Incentive Stock Option Agreement - Rentrak Corp. and Ron Berger
RENTRAK CORPORATION
1986 SECOND AMENDED AND RESTATED STOCK OPTION PLAN
INCENTIVE STOCK OPTION
AND
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option is granted, and this
Incentive Stock Option Agreement (the "Agreement") is executed to
be effective as of April 18, 1995, by Rentrak Corporation, an
Oregon corporation (the "Company"), and Ron Berger (the
"Optionee).
RECITALS
A. The Company's Board of Directors has duly adopted, and
the Company's shareholders have approved, that certain 1986
Second Amended and Restated Stock Option Plan (the "Plan"), a
copy of which is available for review in the Company's
administrative offices.
B. The Plan authorizes the Company's Board of Directors or
an Administrative Committee thereof (the "Stock Option
Committee") to grant Incentive Stock Options to officers and
employees of the Company and any of the Company's Affiliates (as
such term is defined in the Plan).
C. On or about April 8, 1994, the Stock Option Committee,
upon due consideration and as further inducement to the Optionee
to enter into an Employment Agreement with the Company, dated
June 1, 1994 (the "Employment Agreement"), designated the
Optionee to receive an Incentive Stock Option under the Plan
covering a total of 70,949 shares of the Common Stock of the
Company and a Nonstatutory Stock Option covering a total of
929,051 shares of said Common Stock (hereinafter the "April 8th
Options"), the exercisability of which were made subject to the
Company's achievement of certain performance objectives
established by the Stock Option Committee. The April 8th Options
were granted subject to obtaining shareholder approval, which
approval was obtained on December 12, 1994.
D. Subsequent to the issuance of the April 8th Options the
Stock Option Committee and the Optionee first learned that keying
the exercisability of the April 8th Options to the satisfaction
of future performance objectives subjected the Company to the
risk that it would have to book substantial charges against its
future income if the value of the Company's stock increased
significantly during the term of said options.
E. In order to avoid the adverse financial statement
impact to the Company from the use of performance objectives, the
Optionee has agreed to cancel the April 8th Options in
consideration of the grant by the Stock Option Committee of this
replacement Incentive Stock Option and a Nonstatutory Option of
even date herewith covering a total of 1,000,000 shares, both
bearing an exercise price equal to the fair market value of the
Company's Common Stock as of the effective date of the grant of
this Option, (the December 20th Options).
F. Subsequent to the issuance of the December 20th
Options, the Stock Option Committee and Optionee agreed to cancel
the December 20th Options in consideration of the grant by the
Stock Option Committee of this replacement Incentive Stock Option
and Non-Statutory Option of even date herewith covering a total
of 1,000,000 shares both bearing an exercise price equal the fair
market value of the Company's Common Stock as of the effective
date of this Option.
NOW, THEREFORE THE PARTIES HERETO COVENANT AND AGREE AS FOLLOWS:
I. Number of Shares Subject to Option and Option Price.
The Company hereby grants to the Optionee an Incentive Stock
Option (the "Option") to purchase from the Company 70,949 shares
of the Common Stock of the Company at an option price of $5.25
per share. The Option is exercisable upon the terms and
conditions contained herein. For the reasons stated in the
Recitals hereto, Optionee agrees that the December 20th options
are hereby cancelled and that the Option granted hereby shall
replace the December 20th Option.
2. Additional Terms of the Option. Subject to the
provisions of Paragraph 3 below, the Option shall have the
following terms:
2.1 The effective date of the grant of the Option
is April 18, 1995.
2.2 The Option shall vest on the dates set forth below
("Vesting Dates") as to the number of shares set forth below.
Percentage Annual Cumulative
Date Vested Shares Vested Shares Vested
March 31, 1995 20% 14,190 14,190
March 31, 1996 20% 14,190 28,380
March 31, 1997 20% 14,190 42,570
March 31, 1998 20% 14,190 56,760
March 31, 1999 20% 14,189 70,949
2.3 Notwithstanding anything to the contrary in
paragraph 2.2 above, in the event the employment of the Optionee
is terminated by the Company pursuant to Section 5.4 of the
Employment Agreement, this Option shall immediately vest as to
any Option shares that have not previously vested in accordance
with paragraph 2.2 above ("Unvested Shares").
2.4 The Option shall expire on the earlier of April 7,
2004, or the applicable date specified below (the "Expiration
Date").
a) Six (6) months following the effective date of the
termination of the Optionee's employment by the Company on
account of the Optionee's disability (within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended (the "Code");
b) One (1) year following the termination of the
Optionee's employment by the Company on account of the
Optionee's death;
c) Thirty (30) days following the effective date of
the termination of the Optionee's employment by the Company
for any reason other than disability (as defined in
paragraph (a) above) or death;
d) The date of any sale, transfer or hypothecation, or
any attempted sale, transfer or hypothecation in violation
of Section 8 of the Plan which provides that an Option
shall not be transferable or exercisable by any person
other than the Optionee, except as provided in paragraphs
(d)(1), (d)(2), and (d)(3), below:
1) In the event of the death of the
Optionee, any Options held by the Optionee shall pass to
the person or persons entitled thereto pursuant to the Will
of the Optionee or the applicable laws of descent and
distribution (a "Qualified Successor"). Any right under
the Option which the Optionee could have exercised
immediately prior to the date of his death shall, subject
to the terms of this paragraph 2.4 and paragraphs 2.6 and
2.7 below, be exercisable by his Qualified Successor for a
period of one (1) year following his death.
2) In the event of the death of the Optionee
following termination of his employment on account of
disability, but prior to the expiration of the six (6)
month period specified in paragraph 2.4 (a) above, this
Option shall pass to and be exercisable by the Qualified
Successor of the Optionee in the manner specified above for
a period of one (1) year following the original termination
of his employment.
3) In the event a guardian or conservator (a
"Guardian") is appointed for the Optionee as the result of
the termination of the Optionee's employment by the Company
on account of Optionee's disability (as defined above) any
Option held by the Optionee, which could have been
exercised immediately prior to such termination of the
employment, shall, subject to this paragraph 2.4 and
paragraphs 2.6 and 2.7 below, be exercisable by the
Guardian of the Optionee for a period of six (6) months
following such termination of employment.
4) Options held by a Qualified Successor or
a Guardian shall continue to vest to the extent provided in
paragraph 2.7 herein.
5) In the event that two or more persons
constitute the Qualified Successor or the Guardian of the
Optionee, all rights of the Qualified Successor or Guardian
shall be exercisable, if at all, by the unanimous agreement
of these persons.
2.5 To the extent vested, the Option may be exercised
in whole or in part at any time and from time to time prior to
the Expiration Date.
2.6 The Option must be exercised, if at all, as to a
whole number of shares. In addition, the Option may be exercised
for not less than ten (10) shares at any time, unless the total
number of shares purchasable under the Option at that time is
less than ten (10), in which case the Option may be exercised for
that lesser number of shares.
2.7 If, because of death or disability, the Optionee
is no longer employed as an officer or employee of the Company,
this Option shall continue to vest in accordance with the
schedule set forth in paragraph 2.2 above during the period prior
to termination of the Option as provided herein. If the Optionee
no longer is employed as an officer or employee of the Company
for any reason other than death, disability or a termination
pursuant to Section 5.4 of the Employment Agreement, the vesting
of the Option shall cease and the Option granted hereunder shall
be limited to those shares which were immediately exercisable by
the Optionee as of the effective date of such termination.
3. Adjustments to and/or Cancellations of the Option.
3.1 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 Stock Option Committee
shall make such adjustments to the Plan and to the Options then
outstanding under the Plan as the Stock Option 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 Section, 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 Stock Option
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
Terminating Event subject to paragraph 3.2 below.
3.2 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 or m ore 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
Section 3.1 above (any of such events is herein referred to as a
"Terminating Event"), the Stock Option Committee shall determine
whether a provision will be made in connection with the
Terminating Event for an appropriate assumption of this Option or
for substitution of appropriate new options covering stock of a
successor corporation employing the Optionee or stock of an
affiliate of such successor employer corporation. If the Stock
Option Committee determines that such an appropriate assumption
or substitution will be made, the Stock Option Committee shall
give notice of the determination to the Optionee 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, which determination
shall be binding upon the Optionee. If the Stock Option
Committee determines that no assumption or substitution will be
made, the Stock Option Committee shall give notice of this
determination to the Optionee, whereupon the Optionee 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, without regarding to any vesting
provision to which the Option may have otherwise been subject
pursuant to paragraph 2.2 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.
4. Exercise of the Option. The Option shall be exercised,
if at all, by (a) delivering to the Company a written notice in
the form of the document attached as Exhibit A specifying the
number of shares of Common Stock for which exercise is made, (b)
tendering full payment of the option price, as required by
Section 7 of the Plan, for the shares for which exercise is made,
and (c) tendering to the Company full payment of any amounts the
Company determines must be withheld for tax purposes from the
Optionee as a result of the exercise of the Option and the
issuance of the shares.
5. Transferability of the Option. Except as provided in
paragraph 2.4 above and Section 8 of the Plan, the Option shall
not be transferable or exercisable by any person other than the
Optionee.
6. Warranties, Representations and Acknowledgements of the
Optionee. By executing this Agreement, the Optionee accepts the
Option and agrees to be bound by all of the terms of this
Agreement and the Plan. In addition, the Optionee acknowledges
that exercise of the Option and the sale of the shares of Common
Stock acquired upon exercise thereof may have tax implications
for which the Optionee should seek individual advice by his or
her own tax counselor or advisor.
7. Indemnification by the Optionee. The Optionee agrees
that, in the event of a claim against the Company resulting from
a breach by the Optionee of the representations, warranties or
provisions contained in this Agreement, the Optionee will
indemnify and hold the Company harmless from any loss or damage,
including attorney's fees or other legal expenses, incurred in
the defense or payment of any such claim against the Company.
8. No Right to Continued Relationship. Nothing herein
shall confer upon the Optionee the right to continue as an
officer or employee of the Company, nor affect any right which
the Company may have to terminate its relationship (whether or
not for cause) with the Optionee.
9. Rights as Shareholder. The Optionee shall have no
rights as a shareholder of the Company, including, without
limitation, any rights to dividends or other rights for which the
record date is prior to the date the certificate representing the
shares acquired upon exercise of the Option is issued, on account
of the Option or on account of shares of Common Stock of the
Company which will be acquired upon exercise of the Option (but
with respect to which no certificates have been delivered to the
Optionee).
10. Further Assurances. The Optionee agrees from time to
time to execute such additional documents as the Company may
reasonably require in order to effect the purposes of the Plan
and this Agreement.
11. Binding Effect. This Agreement shall be binding upon
the Optionee and the optionee's heirs, successors and assigns,
including, without limitation, the Qualified Successor or
Guardian of the Optionee (as those terms are defined in paragraph
2.4(d) above).
12. Waivers/Modifications. No waivers, alterations or
modifications of this Agreement shall be valid unless in writing
and duly executed by the party against whom enforcement of such
waiver, alteration or modification is sought. The failure of any
party to enforce any of its rights against the other party for
breach of any of the terms of this Agreement shall not be
construed a waiver of such rights as to any continued or
subsequent breach.
13. Modification and Termination. The rights of the
Optionee hereunder are subject to modification and termination in
certain events as provided in the Plan.
14. Restriction on Sale of Shares. Optionee represents and
agrees that upon his exercise of the Option, in whole or in part,
unless there is in effect at the time under the Securities Act of
1933, as amended, a registration statement relating to the shares
acquired, such shares will be acquired for his own account, for
investment purposes only and not with a view toward the
distribution or public offering thereof nor with any present
intention of reselling or distributing the shares at any
particular future time, and that upon exercise thereof he will
furnish to the Company a written statement to such effect,
satisfactory to the Company in form and substance. Optionee
agrees that any certificates issued upon exercise of this Option
may bear a legend indicating that their transferability is
restricted in accordance with applicable state or federal
securities law. Any person or persons entitled to the Option
under circumstances in which Optionee would be required to
furnish such a written statement shall furnish to the Company a
written statement to the same effect, satisfactory to the Company
in form and substance.
15. Plan Governs. This Agreement and the Option evidenced
hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the express terms and
provisions of that Plan, as it may be amended from time to time
and construed by the Committee.
16. Notices. All notices to the Company shall be addressed
to the members of the Stock Option Committee with a copy to the
Secretary of the Company at the principal office of the Company
at 7227 N.E. 55th Avenue, Portland, Oregon 97218, and all notices
to Optionee shall be addressed to Optionee at the address of
Optionee on file with the Company or its Affiliates, or to such
other address as either may designate to the other in writing. A
notice shall be deemed to be duly given upon the earlier of
receipt by the addressee or three days following deposit of such
notice in a properly addressed sealed envelope, postage prepaid,
with the United States Postal Service. In lieu of giving notice
by mail as provided above, written notice under this Agreement
may be given by personal delivery to Optionee or to the Chairman
of the Board of Directors of the Company (as the case may be).
17. Sale or Other Disposition. Optionee hereby agrees that
if Optionee disposes (whether by sale, exchange, gift or
otherwise) of any of the shares acquired by exercise of this
Option within two years of the grant date or within one year
after the transfer of such shares to Optionee upon exercise of
this Option, then Optionee shall notify the Company of such
disposition in writing within thirty (30) days from the date of
such disposition. Said written notice shall state the date of
such disposition, and the type and amount of the consideration
received for such share or shares by Optionee in connection
therewith. In the event of any such disposition, the Company
shall have the right to require Optionee to immediately pay the
Company the amount of taxes (if any) which the Company is
required to withhold under federal and/or state law in order to
obtain the benefit of any deduction that would otherwise be
available as a result of the granting or exercise of the subject
Option or the disposition of the subject shares.
18. Governing Law. This Agreement shall be governed by the
laws of the State of Oregon.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
RENTRAK CORPORATION
By
Bill LeVine
Member, Stock Option Committee
By
James Jimirro
Member, Stock Option Committee
OPTIONEE:
By
Ron Berger
EXHIBIT A
NOTICE OF EXERCISE OF INCENTIVE OPTION
To: RENTRAK CORPORATION
7227 N.E. 55th Avenue
Post Office Box 18888
Portland, Oregon 97218
The undersigned exercises the option to purchase
_____________ shares of common stock of Rentrak Corporation (the
"Company") granted to the undersigned pursuant to the terms of
the Company's 1986 Second Amended and Restated Stock Option Plan
(the "Plan") and the Incentive Stock Option and Incentive Stock
Option Agreement effective as of April 18, 1995.
Accompanying this notice is: [select one] (1) ____ cash,
certified check or cashier's check in the amount of $_________,
or (2) a certificate representing ____ shares of Common Stock of
the Company valued at $____________ per share (the fair market
price of those shares on the day preceding the date hereof)
representing the option price of $____________ per share plus the
amount the Company has determined must be withheld for tax
purposes; or (3) ____________ I hereby request to exercise this
option through a cashless transaction and have provided the name
and address of my broker below. I understand that if I elect to
pursue a cashless transaction, Rentrak Corporation will request
and authorize the stock transfer company to issue the
certificate(s) in the name of my broker to facilitate completion
of the transaction.
Date:
BROKER OPTIONEE
Address: Address: