EXHIBIT 4.2
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated ____________, 199__, 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
"Optionee"):
WHEREAS, the Company wishes to afford the Optionee the
opportunity to purchase shares of its $0.001 par value Common
Stock; and
WHEREAS, the Company wishes to carry out the 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 non-qualified Option provided for
herein to the Optionee 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 agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this
Agreement, they shall have the meaning specified below unless the
context clearly indicates to the contrary. The masculine pronoun
shall include the feminine and neuter, and the singular the
plural, where the context so indicates. All capitalized terms
used herein without definition shall have the meanings ascribed
to such terms in the Plan.
Section 1.1. - Board
"Board" shall mean the Board of Directors of the
Company.
Section 1.2. - Code
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.3. - Committee
"Committee" shall mean the Stock Option Committee of
the Board, or another committee of the Board, appointed as
provided in Section 6.1 of the Plan.
Section 1.4. - Company
"Company" shall mean Rentrak Corporation, an Oregon
corporation.
Section 1.5. - Exchange Act
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
Section 1.6. - Option
"Option" shall mean the non-qualified option to
purchase Common Stock of the Company granted under this
Agreement.
Section 1.7. - Plan
"Plan" shall mean The 1997 Non-Officer Employee Stock
Option Plan of Rentrak Corporation, as amended from time to time.
Section 1.8. - Rule 16b-3
"Rule 16b-3" shall mean that certain Rule 16b-3 under
the Exchange Act, as such Rule may be amended from time to time.
Section 1.9. - Secretary
"Secretary" shall mean the Secretary of the Company.
Section 1.10. - Securities Act
"Securities Act" shall mean the Securities Act of 1933,
as amended.
Section 1.11. - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken
chain then owns stock possessing fifty percent (50%) or more of
the total combined voting power of all classes of stock in one
(1) of the other corporations in such chain.
Section 1.12. - Termination of Employment
"Termination of Employment" shall mean the time when
the employee-employer relationship between the Optionee and the
Company or any Subsidiary is terminated for any reason, with or
without cause, including, but not by way of limitation, a
termination by resignation, discharge, death, disability or
retirement; but excluding (i) terminations where there is a
simultaneous reemployment or continuing employment of the
Optionee by the Company or any Subsidiary, (ii) at the discretion
of the Committee, terminations which result in a temporary
severance of the employee-employer relationship, and (iii) at the
discretion of the Committee, terminations which are followed by
the simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee. The
Committee, in its absolute discretion, shall determine the effect
of all matters and questions relating to Termination of
Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge
for good cause, and all questions of whether particular leaves of
absence constitute Terminations of Employment. Notwithstanding
any other provision of this Agreement or of the Plan, the Company
or any Subsidiary has an absolute and unrestricted right to
terminate the Optionee's employment at any time for any reason
whatsoever, with or without cause, except to the extent expressly
provided otherwise in writing.
ARTICLE II
GRANT OF OPTION
Section 2.1. - Grant of Option
In consideration of the Optionee'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 Optionee 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 2.2. - Purchase Price
The purchase price of the shares of stock covered by
the Option shall be $_____ per share, without commission or other
charge.
Section 2.3. - Consideration to Company
In consideration of the granting of this Option by the
Company, the Optionee 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, for a period of at least [one (1) year] from the date
this Option is granted. Nothing in this Agreement or in the Plan
shall confer upon the Optionee 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 Optionee at any time for any
reason whatsoever, with or without cause.
Section 2.4. - Adjustments in Option
The Committee shall make adjustments with respect to
the Option in accordance with the provisions of Section 7.3 of
the Plan.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1. - Commencement of Exercisability
(a) Subject to Section 5.6, the Option shall become
exercisable in [five (5) cumulative installments as follows:
(i) The first installment shall consist of twenty
percent (20%) 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
twenty percent (20%) 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 twenty
percent (20%) 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
twenty percent (20%) 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 twenty
percent (20%) of the shares covered by the Option and shall
become exercisable on the fifth anniversary of the date the
Option is granted.] [or other installment schedule.]
(b) No portion of the Option which is unexercisable at
Termination of Employment shall thereafter become exercisable.
Section 3.2. - Duration of Exercisability
The installments provided for in Section 3.1 are
cumulative. Each such installment which becomes exercisable
pursuant to Section 3.1 shall remain exercisable until it becomes
unexercisable under Section 3.3.
Section 3.3. - 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) The time of the Optionee's Termination of
Employment unless such Termination of Employment results from his
death, his retirement, his disability or his being discharged not
for good cause; or
(c) The expiration of three (3) months from the date
of the Optionee's Termination of Employment by reason of his
retirement or his being discharged not for good cause, unless the
Optionee dies within said three-month period; or
(d) The expiration of one (1) year from the date of
the Optionee's Termination of Employment by reason of his
disability; or
(e) The expiration of one (1) year from the date of
the Optionee's death; or
(f) 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. At
least ten (10) days prior to the effective date of such merger,
consolidation, acquisition, liquidation or dissolution, the
Committee shall give the Optionee notice of such event if the
Option has then neither been fully exercised nor become
unexercisable under this Section 3.3.
Section 3.4. - Acceleration of Exercisability
In the event of 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, the Committee may, in its absolute discretion and
upon such terms and conditions as it deems appropriate, provide
by resolution, adopted prior to such event and incorporated in
the notice referred to in Section 3.3(f), that at some time prior
to the effective date of such event this Option shall be
exercisable as to all the shares covered hereby, notwithstanding
that this Option may not yet have become fully exercisable under
Section 3.1(a). [; provided, however, that this acceleration of
exercisability shall not take place if:
(a) This Option becomes unexercisable under Section
3.3 prior to said effective date; or
(b) In connection with such an event, provision is
made for an assumption of this Option or a substitution therefor
of a new option by an employer corporation or a parent or
subsidiary of such corporation; and
provided, further, that nothing in this Section 3.4 shall make
this Option exercisable if it is otherwise unexercisable by
reason of Section 5.6.]
[The Committee may make such determinations and adopt
such rules and conditions as it, in its absolute discretion,
deems appropriate in connection with such acceleration of
exercisability, including, but not by way of limitation,
provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the
contemplated corporate transaction.]]
ARTICLE IV
EXERCISE OF OPTION
Section 4.1. - Person Eligible to Exercise
During the lifetime of the Optionee, only he may
exercise the Option or any portion thereof. After the death of
the Optionee, any exercisable portion of the Option may, prior to
the time when the Option becomes unexercisable under Section 3.3,
be exercised by his personal representative or by any person
empowered to do so under the deceased Optionee's will or under
the then applicable laws of descent and distribution.
Section 4.2. - 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 3.3; provided,
however, that each partial exercise shall be for not less than
____________ (__) shares (or the minimum installment set forth in
Section 3.1, if a smaller number of shares) and shall be for
whole shares only.
Section 4.3. - 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 3.3:
(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
Optionee or other person then entitled to exercise the Option or
such portion; and
(b) [(i)] Full cash payment to the Secretary of the
Company for the shares with respect to which such Option or
portion is exercised; [or] and
[(ii) With the consent of the Committee, (A)
shares of the Company's Common Stock owned by the Optionee,
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
Optionee 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]
[(iii) With the consent of the Committee, a full
recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest
under the Code or successor provision) and payable upon such
terms as may be prescribed by the Committee. The Committee
may also prescribe the form of such note and the security to
be given for such note. The Option may not be exercised,
however, by delivery of a promissory note or by a loan from
the Company when or where such loan or other extension of
credit is prohibited by law; or]
[(iv) With the consent of the Committee, property
of any kind which constitutes good and valuable
consideration; or]
[(v) With the consent of the Committee, a notice
that the Optionee 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; or]
[(vi) With the consent of the Committee, any
combination of the consideration provided in the foregoing
subparagraphs (i), (ii), (iii), (iv) and (v); and]
(c) A bona fide written representation and agreement,
in a form satisfactory to the Committee, signed by the Optionee
or other person then entitled to exercise such Option or portion,
stating that the shares of stock are being acquired for his own
account, for investment and without any present intention of
distributing or reselling said shares or any of them except as
may be permitted under the Securities Act and then applicable
rules and regulations thereunder, and that the Optionee or other
person then entitled to exercise such Option or portion will
indemnify the Company against and hold it free and harmless from
any loss, damage, expense or liability resulting to the Company
if any sale or distribution of the shares by such person is
contrary to the representation and agreement referred to above.
The Committee may, in its absolute discretion, take whatever
additional actions it deems appropriate to insure the observance
and performance of such representation and agreement and 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 Optionee, 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 Optionee 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 4.1 by any person or persons other
than the Optionee, appropriate proof of the right of such person
or persons to exercise the Option.
Section 4.4. - Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of
the Option, or any portion thereof, may be either previously
authorized but unissued shares or issued shares which have then
been reacquired by the Company. Such shares shall be fully paid
and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock
purchased upon the exercise of the Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing or
quotation on all stock exchanges or securities markets on which
such class of stock is then listed or quoted; and
(b) The completion of any registration or other
qualification of such shares under any state or federal law or
under rulings or regulations of the Securities and Exchange
Commission or of any other governmental regulatory body, which
the Committee shall, in its absolute discretion, deem necessary
or advisable; and
(c) The obtaining of any approval or other clearance
from any state or federal governmental agency which the Committee
shall, in its absolute discretion, determine to be necessary or
advisable; and
(d) The receipt by the Company of full payment for
such shares, including payment of all amounts which, under
federal, state or local tax law, the Company (or other employer
corporation) is required to withhold upon exercise of the Option;
and
(e) The lapse of such reasonable period of time
following the exercise of the Option as the Committee may from
time to time establish for reasons of administrative convenience.
Section 4.5 - 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 V
OTHER PROVISIONS
Section 5.1. - Administration
The Committee shall have the power to interpret the
Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such
rules. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final
and binding upon the Optionee, the Company and all other
interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation
made in good faith with respect to the Plan or the Option. In
its absolute discretion, the Board may at any time and from time
to time exercise any and all rights and duties of the Committee
under the Plan and this Agreement.
Section 5.2. - 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 Optionee 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 5.3. - 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 5.4. - 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 Optionee
shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section
5.4, 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 Optionee shall, if the Optionee is then deceased, be
given to the Optionee's personal representative if such
representative has previously informed the Company of his status
and address by written notice under this Section 5.4. 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 5.5. - Titles
Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of
this Agreement.
Section 5.6. - 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 5.7. - Conformity to Securities Laws
The Optionee 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.
[Section . - Company's Right to Repurchase Shares
Upon Termination of Employment [which results from any
reason other than (a) a discharge by the Company not for good
cause or (b) the Optionee's death or retirement], the Company
shall have the option to repurchase all (but not less than all)
of the shares of stock which have been purchased by the Optionee
pursuant to exercise of the Option and which the Optionee then
holds. The repurchase price payable by the Company if it
exercises its repurchase option shall be $______ [or a formula
price].
The Company's repurchase option shall be exercisable by
giving written notice (accompanied by payment for the shares) to
the Optionee within thirty (30) calendar days after the
Termination of Employment [which gives rise to the Company's
repurchase option]. [In the event that the book value of such
shares as of the end of the immediately preceding fiscal year has
not yet been certified by the Company's accountants at the time
of said Termination of Employment, said thirty (30) calendar day
period for the Company's exercise of its repurchase option shall
commence upon said certification.]
[Section . - Restrictions on Transfer of Shares
(a) There can be no valid transfer (as hereinafter
defined) of any shares of stock purchased on exercise of the
Option, or any interest in such shares, by any holder of such
shares or interests unless such transfer is solely for cash
consideration and is made in compliance with the following
provisions:
(1) Before there can be a valid transfer of any
shares or any interest therein, the record holder of the
shares to be transferred (the "Offered Shares") shall give
written notice (by registered or certified mail) to the
Company. Such notice shall specify the identity of the
proposed transferee, the cash price offered for the Offered
Shares by the proposed transferee and the other terms and
conditions of the proposed transfer. The date such notice
is mailed shall be hereinafter referred to as the "notice
date" and the record holder of the Offered Shares shall be
hereinafter referred to as the "Offeror."
(2) For a period of thirty (30) calendar days
after the notice date, the Company shall have the option to
purchase all (but not less than all) of the Offered Shares
at the purchase price and on the terms set forth in
subsection (a)(3) of this Section __.__. This option shall
be exercisable by the Company by mailing (by registered or
certified mail) written notice of exercise to the Offeror
prior to the end of said thirty (30) days.
(3) The price at which the Company may purchase
the Offered Shares pursuant to the exercise of such option
shall be the cash price offered for the Offered Shares by
the proposed transferee (as set forth in the notice required
under subsection (a)(1) of this Section __.__). The
Company's notice of exercise of such option shall be
accompanied by full payment for the Offered Shares and, upon
such payment by the Company, the Company shall acquire full
right, title and interest to all of the Offered Shares.
(4) If, and only if, the option given pursuant to
subsection (a)(2) of this Section __.__ is not exercised,
the transfer proposed in the notice given pursuant to
subsection (a)(1) of this Section __.__ may take place;
provided, however, that such transfer must, in all respects,
be exactly as proposed in said notice except that such
transfer may not take place either before the tenth (10th)
calendar day after the expiration of said thirty-day option
exercise period or after the ninetieth (90th) calendar day
after the expiration of said thirty-day option exercise
period, and if such transfer has not taken place prior to
said ninetieth (90th) day, such transfer may not take place
without once again complying with subsection (a) of this
Section __.__.
(b) As used in this Section __.__, the term "transfer"
means any sale, encumbrance, pledge, gift or other form of
disposition or transfer of shares of the Company's stock or any
legal or equitable interest therein; provided, however, that the
term "transfer" does not include a transfer of such shares or
interests by will or by the applicable laws of descent and
distribution or a gift of such shares if the donee agrees to be
bound by the provisions of this Section __.__.
(c) None of the shares of the Company's stock
purchased on exercise of the Option shall be transferred on the
Company's books nor shall the Company recognize any such transfer
of any such shares or any interest therein unless and until all
applicable provisions of this Section __.__ have been complied
with in all respects. The certificates of stock evidencing
shares of stock purchased on exercise of the Option shall bear an
appropriate legend referring to the transfer restrictions imposed
by this Section __.__ and to the repurchase option provided for
in Section __.__.]
IN WITNESS WHEREOF, this Agreement has been executed
and delivered by the parties hereto.
RENTRAK CORPORATION
By ___________________________
President
By ___________________________
Secretary
____________________________
Optionee
____________________________
____________________________
Address
Optionee's Taxpayer
Identification Number:
____________________________