cause unauthorized access to, or disruption, impairment, disablement, or destruction of, Software, data, or other materials (Contaminants). The Company has at all times employed commercially reasonable best practices and safeguards to ensure that the Systems are substantially free from Contaminants.
(s) During the 12-month period ending on the date hereof, except as set forth on Schedule 3.16(s) to the Disclosure Memorandum, there has been no failure, breakdown or continued substandard performance of any Systems that has caused a material disruption or interruption in or to any customers use of the Systems or the operation of the Business, except as would not reasonably be expected to result in a Company Material Adverse Effect. The Company makes back-up copies of all customer data and any other data critical to the conduct of the Business in real time and conducts periodic tests to ensure the effectiveness of such back-up systems.
3.17 | Corporate Books and Records |
The Company has furnished to Buyer accurate and complete copies of its (a) governing documents and (b) minute books solely to the extent such minute books contain documents or resolutions related to the Business. Such books and records reflect, in all material respects, all meetings of the Companys board of directors, and the minutes or written consents contained therein accurately reflect the events of, and actions taken, at such meetings or by such written consents, in each case, in all material respects.
3.18 | Compliance with Laws |
Except as would not reasonably be expected to prevent or prohibit the Company from performing its obligations under, and completing the transactions contemplated by, the Transaction Documents, the Company is, and has been at all times during the prior three years, in compliance in all material respects with all applicable federal, state, local, and foreign statutes, laws, ordinances, rules, Judgments, and regulations of any Governmental Body applicable to the Business. The Company has not received any written notice of any alleged violation of any of the matters raised in the immediately preceding sentence.
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3.19 | Insurance |
The Company is insured pursuant to insurance policies maintained by the WPP Group in the United States for the benefit of the WPP Groups companies in the United States. Such insurance policies include those that are of a type and amount that are customarily maintained by companies in the United States such as the Company with respect to the Business, including all such policies as are required by applicable law. Each such insurance policy is legal, valid, binding, enforceable and in full force and effect. As of the date of this Agreement, there is no claim pending in respect of the Business under any such insurance policy.
3.20 | Title to Transferred Assets |
(a) The Company has good and marketable title, free and clear of all Encumbrances (other than Permitted Encumbrances) to all of the Transferred Assets (other than the Inbound Licenses) and all rights of the Company under the Assumed Contracts, all of which are reflected on the Financial Statements to the extent required by GAAP.
(b) The Company has not made any sale, license or assignment that would conflict with the sale and assignment of its rights in and to the Transferred Assets to Buyer as contemplated by this Agreement. The Transferred Assets, together with the rights licensed to Buyer under any of the other Transaction Documents, are sufficient to permit Buyer to conduct the Business.
3.21 | Environmental Matters |
(a) Except as set forth on Schedule 3.21 to the Disclosure Memorandum, to the Companys Knowledge, the Companys operation of the Business and its use of the Real Property are, and at all times have been, in compliance in all material respects with all Environmental Laws, which compliance includes the possession by the Company of all Permits required under all Environmental Laws, and compliance with the terms and conditions thereof. Since January 1, 2011, the Company has not received any written communication from a Governmental Body that alleges the Company is not in such compliance. All Permits, if any, currently held by the Company pursuant to all Environmental Laws and relevant to the Business have been made available to Buyer.
(b) There is no Environmental Claim related to the Business, the Transferred Assets, the Assumed Liabilities or any of the Real Property pending or, to the Companys Knowledge, threatened against the Company or against any Person whose Liability for any Environmental Claim the Company has retained or assumed either contractually or by operation of law.
(c) To the Companys Knowledge, there are no past or present actions, activities, facts, circumstances, use, conditions, events or incidents relating to the Business, the Transferred Assets, the Assumed Liabilities or any of the Real Property (including the importing, manufacturing, processing, distribution, use, treatment, storage, transporting, exporting, handling, release, emission, discharge, presence or disposal of any Hazardous Materials) that could reasonably form the basis of any Environmental Claim against the Company or against any Person whose Liability for any Environmental Claim the Company has retained or assumed either contractually or by operation of law, or otherwise result in any costs or Liabilities under any Environmental Laws.
(d) Except for use by the Company in the ordinary course of business in compliance with all applicable Environmental Laws, to the Companys Knowledge, the Transferred Assets and properties currently leased by the Company, relating to the Business, are not used by the Company or any Person acting on the Companys behalf or any other Person, for the treatment, storage or disposal of Hazardous Materials.
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3.22 | Permits |
All Permits required by applicable law to conduct the Business including, without limitation, all Permits that are necessary under applicable Environmental Laws, have been obtained and are in full force and effect, and the Company is complying with such Permits in all material respects. Except as set forth on Schedules 3.21 and 3.22 to the Disclosure Memorandum, there are no material Permits that are required for the ownership or operation of the Transferred Assets or the conduct of the Business as currently conducted by the Company. Since January 1, 2011, the Company has not received any written notice from any Governmental Body of any alleged violation (whether past or present and whether remedied or not) of, nor any written threat of the suspension, revocation, modification, invalidity or limitation of, any such Permit.
3.23 | Absence of Questionable Payments |
The Company has complied in all material respects with the provisions of the U.S. Foreign Corrupt Practices Act of 1977, as amended, and the provisions of any anti-corruption laws of each jurisdiction in which the Company or any Representative of the Company is conducting or has conducted business. To the Companys Knowledge, neither the Company nor any Representative of the Company at the direction of or on behalf of the Company has offered or given anything of value to: (a) any Foreign Official, any foreign political party or official thereof, or any candidate for foreign political office; or (b) any other Person, in any such case while knowing, or having reason to know, that all or a portion of such money or thing of value may be offered, given or promised, directly or indirectly, to any Foreign Official, any foreign political party or official thereof, or candidate for foreign political office for the purpose of any of the following: (i) influencing any action or decision of such Person, in its, his or her official capacity, including a decision to fail to perform its, his or her official function; (ii) inducing such Person to use its, his or her influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality to assist the Company in obtaining or retaining business for or with, or directing business to, any Person or to secure an improper advantage; or (iii) where such payment would constitute a bribe, kickback or illegal or improper payment to assist the Company in obtaining or retaining business for, or with, or directing business to, any Person or in securing any improper advantage.
3.24 | Accounts and Other Receivables |
All accounts receivable of the Business and included in the Transferred Assets represent bona fide transactions made in the ordinary course of business of the Company. The Company
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has delivered to Buyer an aging report with respect to all accounts receivable of the Business existing as of the date that is two Business Days immediately preceding the date of this Agreement.
3.25 | Brokers or Finders |
The Company does not and will not have, directly or indirectly, any Liability for brokerage or finders fees or any similar fee or commission in connection with this Agreement or the Transactions.
3.26 | Common Stock of Buyer |
(a) The Company understands that the shares of Stock Consideration are restricted securities and have not been registered under the Securities Act or any applicable state securities law and (i) the Company is acquiring such Stock Consideration as principal for its own account and not with a view to or for distributing or reselling such Stock Consideration or any part thereof in violation of the Securities Act or any applicable state securities law, (ii) has no present intention of distributing any of such Stock Consideration in violation of the Securities Act or any applicable state securities law and (iii) has no direct or indirect arrangement or understandings with any other persons to distribute, or regarding the distribution of, such Stock Consideration (this representation and warranty not limiting the Companys right to sell such Stock Consideration pursuant to a registration statement or otherwise in compliance with applicable federal and state securities laws, and not in any way a representation or warranty by the Company to hold such Stock Consideration for any period of time) in violation of the Securities Act or any applicable state securities law; provided, however, that the Company may sell or transfer the Stock Consideration to WPP Luxembourg or an Affiliate thereof.
(b) When the Company acquires such Stock Consideration it will be, and at the date hereof it is, an accredited investor as defined in Rule 501(a) under the Securities Act.
(c) The Company, either alone or together with its Representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the acquisition of such Stock Consideration, and has so evaluated the merits and risks of such acquisition. The Company is able to bear the economic risk of the acquisition of such Stock Consideration and, at the present time, is able to afford a complete loss in value of such Stock Consideration.
(d) The Company understands that the Stock Consideration is being issued to it in reliance upon specific exemptions from, or non-application of, the registration requirements of United States federal and state securities laws and that Buyer is relying upon the truth and accuracy of, and the Companys compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Company set forth herein in order to determine the availability of such exemptions and the eligibility of the Company to acquire the Stock Consideration.
(e) The Company acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of
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Buyer concerning the terms and conditions of the issuance of the Stock Consideration and the merits and risks of acquiring the Stock Consideration; (ii) access to information about Buyer and its financial condition, results of operations, businesses, properties, management and prospects sufficient to enable it to evaluate its acquisition of the Stock Consideration, including, without limitation, the SEC Reports, and the Company has had the opportunity to review the SEC Reports, including the Risk Factors included in the SEC Reports; and (iii) the opportunity to obtain such additional information that Buyer possesses or can acquire without unreasonable effort or unreasonable expense that is necessary to make an informed decision with respect to its acquisition of the Stock Consideration.
(f) The Company acknowledges and understands that its acquisition of the Stock Consideration involves a significant degree of risk, including, without limitation, (i) an investment in Buyer is speculative, and only a Person who can afford the loss of its entire investment should consider investing in Buyer and acquiring the Stock Consideration; (ii) in the event of a disposition of the Stock Consideration, the Company could sustain the loss of the entire value of its investment; and (vi) Buyer has not paid any dividends on its Common Stock since inception and does not anticipate the payment of dividends in the foreseeable future. Such risks are more fully set forth in the SEC Reports.
(g) The Company has, in connection with the Companys decision to acquire the Stock Consideration, not relied upon any representations or other information (whether oral or written) other than as set forth in the representations and warranties of Buyer contained in the Transaction Documents, and the Company has, with respect to all matters relating to this Agreement and the issuance of the Stock Consideration, relied solely upon the advice of the Companys own counsel and has not relied upon or consulted counsel to Buyer.
(h) The Company understands that no Governmental Body has passed upon or made any recommendation or endorsement of the Stock Consideration or the issuance or acquisition thereof.
(i) The Company is not acquiring the Stock Consideration as a result of any advertisement, article, notice or other communication regarding the Stock Consideration published in any newspaper, magazine, website or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
(j) Other than the transactions contemplated hereunder, the Company has not directly or indirectly, nor has any Person acting on behalf of, or pursuant to, any understanding with the Company, executed any disposition, including short sales (as such term is defined in Rule 200 of Regulation SHO under the Exchange Act), in the securities of Buyer during the period commencing from the time that the Company first received a term sheet (written or oral) from Buyer or any other Person setting forth the material terms of the transaction contemplated hereunder until the date hereof. Other than to Affiliates of the Company and to Representatives of the Company and such Affiliates, the Company has maintained the confidentiality of all disclosures made to it in connection with the transactions contemplated hereunder (including the existence and terms of such transactions)
(k) As of immediately prior to the Closing, neither the Company nor any of its Affiliates Beneficially Own any Buyer Securities.
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3.27 | No Other Representations or Warranties |
Except for the representations and warranties contained in this Article III (including the related portions of the Disclosure Memorandum), neither the Company nor any other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Company, including any representation or warranty as to the accuracy or completeness of any information regarding the Business, the Audiences Division and the Transferred Assets furnished or made available to Buyer or its Representatives and any information or material delivered to Buyer or made available to Buyer or its Representatives in any electronic data room, management presentations or in any other form in expectation of the Transactions or as to the future revenue, profitability or success of the Business, or any representation or warranty arising from statute or otherwise in law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
In order to induce the Company to enter into and perform this Agreement, Buyer represents and warrants to the Company as follows:
4.1 | Organization and Good Standing |
Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Oregon.
4.2 | Authority and Enforceability |
Buyer has full power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder. All action on the part of Buyer and its directors, officers and stockholders necessary for the authorization, execution, delivery and performance by Buyer of this Agreement and the other applicable Transaction Documents to which Buyer is a party has been taken. This Agreement is the valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, and the Transaction Documents to which Buyer is a party, when executed and delivered by Buyer, will constitute valid and binding obligations of Buyer, enforceable against Buyer in accordance with their respective terms, except, in each such case, as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws relating to or limiting creditors rights generally and by equitable principles.
4.3 | No Approvals; No Conflicts |
The execution and delivery by Buyer of this Agreement and the other Transaction Documents to which it is a party do not, and the performance by Buyer of its obligations under this Agreement and the other Transaction Documents to which it is a party and the consummation of the Transactions will not: (i) subject to the receipt of any required consent,
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approval or authorization of any Governmental Body or the termination or expiration of any waiting period under applicable law constitute a violation (with or without the giving of notice or lapse of time, or both) of any law or any Judgment applicable to Buyer; (ii) violate, conflict with, result in any breach of, or result in a default (with or without the giving of notice or lapse of time, or both) under, or create in any Person the right to accelerate, terminate, modify or cancel (or automatically do any of the foregoing) any Contract to which Buyer is a party or by which it is bound or to which any of its assets are subject; (iii) conflict with or result in a breach of or constitute a default under any provision of its governing documents, except in the case of clause (ii) above to the extent such violations, conflicts, breaches, defaults or other matters would not reasonably be expected to prevent or prohibit Buyer from performing its obligations under, and completing the transactions contemplated by, the Transaction Documents.
4.4 | Issuance of the Stock Consideration |
The shares of Common Stock issued or to be issued in respect of the Stock Consideration are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Encumbrances. Immediately following the issuance of the Common Stock that constitutes the Stock Consideration, such Common Stock will comprise at least 11% of the issued and outstanding capital stock of Buyer.
4.5 | Capitalization |
The authorized capital stock of Buyer consists of: (i) 75,000,000 shares of Common Stock, of which 12,353,122 shares are issued and outstanding; and; (ii) 10,000,000 shares of Preferred Stock, $0.001 par value per share, 300,000 shares of which are designated as Series A Junior Participating Preferred Stock, none of which are issued and outstanding. Since October 1, 2014, Buyer has not issued any shares of Common Stock, other than pursuant to Buyers equity based compensation plans and arrangements. All of the issued and outstanding shares of Common Stock of Buyer have been duly authorized and validly issued, are fully paid and non-assessable and have been issued in compliance with applicable federal and state securities laws. None of Buyers outstanding shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights, except as set forth on Schedule 4.5 to the Disclosure Memorandum. Other than pursuant to Buyers equity based compensation plans and arrangements or as set forth in Schedule 4.5 to the Disclosure Memorandum, there are no: outstanding or authorized subscriptions, warrants, options or other rights granted by Buyer to purchase or acquire, or preemptive rights with respect to the issuance or sale of, the capital stock of Buyer, or which obligate or may obligate Buyer to issue any additional shares of its capital stock or any securities convertible into or evidencing the right to subscribe for any shares of its capital stock. Neither the acquisition of the Stock Consideration pursuant to this Agreement nor the acquisition of the Shares (as defined in the Stock Purchase Agreement) under the Stock Purchase Agreement (whether taken together or separately) will give rise to any rights to acquire or receive, or obligate Buyer to issue any additional shares of its capital stock or any securities convertible or exchangeable for its capital stock and no such rights or obligations will arise under the Rights Agreement, dated as of May 18, 2005, between Buyer and Computershare Trust Company, N.A., as the same may be amended, modified or supplemented from time to time.
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4.6 | SEC Reports |
Buyer has filed all required registration statements, prospectuses, reports, schedules, forms, statements and other documents (including exhibits and all other information incorporated by reference) required to be filed by it with the United States Securities and Exchange Commission (the SEC) since January 1, 2011 (the foregoing materials being collectively referred to herein as the SEC Reports) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, or, if amended or supplemented prior to the date of this Agreement, as of the date of such amendment or supplement, each SEC Report complied in all material respects with the requirements of the Securities Act of 1933, as amended (the Securities Act), or the Securities Exchange Act of 1934, as amended (the Exchange Act), as the case may be, and the rules and regulations of the SEC thereunder applicable to such SEC Report.
4.7 | Buyer Financial Statements |
The financial statements of Buyer included in the SEC Reports (the Buyer Financial Statements) comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or, if an amendment with respect to any such document was filed, when such amendment was filed). The Buyer Financial Statements have been prepared in accordance with GAAP, except as may be otherwise specified in the Buyer Financial Statements or the notes thereto, and fairly present in all material respects the financial position of Buyer and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. Since September 30, 2014 (the Buyer Balance Sheet Date): (a) there has been no event, occurrence or development that has or that could reasonably be expected to result in a Buyer Material Adverse Effect; (b) neither Buyer nor any material subsidiary has incurred any Liabilities (contingent or otherwise) other than (x) Liabilities incurred in the ordinary course of business and (y) Liabilities not required to be reflected in the Buyer Financial Statements pursuant to GAAP or required to be disclosed in filings made with the SEC; (c) Buyer has not altered its method of accounting or the identity of its independent registered public accounting firm; and (d) Buyer has not declared or made any payment or distribution of cash or other property to its stockholders or officers or directors (other than in compliance with existing stock option, stock award, stock appreciation or phantom stock plans of Buyer (collectively, Buyer Stock Plans)) with respect to its capital stock, or purchased or redeemed (or made any agreements to purchase or redeem) any shares of its capital stock.
4.8 | Absence of Certain Changes or Events |
Since the Balance Sheet Date and other than repurchases of Common Stock pursuant to the terms of equity awards under Buyer Stock Plans, there has not been (a) any declaration, setting aside or payment of any dividend on, or other distribution (whether in cash, stock or
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property) in respect of, any of Buyers capital stock, or any purchase, redemption or other acquisition by Buyer of any of Buyers capital stock or any other securities of Buyer or any options, warrants, calls or rights to acquire any such shares or other securities except for repurchases from employees following their termination pursuant to the terms of their pre-existing stock option or purchase agreements, or (ii) any split, combination or reclassification of any of Buyers capital stock.
4.9 | Brokers or Finders |
Buyer does not and will not have, directly or indirectly, any Liability for brokerage or finders fee or any similar charges in connection with this Agreement or the Transactions.
4.10 | No Reliance |
Buyer acknowledges and agrees that: (a) other than as expressly set forth in Article III of this Agreement, Buyer has not relied and is not relying on any representation or warranty regarding the subject matter of this Agreement; and (b) neither the Company nor any other Person has made any representation or warranty as to the Company, the Business, the Audiences Division, the Transferred Assets or this Agreement, except as expressly set forth in Article III of this Agreement. Buyer acknowledges that neither the Company nor any of its Affiliates and Representatives shall have or be subject to any liability to Buyer or any other Person resulting from the distribution to Buyer, or Buyers use of, any information, including any information, documents or material made available to Buyer or its Representatives in any electronic data rooms, management presentations or in any other form in expectation of the Transactions, except as expressly set forth in Article III of this Agreement.
ARTICLE V
COVENANTS
5.1 | Closing Efforts |
(a) From and after the date of this Agreement, upon the terms and subject to the conditions of this Agreement, the parties agree to use commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable (subject to any applicable laws) to complete the transactions contemplated hereby as promptly as practicable (including satisfaction, but not waiver, of the closing conditions set forth in Article VI), including: (i) promptly, but in any event within no more than 10 Business Days from the date of this Agreement, to make all filings required under the HSR Act (including such filings to be made with the Federal Trade Commission (the FTC) and the Antitrust Division of the Department of Justice (the DOJ)); (ii) to comply, at the earliest practicable date, with any request for additional information made by the DOJ or the FTC; and (iii) to the extent permitted by law, to cooperate with the other party in connection with such other partys filings under the HSR Act. Notwithstanding anything to the contrary contained in this Agreement, in no event shall Buyer or the Company or any of their respective Affiliates be required to agree to hold separate, divest, license or cause a third party to purchase, assets, capital stock or other equity interests and/or businesses of Buyer or the Company or any of their respective Affiliates in connection with obtaining any approval or other authorization under the HSR Act or any similar law, rule or regulation.
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(b) Without limiting Section 5.1(a) above, but subject to applicable law, rule or regulation, Buyer and the Company will reasonably cooperate and coordinate with each other in connection with the making of all filings required under the HSR Act, including: (i) furnishing all information required for such filing to be made pursuant to any applicable law in connection with the Transactions; and (ii) keeping the other party informed in all material respects of any material communication received by such party from, or given by such party to, the FTC, DOJ or other Governmental Body relating to the Transactions.
5.2 | Consents |
The Company will use its commercially reasonable efforts, and Buyer will use its commercially reasonable efforts to cooperate with the Company, to obtain the third-party consents listed on Schedule 5.2 to the Disclosure Memorandum without being obligated to make any payments to third parties in connection therewith or, if such payment is required, the parties agree to use their respective commercially reasonable efforts to minimize the amount thereof; provided, however, that the Company shall not be required to make any payment to any third party in order to obtain any such consent.
5.3 | Operation of the Business |
Except as contemplated by this Agreement, with the written consent of Buyer (such consent not to be unreasonably withheld, delayed or conditioned) or as required by law, rule or regulation, during the period from the date of this Agreement to the Closing, the Company will operate the Business in the ordinary course and in compliance with all applicable laws and regulations and, to the extent consistent therewith, use its commercially reasonable efforts to preserve intact the current organization of the Business, keep the physical assets of the Business in good working condition, keep available the services of the Businesss current officers and key employees and preserve the current business relationships of the Business with its customers and suppliers. Without limiting the generality of the foregoing, prior to the Closing, the Company will not, without the written consent of Buyer (such consent not to be unreasonably withheld, delayed or conditioned), take any of the actions set forth in Section 3.7(d).
5.4 | Access to Information |
From the date of this Agreement until the Closing, the Company shall afford Buyers Representatives reasonable access, during normal business hours, and upon reasonable advance written notice, to properties, books, contracts, documents, insurance policies, records and personnel of or with respect to the Business as Buyer may from time to time reasonably request as is necessary to consummate the transactions contemplated by this Agreement; provided, however, that nothing herein will require the Company to disclose any information to Buyer if such disclosure would, in the reasonable judgment of the Company: (a) cause significant competitive harm to the Company or the Business if the Transactions are not consummated; (b) unreasonably interfere with the Business and operations of the Company; (c) violate applicable law, rules or regulations or the provisions of any Contract to which the Company is
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party or by which its assets are bound; or (d) jeopardize any attorney-client or other legal privilege. Buyer agrees that it will not, and will cause its Representatives not to, use any information obtained pursuant to this Section 5.4 for any competitive or other purpose unrelated to the consummation of the Transactions pursuant to this Agreement. Without limiting the foregoing, Buyer shall hold all such information pursuant to the terms of the NDA, and Buyer and its Representatives shall not be permitted to unreasonably interfere with the Company or the conduct of the Business.
5.5 | Further Assurances |
Each of the parties hereto shall execute such further documents, and perform such further acts, as may be reasonably necessary to consummate the transactions contemplated hereby, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the Transactions.
5.6 | Confidentiality |
WPP 2005 Limited and Buyer entered into that certain Confidentiality Agreement dated December 30, 2013 (the NDA). The parties agree that the NDA shall continue in full force and effect and will apply to all Confidential Information (as defined in the NDA) exchanged in connection with this Agreement and the Transactions.
5.7 | Tax Matters |
(a) Any excise and property Taxes (other than Transfer Taxes, if any, arising out of the Transactions) pertaining to the Transferred Assets and payable during the tax year in which the Closing occurs will be prorated on the basis of the number of days of the relevant tax year or period that have elapsed through the Closing Date, determined without reference to any change of ownership occasioned by the completion of the Transactions. In the event Taxes are prorated as set forth in the preceding sentence, the Company will be responsible for that portion of such amounts relating to the period on or prior to the Closing Date and Buyer will be responsible for that portion of such amounts relating to the period after the Closing Date. The Company is responsible for any excise and property Taxes pertaining to the Transferred Assets and payable during tax years before the tax year in which the Closing occurs.
(b) Buyer and the Company will, and will cause their respective affiliates to, provide each other with such cooperation and information as either of them reasonably may request of the other in connection with the filing of any Return, amended return or claim for refund, the determination of any Liability for Taxes or a right to refund of Taxes or preparation for litigation or investigation of claims or in connection with any Tax Contest, in each case relating to the Transferred Assets or the Business. The Company will retain all Returns, schedules and work papers and all material records or other documents relating to Tax matters for the taxable year of the Company ending after the Closing Date and for all previous years, until the expiration of the statute of limitations of the taxable years to which such Returns and other documents relate. Any information obtained under this Section 5.7(b) will be kept confidential, except as may be otherwise necessary in connection with the filing of Returns or claims for refund or in conducting a Tax Contest.
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(c) Buyer and the Company agree to adopt and comply with the standard procedure set forth in Sections 4.01 through 4.04 of Revenue Procedure 2004-53.
(d) Any payment made in accordance with Article VII will be treated for Tax purposes as an adjustment to the consideration paid by Buyer under this Agreement, unless otherwise required under applicable law.
5.8 | Customer and Supplier Inquiries; Accounts Receivable |
(a) From and after the Closing, the Company will refer to Buyer all customer, supplier, or other inquiries or correspondence to the extent relating to the Transferred Assets or the Business.
(b) The Company will promptly remit to Buyer all payments and invoices received after the Closing Date that relate to the Transferred Assets, the Assumed Liabilities or the Business, and Buyer will promptly remit to the Company all payments and invoices received after the Closing Date that relate to the Excluded Assets or the Liabilities of the Company other than Assumed Liabilities.
5.9 | Press Releases and Public Announcements |
Except as otherwise required by applicable law or any securities exchange or similar body, (a) the Company and Buyer will not, and, the Company and Buyer will not permit any of its officers, employees, directors, managers, Affiliates, Representatives or advisors to, issue or cause the publication of any press release or make any other public announcement, including any tombstone advertisement, or any announcement to employees, customers or suppliers with respect to the Transactions, without the prior written consent of (i) in the case of the Company, Buyer and (ii) in the case of Buyer, the Company; and (b) the Company and Buyer will issue a joint press release after the Closing, and each the Company on the one hand, and Buyer on the other hand, will cooperate with the other in the development and distribution of such press release.
5.10 | No Bonuses |
The Company will not pay any transaction-related bonuses or payments, or any severance payments in excess of those disclosed in the Disclosure Memorandum, to any Company Employee or any independent contractor or consultant engaged by the Audiences Division for the Business.
5.11 | Employees |
(a) As promptly as reasonably practicable after execution of this Agreement by the parties hereto, the Company will provide Buyer with access to all of its employees that are engaged in the Business and identified on Schedule 5.11(a) to the Disclosure Memorandum, and, at the request of Buyer, use all commercially reasonable efforts to facilitate meetings between Representatives of Buyer and such employees, for the purpose of providing Buyer with a reasonable opportunity to interview and evaluate such employees in order to permit Buyer to determine whether it will offer employment to any of such employees.
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(b) Buyer shall enter into employment arrangements with those employees listed on Schedule 5.11(b) to the Disclosure Memorandum on terms acceptable to Buyer, subject to standard benefits, policies, procedures and employment practices of Buyer (any such Company employee who actually commences employment with Buyer being a Transferred Employee). Buyer will not be obligated to employ any particular employee for any particular period of time or on any particular terms or conditions of employment and will have no other Liability to any employees of the Company after Closing.
(c) Immediately prior to the Closing, the Company will terminate all Transferred Employees effective as of the close of business on the Business Day immediately preceding the Closing. Simultaneously with such termination, the Company will pay each such Transferred Employee all accrued wages and salaries, severance, accrued vacation, sick and personal time and all other amounts due from the Company to such employees.
(d) Buyer shall use commercially reasonable efforts to cause the Transferred Employees to receive credit for service with the Company for purposes of eligibility to participate and vesting under any employee benefit plan sponsored or maintained by Buyer for the benefit of the Transferred Employees (each, a Buyer Benefit Plan) and, solely with respect to any vacation policy maintained by Buyer for the benefit of Transferred Employees, for purposes of benefit entitlement; provided, that such service shall not be recognized to the extent that such recognition would result in a duplication of benefits or to the extent that such service was not recognized under the analogous Employee Benefit Plan.
(e) The Company will bear all responsibility for, and related costs associated with, complying with the federal Workers Adjustment and Retraining Notification Act and similar state, local or foreign laws to the extent that the same apply to any employees who do not become Transferred Employees.
(f) Buyer shall provide employee benefits (other than equity-based compensation arrangements, incentive compensation, and severance benefits) to each Transferred Employee that are no less favorable in the aggregate than the employee benefits provided to similarly situated employees of Buyer. With respect to each Buyer Benefit Plan that is a group health plan, Buyer shall (i) offer health and welfare coverage to each Transferred Employee (and beneficiaries thereof) effective as of the Closing Date as Buyer offers its employees as of the Closing Date, and (ii) use commercially reasonable efforts to cause such plans to waive all pre-existing conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to each Transferred Employee (and eligible dependents thereof) thereunder, other than conditions, exclusions or waiting periods that are already in effect with respect to any such Transferred Employee (or any spouse or dependent thereof) under the Transferred Employees previous coverage that have not been satisfied as of the Closing Date.
(g) As soon as administratively practicable after the Closing Date, Buyer shall permit each Transferred Employee to make a direct rollover (in the form of cash and, to the extent allowed by the service providers of Buyer, notes associated with plan loans not then in default)
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of distributions from The Savings Investment Plan to a qualified defined contribution plan sponsored by Buyer or one of its Affiliates after the Closing Date, provided such distributions are eligible rollover distributions as defined in Section 402(c)(4) of the Code.
(h) Notwithstanding the foregoing, nothing contained in this Agreement or any other Transaction Document will (i) confer upon any employee of the Company, including any Transferred Employee, any representative thereof, or any Governmental Body any rights or remedies of any nature or kind under or by reason of this Agreement, any other Transaction Document or any other document contemplated hereby or thereby, including any right to employment or continued employment or to any benefits that may be provided, directly or indirectly, under any employee benefit plan, policy or arrangement of Buyer, (ii) constitute a limitation on or restriction against the right of Buyer to amend, modify or terminate any such plan, policy or arrangement or the terms or conditions of employment, or (iii) be treated as an amendment or other modification of any such plan, policy or arrangement.
(i) Subject to the Transition Services Agreement, the Company will retain all Liabilities arising from the Companys termination at any time and from time to time of any of its employees, including with respect to Transferred Employees terminated at or before the Closing.
(j) The Company and the Selling Group shall be responsible for providing continuation coverage to the extent required by COBRA to those individuals who are M&A qualified beneficiaries, as defined in Treasury Regulation Section 54.4980B-9, Q&A-4(a), with respect to the transactions contemplated in or by this Agreement (the M&A Qualified Beneficiaries). The Company and the Selling Group further agree and acknowledge that in the event that the Company and the Selling Group cease to provide any group health plan to any employee prior to the expiration of the continuation coverage period for all M&A Qualified Beneficiaries (pursuant to Treasury Regulation Section 54.4980B-9, Q&A-8(c)), then the Company or a member of the Selling Group shall provide Buyer with (i) written notice of such cessation as far in advance of such cessation as is reasonably practicable (and in any event, at least thirty (30) days prior to such cessation), and (ii) all information necessary or appropriate to enable Buyer to offer continuation coverage to the M&A Qualified Beneficiaries if Buyer determines it is legally obligated to do so.
5.12 | Non-Solicitation and Non-Competition |
(a) During the five-year period commencing on the Closing Date, (a) the Company will not, directly or indirectly, hire, or solicit or encourage any Transferred Employee who is then employed by Buyer to leave the employment of Buyer, and (b) Buyer will not, directly or indirectly, hire, or solicit or encourage any employee to leave the employment of the Company, in each case in any market outside the U.S. where television audience measurement (TAM) or RPD services are being offered by the Company or any Affiliate thereof or Buyer. Prior to Buyer entering a market outside the U.S. where the Company or any Affiliate thereof provides RPD services, Buyer agrees to negotiate with the Company as to whether Buyer and the Company or such Affiliate will jointly operate in such market. In the event that an agreement with respect to such negotiation is not reached within 30 days after initial commencement of negotiations, Buyer and the Company will each be allowed to compete with each other with
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respect to the provision of RPD services in such market. Nothing contained herein shall authorize or commit the parties to enter into agreements in violation of the laws governing such market.
(b) From the Closing Date, and for a period of four years thereafter, neither the Company nor any other member of the Kantar Group will engage within the United States in the business of providing television audience viewing measurement services derived from RPD files from digital set top boxes or internet enabled TVs (the Restricted Business) without the prior written consent of Buyer; provided, however, that the foregoing shall:
(i) not apply to any services, business or actions contemplated by this Agreement or any of the other Transaction Documents or the Transactions;
(ii) not be deemed to limit in any respect any business currently engaged in by any member of the WPP Group other than the Kantar Group (including, but not limited to, the WPP Groups media investment management business);
(iii) not prevent any member of the Kantar Group from owning less than 2% of a class of stock of a publicly-held corporation which is traded on a national securities exchange or in the over-the-counter market, so long as such member of the Kantar Group has no any active participation in the business or management of such entity; and
(iv) not apply to any entity, division or other business unit that engages in the Restricted Business that is acquired as part of a larger acquisition by any Affiliate of the Company within the Kantar Group after the date hereof.
5.13 | Post-Closing Cooperation |
After the Closing Date, the Company on the one hand, and Buyer on the other hand, will provide each other with such reasonable assistance (without charge) as may be requested by the other in connection with any Claim or audit of any kind or nature whatsoever or the preparation of any response, demand, inquiry, filing, disclosure or the like relating to the Transferred Assets, the Assumed Liabilities or the Business. Such assistance will include permitting the party requesting assistance to have reasonable access to the employees, books and records of the other party. In furtherance of the foregoing, the Company agrees to cooperate with Buyers reasonable requests in order to allow Buyer to prepare audited financial statements for the Business for each of 2011, 2012 and 2013; provided, however, that Buyer shall be responsible for all costs in connection with the preparation of such audited financial statements, including the costs of any auditors or other consultants or advisors engaged in connection therewith or any other third-party costs.
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ARTICLE VI
CONDITIONS TO CLOSING
6.1 | Conditions to the Obligations of All Parties |
The respective obligations of each party to complete and effect the transactions contemplated by this Agreement will be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived (except as may be prohibited by applicable law), in writing, by agreement of Buyer and the Company:
(a) no temporary restraining order, preliminary or permanent injunction or other Judgment issued by any court of competent jurisdiction or other regulatory restraint or prohibition that makes illegal or otherwise directly prevents the completion of the transactions contemplated by this Agreement will be in effect, nor will any proceeding brought or threatened in writing to be brought by any Governmental Body seeking any of the foregoing be pending, nor will any statute, rule, regulation or Judgment have been enacted, entered or enforced that makes completion of the transactions contemplated by this Agreement illegal; and
(b) the parties will have timely obtained from those Governmental Bodies and other Persons, in each case, that are set forth on Schedule 6.1(b) to the Disclosure Memorandum, such approvals, waivers and consents that are described adjacent to such Persons name and necessary for completion of the transactions contemplated hereby.
6.2 | Additional Conditions to the Obligations of Buyer |
The obligations of Buyer to complete and effect the transactions contemplated hereby will be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived (except as may be prohibited by applicable law), in writing, by Buyer:
(a) Representations, Warranties and Covenants. (i) The representations and warranties of the Company in this Agreement will be true, complete and correct in all material respects as of the date of this Agreement and on and as of the Closing Date (disregarding materiality and Company Material Adverse Effect in any such representations or warranties) as though such representations and warranties were made on and as of such date, except, in each case, (A) for such representations and warranties that speak as of a particular date which representations and warranties will be true, complete and correct in all material respects as of such date and (B) where the failure of such representations and warranties to be so true, complete and correct has not had a Company Material Adverse Effect; and (ii) the Company will have performed and complied in all material respects with all material agreements and covenants contained in this Agreement that are required to be performed and complied with by the Company on or prior to the Closing Date.
(b) Certificates of the Company. Buyer will have received certificates executed by a duly authorized officer of the Company, certifying (i) the fulfillment of the conditions set forth in Section 6.2(a); (ii) that attached thereto is a true, complete and correct copy of the resolutions of the member of the Company authorizing the execution, delivery and performance of this
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Agreement and each other Transaction Document to which the Company is a party and the Transactions; and (iii) that attached are the Companys formation documents as are then in full force and effect.
(c) Bill of Sale. The Company will have delivered to Buyer a duly executed Bill of Sale, Assignment and Assumption Agreement (the Bill of Sale) in the form attached as Exhibit A, transferring the Transferred Assets, including the Assumed Contracts, to Buyer.
(d) Good Standing Certificate. The Company will have delivered to Buyer a certificate of good standing (or equivalent) issued by the Secretary of State of the State of Delaware, dated within five Business Days before the Closing, and stating that the Company is in good standing (or equivalent).
(e) Withholding. The Company will have delivered to Buyer a duly executed Form W-9 from GUSA.
(f) Guarantee. The Company will have delivered to Buyer a Guarantee, substantially in the form of Exhibit B attached hereto, executed by GUSA and WPP Jubilee Limited.
(g) Other Closing Documents. The Company will have delivered to Buyer such other documents as Buyer may reasonably request for the purpose of facilitating the completion of the Transactions.
6.3 | Additional Conditions to the Obligations the Company |
The obligations of the Company to complete and effect the Transactions will be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived (except as may be prohibited by applicable law), in writing, by the Company:
(a) Representations, Warranties and Covenants. (i) The representations and warranties of Buyer in this Agreement will be true, complete and correct (A) as of the date of this Agreement in all respects and (B) on and as of the Closing Date in all material respects (disregarding materiality and Buyer Material Adverse Effect in any such representations or warranties) as though such representations and warranties were made on and as of such date (except for such representations and warranties that speak as of a particular date which representations and warranties need be true, complete and correct only as of such date); and (ii) Buyer will have performed and complied in all material respects with all agreements, covenants, obligations and conditions of this Agreement required to be performed and complied with by Buyer on or prior to the Closing Date.
(b) Certificate of Buyer. The Company will have received a certificate executed by a duly authorized officer of Buyer, in form and substance reasonably satisfactory to the Company, certifying the fulfillment of the conditions set forth in Section 6.3(a).
(c) Bill of Sale. Buyer will have delivered to the Company a duly executed Bill of Sale, assuming the Assumed Liabilities.
(d) Closing Payment. Buyer will have issued to the Company the number of shares of Common Stock equal to the portion of the Stock Consideration due at the Closing, in accordance with Section 2.1.
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ARTICLE VII
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 | Indemnification |
(a) Companys Indemnification Obligations. Subject to the limitations set forth in this Article VII, from and after the Closing Date, the Company will defend, indemnify, and hold Buyer and its Affiliates (collectively, the Buyer Indemnified Parties) harmless from and against, and reimburse Buyer with respect to, any Indemnifiable Amounts (and only Indemnifiable Amounts) that are incurred by Buyer to the extent related to or arising out of, whether or not pursuant to a claim by a third party: (i) any Breach of any representation or warranty of the Company contained in this Agreement or contained in the certificate required to be delivered by the Company to Buyer pursuant to Section 6.2(b) of this Agreement; (ii) the failure, partial or total, of the Company to perform any obligation, agreement or covenant required by this Agreement to be performed by it; or (iii) the Excluded Assets and Excluded Liabilities.
(b) Buyers Indemnification Obligations. Subject to the limitations set forth in this Article VII, from and after the Closing Date, Buyer will defend, indemnify, and hold the Company and its Affiliates (collectively, the Company Indemnified Parties) harmless from and against, and reimburse the Company with respect to, any Indemnifiable Amounts (and only Indemnifiable Amounts) that are incurred by a Company Indemnified Party to the extent related to or arising out of, whether or not pursuant to a claim by a third party: (i) any Breach of any representation or warranty of Buyer contained in this Agreement or contained in the certificate required to be delivered by Buyer to the Company pursuant to Section 6.3(b) of this Agreement; (ii) the failure, partial or total, of Buyer to perform any obligation, agreement or covenant required by this Agreement to be performed by it; or (iii) the Assumed Liabilities.
7.2 | Claims Procedure |
Any party seeking indemnification under this Article VII (the Claiming Party), whether or not the Deductible Basket has been exceeded, will provide prompt written notice to the other party from whom indemnification is sought (the Indemnifying Party) of any claim with respect to which indemnification is sought (the Claim Notice); provided, that failure to give timely a Claim Notice will not limit the indemnification obligations of the Indemnifying Party under this Article VII except to the extent that the Indemnifying Party is materially prejudiced thereby. The Claim Notice will: (a) state that the Claiming Party has determined in good faith that it has a bona fide claim for indemnification pursuant to this Article VII and shall specify the basis for such determination; (b) describe the nature, facts and circumstances upon which such claim for indemnification is based and provide copies of all documents and furnish all such other information relating to such claim (to the extent, in the case of such documents and other information, then possessed by or available to the Claiming Party); and (c) state the claimed Indemnifiable Amount if then ascertainable or, if not then ascertainable, a reasonable, good-faith estimate of the amount thereof.
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7.3 | Third Party Claims |
(a) Whenever an Indemnified Party receives a written notice that a claim, demand, suit, action, arbitration, investigation, inquiry or proceeding has been asserted by a third party, including a subpoena or written request from a Governmental Body, with respect to which the Indemnified Party seeks indemnification under this Article VII (any such claim, demand, suit, action, arbitration, investigation, inquiry or proceeding by a third party being referred to as a Third Party Claim), the Indemnified Party will provide a Claim Notice to the Indemnifying Party.
(b) Upon written notice to the Indemnified Party within 30 days after receipt of the Claim Notice, the Indemnifying Party shall have the right to direct, through counsel of its own choosing, the defense or settlement of any Third Party Claim at its own expense. If the Indemnifying Party elects to direct the defense of any Third Party Claim, the Indemnified Party shall not pay, or permit to be paid, any portion of such Third Party Claim unless the Indemnifying Party consents in writing to such payment or unless a final judgment from which no appeal may be taken by or on behalf of the Indemnifying Party is entered against the Indemnified Party for such liability. The Indemnifying Party shall keep the Indemnified Party timely apprised of the status of such Third Party Claim. The Indemnified Party shall retain the right to employ its own counsel and to participate, at its own expense, in the defense or handling of any Third Party Claim, the defense of which has been assumed by the Indemnifying Party pursuant hereto.
(c) If the Indemnifying Party does not give written notice to the Indemnified Party within 30 days after receipt of the Claim Notice of a Third Party Claim that the Indemnifying Party has elected to assume the defense of such Third Party Claim or if the Indemnifying Party shall fail to defend or, if after commencing or undertaking any such defense, shall fail to prosecute or shall withdraw from such defense, the Indemnified Party shall have the right to undertake the defense or settlement thereof, at the Indemnifying Partys expense. If the Indemnified Party assumes the defense of a Third Party Claim pursuant to the terms of this clause (c), the Indemnified Party shall keep the Indemnifying Party timely apprised of the status of such Third Party Claim and shall not settle such Third Party Claim without the prior written consent of the Indemnifying Party (which shall not be unreasonably delayed, conditioned or withheld). If an Indemnified Party defends or handles such Third Party Claim, the Indemnifying Party shall be entitled to participate in the defense or handling of such Third Party Claim with its own counsel and at its own expense.
7.4 | Survival |
The representations and warranties in this Agreement or in any certificate or other document delivered in accordance with this Agreement will survive for a period of 18 months after the Closing and, upon the expiration of such 18-month period, shall terminate, expire and be of no further force or effect; provided, however, that (a) any claim for indemnification based on fraud will survive the Closing indefinitely; (b) any claim for indemnification based on any
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Breaches of representations and warranties in Sections 3.2 (Authority and Enforceability), 3.3 (Capitalization), 3.8 (Taxes), 3.20(a) (Title to Transferred Assets), 3.21 (Environmental Matters), 3.25 (Brokers or Finders), 4.1 (Authority and Enforceability), 4.4 (Issuance of the Stock Consideration), 4.5 (Capitalization) and 4.9 (Brokers or Finders) (collectively, the Excluded Representations) will survive the Closing until 30 days after the expiration of the applicable statute of limitations of the liability in question; and (c) any claim for indemnification pursuant to which a Claim Notice has been timely given in accordance with Section 7.3 prior to the expiration of the survival period applicable to such claim (as set forth in this Section 7.4) will survive until resolved. The covenants and agreements contained in this Agreement will survive the Closing and will continue until fully performed or satisfied.
7.5 | Limitations; Exclusive Remedy |
Notwithstanding anything to the contrary contained in this Agreement:
(a) The Indemnifying Party will not be entitled to indemnification under Section 7.1(a) or (b), as applicable, and the Indemnified Party shall have no liability thereunder, unless and until the aggregate Indemnifiable Amounts incurred by the Indemnifying Party thereunder exceeds $984,932 (the Threshold Amount); provided that if and when the aggregate Indemnifiable Amounts under either Section 7.1(a) or (b) exceeds the Threshold Amount, the Buyer Indemnified Parties or the Company Indemnified Parties, respectively, will be entitled to be indemnified for such aggregate Indemnifiable Amounts in excess of the Threshold Amount. The aggregate maximum Indemnifiable Amounts for which an Indemnifying Party shall be entitled to indemnification under this Article VII shall be limited to $11,819,190 (the Cap). Notwithstanding the foregoing provisions of this Section 7.5(a), (i) the Cap and the Threshold Amount shall not apply to indemnification claims for Indemnifiable Amounts incurred by the Indemnified Party (A) under Section 7.1(a)(ii) or 7.1(b)(ii), as applicable, or (B) as a result of fraud committed by the Indemnifying Party, and (ii) the Threshold Amount shall not apply to indemnification claims (x) under Section 7.1(b)(iii) or (y) for Indemnifiable Amounts incurred by Buyer or the Company, as the case may be as a result of a Breach of an Excluded Representation.
(b) Any payment to an Indemnified Party shall be limited to the amount of Indemnifiable Amounts that remain after deducting therefrom any insurance proceeds recoverable by the Indemnified Party or its Affiliates in connection therewith. Each party shall use commercially reasonable efforts to mitigate Indemnifiable Amounts upon or after becoming aware of any event that could reasonably be expected to give rise thereto. Without limiting the foregoing, each Indemnified Party shall use its commercially reasonable efforts to collect any amount available from any third party alleged to be responsible for any Indemnifiable Amounts for which an indemnity claim is being made. Neither party shall be entitled to indemnification with respect to any amount included in the adjustments provided in Section 2.2.
(c) The rights of the parties to indemnification relating to this Agreement shall be strictly limited to those contained in this Article VII, and such indemnification rights shall be the sole and exclusive remedy of the parties with respect to any matter relating to this Agreement or arising in connection herewith; provided, however, that the foregoing shall not apply in the event of fraud and shall not limit the parties rights under Section 9.11.
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ARTICLE VIII
TERMINATION
8.1 | Termination |
The parties may terminate this Agreement prior to the Closing as provided below:
(a) the parties may terminate this Agreement by mutual written consent;
(b) Buyer may terminate this Agreement by giving written notice to the Company in the event the Company is in breach of any representation, warranty or covenant made by the Company and contained in this Agreement such that the condition set forth in Section 6.2(a) would not be satisfied (a Terminating Company Breach) and such Terminating Company Breach is not cured within 30 days after written notice thereof or is incapable of being cured by the Company by the Outside Date; provided that if such Terminating Company Breach is curable and can reasonably be expected to be cured by the Company by the Outside Date through the exercise of commercially reasonable efforts, Buyer may not terminate this Agreement under this Section 8.1(b) until the Outside Date for so long as the Company continues to exercise such commercially reasonable efforts;
(c) The Company may terminate this Agreement by giving written notice to Buyer in the event Buyer is in breach of any representation, warranty or covenant made by Buyer and contained in this Agreement such that the condition set forth in Section 6.3(a) would not be satisfied (a Terminating Buyer Breach) and such Terminating Buyer Breach is not cured within 30 days after written notice thereof or is incapable of being cured by Buyer by the Outside Date; provided that if such Terminating Buyer Breach is curable and can reasonably be expected to be cured by Buyer by the Outside Date through the exercise of commercially reasonable efforts, the Company may not terminate this Agreement under this Section 8.1(c) until the Outside Date for so long as Buyer continues to exercise such commercially reasonable efforts; or
(d) Buyer, on the one hand, or the Company, on the other hand, may terminate this Agreement if any permanent injunction or other order of a court or other competent Governmental Body preventing the completion of the Transactions shall have become final and nonappealable.
8.2 | Effect of Termination |
If either party terminates this Agreement pursuant to Section 8.1, all obligations of the parties under this Agreement will terminate without any liability of any party to any other party, except that (i) the obligations under Sections 9.1 and 9.7 shall survive, and (ii) nothing shall relieve either party from any Liability for Indemnifiable Amounts for any willful, material breach of this Agreement.
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ARTICLE IX
GENERAL
9.1 | Expenses |
Regardless of whether the Transactions are completed, except as otherwise specifically provided herein, each party will pay its own fees and expenses incident to the negotiation, preparation and execution of this Agreement and the other Transaction Documents, and the completion of the Transactions, including legal, accounting and financial advisory fees and expenses.
9.2 | Notices |
Any notice, request or demand or other communication desired or required to be given hereunder will be in writing and will be deemed given upon: (a) actual receipt or personal delivery; (b) confirmed delivery by a standard overnight courier service, or when delivered by hand; (c) three Business Days after being mailed in the United States by certified or registered mail, postage prepaid; or (d) transmitters confirmation of a receipt of an email or facsimile transmission, in each case addressed as respectively set forth below or to such other address as any party will have previously designated by such a notice.
TO BUYER:
Rentrak Corporation One Airport Center 7700 N.E. Ambassador Place Portland, Oregon 97220 Fax: (866) 656-7413 |
TO THE COMPANY:
Competitive Media Reporting, LLC c/o WPP Group USA, Inc. 100 Park Avenue 4th Floor New York, NY 10017 | |||||
Attention: | Chief Financial Officer | Fax: (212) 632-2222 | ||||
Email: | dch@rentrak.com | Attention: Chief Financial Officer Email: mhowe@wpp.com | ||||
with a copy (which will not constitute notice) to:
Perkins Coie LLP 1120 NW Couch Street Tenth Floor Portland, OR 97209 Fax: (503) 727-2222 |
with a copy (which will not constitute notice) to:
Davis & Gilbert LLP 1740 Broadway New York, New York 10019 Attention: Matthew B. Schneider, Esq. Curt C. Myers, Esq. | |||||
Attention: | John Thomas, Esq. | Fax: (212) 468-4888 | ||||
Email: |
Darren Nakata, Esq. jrthomas@perkinscoie.com dnakata@perkinscoie.com |
Email: mschneider@dglaw.com cmyers@dglaw.com |
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9.3 | Severability |
If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties to the fullest extent possible.
9.4 | Entire Agreement; Incorporation of Exhibits and Schedules |
This Agreement (including the Disclosure Memorandum and all other exhibits) and the other Transaction Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof; provided, however, that the NDA shall not be superseded hereby and shall remain in full force and effect. The Exhibits, Annexes, Schedules and the Disclosure Memorandum (and any exhibits included therein) identified in this Agreement are incorporated herein by reference and made a part hereof. The Exhibits, Annexes, Schedules and Disclosure Memorandum do not modify this Agreement except to the extent specifically provided in the Agreement. The Disclosure Memorandum is arranged in schedules corresponding to the lettered and numbered sections and sub-sections contained in this Agreement. Buyer acknowledges and agrees that if any schedule of the Disclosure Memorandum lists an item or information that appears reasonably relevant from a review of such schedule to another schedule of the Disclosure Memorandum, the matter will be deemed to have been disclosed in such other schedule of the Disclosure Memorandum, notwithstanding the omission of an appropriate cross-reference to such other schedule.
9.5 | Assignment |
This Agreement may not be assigned by operation of law or otherwise; provided, however, that any rights and obligations of the parties may be assigned to one or more of their respective Affiliates; provided, further, that no such assignment shall relieve either party hereto from any Liability of such party under this Agreement.
9.6 | Parties in Interest |
This Agreement will be binding on and inure solely to the benefit of the parties and their respective successors, heirs, legal Representatives and permitted assigns, and nothing in this Agreement, express or implied, is intended to or will confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
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9.7 | Governing Law; Jurisdiction |
(a) This Agreement will be governed in all respects, including validity, interpretation, and effect by the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.
(b) Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York located in the borough of Manhattan in the City of New York, or if such court does not have jurisdiction, the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of or in connection with this Agreement or any transaction contemplated hereby. Each of the parties hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such partys respective address set forth in Section 9.2 shall be effective service of process for any action, suit or proceeding with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the United States District Court for the Southern District of New York or (ii) the Supreme Court of the State of New York, New York County, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
9.8 | Headings; Construction |
The descriptive headings contained in this Agreement are included for convenience of reference only and will not affect in any way the meaning or interpretation of this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute, law or ordinance will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word include, includes, and including means including without limitation; the word or means and/or; and the word any means any or all. The parties intend that each representation, warranty and covenant contained herein will have independent significance. If any party has Breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the party has not Breached will not detract from or mitigate the fact that the party is in Breach of the first representation, warranty or covenant.
9.9 | Counterparts |
This Agreement may be executed and delivered (including by facsimile or other electronic transmission (e.g., .pdf or .tiff)) in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one agreement.
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9.10 | Waiver of Jury Trial |
Each party hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on Contract, tort or otherwise) arising out of or relating to this Agreement and the other Transaction Documents, the Transactions or the actions of such parties in the negotiation, administration, performance and enforcement hereof and thereof.
9.11 | Specific Performance |
The parties acknowledge and agree that any breach of the terms of this Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy and accordingly the parties agree that, in addition to any other remedies, each will be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy.
9.12 | Amendment |
This Agreement may be amended, modified or supplemented at any time, but only pursuant to an instrument in writing signed by Buyer and the Company, and any such amendment will be binding on all parties.
9.13 | Waiver |
Any party hereto may, to the extent legally allowed: (a) extend the time for the performance of any of the obligations or other acts of the other parties under this Agreement or any other Transaction Document; (b) waive any inaccuracy in the representations and warranties in this Agreement or in any document delivered pursuant hereto made to such party; and (c) waive compliance with any of the agreements, covenants, or conditions in this Agreement or any other Transaction Documents. Any extension or waiver contemplated in this Section 9.13 will be valid only if set forth in an instrument in writing signed by the Company on the one hand, or Buyer on the other hand, as applicable, and will apply only as set forth in such instrument and will not operate as a waiver of, or estoppel with respect to, any failure to comply with any other obligation, covenant, agreement or condition contained herein.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have entered into and signed this Agreement as of the date and year first above written.
RENTRAK CORPORATION | ||
By: | /s/ David I. Chemerow | |
Name: | David I. Chemerow | |
Title: | Chief Operating Officer, Chief Financial Officer and Secretary |
COMPETITIVE MEDIA REPORTING, LLC | ||
By: | /s/ Kevin Farewell | |
Name: | Kevin Farewell | |
Title: | Secretary |
ANNEX A
DEFINITIONS
Accounting Firm has the meaning set forth in Section 2.2(c).
Advertising Agreement has the meaning set forth in the recitals.
Affiliate means with respect to a Person, any other Person that, directly or indirectly, controls or is controlled by or is under common control with the first Person.
Agreement has the meaning set forth in the preamble.
Assumed Contracts has the meaning set forth in Section 1.1(a)(i).
Assumed Liabilities has the meaning set forth in Section 1.2(a).
Audiences Division means the Kantar Media Audiences division of the Company in the United States.
A Person shall be deemed to Beneficially Own securities:
(a) which such Person or any of such Persons Affiliates, directly or indirectly, owns or has the right to acquire (whether such right is exercisable immediately or only after the passage of time or upon the satisfaction of one or more conditions whether or not within the control of such Person, compliance with regulatory requirements or otherwise) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants or options, or otherwise; or
(b) which such Person or any of such Persons Affiliates, directly or indirectly, has the right to vote or dispose of or has Beneficial Ownership of (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing.
Bill of Sale has the meaning set forth in Section 6.2(e).
Breach or Breached: A Breach of a representation, warranty, certification, covenant, obligation or other provision of this Agreement will be deemed to have occurred, or a representation, warranty, certification, covenant, obligation or other provision of this Agreement will have been Breached, if there is or has been any inaccuracy in or breach of, or any failure to perform or comply (in whole or in part) with, such representation, warranty, certification, covenant, obligation or other provision; and the term Breach means any such inaccuracy, breach, or failure.
Business means the business of television tuning analytics utilizing RPD as conducted by the Audiences Division in the United States as of the date hereof.
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Business Day means any day that is not a Saturday, a Sunday or any other day on which commercial banks generally are required or authorized to be closed in New York, New York.
Buyer has the meaning set forth in the preamble.
Buyer Balance Sheet Date has the meaning set forth in Section 4.6.
Buyer Financial Statements has the meaning set forth in Section 4.6.
Buyer Indemnified Parties has the meaning set forth in Section 7.1(a).
Buyer Material Adverse Effect means any change, development, occurrence or effect with respect to Buyer that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of Buyer, or would reasonably be expected to materially delay or prevent the consummation of the Transactions; provided, however, that the foregoing shall not include any adverse change, development, occurrence or effect arising from or relating to: (a) changes in the general economic conditions or political climate in the United States or any region in the world where Buyer operates, except for such changes as would have a disproportionate effect on Buyer; (b) changes in the U.S. or global or applicable regional financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index), except for such changes as would have a disproportionate effect on Buyer; (c) changes generally applicable to the industries in which Buyers business is conducted, including changes in industry performance and changes in accounting principles and practices applicable generally or to such industries, except for such changes as would have a disproportionate effect on Buyer; (d) actions required by or changes in laws, rules and regulations applicable to Buyer or its business; (e) any natural disasters, labor unrest, strikes, acts of war, terrorism, sabotage or other force majeure events; or (f) any action taken at the request of the Company or contemplated by this Agreement.
Buyer Securities means (i) any Common Stock and (ii) any other securities of Buyer entitled to vote generally in the election of directors of Buyer.
Buyer Stock Plans has the meaning set forth in Section 4.6.
Cap has the meaning set forth in Section 7.5(a).
Claim means any claim, demand, cause of action, suit, proceeding, arbitration, audit, hearing, investigation or inquiry (whether formal or informal).
Claim Notice has the meaning set forth in Section 7.2.
Claiming Party has the meaning set forth in Section 7.2.
Closing has the meaning set forth in Section 1.4.
Closing Date has the meaning set forth in Section 1.4.
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Closing Balance Sheet has the meaning set forth in Section 2.2(c).
COBRA means the provisions of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code and all regulations thereunder and any state similar law.
Code means the Internal Revenue Code of 1986, as amended, and all rules and regulations promulgated thereunder, as in effect from time to time.
Common Stock means the common stock of Buyer, par value $0.001 per share.
Company has the meaning set forth in the preamble.
Company Balance Sheet has the meaning set forth in Section 3.6(a).
Company Balance Sheet Date has the meaning set forth in Section 3.6(a).
Company Employees means all employees of the Company engaged in or otherwise relating to the Business as of the date of the Agreement.
Company Indemnified Parties has the meaning set forth in Section 7.1(b).
Company IP means any and all IP Rights owned (in whole or in part) by, purported to be owned (in whole or in part) by, or licensed to, the Company, in each case, in connection with the Business.
Company Material Adverse Effect means any change, development, occurrence or effect with respect to the Company that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of the Company and the Business, taken as a whole, or would reasonably be expected to materially delay or prevent the consummation of the Transactions; provided, however, that the foregoing shall not include any adverse change, development, occurrence or effect arising from or relating to: (a) the announcement of the transactions contemplated by this Agreement or the satisfaction of the obligations set forth herein (including any cancellation of or delays in customer orders or work for clients, any reductions in sales, any disruption in licensor, vendor, partner or similar relationships or any loss of employees); (b) the identity of Buyer or its Affiliates and Buyers post-closing plans for the Business and the customers, suppliers and employees of the Business; (c) changes in the general economic conditions or political climate in the United States or any region in the world where the Business operates, except for such changes as would have a disproportionate effect on the Business; (d) changes in the U.S. or global or applicable regional financial, banking, or securities markets (including any disruption thereof and any decline in the price of any security or any market index); (e) changes generally applicable to the industries in which the Business is conducted, including changes in industry performance and changes in accounting principles and practices applicable generally or to such industries, except for such changes as would have a disproportionate effect on the Business; (f) actions required by or changes in laws, rules and regulations applicable to the Company or the Business; (g) any failure by the Company to meet any forecasts or projections prepared by the Company or its Representatives; (h) any natural disasters, labor unrest, strikes, acts of war, terrorism, sabotage or other force majeure events; or (i) any action taken at the request of Purchaser or contemplated by this Agreement.
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Company Software means any Software that is owned or licensed to the Company or otherwise used, distributed or made available by the Company, in each case, for use in connection with the Business.
Companys Knowledge means the actual knowledge of George Shababb and Amy Silverstein, in each case, after reasonable inquiry of their direct reports.
Contract means any contract, agreement, permission, consent, lease, license, release, covenant not to sue, commitment, plan, arrangement, undertaking and understanding, oral or written, including a purchase order, security agreement, publication contract, license agreement, sublicense agreement, website terms of service, software development agreement, service agreement, independent contractor agreement, freelancer agreement, distribution agreement, joint venture agreement, reseller agreement, credit agreement, co-marketing/content agreement, membership agreement or instrument relating to the borrowing of money and any amendment, supplement or modification thereto.
Copyrights means applications and registrations for copyrights or rights with respect to works of authorship (including any moral and economic rights, however denominated).
Critical Problem has the meaning set forth in Section 3.16(p).
Databases means databases and data collections.
Data License Agreement has the meaning set forth in the recitals.
Data Purchase Agreement has the meaning set forth in the recitals.
Dispute Notice has the meaning set forth in Section 2.2(c).
DOJ has the meaning set forth in Section 5.1(a).
Dollars, dollars and $ means lawful money of the United States.
Domain Name(s) means domain names, uniform resource locators and other names and locators associated with the internet, including applications and registrations thereof.
Employee Benefit Plan means any retirement, pension, profit sharing, deferred compensation, equity bonus, savings, bonus, incentive, cafeteria, medical, dental, vision, hospitalization, life insurance, accidental death and dismemberment, medical expense reimbursement, dependent care assistance, tuition reimbursement, disability, sick pay, holiday, vacation, severance, change of control, equity purchase, equity option, restricted equity, phantom equity, equity appreciation rights, fringe benefit or other employee benefit or compensatory plan, program, policy, practice, Contract or fund (including any employee benefit plan, as defined in Section 3(3) of ERISA) or any employment, consulting or personal services contract, whether written or oral, funded or unfunded or domestic or foreign, (a) sponsored, maintained or
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contributed to by the Company or to which the Company is a party, (b) covering or benefiting any current or former employee, agent, manager or independent contractor of the Company (or any dependent or beneficiary of any such individual), or (c) with respect to which the Company has (or could have) any Liability.
Encumbrance means any security interest, mortgage, lien, pledge, encumbrance, charge, deed of trust, option, easement, other title or interest retaining agreements or adverse claim, including any restriction on the use, transfer, voting, receipt of income or other exercise of any attributes of ownership.
Environment means the air, ground (surface and subsurface) or water (surface and groundwater), natural resources, fish, wildlife, fauna or the workplace.
Environmental Claim means any Claim (written or oral) by any Person alleging potential Liability of the Company or the Business or for which the Company or the Business could become liable (including potential Liability for investigatory Remedial Action, governmental or Third Party response costs, natural resources damages, remediation or property damages, personal injuries, or penalties) arising out of, based on or resulting from (a) the presence in the Environment, or emission, discharge, disposal or release into the Environment, of, or exposure to, any Hazardous Materials at any location, whether or not owned or operated by the Company, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law or Permit relating to the protection of the Environment.
Environmental Law means all laws relating to pollution or protection of human health and safety (including occupational health and safety) or the Environment, including laws relating to (a) emissions, discharges, releases or threatened releases of, or exposure to, Hazardous Materials, (b) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, (c) recordkeeping, notification, disclosure and reporting requirements regarding Hazardous Materials, and (d) endangered or threatened species of fish, wildlife and plant and the management or use of natural resources.
ERISA means the Employee Retirement Income Security Act of 1974, and all rules and regulations promulgated thereunder, all as in effect from time to time.
ERISA Affiliate means any Person that, together with the Company, is (or, at any time, was) treated as a single employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(a)(14) or 4001(b)(1) of ERISA.
Estimated Closing Balance Sheet has the meaning set forth in Section 2.2(b).
Estimated Net Working Capital has the meaning set forth in Section 2.2(b).
Estimated Net Working Capital Adjustment Amount has the meaning set forth in Section 2.2(b).
Exchange Act has the meaning set forth in Section 4.5.
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Excluded Assets has the meaning set forth in Section 1.1(b).
Excluded Liabilities has the meaning set forth in Section 1.2(b).
Excluded Representations has the meaning set forth in Section 7.4.
Fee Adjustment Agreement has the meaning set forth in the recitals.
Financial Statements has the meaning set forth in Section 3.6(a).
Foreign Official means any officer or employee of a foreign government or any department, agency or instrumentality thereof, or of a public international organization, or any person acting in an official capacity or on behalf of any such government, department, agency or instrumentality or for, or on the behalf of, such public international organization, including but not limited to directors, officers, managers, employees and other agents of any enterprise owned directly or indirectly by an foreign government or public international organization.
FTC has the meaning set forth in Section 5.1(a).
GAAP means generally accepted accounting principles in the United States as in effect from time to time.
Governmental Body means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.
Group M has the meaning set forth in the recitals.
GUSA has the meaning set forth in Section 3.3.
Hazardous Materials means all chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products, asbestos or asbestos-containing materials or products, polychlorinated biphenyls, lead or lead-based paints or materials, radon, fungus, mold, mycotoxins, urea formaldehyde insulation, chlorofluorocarbons and other ozone-depleting substances or other substances that may have an adverse effect on human health or the Environment.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
IFRS means the International Finance Reporting Standards as in effect from time to time.
Inbound License(s) means any Contract pursuant to which the Company is authorized or otherwise permitted to access or exploit any other Persons IP Rights in connection with the Business, including any Software license, Patent license, Copyright license or Trademark license.
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Indemnifiable Amount means any losses, damages, liabilities, obligations, claims, judgments, settlements, fines, costs, and expenses (including reasonable attorneys fees and expenses); provided that Indemnifiable Amount shall not include any (i) special, indirect, incidental, consequential or punitive damages, or (ii) lost profits or lost opportunities.
Indemnified Party means the Buyer Indemnified Parties or the Company Indemnified Parties, as the case may be.
Indemnifying Party has the meaning set forth in Section 7.2.
Investor Rights Agreement has the meaning set forth in the recitals.
IP License Agreement has the meaning set forth in the recitals.
IP Rights means collectively any and all rights (anywhere in the world, whether statutory, common law or otherwise) with respect to: (a) Patents; (b) Copyrights; (c) Trademarks; (d) Domain Names; (e) mask works; (f) Trade Secrets, including rights to limit the use or disclosure thereof by any Person; (g) privacy or publicity; (h) Technology; (i) Databases; (j) all other or similar rights; and (k) any rights to pursue, recover or retain damages, costs or attorneys fees for past, present and future infringement or misappropriation of the foregoing.
IRS means the United States Internal Revenue Service.
Joint Marketing Agreement MOU has the meaning set forth in the recitals.
Judgment means any judgment, order, award, writ, injunction, ruling or decree of any Governmental Body or arbitrator.
Kantar Group means the group of companies indirectly controlled by WPP known as the Kantar Group of companies.
Liability or Liabilities means any debt, obligation, duty or liability of any nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious, derivative, joint, several, or secondary liability).
Licenses means collectively all Inbound Licenses and Outbound Licenses.
M&A Qualified Beneficiaries has the meaning set forth in Section 5.11(j).
Material Contract has the meaning set forth in Section 3.10.
Millward Brown has the meaning set forth in the recitals.
NDA has the meaning set forth in Section 5.6.
Net Working Capital means current assets minus current liabilities.
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Off-the-Shelf Software Agreement means any binary or object code license agreements for standard shrink wrapped, click through, or other form license-based off-the-shelf third party software programs that are generally commercially available for annual license fees.
Outbound License(s) means any Contract pursuant to which the Company authorizes any other Person to access or exploit any Owned IP in connection with the Business.
Outside Date means March 2, 2015.
Owned IP means all IP Rights owned by the Company and used in the Business.
Patents means applications and registrations for patents, or other industrial rights or designs including any reissues, divisionals, renewals, extensions, provisionals, continuations or continuations-in-part thereof, and any other filings claiming priority to or serving as a basis for priority thereof.
Permit means any permit, authorization, license, approval, certification, endorsement or qualification of any Governmental Body.
Permitted Encumbrance means any of the following: (a) the provisions of all applicable zoning laws, statutory liens of landlords, carriers, warehousemen, mechanics, materialmen and other similar Persons and other liens imposed by applicable laws incurred in the ordinary course of business; (b) liens for Taxes and other governmental assessments, charges or claims not yet due and payable or being contested in good faith by appropriate proceedings; and (c) with respect to any physical assets owned or leased by the Company, any Encumbrances which do not materially affect the use by the Company of such assets.
Person means any individual, corporation, partnership, trust, joint venture, limited liability company, association, organization, other entity or Governmental Body or regulatory authority.
PII means any information protected under applicable law that identifies an individual.
Preliminary Report has the meaning set forth in Section 2.2(b).
Real Property has the meaning set forth in Section 1.1(b)(x).
Registered IP means any Owned IP that is the subject of an application or registration with any Governmental Body, including any Domain Name registration and any application or registration for any Patent, Copyright or Trademark.
Remedial Action means any investigation, site assessment, monitoring or other evaluation of conditions relating to the Environment at a site, or any clean-up, treatment, containment, removal, restoration, corrective action or remedial work involving any Hazardous Materials.
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Representatives means, collectively, the respective partys officers, directors, agents, employees, and affiliates, and any investment banker, financial advisor, attorney, accountant, or other advisor, agent, and representative.
Restricted Business has the meaning set forth in Section 5.12(b).
Returns means any returns, reports, declarations, statements, and similar documents filed or required to be filed with respect to any Tax (including any attachments thereto and any amendments thereof).
RPD means Return Path Data.
SEC has the meaning set forth in Section 4.5.
SEC Reports has the meaning set forth in Section 4.5.
Securities Act has the meaning set forth in Section 4.5.
Selling Group has the meaning set forth in Section 3.15(g).
Software means all computer programs (including any and all software implementation of algorithms, models and methodologies whether in Source Code or object code), HTML, XML and similar files, website pages, databases and computations (including any and all data and collections of data), and documentation (including user manuals and training manuals) relating to any of the foregoing.
Source Code means computer software and code that has not been compiled into object code form, including related programmer comments and annotations, help text, data and data structures, and instructions, which may be printed out or displayed in human readable form.
Stock Consideration has the meaning set forth in Section 2.1.
Stock Purchase Agreement has the meaning set forth in the recitals.
Systems has the meaning set forth in Section 3.16(q).
TAM has the meaning set forth in Section 5.12.
Target Net Working Capital means $0.00.
Tax or Taxes means (a) any federal, state, local, and foreign taxes, charges, fees, levies, imposts, duties, and other similar assessments or charges of any kind whatsoever imposed by any Governmental Body, including income taxes (whether imposed on or measured by net income, gross income, income as specially defined, earnings, profits, or selected items of income, earnings, or profits), capital taxes, gross receipts taxes, environmental taxes, sales taxes, use taxes, value added taxes, goods and services taxes, transfer taxes, franchise taxes, license taxes, withholding taxes or other withholding obligations, payroll taxes, employment taxes, excise taxes, severance taxes, social security premiums, workers compensation premiums,
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employment insurance or compensation premiums, stamp taxes, occupation taxes, premium taxes, ad valorem taxes, property taxes, windfall profits taxes, alternative or add-on minimum taxes, and customs duties, together with all interest, penalties, fines, additions to tax, or other amounts imposed with respect to the foregoing; (b) any Liability for any amounts of the type described in clause (a) as a result of being or ceasing to be a member of any Tax Group (including any Liability under Treasury Regulation Section 1.1502-6 or any comparable provision of state, local, or foreign law); and (c) any Liability for any amounts of the type described in clauses (a) or (b) arising under contract, by operation of law, by reason of being a successor or transferee, or otherwise. The term Tax means any one of the foregoing Taxes.
Tax Contest means any audit, examination, or other administrative or judicial proceeding with respect to any Taxes or Returns of the Company.
Tax Group means any affiliated group of corporations within the meaning of Code Section 1504 (or any similar affiliated, combined, consolidated, or unitary group or arrangement for group relief for state, local, or foreign Tax purposes).
Technology means any and all: (a) technology, formulae, algorithms, procedures, processes, methods, techniques, know-how, ideas, creations, inventions, discoveries, and improvements (whether patentable or unpatentable and whether or not reduced to practice); (b) technical, engineering, manufacturing, product, marketing, servicing, financial, supplier, personnel and other information and materials; (c) customer lists, customer contact and registration information, customer correspondence and customer purchasing histories; (d) specifications, designs, models, devices, prototypes, schematics and development tools; (e) Software, websites, content, images, graphics, text, photographs, artwork, audiovisual works, sound recordings, graphs, drawings, reports, analyses, writings, and other works of authorship and copyrightable subject matter; (f) databases and other compilations and collections of data or information; (g) Trade Secrets; and (h) tangible embodiments of any of the foregoing, in any form or media whether or not specifically listed herein.
Terminating Buyer Breach has the meaning set forth in Section 8.1(c).
Terminating Company Breach has the meaning set forth in Section 8.1(b).
Third Party Claim has the meaning set forth in Section 7.3(a).
Threshold Amount has the meaning set forth in Section 7.5(a).
Trademarks means trademarks, service marks, logos and design marks, trade dress, trade names, corporate names, fictitious and other business names, or brand names, together with all goodwill associated with any of the foregoing, and all applications, registrations and renewals therefor.
Trade Secrets means information and materials not generally known to the public that hold commercial value to the Business, including trade secrets and other confidential or proprietary information.
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Transactions has the meaning set forth in Section 2.3(a).
Transaction Documents has the meaning set forth in the recitals.
Transfer Taxes has the meaning set forth in Section 2.3(a).
Transferred Assets has the meaning set forth in Section 1.1(a).
Transferred Employee has the meaning set forth in Section 5.11(b).
Transition Services Agreement has the meaning set forth in the recitals.
Working Capital Report has the meaning set forth in Section 2.2(c).
WPP means WPP plc, a public limited company incorporated under the Companies (Jersey) Law 1991 (as amended).
WPP Group means WPP and its direct and indirect subsidiaries.
WPP Luxembourg has the meaning set forth in the recitals.
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Exhibit 4.1
INVESTOR RIGHTS AGREEMENT
BY AND AMONG
RENTRAK CORPORATION,
COMPETITIVE MEDIA REPORTING, LLC
AND
WPP LUXEMBOURG GAMMA THREE S.À R.L.
Dated as of October 8, 2014
TABLE OF CONTENTS
Page | ||||||
ARTICLE 1 |
DEFINITIONS |
2 | ||||
1.1 |
Defined Terms | 2 | ||||
ARTICLE 2 |
TRANSFER RESTRICTIONS; STANDSTILL |
6 | ||||
2.1 |
Transfer Restrictions | 6 | ||||
2.2 |
Standstill | 8 | ||||
2.3 |
Third Party Offers | 10 | ||||
2.4 |
Voting of Shares | 10 | ||||
ARTICLE 3 |
BOARD OBSERVER AND INFORMATION RIGHTS |
11 | ||||
3.1 |
Board Observer | 11 | ||||
3.2 |
Disclosure and Confidentiality | 11 | ||||
3.3 |
Nonpublic Information | 12 | ||||
3.4 |
Costs and Expenses | 12 | ||||
3.5 |
Transfer; Additional Observer Rights | 12 | ||||
ARTICLE 4 |
REPRESENTATIONS OF THE INVESTOR |
13 | ||||
4.1 |
Due Organization, Authorization | 13 | ||||
4.2 |
No Conflicts | 13 | ||||
4.3 |
Short Sales and Confidentiality Prior to the Date Hereof | 13 | ||||
ARTICLE 5 |
REGISTRATION RIGHTS |
14 | ||||
5.1 |
Demand Registrations | 14 | ||||
5.2 |
Piggyback Registrations | 15 | ||||
5.3 |
Obligations of the Investor With Respect to the Underwriting Agreement and Prospectuses | 15 | ||||
5.4 |
Expenses of Registration | 16 | ||||
5.5 |
Registration Procedures | 17 |
i
TABLE OF CONTENTS
(continued)
Page | ||||||
5.6 |
Indemnification | 18 | ||||
5.7 |
Hold-Back Agreements | 20 | ||||
ARTICLE 6 |
CERTAIN ADDITIONAL COVENANTS |
20 | ||||
6.1 |
Tax Matters | 20 | ||||
6.2 |
Insider Trading | 21 | ||||
ARTICLE 7 |
MISCELLANEOUS |
21 | ||||
7.1 |
Headings; Construction | 21 | ||||
7.2 |
Entire Agreement | 21 | ||||
7.3 |
Further Actions; Cooperation | 21 | ||||
7.4 |
Notices | 22 | ||||
7.5 |
Fees and Expenses | 23 | ||||
7.6 |
Governing Law; Jurisdiction; Waiver of Jury Trial | 23 | ||||
7.7 |
Survival | 23 | ||||
7.8 |
Severability | 23 | ||||
7.9 |
Replacement of Securities | 23 | ||||
7.10 |
Successors and Assigns | 24 | ||||
7.11 |
No Third-Party Beneficiaries | 24 | ||||
7.12 |
Amendments; Waiver | 24 | ||||
7.13 |
Counterparts | 24 | ||||
7.14 |
Specific Performance | 24 | ||||
7.15 |
Adjustments in Share Numbers and Prices | 24 | ||||
7.16 |
Effectiveness; Termination | 24 |
ii
INVESTOR RIGHTS AGREEMENT
OF
RENTRAK CORPORATION
THIS INVESTOR RIGHTS AGREEMENT (this Agreement) is made as of October 8, 2014, by and among Rentrak Corporation, an Oregon corporation (the Company), Competitive Media Reporting, LLC, a Delaware limited liability company (CMR) and WPP Luxembourg Gamma Three S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg (WPP Luxembourg; together with CMR, the Investor). Capitalized terms used but not defined in Section 1.1 of this Agreement have the same meanings given such terms in the Stock Purchase Agreement between the Company and WPP Luxembourg, entered into as of the date hereof (the Purchase Agreement). Unless otherwise indicated, references to articles and sections shall be to articles and sections of this Agreement.
WHEREAS, concurrent with the execution of this Agreement, CMR and the Company, are entering into that certain Asset Purchase Agreement (the Asset Purchase Agreement), pursuant to which, and subject to the terms and conditions contained therein, the Company will purchase substantially all of the assets of the Business (as defined in the Asset Purchase Agreement) from CMR and, in exchange for such assets, the Company will issue to the Investor shares of Common Stock that will represent eleven percent (11%) of the issued and outstanding shares of Common Stock (after giving effect to such issuance) (such shares of Common Stock to be issued by the Company pursuant to the Asset Purchase Agreement are sometimes referred to in this Agreement as the Stock Consideration);
WHEREAS, concurrent with the execution of this Agreement, WPP Luxembourg is entering into the Purchase Agreement pursuant to which, and subject to the terms and conditions contained therein, the Company will issue and sell to WPP Luxembourg shares of Common Stock (collectively with the Stock Consideration, the Shares), and WPP Luxembourg will purchase and receive such shares from the Company in an amount that will represent six and 37/100 percent (6.37%) of the issued and outstanding Common Stock (after giving effect to such issuance);
WHEREAS, immediately following the issuance of the Stock Consideration under the Asset Purchase Agreement and the Common Stock under the Purchase Agreement, the Investor will hold sixteen and 67/100 percent (16.67%) of the then issued and outstanding Common Stock; and
WHEREAS, the Investor and the Company deem it to be in their best interests to set forth certain of their respective rights and obligations in connection with the Shares.
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NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. For purposes of this Agreement, the following terms shall have the following meanings:
(a) Activist Investor means a Person who Beneficially Owns a number of shares of Common Stock, or securities convertible into (or exercisable for) shares of Common Stock, such that such Person is required to file Schedule 13D with the Commission and who the Investor actually knows has the intention of replacing members of the Board, effecting a Change of Control, or otherwise advocating the Company to take or refrain from taking any like action.
(b) Affiliate means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144; provided that (i) the Company shall not be deemed to be an Affiliate of the Investor and (ii) the Investor shall not be deemed to be an Affiliate of the Company.
(c) Agreement has the meaning given in the preamble.
(d) Asset Purchase Agreement has the meaning given in the recitals.
(e) A Person shall be deemed to Beneficially Own (or have Beneficial Ownership of) securities:
(i) which such Person or any of such Persons Affiliates, directly or indirectly, owns or has the right to acquire (whether such right is exercisable immediately or only after the passage of time or upon the satisfaction of one or more conditions whether or not within the control of such Person, compliance with regulatory requirements or otherwise) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, other rights, warrants or options, or otherwise; or
(ii) which such Person or any of such Persons Affiliates, directly or indirectly, has the right to vote or dispose of or has Beneficial Ownership of (as determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to any agreement, arrangement or understanding, whether or not in writing.
(f) Board means the board of directors of the Company.
(g) Business Day means any day that is not a Saturday, a Sunday or any other day on which commercial banks generally are required or authorized to be closed in New York, New York.
(h) Change of Control means a single transaction or a series of related transactions, whether by way of purchase, acquisition, tender, exchange or other similar offer or recapitalization, reclassification, consolidation, merger, amalgamation, share exchange or other
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business combination transaction, in which any Person or Group (other than the Company or a holding company formed by the Company) becomes the Beneficial Owner of (i) more than thirty percent (30%) of the combined outstanding Voting Power of the Company or (ii) substantially all of the consolidated assets of the Company and its subsidiaries.
(i) Closing has the meaning given in the Purchase Agreement.
(j) Closing Date has the meaning given in the Purchase Agreement.
(k) CMR has the meaning given in the preamble.
(l) Commission means the United States Securities and Exchange Commission or any successor agency.
(m) Common Stock means the common stock of the Company, par value $0.001 per share, and any and all securities of any kind whatsoever of the Company that may be issued and outstanding on or after the Closing Date in respect of, in exchange for, or upon conversion of Common Stock pursuant to a merger, consolidation, stock split, stock dividend or recapitalization of the Company or otherwise.
(n) Company has the meaning given in the preamble.
(o) Company Notice has the meaning given in Section 2.1(e).
(p) Company ROFR has the meaning given in Section 2.1(e).
(q) Company Securities means (i) any Common Stock and (ii) any other securities of the Company entitled to vote generally in the election of directors of the Company.
(r) Demand Registration has the meaning given in Section 5.1(a).
(s) Excess Shares has the meaning given in Section 2.2(d).
(t) Exchange Act means the Securities Exchange Act of 1934, as amended.
(u) Government Approval means any authorization, consent, approval, waiver, exception, variance, order, exemption, publication, filing, declaration, concession, grant, franchise, agreement, permission, permit, or license of, from or with any Governmental Body, the giving of notice to or registration with any Governmental Body or any other action in respect of any Governmental Body.
(v) Governmental Body means any government or any agency, bureau, board, commission, court, department, official, political subdivision, tribunal or other instrumentality of any government, whether federal, state or local, domestic or foreign.
(w) Group has the meaning given in Section 13(d) of the Exchange Act as in effect on the Closing Date.
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(x) Indemnified Party has the meaning given in Section 5.6(c)
(y) Indemnifying Party has the meaning given in Section 5.6(c).
(z) Investor has the meaning given in the preamble; provided, that, except where the context otherwise requires, any reference to the Investor shall also refer to the Affiliates of the Investor.
(aa) Investor Notice has the meaning given in Section 2.1(e).
(bb) Law means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Body.
(cc) Long-Form Registrations has the meaning given in Section 5.1(a).
(dd) Losses has the meaning given in Section 5.6(a).
(ee) NASDAQ means the NASDAQ Global Market.
(ff) Notice Period has the meaning given in Section 2.1(e).
(gg) Observer has the meaning given in Section 3.1(a).
(hh) Ownership Cap has the meaning given in Section 2.2(b).
(ii) Permitted Transferee means any Person who comes to own Common Stock in a Transfer of Common Stock permitted by Section 2.1(a).
(jj) Person means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or any court or other federal, state, local or other governmental authority or other entity of any kind.
(kk) Piggyback Registration has the meaning given in Section 5.2(a).
(ll) Prospective Transferee has the meaning given in Section 2.1(e).
(mm) Prospectus means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including post effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
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(nn) Public Offering means an offering of equity securities of the Company pursuant to an effective registration statement under the Securities Act, including an offering in which the Investor is entitled to sell Common Stock pursuant to the terms of this Agreement.
(oo) Purchase Agreement has the meaning given in the preamble.
(pp) Registration Expenses has the meaning given in Section 5.4(a).
(qq) Registrable Securities means any Common Stock issued or issuable pursuant to the Purchase Agreement or the Asset Purchase Agreement, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however, that Registrable Securities shall cease to be Registrable Securities when (i) such shares of Common Stock have been disposed of in accordance with the Registration Statement or (ii) such shares of Common Stock are eligible to be transferred pursuant to Rule 144 under the Securities Act without any limitation on the number of shares that may be sold at any one time or during any period.
(rr) Registration Statement means each registration statement required to be filed under Article 5, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.
(ss) Requested Information has the meaning given in Section 5.6(f).
(tt) Rule 144 means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such rule.
(uu) SEC Reports means all reports the Company has filed under the Exchange Act (whether or not required), including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof.
(vv) Securities Act means the Securities Act of 1933, as amended.
(ww) Selling Expenses has the meaning given in Section 5.4(a).
(xx) Shares has the meaning given in the recitals.
(yy) Short-Form Registrations has the meaning given in Section 5.1(a).
(zz) Stock Consideration has the meaning given in the recitals.
(aaa) Third Party Offer means a bona fide offer to enter into a transaction that would (if consummated) result in a Change of Control by a Person, other than (i) the Investor or any of its Affiliates or (ii) any other Person acting on behalf of or as part of a Group with the Investor.
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(bbb) Transaction Documents has the meaning given in the Asset Purchase Agreement.
(ccc) Transfer means, with respect to any Shares, (i) when used as a verb, to sell, assign, dispose of, exchange, pledge, charge, encumber, hypothecate or otherwise transfer such Shares or any participation or interest therein, whether directly or indirectly (including by means of any hedging or derivative transactions that may have a similar effect to the foregoing), or agree or commit to do any of the foregoing and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange, pledge, charge, encumbrance, hypothecation, or other transfer of such Shares or any participation or interest therein (or any hedging or derivative transactions that may have a similar effect to the foregoing) or any agreement or commitment to do any of the foregoing, other than, in the case of each of clauses (i) and (ii) above any blanket liens on all or substantially all of the assets of the Investor and its Affiliates pursuant to a credit facility or similar arrangement.
(ddd) Underwritten Offering means a sale of securities of the Company to an underwriter or underwriters for reoffering to the public.
(eee) Voting Power of the Company means the total number of votes that may be cast in the election of directors of the Company if all securities of the Company entitled to vote in the election of directors were present and voted at a meeting held for such purpose
(fff) WPP Luxembourg has the meaning given in the preamble.
ARTICLE 2
TRANSFER RESTRICTIONS; STANDSTILL
2.1 Transfer Restrictions.
(a) The Investor shall not, directly or indirectly, Transfer any Shares to any other Person, other than the Company, until the later of (x) the date that is six (6) months after the Closing Date or (y) the time when the Investor Beneficially Owns less than five percent (5%) of the outstanding Common Stock of the Company (in the case of clause (y) other than as a result of a Transfer in violation of this Section 2.1), except for:
(i) Transfers effected through widely-distributed underwritten transactions to unknown purchasers;
(ii) Transfers in a block, or series of related blocks, representing in the aggregate less than two percent (2%) of the Companys Common Stock to a Beneficial Owner of less than five percent (5%) of the Companys Common Stock; provided that the transferee in a Transfer under this Section 2.1(a)(ii) is not an Activist Investor;
(iii) Transfers otherwise approved by the Board; or
(iv) so long as the Company is notified in advance in writing, Transfers to any Affiliate of the Investor that is a direct or indirect wholly-owned subsidiary of WPP plc.
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Any Transfer by the Investor to a Permitted Transferee permitted under (x) clause (i), shall be made pursuant to an effective registration statement under the Securities Act, or (y) clause (ii) shall be subject to Section 2.1(e) (unless the provisions of Section 2.2 apply) and shall be made in accordance with Rule 144 (including the volume and manner-of-sale limitations of Rule 144, if such limitations are applicable to such Transfer) and otherwise in compliance with the Securities Act.
(b) Any Permitted Transferee (other than a Permitted Transferee who becomes a Permitted Transferee pursuant to Section 2.1(a)(i)) shall agree in writing to be bound by the provisions that apply to the Investor under this Agreement, and all references in this Agreement to the Investor shall be deemed to include such Permitted Transferee upon consummation of any Transfer of Shares by the Investor to the Permitted Transferee.
(c) Nothing in this Section 2.1 shall restrict the Investors ability to Transfer any Shares as otherwise expressly permitted or required in Section 2.2 of this Agreement.
(d) The Investor agrees to the imprinting, so long as is required by this Section 2.1(d), of the following legend on any certificate evidencing Registrable Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
Certificates evidencing the Registrable Securities shall not be required to contain such legend or any other legend (i) while a Registration Statement covering the resale of such Registrable Securities is effective under the Securities Act, or (ii) following any sale of such Registrable Securities pursuant to Rule 144, or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).
(e) Except with respect to a Transfer proposed to be made pursuant to Section 2.1(a)(i), (iii) or (iv) or pursuant to Section 2.2(d) or (e), the Investor hereby unconditionally and irrevocably grants to the Company a right of first refusal (the Company ROFR) to purchase all of the Shares that the Investor may propose to Transfer pursuant to an arms length, bona fide
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offer by a Person, other than the Investor or any of its Affiliates (such person a Prospective Transferee), at the same price and on the same terms and conditions as those offered to the Prospective Transferee. The Investor proposing to make such a Transfer must deliver notice to the Company not later than forty-five (45) Business Days prior to the consummation of such Transfer (an Investor Notice). Such Investor Notice shall contain the material terms and conditions (including price and form of consideration) of the proposed Transfer, the identity of the Prospective Transferee and the intended date of the proposed Transfer. To exercise the Company ROFR under this Section 2, the Company must deliver notice to the Investor within thirty (30) days after delivery of the Investor Notice (the Notice Period) stating the Companys desire to purchase the shares that are the subject of the proposed Transfer on the terms and subject to the conditions set forth in the Investor Notice (the Company Notice). The closing of the purchase of the Shares that are set forth in the Investor Notice shall take place, and all payments from the Company shall have been delivered to the Investor, by the later of (i) the date specified in the Investor Notice as the intended date of the proposed Transfer and (ii) thirty (30) Business Days after delivery of the Investor Notice. If the Company does not deliver the Company Notice prior to the expiration of the Notice Period, the Investor may, during a period of ninety (90) Business Days following the expiration of the Notice Period, Transfer all of the Shares described in the Investor Notice to the Prospective Transferee on terms and conditions no more favorable to such transferee than those set forth in the Investor Notice. If the Investor does not Transfer the Shares described in the Investor Notice within such period, the Companys rights provided in this paragraph (e) with respect to the Shares described in the Investor Notice shall be revived and such Shares shall again be subject to the Company ROFR.
2.2 Standstill.
(a) Except as specifically approved by the Board, the Investor shall not, directly or indirectly: (i) by purchase or otherwise (including through hedging or derivative transactions), acquire, agree to acquire or offer to acquire Company Securities or direct or indirect rights or options to acquire Company Securities (including any voting trust certificates representing such securities) that would result in the Investor Beneficially Owning more than twenty percent (20%) of the Common Stock outstanding at the time of any of the foregoing actions; (ii) enter, propose to enter into, solicit or support any merger, business combination or similar transaction involving the Company or any of its subsidiaries, or purchase, acquire, propose to purchase or acquire or solicit or support the purchase or acquisition of any portion of the business or assets of the Company or any of its subsidiaries, in each case, if such forgoing transaction would result in a Change of Control; (iii) initiate or propose any shareholder proposal without the approval of the Board granted in accordance with this Agreement or make, or in any way participate in, any solicitation of proxies (as such terms are used in the proxy rules promulgated by the Commission under the Exchange Act) to vote, or seek to advise or influence any Person with respect to the voting of, any Company Securities or request or take any action to obtain any list of shareholders of the Company for such purposes with respect to any matter (or, as to such matters, solicit any Person in a manner that would require the filing of a proxy statement under Regulation 14A of the Exchange Act); (iv) form, join or in any way participate in a Group formed for the purpose of (A) acquiring, holding, voting or disposing of or taking any other action with respect to Company Securities or (B) effecting a Change of Control of the
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Company; (v) deposit any Company Securities in a voting trust or enter into any voting agreement or arrangement with respect thereto (other than this Agreement); (vi) seek representation on the Board, the removal of any directors from the Board, or a change in the size or composition of the Board; (vii) make any request to amend or waive any provision of this Section 2.2, except to the extent such request is made on a confidential basis solely to the Board; (viii) disclose any intent, purpose, plan, arrangement or proposal inconsistent with the foregoing (including any such intent, purpose, plan, arrangement or proposal that is conditioned on or would require the waiver, amendment, nullification or invalidation of any of the foregoing) or take any action that would require public disclosure of any such intent, purpose, plan, arrangement or proposal; (ix) take any action challenging the validity or enforceability of this Section 2.2; or (x) assist, advise, encourage or negotiate with any Person with respect to, or seek to do, any of the foregoing.
(b) The restrictions in Section 2.2(a) shall not prevent the Investor, following the Closing Date, from purchasing shares of the Common Stock in the secondary market in an amount such that (after giving effect to any such purchases) the Investor Beneficially Owns no more than twenty percent (20%) of the then outstanding Common Stock (the Ownership Cap).
(c) Nothing in this Section 2.2 shall prohibit or restrict the Investor from: (i) responding to any inquiries from any shareholders of the Company as to the Investors intention with respect to the voting of any Company Securities Beneficially Owned by the Investor so long as such response is consistent with the terms of this Agreement; or (ii) making any confidential proposals to the Board in respect of any matter, so long as such proposal does not require a public announcement by the Company, the Investor or any Affiliate of the Investor.
(d) If the Board shall, at any time and in good faith, reasonably determine that the Investor Beneficially Owns shares of Common Stock in excess of the Ownership Cap, the Company shall ask the Investor to reduce the level of such Beneficial Ownership to an amount below the Ownership Cap. If the Investor does not effect such reduction within ten (10) Business Days of the date on which it is so advised by the Company, the Company shall have the power (i) to call for the purchase by the Company from the Investor of a number of shares of Common Stock sufficient to bring such Beneficial Ownership to no more than the Ownership Cap (such number of shares of Common Stock being the Excess Shares), and (ii) to refuse to transfer or issue Company Securities to the Investor until such time that such Beneficial Ownership is equal to or less than the Ownership Cap. The purchase price per share for the Excess Shares shall be equal to the weighted-average closing sales price per share for the Common Stock as reported by NASDAQ or other national securities exchange on which the Common Stock are then listed for the five (5) trading days preceding such purchase. Payment of the purchase price shall be made in cash by the Company no later than five (5) Business Days after the Company has provided written notice to the Investor that the Company intends to exercise its call right pursuant to this paragraph (d). From and after the payment of such purchase price by the Company, the Beneficial Owner of the Excess Shares shall cease to be entitled to distributions, voting rights and other benefits with respect to such Excess Shares. If the Company does not grant an exemption from the ownership restrictions set forth in this Section 2.2, then any action described in Section 2.2(a) that would result in the Investor
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Beneficially Owning shares of Common Stock in excess of the amounts permitted by this Section 2.2 shall be deemed void ab initio and the Investor shall be deemed never to have had an interest in the applicable Company Securities. If the foregoing provision is determined to be void or invalid by virtue of any legal decision, judgment, statute, rule or regulation, then the Investor shall be deemed, at the option of the Company, to have acted as agent on behalf of the Company in acquiring such Company Securities and to hold such Company Securities on behalf of the Company.
(e) Notwithstanding the Companys rights under Section 2.2(d) above, if the Investor shall, at any time and in good faith, reasonably determine that the Investor Beneficially Owns shares of Common Stock in excess of the Ownership Cap as a result of any action taken by Company (including, without limitation, any share buy-back), the Investor shall have the right (but not the obligation) to (i) sell to the Company, and the Company shall be obligated to purchase from the Investor, the Excess Shares or (ii) sell the Excess Shares in the market subject to compliance with applicable law. For purposes of the immediately preceding clause (i), the purchase price per share for the Excess Shares shall be equal to the average closing sales price per share for the Common Stock as reported by NASDAQ or other national securities exchange on which the Common Stock are then listed for the five (5) trading days preceding such purchase. Payment of the purchase price shall be made in cash by the Company no later than five (5) Business Days after the Investor has provided written notice to the Company that the Investor intends to exercise its put right pursuant to this paragraph (e).
2.3 Third Party Offers. In the event that the Company becomes the subject of a Third Party Offer:
(a) the Investor shall not support such Third Party Offer, vote in favor of such Third Party Offer or tender or sell its Company Securities to the Person making such Third Party Offer, unless such Third Party Offer is approved by the Board; and
(b) the Investor shall have the right to make an offer to enter into a transaction that would result in a Change of Control of the Company within twenty (20) trading days of the date on which such Third Party Offer is publicly announced; provided that, the Company will notify the Investor of a Third Party Offer that is not publicly announced within two (2) trading days of the Boards decision to proceed with such Third Party Offer (if the terms of such Third Party Offer do not prevent such disclosure), and the Investor shall have the right to make an offer under this Section 2.3(b) as if the Third Party Offer had been publicly announced on the date the Company notifies the Investor of such offer.
2.4 Voting of Shares. At each meeting of shareholders of the Company occurring (or in connection with any action by written consent of shareholders of the Company) during the term of this Agreement with respect to any Third Party Offer, any shareholder proposal or other third party proxy proposal (including nominees for election to the Board) that is to be voted upon at such meeting (or acted upon in such written consent), the Investor shall vote any of the Company Securities it then Beneficially Owns as recommended by the Board.
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ARTICLE 3
BOARD OBSERVER AND INFORMATION RIGHTS
3.1 Board Observer.
(a) The Investor shall be entitled to designate a representative (the Observer) to attend any Board meetings in accordance with the terms and conditions set forth herein so long as the Investor Beneficially Owns at least five percent (5%) of the shares of Common Stock then outstanding.
(b) The Company shall deliver to the Observer, subject to the terms and conditions herein, notice of all meetings of the Board; and the Observer shall be entitled to attend all meetings of the Board in a non-voting, observer capacity, other than any meetings (or portions thereof) where the Board determines in good faith, upon the advice of counsel, (i) that the attendance of the Observer at such meeting (or portion thereof) would adversely affect the attorney-client privilege between the Company and its counsel, (ii) that the exclusion of the Observer from such meeting (or portion thereof) is necessary to protect the Companys trade secrets, (iii) that the attendance of the Observer at such meeting (or portion thereof) would cause competitive harm, or (iv) that the exclusion of the Observer from such meeting (or a portion thereof) is necessary in order to discuss a Third Party Offer; provided that, in the event the Observer is excluded from any portion of such meeting, the Observer will be allowed to rejoin the remainder of such meeting after the Board ceases its discussions on the matters that gave rise to excluding the Observer pursuant to foregoing clauses (i) through (iv) of this Section 3.1(b). The Company shall deliver to the Observer copies of all minutes, consents and any other material that the Company provides to the members of the Board, except for such minutes, consents and other material that the Board determines in good faith, upon the advice of counsel, (w) would, if delivered to the Observer, adversely affect the attorney-client privilege between the Company and its counsel, (x) should not be provided to the Observer in order to protect the Companys trade secrets, (y) would cause competitive harm to the Company if provided to the Observer, or (z) concern a Third Party Offer.
(c) All Board meetings shall be duly constituted notwithstanding the absence of the Observer for any reason or no reason. No Board meeting shall be subject to delay and the Company shall not be in breach of its obligations hereunder, provided that the Company has provided notice of such Board meeting to the Observer in the same manner as notice was provided to the directors.
3.2 Disclosure and Confidentiality. Each of the Investor and the Observer shall, and shall cause its representatives to, keep confidential any materials or information regarding the Company that has been communicated pursuant to the terms of this Agreement (including any materials or information provided at or in connection with any Board meetings) or any other Transaction Document, unless (a) such materials or information is or becomes generally available to the public other than as a result of disclosure by the Company or its Affiliates or their respective representatives in breach of this Section 3.2; (b) such materials or information was within the possession of or actually known to the Investor or its representatives on a non-confidential basis prior to its disclosure to the Investor or its representatives by the Company or
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its Affiliates or their respective representatives pursuant to this Agreement or any other Transaction Document; (c) such materials or information becomes available to the Investor or its representatives other than pursuant to this Agreement or any other Transaction Document, and other than as a result of a breach of a legal, contractual or fiduciary obligation owed by such source to the Company of which the Investor or the Observer knows, or should reasonably be expected to know, at the time of such disclosure; or (d) the Investor or the Observer or their respective representatives, as the case may be, become compelled by law or direction of a Governmental Body having jurisdiction over the Investor or the Observer or their representatives, as the case may be, to disclose any such materials or information; provided, however, that (i) the Investor or the Observer or their respective representatives, as the case may be, will provide the Company, prior to such disclosure, to the extent practicable without prejudicing the legal rights, privileges or legal obligations of the Investor, Observer or their respective representatives, as the case may be, and as otherwise permitted by law, with reasonably prompt written notice so that the Company may seek a protective order or appropriate remedy; (ii) the Investor, the Observer and their respective representatives, as the case may be, shall cooperate with the Companys reasonable requests, at the Companys expense, so that the Company may obtain such protective order; and (iii) in the event that a protective order or other remedy is not obtained, the Investor, the Observer and their respective representatives, as the case may be, will furnish only the portion of the materials or information that is legally required to be disclosed. The Investor will be responsible for any breach of this paragraph by it, the Observer or any of their respective Affiliates or their respective directors, officers, employees or other representatives.
3.3 Nonpublic Information. The Investor acknowledges that it is aware, and that it will advise its Affiliates and their respective representatives who receive undisclosed material information regarding the Company, that securities Laws prohibit any Person who has non-public material information from purchasing or selling Common Stock or other securities of the Company from or to any uninformed third party or from communicating such information to any uninformed third party under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such Common Stock or other securities.
3.4 Costs and Expenses. Except as provided in Section 3.2, all costs and expenses of the Observer in connection with the exercise of the rights of the Investor set forth in this Article 3 shall be borne by the Investor.
3.5 Transfer; Additional Observer Rights. The rights of the Investor set forth in this Article 3 are personal to the Investor and shall not be transferred with the disposition of any Common Stock by the Investor or by any other means, except for transfers to Affiliates pursuant to Section 2.1. In the event that another major advertising holding company Beneficially Owns at least five percent (5%) of the outstanding Common Stock, the Company may, in its sole discretion, grant such shareholder observer rights equal to, but no greater than, the rights granted to the Investor under this Article 3.
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ARTICLE 4
REPRESENTATIONS OF THE INVESTOR
The Investor hereby represents and warrants to the Company:
4.1 Due Organization, Authorization. The Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite power and authority to enter into and to complete the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by the Investor has been duly authorized by all necessary action on the part of the Investor. This Agreement has been duly executed and delivered by the Investor and constitutes the valid and binding obligation of the Investor, enforceable against it in accordance with its terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general applications relating to or affecting the enforcement of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).
4.2 No Conflicts. The execution, delivery and performance of this Agreement by the Investor and the consummation by the Investor of the transactions contemplated hereby will not (a) result in a violation of, be in conflict with or constitute a default (with or without notice or lapse of time or both) under (i) any law applicable to the Investor or any of its assets, (ii) any provision of the Investors organizational documents, (iii) any order or judgment of any court or other Governmental Body applicable to the Investor or any of its assets or (iv) any contractual restriction binding on or affecting the Investor or any of its assets or (b) result in the creation or imposition of any lien, mortgage, pledge, claim, right, charge, security interest or other restriction or encumbrance upon any of the Investors assets, including the Company Securities.
4.3 Short Sales and Confidentiality Prior to the Date Hereof. Other than the transaction contemplated by the Purchase Agreement, the Investor has not directly or indirectly, nor has any Person acting on behalf of, or pursuant to, any understanding with the Investor, executed any disposition, including short sales (as such term is defined in Rule 200 of Regulation SHO under the Exchange Act), in the securities of the Company during the period commencing from the time that the Investor first received a term sheet (written or oral) from the Company or any other Person setting forth the material terms of the transaction contemplated by the Purchase Agreement until the date hereof. Other than to Affiliates of the Investor and to representatives and advisors of the Investor and such Affiliates, the Investor has maintained the confidentiality of all disclosures made to it in connection with the transaction contemplated hereunder (including the existence and terms of such transaction).
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ARTICLE 5
REGISTRATION RIGHTS
5.1 Demand Registrations.
(a) Requests for Registration. At any time and from time to time after the third anniversary of the Closing, the Investor may request that the Company effect a registration under the Securities Act with respect to a minimum of five percent (5%) of the Companys Common Stock then outstanding, and the Company shall effect such registration (i) on Form S-1 or any similar form (a Long-Form Registration), or (ii) on Form S-3 or any similar form, if available (a Short-Form Registration; and each a Demand Registration).
(b) Long-Form Registrations. All Long-Form Registrations shall be underwritten registrations.
(c) Deferral of Demand Registration. The Company shall file a registration statement with respect to each Demand Registration requested pursuant to Section 2.1(a) as soon as practicable after receipt of the demand of the Investor; provided, however, that if in the good faith judgment of the Board of Directors of the Company, a requested Demand Registration would be detrimental to the Company in that such registration would interfere with a proposed primary registration of securities by the Company or any other pending material corporate transaction or event and the Board of Directors concludes, as a result, that it is advisable to defer the filing of such registration statement at such time, then the Company shall have the right to defer such filing for the period during which such registration would be detrimental; provided, however, that (i) the Company may not defer the filing for a period of more than ninety (90) days after receipt of the demand of the Investor, (ii) the Company shall not exercise its right to defer a Demand Registration more than once in any three hundred sixty-five (365)-day period, and (iii) if the Company undertakes a primary registration following an exercise of its deferral right, the Investor shall have piggyback rights under Section 5.2 hereof with respect to not less than one-fourth (1/4) of the number of shares of Common Stock to be sold in such offering.
(d) Underwriting. If the Investor intends to distribute the Registrable Securities covered by a Demand Registration by means of an underwriting, it shall so advise the Company as a part of its demand made pursuant to Section 5.1(a). The Company shall have the right to select the managing underwriter(s) for an underwritten Demand Registration, which managing underwriters shall be reasonably acceptable to the Investor. The right of the Investor to participate in an underwritten Demand Registration shall be conditioned upon the Investors participation in such underwriting in accordance with the terms and conditions thereof, and the Company and the Investor will enter into an underwriting agreement in customary form.
(e) Priorities. If other securities are included in any Demand Registration that is an underwritten offering, and the managing underwriter for such offering advises the Company that in its opinion the amount of securities to be included exceeds the amount of securities that can be sold in such offering without adversely affecting the marketability or pricing thereof, the Company will include in such registration all Registrable Securities requested to be included therein prior to the inclusion of any other securities.
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(f) Restrictions on Demand Registrations. The Company shall not be obligated to effect any Demand Registration if (i) at least two (2) Demand Registrations have been effected in the then prior twelve (12)-month period, (ii) such Demand Registration would be effected within ninety (90) days after the effective date of a previous Demand Registration, or (iii) the Company, in effecting such registration, would be required to execute a general consent to service of process in a particular jurisdiction, unless the Company is already subject to service in such jurisdiction and except as may be required under the Securities Act. The Company may postpone for up to ninety (90) days the filing or the effectiveness of a registration statement for a Demand Registration if a certificate signed by the Companys chief financial officer is furnished by the Company to the Investor stating that in the good faith judgment of the Companys senior management such Demand Registration would reasonably be expected to have a material adverse effect on any proposal or plan by the Company to acquire financing, engage in any acquisition of assets (other than in the ordinary course of business), or engage in any merger, consolidation, tender offer, reorganization, disposition or similar transaction.
5.2 Piggyback Registrations.
(a) Request for Inclusion. If the Company shall determine to register any of its securities for its own account or for the account of other security holders of the Company (other than the Investor pursuant to Section 5.1) on any registration form (other than Form S-4 or S-8) that permits the inclusion of Registrable Securities (a Piggyback Registration), the Company will promptly give the Investor written notice thereof and, subject to Section 5.2(c), shall include in such registration all the Registrable Securities requested to be included therein pursuant to the written requests of the Investor received within twenty (20) days after delivery of the Companys notice.
(b) Underwriting. If the Piggyback Registration relates to an underwritten public offering, the Company shall so advise the Investor as a part of the written notice given pursuant to Section 5.2(a). In such event, the right of the Investor to participate in such registration shall be conditioned upon the Investors participation in such underwriting in accordance with the terms and conditions thereof. The Investor shall (together with the Company) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by the Company.
(c) Priorities. If such proposed Piggyback Registration is an underwritten offering and the managing underwriter for such offering advises the Company that the securities requested to be included therein exceed the amount of securities that can be sold in such offering without adversely affecting the marketability or pricing thereof, the securities that the Company determined to register under Section 5.2(a) (either for its own account or for the account of other security holders of the Company, provided that such other security holders are then exercising demand registration rights with respect to the securities to be so registered) shall have priority over any Registrable Securities requested to be included in the Piggyback Registration by the Investor.
5.3 Obligations of the Investor With Respect to the Underwriting Agreement and Prospectuses. The Investor shall cease using any prospectus after receipt of written notice from
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the Company of the happening of any event as a result of which such prospectus (a) contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading in the light of the circumstances under which they were made or (b) is otherwise not legally available to support sales of the Registrable Securities. The Investor shall cooperate with the Company (as reasonably requested by the Company) in connection with the preparation of the registration statement, and, for so long as the Company is obligated to file and keep effective such registration statement, the Investor shall provide to the Company, in writing, for use in the applicable registration statement, all such information regarding the Investor and its plan of distribution for such securities as may be reasonably necessary to enable the Company to prepare the registration statement and prospectus covering such securities, to maintain the effectiveness thereof and otherwise to comply with all applicable requirements of law in connection therewith. The Investor further agrees to become a party to any underwriting agreement entered into by the Company in connection with an offering pursuant to a Demand Registration that is an underwritten offering.
5.4 Expenses of Registration.
(a) Subject to Sections 5.4(b), 5.4(c) and 5.5, all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, fees and disbursements of counsel for the Company and of all independent certified public accountants for the Company, and fees and expenses of underwriters including, if necessary, a qualified independent underwriter within the meaning of the rules of the National Association of Securities Dealers, Inc. (in each case, excluding Selling Expenses (as defined below), which shall be borne by the Investor with respect to the Investors Registrable Securities to be offered pursuant to the applicable registration statement), and other Persons retained by the Company (all such expenses being herein called Registration Expenses), incurred in connection with up to two (2) Demand Registrations during any given twelve (12) month period, and all Piggyback Registrations, shall be borne by the Company; provided, however, that (i) no Demand Registration shall count as one of the Company-paid Demand Registrations unless such registration is declared effective by the Commission and remains continuously effective for a period of one hundred twenty (120) days (or such shorter period as is required to effect the complete distribution of the Registrable Securities covered thereby), and (ii) if the Investor requests more than two (2) Demand Registrations during any given twelve (12) month period, then the Investor shall bear all Registration Expenses associated with such additional Demand Registrations. All underwriting discounts and selling commissions applicable to the sale of Registrable Securities (Selling Expenses) subject to any Demand or Piggyback Registration shall be borne by the Investor.
(b) To the extent expenses are not required to be paid by the Company in Section 5.4(a) above, the Investor shall pay those expenses allocable to its securities that are the subject of the Demand Registration or Piggyback Registration, and any expenses not so allocable shall be borne by all other sellers of securities included in such Demand Registration or Piggyback Registration in proportion to the aggregate selling price of the securities to be so registered.
(c) Notwithstanding Section 5.4(a) above, the Company shall not be required to pay for any expenses of registration begun pursuant to this Article 5 if the registration request is subsequently withdrawn at the request of the Investor (in which case, the Investor shall bear all such expenses).
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5.5 Registration Procedures. In the case of each registration effected by the Company pursuant to this Article 5, the Company will keep the Investor advised in writing as to the initiation of such registration and as to the completion thereof. At its expense, the Company will use reasonable efforts to:
(a) cause such registration to be declared effective by the Commission and, in the case of a Demand Registration, keep such registration effective for a period of one hundred twenty (120) days or until the Investor has completed the distribution described in the registration statement relating thereto, whichever first occurs;
(b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement (including post-effective amendments) as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement;
(c) obtain appropriate qualifications of the securities covered by such registration under state securities or blue sky laws in such jurisdictions as may be requested by the holders of Registrable Securities; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 5.5, (ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of process in any such jurisdiction;
(d) furnish such number of prospectuses and other documents incident thereto, including any amendment of or supplement to the prospectus, as the Investor from time to time may reasonably request;
(e) notify the Investor, at any time when a prospectus relating to the Registrable Securities is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing, and at the request of the Investor, prepare and furnish to the Investor a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in light of the circumstances then existing; provided, that upon receiving notice from the Company under this clause (e), the Investor shall, and shall use its reasonable best efforts to, cause any sales or placement agent or agents for the Registrable Securities and the underwriters, if any, to forthwith discontinue disposition of the Registrable Securities until such Person shall
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have received copies of such amended or supplemented prospectus and, if so directed by the Company, to destroy all copies, other than permanent file copies, then in its possession of the prospectus (prior to such amendment or supplement) covering such Registrable Securities as soon as practicable after the Investors receipt of such notice.;
(f) cause all Registrable Securities covered by such registration to be listed on each securities exchange or inter-dealer quotation system on which similar securities issued by the Company are then listed;
(g) provide a transfer agent and registrar for all Registrable Securities covered by such registration and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(h) otherwise comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first month after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act; and
(i) in connection with any underwritten Demand Registration, the Company will enter into an underwriting agreement in usual and customary form with the managing underwriter(s) of such offering.
5.6 Indemnification.
(a) The Company will indemnify, defend and hold harmless the Investor, each of the Investors officers, directors, partners, agents, employees and representatives, and each person controlling the Investor within the meaning of Section 15 of the Securities Act, with respect to each registration, qualification or compliance effected pursuant to this Article 5, against all expenses, claims, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) (collectively, the Losses) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each such indemnified person for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such Losses; provided, however, that the Company will not be liable in any such case to the extent that any such Losses arise out of or are based on any untrue statement or omission based upon written information furnished to the Company by the Investor and stated to be specifically for use therein. It is agreed that the indemnity agreement contained in this Section 5.6(a) shall not apply to amounts paid in settlement of any such Losses if such settlement is effected without the consent of the Company (unless such consent has been unreasonably withheld).
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(b) The Investor shall indemnify, defend and hold harmless the Company, each of its directors, officers, agents, employees and representatives, and each person who controls the Company within the meaning of Section 15 of the Securities Act, against all Losses arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse such indemnified persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such Losses, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in strict conformity with written information furnished to the Company by the Investor; provided, however, that (i) the Investor shall not be liable hereunder for any amounts in excess of the net proceeds received by the Investor pursuant to such registration, and (ii) the obligations of the Investor hereunder shall not apply to amounts paid in settlement of any such Losses if such settlement is effected without the consent of the Investor (which consent has not been unreasonably withheld).
(c) Each party entitled to indemnification under this Section 5.6 (the Indemnified Party) shall give notice to the party required to provide indemnification (the Indemnifying Party) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom through counsel approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such partys expense; provided, however, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 5.6 to the extent such failure is not prejudicial to the Indemnifying Party. No Indemnifying Party in the defense of any such claim or litigation shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include an unconditional release of such Indemnified Party from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 5.6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied
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by the Indemnifying Party or by the Indemnified Party and the parties relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the Investor shall not be required to contribute amounts in excess of the amounts that such holder would have been required to pay pursuant to the indemnification provisions of this Section 5.6 (assuming such provisions were enforceable).
(e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in an underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.
(f) Prior to the expected filing date of each registration statement pursuant to this Agreement, the Company shall notify the Investor who has timely provided the requisite notice hereunder entitling the Investor to register Registrable Securities in such registration statement of the information, documents and instruments from the Investor that the Company or any underwriter reasonably requests in connection with such registration statement, including, but not limited to a questionnaire, and signatures to a custody agreement, power of attorney, lock-up letter and underwriting agreement, each of which instrument shall be in a form reasonably acceptable to the Investor (the Requested Information). If the Company has not received, on or before the second day before the expected filing date, the Requested Information from the Investor, and provided that the Company has provided the Investor with reasonable advance notice of the expected filing date, the Company will not be obligated to include any of the Investors Registrable Securities in the applicable Registration Statement, and will have no liability for the failure to so include the Investors Registrable Securities.
5.7 Hold-Back Agreements. If requested by the Company or any underwriter of Common Stock of the Company, the Investor shall not sell or otherwise transfer or dispose of any Common Stock (other than pursuant to such registration or, if permitted by any underwriter for such public offering, in a private transfer to a Permitted Transferee) during the one-hundred eighty (180)-day period following the effective date of such registration statement filed pursuant to a Demand Registration under this Article 5; provided, however, that, (a) all executive officers and directors of the Company enter into similar agreements, and (b) if any shareholder of the Company is released from any standoff obligation, the Company shall concurrently therewith cause the same pro rata portion of the Companys outstanding securities then held by the Investor to be released from any standoff obligations. The obligations described in this Section 5.7 shall not apply to a registration on Form S-4 or Form S-8 or similar forms.
ARTICLE 6
CERTAIN ADDITIONAL COVENANTS
6.1 Tax Matters. On or before the Closing (and from time to time thereafter upon the reasonable request of the Company), the Investor agrees to execute and deliver to the Company one or more executed original IRS Form W-9 or applicable IRS Form W-8, or such other forms, certifications and/or documentation relating to the Investor and any subsidiaries of the Investor that directly own Shares and its and their owners as requested by the Company to enable the Company to meet its information reporting and withholding obligations under applicable tax
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laws. Investor agrees to provide new forms (or successor forms), certifications and/or documentation upon the expiration or obsolescence of any previously delivered forms, certifications and/or documentation and agrees to promptly notify the Company of any change in circumstances which would modify or render invalid any portion of any document previously provided under this Section 6.1.
6.2 Insider Trading. The Observer shall comply with the written policies and procedures regarding insider trading and conflicts of interest adopted by the Company, in effect on the date hereof, and as such may be amended from time to time with the approval of the Board; provided that the Observer shall not be required to comply with any such amended policy until the Company has provided a copy of such amended policy to the Observer. The Investor acknowledges that it is aware of such policies and procedures and that it has been provided with a copy of such policies and procedures in effect as of the date of this Agreement.
ARTICLE 7
MISCELLANEOUS
7.1 Headings; Construction. The descriptive headings contained in this Agreement are included for convenience of reference only and will not affect in any way the meaning or interpretation of this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute, law or ordinance will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The words include, includes, and including means including without limitation; the word or means and/or; and the word any means any or all. The parties intend that each representation, warranty and covenant contained herein will have independent significance. If any party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the party has not breached will not detract from or mitigate the fact that the party is in breach of the first representation, warranty or covenant.
7.2 Entire Agreement. This Agreement and the other Transaction Documents, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement and the other Transaction Documents. At or after the Closing, and without further consideration, each party will execute and deliver to the other such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under this Agreement and the other Transaction Documents.
7.3 Further Actions; Cooperation. The Investor agrees to use its reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to give effect to the
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transactions contemplated by the Transaction Documents. Without limiting the generality of the foregoing, the Investor (a) acknowledges that it will prepare and file with the Commission filings under the Exchange Act, including under Section 13(d) of the Exchange Act, relating to its Beneficial Ownership of the Common Stock and (b) agrees to use its reasonable efforts to assist and cooperate with the other parties in promptly preparing, reviewing and executing any such filings under the Exchange Act, including any amendments thereto.
7.4 Notices. Any notice, request or demand or other communication desired or required to be given hereunder will be in writing and will be deemed given upon: (a) actual receipt or personal delivery; (b) confirmed delivery by a standard overnight courier service, or when delivered by hand; (c) three (3) Business Days after being mailed in the United States by certified or registered mail, postage prepaid; or (d) transmitters confirmation of a receipt of an email or facsimile transmission, in each case addressed as respectively set forth below or to such other address as any party will have previously designated by such a notice.
To the Company:
Rentrak Corporation One Airport Center 7700 N.E. Ambassador Place Portland, Oregon 97220 Fax: (866) 656-7413 Attention: Chief Financial Officer Email:dch@rentrak.com |
To the Investor:
Competitive Media Reporting, LLC c/o WPP Group USA, Inc. 100 Park Avenue 4th Floor New York, NY 10017 Fax: (212) 632-2222 Attention: Chief Financial Officer Email: mhowe@wpp.com
and
WPP Luxembourg Gamma Three S.à r.l. 124 boulevard de la Pétrusse L-2330 Luxembourg Fax: +352 26 12 07 21 Attention: Anne Ehrismann / Thierry Lenders | |||||
E-mail: | anne.ehrismann@wpp.lu | |||||
thierry.lenders@wpp.be | ||||||
with a copy (which will not constitute notice) to:
Perkins Coie LLP 1120 NW Couch Street Tenth Floor |
with a copy (which will not constitute notice) to:
Davis & Gilbert LLP 1740 Broadway New York, New York 10019 | |||||
Portland, OR 97209 Fax: (503) 727-2222 |
Attention: | Matthew B. Schneider, Esq. Curt C. Myers, Esq. | ||||
Attention: | John Thomas, Esq. Darren Nakata, Esq. |
Fax: 212-468-4888 | ||||
Email: | mschneider@dglaw.com | |||||
Email: | JRThomas@perkinscoie.com DNakata@perkinscoie.com |
cmyers@dglaw.com |
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7.5 Fees and Expenses. Except as expressly set forth in this Agreement to the contrary (including Article 5 hereof), each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.
7.6 Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement will be governed in all respects, including validity, interpretation, and effect by the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the United States District Court for the Southern District of New York located in the borough of Manhattan in the City of New York, or if such court does not have jurisdiction, the Supreme Court of the State of New York, New York County, for the purposes of any suit, action or other proceeding arising out of or in connection with this Agreement or any transaction contemplated hereby. Each of the parties hereto further agrees that service of any process, summons, notice or document by U.S. registered mail to such partys respective address set forth in Section 7.4 shall be effective service of process for any action, suit or proceeding with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence. Each of the parties hereto irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in (i) the United States District Court for the Southern District of New York or (ii) the Supreme Court of the State of New York, New York County, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each party hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Agreement.
7.7 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery of the Shares, as applicable.
7.8 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties to the fullest extent possible.
7.9 Replacement of Securities. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the
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Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Shares.
7.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Except as otherwise set forth in this Agreement, no party may assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party.
7.11 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person; provided that, the provisions of Section 5.6 are intended for the benefit of the Persons covered thereby or entitled to payment thereunder.
7.12 Amendments; Waiver. This Agreement may be amended, modified or supplemented at any time, but only pursuant to an instrument in writing signed by the Company and the Investor. The Company or the Investor may (a) extend the time for the performance of any of the obligations or other acts of the other parties under this Agreement; (b) waive any inaccuracy in the representations and warranties in this Agreement; and (c) waive compliance with any of the agreements, covenants, or conditions in this Agreement. Any extension or waiver contemplated in this Section 7.12 will be valid only if set forth in an instrument in writing signed by the Company on the one hand, or the Investor on the other hand, as applicable, and will apply only as set forth in such instrument and will not operate as a waiver of, or estoppel with respect to, any failure to comply with any other obligation, covenant, agreement or condition contained herein.
7.13 Counterparts. This Agreement may be executed and delivered, including by facsimile or other electronic transmission (e.g., .pdf or .tiff), in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one agreement.
7.14 Specific Performance. The parties acknowledge and agree that any breach of the terms of this Agreement would give rise to irreparable harm for which money damages would not be an adequate remedy and accordingly the parties agree that, in addition to any other remedies, each will be entitled to enforce the terms of this Agreement by a decree of specific performance without the necessity of proving the inadequacy of money damages as a remedy.
7.15 Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in this Agreement to a number of shares or a price per share shall be amended to appropriately account for such event.
7.16 Effectiveness; Termination. This Agreement will be effective as of the Closing Date immediately following the Closing and will terminate (a) if the Purchase Agreement is
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terminated prior to the Closing, as of the time at which the termination of the Purchase Agreement takes effect, (b) upon the mutual written consent of all of the parties hereto, or (c) if the Investor ceases to Beneficially Own an amount of Common Stock equal to at least five percent (5%) of the Common Stock issued and outstanding; provided, however, that the following shall survive the termination of this Agreement: Sections 5.6 and 5.7 (in the case of termination pursuant clauses (b) or (c) of this Section 7.16), and Sections 7.5, 7.6, 7.11 and this Section 7.16. No termination pursuant to this Section 7.16 shall release the Investor or the Company from their respective indemnification and contribution rights and obligations, if any, pursuant to Section 5.6 herein.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their respective officers thereunto duly as of the date first above written.
RENTRAK CORPORATION | ||
By: | /s/ David I. Chemerow | |
Name: | David I. Chemerow | |
Title: | Chief Operating Officer, | |
Chief Financial Officer and Secretary |
COMPETITIVE MEDIA REPORTING, LLC | ||
By: | /s/ Kevin Farewell | |
Name: | Kevin Farewell | |
Title: | Secretary |
WPP LUXEMBOURG GAMMA THREE S.À R.L. | ||
By: | /s/ Anne Ehrismann / /s/ Thierry Lenders | |
Name: | Anne Ehrismann / Thierry Lenders | |
Title: | Manager / Manager |
Exhibit 4.2
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
This Amendment No. 1, dated October 8, 2014 (this Amendment No. 1), to the Rights Agreement, dated as of May 18, 2005 (the Rights Agreement), is entered into by and between Rentrak Corporation, an Oregon corporation (the Company), and Computershare Trust Company, N.A., successor rights agent to U.S. Stock Transfer Corporation, as Rights Agent (the Rights Agent). Capitalized terms used in this Amendment No. 1 that are not otherwise herein defined shall have the same meaning as set forth in the Rights Agreement.
RECITALS
A. Pursuant to Section 26 of the Rights Agreement, for so long as the Rights are then redeemable, the Company may in its sole and absolute discretion, and the Rights Agent shall, if the Company so directs, supplement or amend any provision of the Rights Agreement in any respect without the approval of any holders of Rights or Common Shares.
B. The Company now desires to amend the Rights Agreement as set forth herein.
AGREEMENT
In consideration of the foregoing and acting pursuant to the power and authority granted to the Company under Section 26 of Rights Agreement, the Company hereby amends the Rights Agreement as follows:
1. Definitions.
(a) The definition of Acquiring Person as set forth in Section 1.1 of the Rights Agreement is hereby amended by adding the following paragraph to the end of Section 1.1:
Notwithstanding the foregoing, Competitive Media Reporting, LLC and WPP Luxembourg will not become an Acquiring Person (i) as a result of the acquisition by Competitive Media Reporting, LLC of Common Shares pursuant to the Asset Purchase Agreement entered into on October 8, 2014 and the subsequent transfer of Common Shares to WPP Luxembourg, (ii) as a result of the acquisition by WPP Luxembourg of Common Shares pursuant to the Stock Purchase Agreement entered into on October 8, 2014, or (iii) as a result of the acquisition by Competitive Media Reporting, LLC and WPP Luxembourg from time to time of additional Common Shares in the secondary market or otherwise in an amount such that (after giving effect to any such purchases) Competitive Media Reporting, LLC and WPP Luxembourg beneficially own no more than 20% of the then outstanding Common Shares.
(b) A new Section 1.12 shall be added (and the numbering of subsequent sections altered accordingly) as follows:
1.12 WPP Luxembourg means WPP Luxembourg Gamma Three S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg and any other wholly-owned direct or indirect subsidiary of WPP plc.
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2. No Other Changes. Except as expressly provided herein, the Rights Agreement is not amended, supplemented, modified, revised or otherwise affected by this Amendment No. 1, and the Rights Agreement and the rights and obligations of the parties thereunder are hereby ratified and confirmed in all respects.
3. Governing Law. This Amendment No. 1 shall be deemed to be a contract made under the laws of Oregon and for all purposes shall be governed by and construed in accordance with the laws of such jurisdiction applicable to contracts to be made and performed entirely within such jurisdiction.
4. Counterparts. This Amendment No. 1 may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. A signature to this Amendment No. 1 executed and/or transmitted electronically shall have the same authority, effect, and enforceability as an original signature.
5. Descriptive Headings. Descriptive headings of the several Sections of this Amendment No. 1 are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 as of the date first written above.
RENTRAK CORPORATION | ||||
By: | /s/ David I. Chemerow | |||
Name: | David I. Chemerow | |||
Title: | Chief Operating Officer, Chief Financial Officer and Secretary | |||
COMPUTERSHARE TRUST COMPANY, N.A. | ||||
By: | /s/ Joseph S. Campbell | |||
Name: | Joseph S. Campbell | |||
Title: | Vice President |