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
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
entitled if Common Stock (as authorized at the date hereof) had been purchased
at the date hereof for the same aggregate price (on the basis of the price per
share set forth in Paragraph 2 hereof) and had not been disposed of. No
fractional share shall be issued upon any such exercise and the aggregate price
paid shall be appropriately reduced on account of any fractional share not
issued.
5. Method Exercise. Subject to the terms and conditions of this
Agreement, the Option may be exercised by written notice to the Company at its
principal office and place of business in the State of Minnesota. Such notice
shall state the election to exercise the Option and the number of Option Shares
in respect of which it is being exercised, and shall be signed by the person so
exercising the Option. Such notice shall be accompanied by the payment of the
full purchase price of such Option Shares and the delivery of such payment to
the Treasurer of the Company. The certificate for the Option Shares as to which
the Option shall have been so exercised shall be registered in the name of the
person exercising the Option. If the Optionee shall so request in the notice
exercising the Option, the certificate shall be registered in the name of the
Optionee and another person jointly with right of survivorship, and shall be
delivered as provided above to or upon the written order of the person
exercising the Option. In the event the Option shall be exercised by any person
other than Optionee, such notice shall be accompanied by appropriate proof of
the right of such person to exercise the Option.
6. Reservation of Shares. The Company shall, at all times during the
term of the Option, reserve and keep available such number of shares of its
capital stock as will be sufficient to satisfy the requirements of this
Agreement, and shall pay all original issue and transfer taxes with respect to
the issue and transfer of Option Shares pursuant hereto, and all other fees and
expenses necessarily incurred by the Company in connection therewith.
7. No Rights as Stockholder. The holder of the Option shall not have
any of the rights of a stockholder with respect to the Option Shares covered by
the Option except to the extent that one or more certificates for shares shall
be delivered to him upon the due exercise of the Option.
8. Registration and Investment Purpose. The Company shall use
reasonable efforts to have the shares issuable upon the exercise of this Option
registered on a Form S-8 Registration Statement with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. Unless the Option
Shares have been so registered, the Option is granted on the condition that the
acquisition of shares hereunder shall be for investment purposes only and the
person acquiring Option Shares upon exercise of the Option must bear the
economic risk of the investment for an indefinite period of time since the
shares so acquired cannot be sold unless they are subsequently registered or an
exemption from such registration is available. Optionee agrees that a legend may
be placed on the stock certificates acknowledging the restrictions on subsequent
distribution of the shares issued upon exercise of this Option.
9. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, successors, assigns and
representatives and shall be governed by the laws of the State of Minnesota.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
K-TEL INTERNATIONAL, INC.
By /s/ David Weiner
------------------------
David Weiner, President
/s/Philip Kives
------------------------
Philip Kives
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
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.
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
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.
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
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
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.
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
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.
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
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
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.
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
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.
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
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
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
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.
(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.
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
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
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
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.
(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.
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
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
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.
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
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.
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
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
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.
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
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.
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
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
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.
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
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.
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
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
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.
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
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.
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
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
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.
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
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.
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:
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Its: V.P.-Finance/CFO
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Employee