EXHIBIT 4.5
K-tel International, Inc., 1998 Non-Qualified Option Agreements
with each of Mark Margiotta, Richard Whinfrey,
Patrick Broderick and Jorma Kosensen
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th
day of September, 1998 between K-tel International, Inc., a Minnesota
corporation (herein called the "Company")and Mark Margiotta, an employee of the
Company or one or more of its subsidiaries (herein called the "Employee").
W I T N E S S E T H
WHEREAS, the Company desires, by affording the Employee an
opportunity to purchase shares of its common stock, (herein called the "Common
Stock"), as provided in this Agreement, to carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; and
WHEREAS, the Board of Directors of the Company (herein called
the "Board") has authorized and approved the granting of the option to purchase
the number of shares of Common Stock of the Company on the terms set forth in
this Agreement under the Plan,
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto have agreed,
and do hereby agree, as follows:
1. Grant of Option. The Company hereby irrevocably grants to
the Employee the right and option (herein called the "Option") to purchase all
or any part of an aggregate of 180,000 shares of Common Stock of the Company on
the terms and conditions set forth in this Agreement.
2. Purchase Price and Term of Option. The purchase price of
the shares of the Common Stock subject to the Option, the dates on which shares
are subject to the Option may be exercised and the date on which the Option
terminates are as follows:
Per Number of Date First Date Option
Share Shares Exercisable Terminates
- ----- ------ ----------- ----------
$6.000 135,000 September 4, 1998 April 17, 2008
$6.000 22,500 April 17, 1999 April 17, 2008
$6.000 22,500 April 17, 2000 April 17, 2008
The purchase price of the shares as to which the Option may be exercised shall
be paid in full in cash at the time of exercise. Except as provided in
paragraphs 7 and 9 of this Agreement, the Option may not be exercised unless the
Employee shall have been in the continuous employ of the Company, or one or more
of its subsidiaries, from the date hereof to the date of the exercise of the
Option.
3. Adjustments. If the number or type of shares of Common
Stock of the Company outstanding shall be changed or if the Company distributes
to the holders of its Common Stock any
stock of the Company or any security convertible into stock of the Company, as a
result of recapitalization, stock split, stock dividend, exchange,
consolidation, combination of shares, or reorganization or other event in which
the Company is the surviving corporation, the Board shall, pursuant to the terms
of the Plan, make such proportionate increase or decrease in the number, kind
and price of the shares subject to the Option as it may deem appropriate, and in
doing so may eliminate any fractional shares which might result from such
proportionate increase or decrease.
4. Not a Stockholder. The holder of the Option shall not have
any of the rights of a stockholder of the Company with respect to the shares
covered by the Option except to the extent that the certificate or certificates
for such shares shall be delivered to him upon the due exercise of the Option.
5. Non-Transferability of Option. The Option shall not be
transferable except by will or the laws of descent and distribution, and may be
exercised during the lifetime of the Employee only by the Employee except as
provided in paragraphs 7 and 9 of this Agreement. Without limiting the
generality of the foregoing restriction of transferability, the Option may not
be assigned, transferred (except as provided in the preceding sentence),
pledged, or hypothecated in any way, shall not be assignable by operation of law
and shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition of
the Option contrary to the provisions hereof, and the levy of any execution,
attachment, or similar process upon the Option, shall be null and void and
without effect.
6. Employment. Subject to the provisions of any written
contract between the Company or one or more of its subsidiaries and the
Employee, the employment of the Employee shall be at the pleasure of the Board
of Directors of each employing corporation and at such compensation as such
employing corporation or corporations shall reasonably determine. In the event
Employee shall (a) be employed by a competitor of, or shall be engaged in any
activity in competition with, the Company without the Company's consent, (b)
divulge without the consent of the Company any secret or confidential
information belonging to the Company, or (c) engage in any other activities
which would constitute grounds of Employee's discharge by the Company (or the
employing corporation) for cause, the Options (and any other option or options
held by him or her under the Plan), to the extent not therefore exercised, shall
forthwith terminate. Nothing in this Agreement shall confer upon the Employee
any right to continue in the employ of the Company or of any of its subsidiaries
or interfere in any way with the right of the Company or any of its subsidiaries
to terminate his employment at any time.
7. Termination of Employment. In the event that the
employment of the Employees shall be terminated (otherwise than by reason of
death), the Option may, subject to the provisions of paragraph 6 hereof, be
exercised by the Employee (to the extent that he shall have been entitled to do
so at the termination of his employment) at any time within one (1) month after
such termination. So long as the Employee shall continue to be an Employee of
the Company or one or more of its subsidiaries, the Option shall not be affected
by any change of duties or position.
8. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement,
the Option may be exercised, at any time prior to the expiration date specified
in such option, by written notice to the Company at its executive offices. Such
notice shall state the election to exercise the Option and the number of shares
in respect of which it is being exercised, shall be signed by the person or
persons so exercising the Option, and shall be accompanied by payment of the
full purchase price of such shares. The Company shall deliver a certificate or
certificates representing such shares as soon as practicable after the notice
shall be received. Payment of such purchase price shall be made by a certified
check payable to the order of the Company. The certificate or certificates for
the shares as to which the Option shall have been so exercised shall be
registered in the name of the person or persons so exercising the Option (or, if
the Option shall be exercised by the Employee and if the Employee shall so
request in the notice exercising the Option, shall be registered in the name of
the Employee and another person jointly, with right or survivorship) and shall
be delivered as provided above to or upon the written order of the Employee
exercising the Option. In the event the Option shall be exercised pursuant to
paragraph 9 of the Agreement by any person or persons other than the Employee,
such notice shall be accompanied by appropriate proof of the right of such
person or persons to exercise the Option. All shares that shall be purchased
upon the exercise of the Option as provided herein shall be fully paid and
non-assessable.
(b) It shall be a condition to the obligation of the
Company to issue or transfer shares of Common Stock upon exercise of the
Option granted under the plan by delivery of shares, that the Employee (or any
authorized representative) pay to the Company, upon its demand, such amount as
may be requested by the Company for the purpose of satisfying its liability to
withhold federal, state or local income or other taxes incurred by reason of the
exercise of the Option or the transfer of shares upon such exercise. If the
amount requested is not paid, the Company may refuse to issue or transfer shares
of Common Stock upon exercise of the Option.
(c) The Company shall not be required to issue or transfer
any certificates for shares purchased upon exercise of this Option until all
applicable requirements of law have been complied with and such shares have been
listed on any securities exchange or system on which the Common Stock may then
be listed.
9. Death of Employee. In the event of the death of the
Employee, the estate of the Employee or the person who acquires the right to
exercise the Employee's Option by reason of the Employee's death, whether by
request, inheritance or intestate succession, shall have the right to exercise
the Option within twelve (12) months following the death of the Employee (but
not after the expiration of the Option) for the number of shares which the
Employee was entitled to purchase at the time of his death, but only if the
person to whom the Option was granted was at the time of his death in the employ
of the Company or any of its subsidiaries or of a corporation (or of a parent or
subsidiary of such corporation) issuing or assuming the Option in the
transaction to which Section 425(a) of the Internal Revenue Code of 1954, as
amended, (herein called the "Internal Revenue Code") was applicable. Any such
exercise shall be made by (a) delivering written notice to the Secretary of the
Company specifying the number of shares of Common Stock with respect to which
the Option is being exercised, and (b) paying or causing to be paid to the
Company the purchase price of such shares (c) providing the Company with such
evidence as the Company may request to demonstrate that the person or persons
exercising the Option has or have the right to do so and that all taxes or other
assessments with respect to the Common Stock issuable upon exercise of the
Option have been paid or adequate
provision for such payment has been made. Upon being satisfied that the person
or persons exercising the Option has or have right to do so and that all taxes
or other assessments with respect to the Common Stock covered thereby have been
paid or provided for, the Company shall issue certificates for such shares in
such denominations as the person or persons exercising the Option may direct,
and shall deliver such shares in accordance with reasonable instructions
contained in the notice.
10. The Plan. The Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1954 and shall be construed; provided, however, that nothing in
this Agreement shall be interpreted as a representation, guaranty or other
undertaking on the part of the Company that this Option is or will be determined
to be an "incentive stock option" within the meaning of Section 422A or any
other section of the Internal Revenue Code. This Option is subject to certain
additional terms and conditions set forth in the Plan pursuant to which the
Option was granted. A copy of the Plan is on file with the Secretary of the
Company and the Employee by execution of this Agreement agrees to and accepts
this Option subject to the terms of the Plan and confirms that he or she has
read and understands the Plan.
11. Disposal of Shares Acquired. In order to enable the
Company to avail itself of any income tax deduction to which it may be entitled,
the Employee shall notify the Company of its intent to dispose of any of the
shares acquired pursuant to exercise of this Option within two (2) years from
the date of the grant of the Option and one (1) year from the date of exercise
of the Option. Promptly after such disposition the Employee shall notify the
Company of the number of shares disposed of, the dates of acquisition and
disposition of such shares, and the consideration, if any, received on such
disposition.
12. Reservation of Shares. The Company shall at all times
during the term of the Option reserve and keep available such number of shares
of the Common Stock as will be sufficient to satisfy the requirement of this
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and will from time
to time use its best efforts to comply with all laws and regulations which, in
the opinion of counsel for the Company, shall be applicable thereto.
13. Investment Representation. By exercising the Option, the
Employee acknowledges that he or she has received all financial and other
information concerning the Company he or she deems necessary or has requested.
In addition, the Employee agrees to furnish the Company with a certificate to
the effect of the foregoing upon exercise of the Option.
14. Definitions. As used herein, the term "subsidiary" shall
mean any present or future corporation which would be a "subsidiary corporation"
of the Company, as the term is defined in Section 425 (f) of the Internal
Revenue Code of 1954 as amended.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand and seal, all on the day and year first above written.
K-TEL INTERNATIONAL, INC.
By:
Its: V.P.-Finance/CFO
Employee
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th
day of September, 1998 between K-tel International, Inc., a Minnesota
corporation (herein called the "Company")and Richard Whinfrey, an employee of
the Company or one or more of its subsidiaries (herein called the "Employee").
W I T N E S S E T H
WHEREAS, the Company desires, by affording the Employee an
opportunity to purchase shares of its common stock, (herein called the "Common
Stock"), as provided in this Agreement, to carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; and
WHEREAS, the Board of Directors of the Company (herein called
the "Board") has authorized and approved the granting of the option to purchase
the number of shares of Common Stock of the Company on the terms set forth in
this Agreement under the Plan,
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto have agreed,
and do hereby agree, as follows:
1. Grant of Option. The Company hereby irrevocably grants to
the Employee the right and option (herein called the "Option") to purchase all
or any part of an aggregate of 4,500 shares of Common Stock of the Company on
the terms and conditions set forth in this Agreement.
2. Purchase Price and Term of Option. The purchase price of
the shares of the Common Stock subject to the Option, the dates on which shares
are subject to the Option may be exercised and the date on which the Option
terminates are as follows:
Per Number of Date First Date Option
Share Shares Exercisable Terminates
- ----- ------ ----------- ----------
$6.000 1,500 April 17, 1999 April 17, 2008
$6.000 1,500 April 17, 2000 April 17, 2008
$6.000 1,500 April 17, 2001 April 17, 2008
The purchase price of the shares as to which the Option may be exercised shall
be paid in full in cash at the time of exercise. Except as provided in
paragraphs 7 and 9 of this Agreement, the Option may not be exercised unless the
Employee shall have been in the continuous employ of the Company, or one or more
of its subsidiaries, from the date hereof to the date of the exercise of the
Option.
3. Adjustments. If the number or type of shares of Common
Stock of the Company outstanding shall be changed or if the Company distributes
to the holders of its Common Stock any stock of the Company or any security
convertible into stock of the Company, as a result of
recapitalization, stock split, stock dividend, exchange, consolidation,
combination of shares, or reorganization or other event in which the Company is
the surviving corporation, the Board shall, pursuant to the terms of the Plan,
make such proportionate increase or decrease in the number, kind and price of
the shares subject to the Option as it may deem appropriate, and in doing so may
eliminate any fractional shares which might result from such proportionate
increase or decrease.
4. Not a Stockholder. The holder of the Option shall not have
any of the rights of a stockholder of the Company with respect to the shares
covered by the Option except to the extent that the certificate or certificates
for such shares shall be delivered to him upon the due exercise of the Option.
5. Non-Transferability of Option. The Option shall not be
transferable except by will or the laws of descent and distribution, and may be
exercised during the lifetime of the Employee only by the Employee except as
provided in paragraphs 7 and 9 of this Agreement. Without limiting the
generality of the foregoing restriction of transferability, the Option may not
be assigned, transferred (except as provided in the preceding sentence),
pledged, or hypothecated in any way, shall not be assignable by operation of law
and shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition of
the Option contrary to the provisions hereof, and the levy of any execution,
attachment, or similar process upon the Option, shall be null and void and
without effect.
6. Employment. Subject to the provisions of any written
contract between the Company or one or more of its subsidiaries and the
Employee, the employment of the Employee shall be at the pleasure of the Board
of Directors of each employing corporation and at such compensation as such
employing corporation or corporations shall reasonably determine. In the event
Employee shall (a) be employed by a competitor of, or shall be engaged in any
activity in competition with, the Company without the Company's consent, (b)
divulge without the consent of the Company any secret or confidential
information belonging to the Company, or (c) engage in any other activities
which would constitute grounds of Employee's discharge by the Company (or the
employing corporation) for cause, the Options (and any other option or options
held by him or her under the Plan), to the extent not therefore exercised, shall
forthwith terminate. Nothing in this Agreement shall confer upon the Employee
any right to continue in the employ of the Company or of any of its subsidiaries
or interfere in any way with the right of the Company or any of its subsidiaries
to terminate his employment at any time.
7. Termination of Employment. In the event that the
employment of the Employees shall be terminated (otherwise than by reason of
death), the Option may, subject to the provisions of paragraph 6 hereof, be
exercised by the Employee (to the extent that he shall have been entitled to do
so at the termination of his employment) at any time within one (1) month after
such termination. So long as the Employee shall continue to be an Employee of
the Company or one or more of its subsidiaries, the Option shall not be affected
by any change of duties or position.
8. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement,
the Option may be exercised, at any time prior to the expiration date specified
in such option, by written notice to the
Company at its executive offices. Such notice shall state the election to
exercise the Option and the number of shares in respect of which it is being
exercised, shall be signed by the person or persons so exercising the Option,
and shall be accompanied by payment of the full purchase price of such shares.
The Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. Payment of such
purchase price shall be made by a certified check payable to the order of the
Company. The certificate or certificates for the shares as to which the Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Option (or, if the Option shall be exercised by the
Employee and if the Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right or survivorship) and shall be delivered as provided above to
or upon the written order of the Employee exercising the Option. In the event
the Option shall be exercised pursuant to paragraph 9 of the Agreement by any
person or persons other than the Employee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable.
(b) It shall be a condition to the obligation of the
Company to issue or transfer shares of Common Stock upon exercise of the
Option granted under the plan by delivery of shares, that the Employee (or any
authorized representative) pay to the Company, upon its demand, such amount as
may be requested by the Company for the purpose of satisfying its liability to
withhold federal, state or local income or other taxes incurred by reason of the
exercise of the Option or the transfer of shares upon such exercise. If the
amount requested is not paid, the Company may refuse to issue or transfer shares
of Common Stock upon exercise of the Option.
(c) The Company shall not be required to issue or transfer
any certificates for shares purchased upon exercise of this Option until all
applicable requirements of law have been complied with and such shares have been
listed on any securities exchange or system on which the Common Stock may then
be listed.
9. Death of Employee. In the event of the death of the
Employee, the estate of the Employee or the person who acquires the right to
exercise the Employee's Option by reason of the Employee's death, whether by
request, inheritance or intestate succession, shall have the right to exercise
the Option within twelve (12) months following the death of the Employee (but
not after the expiration of the Option) for the number of shares which the
Employee was entitled to purchase at the time of his death, but only if the
person to whom the Option was granted was at the time of his death in the employ
of the Company or any of its subsidiaries or of a corporation (or of a parent or
subsidiary of such corporation) issuing or assuming the Option in the
transaction to which Section 425(a) of the Internal Revenue Code of 1954, as
amended, (herein called the "Internal Revenue Code") was applicable. Any such
exercise shall be made by (a) delivering written notice to the Secretary of the
Company specifying the number of shares of Common Stock with respect to which
the Option is being exercised, and (b) paying or causing to be paid to the
Company the purchase price of such shares (c) providing the Company with such
evidence as the Company may request to demonstrate that the person or persons
exercising the Option has or have the right to do so and that all taxes or other
assessments with respect to the Common Stock issuable upon exercise of the
Option have been paid or adequate provision for such payment has been made. Upon
being satisfied that the person or persons exercising the Option has or have
right to do so and that all taxes or other assessments with respect to the
Common Stock covered thereby have been paid or provided for, the Company shall
issue certificates for such shares in such denominations as the person or
persons exercising the Option may direct, and shall deliver such shares in
accordance with reasonable instructions contained in the notice.
10. The Plan. The Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1954 and shall be construed; provided, however, that nothing in
this Agreement shall be interpreted as a representation, guaranty or other
undertaking on the part of the Company that this Option is or will be determined
to be an "incentive stock option" within the meaning of Section 422A or any
other section of the Internal Revenue Code. This Option is subject to certain
additional terms and conditions set forth in the Plan pursuant to which the
Option was granted. A copy of the Plan is on file with the Secretary of the
Company and the Employee by execution of this Agreement agrees to and accepts
this Option subject to the terms of the Plan and confirms that he or she has
read and understands the Plan.
11. Disposal of Shares Acquired. In order to enable the
Company to avail itself of any income tax deduction to which it may be entitled,
the Employee shall notify the Company of its intent to dispose of any of the
shares acquired pursuant to exercise of this Option within two (2) years from
the date of the grant of the Option and one (1) year from the date of exercise
of the Option. Promptly after such disposition the Employee shall notify the
Company of the number of shares disposed of, the dates of acquisition and
disposition of such shares, and the consideration, if any, received on such
disposition.
12. Reservation of Shares. The Company shall at all times
during the term of the Option reserve and keep available such number of shares
of the Common Stock as will be sufficient to satisfy the requirement of this
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and will from time
to time use its best efforts to comply with all laws and regulations which, in
the opinion of counsel for the Company, shall be applicable thereto.
13. Investment Representation. By exercising the Option, the
Employee acknowledges that he or she has received all financial and other
information concerning the Company he or she deems necessary or has requested.
In addition, the Employee agrees to furnish the Company with a certificate to
the effect of the foregoing upon exercise of the Option.
14. Definitions. As used herein, the term "subsidiary" shall
mean any present or future corporation which would be a "subsidiary corporation"
of the Company, as the term is defined in Section 425 (f) of the Internal
Revenue Code of 1954 as amended.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand and seal, all on the day and year first above written.
K-TEL INTERNATIONAL, INC.
By:
Its: V.P.-Finance/CFO
Employee
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th
day of September, 1998 between K-tel International, Inc., a Minnesota
corporation (herein called the "Company")and Patrick Broderick, an employee of
the Company or one or more of its subsidiaries (herein called the "Employee").
W I T N E S S E T H
WHEREAS, the Company desires, by affording the Employee an
opportunity to purchase shares of its common stock, (herein called the "Common
Stock"), as provided in this Agreement, to carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; and
WHEREAS, the Board of Directors of the Company (herein called
the "Board") has authorized and approved the granting of the option to purchase
the number of shares of Common Stock of the Company on the terms set forth in
this Agreement under the Plan,
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto have agreed,
and do hereby agree, as follows:
1. Grant of Option. The Company hereby irrevocably grants to
the Employee the right and option (herein called the "Option") to purchase all
or any part of an aggregate 4,500 shares of Common Stock of the Company on the
terms and conditions set forth in this Agreement.
2. Purchase Price and Term of Option. The purchase price of
the shares of the Common Stock subject to the Option, the dates on which shares
are subject to the Option may be exercised and the date on which the Option
terminates are as follows:
Per Number of Date First Date Option
Share Shares Exercisable Terminates
- ----- ------ ----------- ----------
$6.000 1500 April 17, 1999 April 17, 2008
$6.000 1500 April 17, 2000 April 17, 2008
$6.000 1500 April 17, 2001 April 17, 2008
The purchase price of the shares as to which the Option may be exercised shall
be paid in full in cash at the time of exercise. Except as provided in
paragraphs 7 and 9 of this Agreement, the Option may not be exercised unless the
Employee shall have been in the continuous employ of the Company, or one or more
of its subsidiaries, from the date hereof to the date of the exercise of the
Option.
3. Adjustments. If the number or type of shares of Common
Stock of the Company outstanding shall be changed or if the Company distributes
to the holders of its Common Stock any stock of the Company or any security
convertible into stock of the Company, as a result of
recapitalization, stock split, stock dividend, exchange, consolidation,
combination of shares, or reorganization or other event in which the Company is
the surviving corporation, the Board shall, pursuant to the terms of the Plan,
make such proportionate increase or decrease in the number, kind and price of
the shares subject to the Option as it may deem appropriate, and in doing so may
eliminate any fractional shares which might result from such proportionate
increase or decrease.
4. Not a Stockholder. The holder of the Option shall not have
any of the rights of a stockholder of the Company with respect to the shares
covered by the Option except to the extent that the certificate or certificates
for such shares shall be delivered to him upon the due exercise of the Option.
5. Non-Transferability of Option. The Option shall not be
transferable except by will or the laws of descent and distribution, and may be
exercised during the lifetime of the Employee only by the Employee except as
provided in paragraphs 7 and 9 of this Agreement. Without limiting the
generality of the foregoing restriction of transferability, the Option may not
be assigned, transferred (except as provided in the preceding sentence),
pledged, or hypothecated in any way, shall not be assignable by operation of law
and shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition of
the Option contrary to the provisions hereof, and the levy of any execution,
attachment, or similar process upon the Option, shall be null and void and
without effect.
6. Employment. Subject to the provisions of any written
contract between the Company or one or more of its subsidiaries and the
Employee, the employment of the Employee shall be at the pleasure of the Board
of Directors of each employing corporation and at such compensation as such
employing corporation or corporations shall reasonably determine. In the event
Employee shall (a) be employed by a competitor of, or shall be engaged in any
activity in competition with, the Company without the Company's consent, (b)
divulge without the consent of the Company any secret or confidential
information belonging to the Company, or (c) engage in any other activities
which would constitute grounds of Employee's discharge by the Company (or the
employing corporation) for cause, the Options (and any other option or options
held by him or her under the Plan), to the extent not therefore exercised, shall
forthwith terminate. Nothing in this Agreement shall confer upon the Employee
any right to continue in the employ of the Company or of any of its subsidiaries
or interfere in any way with the right of the Company or any of its subsidiaries
to terminate his employment at any time.
7. Termination of Employment. In the event that the
employment of the Employees shall be terminated (otherwise than by reason of
death), the Option may, subject to the provisions of paragraph 6 hereof, be
exercised by the Employee (to the extent that he shall have been entitled to do
so at the termination of his employment) at any time within one (1) month after
such termination. So long as the Employee shall continue to be an Employee of
the Company or one or more of its subsidiaries, the Option shall not be affected
by any change of duties or position.
8. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement,
the Option may be exercised, at any time prior to the expiration date specified
in such option, by written notice to the
Company at its executive offices. Such notice shall state the election to
exercise the Option and the number of shares in respect of which it is being
exercised, shall be signed by the person or persons so exercising the Option,
and shall be accompanied by payment of the full purchase price of such shares.
The Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. Payment of such
purchase price shall be made by a certified check payable to the order of the
Company. The certificate or certificates for the shares as to which the Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Option (or, if the Option shall be exercised by the
Employee and if the Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right or survivorship) and shall be delivered as provided above to
or upon the written order of the Employee exercising the Option. In the event
the Option shall be exercised pursuant to paragraph 9 of the Agreement by any
person or persons other than the Employee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable.
(b) It shall be a condition to the obligation of the
Company to issue or transfer shares of Common Stock upon exercise of the
Option granted under the plan by delivery of shares, that the Employee (or any
authorized representative) pay to the Company, upon its demand, such amount as
may be requested by the Company for the purpose of satisfying its liability to
withhold federal, state or local income or other taxes incurred by reason of the
exercise of the Option or the transfer of shares upon such exercise. If the
amount requested is not paid, the Company may refuse to issue or transfer shares
of Common Stock upon exercise of the Option.
(c) The Company shall not be required to issue or transfer
any certificates for shares purchased upon exercise of this Option until all
applicable requirements of law have been complied with and such shares have been
listed on any securities exchange or system on which the Common Stock may then
be listed.
9. Death of Employee. In the event of the death of the
Employee, the estate of the Employee or the person who acquires the right to
exercise the Employee's Option by reason of the Employee's death, whether by
request, inheritance or intestate succession, shall have the right to exercise
the Option within twelve (12) months following the death of the Employee (but
not after the expiration of the Option) for the number of shares which the
Employee was entitled to purchase at the time of his death, but only if the
person to whom the Option was granted was at the time of his death in the employ
of the Company or any of its subsidiaries or of a corporation (or of a parent or
subsidiary of such corporation) issuing or assuming the Option in the
transaction to which Section 425(a) of the Internal Revenue Code of 1954, as
amended, (herein called the "Internal Revenue Code") was applicable. Any such
exercise shall be made by (a) delivering written notice to the Secretary of the
Company specifying the number of shares of Common Stock with respect to which
the Option is being exercised, and (b) paying or causing to be paid to the
Company the purchase price of such shares (c) providing the Company with such
evidence as the Company may request to demonstrate that the person or persons
exercising the Option has or have the right to do so and that all taxes or other
assessments with respect to the Common Stock issuable upon exercise of the
Option have been paid or adequate provision for such payment has been made. Upon
being satisfied that the person or persons exercising the Option has or have
right to do so and that all taxes or other assessments with respect to the
Common Stock covered thereby have been paid or provided for, the Company shall
issue certificates for such shares in such denominations as the person or
persons exercising the Option may direct, and shall deliver such shares in
accordance with reasonable instructions contained in the notice.
10. The Plan. The Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1954 and shall be construed; provided, however, that nothing in
this Agreement shall be interpreted as a representation, guaranty or other
undertaking on the part of the Company that this Option is or will be determined
to be an "incentive stock option" within the meaning of Section 422A or any
other section of the Internal Revenue Code. This Option is subject to certain
additional terms and conditions set forth in the Plan pursuant to which the
Option was granted. A copy of the Plan is on file with the Secretary of the
Company and the Employee by execution of this Agreement agrees to and accepts
this Option subject to the terms of the Plan and confirms that he or she has
read and understands the Plan.
11. Disposal of Shares Acquired. In order to enable the
Company to avail itself of any income tax deduction to which it may be entitled,
the Employee shall notify the Company of its intent to dispose of any of the
shares acquired pursuant to exercise of this Option within two (2) years from
the date of the grant of the Option and one (1) year from the date of exercise
of the Option. Promptly after such disposition the Employee shall notify the
Company of the number of shares disposed of, the dates of acquisition and
disposition of such shares, and the consideration, if any, received on such
disposition.
12. Reservation of Shares. The Company shall at all times
during the term of the Option reserve and keep available such number of shares
of the Common Stock as will be sufficient to satisfy the requirement of this
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and will from time
to time use its best efforts to comply with all laws and regulations which, in
the opinion of counsel for the Company, shall be applicable thereto.
13. Investment Representation. By exercising the Option, the
Employee acknowledges that he or she has received all financial and other
information concerning the Company he or she deems necessary or has requested.
In addition, the Employee agrees to furnish the Company with a certificate to
the effect of the foregoing upon exercise of the Option.
14. Definitions. As used herein, the term "subsidiary" shall
mean any present or future corporation which would be a "subsidiary corporation"
of the Company, as the term is defined in Section 425 (f) of the Internal
Revenue Code of 1954 as amended.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand and seal, all on the day and year first above written.
K-TEL INTERNATIONAL, INC.
By:
Its: V.P.-Finance/CFO
Employee
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th day of
September, 1998 between K-tel International, Inc., a Minnesota corporation
(herein called the "Company")and Jorma Kosensen, an employee of the Company or
one or more of its subsidiaries (herein called the "Employee").
W I T N E S S E T H
WHEREAS, the Company desires, by affording the Employee an
opportunity to purchase shares of its common stock, (herein called the "Common
Stock"), as provided in this Agreement, to carry out the purposes of the
Incentive Stock Plan (herein called the "Plan") of the Company; and
WHEREAS, the Board of Directors of the Company (herein called
the "Board") has authorized and approved the granting of the option to purchase
the number of shares of Common Stock of the Company on the terms set forth in
this Agreement under the Plan,
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto have agreed,
and do hereby agree, as follows:
1. Grant of Option. The Company hereby irrevocably grants to
the Employee the right and option (herein called the "Option") to purchase all
or any part of an aggregate of 4,500 shares of Common Stock of the Company on
the terms and conditions set forth in this Agreement.
2. Purchase Price and Term of Option. The purchase price of
the shares of the Common Stock subject to the Option, the dates on which shares
are subject to the Option may be exercised and the date on which the Option
terminates are as follows:
Per Number of Date First Date Option
Share Shares Exercisable Terminates
- ----- ------ ----------- ----------
$6.000 1,500 April 17, 1999 April 17, 2008
$6.000 1,500 April 17, 2000 April 17, 2008
$6.000 1,500 April 17, 2001 April 17, 2008
The purchase price of the shares as to which the Option may be exercised shall
be paid in full in cash at the time of exercise. Except as provided in
paragraphs 7 and 9 of this Agreement, the Option may not be exercised unless the
Employee shall have been in the continuous employ of the Company, or one or more
of its subsidiaries, from the date hereof to the date of the exercise of the
Option.
3. Adjustments. If the number or type of shares of Common
Stock of the Company outstanding shall be changed or if the Company distributes
to the holders of its Common Stock any stock of the Company or any security
convertible into stock of the Company, as a result of
recapitalization, stock split, stock dividend, exchange, consolidation,
combination of shares, or reorganization or other event in which the Company is
the surviving corporation, the Board shall, pursuant to the terms of the Plan,
make such proportionate increase or decrease in the number, kind and price of
the shares subject to the Option as it may deem appropriate, and in doing so may
eliminate any fractional shares which might result from such proportionate
increase or decrease.
4. Not a Stockholder. The holder of the Option shall not have
any of the rights of a stockholder of the Company with respect to the shares
covered by the Option except to the extent that the certificate or certificates
for such shares shall be delivered to him upon the due exercise of the Option.
5. Non-Transferability of Option. The Option shall not be
transferable except by will or the laws of descent and distribution, and may be
exercised during the lifetime of the Employee only by the Employee except as
provided in paragraphs 7 and 9 of this Agreement. Without limiting the
generality of the foregoing restriction of transferability, the Option may not
be assigned, transferred (except as provided in the preceding sentence),
pledged, or hypothecated in any way, shall not be assignable by operation of law
and shall not be subject to execution, attachment, or similar process. Any
attempted assignment, transfer, pledge, hypothecation, or other disposition of
the Option contrary to the provisions hereof, and the levy of any execution,
attachment, or similar process upon the Option, shall be null and void and
without effect.
6. Employment. Subject to the provisions of any written
contract between the Company or one or more of its subsidiaries and the
Employee, the employment of the Employee shall be at the pleasure of the Board
of Directors of each employing corporation and at such compensation as such
employing corporation or corporations shall reasonably determine. In the event
Employee shall (a) be employed by a competitor of, or shall be engaged in any
activity in competition with, the Company without the Company's consent, (b)
divulge without the consent of the Company any secret or confidential
information belonging to the Company, or (c) engage in any other activities
which would constitute grounds of Employee's discharge by the Company (or the
employing corporation) for cause, the Options (and any other option or options
held by him or her under the Plan), to the extent not therefore exercised, shall
forthwith terminate. Nothing in this Agreement shall confer upon the Employee
any right to continue in the employ of the Company or of any of its subsidiaries
or interfere in any way with the right of the Company or any of its subsidiaries
to terminate his employment at any time.
7. Termination of Employment. In the event that the
employment of the Employees shall be terminated (otherwise than by reason of
death), the Option may, subject to the provisions of paragraph 6 hereof, be
exercised by the Employee (to the extent that he shall have been entitled to do
so at the termination of his employment) at any time within one (1) month after
such termination. So long as the Employee shall continue to be an Employee of
the Company or one or more of its subsidiaries, the Option shall not be affected
by any change of duties or position.
8. Method of Exercising Option.
(a) Subject to the terms and conditions of this Agreement,
the Option may be exercised, at any time prior to the expiration date specified
in such option, by written notice to the
Company at its executive offices. Such notice shall state the election to
exercise the Option and the number of shares in respect of which it is being
exercised, shall be signed by the person or persons so exercising the Option,
and shall be accompanied by payment of the full purchase price of such shares.
The Company shall deliver a certificate or certificates representing such shares
as soon as practicable after the notice shall be received. Payment of such
purchase price shall be made by a certified check payable to the order of the
Company. The certificate or certificates for the shares as to which the Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Option (or, if the Option shall be exercised by the
Employee and if the Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right or survivorship) and shall be delivered as provided above to
or upon the written order of the Employee exercising the Option. In the event
the Option shall be exercised pursuant to paragraph 9 of the Agreement by any
person or persons other than the Employee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable.
(b) It shall be a condition to the obligation of the
Company to issue or transfer shares of Common Stock upon exercise of the
Option granted under the plan by delivery of shares, that the Employee (or any
authorized representative) pay to the Company, upon its demand, such amount as
may be requested by the Company for the purpose of satisfying its liability to
withhold federal, state or local income or other taxes incurred by reason of the
exercise of the Option or the transfer of shares upon such exercise. If the
amount requested is not paid, the Company may refuse to issue or transfer shares
of Common Stock upon exercise of the Option.
(c) The Company shall not be required to issue or transfer
any certificates for shares purchased upon exercise of this Option until all
applicable requirements of law have been complied with and such shares have been
listed on any securities exchange or system on which the Common Stock may then
be listed.
9. Death of Employee. In the event of the death of the
Employee, the estate of the Employee or the person who acquires the right to
exercise the Employee's Option by reason of the Employee's death, whether by
request, inheritance or intestate succession, shall have the right to exercise
the Option within twelve (12) months following the death of the Employee (but
not after the expiration of the Option) for the number of shares which the
Employee was entitled to purchase at the time of his death, but only if the
person to whom the Option was granted was at the time of his death in the employ
of the Company or any of its subsidiaries or of a corporation (or of a parent or
subsidiary of such corporation) issuing or assuming the Option in the
transaction to which Section 425(a) of the Internal Revenue Code of 1954, as
amended, (herein called the "Internal Revenue Code") was applicable. Any such
exercise shall be made by (a) delivering written notice to the Secretary of the
Company specifying the number of shares of Common Stock with respect to which
the Option is being exercised, and (b) paying or causing to be paid to the
Company the purchase price of such shares (c) providing the Company with such
evidence as the Company may request to demonstrate that the person or persons
exercising the Option has or have the right to do so and that all taxes or other
assessments with respect to the Common Stock issuable upon exercise of the
Option have been paid or adequate provision for such payment has been made. Upon
being satisfied that the person or persons exercising the Option has or have
right to do so and that all taxes or other assessments with respect to the
Common Stock covered thereby have been paid or provided for, the Company shall
issue certificates for such shares in such denominations as the person or
persons exercising the Option may direct, and shall deliver such shares in
accordance with reasonable instructions contained in the notice.
10. The Plan. The Option is intended to qualify as an
"incentive stock option" within the meaning of Section 422A of the Internal
Revenue Code of 1954 and shall be construed; provided, however, that nothing in
this Agreement shall be interpreted as a representation, guaranty or other
undertaking on the part of the Company that this Option is or will be determined
to be an "incentive stock option" within the meaning of Section 422A or any
other section of the Internal Revenue Code. This Option is subject to certain
additional terms and conditions set forth in the Plan pursuant to which the
Option was granted. A copy of the Plan is on file with the Secretary of the
Company and the Employee by execution of this Agreement agrees to and accepts
this Option subject to the terms of the Plan and confirms that he or she has
read and understands the Plan.
11. Disposal of Shares Acquired. In order to enable the
Company to avail itself of any income tax deduction to which it may be entitled,
the Employee shall notify the Company of its intent to dispose of any of the
shares acquired pursuant to exercise of this Option within two (2) years from
the date of the grant of the Option and one (1) year from the date of exercise
of the Option. Promptly after such disposition the Employee shall notify the
Company of the number of shares disposed of, the dates of acquisition and
disposition of such shares, and the consideration, if any, received on such
disposition.
12. Reservation of Shares. The Company shall at all times
during the term of the Option reserve and keep available such number of shares
of the Common Stock as will be sufficient to satisfy the requirement of this
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and will from time
to time use its best efforts to comply with all laws and regulations which, in
the opinion of counsel for the Company, shall be applicable thereto.
13. Investment Representation. By exercising the Option, the
Employee acknowledges that he or she has received all financial and other
information concerning the Company he or she deems necessary or has requested.
In addition, the Employee agrees to furnish the Company with a certificate to
the effect of the foregoing upon exercise of the Option.
14. Definitions. As used herein, the term "subsidiary" shall
mean any present or future corporation which would be a "subsidiary corporation"
of the Company, as the term is defined in Section 425 (f) of the Internal
Revenue Code of 1954 as amended.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Employee has
hereunto set his hand and seal, all on the day and year first above written.
K-TEL INTERNATIONAL, INC.
By:
Its: V.P.-Finance/CFO
Employee