EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of October 1, 2005, between
ALLAN McLENNAN ("Executive") and RENTRAK CORPORATION, an Oregon corporation
("Corporation").
1. SERVICES
1.1 Employment Position. Corporation agrees to employ Executive as
President of Corporation's Information Division, and Executive accepts such
employment, under the terms and conditions of this Agreement. Executive also
agrees to serve, if elected, without separate compensation, as an officer and/or
director of any subsidiary or affiliate of Corporation. Corporation represents
to Executive that it currently has and will maintain directors and officers
liability insurance.
1.2 Term; At-Will Employment Relationship. The term of this Agreement (the
"Term") will commence on October 1, 2005, and will expire October 31, 2006.
Notwithstanding the foregoing, (a) in the event of a Change in Control of
Corporation, as defined in Section 7 of this Agreement, during the Term of this
Agreement, the Term will automatically be extended to December 31 of the second
calendar year following the year in which the Change in Control occurs; and (b)
the parties acknowledge that Executive will be an at-will employee of
Corporation and nothing in this Agreement will limit the right of Corporation or
Executive to terminate this Agreement at any time for any reason or for no
reason, subject to the provisions of this Agreement describing the compensation
payable, if any, in connection with such a termination of employment.
1.3 Duties. For the period from October 1, 2005, through October 31, 2005,
Executive will be a part-time employee of Corporation with such duties as are
assigned by Corporation's Chief Executive Officer. During the remaining portion
of the Term, Executive will serve in a full-time executive capacity as President
of Corporation's Information Division. Executive will report directly to
Corporation's Chief Executive Officer. Executive will be responsible for
management of the Information Division and such other or different duties on
behalf of Corporation as may be assigned from time to time by Corporation's
Chief Executive Officer or Board of Directors (the "Board"). Executive will do
such traveling as may be required in the performance of his duties under this
Agreement.
1.4 Outside Activities. Except as provided in Section 1.3 with respect to
the initial part-time engagement and except as expressly approved by
Corporation's Chief Executive Officer, during his employment under this
Agreement, Executive will devote his full business time, energies, and attention
to the business and affairs of Corporation, and to the promotion and advancement
of its interests. Executive will perform his services faithfully, competently,
and to the best of his abilities and, except as expressly approved by
Corporation's Chief Executive Officer, will not engage in professional or
personal business activities that may require an appreciable portion of
Executive's time or effort to the detriment of Corporation's business.
1.5 Application of Corporate Policies. Executive will, except as otherwise
provided in this Agreement, be subject to Corporation's rules, practices, and
policies applicable generally
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EMPLOYMENT AGREEMENT
to Corporation's senior executive employees, assuch rules, practices, and
policies may be revised from time to time by the Board.
2. COMPENSATION AND EXPENSES
2.1 Base Salary. As compensation for services under this Agreement,
Corporation will pay to Executive a base salary of $275,000 per year, payable in
a manner consistent with Corporation's payroll practices for management
employees, as such practices may be revised from time to time. Effective April
1, 2006, Corporation's Compensation Committee (the "Committee") will review
Executive's performance, the performance of Corporation, and Corporation's
economic prospects for the coming fiscal year, and will consider in its sole
discretion whether to increase (but will not decrease) the base salary payable
to Executive.
2.2 Bonus Compensation.
2.2.1 General. Executive will participate, together with Corporation's
other senior executives, in Corporation's Annual Incentive Compensation
Plan under which Executive will be assigned predetermined incentive target
levels and performance criteria and factors established in the discretion
of the Committee and will have the opportunity to receive bonus
compensation based on such criteria.
2.2.2 Bonus Pool Program. Executive's Information Division business
unit "Report Card" parameters and "Personal Expectation" performance
parameters for the fiscal year ending March 31, 2006 ("Fiscal 2006") will
be prepared by Corporation and reviewed with Executive not later than
November 30, 2005. Executive's initial targeted bonus for Fiscal 2005 will
be $40,000. As soon as practicable after March 31, 2006, the Committee will
determine the bonus pool for Corporation's senior executives for Fiscal
2005, and evaluate the extent to which Executive and other senior
executives have met their respective Report Card and Personal Expectation
parameters for Fiscal 2005, and, based on the extent to which such
parameters have been accomplished, (a) determine which senior executives
will participate in the bonus pool for Fiscal 2006 and (b) determine the
allocation of the bonus pool among the participating senior executives.
Notwithstanding the foregoing, recognizing that, during his first year,
Executive will likely spend more time than in subsequent years on overall
orientation, establishing internal relationships, organizing the
Information Division and his management team, etc., $20,000 of the target
bonus for Fiscal 2006 is guaranteed to be paid to Executive. Executive will
not be eligible to receive any portion of the bonus pool (including any
guaranteed portion) for Fiscal 2005 unless Executive remains an employee of
Corporation through March 31, 2006. Executive will be entitled to
participate in Corporation's Bonus Pool Program for subsequent fiscal years
during which Executive remains employed by Corporation based on similar
performance parameters as approved by Corporation.
2.2.3 Signing Bonus. Corporation will pay Executive a signing bonus in
the amount of $10,000 (subject to applicable withholding and payroll taxes)
in its first payroll period following Executive's commencement of full time
employment with Corporation (providing this Agreement has been executed).
Executive agrees to repay
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EMPLOYMENT AGREEMENT
the full $10,000 signing bonus to Corporation in the event Executive
voluntarily terminates his employment with Corporation for any reason on or
before October 31, 2006.
2.2.4 Information Division Performance Incentive. In the event that
operating income for the Information Division for the fiscal year ending
March 31, 2006, exceeds $4,542,500 (115% of $3,950,000 (the "Projected
Amount") projected by Corporation for such fiscal year), Corporation will
pay Executive an Information Division Performance Incentive Bonus (in
addition to the other bonus amounts described in this Section 2.2.4) equal
to 15% of the excess of the operating income for such fiscal year over the
Projected Amount. Such Incentive payment will be payable in a single lump
sum payment (subject to applicable withholding and payroll taxes) as soon
as practicable after the operating income for the Information Division for
the fiscal year is determined by Corporation. Executive will not be
eligible to receive any portion of the Information Division Performance
Incentive for such fiscal year unless Executive remains an employee of
Corporation through March 31, 2006.
2.3 Equity-Based or Other Long-Term Incentive Compensation.
2.3.1 General. Executive will participate, together with Corporation's
other senior executives, in Corporation's 2005 Stock Incentive Plan (the
"Plan"). Executive will be granted options to purchase shares of
Corporation's common stock and/or other equity-based awards under the Plan,
or under another long-term incentive compensation plan that may be
developed by Corporation for its senior executives, at the times and in the
amounts determined by the Committee. All awards will be subject to the
provisions of the Plan or such other long-term plan.
2.3.2 Initial Grant. Effective as of October 3, 2005, Corporation will
grant Executive a nonqualified stock option under the Plan for 75,000
shares with an option price equal to the Fair Market Value (as defined in
the Plan) of a share of Corporation's common stock on such date. The option
will be subject to the terms and conditions of an Award Agreement in the
form attached to this Agreement as Appendix 2.3.2.
2.4 Additional Employee Benefits. Executive will receive an annual grant of
208 hours of credit (or such higher number of hours as are credited to
Corporation's other senior executives) under Corporation's Personal Time Off
(PTO) program. Personal time off and vacation may be taken in accordance with
Corporation's rules, practices, and policies applicable to Corporation's senior
executive employees, as such rules, practices, and policies may be revised from
time to time by the Board or the Committee. During the Term, Executive will be
entitled to any other employee benefits approved by the Board or the Committee,
or available to officers and other management employees generally, including any
life and medical insurance plans, 401(k) and other similar plans, and health and
welfare plans, each whether now existing or hereafter approved by the Board or
the Committee ("Benefit Plans"). The foregoing will not be construed to require
Corporation to establish any such plans or to prevent Corporation from modifying
or terminating any such Benefit Plans.
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EMPLOYMENT AGREEMENT
2.5 Expenses. Subject to review and approval by the chairman of
Corporation's audit committee, Corporation will reimburse Executive for
reasonable expenses actually incurred by Executive in connection with the
business of Corporation. Executive will submit to Corporation such
substantiation for such expenses as may be reasonably required by Corporation.
2.6 Relocation. The parties are targeting January 1, 2006 as the date by
which Executive's relocation to Portland will be completed. To simplify the
relocation process and fully enable Executive to manage his move from the Bay
Area to the Portland area in a manner best suited to his needs, Rentrak will
provide Executive with a lump sum payment of $43,000. This payment is designed
to cover all out-of-pocket expenses related to the movement and transportation
of his personal property, as well as any other relocation expenses not covered
by this agreement. During the relocation process, Corporation will pay or
reimburse Executive for reasonable transportation and interim housing expenses
as approved by Corporation.
3. CONFIDENTIAL INFORMATION
3.1 Definition. "Confidential Information" is all nonpublic information
relating to Corporation or its business that is disclosed to Executive, that
Executive produces, or that Executive otherwise obtains during employment.
Confidential Information also includes information received from third parties
that Corporation has agreed to treat as confidential. Examples of Confidential
Information include, without limitation, marketing plans, customer lists or
other customer information, product design and manufacturing information, and
financial information. Confidential Information does not include any information
that (i) is within the public domain other than as a result of disclosure by
Executive in violation of this Agreement, (ii) was, on or before the date of
disclosure to Executive, already known by Executive, or (iii) Executive is
required to disclose in any governmental, administrative, judicial, or
quasi-judicial proceeding, but only to the extent that Executive is so required
to disclose and provided that Executive takes reasonable steps to request
confidential treatment of such information in such proceeding.
3.2 Access to Information. Executive acknowledges that in the course of his
employment he has had and will have access to Confidential Information, that
such information is a valuable asset of Corporation, and that its disclosure or
unauthorized use will cause Corporation substantial harm.
3.3 Ownership. Executive acknowledges that all Confidential Information
will continue to be the exclusive property of Corporation (or the third party
that disclosed it to Corporation), whether or not prepared in whole or in part
by Executive and whether or not disclosed to Executive or entrusted to his
custody in connection with his employment by Corporation.
3.4 Nondisclosure and Nonuse. Unless authorized or instructed in advance in
writing by Corporation, or required by law (as determined by licensed legal
counsel), Executive will not, except as required in the course of Corporation's
business, during or after his employment, disclose to others or use any
Confidential Information, unless and until, and then only to the extent that,
such items become available to the public through no fault of Executive.
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EMPLOYMENT AGREEMENT
3.5 Return of Confidential Information. Upon request by Corporation during
or after his employment, and without request upon termination of employment
pursuant to this Agreement, Executive will deliver immediately to Corporation
all written, stored, saved, or otherwise tangible materials containing
Confidential Information without retaining any excerpts or copies.
3.6 Duration. The obligations set forth in this Section 3 will continue
beyond the term of employment of Executive by Corporation and for so long as
Executive possesses Confidential Information or, if earlier, until 18 months
following termination of Executive's employment for any reason.
4. NONCOMPETITION
4.1 Competitive Entity. For purposes of this Agreement, a Competitive
Entity is any firm, corporation, partnership, limited liability company,
business trust, or other entity that is engaged in the development,
distribution, sale, or servicing of analytical software and/or the analysis of
market information relating to all or any of the following (a "Software Related
Activity"):
(a) The wholesale and/or revenue sharing physical or electronic
distribution of home entertainment software in any media, including
without limitation video cassettes, DVDs, and Video On-Demand
("Entertainment Software");
(b) The fulfillment, warehouse, or distributing business in
connection with the Entertainment Software industry;
(c) The collection, aggregation, tracking, and dissemination of
market information and data (such as sales, marketing, inventory,
occurrence, expenditure, and advertising data) related to consumer
activity in connection with the Entertainment Software industry; or
(d) The delivery of technological intelligence, industry
analysis, and strategic and tactical guidance with respect to consumer
activity in connection with the Entertainment Software industry.
Furthermore, a Competitive Entity includes any business directly competitive
with a business then engaged in by Corporation or identified in Corporation's
three-year business plan that is related to a Software Related Activity of
Corporation.
4.2 Covenant. During the Term of and for a period ending on the last day of
the applicable Noncompete Period described in Section 5.7, Executive will not,
within any geographical area where Corporation engages in business:
(a) Directly or indirectly, alone or with any individual,
partnership, limited liability company, corporation, or other entity,
become associated with, render services to, invest in, represent,
advise, or otherwise participate in any Competitive Entity; provided,
however, that nothing contained in this Section 4.1
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EMPLOYMENT AGREEMENT
will prevent Executive from owning less than 5 percent of any class of
equity or debt securities listed on a national securities exchange or
market, provided such involvement is solely as a passive investor;
(b) Solicit any business on behalf of a Competitive Entity from
any individual, firm, partnership, corporation, or other entity that
is a customer of Corporation during the 12 months immediately
preceding the date Executive's employment with Corporation is
terminated; or
(c) Employ or otherwise engage, or offer to employ for Executive
or any other person, entity, or corporation, the services or
employment of any person who has been an employee, sales
representative, or agent of Corporation during the 12 months preceding
the date Executive's employment with Corporation is terminated.
For purposes of this Section 4, "Corporation" means Corporation and its
subsidiaries (whether now existing or subsequently created) and their successors
and assigns.
4.3 Severability; Reform of Covenant. If, in any judicial proceeding, a
court refuses to enforce this covenant not to compete because it covers too
extensive a geographic area or is too long in its duration, the parties intend
that it be reformed and enforced to the maximum extent permitted under
applicable law.
5. TERMINATION
Executive's employment under this Agreement may terminate as follows:
5.1 Death. Executive's employment will terminate automatically upon the
date of Executive's death.
5.2 Disability. Corporation may, at its option, terminate Executive's
employment under this Agreement upon written notice to Executive if Executive,
because of physical or mental incapacity or disability, fails to perform the
essential functions of his position, with reasonable accommodation, required of
him under this Agreement for a continuous period of 120 days or any 180 days
within any 12-month period.
5.3 Termination by Corporation for Cause. Corporation may terminate
Executive's employment under this Agreement for Cause at any time. For purposes
of this Agreement, "Cause" means: (a) Executive's willful material misconduct in
performance of the duties of his position with Corporation or a material breach
by Executive of this Agreement, (b) Executive's willful commission of a material
act of malfeasance, dishonesty, or breach of trust against Corporation or its
successors that materially harms or discredits Corporation or its successors or
is materially detrimental to reputation of Corporation or its successors, or (c)
Executive's conviction of or a plea of nolo contendere to a felony involving
moral turpitude. In all cases, Corporation will give Executive notice setting
for forth in reasonable detail the specific respects in which the Corporation
believes it has Cause to terminate Executive and allow Executive a reasonable
opportunity to correct such conduct.
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EMPLOYMENT AGREEMENT
5.4 Termination by Executive for Good Reason. Executive may terminate his
employment with Corporation under this Agreement for "Good Reason" if
Corporation has not cured the actions or circumstances which are the basis for
such termination within 30 days following receipt by the Board of written notice
from Executive setting forth the actions or circumstances constituting Good
Reason. For purposes of this Agreement, "Good Reason" means:
(a) Failure of Corporation to comply with the terms of this
Agreement; or
(b) The occurrence (without Executive's express written consent)
of any of the following acts by Corporation or failures by Corporation
to act:
(i) A substantial adverse alteration in the nature or status
of Executive's title, position, duties, or reporting
responsibilities as an executive of Corporation;
(ii) A reduction in Executive's base salary as set forth in
this Agreement;
(iii) The failure by Corporation to continue to provide
Executive with benefits and participation in Benefit Plans; or
(iv) The relocation of Corporation's executive offices at
which Executive is to provide services to a location more than 35
miles from its current location on N.E. Ambassador Place in
Portland, Oregon.
5.5 Termination by Corporation Without Cause. Corporation may terminate
Executive's employment with Corporation without Cause for any reason or for no
reason at any time by written notice to Executive.
5.6 Termination by Executive Without Good Reason. Executive may terminate
Executive's employment with Corporation other than for Good Reason for any other
reason or for no reason at any time by written notice to the Chief Executive
Officer of the Corporation.
5.7 Applicable Noncompete Periods upon Termination. The duration of
Executive's obligations under Section 4 (the "Noncompete Period") will be as
follows:
5.7.1 In the event Executive terminates his employment with
Corporation for Good Reason under Section 5.4 or Corporation terminates
Executive's employment with Corporation without Cause under Section 5.5,
the Noncompete Period will continue so long as Executive receives Monthly
Severance Payments under Section 6.2. Executive's obligations under this
Agreement will terminate immediately if Corporation fails to make a Monthly
Severance Payment within 15 days after it is due. For this purpose, a check
for a Monthly Severance Payment mailed within such 15-day period (as
evidenced by official postmark) will be deemed to be made within such
15-day period.
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EMPLOYMENT AGREEMENT
5.7.2 Subject to extension by Corporation as provided below, in the
event Executive terminates his employment with Corporation other than for
Good Reason under Section 5.6 or Executive's employment with Corporation
terminates due to the expiration of the Term, the Noncompete Period will be
one year from the date of termination. Corporation may in its sole
discretion extend the Noncompete Period for a period not to extend beyond
24 months from the date the Noncompete Period would otherwise expire by
agreeing to make Monthly Severance Payments to Executive during the
extended Noncompete Period. To extend the Noncompete Period, Corporation
must give Executive written notice (an "Extension Notice") no later than 60
days following the date of termination, stating the elected duration of the
extended Noncompete Period. The Extension Notice will constitute a binding
commitment by Corporation to make Monthly Severance Payments for the full
duration of the extended Noncompete Period and no further extension of the
Noncompete Period will be permitted. Executive's obligations under this
Agreement will terminate immediately if Corporation fails to make a Monthly
Severance Payment within 15 days after it is due.
5.7.3 In the event Corporation terminates Executive's employment for
Cause, the Noncompete Period will be one year from the date of termination.
6. COMPENSATION UPON TERMINATION
6.1 Death or Disability. Upon termination of Executive's employment
pursuant to Section 5.1 or Section 5.2 prior to the expiration of the Term, all
obligations of Corporation under this Agreement will cease, except that
Executive will be entitled to:
(a) Accrued base salary through the date of Executive's
termination of employment;
(b) A prorated portion of the bonuses described in Section 2.2
(not less than a pro rata portion of the minimum bonus described in
that Section), to the extent not previously paid; and
(c) Other benefits under Benefit Plans to which Executive was
entitled upon such termination of employment in accordance with the
terms of such Benefit Plans.
6.2 Termination Without Cause or by Executive for Good Reason.
6.2.1 Monthly Severance Payments.
(a) In the event that no Change in Control (as defined in Section
7) has occurred and, prior to the expiration of the Term, Executive
terminates his employment with Corporation for Good Reason under
Section 5.4 or Corporation terminates Executive's employment with
Corporation without Cause under Section 5.5, Executive will be
entitled to the benefits described in Section 6.1, plus severance
payments equal to 12 months multiplied by the base salary per month in
effect as of the date of termination, payable in equal monthly
installments (each installment, a "Monthly Severance Payment").
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EMPLOYMENT AGREEMENT
Executive acknowledges that the 12-month severance period reflects
Executive's status as a new employee and that in the event of any new
employment agreement following the Term, the severance period will be
limited to six months (or, if longer, the number of whole calendar
months remaining in the term of such new agreement). This provision
does not require either Corporation or Executive to enter into any
further employment agreement.
(b) Corporation's obligations to pay Monthly Severance Payments
under this Section 6.2.1 and to continue medical and dental insurance
benefits as provided in Section 6.2.2 are expressly conditioned on (i)
Executive's execution of a release (in the form attached to this
Agreement as Appendix 6.2.1(b), with such modifications specifically
in response to changes in applicable law as counsel for Corporation
determines to be reasonably necessary or desirable to ensure effective
release of all claims) of any and all claims that Executive may hold
through the date such release is executed against Corporation or any
of its subsidiaries or affiliates, and (ii) the expiration of any
applicable revocation period specified in such release without
revocation of the release by Executive.
(c) Monthly Severance Payments will be payable in a manner
consistent with Corporation's payroll practices for management
employees.
(d) Executive will not be required to mitigate the Monthly
Severance Payments pursuant to this Agreement by seeking other
employment; provided however, that amounts payable by Corporation as
Monthly Severance Payments will be reduced by compensation actually
received by Executive from a new employer during the severance period
described above.
6.2.2 Medical and Dental Insurance Benefits. In addition to Monthly
Severance Payments, subject to the execution of a release as described in
Section 6.2.1(b), Corporation will continue to provide or will arrange to
provide (at Corporation's cost) Executive with medical and dental insurance
benefits substantially similar to those to which Executive was entitled as
of the date of termination for a period of 12 months from date of
termination or until Corporation's obligation to make Monthly Severance
Payments expires, whichever is later; provided, however, that if Executive
is employed with another employer and is eligible to receive medical and
dental insurance benefits under another employer-provided plan,
Corporation's obligation to provide the medical and dental benefits
described in this paragraph will terminate automatically.
6.2.3 Effect of Competition. Corporation's obligation to make Monthly
Severance Payments and provide medical and dental insurance benefits to
Executive will terminate if Executive breaches a material provision of
Section 4.
6.3 Termination For Cause or by Executive Without Good Reason. In the event
that, prior to the expiration of the Term, Corporation terminates Executive's
employment with Corporation for Cause under Section 5.3, or Executive terminates
his employment with Corporation for other than Good Reason under Section 5.6,
Corporation's obligations under this Agreement will cease and Executive will be
entitled to that portion of his base salary and
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EMPLOYMENT AGREEMENT
employment benefits for which he is qualified as of the date of termination and
Executive will not be entitled to any other compensation or consideration.
7. EFFECT OF CHANGE IN CONTROL
7.1 Definitions.
"Change in Control". For purposes of this Agreement, a "Change in Control"
will be deemed to have occurred upon the first fulfillment of the conditions set
forth in any one of the following three paragraphs:
(a) Any "person" (as that term is defined in Section 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than a trustee or other fiduciary holding
securities under an employee benefit plan of Corporation, is or
becomes a beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of
securities of Corporation representing 25% or more of the combined
voting power of Corporation's then outstanding securities;
(b) A majority of the directors elected at any annual or special
meeting of shareholders are not individuals nominated by Corporation's
then incumbent Board; or
(c) The shareholders of Corporation approve a merger or
consolidation of Corporation with any other corporation, other than a
merger or consolidation which would result in the voting securities of
Corporation outstanding immediately prior to such transaction
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least 75%
of the combined voting power of the voting securities of Corporation
or of such surviving entity outstanding immediately after such merger
or consolidation, or the shareholders of Corporation approve a plan of
complete liquidation of Corporation or an agreement for the sale or
disposition by Corporation of all or substantially all of its assets.
"Other Payment" means any payment or benefit payable to Executive in
connection with a Change in Control of Corporation pursuant to any plan,
arrangement, or agreement (other than this Agreement) with Corporation, a person
whose actions result in such Change in Control, or any person affiliated with
Corporation or such person.
"Total Payments" means all payments or benefits payable to Executive in
connection with a Change in Control, including Change in Control Payments
pursuant to this Agreement and any Other Payments pursuant to any other plan,
agreement, or arrangement with Corporation, a person whose actions result in the
Change in Control, or any person affiliated with Corporation or such person.
7.2 Compensation Upon Termination Following a Change in Control.
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EMPLOYMENT AGREEMENT
7.2.1 Change in Control Payments. In the event of Corporation's
termination of Executive without Cause, or Executive's termination of
employment with Corporation for Good Reason, following a Change in Control
and at any time during the Term of this Agreement (as extended pursuant to
Section 1.2), Executive will be entitled to the benefits described in
Section 6.1 plus the following payments (the "Change in Control Payments"):
(a) A lump sum severance payment equal to two times Executive's
annual base salary as in effect immediately before the Change in
Control; and
(b) Continuation for a period of two years following such
termination of Executive's participation in all Benefit Plans in which
Executive was entitled to participate immediately before the Change in
Control, provided that such continued participation is possible under
the general terms and provisions of such Benefit Plans. In the event
Executive's continued participation in any Benefit Plan is barred by
the provisions of the Benefit Plan, Corporation will, at Corporation's
cost, arrange to provide Executive with benefits substantially similar
to those which Executive was entitled to receive under the Benefit
Plan.
7.2.2 Reduction. In the event that any portion of the Total Payments
payable to Executive in connection with a Change in Control of Corporation
would constitute an "excess parachute payment" within the meaning of IRC
ss. 280G(b) that is subject to the excise tax imposed on so-called excess
parachute payments pursuant to IRC ss.4999 (an "Excise Tax"), the Change in
Control Payments otherwise payable under this Section 7.2.1 will be reduced
to avoid such Excise Tax if, and to the extent that, such reduction will
result in a larger after-tax benefit to Executive, taking into account all
applicable federal, state, and local income and excise taxes.
7.2.3 Application. For purposes of this Section 7.2:
(a) No portion of the Total Payments, the receipts or enjoyment
of which Executive has effectively waived in writing prior to the date
of payment of any Change in Control Payments, will be taken into
account;
(b) No portion of the Total Payments will be taken into account
which, in the opinion of tax counsel selected by Corporation and
reasonably acceptable to Executive ("Tax Counsel"), does not
constitute a "parachute payment" within the meaning of IRC ss. 280G;
(c) If Executive and Corporation disagree whether any payment of
Change in Control Payments will result in an Excise Tax or whether a
reduction in any Change in Control Payments will result in a larger
after-tax benefit to Executive, the matter will be conclusively
resolved by an opinion of Tax Counsel;
(d) Executive agrees to provide Tax Counsel with all financial
information necessary to determine the after-tax consequences of
payments of Change in Control Payments for purposes of determining
whether, or to what
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extent, Change in Control Payments are to be reduced pursuant to
Section 7.2.2; and
(e) The value of any noncash benefit or any deferred payment or
benefit included in the Total Payments, and whether or not all or a
portion of any payment or benefit is a "parachute payment" for
purposes of this Section 7.2, will be determined by Corporation's
independent accountants in accordance with the principles of IRC ss.
280(G)(d)(3) and (4).
7.2.4 Effect on Other Agreements. In the event that any other
agreement, plan, or arrangement providing for Other Payments (an "Other
Agreement") has a provision that requires a reduction in the Other Payment
governed by such Other Agreement to avoid or eliminate an "excess parachute
payment" for purposes of IRC ss. 280G, the reduction in Change in Control
Payments pursuant to Section 7.2.2 will be given effect before any
reduction in the Other Payment pursuant to the Other Agreement. To the
extent possible, Corporation and Executive agree that reductions in
benefits under any plan, program, or arrangement of Corporation will be
reduced (only to the extent described in Section 7.2.2) in the following
order of priority:
(a) Change in Control Payments under this Agreement;
(b) Benefit Plan benefit continuation pursuant to Section
7.2.1(b); and
(c) The acceleration in the exercisability of any stock option or
other stock related award granted by Corporation.
8. REMEDIES
The respective rights and duties of Corporation and Executive under this
Agreement are in addition to, and not in lieu of, those rights and duties
afforded to and imposed upon them by law or at equity. Executive acknowledges
that any breach or threatened breach of Sections 3 or 4 of this Agreement will
cause irreparable harm to Corporation and that any remedy at law would be
inadequate to protect the legitimate interests of Corporation. Executive agrees
that Corporation will be entitled to specific performance, or to any other form
of injunctive relief to enforce its rights under Sections 3 or 4 of this
Agreement without the necessity of showing actual damage or irreparable harm or
the posting of any bond or other security. Such remedies will be in addition to
any other remedy available to Corporation at law or in equity.
9. SEVERABILITY OF PROVISIONS
The provisions of this Agreement are severable, and if any provision of
this Agreement is held invalid, unenforceable, or unreasonable, it will be
enforced to the maximum extent permissible, and the remaining provisions of the
Agreement will continue in full force and effect.
10. NONWAIVER
Failure of Corporation at any time to require performance of any provision
of this Agreement will not limit the right of Corporation to enforce the
provision. No provision of this
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EMPLOYMENT AGREEMENT
Agreement or breach of this Agreement may be waived by either party except in
writing signed by that party. A waiver of any breach of a provision of this
Agreement will be construed narrowly and will not be deemed to be a waiver of
any succeeding breach of that provision or a waiver of that provision itself or
of any other provision.
11. NOTICES
All notices required or permitted under this Agreement must be in writing
and will be deemed to have been given if delivered by hand, or mailed by
first-class, certified mail, return receipt requested, postage prepaid, to the
respective parties as follows (or to such other address as any party may
indicate by a notice delivered to the other parties hereto): (i) if to
Executive, to his residence as listed in Corporation's records, and (ii) if to
Corporation, to the address of the principal office of Corporation, at:
One Airport Center
7700 N.E. Ambassador Place
Portland, Oregon 97220
With a copy to:
12. ATTORNEY FEES
In the event of any suit or action or arbitration proceeding to enforce or
interpret any provision of this Agreement (or which is based on this Agreement),
the prevailing party will be entitled to recover, in addition to other costs,
the reasonable attorney fees incurred by the prevailing party in connection with
such suit, action, or arbitration, and in any appeal. The determination of who
is the prevailing party and the amount of reasonable attorney fees to be paid to
the prevailing party will be decided by the arbitrator or arbitrators (with
respect to attorney fees incurred prior to and during the arbitration
proceedings) and by the court or courts, including any appellate courts, in
which the matter is tried, heard, or decided, including the court which hears
any exceptions made to an arbitration award submitted to it for confirmation as
a judgment (with respect to attorney fees incurred in such confirmation
proceedings).
13. GOVERNING LAW
This Agreement will be construed in accordance with the laws of the state
of Oregon, without regard to any conflicts of laws rules. Any suit or action
arising out of or in connection with this Agreement, or any breach of this
Agreement, must be brought and maintained in the Multnomah County Circuit Court
of the State of Oregon. The parties irrevocably submit to the jurisdiction of
such court for the purpose of such suit or action and expressly and irrevocably
waive, to the fullest extent permitted by law, any claim that any such suit or
action has been brought in an inconvenient forum.
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EMPLOYMENT AGREEMENT
14. GENERAL TERMS AND CONDITIONS
This Agreement constitutes the entire understanding of the parties relating
to the employment of Executive by Corporation, and supersedes and replaces all
written and oral agreements heretofore made or existing by and between the
parties relating to such employment except that the Confidentiality and
Noncompetition Agreement dated October 7, 1988, between Corporation and
Executive will remain in full force and effect. Executive acknowledges that he
has read and understood all of the provisions of this Agreement, that the
restrictions contained in Sections 4 and 5.7 of this Agreement are reasonable
and necessary for the protection of Corporation's business and that Executive
entered into this contract in connection with a bona fide advancement of
Executive with Corporation in that Executive was granted a long-term employment
contract. This Agreement will inure to the benefit of any successors or assigns
of Corporation. All captions used in this Agreement are intended solely for
convenience of reference and will in no way limit any of the provisions of this
Agreement.
The parties have executed this Employment Agreement as of the date stated
above.
RENTRAK CORPORATION
/s/ Allan McLennan /s/ Paul Rosenbaum
- ------------------------------ By:------------------------------------------
Allan McLennan Title: Paul Rosenbaum,
Chief Executive Officer
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EMPLOYMENT AGREEMENT