As filed with the Securities and Exchange Commission on June __, 1997
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
K-TEL INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
Minnesota 41-0946588
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2605 Fernbrook Lane North
Minneapolis, Minnesota 55447-4736
(Address, including zip code, of Registrant's principal executive offices)
K-TEL INTERNATIONAL, INC.
1994 NONQUALIFIED STOCK OPTION PLAN
1996 NONQUALIFIED STOCK OPTION PLAN
1997 NONQUALIFIED STOCK OPTION PLAN
(Full Title of the Plan)
Mark J. Dixon
Vice President - Finance and Chief Financial Officer
K-tel International, Inc.
2605 Fernbrook Lane North
Minneapolis, Minnesota 55447-4736
(612) 559-6800
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
(Cover page continued on next page)
(Cover page continued from preceding page)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------------
Title of securities to be Amount to be Proposed maximum Proposed maximum Amount of registration
registered registered offering price per share aggregate offering price fee
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 442,500 shares (1) $8.00 $3,540,000 $1,073 (2)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of the following shares: (a) 12,500 shares issuable pursuant
to non-qualified stock option agreements granted in 1994 (the "1994
Options"); (b) 400,000 shares issuable pursuant to non-qualified stock
option agreements granted in 1996 (the "1996 Options"); and (c) 30,000
shares issuable pursuant to a non-qualified stock option agreement
granted in 1997 (the "1997 Option"). The number of shares of Common
Stock stated above may be adjusted in accordance with the provisions of
the 1994 Options, the 1996 Options, and the 1997 Option, in the event
that, during the period such options are in effect there is effected
any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares or the payment
of a stock dividend or any other increase or decrease in the number of
shares effected without receipt of consideration by the Company.
Accordingly, this Registration Statement covers, in addition to the
number of shares of Common Stock stated above, an indeterminate number
of shares which by reason of any such events may be issued in
accordance with the 1994 Options, the 1996 Options and the 1997 Option.
(2) Pursuant to Rule 457(h)(1), the aggregate offering price and the amount
of the registration fee is computed based on the price of $8.00 per
share, the average of the high and low prices of the Registrant's
Common Stock on The Nasdaq Stock Market on June 3, 1997, and assuming
that 442,500 shares is the maximum number of the Registrant's
securities issuable under the Plan that are covered by the Registration
Statement.
EXPLANATORY NOTE
As permitted by the rules of the Securities and Exchange Commission (the
"Commission"), this Registration Statement omits the information specified in
Part I of Form S-8.
PROSPECTUS
K-TEL INTERNATIONAL, INC.
442,500 SHARES OF COMMON STOCK
(PAR VALUE $.01 PER SHARE)
K-TEL INTERNATIONAL, INC.
1994 NON-QUALIFIED STOCK OPTION AGREEMENTS
1996 NON-QUALIFIED STOCK OPTION AGREEMENTS
1997 NON-QUALIFIED STOCK OPTION AGREEMENT
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
The 442,500 shares of Common Stock, $.01 par value per share (the
"Stock"), of K-tel International, Inc. (the "Company") covered by this
Prospectus are to be offered from time to time to certain employees of the
Company or any of its subsidiaries pursuant to the terms of the K-tel
International, Inc. 1994 Non-Qualified Stock Option Agreements, 1996
Non-Qualified Stock Option Agreements, and the 1997 Non-Qualified Stock Option
Agreement (the "Plan") which are described herein.
The outstanding shares of Stock and the shares offered hereby will be
listed on The Nasdaq Stock Market.
This Prospectus may not be used in the reoffer or resale of shares
purchased pursuant to the Plan. Persons who are not deemed to be "affiliates" of
the Company within the meaning of Rule 405 under the Securities Act of 1933 (the
"Act") may reoffer or resell shares purchased by them under the Plan without
restriction. "Affiliates" of the company may reoffer or resell such shares only
pursuant to (a) the requirements of the Rule 144 under said Act, or (b) a
registered offering involving a separate prospectus.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
The date of this Prospectus is June __, 1997
AVAILABLE INFORMATION
The Company undertakes to provide without charge to each person to whom
a Prospectus is delivered, upon written or oral request, a copy of any and all
of the information that has been incorporated by reference in Item 3 of Part II
of the Registration Statement, other than certain exhibits to such documents,
relating to the shares covered hereby. These documents are incorporated by
reference in this Section 10(a) Prospectus. In addition, the Company undertakes
to provide without charge to each participant in the Plan, upon written or oral
request, a copy of the documents required to be delivered to participants
pursuant to Rule 428(b) under the Act. Such requests, along with requests for
information regarding the Plan and its administrators, should be directed to
Mark J. Dixon, Vice President - Finance and Chief Financial Officer, K-tel
International, Inc., 2605 Fernbrook Lane North, Minneapolis, Minnesota
55447-4736 (telephone: (612) 559-6820.
DESCRIPTION OF THE PLAN
The Board of Directors of the Company has, from time to time, granted
non-qualified stock options to certain key employees which were not under the
Company's 1987 Stock Incentive Plan. The purpose of these options is to attract
and retain outstanding individuals as officers and employees of the Company and
its subsidiaries and to furnish incentives to such persons by providing them the
opportunity to acquire shares of Stock.
The aggregate number of shares of Stock reserved for issuance pursuant
to the non-qualified stock options granted under the agreements in this Plan is
442,500 shares. To the extent that any options under the Plan lapse, expire, are
terminated or cancelled, such shares will not again be available under the Plan.
The Plan is administered by the Compensation Committee of the Board of
Directors of the Company or the Board of Directors of the Company. The
Compensation Committee and the Board of Directors have authority to establish
specific terms relative to options granted pursuant to the Plan, including but
not limited to, vesting requirements, period of exercise after termination of
employment, and limitations on exercise.
The exercise price for the non-qualified stock options granted under
the Plan is the fair market value of the Stock at the time the respective option
is granted. The period of any option will be determined by the Board of
Directors or the Compensation Committee, but the term of options may not be any
longer than ten years from the date of grant. The period of any option will be
set forth in the option agreement for the respective option.
This description is qualified in its entirety by reference to the
respective option agreement for the options granted under the Plan. The Plan is
not a qualified plan under Section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and is not subject to the provisions of the Employee
Retirement Income Security Act of 1974.
U.S. FEDERAL INCOME TAX EFFECTS
The options granted under the Plan are all non-qualified stock options
("NQSO's"). Holders of NQSO's will not realize income until the option is
exercised. At the time of exercise, the grantee will realize ordinary income,
and the Company will become entitled to a corresponding deduction in the amount
by which the market value of the purchased shares at the time of exercise
exceeds the exercise price for such shares. If an optionee thereafter sells such
shares, the gain or loss, if any, realized upon such disposition will constitute
capital gain or loss to the optionee. At the time of exercise, the grantee must
deliver to the Company the amount of the exercise price for the shares of Stock
purchased upon exercise of the option and the amount of federal and state income
tax withholding that the Company determines is required to be withheld at the
time of the exercise.
INDIVIDUAL TAX IMPLICATIONS ATTENDANT TO PARTICIPATION IN THE PLAN ARE
THE RESPONSIBILITY OF THE INDIVIDUAL PARTICIPANT. THE BRIEF DESCRIPTION OF
FEDERAL TAX CONSEQUENCES PROVIDED ABOVE IS BASED UPON CURRENT LAW AND THE
POLICIES OF THE UNITED STATES DEPARTMENT OF THE TREASURY AND THE INTERNAL
REVENUE SERVICE, AND IT SHOULD BE UNDERSTOOD THAT SUCH DESCRIPTION IS NOT
EXHAUSTIVE, THAT THE LAW MAY CHANGE AND, FURTHER, THAT SPECIAL RULES ARE
PROVIDED WITH RESPECT TO SITUATIONS NOT SPECIFICALLY DISCUSSED HEREIN.
PARTICIPANTS AR URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES OF ANY TRANSACTIONS.
RESALE OF STOCK
This Prospectus may not be used in the reoffer or resale of shares of
Stock purchased upon exercise of options granted pursuant to the Plan. Persons
who are not deemed to be "affiliates" of the Company within the meaning of Rule
405 under the Securities Act of 1933 (the "Act") may reoffer or resell shares
purchased by them under the Plan without restriction. "Affiliates" of the
company may reoffer or resell such shares only pursuant to (a) the requirements
of the Rule 144 under said Act, or (b) a registered offering involving a
separate prospectus.
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3: INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Commission by K-tel
International, Inc. (the "Company") (File No. 0-6664) are incorporated in this
Registration Statement on Form S-8 (the 'Registration Statement") by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996;
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1996;
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1996; and
4. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered hereunder have been sold or which
deregisters all of the securities offered then remaining unsold, shall be deemed
to be incorporated herein by reference and to be a part hereof from the date of
filing of such documents.
ITEM 4: DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5: INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6: INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article V, Section 5.01 of the Bylaws of the Company provides that the
Company shall indemnify persons to the extent required by Minnesota Statutes,
Section 302A.521. Section 302A.521 provides that a corporation shall indemnify
any person who was or is made or is threatened to be made a party to any
proceeding by reason of the former or present official capacity of such person
against judgments, penalties and fines, including, without limitation, excise
taxes assessed against such person with respect to an employee benefit plan,
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by such person in connection with the proceeding, if,
with respect to the acts or omissions of such person complained of in the
proceeding, such person has not been indemnified by another organization or
employee benefit plan for the same penalties, fines, taxes and expenses with
respect to the same acts or omissions; acted in good faith; received no improper
personal benefit and Section 302A.255 (regarding conflicts of interest), if
applicable, has been satisfied; in the case of a criminal proceeding, had no
reasonable cause to believe the conduct was unlawful; and in the case of acts or
omissions by persons who are or were serving other organizations at the request
of the corporation or whose duties involve or involved service for other
organizations, reasonably believed that the conduct was not opposed to the best
interests of the corporation.
ITEM 7: EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8: EXHIBITS
4.1 Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit (3) filed as part of the
Company's Annual Report on Form 10-K for the year ended June
30, 1985))
4.2 By-laws of the Company (incorporated by reference to Exhibit
(3) filed as part of the Company's Annual Report on Form 10-K
for the year ended June 30, 1985))
4.3 K-tel International, Inc. 1994 Non-Qualified Stock Option
Agreements with Mark J. Dixon and Jeffrey Koblick (1994
Non-Qualified Stock Options)
4.4 K-tel International, Inc. 1996 Non-Qualified Stock Option
Agreements with David Weiner and Philip Kives (1996
Non-Qualified Stock Options)
4.5 K-tel International, Inc. 1997 Non-Qualified Stock Option
Agreement with William Isaacs (1997 Non-Qualified Stock
Option)
5.1 Opinion of Kaplan, Strangis and Kaplan, P.A.
23.1 Consent of Kaplan, Strangis and Kaplan, P.A. (included in
Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Powers of Attorney
ITEM 9: UNDERTAKINGS
Rule 415 Offering.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Company pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Incorporation of Subsequent Exchange Act Documents by Reference.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Form S-8 Registration Statement.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Company will,
unless in the opinion of its counsel the mater has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, the Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Minneapolis, State of Minnesota, on June 5,
1997.
K-TEL INTERNATIONAL, INC.
By: /s/David Weiner
David Weiner
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Chairman of the Board and
* Chief Executive Officer
- ----------------------- (Principal Executive Officer)
Philip Kives June 5, 1997
/s/ David Weiner
- ----------------------- President and Director
David Weiner June 5, 1997
Vice President - Finance,
Chief Financial Officer and
Director
/s/ Mark J. Dixon (Principal Financial Officer and
- ----------------------- Principal Accounting Officer) June 5, 1997
Mark J. Dixon
Senior Vice President - June 5, 1997
* Purchasing and Operations and
- ----------------------- Director
Jeffrey Koblick
* Director June 5, 1997
- -----------------------
Garry Kieves
* Director June 5, 1997
- -----------------------
Lou Scheimer
* By /s/Mark J. Dixon As attorney-in-fact for the above June 5, 1997
- ----------------------- officers and directors marked by
Mark J. Dixon an asterisk.
Attorney-in-Fact
EXHIBIT INDEX
Exhibit Sequentially
Number Description of Exhibit Numbered Page
4.1 Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit (3) filed as part of the
Company's Annual Report on Form 10-K for the year ended June
30, 1985)
4.2 By-laws of the Company (incorporated by reference to Exhibit
(3) filed as part of the Company's Annual Report on Form 10-K
for the year ended June 30, 1985)
4.3 K-tel International, Inc. 1994 Non-Qualified
Stock Option Agreements with Mark J. Dixon and
Jeffrey Koblick
4.4 K-tel International, Inc. 1996 Stock Option
Agreements with David Weiner and Philip Kives
4.5 K-tel International, Inc. 1997 Stock Option
Agreement with William Isaacs
5.1 Opinion of Kaplan, Strangis and Kaplan, P.A.
23.1 Consent of Kaplan, Strangis and Kaplan, P.A.
(included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP
24.1 Powers of Attorney
EXHIBIT 4.3
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 22th day of February
1994, between K-tel International, Inc., a Minnesota corporation (herein called
the "Company") and Mark Dixon, an employee of the Company or one or more of its
subsidiaries (herein called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires, by affording the Employee an opportunity
to purchase shares of its common stock, (herein called the"Common Stock"), as
provided in this Agreement, to provide Employee with an incentive to create
value for the shareholders of the Company and to make the Company successful;
and
WHEREAS, the Board of Directors of the Company (herein called the
"Board") has authorized and approved the granting of the option to purchase the
number of shares of Common Stock of the Company on the terms set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto have agreed, and
do hereby agree, as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Employee the right and option (herein called the "Option") to purchase all or
any part of an aggregate of 7,500 shares of Common Stock of the Company on the
terms and conditions set forth in this Agreement. The option is a Nonqualified
Stock Option under the Plan.
2. Purchase Price and Term of Option. The purchase price of the shares
of the Common Stock subject to the Option, the dates on which shares are subject
to the Option may be exercised and the date on which the Option terminates are
as follows:
Date First Date Option
Number of Shares Exercisable Terminates Price Per Share
- ---------------- ----------- ---------- ---------------
1,875 February 22, 1994 February 22, 2004 $6.75
1,875 February 22, 1995 February 22, 2004 $6.75
1,875 February 22, 1996 February 22, 2004 $6.75
1,875 February 22, 1997 February 22, 2004 $6.75
The purchase price of the shares as to which the Option may be exercised shall
be paid in full in cash at the time of exercise. Except as provided in
paragraphs 7 and 9 of this Agreement, the Option may not be exercised unless the
Employee shall have been in the continuous employ of the Company, or one or more
of its subsidiaries, from the date hereof to the date of the exercise of the
Option.
3. Adjustments. If the number or type of shares of Common Stock of the
Company outstanding shall be changed or if the Company distributes to the
holders of its Common Stock any stock of the Company or any security convertible
into stock of the Company, as a result of recapitalization, sock split, stock
dividend, exchange, consolidation, combination of shares, or reorganization or
other event in which the Company is the surviving corporation, the Board shall
make such proportionate increase or decrease in the number, kind and price of
the shares subject to the Option as it may deem appropriate, and in doing so may
eliminate any fractional shares which might result from such proportionate
increase or decrease.
4. Not a Stockholder. The holder of the Option shall not have any of
the rights of a stockholder of the Company with respect to the shares covered by
the Option except to the extent that the certificate or certificates for such
shares shall be delivered to him upon the due exercise of the Option.
5. Non-Transferability of Option. The Option shall not be transferable
except by will or the laws of descent and distribution, and may be exercised
during the lifetime of the employee only by the Employee except as provided in
paragraphs 7 and 9 of this Agreement. Without limiting the generality of the
foregoing restriction of transferability, the Option may not be assigned,
transferred (except as provided in the preceding sentence), pledged, or
hypothecated in any way, shall not be assignable by operation of law and shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment, or
similar process upon the Option, shall be null and void and without effect.
6. Employment. Subject to the provisions of any written contract
between the Company or one or more of its subsidiaries and the Employee, the
employment of the Employee shall be at the pleasure of the Board of Directors of
each employing corporation and at such compensation as such employing
corporation or corporations shall reasonably determine. In the event Employee
shall (a) be employed by a competitor of, or shall be engaged in any activity in
competition with, the Company without the Company's consent, (b) divulge without
the consent of the Company any secret or confidential information belonging to
the Company, or (c) engage in any other activities which would constitute
grounds of Employee's discharge by the Company (or the employing corporation)
for cause, the Options (and any other option or options held by him or her under
the Plan), to the extent not therefore exercised, shall forthwith terminate.
Nothing in this Agreement shall confer upon the Employee any right to continue
in the employ of the Company or of any of its subsidiaries or interfere in any
way with the right of the Company or any of its subsidiaries to terminate his
employment at any time.
7. Termination of Employment. In the event that the employment of the
Employees shall be terminated (otherwise than by reason of death), the Option
may, subject to the provisions of paragraph 6 hereof, be exercised by the
Employee (to the extent that he shall have been entitled to do so at the
termination of his employment) at any time within one (1) month after such
termination. So long as the Employee shall continue to be an Employee of the
Company or one or more of its subsidiaries, the Option shall not be affected by
any change of duties or position.
8. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement, the Option
may be exercised, at any time prior to the expiration date specified in such
option, by written notice to the Company at its executive offices. Such notice
shall state the election to exercise the Option and the number of shares in
respect of which it is being exercised, shall be signed by the person or persons
so exercising the Option, and shall be accompanied by payment of the full
purchase price of such shares. The Company shall deliver a certificate or
certificates representing such shares as soon as practicable after the notice
shall be received. Payment of such purchase price shall be made by a certified
check payable to the order of the Company. The certificate or certificates for
the shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option (or, if
the Option shall be exercised by the Employee and if the Employee shall so
request in the notice exercising the Option, shall be registered in the name of
the Employee and another person jointly, with right or survivorship) and shall
be delivered as provided above to or upon the written order of the Employee
exercising the Option. In the event the Option shall be exercised pursuant to
paragraph 9 of the Agreement by any person or persons other than the Employee,
such notice shall be accompanied by appropriate proof of the right of such
person or persons to exercise the Option. All shares that shall be purchased
upon the exercise of the Option as provided herein shall be fully paid and
non-assessable.
(b) It shall be a condition to the obligation of the Company to issue
or transfer shares of Common Stock upon exercise of the Option granted under the
plan by delivery of shares, that the Employee (or any authorized representative)
pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying its liability to withhold federal, state
or local income or other taxes incurred by reason of the exercise of the Option
or the transfer of shares upon such exercise. If the amount requested is not
paid, the Company may refuse to issue or transfer shares of Common Stock upon
exercise of the Option.
(c) The Company shall not be required to issue or transfer any
certificates for shares purchased upon exercise of this Option until all
applicable requirements of law have been complied with and such shares have been
listed on any securities exchange or system on which the Common Stock may then
be listed.
9. Death of Employee. In the event of the death of the Employee, the
estate of the Employee or the person who acquires the right to exercise the
Employee's Option by reason of the Employee's death, whether by request,
inheritance or intestate succession, shall have the right to exercise the Option
within twelve (12) months following the death of the Employee (but not after the
expiration of the Option) for the number of shares which the Employee was
entitled to purchase at the time of his death, but only if the person to whom
the Option was granted was at the time of his death in the employ of the Company
or any of its subsidiaries or of a corporation (or of a parent or subsidiary of
such corporation) issuing or assuming the Option in the transaction to which
Section 425(a) of the Internal Revenue Code of 1954, as amended, (herein called
the "Internal Revenue Code") was applicable. Any such exercise shall be made by
(a) delivering written notice to the Secretary of the Company specifying the
number of shares of Common Stock with respect to which the Option is being
exercised, and (b) paying or causing to be paid to the Company the purchase
price of such shares (c) providing the Company with such evidence as the Company
may request to demonstrate that the person or persons exercising the Option has
or have the right to do so and that all taxes or other assessments with respect
to the Common Stock issuable upon exercise of the Option have been paid or
adequate provision for such payment has been made. Upon being satisfied that the
person or persons exercising the Option has or have right to do so and that all
taxes or other assessment with respect to the Common Stock covered thereby have
been paid or provided for, the Company shall issue certificates for such shares
in such denominations as the person or persons exercising the Option may direct,
and shall deliver such shares in accordance with reasonable instructions
contained in the notice.
10. Reservation of Shares. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of the
Common stock as will be sufficient to satisfy the requirement of this Agreement,
shall pay all original issue and transfer taxes with respect to the issue and
transfer of shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith, and will from time to time use
its best efforts to comply with all laws and regulations which, in the opinion
of counsel for the Company, shall be applicable thereto.
11. Restricted Securities and Investment Representation. By execution
of this Agreement, the Employee agrees and understands that the shares of Common
stock issuable upon exercise of this Option have not been registered under
applicable federal and state securities laws and, therefore, constitute
"restricted securities" within the meaning of the federal securities laws, that
the shares may only be resold pursuant to an applicable exemption from
registration or pursuant to an effective registration statement and that the
shares will bear a restrictive legend and stop transfer restrictions to such
effect. Further, the Employee represents and agrees to hold the shares acquired
by exercise of the Option for investment and not with a view to resale or
distribution thereof to the public. By exercising the Option, the Employee
acknowledges that he or she has received all financial and other information
concerning the Company he or she deems necessary or has requested. In addition,
the Employee agrees to furnish the Company with a certificate to the effect of
the foregoing upon exercise of the Option.
12. Definitions. As used herein, the term "subsidiary" shall mean any
present or future corporation which would be a "subsidiary corporation" of the
Company, as the term is defined in Section 425(f) of the Internal Revenue Code
of 1954 as amended.
13. Governing law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand and seal, all on the day and year first above written.
K-TEL INTERNATIONAL, INC.
By: /s/ Mickey Elfenbein
Its: CEO and President
Employee: /s/ Mark Dixon
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 22th day of February
1994, between K-tel International, Inc., a Minnesota corporation (herein called
the "Company") and Jeffrey Koblick, an employee of the Company or one or more of
its subsidiaries (herein called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires, by affording the Employee an opportunity
to purchase shares of its common stock, (herein called the"Common Stock"), as
provided in this Agreement, to provide Employee with an incentive to create
value for the shareholders of the Company and to make the Company successful;
and
WHEREAS, the Board of Directors of the Company (herein called the
"Board") has authorized and approved the granting of the option to purchase the
number of shares of Common Stock of the Company on the terms set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto have agreed, and
do hereby agree, as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Employee the right and option (herein called the "Option") to purchase all or
any part of an aggregate of 5,000 shares of Common Stock of the Company on the
terms and conditions set forth in this Agreement. The option is a Nonqualified
Stock Option under the Plan.
2. Purchase Price and Term of Option. The purchase price of the shares
of the Common Stock subject to the Option, the dates on which shares are subject
to the Option may be exercised and the date on which the Option terminates are
as follows:
Date First Date Option
Number of Shares Exercisable Terminates Price Per Share
- ---------------- ----------- ---------- ---------------
1,250 February 22, 1994 February 22, 2004 $6.75
1,250 February 22, 1995 February 22, 2004 $6.75
1,250 February 22, 1996 February 22, 2004 $6.75
1,250 February 22, 1997 February 22, 2004 $6.75
The purchase price of the shares as to which the Option may be exercised shall
be paid in full in cash at the time of exercise. Except as provided in
paragraphs 7 and 9 of this Agreement, the Option may not be exercised unless the
Employee shall have been in the continuous employ of the Company, or one or more
of its subsidiaries, from the date hereof to the date of the exercise of the
Option.
3. Adjustments. If the number or type of shares of Common Stock of the
Company outstanding shall be changed or if the Company distributes to the
holders of its Common Stock any stock of the Company or any security convertible
into stock of the Company, as a result of recapitalization, sock split, stock
dividend, exchange, consolidation, combination of shares, or reorganization or
other event in which the Company is the surviving corporation, the Board shall
make such proportionate increase or decrease in the number, kind and price of
the shares subject to the Option as it may deem appropriate, and in doing so may
eliminate any fractional shares which might result from such proportionate
increase or decrease.
4. Not a Stockholder. The holder of the Option shall not have any of
the rights of a stockholder of the Company with respect to the shares covered by
the Option except to the extent that the certificate or certificates for such
shares shall be delivered to him upon the due exercise of the Option.
5. Non-Transferability of Option. The Option shall not be transferable
except by will or the laws of descent and distribution, and may be exercised
during the lifetime of the employee only by the Employee except as provided in
paragraphs 7 and 9 of this Agreement. Without limiting the generality of the
foregoing restriction of transferability, the Option may not be assigned,
transferred (except as provided in the preceding sentence), pledged, or
hypothecated in any way, shall not be assignable by operation of law and shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment, or
similar process upon the Option, shall be null and void and without effect.
6. Employment. Subject to the provisions of any written contract
between the Company or one or more of its subsidiaries and the Employee, the
employment of the Employee shall be at the pleasure of the Board of Directors of
each employing corporation and at such compensation as such employing
corporation or corporations shall reasonably determine. In the event Employee
shall (a) be employed by a competitor of, or shall be engaged in any activity in
competition with, the Company without the Company's consent, (b) divulge without
the consent of the Company any secret or confidential information belonging to
the Company, or (c) engage in any other activities which would constitute
grounds of Employee's discharge by the Company (or the employing corporation)
for cause, the Options (and any other option or options held by him or her under
the Plan), to the extent not therefore exercised, shall forthwith terminate.
Nothing in this Agreement shall confer upon the Employee any right to continue
in the employ of the Company or of any of its subsidiaries or interfere in any
way with the right of the Company or any of its subsidiaries to terminate his
employment at any time.
7. Termination of Employment. In the event that the employment of the
Employees shall be terminated (otherwise than by reason of death), the Option
may, subject to the provisions of paragraph 6 hereof, be exercised by the
Employee (to the extent that he shall have been entitled to do so at the
termination of his employment) at any time within one (1) month after such
termination. So long as the Employee shall continue to be an Employee of the
Company or one or more of its subsidiaries, the Option shall not be affected by
any change of duties or position.
8. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement, the Option
may be exercised, at any time prior to the expiration date specified in such
option, by written notice to the Company at its executive offices. Such notice
shall state the election to exercise the Option and the number of shares in
respect of which it is being exercised, shall be signed by the person or persons
so exercising the Option, and shall be accompanied by payment of the full
purchase price of such shares. The Company shall deliver a certificate or
certificates representing such shares as soon as practicable after the notice
shall be received. Payment of such purchase price shall be made by a certified
check payable to the order of the Company. The certificate or certificates for
the shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option (or, if
the Option shall be exercised by the Employee and if the Employee shall so
request in the notice exercising the Option, shall be registered in the name of
the Employee and another person jointly, with right or survivorship) and shall
be delivered as provided above to or upon the written order of the Employee
exercising the Option. In the event the Option shall be exercised pursuant to
paragraph 9 of the Agreement by any person or persons other than the Employee,
such notice shall be accompanied by appropriate proof of the right of such
person or persons to exercise the Option. All shares that shall be purchased
upon the exercise of the Option as provided herein shall be fully paid and
non-assessable.
(b) It shall be a condition to the obligation of the Company to issue
or transfer shares of Common Stock upon exercise of the Option granted under the
plan by delivery of shares, that the Employee (or any authorized representative)
pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying its liability to withhold federal, state
or local income or other taxes incurred by reason of the exercise of the Option
or the transfer of shares upon such exercise. If the amount requested is not
paid, the Company may refuse to issue or transfer shares of Common Stock upon
exercise of the Option.
(c) The Company shall not be required to issue or transfer any
certificates for shares purchased upon exercise of this Option until all
applicable requirements of law have been complied with and such shares have been
listed on any securities exchange or system on which the Common Stock may then
be listed.
9. Death of Employee. In the event of the death of the Employee, the
estate of the Employee or the person who acquires the right to exercise the
Employee's Option by reason of the Employee's death, whether by request,
inheritance or intestate succession, shall have the right to exercise the Option
within twelve (12) months following the death of the Employee (but not after the
expiration of the Option) for the number of shares which the Employee was
entitled to purchase at the time of his death, but only if the person to whom
the Option was granted was at the time of his death in the employ of the Company
or any of its subsidiaries or of a corporation (or of a parent or subsidiary of
such corporation) issuing or assuming the Option in the transaction to which
Section 425(a) of the Internal Revenue Code of 1954, as amended, (herein called
the "Internal Revenue Code") was applicable. Any such exercise shall be made by
(a) delivering written notice to the Secretary of the Company specifying the
number of shares of Common Stock with respect to which the Option is being
exercised, and (b) paying or causing to be paid to the Company the purchase
price of such shares (c) providing the Company with such evidence as the Company
may request to demonstrate that the person or persons exercising the Option has
or have the right to do so and that all taxes or other assessments with respect
to the Common Stock issuable upon exercise of the Option have been paid or
adequate provision for such payment has been made. Upon being satisfied that the
person or persons exercising the Option has or have right to do so and that all
taxes or other assessment with respect to the Common Stock covered thereby have
been paid or provided for, the Company shall issue certificates for such shares
in such denominations as the person or persons exercising the Option may direct,
and shall deliver such shares in accordance with reasonable instructions
contained in the notice.
10. Reservation of Shares. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of the
Common stock as will be sufficient to satisfy the requirement of this Agreement,
shall pay all original issue and transfer taxes with respect to the issue and
transfer of shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith, and will from time to time use
its best efforts to comply with all laws and regulations which, in the opinion
of counsel for the Company, shall be applicable thereto.
11. Restricted Securities and Investment Representation. By execution
of this Agreement, the Employee agrees and understands that the shares of Common
stock issuable upon exercise of this Option have not been registered under
applicable federal and state securities laws and, therefore, constitute
"restricted securities" within the meaning of the federal securities laws, that
the shares may only be resold pursuant to an applicable exemption from
registration or pursuant to an effective registration statement and that the
shares will bear a restrictive legend and stop transfer restrictions to such
effect. Further, the Employee represents and agrees to hold the shares acquired
by exercise of the Option for investment and not with a view to resale or
distribution thereof to the public. By exercising the Option, the Employee
acknowledges that he or she has received all financial and other information
concerning the Company he or she deems necessary or has requested. In addition,
the Employee agrees to furnish the Company with a certificate to the effect of
the foregoing upon exercise of the Option.
12. Definitions. As used herein, the term "subsidiary" shall mean any
present or future corporation which would be a "subsidiary corporation" of the
Company, as the term is defined in Section 425(f) of the Internal Revenue Code
of 1954 as amended.
13. Governing law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand and seal, all on the day and year first above written.
K-TEL INTERNATIONAL, INC.
By: /s/ Mickey Elfenbein
Its: CEO and President
Employee: /s/ Jeffrey Koblick
EXHIBIT 4.4
K-TEL INTERNATIONAL, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT made and entered into as of September 16, 1996, by and
between K-TEL INTERNATIONAL, INC., a Minnesota corporation (the "Company"), and
DAVID WEINER, a California resident (the "Optionee");
W I T N E S S E T H:
WHEREAS, the Optionee has consented to serving as the Company's
President; and
WHEREAS, the Company desires to afford the Optionee an opportunity to
purchase shares of its common stock, par value $.01, (the "Common Stock"),
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right
and option (hereinafter called the "Option") to purchase all or any part of an
aggregate of two hundred thousand (200,000) shares of Common Stock (the "Option
Shares") (such number being subject to adjustment as provided in Paragraph 4
hereof) on the terms and conditions herein set forth. The Option is a
non-qualified stock option under the Internal Revenue Code of 1986, as amended.
2. Purchase Price. Subject to the provisions of Paragraph 4 hereof, the
purchase price for the Option Shares shall be $4.00 per share, which has been
determined to be the fair market value of the Option Shares at the date of grant
of the Option.
3. Term and Vesting of Option. The Option shall expire (the "Expiration
Date") upon the earlier to occur of: (a) the close of business on the tenth
anniversary of the date hereof or (b) five (5) years after the date on which the
Optionee is no longer employed by the Company, unless such termination of
employment is by Optionee or by the Company for Cause as defined in the
employment agreement dated the date hereof between Optionee and the Company, in
which case the Option will expire ninety (90) days after such termination. Prior
to the Expiration Date, the Optionee shall be entitled to exercise the Option as
to all or any part of the Option Shares which have theretofore become vested.
The Option Shares shall vest and become exercisable as follows: (1) 100,000
shares upon the date hereof, (2) 33,000 shares upon the first anniversary of the
date hereof, (3) 33,000 shares upon the second anniversary of the date hereof,
and (4) 34,000 shares upon the third anniversary of the date hereof; provided,
however, in the event of the sale of all or substantially all of the assets of
the Company or a merger, consolidation or other reorganization of the Company in
which the shareholders of the Company immediately prior to such merger,
consolidation or reorganization constitute less than fifty-one percent (51%) of
the voting power of the surviving corporation (a "Sale Transaction") on or after
the first anniversary of this Agreement, then all of the Option Shares shall be
vested and exercisable upon the occurrence of such closing; provided further, in
the event a Sale Transaction occurs before the first anniversary of the date of
this Agreement, then the number of Option Shares shall be reduce to the 100,000
shares which vest on the date hereof. Notwithstanding the foregoing, the Option
may in no event be exercised by anyone to any extent in the event of a voluntary
dissolution, liquidation or winding up of the affairs of the Company, after the
close of business on the later of (i) the date of the twentieth day after the
mailing of written notice of such dissolution, liquidation or winding up, and
(ii) the record date for determination of holders of Common Stock entitled to
participate therein.
4. Adjustments for Changes in Capital Structure. If all or any portion
of this Option shall be exercised subsequent to any share dividend,
recapitalization, merger, consolidation, exchange of shares or reorganization as
a result of which shares of any class shall be issued in respect to outstanding
Common Stock, or if Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes, the person so
exercising this Option shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares to which they would have been
entitled if Common Stock (as authorized at the date hereof) had been purchased
at the date hereof for the same aggregate price (on the basis of the price per
share set forth in Paragraph 2 hereof) and had not been disposed of. No
fractional share shall be issued upon any such exercise and the aggregate price
paid shall be appropriately reduced on account of any fractional share not
issued.
5. Method Exercise. Subject to the terms and conditions of this
Agreement, the Option may be exercised by written notice to the Company at its
principal office and place of business in the State of Minnesota. Such notice
shall state the election to exercise the Option and the number of Option Shares
in respect of which it is being exercised, and shall be signed by the person so
exercising the Option. Such notice shall be accompanied by the payment of the
full purchase price of such Option Shares and the delivery of such payment to
the Treasurer of the Company. The certificate for the Option Shares as to which
the Option shall have been so exercised shall be registered in the name of the
person exercising the Option. If the Optionee shall so request in the notice
exercising the Option, the certificate shall be registered in the name of the
Optionee and another person jointly with right of survivorship, and shall be
delivered as provided above to or upon the written order of the person
exercising the Option. In the event the Option shall be exercised by any person
other than Optionee, such notice shall be accompanied by appropriate proof of
the right of such person to exercise the Option.
6. Reservation of Shares. The Company shall, at all times during the
term of the Option, reserve and keep available such number of shares of its
capital stock as will be sufficient to satisfy the requirements of this
Agreement, and shall pay all original issue and transfer taxes with respect to
the issue and transfer of Option Shares pursuant hereto, and all other fees and
expenses necessarily incurred by the Company in connection therewith.
7. No Rights as Stockholder. The holder of the Option shall not have
any of the rights of a stockholder with respect to the Option Shares covered by
the Option except to the extent that one or more certificates for shares shall
be delivered to him upon the due exercise of the Option.
8. Registration and Investment Purpose. The Company shall use
reasonable efforts to have the shares issuable upon the exercise of this Option
registered on a Form S-8 Registration Statement with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. Unless the Option
Shares have been so registered, the Option is granted on the condition that the
acquisition of shares hereunder shall be for investment purposes only and the
person acquiring Option Shares upon exercise of the Option must bear the
economic risk of the investment for an indefinite period of time since the
shares so acquired cannot be sold unless they are subsequently registered or an
exemption from such registration is available. Optionee agrees that a legend may
be placed on the stock certificates acknowledging the restrictions on subsequent
distribution of the shares issued upon exercise of this Option.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, successors, assigns and
representatives and shall be governed by the laws of the State of Minnesota.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
K-TEL INTERNATIONAL, INC.
By /s/ Philip Kives
Philip Kives, Chairman and
Chief Executive Officer
/s/ David Weiner
David Weiner
K-TEL INTERNATIONAL, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT made and entered into as of November 18, 1996, by and
between K-TEL INTERNATIONAL, INC., a Minnesota corporation (the "Company"), and
PHILIP KIVES, a Canadian resident (the "Optionee");
W I T N E S S E T H:
WHEREAS, the Optionee has served as the Company's Chairman and Chief
Executive Officer for a number of years without compensation; and
WHEREAS, the Company desires to award Optionee the non-qualified stock
option to purchase 200,000 shares of the Company's common stock, par value $.01,
(the "Common Stock") in recognition of Optionee's past services,
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right
and option (hereinafter called the "Option") to purchase all or any part of an
aggregate of two hundred thousand (200,000) shares of Common Stock (the "Option
Shares") (such number being subject to adjustment as provided in Paragraph 4
hereof) on the terms and conditions herein set forth. The Option is a
non-qualified stock option under the Internal Revenue Code of 1986, as amended.
2. Purchase Price. Subject to the provisions of Paragraph 4 hereof, the
purchase price for the Option Shares shall be $4.00 per share, which has been
determined to be the fair market value of the Option Shares at the date of grant
of the Option.
3. Term and Vesting of Option. The Option shall be completely vested on
the date hereof and shall expire (the "Expiration Date") upon the earlier to
occur of: (a) the close of business on the tenth anniversary of the date hereof
or (b) five (5) years after the date on which the Optionee is no longer employed
by the Company. Notwithstanding the foregoing, the Option may in no event be
exercised by anyone to any extent in the event of a voluntary dissolution,
liquidation or winding up of the affairs of the Company, after the close of
business on the later of (i) the date of the twentieth day after the mailing of
written notice of such dissolution, liquidation or winding up, and (ii) the
record date for determination of holders of Common Stock entitled to participate
therein.
4. Adjustments for Changes in Capital Structure. If all or any portion
of this Option shall be exercised subsequent to any share dividend,
recapitalization, merger, consolidation, exchange of shares or reorganization as
a result of which shares of any class shall be issued in respect to outstanding
Common Stock, or if Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes, the person so
exercising this Option shall receive, for the aggregate price paid upon such
exercise, the aggregate number and class of shares to which they would have been
entitled if Common Stock (as authorized at the date hereof) had been purchased
at the date hereof for the same aggregate price (on the basis of the price per
share set forth in Paragraph 2 hereof) and had not been disposed of. No
fractional share shall be issued upon any such exercise and the aggregate price
paid shall be appropriately reduced on account of any fractional share not
issued.
5. Method Exercise. Subject to the terms and conditions of this
Agreement, the Option may be exercised by written notice to the Company at its
principal office and place of business in the State of Minnesota. Such notice
shall state the election to exercise the Option and the number of Option Shares
in respect of which it is being exercised, and shall be signed by the person so
exercising the Option. Such notice shall be accompanied by the payment of the
full purchase price of such Option Shares and the delivery of such payment to
the Treasurer of the Company. The certificate for the Option Shares as to which
the Option shall have been so exercised shall be registered in the name of the
person exercising the Option. If the Optionee shall so request in the notice
exercising the Option, the certificate shall be registered in the name of the
Optionee and another person jointly with right of survivorship, and shall be
delivered as provided above to or upon the written order of the person
exercising the Option. In the event the Option shall be exercised by any person
other than Optionee, such notice shall be accompanied by appropriate proof of
the right of such person to exercise the Option.
6. Reservation of Shares. The Company shall, at all times during the
term of the Option, reserve and keep available such number of shares of its
capital stock as will be sufficient to satisfy the requirements of this
Agreement, and shall pay all original issue and transfer taxes with respect to
the issue and transfer of Option Shares pursuant hereto, and all other fees and
expenses necessarily incurred by the Company in connection therewith.
7. No Rights as Stockholder. The holder of the Option shall not have
any of the rights of a stockholder with respect to the Option Shares covered by
the Option except to the extent that one or more certificates for shares shall
be delivered to him upon the due exercise of the Option.
8. Registration and Investment Purpose. The Company shall use
reasonable efforts to have the shares issuable upon the exercise of this Option
registered on a Form S-8 Registration Statement with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. Unless the Option
Shares have been so registered, the Option is granted on the condition that the
acquisition of shares hereunder shall be for investment purposes only and the
person acquiring Option Shares upon exercise of the Option must bear the
economic risk of the investment for an indefinite period of time since the
shares so acquired cannot be sold unless they are subsequently registered or an
exemption from such registration is available. Optionee agrees that a legend may
be placed on the stock certificates acknowledging the restrictions on subsequent
distribution of the shares issued upon exercise of this Option.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, successors, assigns and
representatives and shall be governed by the laws of the State of Minnesota.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
K-TEL INTERNATIONAL, INC.
By /s/ David Weiner
David Weiner, President
/s/ Philip Kives
Philip Kives
EXHIBIT 4.5
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 27th day of February
1997, between K-tel International, Inc., a Minnesota corporation (herein called
the "Company") and William Isaacs, an employee of the Company or one or more of
its subsidiaries (herein called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires, by affording the Employee an opportunity
to purchase shares of its common stock, (herein called the"Common Stock"), as
provided in this Agreement, to provide Employee with an incentive to create
value for the shareholders of the Company and to make the Company successful;
and
WHEREAS, the Board of Directors of the Company (herein called the
"Board") has authorized and approved the granting of the option to purchase the
number of shares of Common Stock of the Company on the terms set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto have agreed, and
do hereby agree, as follows:
1. Grant of Option. The Company hereby irrevocably grants to the
Employee the right and option (herein called the "Option") to purchase all or
any part of an aggregate of 30,000 shares of Common Stock of the Company on the
terms and conditions set forth in this Agreement. The option is a Nonqualified
Stock Option under the Plan.
2. Purchase Price and Term of Option. The purchase price of the shares
of the Common Stock subject to the Option, the dates on which shares are subject
to the Option may be exercised and the date on which the Option terminates are
as follows:
Date First Date Option
Number of Shares Exercisable Terminates Price Per Share
- ---------------- ----------- ---------- ---------------
7,500 February 27, 1997 February 27, 2007 $8.25
7,500 February 27, 1998 February 27, 2007 $8.25
7,500 February 27, 1999 February 27, 2007 $8.25
7,500 February 27, 2000 February 27, 2007 $8.25
The purchase price of the shares as to which the Option may be exercised shall
be paid in full in cash at the time of exercise. Except as provided in
paragraphs 7 and 9 of this Agreement, the Option may not be exercised unless the
Employee shall have been in the continuous employ of the Company, or one or more
of its subsidiaries, from the date hereof to the date of the exercise of the
Option.
3. Adjustments. If the number or type of shares of Common Stock of the
Company outstanding shall be changed or if the Company distributes to the
holders of its Common Stock any stock of the Company or any security convertible
into stock of the Company, as a result of recapitalization, sock split, stock
dividend, exchange, consolidation, combination of shares, or reorganization or
other event in which the Company is the surviving corporation, the Board shall
make such proportionate increase or decrease in the number, kind and price of
the shares subject to the Option as it may deem appropriate, and in doing so may
eliminate any fractional shares which might result from such proportionate
increase or decrease.
4. Not a Stockholder. The holder of the Option shall not have any of
the rights of a stockholder of the Company with respect to the shares covered by
the Option except to the extent that the certificate or certificates for such
shares shall be delivered to him upon the due exercise of the Option.
5. Non-Transferability of Option. The Option shall not be transferable
except by will or the laws of descent and distribution, and may be exercised
during the lifetime of the employee only by the Employee except as provided in
paragraphs 7 and 9 of this Agreement. Without limiting the generality of the
foregoing restriction of transferability, the Option may not be assigned,
transferred (except as provided in the preceding sentence), pledged, or
hypothecated in any way, shall not be assignable by operation of law and shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment, or
similar process upon the Option, shall be null and void and without effect.
6. Employment. Subject to the provisions of any written contract
between the Company or one or more of its subsidiaries and the Employee, the
employment of the Employee shall be at the pleasure of the Board of Directors of
each employing corporation and at such compensation as such employing
corporation or corporations shall reasonably determine. In the event Employee
shall (a) be employed by a competitor of, or shall be engaged in any activity in
competition with, the Company without the Company's consent, (b) divulge without
the consent of the Company any secret or confidential information belonging to
the Company, or (c) engage in any other activities which would constitute
grounds of Employee's discharge by the Company (or the employing corporation)
for cause, the Options (and any other option or options held by him or her under
the Plan), to the extent not therefore exercised, shall forthwith terminate.
Nothing in this Agreement shall confer upon the Employee any right to continue
in the employ of the Company or of any of its subsidiaries or interfere in any
way with the right of the Company or any of its subsidiaries to terminate his
employment at any time.
7. Termination of Employment. In the event that the employment of the
Employee shall be terminated (otherwise than by reason of death), the Option
may, subject to the provisions of paragraph 6 hereof, be exercised by the
Employee (to the extent that he shall have been entitled to do so at the
termination of his employment) at any time within one (1) month after such
termination. So long as the Employee shall continue to be an Employee of the
Company or one or more of its subsidiaries, the Option shall not be affected by
any change of duties or position. A termination of employment shall also occur
in the event of the sale of one or more subsidiaries of the Company which employ
Employee if Employee does not remain in the employ of the Company or one of its
other subsidiaries which is not sold; and any such termination of employment
shall be deemed to have occurred on the date of the sale of the subsidiary
employing Employee.
8. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement, the Option
may be exercised, at any time prior to the expiration date specified in such
option, by written notice to the Company at its executive offices. Such notice
shall state the election to exercise the Option and the number of shares in
respect of which it is being exercised, shall be signed by the person or persons
so exercising the Option, and shall be accompanied by payment of the full
purchase price of such shares. The Company shall deliver a certificate or
certificates representing such shares as soon as practicable after the notice
shall be received. Payment of such purchase price shall be made by a certified
check payable to the order of the Company. The certificate or certificates for
the shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option (or, if
the Option shall be exercised by the Employee and if the Employee shall so
request in the notice exercising the Option, shall be registered in the name of
the Employee and another person jointly, with right or survivorship) and shall
be delivered as provided above to or upon the written order of the Employee
exercising the Option. In the event the Option shall be exercised pursuant to
paragraph 9 of the Agreement by any person or persons other than the Employee,
such notice shall be accompanied by appropriate proof of the right of such
person or persons to exercise the Option. All shares that shall be purchased
upon the exercise of the Option as provided herein shall be fully paid and
non-assessable.
(b) It shall be a condition to the obligation of the Company to issue
or transfer shares of Common Stock upon exercise of the Option granted under the
plan by delivery of shares, that the Employee (or any authorized representative)
pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying its liability to withhold federal, state
or local income or other taxes incurred by reason of the exercise of the Option
or the transfer of shares upon such exercise. If the amount requested is not
paid, the Company may refuse to issue or transfer shares of Common Stock upon
exercise of the Option.
(c) The Company shall not be required to issue or transfer any
certificates for shares purchased upon exercise of this Option until all
applicable requirements of law have been complied with and such shares have been
listed on any securities exchange or system on which the Common Stock may then
be listed.
9. Death of Employee. In the event of the death of the Employee, the
estate of the Employee or the person who acquires the right to exercise the
Employee's Option by reason of the Employee's death, whether by request,
inheritance or intestate succession, shall have the right to exercise the Option
within twelve (12) months following the death of the Employee (but not after the
expiration of the Option) for the number of shares which the Employee was
entitled to purchase at the time of his death, but only if the person to whom
the Option was granted was at the time of his death in the employ of the Company
or any of its subsidiaries or of a corporation (or of a parent or subsidiary of
such corporation) issuing or assuming the Option in the transaction to which
Section 425(a) of the Internal Revenue Code of 1954, as amended, (herein called
the "Internal Revenue Code") was applicable. Any such exercise shall be made by
(a) delivering written notice to the Secretary of the Company specifying the
number of shares of Common Stock with respect to which the Option is being
exercised, and (b) paying or causing to be paid to the Company the purchase
price of such shares (c) providing the Company with such evidence as the Company
may request to demonstrate that the person or persons exercising the Option has
or have the right to do so and that all taxes or other assessments with respect
to the Common Stock issuable upon exercise of the Option have been paid or
adequate provision for such payment has been made. Upon being satisfied that the
person or persons exercising the Option has or have right to do so and that all
taxes or other assessment with respect to the Common Stock covered thereby have
been paid or provided for, the Company shall issue certificates for such shares
in such denominations as the person or persons exercising the Option may direct,
and shall deliver such shares in accordance with reasonable instructions
contained in the notice.
10. Reservation of Shares. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of the
Common stock as will be sufficient to satisfy the requirement of this Agreement,
shall pay all original issue and transfer taxes with respect to the issue and
transfer of shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith, and will from time to time use
its best efforts to comply with all laws and regulations which, in the opinion
of counsel for the Company, shall be applicable thereto.
11. Restricted Securities and Investment Representation. By execution
of this Agreement, the Employee agrees and understands that the shares of Common
stock issuable upon exercise of this Option have not been registered under
applicable federal and state securities laws and, therefore, constitute
"restricted securities" within the meaning of the federal securities laws, that
the shares may only be resold pursuant to an applicable exemption from
registration or pursuant to an effective registration statement and that the
shares will bear a restrictive legend and stop transfer restrictions to such
effect. Further, the Employee represents and agrees to hold the shares acquired
by exercise of the Option for investment and not with a view to resale or
distribution thereof to the public. By exercising the Option, the Employee
acknowledges that he or she has received all financial and other information
concerning the Company he or she deems necessary or has requested. In addition,
the Employee agrees to furnish the Company with a certificate to the effect of
the foregoing upon exercise of the Option.
12. Definitions. As used herein, the term "subsidiary" shall mean any
present or future corporation which would be a "subsidiary corporation" of the
Company, as the term is defined in Section 425(f) of the Internal Revenue Code
of 1954 as amended.
13. Governing law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand and seal, all on the day and year first above written.
K-TEL INTERNATIONAL, INC.
By: /s/ David Weiner
Its: President
Employee: /s/ William Isaacs
EXHIBIT 5.1
(612) 904-5607
Direct Dial
June 5, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street NW
Washington, D.C. 20549
Re: K-tel International, Inc.
Form S-8 Registration Statement (the "Registration Statement")
for K-tel International, Inc. 1994 Nonqualified Stock Option
Agreements, 1996 Nonqualified Stock Option Agreements, and
1997 Nonqualified Stock Option Agreement
Ladies and Gentlemen:
This opinion is furnished in connection with the Registration Statement
on Form S-8 (the "Registration Statement") filed with the Securities and
Exchange Commission by K-tel International, Inc. (the "Company") covering shares
of Common Stock, par value $.01 (the "Common Stock"), reserved for issuance
under K-tel International, Inc. 1994 Nonqualified Stock Option Agreements, the
1996 Nonqualified Stock Option Agreements, and the 1997 Nonqualified Stock
Option Agreements (collectively the "Plan").
We have acted as counsel to the Company and, as such, have examined the
Company's Articles of Incorporation, Bylaws and such other corporate records and
documents as we have considered relevant and necessary for the purpose of this
opinion. We have participated in the preparation and filing of the Registration
Statement. We are familiar with the proceedings taken by the Company with
respect to the authorization and proposed issuance of shares of Common Stock
pursuant to the Plan as contemplated by the Registration Statement.
Based on the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing and
in good standing under the laws of the State of Minnesota.
June 6, 1997
Page 8
2. The Company has corporate authority to issue the shares of Common
Stock covered by the Registration Statement.
3. The 442,500 shares of Common Stock proposed to be issued under the
Plan described in the Registration Statement will, when sold and paid for, be
duly and validly issued, fully paid and non-assessable.
We hereby consent to the reference to our firm in the Registration
Statement.
Sincerely,
KAPLAN, STRANGIS AND KAPLAN, P.A.
By /s/Bruce J. Parker
Bruce J. Parker
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated October 11, 1996,
included in K-Tel International, Inc.'s Form 10-K for the year ended June 30,
1996 and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
June 6, 1997
EXHIBIT 24.1
POWER OF ATTORNEY
I, the undersigned Director of K-tel International, Inc., a Minnesota
corporation, do hereby name, constitute and appoint David Weiner and Mark J.
Dixon, and each of them, my agent and attorney-in-fact, for me and in my behalf
as a Director of K-tel International, Inc. to sign and execute a Registration
Statement on Form S-8 and any amendments thereto, relating to the registration
with the Securities and Exchange Commission of up to 442,500 shares of Common
Stock, par value $.01 per share, of K-tel International, Inc. in connection with
non-qualified stock options granted by the Board of Directors of K-tel
International, Inc. or the Compensation Committee thereof.
Executed this 18th day of February, 1997.
/s/ Mark J. Dixon /s/Jeffrey M. Koblick
- ------------------------------- ---------------------------------
Mark J. Dixon Jeffrey M. Koblick
/s/ Philip Kives /s/ Louis Scheimer
- ------------------------------- ---------------------------------
Philip Kives Louis Scheimer
/s/ Garry Kieves /s/ David Weiner
- ------------------------------- ---------------------------------
Garry Kieves David Weiner
