DESCRIPTION OF RENTRAK CORPORATION CAPITAL STOCK
General
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The authorized capital stock of Rentrak Corporation, a corporation organized
under the laws of the state of Oregon, consists of 30,000,000 shares of common
stock, par value $.001 per share, and 10,000,000 shares of preferred stock, par
value $.001 per share, 300,000 shares of which have been designated Series A
Junior Participating Preferred Stock and reserved for issuance upon the exercise
of the rights distributed to the holders of Rentrak Corporation common stock
pursuant to the rights plan described below under "Description of Rights." All
of the outstanding shares of the capital stock of Rentrak Corporation are duly
authorized, validly issued, fully paid, and nonassessable.
Rentrak Corporation Common Stock
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Subject to the rights of holders of any outstanding Rentrak Corporation
preferred stock, the holders of outstanding shares of Rentrak Corporation common
stock are entitled to share ratably in dividends declared out of assets legally
available therefor at such time and in such amounts as the Rentrak Corporation
Board of Directors may from time to time lawfully determine. Each holder of
Rentrak Corporation common stock is entitled to one vote for each share held
and, except as otherwise provided by law or by the Rentrak Corporation Board of
Directors with
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respect to any series of Rentrak Corporation preferred stock, the holders of
Rentrak Corporation common stock will exclusively possess all voting power.
Holders of Rentrak Corporation common stock are not entitled to accumulate votes
for the election of directors. The Rentrak Corporation common stock is not
entitled to conversion or preemptive rights and is not subject to redemption or
assessment. Subject to the rights of holders of any outstanding Rentrak
Corporation preferred stock, upon liquidation, dissolution, or winding up of
Rentrak Corporation, any assets legally available for distribution to
stockholders are to be distributed ratably among the holders of the Rentrak
Corporation common stock at that time outstanding.
Rentrak Corporation Preferred Stock
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The Rentrak Corporation Board of Directors has the authority to issue Rentrak
Corporation preferred stock in one or more series with such distinctive serial
designations, at such price or prices, and for such other consideration as may
be fixed by the Rentrak Corporation Board of Directors. Rentrak Corporation
preferred stock of all series shall be in all respects entitled to the same
preferences, rights, and privileges and subject to the same qualifications,
limitations, and restrictions; provided, however, that different series of
Rentrak Corporation preferred stock may vary with respect to, among other
things, dividend rates, conversion rights, voting rights, redemption rights,
liquidation preferences, and the number of shares constituting each such series
as shall be determined and fixed by resolution or resolutions of the Rentrak
Corporation Board of Directors providing for the issuance of such series,
without any further vote or action by the stockholders of Rentrak Corporation.
All the shares of any one series will be alike in all respects. The ability of
the Rentrak Corporation Board of Directors to issue Rentrak Corporation
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preferred stock, while providing flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from acquiring, a majority of the outstanding voting stock of Rentrak
Corporation.
Description of Rights
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On May 18, 1995, the Rentrak Corporation Board of Directors adopted a Rights
Plan. Pursuant to the Rights Plan, Rentrak Corporation has distributed a
dividend of one right to purchase shares of capital stock of Rentrak
Corporation, under certain circumstances specified in the Rights Plan, for each
outstanding share of common stock. These purchase rights are hereinafter
referred to as the "Rights." The Rights trade with the common stock and will
detach and become exercisable ten business days after either a person (together
with that person's affiliates or associates) acquires beneficial ownership of
15% or more of the outstanding shares of Rentrak Corporation common stock, or
announces a tender offer the completion of which would result in beneficial
ownership by a person (together with such person's affiliates or associates) of
15% or more of those shares. If the Rights detach and become exercisable, unless
subsequently redeemed, each Right then would entitle its holder to purchase one
one-hundredth of a share of the Series A Junior Participating Preferred Stock
for and exercise price of $40, subject to antidilution adjustment.
If Rentrak Corporation were to be involved in a merger or other business
combination transaction in which Rentrak Corporation is not the surviving
corporation after the Rights
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become exercisable, each Right would entitle its holder to purchase, for the
Right's exercise price, a number of the acquiring or surviving company's shares
of common stock having a market value equal to twice the exercise price. If, in
a transaction not approved by the Rentrak Corporation Board of Directors, a
person (together with such person's affiliates or associates) acquires 15% or
more of the outstanding shares of Rentrak Corporation common stock or Rentrak
Corporation is the surviving corporation in a merger or other business
combination with such a person, each Right would entitle its holder (other than
the acquiring person and its affiliates and associates, all of whose Rights
become automatically void) to purchase, for the Right's exercise price, a number
of shares of Rentrak Corporation common stock having a market value equal to
twice the exercise price. At any time after a person (together with such
person's affiliates or associates) acquires at least 15%, but not more than 50%,
of the outstanding shares of Rentrak Corporation common stock, the Rentrak
Corporation Board of Directors can elect to exchange that number of shares of
common stock having an aggregate value equal to the spread (the excess of the
value of the common stock issuable upon exercise of a Right over the exercise
price) for each Right (other than Rights held by such acquiring person and its
affiliates and associates).
Rentrak Corporation would be entitled to redeem the Rights at $.01 per Right at
any time until ten business days following a public announcement that a person
(together with such person's affiliates or associates) has acquired beneficial
ownership of 15% or more of the outstanding shares of common stock. Following an
announcement confirming Rentrak Corporation's intent to redeem the Rights, the
entitlement to exercise the Rights will terminate and the only right of the
holders of Rights (other than the acquiring person, whose Rights shall be void)
will be to receive the redemption price.
Prior to the date upon which the Rights detach, the terms of the Rights Plan may
be amended by the Rentrak Corporation Board of Directors without the consent of
the holders of the Rights. The Rights expire on May 18, 2005, unless
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earlier redeemed or exchanged by Rentrak Corporation or terminated.
The Rights Plan may deter takeover bids for Rentrak Corporation. To the extent
an acquirer would be discouraged by the Rights Plan from acquiring an equity
position in Rentrak Corporation, stockholders may be deprived from receiving a
premium for their shares. The issuance of additional shares of common stock
prior to the time the Rights become exercisable would result in an increase in
the number of Rights outstanding.
Each share of Series A Junior Participating Preferred Stock would have a
quarterly dividend rate per share equal to 100 times the per share amount of any
dividend (other than a dividend payable in shares of common stock or a
subdivision of the common stock) (but not less than $1.00 per share) declared
from time to time on the common stock, subject to certain adjustments. The
holders of Series A Junior Participating Preferred Stock would be entitled to
receive a preferred liquidation payment per share of $100 (plus accrued and
unpaid dividends) or, if greater, an amount equal to 100 times the payment to be
made per share of common stock. Generally, the holder of each share of Series A
Junior Participating Preferred Stock would vote together with the common stock
(and any other series of preferred stock entitled to vote on such matter) on any
matter as to which the common stock is entitled to vote, including the election
of directors. The holder of each share of Series A Junior Participating
Preferred Stock would be entitled to 100 votes. In the event of any merger,
consolidation, combination, or other transaction in which shares of common stock
are exchanged for or changed into other stock or securities, cash, and/or
property, the holder of each share of Series A Junior Participating Preferred
Stock would be entitled to receive 100 times the aggregate amount of stock,
securities, cash, and/or property into which or for
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which each share of common stock is changed or exchanged. The foregoing
dividend, voting, and liquidation rights of the Series A Junior Participating
Preferred Stock would be protected against dilution in the event that additional
shares of common stock are issued pursuant to a stock split or stock dividend.
Because of the nature of the Series A Junior Participating Preferred Stock's
dividend, voting, liquidation, and other rights, the value of the one
one-hundredth of a share of Series A Junior Participating Preferred Stock
purchasable with each Right is intended to approximate the value of one share of
common stock.
Statutory Business Combination Provision
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Rentrak Corporation is subject to Section 60.835 of the Oregon Revised Statutes,
which generally prohibits an Oregon corporation from engaging in a "business
combination"
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with an "interested stockholder" for a period of three years after the time that
the person became an interested stockholder, unless (i) prior to such time the
Board of Directors of the corporation approved either the business combination
or the transaction in which the person became an interested stockholder, (ii)
upon consummation of the transaction that resulted in the stockholder becoming
an interested stockholder, the interested stockholder owns at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding shares owned by directors who are also officers of the
corporation and by certain employee stock plans, or (iii) at or after such time
the business combination is approved by the Board of Directors of the
corporation and by the affirmative vote of at least 66 2/3% of the outstanding
voting stock of the corporation that is not owned by the interested stockholder.
A "business combination" generally includes mergers, asset sales, and similar
transactions between the corporation and the interested stockholder, and other
transactions resulting in a financial benefit to the stockholder. An "interested
stockholder" is a person who owns 15% or more of the corporation's voting stock
or who is an affiliate or associate of the corporation and, together with his or
her affiliates and associates, has owned 15% or more of the corporation's voting
stock within the three year period immediately prior to the date on which it is
sought to be determined whether such person is an interested stockholder.
Other Matters
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The bylaws of Rentrak Corporation contain provisions (i) requiring that advance
notice be delivered to Rentrak Corporation of any business to be brought by a
stockholder before any meeting of stockholders and (ii) establishing procedures
to be followed by stockholders in nominating persons for election to the Board
of Directors. Generally, such advance notice provisions provide that written
notice must be given to the Secretary of Rentrak Corporation by a stockholder,
with respect to director nominations or stockholder proposals, not less than 60
nor more than 90 days prior to the first anniversary of the preceding year's
annual meeting (except that if the date of the annual meeting is changed by more
than 30 days from such anniversary date, then notice by the stockholder, to be
timely, must be received within 10 days of the date on which notice of the date
of the meeting was mailed or public disclosure of the date was made, whichever
first occurs).
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Such notice must set forth specific information regarding such stockholder and
such business or director nominee, as described in the bylaws.
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