As filed with the Securities and Exchange Commission on October 15, 1998
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 or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2605 Fernbrook Lane North
Minneapolis, MN 55447-4736
(Address, including zip code, of Registrant's principal executive offices)
K-TEL INTERNATIONAL, INC.
1997 STOCK OPTION PLAN
1997 NON-QUALIFIED STOCK OPTION AGREEMENTS
1998 NON-QUALIFIED STOCK OPTION AGREEMENTS
(Full Title of the Plans)
-------------
Corey E. Fischer
Chief Financial Officer
K-tel International, Inc.
23801 Calabasas Road
Suite 2000
Calabasas, CA 91302
(818) 225-6160
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------
(Cover page continued on next page)
<PAGE>
(Cover page continued from preceding page)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------ ------------------------ ----------------------- ----------------------- -----------------------
Title of securities to Amount to be Proposed maximum Proposed maximum Amount of registration
be registered offering price per aggregate offering fee
registered share price
- ------------------------ ------------------------ ----------------------- ----------------------- -----------------------
- ------------------------ ------------------------ ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share 1,044,500 shares (1) $5.344(2) $5,581,803 $1,117(2)
- ------------------------ ------------------------ ----------------------- ----------------------- -----------------------
</TABLE>
(1) Consists of the following shares: (a) 600,000 shares issuable pursuant
to the 1997 Stock Option Plan (the "1997 Plan"); (b) 251,000 shares
issuable pursuant to a non-qualified stock option agreement granted in
1997 (the "1997 Non-Qualified Stock Option Agreements"); and (c)
193,500 shares issuable pursuant to the non-qualified stock option
agreements granted in 1998 (the "1998 Non-Qualified Stock Option
Agreements"). The number of shares of Common Stock stated above may be
adjusted in accordance with the provisions of the 1997 Plan, the 1997
Non-Qualified Stock Option Agreement and the 1998 Non-Qualified Stock
Option Agreements (collectively the "Plans"), 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
Plans. The number of shares being registered for the 1997 Plan and the
1997 Non-Qualified Stock Option Agreement have been adjusted for the
two for one stock split by the Company prior to the date hereof and
since the respective dates of their adoption.
(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 $5.344 per
share, the average of the high and low prices of the Registrant's
Common Stock on the NASDAQ Stock Market on October 9, 1998, and
assuming that 1,044,500 shares is the maximum number of the
Registrant's securities issuable under the Plans that are covered by
the Registration Statement.
<PAGE>
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.
<PAGE>
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, 1998.
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.
II-1
<PAGE>
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. 1997 Stock Option Plan.
4.4 K-tel International, Inc. 1997 Non-Qualified Option
Agreements with each of Philip Kives, Patrick
Broderick,.Carolyn D'Alton, Tony Deloughery, Lourdes Diaz,
Claudia Pferr, Angelika Reitzammer, Anna Sahakian, Annette
Schilling, Jane Weber, and Corinna Wieja.
4.5 K-tel International, Inc. 1998 Non-Qualified Option
Agreements with each of Mark Margiotta, Richard Whinfrey,
Patrick Broderick and Jorma Kosensen.
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
II-2
<PAGE>
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 Sections 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 matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question where such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
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 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on October 6, 1998.
K-TEL INTERNATIONAL, INC.
By:/s/Philip Kives
---------------------------------------
Philip Kives
Chairman and Chief Executive Officer
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
--------- ----- ----
/s/Philip Kives Chairman of the Board and
- ------------------- Chief Executive Officer
Philip Kives (Principal Executive Officer) October 6, 1998
/s/Corey E. Fischer Vice President - Finance,
- ------------------- Chief Financial Officer and
Corey E. Fischer Director
(Principal Financial Officer and
Principal Accounting Officer) October 6, 1998
/s/Jeffrey Koblick Director October 6, 1998
- -------------------
Jeffrey Koblick
/s/Garry Kieves Director October 6, 1998
- -------------------
Garry Kieves
/s/Lou Scheimer Director October 6, 1998
- -------------------
Lou Scheimer
II-4
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit Sequentially
------- ---------------------- ------------
Number 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. 1997 Stock Option Plan.
4.4 K-tel International, Inc. 1997 Non-Qualified Option
Agreement with each of Philip Kives, Patrick Broderick,
Carolyn D'Alton, Tony Deloughery, Lourdes Diaz, Claudia
Pferr, Angelika Reitzammer, Anna Sahakian, Annette
Schilling, Jane Weber, and Corinna Wieja
4.5 K-tel International, Inc. 1998 Non-Qualified Option
Agreements with each of Mark Margiotta Richard Whinfrey,
Patrick Broderick and Jorma Kosensen.
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 Power of Attorney.
II-5
EXHIBIT 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).
EXHIBIT 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).
EXHIBIT 4.3
K-tel International, Inc. 1997 Stock Option Plan.
<PAGE>
K-TEL INTERNATIONAL, INC.
1997 STOCK OPTION PLAN
------------------------------
PART I
PURPOSES; DEFINITIONS; SHAREHOLDER APPROVAL;
RESERVATION OF SHARES; AND PARTICIPATION IN PLAN
ARTICLE I
Purposes
1.1 Purposes of Plan. The purpose of this K-tel International, Inc.
1997 Stock Option Plan (the "Plan") is to provide incentives to employees of the
Company and/or any Subsidiary who contribute, and are expected to contribute, to
the success of the Company and any Subsidiary, to provide a means of rewarding
outstanding performance, and to enhance the interest of such employees in the
Company's continued success and progress by providing them a proprietary
interest in the Company. Further, this Plan is designed to enhance the Company's
ability to maintain a competitive position in attracting and retaining qualified
personnel necessary for the continued success and progress of the Company.
ARTICLE II
Definitions
2.1 Certain terms used herein shall have the meaning below stated,
subject to the provisions of Section 7.1.
"Board" or "Board of Directors" means the Board of Directors of the
Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee appointed by the Board to administer
this Plan pursuant to Article VII or, if no Committee is appointed by the Board,
means the Board.
"Common Stock" means, subject to the provisions of Section 9.3, the
Common Stock of the Company, par value $.01 per share.
"Company" means K-tel International, Inc., a Minnesota corporation.
<PAGE>
"Disability" means (subject to Section 6.2) a physical or mental
impairment of sufficient severity such that an Employee is permanently unable to
continue his employment with the Company as determined by the Committee.
"Employee" means an employee (including an officer) of the Company or
of any Subsidiary of the Company.
"Fair Market Value" means the fair market value of the Company's Common
Stock as determined by the Committee on the basis of available prices for such
Common Stock or in such manner as may be authorized by applicable regulations
under the Code.
"Incentive Stock Option" means an option to purchase Common Stock,
granted by the Company to an Employee pursuant to Section 5.1, which is intended
to meet the requirements of Section 422A of the Code and which is designated at
the time of the award of an Incentive Stock Option.
"Non-Statutory Option" means an option to purchase Common Stock,
granted by the Company to an Optionee pursuant to Section 5.1, which is not an
Incentive Stock Option.
"Option" means an Incentive Stock Option or a Non-Statutory Option.
"Optionee" means the holder of an Option granted under the Plan.
"Plan" means the K-tel International, Inc. 1997 Stock Option Plan, as
set forth herein and as from time to time amended.
"Subsidiary" means a subsidiary or parent corporation, as defined in
Section 425(e) and (f) of the Code, with respect to the Company.
"1933 Act" means the Securities Act of 1933, as amended.
ARTICLE III
Shareholder Approval; Reservations of Shares
3.1 Shareholder Approval. This Plan was approved by the Board of
Directors on February 18, 1997 and shall be subject to approval by the
affirmative vote of the holders of a majority of the Company's Common Stock at a
meeting of shareholders, which approval must be obtained no later than February
17, 1998.
3.2 Shares Reserved Under Plan. Subject to adjustment under the
provisions of Section 9.3 hereof, the maximum number of shares of Common Stock
which may be issued and sold under this Plan is 300,000 shares. Such shares may
be either authorized and unissued shares or shares issued and thereafter
acquired by the Company. Shares issued pursuant to this Plan shall be subject to
all applicable provisions of the Articles of Incorporation and Bylaws of the
Company in existence at the time of issuance of such shares and at all times
thereafter. If Options granted under this Plan shall terminate or cease to be
exercisable by reason of expiration, surrender for cancellation or otherwise
<PAGE>
without having been wholly exercised, new Options may be granted under this Plan
covering the number of shares to which such termination or cessation relates. At
no time may the sum of the maximum number of shares issuable under outstanding
Options granted under this Plan and the number of shares previously issued under
Options granted under this Plan exceed the maximum number of shares that may be
issued and sold under this Plan, as above stated.
ARTICLE IV
Participation in Plan
4.1 Eligibility to Receive Options. Options under this Plan may be
granted only to Employees who are employed by the Company or a Subsidiary on the
date the Option is granted and who the Committee believes are in a position to
make an important contribution to the success of the Company, all as determined
by the Committee, provided that no Employee shall be eligible for Options under
this Plan if such person has been a member of the Board of Directors of the
Company or a Subsidiary within one year of the grant.
4.2 Participation Not Guarantee of Employment. Nothing in this Plan or
in the instrument evidencing the grant of an Option shall in any manner be
construed to limit in any way the right of the Company or a Subsidiary to
terminate an Employee's employment at any time without regard to the effect of
such termination on any rights such Employee would otherwise have under this
Plan, or give any right to such an Employee to remain employed by the Company or
a Subsidiary in any particular position or at any particular rate of
compensation.
PART II
OPTIONS;
TERMINATION OF EMPLOYMENT AND DEATH
ARTICLE V
Options
5.1 Grants of Options.
(a) Grant. The Committee may grant Incentive Stock Options
and/or Non-Statutory Options to Employees, subject to the limitations provided
in Section 5.1(f) and Section 7.1. All Options under this Plan shall be granted
within ten years of February 18, 1997, the date on which this Plan was adopted
by the Board of Directors subject to approval of the Plan by shareholders.
(b) Option Price. The purchase price per share of Common Stock
under each Incentive Stock Option and Non-Statutory Option shall be determined
by the Committee but shall be not less than 100% of the Fair Market Value per
share of such Common
<PAGE>
Stock on the date the Option is granted for Incentive Stock Options and no less
than 85% of the Fair Market Value per share of such Common Stock on the date the
Option is granted for Non-Statutory Options. The purchase price per share may be
subject to adjustment in accordance with the provisions of Section 9.3 hereof.
(c) Options Agreements. Options shall be evidenced by option
agreements in such form and containing such terms and conditions as the
Committee shall approve, which terms and conditions need not be the same for all
Options.
(d) Options Nontransferable. Except with the prior written
consent of the Committee, an Option granted under this Plan shall by its terms
be nontransferable by the Optionee other than by will or the laws of descent and
distribution, and, during the lifetime of the Optionee, shall be exercisable
only by such Optionee. No transfer of an Option by an Optionee by will or by the
laws of descent and distribution shall be effective to bind the Company unless
the Company shall have been furnished with written notice thereof and a copy of
the will and/or such other evidence as the Committee may determine necessary to
establish the validity of the transfer.
(e) Substitution and Cancellation. The Committee may, in its
sole discretion, grant to an Optionee who has been granted an Option under this
Plan, in exchange for the surrender and cancellation of such Option, a new
Option having a purchase price lower (or higher) than the purchase price
provided in the Option so surrendered and cancelled and containing such other
terms as the Committee may deem appropriate, subject to Section 5.1(b) and such
other limitations or restrictions with respect to an Incentive Stock Option as
may be imposed by the Code.
(f) Annual Per-Employee Limitation. The number of shares of
Common Stock subject to all Options granted to any Employee during any calendar
year shall not exceed 50,000 shares.
5.2 Exercise.
(a) Term of Options; Vesting; and Exercise. The term of each
Option granted under this Plan shall not exceed ten (10) years from the date of
grant. An Option granted under this Plan shall become vested and exercisable at
such rate and on such conditions as the Committee shall determine at the time
such Option is granted.
(b) Exercise; Payment on Exercise. Options shall be exercised
by delivering to the Company an exercise notice in the form prescribed by the
Committee. No shares of Common Stock shall be issued on the exercise of an
Option unless paid for in full at the time of purchase as provided in the next
sentence and until the provisions of 9.4 shall have been satisfied. Payment for
shares of Common Stock purchased upon the exercise of an Option shall be made
(i) in cash, or (ii) the following alternative forms of payment: (A) in whole or
in part in shares of Common Stock held by the Optionee for at least six months
and valued at the then Fair Market Value thereof, or (B) by delivery to the
Company of irrevocable instructions to the Optionee's broker, which instructions
and broker shall be satisfactory to the Company, to promptly deliver to the
Company the total purchase price for the shares of the Option being exercised
from the sale proceeds for such shares or the loan proceeds for such shares or
any other securities which the Optionee may have in his account with such
broker, and the Company will deliver such shares directly to such broker in
accordance with such procedures as the Committee may establish, which
alternative forms of payment may be permitted by the Committee at the time the
Option is granted or at any time thereafter during the term of the Option. Stock
certificates
<PAGE>
for the shares of Common Stock so paid for will be issued and delivered to the
person entitled thereto only at the Company's office in Minneapolis, Minnesota.
No Optionee shall have any rights as a shareholder with respect to any share of
Common Stock covered by an Option unless and until such Optionee shall have
become the holder of record of such share and, except as otherwise permitted in
Section 9.3 hereof, no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property or distributions or
other rights) in respect of such share for which the record date is prior to the
date on which such Optionee shall have become the holder of record thereof.
(c) Dissolution, Liquidation, Etc. If at any time after an
Option has become exercisable and prior to its exercise and expiration, a
voluntary dissolution, liquidation (other than a liquidation into another
corporation which agrees to continue this Plan) or winding up of the affairs of
the Company shall be proposed, the Company shall cause notice in writing to be
mailed to each person holding an Option under this Plan, which notice shall be
mailed not less than twenty days prior to the closing of the transfer books of
the Company or the record date for determination of the holders of Common Stock
of the Company entitled to participate in such dissolution, liquidation or
winding up, as the case may be, to the end that during such notice period the
holder of any Option, to the extent that the same is then exercisable by such
holder, subject to the terms of Article V hereof, may purchase Common Stock in
accordance with the terms of the Option and be entitled, in respect of the
number of shares so purchased, to all the rights of the other holders of Common
Stock of the Company with respect to such proposed dissolution, liquidation or
winding up of the affairs of the Company. Each Option at the time outstanding
and all rights thereunder shall terminate at the close of business on the
twentieth day after mailing of such notice to the holder of such Option or on
the record date for determination of holders of Common Stock entitled to
participate in such dissolution, liquidation or winding up, whichever date is
later.
(d) Exercise of Options. In the event that an Optionee
exercises an Option, such Optionee shall comply with all requirements set forth
in the option agreement for such Options in connection with the purchase of
shares of Common Stock under this Plan.
5.3 Incentive Stock Options.
(a) Annual Limitation. In no event shall any Optionee be
granted an Incentive Stock Option under this Plan or any other plan of the
Company or any Subsidiary if such option would, during the calendar year in
which the option first becomes exercisable when combined with other Incentive
Stock Options which first become exercisable in such calendar year, entitle such
Optionee, to purchase shares of Common Stock or shares of any Subsidiary having
an aggregate fair market value (determined as of the time such option or options
were granted) in excess of $100,000. In the event an option granted hereunder is
designated an Incentive Stock Option and exceeds the limitations set forth in
this Section 5.3(a), whether at the time of grant or thereafter, such option
shall be an Incentive Stock Option only to the extent permitted hereby and the
balance thereof shall be a Non-Statutory Option for the purposes of this Plan.
(b) Incentive Stock Options Granted to Ten Percent
Shareholders. No Incentive Stock Option shall be granted to any Employee who
owns, directly or indirectly pursuant to Section 425(d) of the Code, stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Subsidiary, unless at the time such
Incentive Stock Option
<PAGE>
is granted, the price of the Incentive Stock Option is at least 110% of the Fair
Market Value of the Common Stock subject to the Incentive Stock Option and such
Incentive Stock Option, by its terms, is not exercisable after the expiration of
five (5) years from the date such Incentive Stock Option is granted.
(c) Notice. Each Optionee shall give prompt notice to the
Company of any disposition of shares acquired upon exercise of an Incentive
Stock Option if such disposition occurs within either two years after the date
of grant or one year after the date of transfer of such shares to the Optionee
upon the exercise of such Incentive Stock Option.
(d) Consent. To the extent appropriate to avoid a
"modification" or other event described in Section 425(h) of the Code, a
Optionee's rights under an Incentive Stock Option (including the rights to pay
the exercise price in Common Stock) shall be set forth in the option agreement
for such Option entered into at the date of grant, so as to preclude any
requirement that further Committee consent be given after the date of grant.
ARTICLE VI
Termination of Employment
6.1 Termination of Employment. Unless earlier terminated in accordance
with its terms, an Option shall terminate thirty (30) days after any termination
of the Optionee's employment with the Company or any Subsidiary for any reason
other than as a result of the death or disability of the Optionee or, in the
case of death or disability of any Optionee, 120 days after the death or the
termination of the Optionee's employment due to disability.
6.2 Employment. For all purposes of this Plan, and any Option granted
hereunder, "employment" shall be defined in accordance with the provisions of
Section 1.421-7(h) of the Income Tax Regulations (or any successor regulations).
<PAGE>
PART III
ADMINISTRATION, AMENDMENT AND TERMINATION
OF PLAN; MISCELLANEOUS
ARTICLE VII
Administration of Plan
7.1 The Committee. This Plan shall be administered by the Board or a
Committee of the Board consisting of two or more directors, each of whom shall
be a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3)(i) of the
Securities and Exchange Commission and shall be appointed by, and serve at the
pleasure of, the Board. A majority of the Committee shall constitute a quorum
thereof and the actions of a majority of the Committee at a meeting at which a
quorum is present, or actions unanimously approved in writing by all members of
the Committee, shall be the actions of the Committee. Vacancies occurring on the
Committee shall be filled by the Board. The Committee shall have full and final
authority to interpret this Plan and the agreements evidencing Options granted
hereunder (which agreements need not be identical), to prescribe, amend and
rescind rules and regulations, if any, relating to this Plan and to make all
determinations necessary or advisable for the administration of this Plan. The
Committee's determination in all matters referred to herein shall be conclusive
and binding for all purposes and upon all persons including, but without
limitation, the Company, the shareholders of the Company, the Committee and each
of the members thereof, and the Employees and the Optionees, and their
respective personal representatives, heirs and assigns.
7.2 Liability of Committee. No member of the Committee shall be liable
for anything done or omitted to be done by such member or by any other member of
the Committee in connection with this Plan, except for the willful misconduct or
gross negligence of such member. The Committee shall have power to engage
outside consultants, auditors or other professional help to assist in the
fulfillment of the Committee's duties under this Plan at the Company's expense.
7.3 Determinations of the Committee. In making its determinations
concerning the Employees, who shall receive Options as well as the number of
shares to be covered thereby and time or times at which they shall be granted,
the Committee shall take into account the nature of the services rendered by the
respective Employees and their past, present, and potential contribution to the
Company's success and such other factors as the Committee may deem relevant. The
Committee shall also determine the form of option agreements to be issued under
this Plan and the terms and conditions to be included therein, provided such
terms and conditions are not inconsistent with the terms of this Plan. In its
discretion or in accordance with a direction from the Board, the Committee may
waive any provisions of any option agreement, provided such waiver is not
inconsistent with the terms of this Plan as then in effect.
<PAGE>
ARTICLE VIII
Amendment and Termination of Plan
8.1 Amendment of Plan.
(a) Generally. The Plan may be amended at any time and from
time to time by the Board of Directors of the Company but no amendment which (i)
increases the aggregate number of shares of Common Stock which may be issued and
sold under this Plan other than adjustments pursuant to Section 9.3, (ii)
decreases the minimum option price provided in this Plan, (iii) extends the
period during which Options may be granted under this Plan, or (vi) changes the
class of Employees eligible to receive Options, shall be effective unless and
until the same is approved by the affirmative vote, in person or by proxy, of
the holders of a majority of the shares of Common Stock of the Company present
and entitled to vote at a meeting held to take such action at which a quorum is
present. No termination or amendment of this Plan, without the consent of the
holder of any Option then existing, may terminate such holder's Option or
materially and adversely affect such holder's rights thereunder.
(b) Amendments Relating to Incentive Stock Options. To the
extent applicable, this Plan is intended to permit the issuance of Incentive
Stock Options in accordance with the provisions of Section 422A of the Code. The
Plan may be modified or amended at any time, both prospectively and
retroactively, and in such manner as to affect Incentive Stock Options
previously granted (after taking into account Section 425(h) of the Code,
relating to "modifications," etc.), if such amendment or modification is
necessary for this Plan and the Incentive Stock Options granted hereunder to
qualify under said provisions of the Code.
8.2 Termination. The Board of Directors of the Company may at any time
terminate this Plan as of any date specified in a resolution adopted by the
Board. If not earlier terminated, this Plan shall terminate on the tenth
anniversary of the effective date of the Plan. No Options may be granted after
this Plan has terminated. After this Plan shall terminate, the function of the
Committee will be limited to supervising the administration of Options
previously granted.
ARTICLE IX
Miscellaneous Provisions
9.1 Restrictions Upon Grant of Options. The registration or
qualification under any Federal or state law of any shares of Common Stock
issuable upon the exercise of Options granted pursuant to this Plan (whether to
permit the grant of Options or the resale or other disposition of any such
shares of Common Stock by or on behalf of the Optionees receiving such shares)
may be necessary or desirable and, in any such event, delivery of the
certificates for such shares of Common Stock shall, if the Board of Directors,
in its sole discretion, shall determine, not be made until such listing,
registration or qualification shall have been completed.
9.2 Restrictions upon Resale of Unregistered Stock. If the shares of
Common Stock that have been transferred to a Optionee pursuant to the terms of
this Plan are not registered under the 1933 Act, pursuant to an effective
registration statement, such Optionee, if the Committee shall deem it
<PAGE>
advisable, may be required to represent and agree in writing (i) that any shares
of Common Stock acquired by such Optionee pursuant to this Plan will not be sold
except pursuant to an effective registration statement under the 1933 Act, or
pursuant to an exemption from registration under the 1933 Act and (ii) that such
Optionee is acquiring such shares of Common Stock for such Optionee's own
account and not with a view to the distribution thereof.
9.3 Adjustments. In the event of any change whether through
recapitalization, merger, consolidation, stock dividend, split-up, or amount of
the Company's capital stock (or any other transaction described in Section
425(a) of the Code) after any Option is granted hereunder and prior to the
exercise thereof, the Option, to the extent that it has not been exercised,
shall entitle the holder to such number and kind of securities as such holder
would have been entitled to had such holder actually owned the stock subject to
the Option at the time of the occurrence of such change. If any such event
should occur, the number of shares subject to Options which are authorized to be
issued hereunder, but which have not been issued, shall be similarly adjusted.
If any other event shall occur, prior to the exercise of an Option granted to an
Optionee hereunder, which shall increase or decrease the amount of capital stock
outstanding and which the Committee, in its sole discretion, shall determine
equitably requires an adjustment in the number of shares which the holder should
be permitted to acquire, such adjustment as the Committee shall determine may be
made, and when so made shall be effective and binding for all purposes of this
Plan.
9.4 Withholding of Taxes. Each Optionee who exercises an Option to
purchase Common Stock shall, prior to the issuance of any shares, pay to the
Company, or make arrangements (including withholding of shares of Common Stock
purchased upon exercise of the Option at the Fair Market Value thereof)
satisfactory to the Committee regarding payment of, any taxes of any kind
required by law to be withheld with respect to the transfer to such Optionee of
such shares of Common Stock and/or amounts upon exercise of such Option.
9.5 Use of Proceeds. The proceeds from the sale of Common Stock
pursuant to Options granted under this Plan shall constitute general funds of
the Company and may be used for such corporate purposes as the Company may
determine.
9.6 Other Grants. Options may be granted under this Plan from time to
time in substitution for stock options held by employees of other corporations
who are or are about to become employees of the Company or a Subsidiary as the
result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary, or the acquisition by the Company or a Subsidiary of
the assets of the employing corporation, or the acquisition by the Company or a
Subsidiary of stock of the employing corporation as the result of which it
becomes a Subsidiary of the Company. The terms and conditions of the substituted
Options so granted may vary from the terms and conditions set forth in Part II
to such extent as the Committee may deem appropriate to conform, in whole or in
part, to the provisions of the substituted stock incentives.
9.7 Other Benefits. Nothing contained herein shall prevent the Company
from establishing other incentive plans in which Employees under the Plan may
also participate. No award under this Plan shall be considered as compensation
in calculating any insurance, pension or other benefit for which the recipient
is eligible unless any such insurance, pension or other benefit is granted under
a plan
<PAGE>
which expressly provides that compensation under this Plan (and specifying the
type of such compensation) shall be considered as compensation under such plan.
EXHIBIT 4.4
K-tel International, Inc., 1998 Non-Qualified Option Agreements
with each of Philip Kives, Patrick Broderick, Carolyn D'Alton, Tony Deloughery,
Lourdes Diaz, Claudia Pferr, Angelika Reitzammer, Anna Sahakian,
Annette Schilling, Jane Weber and Corinna Wieja
<PAGE>
K-TEL INTERNATIONAL, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT made and entered into as of October 1, 1997, 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 115,500 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 one hundred fifteen thousand five hundred (115,500) 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 $6.125 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
<PAGE>
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.
<PAGE>
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
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Patrick Broderick, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 2,000 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
400 October 1, 1997 October 1, 2007 $6.125
400 October 1, 1998 October 1, 2007 $6.125
400 October 1, 1999 October 1, 2007 $6.125
400 October 1, 2000 October 1, 2007 $6.125
400 October 1, 2001 October 1, 2007 $6.125
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
<PAGE>
7. 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.
8. 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.
9. 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
<PAGE>
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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
------------------------------
Its: V.P.-Finance/CFO
------------------------------
---------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Carolyn D'Alton, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 750 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
150 October 1, 1997 October 1, 2007 $6.125
150 October 1, 1998 October 1, 2007 $6.125
150 October 1, 1999 October 1, 2007 $6.125
150 October 1, 2000 October 1, 2007 $6.125
150 October 1, 2001 October 1, 2007 $6.125
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
<PAGE>
7. 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.
8. 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.
9. 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
<PAGE>
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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Tony Deloughery, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 750 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
150 October 1, 1997 October 1, 2007 $6.125
150 October 1, 1998 October 1, 2007 $6.125
150 October 1, 1999 October 1, 2007 $6.125
150 October 1, 2000 October 1, 2007 $6.125
150 October 1, 2001 October 1, 2007 $6.125
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
<PAGE>
7. 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.
8. 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.
9. 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
<PAGE>
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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Lourdes Diaz, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 1,000 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
200 October 1, 1997 October 1, 2007 $6.125
200 October 1, 1998 October 1, 2007 $6.125
200 October 1, 1999 October 1, 2007 $6.125
200 October 1, 2000 October 1, 2007 $6.125
200 October 1, 2001 October 1, 2007 $6.125
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
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
7 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
<PAGE>
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.
8. 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.
9. 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.
<PAGE>
(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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Claudia Pferr, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 1,000 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
200 October 1, 1997 October 1, 2007 $6.125
200 October 1, 1998 October 1, 2007 $6.125
200 October 1, 1999 October 1, 2007 $6.125
200 October 1, 2000 October 1, 2007 $6.125
200 October 1, 2001 October 1, 2007 $6.125
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
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
7. 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
<PAGE>
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.
8. 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.
9. 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.
<PAGE>
(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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Angelika Reitzammer, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 1,000 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
200 October 1, 1997 October 1, 2007 $6.125
200 October 1, 1998 October 1, 2007 $6.125
200 October 1, 1999 October 1, 2007 $6.125
200 October 1, 2000 October 1, 2007 $6.125
200 October 1, 2001 October 1, 2007 $6.125
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
<PAGE>
7. 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.
8. 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.
9. 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
<PAGE>
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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Anna Sahakian, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 750 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
150 October 1, 1997 October 1, 2007 $6.125
150 October 1, 1998 October 1, 2007 $6.125
150 October 1, 1999 October 1, 2007 $6.125
150 October 1, 2000 October 1, 2007 $6.125
150 October 1, 2001 October 1, 2007 $6.125
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
<PAGE>
7. 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.
8. 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.
9. 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
<PAGE>
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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Annette Schilling, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 1,000 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
200 October 1, 1997 October 1, 2007 $6.125
200 October 1, 1998 October 1, 2007 $6.125
200 October 1, 1999 October 1, 2007 $6.125
200 October 1, 2000 October 1, 2007 $6.125
200 October 1, 2001 October 1, 2007 $6.125
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
<PAGE>
7. 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.
8. 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.
9. 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
<PAGE>
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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Jane Weber, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 750 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
150 October 1, 1997 October 1, 2007 $6.125
150 October 1, 1998 October 1, 2007 $6.125
150 October 1, 1999 October 1, 2007 $6.125
150 October 1, 2000 October 1, 2007 $6.125
150 October 1, 2001 October 1, 2007 $6.125
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
<PAGE>
7. 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.
8. 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.
9. 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
<PAGE>
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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of
October, 1997 between K-tel International, Inc., a Minnesota corporation (herein
called the "Company") and Corinna Wieja, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 1,000 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:
Number of Date First Date Option Price
Shares Exercisable Terminates Per Share
------ ----------- ---------- ---------
200 October 1, 1997 October 1, 2007 $6.125
200 October 1, 1998 October 1, 2007 $6.125
200 October 1, 1999 October 1, 2007 $6.125
200 October 1, 2000 October 1, 2007 $6.125
200 October 1, 2001 October 1, 2007 $6.125
<PAGE>
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, stock
split, stock dividend, exchange, consolidation, combination of shares, or
reorganization or other event in which the Company is the surviving corporation,
the Board shall, pursuant to the terms of the Plan, 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. Private Transaction. In the event of (i) the sale of all
or substantially all of the assets of the Company, or (ii) 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, then all of the shares subject to the Option shall be
vested and exercisable in full upon the occurrence of such event. In addition,
in the event of a Going Private Transaction (as defined below) is consummated,
then all of the shares subject to the Option shall become fully vested upon the
closing of the Going Private Transaction and shall be entitled to receive from
the Company in cancellation of all rights under the Option and related Option
Agreement in cash the excess of the price per share for the common stock of the
Company paid to shareholders (other than Philip Kives or any entity which he
controls) in the Going Private Transaction over the option exercise price of the
Option multiplied by the number of shares subject to the Option. The term "Going
Private Transaction" means any transaction or series of transactions between the
Company and any entity directly or indirectly controlled by Philip Kives,
including a sale of all or substantially all of the assets of the Company to
such an entity or any merger, consolidation or other reorganization of the
Company with such an entity for which a filing is required under Regulation
13e-3 of the Securities and Exchange Commission.
<PAGE>
7. 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.
8. 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.
9. 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
<PAGE>
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.
10. 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 assessments 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.
11. The Plan. The Option is subject to certain additional
terms and conditions set forth in the Plan pursuant to which the Option was
granted. A copy of the Plan is on file with the Secretary of the Company and the
Employee by execution of this Agreement agrees to and accepts this Option
subject to the terms of the Plan and confirms that he or she has read and
understands the Plan.
12. 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.
13. Investment Representation. 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.
<PAGE>
14. 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.
15. 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:
-------------------------------
Its: V.P.-Finance/CFO
------------------------------
----------------------------------
Employee
EXHIBIT 4.5
K-tel International, Inc., 1998 Non-Qualified Option Agreements
with each of Mark Margiotta, Richard Whinfrey,
Patrick Broderick and Jorma Kosensen
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th
day of September, 1998 between K-tel International, Inc., a Minnesota
corporation (herein called the "Company")and Mark Margiotta, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 180,000 shares of Common Stock of the Company on
the terms and conditions set forth in this Agreement.
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:
Per Number of Date First Date Option
Share Shares Exercisable Terminates
- ----- ------ ----------- ----------
$6.000 135,000 September 4, 1998 April 17, 2008
$6.000 22,500 April 17, 1999 April 17, 2008
$6.000 22,500 April 17, 2000 April 17, 2008
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
<PAGE>
stock of the Company or any security convertible into stock of the Company, as a
result of recapitalization, stock split, stock dividend, exchange,
consolidation, combination of shares, or reorganization or other event in which
the Company is the surviving corporation, the Board shall, pursuant to the terms
of the Plan, 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.
<PAGE>
(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
<PAGE>
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 assessments 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. The Plan. The Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1954 and shall be construed; provided, however, that nothing in
this Agreement shall be interpreted as a representation, guaranty or other
undertaking on the part of the Company that this Option is or will be determined
to be an "incentive stock option" within the meaning of Section 422A or any
other section of the Internal Revenue Code. This Option is subject to certain
additional terms and conditions set forth in the Plan pursuant to which the
Option was granted. A copy of the Plan is on file with the Secretary of the
Company and the Employee by execution of this Agreement agrees to and accepts
this Option subject to the terms of the Plan and confirms that he or she has
read and understands the Plan.
11. Disposal of Shares Acquired. In order to enable the
Company to avail itself of any income tax deduction to which it may be entitled,
the Employee shall notify the Company of its intent to dispose of any of the
shares acquired pursuant to exercise of this Option within two (2) years from
the date of the grant of the Option and one (1) year from the date of exercise
of the Option. Promptly after such disposition the Employee shall notify the
Company of the number of shares disposed of, the dates of acquisition and
disposition of such shares, and the consideration, if any, received on such
disposition.
12. 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.
13. Investment Representation. 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.
14. 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.
15. 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.
<PAGE>
K-TEL INTERNATIONAL, INC.
By:
Its: V.P.-Finance/CFO
Employee
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th
day of September, 1998 between K-tel International, Inc., a Minnesota
corporation (herein called the "Company")and Richard Whinfrey, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 4,500 shares of Common Stock of the Company on
the terms and conditions set forth in this Agreement.
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:
Per Number of Date First Date Option
Share Shares Exercisable Terminates
- ----- ------ ----------- ----------
$6.000 1,500 April 17, 1999 April 17, 2008
$6.000 1,500 April 17, 2000 April 17, 2008
$6.000 1,500 April 17, 2001 April 17, 2008
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
<PAGE>
recapitalization, stock split, stock dividend, exchange, consolidation,
combination of shares, or reorganization or other event in which the Company is
the surviving corporation, the Board shall, pursuant to the terms of the Plan,
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
<PAGE>
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 assessments with respect to the
<PAGE>
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. The Plan. The Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1954 and shall be construed; provided, however, that nothing in
this Agreement shall be interpreted as a representation, guaranty or other
undertaking on the part of the Company that this Option is or will be determined
to be an "incentive stock option" within the meaning of Section 422A or any
other section of the Internal Revenue Code. This Option is subject to certain
additional terms and conditions set forth in the Plan pursuant to which the
Option was granted. A copy of the Plan is on file with the Secretary of the
Company and the Employee by execution of this Agreement agrees to and accepts
this Option subject to the terms of the Plan and confirms that he or she has
read and understands the Plan.
11. Disposal of Shares Acquired. In order to enable the
Company to avail itself of any income tax deduction to which it may be entitled,
the Employee shall notify the Company of its intent to dispose of any of the
shares acquired pursuant to exercise of this Option within two (2) years from
the date of the grant of the Option and one (1) year from the date of exercise
of the Option. Promptly after such disposition the Employee shall notify the
Company of the number of shares disposed of, the dates of acquisition and
disposition of such shares, and the consideration, if any, received on such
disposition.
12. 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.
13. Investment Representation. 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.
14. 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.
15. 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.
<PAGE>
By:
Its: V.P.-Finance/CFO
Employee
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th
day of September, 1998 between K-tel International, Inc., a Minnesota
corporation (herein called the "Company")and Patrick Broderick, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 4,500 shares of Common Stock of the Company on the
terms and conditions set forth in this Agreement.
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:
Per Number of Date First Date Option
Share Shares Exercisable Terminates
- ----- ------ ----------- ----------
$6.000 1500 April 17, 1999 April 17, 2008
$6.000 1500 April 17, 2000 April 17, 2008
$6.000 1500 April 17, 2001 April 17, 2008
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
<PAGE>
recapitalization, stock split, stock dividend, exchange, consolidation,
combination of shares, or reorganization or other event in which the Company is
the surviving corporation, the Board shall, pursuant to the terms of the Plan,
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
<PAGE>
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 assessments with respect to the
<PAGE>
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. The Plan. The Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1954 and shall be construed; provided, however, that nothing in
this Agreement shall be interpreted as a representation, guaranty or other
undertaking on the part of the Company that this Option is or will be determined
to be an "incentive stock option" within the meaning of Section 422A or any
other section of the Internal Revenue Code. This Option is subject to certain
additional terms and conditions set forth in the Plan pursuant to which the
Option was granted. A copy of the Plan is on file with the Secretary of the
Company and the Employee by execution of this Agreement agrees to and accepts
this Option subject to the terms of the Plan and confirms that he or she has
read and understands the Plan.
11. Disposal of Shares Acquired. In order to enable the
Company to avail itself of any income tax deduction to which it may be entitled,
the Employee shall notify the Company of its intent to dispose of any of the
shares acquired pursuant to exercise of this Option within two (2) years from
the date of the grant of the Option and one (1) year from the date of exercise
of the Option. Promptly after such disposition the Employee shall notify the
Company of the number of shares disposed of, the dates of acquisition and
disposition of such shares, and the consideration, if any, received on such
disposition.
12. 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.
13. Investment Representation. 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.
14. 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.
15. 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.
<PAGE>
By:
Its: V.P.-Finance/CFO
Employee
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th day of
September, 1998 between K-tel International, Inc., a Minnesota corporation
(herein called the "Company")and Jorma Kosensen, 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 carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; 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 under the Plan,
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 4,500 shares of Common Stock of the Company on
the terms and conditions set forth in this Agreement.
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:
Per Number of Date First Date Option
Share Shares Exercisable Terminates
- ----- ------ ----------- ----------
$6.000 1,500 April 17, 1999 April 17, 2008
$6.000 1,500 April 17, 2000 April 17, 2008
$6.000 1,500 April 17, 2001 April 17, 2008
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
<PAGE>
recapitalization, stock split, stock dividend, exchange, consolidation,
combination of shares, or reorganization or other event in which the Company is
the surviving corporation, the Board shall, pursuant to the terms of the Plan,
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
<PAGE>
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 assessments with respect to the
<PAGE>
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. The Plan. The Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1954 and shall be construed; provided, however, that nothing in
this Agreement shall be interpreted as a representation, guaranty or other
undertaking on the part of the Company that this Option is or will be determined
to be an "incentive stock option" within the meaning of Section 422A or any
other section of the Internal Revenue Code. This Option is subject to certain
additional terms and conditions set forth in the Plan pursuant to which the
Option was granted. A copy of the Plan is on file with the Secretary of the
Company and the Employee by execution of this Agreement agrees to and accepts
this Option subject to the terms of the Plan and confirms that he or she has
read and understands the Plan.
11. Disposal of Shares Acquired. In order to enable the
Company to avail itself of any income tax deduction to which it may be entitled,
the Employee shall notify the Company of its intent to dispose of any of the
shares acquired pursuant to exercise of this Option within two (2) years from
the date of the grant of the Option and one (1) year from the date of exercise
of the Option. Promptly after such disposition the Employee shall notify the
Company of the number of shares disposed of, the dates of acquisition and
disposition of such shares, and the consideration, if any, received on such
disposition.
12. 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.
13. Investment Representation. 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.
14. 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.
15. 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.
<PAGE>
By:
Its: V.P.-Finance/CFO
Employee
EXHIBIT 5.1
Opinion of Kaplan, Strangis, and Kaplan, P.A.
<PAGE>
October 13, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street NW
Washington, DC 20549
Re: K-tel International, Inc.
Form S-8 Registration Statement (the "Registration Statement") for K-tel
International, Inc. 1997 Stock Option Plan, 1997 Non-Qualified Stock
Option Agreements, and 1998 Non-Qualified Stock Option Agreements
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. 1997 Stock Option Plan, the 1997 Non-Qualified
Stock Option Agreements and the 1998 Non-Qualified 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.
2. The Company has corporate authority to issue the shares of Common
Stock covered by the Registration Statement.
<PAGE>
3. The 1,044,500 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 23.1
Consent of Kaplan, Strangis, and Kaplan, P.A.
(included in Exhibit 5.1)
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 9, 1998,
included in K-tel International, Inc.'s Form 10-K for the year ended June 30,
1998 and to all references to our Firm included in this registration statement
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
October 13, 1998
