INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, dated__________________, is made by and
between Rentrak Corporation, an Oregon corporation (hereinafter
referred to as "Company"), and , an
employee of the Company or a Subsidiary of the Company
(hereinafter referred to as "Employee"):
WHEREAS, the Company wishes to afford the Employee the
opportunity to purchase shares of its $0.01 par value Common
Stock; and
WHEREAS, the Company wishes to carry out the 1997
Equity Participation Plan of Rentrak Corporation (hereinafter
referred to as "Plan") (the terms of which are hereby
incorporated by reference and made a part of this Agreement); and
WHEREAS, the Committee, appointed to administer the
Plan, has delegated to certain officers of the Company the
authority to implement grants of Options under the Plan; and
WHEREAS, such officers have determined that it would be
to the advantage and best interest of the Company and its
shareholders to grant the Incentive Stock Option provided for
herein to the Employee as an inducement to enter into or remain
in the service of the Company or its Subsidiaries and as an
incentive for increased efforts during such service;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable
consideration, receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
ARTICLE I
GRANT OF OPTION
Section 1.1 - Grant of Option
In consideration of the Employee's agreement to remain
in the employ of the Company or its Subsidiaries and for other
good and valuable consideration, on the date hereof the Company
irrevocably grants to the Employee the option to purchase any
part or all of an aggregate of ____________shares of its $0.001
par value Common Stock upon the terms and conditions set forth in
this Agreement.
Section 1.2 - Purchase Price
The purchase price of the shares of stock covered by
the Option shall be $_________ per share without commission or
other charge.
Section 1.3 - Consideration to Company
In consideration of the granting of this Option by the
Company, the Employee agrees to render faithful and efficient
services to the Company or a Subsidiary, with such duties and
responsibilities as the Company shall from time to time
prescribe. Nothing in this Agreement or in the Plan shall confer
upon the Employee any right to continue in the employ of the
Company or any Subsidiary, or as a director of the Company, or
shall interfere with or restrict in any way the rights of the
Company and its Subsidiaries, which are hereby expressly
reserved, to discharge the Employee at any time for any reason
whatsoever, with or without cause.
Section 1.4 - Adjustments in Option
The Committee shall make adjustments with respect to
the Option in accordance with the provisions of Section 9.3 of
the Plan; provided, however, that each such adjustment shall be
made in such manner as not to constitute a "modification" within
the meaning of Section 424(h)(3) of the Code, unless the Optionee
consents to an adjustment which would constitute such a
"modification".
ARTICLE II
PERIOD OF EXERCISABILITY
Section 2.1 - Commencement of Exercisability
(a) Subject to Sections 2.5, the Option shall become
exercisable in [five (5) cumulative installments as follows:
(i) The first installment shall consist of
___________ percent of the shares covered by the Option and
shall become exercisable on the first anniversary of the
date the Option is granted.
(ii) The second installment shall consist of
___________percent of the shares covered by the Option and
shall become exercisable on the second anniversary of the
date the Option is granted.
(iii) The third installment shall consist of
__________ percent of the shares covered by the Option and
shall become exercisable on the third anniversary of the
date the Option is granted.
(iv) The fourth installment shall consist of
____________ percent of the shares covered by the Option and
shall become exercisable on the fourth anniversary of the
date the Option is granted.
(v) The fifth installment shall consist of
__________ percent of the shares covered by the Option and
shall become exercisable on the fifth anniversary of the
date the Option is granted.]
(b) No portion of the Option which is unexercisable at
Termination of Employment shall thereafter become exercisable.
Section 2.2 - Duration of Exercisability
The installments provided for in Section 2.1 are
cumulative. Each such installment which becomes exercisable
pursuant to Section 2.1 shall remain exercisable until it becomes
unexercisable under Section 2.3.
Section 2.3 - Expiration of Option
The Option may not be exercised to any extent by anyone
after the first to occur of the following events:
(a) The expiration of ten (10) years from the date the
Option was granted; or
(b) If the Employee owned (within the meaning of
Section 424(d) of the Code), at the time the Option was granted,
more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the
Code), the expiration of five (5) years from the date the Option
was granted; or
(c) The expiration of one (1) month from the date of
the Employee's Termination of Employment unless such Termination
of Employment results from his death, his retirement, his
disability (within the meaning of Section 22(e)(3) of the Code)
or his being discharged not for good cause; or
(d) The expiration of one (1) months from the date of
the Employee's Termination of Employment by reason of his
retirement or his being discharged not for good cause, unless the
Employee dies within said one-month period; or
(e) The expiration of one (1) year from the date of
the Employee's Termination of Employment by reason of his
disability (within the meaning of Section 22(e)(3) of the Code);
or
(f) The expiration of one (1) year from the date of
the Employee's death; or
(g) The effective date of either the merger or
consolidation of the Company with or into another corporation, or
the acquisition by another corporation or person of all or
substantially all of the Company's assets or eighty percent (80%)
or more of the Company's then outstanding voting stock, or the
liquidation or dissolution of the Company, unless the Committee
waives this provision in connection with such transaction. As
soon as practicable prior to the effective date of such merger,
consolidation, acquisition, liquidation or dissolution, the
Committee shall give the Employee notice of such event if the
Option has then neither been fully exercised nor become
unexercisable under this Section 2.3.
Section 2.4 - Adjustments to and/or Cancellation of the Option
If there is a material alteration in the capital structure of the
Company on account of a reorganization, merger, recapitalization,
exchange of shares, stock split, reverse stock split, stock
dividend, or otherwise, the Committee shall make such adjustments
to the Plan and to the Options then outstanding under the Plan as
the Committee determines to be appropriate and equitable under
the circumstances. Such adjustments may include, without
limitation, (a) a change in the number or kind of shares of
stock of the Company covered by the Options and/or (b) a change
in the Option Price payable per share; provided, however, that
the aggregate Option Price applicable to the unexercised portion
of existing Options shall not be altered, it being intended that
any adjustments made with respect to these Options shall apply
only to the price per share and the number of shares subject
thereto. For purposes of this paragraph, neither (i) the
issuance of additional shares of stock of the Company in exchange
for adequate consideration (including services), nor (ii) the
conversion of outstanding preferred shares of the Company into
Common Stock, shall be deemed a material alteration of the
capital structure of the Company. In the event the Committee
shall determine that the nature of a material alteration in the
capital structure of the Company is such that it is not practical
or feasible to make appropriate adjustments to the Plan or to
this Option, such event shall be deemed a Termination Event
subject to the following paragraph.
In the event of (a) the dissolution or liquidation of
the Company, (b) a reorganization , merger, or consolidation of
the Company with one or more corporations as a result of which
the Company will not be a surviving corporation, (c) the sale of
all or substantially all of the assets of the Company, (d) a
sale or other transfer of more than eighty percent (80%) of the
then outstanding shares of Common Stock of the Company, or (e)
a material change in the capital structure of the Company that is
subject to this Section in accordance with the last sentence of
the previous paragraph (any of such events is herein referred to
as a "Terminating Event"), the Committee shall determine whether
a provision will be made in connection with the Terminating Event
for an appropriate assumption of this Option for stock or for
substitution of appropriate new options covering stock of a
successor corporation employing the Employee under this Plan and
Agreement or stock of an affiliate of such successor employer
corporation . If the Committee determines that such an
appropriate assumption or substitution will be made, the
Committee shall give notice of the determination to the Employee
and the provisions of such assumption or substitution, and any
adjustments made (i) to the number and kind of shares subject
to the Option outstanding under the Plan (or to options issued in
substitution therefor), (ii) to the Option price and/or (iii)
to the terms and conditions of this Option, shall be binding upon
the Employee. If the Committee determines that no assumption or
substitution will be made, the Committee shall give notice of
this determination to the Employee, whereupon the Employee shall
have the right for a period of thirty (30) days following the
notice to exercise in full or in part any unexercised or
unexpired Option then held by him or her, without regarding to
any contingent vesting provision to which the Option may
otherwise been subject pursuant to Paragraph 2.1a above. Upon
the expiration of this thirty (30) day period, this option shall
expire to the extent not earlier exercised, and the Plan shall
terminate.
Section 2.5 - Special Tax Consequences
The Employee acknowledges that, to the extent that the
aggregate Fair Market Value of stock with respect to which
"incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code),
including the Option, are exercisable for the first time by the
Employee during any calendar year (under the Plan and all other
incentive stock option plans of the Company, any Subsidiary and
any parent corporation thereof (within the meaning of Section 422
of the Code)) exceeds $100,000, such options shall be treated as
Non-Qualified Options to the extent required by Section 422 of
the Code. The Employee further acknowledges that the rule set
forth in the preceding sentence shall be applied by taking
options into account in the order in which they were granted.
For purposes of these rules, the Fair Market Value of stock shall
be determined as of the time the option with respect to such
stock is granted.
ARTICLE III
EXERCISE OF OPTION
Section 3.1 - Partial Exercise
Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or
in part at any time prior to the time when the Option or portion
thereof becomes unexercisable under Section 2.3; provided,
however, that each partial exercise shall be for not less than
ten (10) shares (or the minimum installment set forth in Section
2.1, if a smaller number of shares) and shall be for whole shares
only.
Section 3.2 - Manner of Exercise
The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of
all of the following prior to the time when the Option or such
portion becomes unexercisable under Section 2.3:
(a) A written notice complying with the applicable
rules established by the Committee stating that the Option, or a
portion thereof, is exercised. The notice shall be signed by the
Employee or other person then entitled to exercise the Option or
such portion; and
(b) Full payment to the Company for the shares with
respect to which such Option or portion is exercised in
accordance with Section 5.2d of the Plan.
(i) With the consent of the Committee, (A) shares of
the Company's Common Stock owned by the Employee, duly
endorsed for transfer to the Company, with a Fair Market
Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof,
or (B) shares of the Company's Common Stock issuable to the
Employee upon exercise of the Option, with a Fair Market
Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof;
or
(ii) With the consent of the Committee, a notice that
the Employee has placed a market sell order with a broker
with respect to shares of the Company's Common Stock then
issuable upon exercise of the Option, and that the broker
has been directed to pay a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the
Option exercise price.
(c) A bona fide written representation and agreement,
in a form satisfactory to the Committee, signed by the Employee
or other person then entitled to exercise such Option or portion
as the Committee in its discretion, shall determine is necessary
or appropriate to effect compliance with the Securities Act and
any other federal or state securities laws or regulations.
Without limiting the generality of the foregoing, the Committee
may require an opinion of counsel acceptable to it to the effect
that any subsequent transfer of shares acquired on an Option
exercise does not violate the Securities Act, and may issue
stop-transfer orders covering such shares. Share certificates
evidencing stock issued on exercise of this Option shall bear an
appropriate legend referring to the provisions of this subsection
(c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection
(c) shall, however, not be required if the shares to be issued
pursuant to such exercise have been registered under the
Securities Act, and such registration is then effective in
respect of such shares; and
(d) Full payment to the Company (or other employer
corporation) of all amounts which, under federal, state or local
tax law, it is required to withhold upon exercise of the Option;
with the consent of the Committee, (i) shares of the Company's
Common Stock owned by the Employee, duly endorsed for transfer,
with a Fair Market Value equal to the sums required to be
withheld, or (ii) shares of the Company's Common Stock issuable
to the Employee upon exercise of the Option with a Fair Market
Value equal to the sums required to be withheld, may be used to
make all or part of such payment; and
(e) In the event the Option or portion shall be
exercised pursuant to Section 9.1 by any person or persons other
than the Employee, appropriate proof of the right of such person
or persons to exercise the Option.
Section 3.3 - Rights as Shareholder
The holder of the Option shall not be, nor have any of
the rights or privileges of, a shareholder of the Company in
respect of any shares purchasable upon the exercise of any part
of the Option unless and until certificates representing such
shares shall have been issued by the Company to such holder.
ARTICLE IV
OTHER PROVISIONS
Section 4.1 - Option Not Transferable
Neither the Option nor any interest or right therein or
part thereof shall be sold, pledged, assigned, or transferred in
any manner other than by will or the laws of descent and
distribution, unless and until such Option has been exercised, or
the shares underlying such Option have been issued, and all
restrictions applicable to such shares have lapsed. Neither the
Option nor any interest or right therein or part thereof shall be
liable for the debts, contracts or engagements of the Employee or
his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the
extent that such disposition is permitted by the preceding
sentence.
Section 4.2 - Shares to Be Reserved
The Company shall at all times during the term of the
Option reserve and keep available such number of shares of stock
as will be sufficient to satisfy the requirements of this
Agreement.
Section 4.3 - Notices
Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in
care of its Secretary, and any notice to be given to the Employee
shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section
4.3, either party may hereafter designate a different address for
notices to be given to him. Any notice which is required to be
given to the Employee shall, if the Employee is then deceased, be
given to the Employee's personal representative if such
representative has previously informed the Company of his status
and address by written notice under this Section 4.3. Any notice
shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with
postage prepaid) in a post office or branch post office regularly
maintained by the United States Postal Service.
Section 4.4 - Titles
Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of
this Agreement.
Section 4.5 - Notification of Disposition
The Employee shall give prompt notice to the Company of
any disposition or other transfer of any shares of stock acquired
under this Agreement if such disposition or transfer is made (a)
within two (2) years from the date of granting the Option with
respect to such shares or (b) within one (1) year after the
transfer of such shares to him. Such notice shall specify the
date of such disposition or other transfer and the amount
realized, in cash, other property, assumption of indebtedness or
other consideration, by the Employee in such disposition or other
transfer.
Section 4.6 - Construction
This Agreement shall be administered, interpreted and
enforced under the internal laws of the State of Oregon without
regard to conflicts of laws thereof.
Section 4.7- Conformity to Securities Laws
The Employee acknowledges that the Plan is intended to
conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations
and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3.
Notwithstanding anything herein to the contrary, the Plan shall
be administered, and the Option is granted and may be exercised,
only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan
and this Agreement shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.
IN WITNESS WHEREOF, this Agreement has been executed
and delivered by the parties hereto.
RENTRAK CORPORATION
By
President
By
Secretary
Employee
__________________________________
Address
Employee's Taxpayer
Identification Number: _________________________
