STOCK TRANSFER AND LOAN REPAYMENT AGREEMENT
STOCK TRANSFER
AND
LOAN REPAYMENT AGREEMENT
This Stock Transfer and Loan Repayment Agreement dated as of June 28, 1995
is made and entered into by and among K-5 Leisure Products, Inc., a Minnesota
corporation ("K-5"), Simitar, Inc., a Minnesota corporation ("Simitar"), and
Mickey Elfenbein ("Elfenbein"), a resident of Medina, Minnesota,
RECITALS
WHEREAS, Elfenbein is indebted to K-5 in an amount that, as of the Closing
Date (as hereinafter defined) will be approximately $927,263 pursuant to a loan
in the principal amount of $448,000 made by K-5 to Elfenbein and a loan in the
principal amount of $120,575 made by National Developments Ltd. ("National
Developments") to Elfenbein (National Developments' rights with respect to which
were previously assigned to K-5) (collectively, the "K-5 Indebtedness"); and
WHEREAS, the K-5 Indebtedness is in part the subject of that certain
agreement (the "Debt Agreement") dated April 27, 1988 by and among Elfenbein,
K-5, Qwil Resources, Inc. ("Qwil"), Bradley Investments, Inc. ("Bradley"),
National Celebrity Video, Inc. ("NCV"), and Simitar Entertainment, Inc.
("Simitar Entertainment") and a related pledge agreement (the "Pledge
Agreement"), of even date therewith, between Elfenbein and K-5; and
WHEREAS, Elfenbein is the sole shareholder of Simitar, and the record and
beneficial owner of 362,611 shares of the common stock of K-tel International,
Inc. ("K-tel") and 430 common shares and 50 preferred shares of the capital
stock of Simitar Entertainment; and
WHEREAS, K-5 is the record and beneficial owner of 520 common shares and 50
preferred shares of the capital stock of Simitar Entertainment (collectively,
the "Simitar Entertainment Shares"); and
WHEREAS, the parties hereto desire to provide for the payment of the K-5
Indebtedness and for the exchange of the Simitar Entertainment Shares for
certain common shares in K-tel and a promissory note, on the terms and subject
to the conditions contained in this Agreement,
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. REPAYMENT OF K-5 INDEBTEDNESS. At the Closing (as hereinafter defined)
and on the Closing Date (as hereinafter defined), Elfenbein shall assign,
transfer and convey to K-5 231,816 shares of the common stock of K-tel (the
"K-tel Repayment Shares") free and clear of any lien, claim or encumbrance of
any nature whatsoever, and K-5 shall accept such shares as payment in full of
all amounts owing by Elfenbein to K-5.
2. EXCHANGE OF SIMITAR ENTERTAINMENT SHARES FOR NOTE AND K-TEL SHARES. On
or prior to the Closing, Elfenbein shall assign, transfer and convey to Simitar,
as a capital contribution, 118,184 common shares of K-tel (the "K-tel Exchange
Shares") and all of the common and preferred shares in Simitar Entertainment
held of record or beneficially by Elfenbein. At the Closing and on the Closing
Date, K-5 shall assign, transfer and convey to Simitar, free and clear of any
lien, claim or encumbrance of any nature whatsoever, all of the common and
preferred shares in Simitar Entertainment held of record or beneficially by K-5
and, in exchange therefor, Simitar shall assign, transfer and convey to K-5,
free and clear of any lien, claim or encumbrance of any nature whatsoever, the
K-tel Exchange Shares and Simitar's promissory note in the form attached hereto
as Exhibit A (the "Note").
3. CLOSING DATE AND CLOSING PROCEDURES.
(1) The Closing of the transactions contemplated herein shall take
place at the offices of Kaplan, Strangis and Kaplan, P.A., 5500 Norwest
Center, 90 South Seventh Street, Minneapolis, Minnesota 55402, at 10:00
a.m. on October 16, 1995, or at such other time, date or place as to which
the parties hereto may mutually agree (for purposes of this Agreement, such
event is referred to as the "Closing" and such date and time are referred
to as the "Closing Date").
(2) At the Closing, the parties shall take the following actions:
(a) Elfenbein shall deliver to K-5 the certificate or
certificates representing the K-tel Repayment Shares, duly endorsed
for transfer;
(b) K-5 shall execute and deliver to Elfenbein a receipt
acknowledging receipt of the K-tel Repayment Shares as payment in full
of all amounts owing by Elfenbein to K-5;
(c) Elfenbein, K-5, Qwil, Bradley, NCV, Simitar Entertainment and
National Developments shall execute a termination and release
acknowledging termination of the Debt Agreement and the Pledge
Agreement and the repayment in full of all amounts owing by Simitar
Entertainment, Elfenbein, NCV and/or Bradley to National Developments,
K-5 and/or Qwil and all amounts owing by NCV to Elfenbein;
(d) K-5 shall deliver to Simitar the certificates representing
the Simitar Entertainment Shares, duly endorsed for transfer;
(e) Simitar shall deliver to K-5 the certificate or certificates
representing the K-tel Exchange Shares, duly endorsed for transfer,
and the Note;
(f) Each of Elfenbein and Simitar, on the one hand, and K-5, on
the other hand, shall deliver to the other a certificate stating that
the representations and warranties made herein were true and correct
on the date hereof and are true and correct on the Closing Date and
evidencing the due authorization of their execution, delivery and
performance of this Agreement by their respective boards of directors;
(g) Philip Kives, the principal shareholder of K-5, shall submit
his resignation as a director and officer of Simitar Entertainment;
(h) K-5, Simitar and Elfenbein shall, and K-5 shall cause Philip
Kives to, execute and deliver a release in the form attached hereto as
Exhibit B; and
(i) K-5 shall enter into a record license agreement with Dominion
Entertainment, Inc. in the form attached hereto as Exhibit C.
4. REPRESENTATIONS AND WARRANTIES.
(1) Representations and Warranties of Simitar and Elfenbein. In order
to induce K-5 to enter into this Agreement and to consummate the
transactions contemplated herein, Simitar and Elfenbein, jointly and
severally, make the following representations and warranties to K-5:
(a) Elfenbein is the sole record and beneficial owner of the
K-tel Repayment Shares and the K-tel Exchange Shares, with full right,
power and authority to transfer the same as contemplated in this
Agreement, free and clear of any lien, claim or encumbrance of any
nature whatsoever (other than compliance with applicable securities
laws). As of the Closing Date, Simitar shall be the sole record and
beneficial owner of the K-tel Exchange Shares, with the full right,
power and authority to transfer the same as contemplated in this
Agreement, free and clear of any lien, claim or encumbrance of any
nature whatsoever (other than compliance with applicable securities
laws). Between the date hereof and the Closing Date, Elfenbein shall
not assign, transfer, convey, pledge, mortgage, hypothecate or
otherwise transfer the K-tel Repayment Shares or the K-tel Exchange
Shares, or any interest in either of the foregoing, except pursuant to
this Agreement.
(b) Simitar and Elfenbein have each received or had access to all
information with respect to K-tel and Simitar Entertainment that they
believe is necessary or appropriate to evaluate the merits and risks
of the transactions contemplated herein. Elfenbein and Simitar are
each sufficiently sophisticated and experienced in financial and
business matters to evaluate such merits and risks.
(c) Simitar is acquiring the Simitar Entertainment Shares without
a view to the distribution thereof, solely for Simitar's own account
and not for the account of any other person or persons, and Simitar
shall not sell or otherwise dispose of such shares except in
compliance with all applicable securities laws.
(d) Elfenbein does not hold or have any direct or indirect
interest in any securities, options or rights to acquire debt of
K-tel, except 362,611 shares of common stock of K-tel (231,816 of
which constitute the K-tel Repayment Shares and 118,184 of which
constitute the K-tel Exchange Shares), and except for rights arising
as a result of his employment as an officer and director of K-tel.
(2) REPRESENTATIONS AND WARRANTIES OF K-5. In order to induce
Elfenbein and Simitar to enter into this Agreement and to consummate the
transactions contemplated herein, K-5 represents and warrants to Elfenbein
and Simitar as follows:
(a) K-5 is the sole record and beneficial owner of the Simitar
Entertainment Shares, with full right, power and authority to transfer
the same as contemplated in this Agreement, free and clear of any
lien, claim or encumbrance of any nature whatsoever. Between the date
hereof and the Closing Date, K-5 shall not assign, transfer, convey,
pledge, mortgage, hypothecate or otherwise transfer the Simitar
Entertainment Shares, K-5's rights with respect to any amounts owing
by Elfenbein to K-5, or any interest in either of the foregoing,
except pursuant to this Agreement.
(b) K-5 has received or had access to all information with
respect to K-tel and Simitar Entertainment that it believes is
necessary or appropriate to evaluate the merits and risks of the
transactions contemplated herein. K-5 is sufficiently sophisticated
and experienced in financial and business matters to evaluate such
merits and risks.
(c) K-5 is acquiring the K-tel Repayment Shares and the K-tel
Exchange Shares without a view to the distribution thereof, solely for
K-5's own account and not for the account of any other person or
persons, and K-5 shall not sell or otherwise dispose of such shares
except in compliance with all applicable securities laws.
(d) Neither K-5 nor its principal shareholder, Philip Kives,
holds or has any direct or indirect interest in any securities,
options or rights to acquire debt of Simitar Entertainment, except the
Simitar Entertainment Shares.
5. CONDITIONS PRECEDENT. The obligation of each of the parties to close on
the transactions contemplated herein is subject to the fulfillment at or prior
to the Closing Date of each of the following conditions:
(1) ACCURACY OF REPRESENTATIONS AND WARRANTIES IN COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the other parties hereto
contained in this Agreement shall have been true and correct at and as of
the date hereof, and they shall be true and correct at and as of the
Closing Date with the same force and effect as though made at and as of
that time. Each of the other parties shall have performed and complied with
all of their obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date.
(2) PURCHASE AND SALE TRANSACTION. The closing of the transactions
contemplated by that certain Agreement for Purchase and Sale of even date
herewith by and among Simitar and K-tel International, Inc. shall have
occurred or be occurring contemporaneously with the Closing of the
transactions contemplated herein.
6. EXPENSES. The expenses of the transactions contemplated hereunder,
including legal and accounting fees, if any, shall be borne by the party
incurring the expense, whether or not the transactions contemplated under this
Agreement shall be consummated.
7. FURTHER ASSURANCES. From and after the Closing, each of the parties
hereto shall execute, acknowledge and deliver all such further assignments,
assurances and other instruments as may be reasonably necessary to perfect the
conveyances contemplated in this Agreement.
8. ENTIRE AGREEMENT. This Agreement contains the entire Agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings among them with respect thereto. This
Agreement may be amended, modified or supplemented only pursuant to a written
instrument signed by each of the parties hereto.
9. TERMINATION. This Agreement may be terminated and the transactions
contemplated herein abandoned by either party hereto in the event that the
Closing shall not have taken place by November 30, 1995, but any such
termination shall be without prejudice to any other rights or remedies of any
party hereto with respect to any breach of this Agreement occurring prior to
such termination.
10. BROKER'S COMMISSION. Each of the parties hereto shall indemnify and
hold harmless the other from the commission, fee or claim of any person, firm or
corporation employed or retained or claiming to be employed or retained by such
party to bring about, or to represent it in, the transactions contemplated
hereby.
11. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs
and legal representatives.
12. NOTICES. Any notice, request, information or other document to be given
hereunder to any of the parties by any other party shall be in writing and
delivered personally, or sent by registered or certified mail or nationally
recognized overnight carrier, postage prepaid, or by facsimile transmission, as
follows:
If to Simitar or 2605 Fernbrook Lane North
Elfenbein: Minneapolis, MN 55447-4736
Attention: Mickey Elfenbein
Facsimile No. 612-559-6885
with a copy to: Leonard, Street and Deinard
150 South Fifth Street, Suite 2300
Minneapolis, Minnesota 55402
Attention: Steven D. DeRuyter
Facsimile No. 612-335-1657
If to K-5: 2605 Fernbrook Lane North
Suite O
Minneapolis, Minnesota 55447-4736
with a copy to: Taylor McCaffrey
9th Floor, 400 St. Mary Avenue
Winnipeg, Manitoba
Canada R3C 4K5
Attention: Jacqueline A. Lowe
Facsimile No. 204-957-0945
A notice, request, information or other document shall be deemed to have been
given (i) when personally delivered, (ii) five days after having been placed in
the mail, if delivered by registered or certified mail, (iii) the day after
having been placed with a nationally recognized overnight carrier, if delivered
by a nationally recognized overnight carrier, and (iv) when transmitted with
electronic confirmation of receipt, if transmitted by facsimile. Any party may
change the address to which communications hereunder are to be sent to it by
giving written notice of such change of address in the manner herein provided
for giving notice.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota applicable to contracts made
and to be performed therein.
IN WITNESS WHEREOF, the undersigned have executed this Stock Transfer
Agreement on the date first written above.
K-5 LEISURE PRODUCTS, INC.
By ________________________________________
Its _____________________________________
/s/ Mickey Elfenbein
Mickey Elfenbein
SIMITAR, INC.
By /s/ Mickey Elfenbein
Mickey Elfenbein
Its President
Exhibit A
PROMISSORY NOTE
[See Attachment] Dated: __________, 1995
Minneapolis, Minnesota
FOR VALUE RECEIVED, Simitar, Inc., a Minnesota corporation (the
"Borrower"), K-tel International (USA), Inc., Dominion Entertainment, Inc., US
Distribution Services, Inc., and Simitar Entertainment, Inc., jointly and
severally, promise to pay to the order of K-5 Leisure Products, Inc., a
Minnesota corporation (the "Holder"), at the Holder's principal office located
at 2605 Fernbrook Lane North, Suite O, Minneapolis, Minnesota 55447-4736, or at
such other place as the Holder of this Note may from time to time designate, the
principal sum of [see attachment], plus interest on the principal balance
remaining unpaid from time to time at the Prime Rate (as hereinafter defined) as
of the date of this Note, and as adjusted on _______________ and _______________
[semi-annual adjustment dates] of each year thereafter (the "Adjustment Dates").
As used in this Note, "Prime Rate" means the rate designated as the "Prime Rate"
in the "Money Rates" section (or any successor thereto) of the Wall Street
Journal as of the applicable Adjustment Date (or, if the applicable Adjustment
Date is not a business day, as of the business day immediately preceding the
applicable Adjustment Date).
The entire outstanding principal balance of this Note and all accrued but
unpaid interest thereon shall be due and payable in full upon the first to occur
of the following events (the occurrence of any such event, or other payment in
full of all amounts owing under this Note, being hereinafter referred to as the
"Maturity" of this Note):
1. The completion by the Borrower, any of its subsidiaries, or any other
corporation that controls all or substantially all of the issued and outstanding
capital stock of the Borrower, of a registered public offering of its equity
securities;
2. The Borrower, K-tel International (USA) Inc., Dominion Entertainment,
Inc. or Simitar Entertainment, Inc. becoming insolvent or any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law being commenced in respect of any of the foregoing
corporations and remaining for 60 days undismissed;
3. The Borrower or any of its subsidiaries transferring to a third party
assets having a fair market value greater than $1,000,000, other than sales in
the ordinary course of business, sales of the stock or any assets of Dominion
Vertriebs, GmbH, K-tel International (FRANCE) SARL, and K-tel International
(SPAIN) SL, and sales and other transfers of assets in connection with the
Borrower's financing of its acquisition as of the date hereof of the other
makers of this Note;
4. The cumulative retained earnings of the Borrower (determined in
accordance with generally accepted accounting principles consistently applied)
increasing from and after the date hereof by $5,000,000 (provided that any
payment of principal or interest by reason of the occurrence of the event set
forth in this subparagraph 4 shall be subject to any restrictions or limitations
binding upon the Borrower in favor of the Borrower's lenders or equity security
holders); or
5. Mickey Elfenbein selling or otherwise disposing of any of his shares of
the capital stock of the Borrower or any interest in such shares other than:
(a) a transfer of such shares or any interest therein to a spouse or
child of Mickey Elfenbein or a trust established for the principal benefit
of Mickey Elfenbein or a spouse or child of Mickey Elfenbein;
(b) a transfer of such shares or interest to an employee of the
Borrower or any of its affiliates; and
(c) a grant of a security interest in such shares or any interest
therein to any party providing financing to the Borrower or any of its
affiliates;
provided that such transfer or grant of a security interest does not
result in Mickey Elfenbein being the registered and beneficial owner of
less than 50 percent of the issued and outstanding shares of the capital
stock of the Borrower of which he is the record and beneficial owner as of
the date of this Note.
Prior to the Maturity of this Note or the Amortization Commencement Date
(as hereinafter defined), the Borrower shall pay to the Holder, as prepayments
of amounts owing hereunder:
1. an amount equal to the Profits (as hereinafter defined) of K-tel
International, Inc. ("K-tel") or its affiliates up to the date hereof with
respect to the product known as the "101 Country Hits", payable within 60 days
of the date hereof;
2. an amount equal to the Profits earned by the Borrower, or the Borrower's
affiliates with respect to the product known as the "101 Country Hits" from and
after the date hereof and prior to the Maturity of this Note, payable in
installments within 60 days following the end of each calendar quarter; and
3. an amount equal to all royalties due and owing by the Holder (excluding
American Federation of Musicians' payments and other expense reimbursements and
non-royalty payments, if any) prior to the maturity of this Note to Dominion
Entertainment, Inc. ("Dominion") pursuant to that certain record license
agreement of even date herewith between Dominion and the Holder (the "Record
License Agreement"), less one cent per track and less all income and similar
taxes owing by Dominion with respect thereto, payable as an offset against
amounts owing by the Holder to Dominion pursuant to the Record License
Agreement.
As used in this Note, "Profits" means gross receipts from the sale of the
"101 Country Hits" box set, any individual compact discs or cassette tapes with
respect thereto and all "upsales" made in connection with direct response sales
thereof (collectively, the "Products"), less (i) reserves for returns and bad
debts with respect to the Products, determined in accordance with the methods
used by Borrower to determine such reserves generally (the reserve for returns
being 10 percent of shipped orders), (ii) the costs set forth on Exhibit A
attached hereto and incorporated herein by reference and corresponding costs
with respect to "upsales", (iii) other amounts paid to third parties in
connection with the production, manufacturing, promotion, marketing, sale or
distribution of the Products (excluding commissions on sales to retail outlets),
and (iv) in the case of sales to retail outlets, 10 percent of the selling
price.
The Holder shall have the right to audit the books and records of the
Borrower with respect to the Products, during normal business hours and on
reasonable prior written notice, at anytime prior to the Amortization
Commencement Date (but not more often than once per calendar quarter), for the
purpose of identifying the calculation of "Profits" pursuant to the proceeding
paragraph (including, without limitation, the product costs set forth on Exhibit
A attached hereto); provided, however, that (i) the royalties paid by Borrower
to third parties shall be assumed to have been based on a $90.00 selling price,
whether or not the amounts actually paid were so based, (ii) the royalties paid
to the Borrower and its subsidiaries shall be assumed to have been $.03 per
track, regardless of the amount actually paid, and (iii) the freight and
handling costs shall be assumed to have been $2.02 or $2.03, as shown on Exhibit
A, regardless of the amount actually paid. The Holder shall maintain all
information received in such audit in strict confidence, and not disclose such
information to any third party or use such information for any purpose other
than enforcing its rights under this Note.
The Borrower may otherwise prepay amounts owing hereunder, in whole or in
part, at any time and from time to time, without premium or penalty. All
prepayments shall be applied first in reduction of the accrued but unpaid
interest owing hereunder and thereafter in reduction of the principal balance
hereof.
Interest accruing hereunder from the date of this Note through the fifth
anniversary hereof (the "Amortization Commencement Date"), to the extent not
prepaid pursuant to the preceding paragraphs, shall be paid in annual
installments on each anniversary of the date of this Note.
The entire principal balance of this Note outstanding as of the
Amortization Commencement Date, together with all interest accrued but unpaid as
of such date or thereafter accruing, shall be paid in five equal annual
installments, one on each of the five anniversaries of the Amortization
Commencement Date.
The Borrower hereby waives: (a) presentment, protest and demand, and (b)
notice of protest, demand, dishonor and nonpayment of this Note.
The obligation evidenced by this Note was negotiated, delivered and
accepted in the State of Minnesota, the laws of which state shall in all
respects be controlling in the interpretation and validity of this Note and all
obligations evidenced hereby.
SIMITAR, INC.
By ________________________________________
Mickey Elfenbein
Its President
K-TEL INTERNATIONAL (USA), INC.
By ________________________________________
Its _____________________________________
DOMINION ENTERTAINMENT, INC.
By ________________________________________
Its _____________________________________
US DISTRIBUTION SERVICES, INC.
By ________________________________________
Its _____________________________________
SIMITAR ENTERTAINMENT, INC.
By ________________________________________
Its _____________________________________
Exhibit A
101 COUNTRY SONGS - SET 6/9/95
101 COUNTRY SONGS
PRODUCT #80184/80182
INITIAL SRLP:
DIRECT RESPONSE: $69.95 $89.95
SHIPPING & HANDLING: $8.95 $8.95
DIRECT RESPONSE
CASS CD
1) FOREVER COUNTRY $1.67 $2.31
2) COUNTRY SUNSHINE $1.66 $2.30
3) EASY COUNTRY $1.27 $1.71
4) MELLOW COUNTRY $1.59 $2.19
5) COUNTRY MEMORIES $1.26 $1.70
6) TIMELESS COUNTRY $1.50 $2.06
7) COUNTRY NIGHTS $1.41 $1.91
8) COUNTRY ROMANCE $1.51 $2.07
9) COUNTRY CLASSICS $1.30 $1.76
10) COUNTRY ROADS $1.55 $2.13
$14.72 $20.14
BOX $0.15 $0.15
ASSEMBLY (HANDS) $0.17 $0.17
TOTAL 10 CD SET COST $15.04 $20.46
PATSY CLINE $1.32 $1.84
GREATEST WESTERN THEMES $1.75 $2.11
ACM ROYALTY $0.70 $0.90
EDDIE RABBITT ROYALTY $1.05 $1.35
FREIGHT & HANDLING $2.02 $2.03
MAILER $0.15 $0.15
TOTAL: $22.03 $28.84
ATTACHMENT
CALCULATION OF PROMISSORY NOTE
PRINCIPAL BALANCE
Principal Start Date Per Diem Interest
K-5 Loan to Elfenbein 448,000 October 25, 1995 $98.19 (8%/annum)
National Development, Ltd. 118,376 December 12, 1994 $14.28 (8%/annum on $65,169)
Loan to Elfenbein
K-5 Letter of 140,000 December 31, 1994 $30.68 (8%/annum)
Credit Expenses
Original principal amount of loan will be sum of principal balances plus per
diems from the respective start dates to the closing date.
Exhibit B
MUTUAL RELEASE
EXHIBIT B
MUTUAL RELEASE
This instrument is made and entered into as of the ____ day of __________,
1995 by and among K-5 Leisure Products, Inc. ("K-5"), a Minnesota corporation,
Simitar, Inc. ("Simitar"), a Minnesota corporation, Mickey Elfenbein
("Elfenbein"), a resident of Medina, Minnesota, and Philip Kives ("Kives"), a
resident of Winnepeg, Manitoba pursuant to that certain stock transfer and loan
payment agreement dated _______________, 1995 by and among K-5, Simitar and
Elfenbein (the "Stock Transfer Agreement"). Capitalized terms used but not
otherwise defined in this instrument are used in this instrument as defined in
the Stock Transfer Agreement.
A. KNOW ALL MEN BY THESE PRESENTS that Simitar and Elfenbein
(collectively, the "Elfenbein Parties"), for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, for themselves and
for their heirs, predecessors, successors and assigns, do hereby remise, release
and forever discharge K-5 and Kives (collective, the "Kives Parties") and their
heirs, predecessors, successors and assigns of and from any and all manner of
actions, suits, claims, demands, advances, indemnifications, damages, judgments,
levies, and executions, whether known or unknown, suspected or unsuspected,
liquidated or unliquidated, fixed or contingent, direct or indirect, at law or
in equity, that any one or more of the Elfenbein Parties, or their heirs,
predecessors, successors or assigns, ever had, has or ever can, shall or may
have or claim to have against any one or more of the Kives Parties for, upon, or
by reason of any matter, fact or thing prior to the date of these presents
relating to or arising out of the debt agreement, the pledge agreement, or the
business of K-5, Simitar, Qwil, Bradley, NCV, or Simitar Entertainment, other
than claims arising out of the Stock Transfer Agreement, that certain agreement
for purchase and sale dated ___________, 1995 between Simitar and K-tel
International, Inc., and any promissory note, certificate, agreement or other
instrument issued pursuant to or in connection with either of the foregoing.
B. KNOW ALL MEN BY THESE PRESENTS that the Kives Parties, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, for themselves and for their heirs, predecessors, successors and
assigns, do hereby remise, release and forever discharge the Elfenbein Parties
and their heirs, predecessors, successors and assigns of and from any and all
manner of actions, suits, claims, demands, advances, indemnifications, damages,
judgments, levies, and executions, whether known or unknown, suspected or
unsuspected, liquidated or unliquidated, fixed or contingent, direct or
indirect, at law or in equity, that any one or more of the Kives Parties, or
their heirs, predecessors, successors or assigns, ever had, has or ever can,
shall or may have or claim to have against any one or more of the Elfenbein
Parties for, upon, or by reason of any matter, fact or thing prior to the date
of these presents relating to or arising out of the debt agreement, the pledge
agreement, or the business of K-5, Simitar, Qwil, Bradley, NCV, or Simitar
Entertainment, other than claims arising out of the Stock Transfer Agreement,
that certain agreement for purchase and sale dated ___________, 1995 between
Simitar and K-tel International, Inc., and any promissory note, certificate,
agreement or other instrument issued pursuant to or in connection with either of
the foregoing.
C. The undersigned, by execution hereof, state that they have been duly
represented by counsel of their own selection in the premises, and that this
Mutual Release has been read by the undersigned and their counsel, and that the
undersigned understand and fully agree to each, all and every provision hereof,
hereby acknowledging receipt of a copy hereof.
K-5 LEISURE PRODUCTS, INC.
Dated: ___________, 1995 By _____________________________
Its _________________________
SIMITAR, INC.
Dated: ___________, 1995 By _____________________________
Its _________________________
Dated: ___________, 1995 ________________________________
Mickey Elfenbein
Dated: ___________, 1995 ________________________________
Philip Kives
EXHIBIT C
RECORD LICENSE AGREEMENT
Dated as of the ___ day of ___________, 1995
Between And
DOMINION ENTERTAINMENT, INC. K-TEL INTERNATIONAL, INC.
2605 Fernbrook Lane North 2605 Fernbrook Lane North
Minneapolis, MN 55447 Suite O
(the "Licensor") Minneapolis, MN 55447
(the "Licensee")
W I T N E S S E T H
In consideration of the mutual promises and covenants herein
contained, the parties hereby agree as follows:
GRANT AND SCOPE OF RIGHTS
(a) Subject to all limitations contained herein, Licensor hereby grants to
Licensee for the Term (as defined in Clause 4) and in the Territory (as defined
in Clause 22) the non-exclusive right to use master recordings contained in the
Dominion re-record catalog which have been approved in writing by Licensor
(hereinafter called the "Licensed Masters") in connection with the exploitation
of one Album for sale by Licensee via infomercials.
(b) The rights hereby granted by Licensor to Licensee include the following:
(i) The right to exploit the Album through television infomercial sales
only.
(ii) The right to use the approved name likeness and biography of each
artist whose performance is embodied in the said Licensed Masters in connection
with the advertising, publicizing or sale of the Albums.
(iii) The right, subject to Clause 9(c) hereof and to the extent permitted
by the applicable laws of the Territory, to perform publicly or to permit the
public performance by means of radio or television broadcast or otherwise of
records manufactured from the said Licensed Masters for the purposes only of
advertising the sale of the Albums.
(iv) The right to use and control the use of the said Licensed Masters the
matrices, mothers, stampers or other copies or derivatives and records
manufactured from the master recordings and the performance(s) embodied therein
for the purposes hereof only.
2. LIMITATIONS OF RIGHTS
(a) Notwithstanding anything to the contrary contained herein:
(i) Licensee shall only embody the Licensed Masters on the said Albums and
shall not make any second or other use thereof.
(ii) It is acknowledged that all Licensed Masters hereunder are not the
original recordings but rather a re-recorded version of the original recording
and Licensee shall clearly designate such Licensed Masters as re-recordings on
all Album jackets, sleeves, inlay cards, and any packaging related thereto. The
obligation to so designate such Licensed Masters is of the essence of this
Agreement.
(iii) The rights herein granted to Licensee shall be limited to the extent
that Licensor owns or controls such rights, and Licensor specifically states
that it does not own or control the exclusive rights in the Territory to each
and every Licensed Master comprising the Albums.
(b) Except as described in paragraph (c) of this Clause 2, Licensor reserves
exclusively to itself and its successors, licensees and assigns all rights and
uses in and to the Licensed Masters whether now or hereafter known or in
existence, except the limited use expressly licensed hereunder. By way of
illustration and not of limitation, Licensee shall not:
(i) Exploit the Album hereunder at any price other than in the so-called
"full-priced" category.
(ii) Use the Licensed Masters or dispose of or use in any way records or
tapes manufactured therefrom except for commercial manufacture and sale of the
records as herein provided.
(iii) [Intentionally Deleted]
(iv) Edit or alter the Licensed Masters. Licensee shall only employ the
Licensed Masters in the manner and for the purpose originally recorded by or for
Licensor.
(v) Sub-license or otherwise convey any rights under this Agreement.
(vi) Exploit the Album in any retail channels of trade either directly or
indirectly.
(vii) Undertake or knowingly permit the manufacture, advertising,
distribution or sale of any Licensed Master or the Album outside the Territory.
3. RESERVATION OF RIGHTS
(a) The following shall be and remain the property of Licensor:
(i) The Licensed Masters supplied by Licensor under this Agreement as well
as all mothers and stampers produced therefrom by or for Licensee;
(ii) Licensor's copyright and other property rights under statutory and/or
common law in the Licensed Masters, tapes, matrices, and mothers and stampers;
(iii) Any and all copyrights, trademarks or other similar rights or other
property rights which may otherwise accrue to Licensee or to any of its
distributors, agents or representatives by reason of the exercise of the rights
granted by this Agreement;
(iv) The exclusive right to use or license the Licensed Masters or the
performance embodied thereon for use in connection with the synchronization of
said performance with television productions and/or motion pictures, including
any soundtrack albums derived therefrom, whether produced in the Territory or
otherwise.
(b) Licensee will, upon request, execute or cause to be executed, and will
deliver to Licensor, all documents necessary to establish and effectuate
Licensor's unencumbered ownership of all such rights.
(c) Licensee shall take all precautions necessary, including but not limited
to placing the appropriate "P" line credit on all Album jackets, sleeves, labels
or inlay cards, to preserve and protect the copyright in the Licensed Masters in
Licensor's name and to prevent same from falling into the public domain.
(d) All records manufactured under the authority of this Agreement shall be
distributed in packaging materials bearing a Universal Product Code (UPC) that
will enable retail stores equipped with devices that identify bar codes at the
point of sale to report the number of records sold to SoundScan, Inc. for
tabulation if applicable.
4. TERM
The Term of this Agreement shall be for a period of five (5) years commencing
with the Closing Date of the agreement or when otherwise terminated under
Section 18 below. Each year of the Term may hereinafter be referred to as a
"Contract Year".
5. ADVANCES
[Intentionally deleted]
6. ROYALTIES
In consideration of the license and rights herein granted to Licensee, Licensee
hereby agrees to pay all of the following to Licensor:
(a) A royalty of eight (8%) percent based on the actual selling price to the
consumer, such royalty being accruable on one hundred percent (100%) of all
copies of the Albums which are exploited hereunder which amount shall in no
event be less than US $.04 per master recording on cassettes and US $.06 per
master recording on compact disc. Royalties on "bonus" or "free" records shall
be US $.04 per master recording on cassettes and US $.06 per master recording on
compact disc.
(b) In computing the number of Albums manufactured and sold hereunder Licensee
shall have the right to deduct returns and credits on account of defective
merchandise, errors in billing and errors in shipment.
7. ACCOUNTING STATEMENTS
(a) During the Term of this Agreement and thereafter as long as Licensee
continues to sell the Album hereunder, Licensee agrees to keep all usual and
proper records and books of account and make all usual and proper entries
therein relating to the exploitation of the Album.
(b) Licensee shall deliver to Licensor within thirty (30) days following the
last day of March, June, September and December of each year detailed written
statements, showing sales of records hereunder during such period. Licensee
shall in said statements advise Licensor in writing of the identity of each
Album manufactured hereunder and identify each Licensed Master embodied thereon.
Such statements shall include the following information:
(i) The number of copies of the Album sold within the Territory during the
accounting period; and
(ii) The amount of royalties and other payments due to Licensor pursuant to
this Agreement.
(c) Simultaneously with the delivery of the accounting statements referred to
above, Licensee shall pay to Licensor, at the above written address, all sums
shown to be due to Licensor by such statements. All payments shall be made in
United States Dollars (where applicable computed at the rate of exchange
existing on the date the payments are required to be made pursuant to the terms
of this Agreement).
(d) In the event Licensee does not pay to Licensor the amount shown to be due
by any accounting statement on the date the payment is required to be made
pursuant to the terms of this Agreement then:
(i) Licensor may at its election terminate this Agreement hereunder
pursuant to Clause 18(b) or (c) below; and/or
(ii) Licensor may charge interest at the rate of three percent (3%) above
the then current Prime Lending Rate to and payable by Licensee for the period
commencing upon the date such payment was due until the date such payment is
made.
(e) In the event that Licensee is unable because of governmental restrictions
to make payment in the manner described in this Clause and if Licensor agrees to
accept payment in a currency other than United States Dollars, Licensee shall
deposit (at Licensee's expense) to Licensor's credit or account or to such other
account as Licensor may from time to time designate, in a depository selected by
Licensor, all sums payable to Licensor hereunder. Notwithstanding, in the event
that Licensee in unable because of governmental restrictions to make payment to
Licensor in the United States or in United States Dollars, Licensor shall have
the right to terminate this Agreement upon thirty (30) days written notice,
without prejudice to Licensor's rights.
8. INSPECTION
(a) Licensee shall permit Licensor or its duly authorized representative to
inspect, audit, abstract and copy such of Licensee's books and records as
reasonably relate to the subject matter of this Agreement. Such inspection shall
be allowed twice during each calendar year for as long as Licensee continues to
distribute or sell the Album, and twice in each of the two (2) years thereafter,
upon thirty (30) days written notice, and may be conducted at Licensee's regular
place of business in the United States or where books and records are
maintained.
In the event calculation of royalty payments is determined by a computer based
system, Licensor shall be permitted to examine the machine sensible data
utilized by such system and the related documentation describing such system and
Licensee agrees to retain such data for at least two (2) years after the
expiration of this Agreement.
(b) Any inspection undertaken by Licensor shall be at Licensor's expense
provided, however, that if an underpayment equal to or in excess of five (5%)
percent of the royalties properly due and payable to Licensor is discovered,
Licensee shall reimburse Licensor for the expense of such inspection in addition
to remitting the amount determined to be properly due plus accrued interest at
the rate of three percent (3%) above the then current Prime Lending Rate.
(c) This Clause shall survive the termination of this Agreement or any
subsequent agreement between the parties hereto covering generally the subject
matters covered herein.
9. THIRD PARTY PAYMENTS
(a) With respect to royalties payable to copyright proprietors by reason of
Licensee's exercise of its rights hereunder, Licensee agrees to secure licenses
from such copyright proprietors or their agents in the Territory and to make
payments directly to such proprietors or agents. No rights to manufacture and
exploit the Licensed Masters are granted hereunder until Licensee secures such
copyright licenses.
(b) Licensee shall be responsible for the payment of any sums that may be
payable to the Special Payments Fund and the Music Performance Trust Fund of the
American Federation of Musicians (the "AFofM") or any other union or guild
(including AFTRA) based upon the manufacture and sale of the Licensed Masters as
contained on the Albums. Licensee shall pay to Licensor an additional royalty of
one (1%) percent of the actual selling price to the consumer for the "AFofM"
royalty, said royalty being payable by Licensee to Licensor in accordance with
paragraph 7 herein.
(c) Licensee shall be responsible for any amounts properly becoming due to any
union or guild having jurisdiction in the nature of so-called "re-use" fees
arising as a result of Licensee's use of the performances embodied on the
Masters hereunder, including but not limited to commercial advertisements for
the sale of the Licensed Masters as contained on the Albums.
(d) Subject to subsections (a), (b), and (c) above, Licensor shall pay all
other royalties and payments, if any, which may become due to artists, producers
and other contributors to the performances embodied on the Licensed Masters.
(e) Within thirty (30) days of receipt of Licensor's invoice Licensee shall
pay to Licensor costs incurred by Licensor relating to copying, packaging and
shipping of the Licensed Masters, negatives, advertising, promotional, display
and any other materials supplied or caused to be supplied by Licensor.
10. DELIVERY AND QUALITY OF LICENSED MASTERS
(a) Licensor shall use its best efforts to deliver or cause to be delivered
within twenty (20) days after acceptance of Licensee's request therefor and
receipt of copies of Licensee's mechanical copyright licenses, copy master tapes
of those Licensed Masters then agreed to be licensed hereunder. Such copy master
tapes shall be of suitable quality for use in the commercial production of
records for general sale. Any Licensed Masters delivered to Licensee hereunder,
shall be deemed to be technically satisfactory for the purposes hereunder,
unless Licensor has been notified to the contrary within ten days (10) after
receipt of the said Licensed Masters. Any such notification must contain a
written technical report from the laboratory of Licensee which specifically
details and describes any technical defects in the material. Upon receipt of
such notification, Licensor shall attempt to have the defects corrected, at its
expense, and reship the corrected Licensed Masters promptly thereafter.
(b) Licensor shall supply to Licensee in writing the correct title of the
recorded work(s), the names of the author and composer thereof, the names of the
recording artists as Licensor desires to have them displayed on the label of the
Album, and any other relevant copyright information available to Licensor.
11. SUBSTITUTIONS
(a) In the event Licensor is not reasonably able to correct the noticed
defects pursuant to Clause 10 above, or in the event the Licensor's ownership of
or otherwise control of the rights of any Licensed Master has become encumbered,
restricted or terminated, the Licensor, in its sole discretion, reserves the
right to substitute a Licensed Master.
(b) Licensee's sole remedy, in the event of Licensor's failure to provide a
substitute Licensed Masters referred to above, shall be the refund of monies
paid as advances for such Licensed Master and no other.
12. LABEL CREDIT
The labels, sleeves and inlay cards of all Records shall bear a credit to
Licensor in such form as indicated on the Schedules.
13. SAMPLES
Licensee shall provide Licensor, prior to the distribution thereof, with three
(3) sample copies of the Albums.
14. LICENSEE'S WARRANTIES
Licensee warrants and represents that:
(a) Licensee possesses the full right, power and authority to enter into this
Agreement.
(b) Prior to the delivery of the master tapes and prior to the manufacture of
records, Licensee shall have obtained all mechanical copyright licenses relating
to the musical compositions embodied on the Licensed Masters contained on such
Album and shall remit copies of such mechanical licenses to Licensor. This
warranty is of the essence of this Agreement.
(c) All Albums manufactured by Licensee hereunder shall be of the highest
quality and shall be consistent with the standards of the record industry.
(d) All Albums manufactured by Licensee hereunder shall be exploited by
Licensee in strict compliance with all the terms and conditions of this
Agreement. In particular, but without limitation, Licensee hereby expressly
warrants that no Album may be exported for sale outside the Territory nor shall
Licensee knowingly sell any Album manufactured hereunder to any third party
intending to resell same outside the Territory.
(e) Neither Licensee nor anyone claiming rights through Licensee shall sell,
assign, transfer, mortgage, hypothecate or subject to any lien or encumbrance
the Licensed Masters or any of the above rights, and any attempt thereto shall
cause the immediate termination of this Agreement and/or be deemed null and void
and of no force and effect whatsoever.
15. LICENSOR'S WARRANTIES
Licensor warrants and represents that:
(a) Licensor possesses the full right, power and authority to enter into and
to perform this Agreement.
(b) At the time of delivery of the Licensed Masters Licensor will be the
exclusive owner of or otherwise control the rights herein granted to Licensee in
such Licensed Masters.
(c) The Licensed Masters were recorded and otherwise prepared in all respects
in accordance with the rules and regulations of all unions and similar
associations having jurisdiction.
16. INDEMNIFICATION
(a) Each of the parties hereto shall indemnify, save and hold the other
harmless from loss or damage arising out of or connected with any claim by a
third party which is inconsistent with any of the recitals, agreements,
representations or warranties herein. Either party shall reimburse the other on
demand for any payment made by the demanding party at any time after the date
hereof in respect of any liability or claim to which this indemnity relates and
which has resulted in an adverse final judgment against the demanding party, or
a settlement approved by both parties, in which it is determined that the
ultimate liability is that of the indemnifying party. Prompt notice shall be
given to the indemnifying party of any claim to which this indemnity relates and
the indemnifying party shall have the right, at its own expense to control the
defense thereof, provided that:
(i) The demanding party shall have the right to cooperate in such defense
at its own expense.
(ii) If the indemnifying party shall not exercise its right to control the
defense, then the demanding party shall, in addition to any other indemnity
hereunder, be reimbursed for its reasonable expenses (including reasonable
attorney's fees), if any, incurred in the defense if it shall be determined that
the ultimate liability is that of the indemnifying party; and
(b) Nothing herein is to be construed so as to permit Licensee the right to
withhold royalties payable hereunder.
17. ASSIGNMENT
Neither this Agreement nor the rights granted to Licensee hereunder may be
assigned by Licensee without the written consent of Licensor. Licensor shall be
entitled to assign this Agreement including its rights hereunder to any parent,
affiliated or subsidiary company or corporation, or to anyone owning or
acquiring substantially all of the capital stock or assets of Licensor.
18. TERMINATION OR EXPIRATION
(a) Bankruptcy and Insolvency.
In the event Licensee shall be adjudged a bankrupt or in the event that any
insolvency proceedings are instituted by or against Licensee and are not
dismissed within thirty (30) days after the institution thereof, or in the event
a trustee or receiver is appointed to take over all or a substantial part of
Licensee's assets, Licensee's rights under this Agreement shall automatically
terminate, and such termination shall be deemed effective as of the commencement
of the event which gave rise to such termination. In the event of such
termination, all monies due and unpaid by Licensee pursuant to this Agreement
shall there upon become due and payable. Further, all Licensed Masters and all
copies thereof, all color separations and other artwork and all other property
of Licensor shall be returned to Licensor at Licensee's expense, and in no event
shall the title thereto or any rights therein be acquired by or vest in any
trustee, receiver or in any other party by reason of any such insolvency,
bankruptcy or other such occurrence affecting Licensee.
(b) Breaches.
Without prejudice to any other rights or claims which Licensor may have,
Licensor may, at its option, terminate this Agreement upon giving not less than
fifteen (15) days written notice and period to cure to Licensee, in the event of
any of the following, which shall constitute a material breach of this
Agreement:
(i) Licensee shall fail to account and make payments hereunder or shall
fail to perform any other of its material obligations required of it hereunder.
(ii) Licensee, through act or omission, shall violate or knowingly permit
the violation of any of its warranties and representations hereunder.
(iii) Licensee utilizes or duplicates Licensor's mark in violation of the
applicable terms of this Agreement.
(iv) Licensee denies Licensor the right granted hereunder to audit
Licensee's books.
(c) Immediate Termination.
Notwithstanding Section 18(b) above, and without prejudice to any other rights
or claims which Licensor may have, Licensor shall have the right to immediately
terminate this license without any written notice to Licensee in the event of
any of the following:
(i) Licensee has failed to timely account and make payments hereunder a
total of four (4) times, whether or not prior delinquent accountings and
payments have been made.
(ii) Licensee has willfully reported inaccurate accountings of payments due
hereunder.
(iii) Licensee knowingly exports, distributes or licenses any Licensed
Master or Album outside the Territory.
(d) Death or change in ownership.
In the event of: (i) the death of Philip Kives; or (ii) discontinuance of Philip
Kives as an active senior officer or manager of Licensee; or (iii) a change in
the ownership of fifty percent (50%) or more of the Licensee, Licensor may
terminate this Agreement by giving the Licensee fifteen (15) days' written
notice. In such event Licensee shall have a six (6) month period in which to
sell off existing inventory of the Albums.
(e) Termination/Expiration Procedure.
(i) In the event of the termination of this Agreement, all rights herein
granted by Licensor to Licensee shall immediately terminate and shall thereupon
revert to Licensor, free and clear of any claims by Licensee. Licensee shall
continue, nevertheless, to be responsible for accounting and payments as set
forth in this Agreement, and upon notification from Licensor will return to
Licensor or to Licensor's designee at Licensee's expense, all tapes, matrices,
duplicate tapes, masters, mothers and stampers supplied by Licensor hereunder
that are in Licensee's possession or control.
(ii) If this Agreement expires by expiration of the Term then, at the end
of the Term, all Licensed Masters, tapes or matrices supplied to Licensee and
all derivatives of said tapes and matrices, including duplicate tapes, masters,
mothers and stampers provided to Licensee pursuant to the License Agreement,
shall at Licensor's election either be destroyed in the presence of one of
Licensor's duly authorized representatives, or delivered to Licensor free of
cost to Licensor.
(f) Sell-off.
(i) Licensee shall advise Licensor in writing, upon the expiration of the
term, the quantity of Albums that are in Licensee's stock at the time of said
expiration.
(ii) Provided Licensee supplies Licensor with the aforesaid information
Licensee shall be entitled to sell-off, for a period of six (6) months
thereafter, all existing stocks of the applicable Album subject to the
continuing obligation to account for and pay royalties on such sales in
accordance with the terms hereof.
(iii) Upon the expiration of the sell-off period Licensee shall, at its
sole cost and expense, destroy all of its existing inventory of Albums and shall
furnish Licensor with an affidavit of destruction executed by an officer of
Licensee.
19. NOTICES
All accounting or payment which Licensee is hereto required to give to Licensor
shall be addressed to the addresses first above written. All other notices and
other items from one party to the other hereunder will, unless herein indicated
to the contrary, be addressed as follows;
To Licensee: At Licensee's address as set forth on the first
page hereof;
To Licensor: At Licensor's address as set forth on the first
page hereof, directed to the attention of:
Vice President, Business Affairs
or to such other address as either party shall designate in writing to the other
party from time to time. Unless otherwise set forth in this Agreement, all
notices shall be deemed duly given on the date of mailing.
20. MANUFACTURING
Licensor shall be afforded the right of first refusal to manufacture all of the
product which include master recordings hereunder. The right of first refusal
shall be exercised within five (5) business days of receipt of a written notice
of third party offer to manufacture.
21. MISCELLANEOUS
(a) This Agreement set forth the entire understanding between Licensor and
Licensee with respect to the subject matter hereof, all prior negotiations or
alleged understandings are merged herein, and no amendment to or modification of
this Agreement or any provision hereof shall be binding upon Licensor and
Licensee unless confirmed by a written instrument signed by an Officer of
Licensee and Licensor's authorized signatory. Any process in any action, suit or
proceeding arising out of or relating to this agreement may, among other
methods, be served upon Licensee by delivering it or mailing it in accordance
with Clause 19 above. No waiver of any provision of or default under this
Agreement shall affect Licensee's or Licensor's rights, as the case may be,
thereafter to enforce such provision or to exercise any right or remedy in the
event of any other default, whether or not similar.
(b) Any act or failure to act by either party shall not be construed as a
waiver of any of such party's rights hereunder unless a memorandum thereof,
expressing the intention to waive, signed by the party to be charged, is made
and delivered to the other party. Any such waiver shall not be deemed to be a
waiver of any past or future breach of the same or any other provision of this
Agreement.
(c) If any part of this Agreement shall be determined to be invalid or
unenforceable by a court of competent jurisdiction or by any other legally
constituted body having jurisdiction to make such determination, the remainder
of this Agreement shall remain in full force and effect.
(d) The captions herein are for convenience only, do not constitute a part of
this Agreement, and are not to be used in the construction thereof.
(e) This agreement and any arbitration conducted under paragraph (g) of this
Clause 21 will be governed by and construed in accordance with the substantive,
procedural and evidentiary laws and rules of the State of Minnesota.
(f) Subject to paragraph (g) of this Clause 21, the parties hereby submit to
the jurisdiction of, and waive any venue objections against, the United States
District Court for the District of Minnesota and the trail courts of the State
of Minnesota, in any litigation and/or arbitration arising out of this
Agreement, and each party hereby consents to the personal jurisdiction of such
courts for purposes of this Agreement, including entry of enforcement of any
arbitration award or judgment.
(g) Any claim, dispute, or controversy arising out of or in connection with or
relating to this Agreement or the breach or alleged breach thereof shall be
submitted by the parties to arbitration by the American Arbitration Association
("AAA") in the City of Minneapolis, Minnesota, under the commercial rules then
in effect for the Association except as provided herein. A transcribed record
shall be prepared. The AAA shall recommend three (3) arbitrators who are
knowledgeable in the field in dispute. The parties shall agree upon one (1) of
the three within twenty (20) days. If no arbitrator is mutually agreed upon, the
AAA shall make such appointment within thirty (30) days of such failure.
Each party shall have the right to request the arbitrator to order reasonable
and limited discovery. The award rendered by the arbitrator shall include costs
of arbitration, reasonable attorneys' fees and reasonable costs for expert and
other witnesses, but shall not include punitive damages against either party.
Judgment on such award may be entered as provided in paragraph (f) of this
Clause 21, provided that nothing in this paragraphs (g) shall be deemed as
preventing either party from seeking relief from the courts as necessary to
protect either party`s name, proprietary information, trade secrets, know-how,
or any other appropriate provisional remedy.
(h) Clause 6, 7, 8, 9, 12, 14, 16, 18(f) and 21 will survive the termination
of this Agreement.
22. DEFINITIONS
As used in this Agreement, the following terms shall have the indicated
meanings:
(a) "master recordings" - recordings which embody sound alone and are intended
for reproduction in the form of records or otherwise.
(b) "Record" or "record" means any reproduction of a master recording in the
form of analog cassette tapes and compact discs.
(c) "exploit" - shall mean the manufacture, distribution, advertising,
promotion and sale of the Album pursuant to the terms hereof.
(d) "Album" - that record (which shall contain all of the Licensed Masters)
manufactured, distributed and sold by Licensee hereunder which shall contain up
to one hundred and fifty (150) master recordings on one or more Records.
(e) "Records sold", "record sales" and "sales" mean one hundred (100%) percent
of those records shipped by Licensee hereunder and not returned.
(f) "Infomercial" - shall mean a minimum of a twenty (28) eight minute
television broadcast show as customary in the industry.
(g) "Territory" - United States
(h) "this Agreement" - shall mean this agreement and the Schedule "A" annexed
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
DOMINION ENTERTAINMENT, INC. K-TEL INTERNATIONAL, INC.
BY_______________________ BY__________________________
An authorized signatory An authorized signatory
NAME__________________________ NAME________________________
Please print or type Please print or type
TITLE_________________________ TITLE_______________________
SCHEDULE A
Annexed to and forming part of Agreement dated _________________ , 1995
ALBUM TITLE: HEARTBREAKER
CATALOG NUMBER:
LICENSED MASTERS:
TITLE ARTIST
RAINDROPS KEEP FALLING ON MY HEAD B.J. THOMAS
JEAN OLIVER
CRYSTAL CHANDELIERS VIC DANNA
I BELIEVE FRANKIE LAINE
JUST WALKING IN THE RAIN JOHNNY RAY
LOVE LETTERS IN THE SAND PAT BOONE
RED ROSES FOR A BLUE LADY VIC DANNA
CARA MIA JAY BLACK
BESAME MUCHO TRINI LOPEZ
LOVE IS A MANY SPLENDORED THING FOUR ACES
VENUS* FRANKIE AVALON
MR. BLUE FLEETWOODS
YOUNG GIRL GARY PUCKET AND
THE UNION GAP
JESAMINE CASUALS
HAPPY TOGETHER* TURTLES
LOVE IS ALL AROUND TROGGS
WISHING AND HOPING MERSEYBEATS
YOU WERE ON MY MIND CRISPIAN ST. PETERS
SILENCE IS GOLDEN TREMELOES
A GROOVY KIND OF LOVE WAYNE FONTANA
FERRY 'CROSS THE MERSEY GERRY & THE
PACEMAKERS
YOU'VE GOT YOUR TROUBLES I'VE GOT MINE FORTUNES
IF YOU GOTTA MAKE A FOOL OF SOMEBODY FREDDY & THE
DREAMERS
TRAINS & BOATS & PLANES BILLY J. KRAMER
REFLECTIONS OF MY LIFE MARMALADE
THE END OF THE WORLD SKEETER DAVIS
WILL YOU STILL LOVE ME TOMORROW SHIRELLES
I WILL FOLLOW HIM SANDY POSEY
DOWN IN THE BOONDOCKS BILLY JOE ROYAL
LEADER OF THE PACK SHANGRI-LAS
RUNAWAY DEL SHANNON
CORINNA CORINNA RAY PETERSEN
VENUS IN BLUE JEANS JIMMY CLANTON
IT'S MY PARTY LESLEY GORE
DEDICATED TO THE ONE I LOVE SHIRELLES
HEY PAULA* PAUL & PAULA
TELL LAURA I LOVE HER RAY PETERSEN
TEEN ANGEL MARK DINING
CHAPEL OF LOVE DIXIE CUPS
ROSEGARDEN LYNN ANDERSON
HEARTACHES BY THE NUMBER GUY MITCHELL
THE HAPPIEST GIRL IN THE WHOLE USA DONNA FARGO
WHAT IN THE WORLD'S COME OVER YOU JACK SCOTT
LUCKENBACH TEXAS JOHNNY RUSSELL
HELP ME MAKE IT THROUGH THE NIGHT SAMMI SMITH
TENNESSEE WALTZ PATTI PAGE
HIGH NOON FRANKIE LAINE
SLIDE OFF YOUR SATIN SHEETS JOHNNY PAYCHECK
WILL THE CIRCLE BE UNBROKEN NED MILLER
I CAN'T STOP LOVING YOU KITTY WELLS
NO CHARGE MELBA MONTGOMERY
YOU LIGHT UP MY LIFE MARGO SMITH
GREEN GREEN GRASS OF HOME PORTER WAGONER
**MY SPECIAL PRAYER PERCY SLEDGE
GREAT PRETENDER PLATTERS
MAKE THE WORLD GO AWAY TIMI YURO
ALL I COULD DO WAS CRY ETTA JAMES
**SMOKE GETS IN YOUR EYES PLATTERS
SPANISH HARLEM BEN E. KING
WHEN A MAN LOVES A WOMAN PERCY SLEDGE
WARM AND TENDER LOVE PERCY SLEDGE
STAND BY ME BEN E. KING
ONLY YOU PLATTERS
HURT TIMI YURO
**HEY THERE LONELY GIRL EDDIE HOLMAN
**BRING IT ON HOME TO ME EDDIE FLOYD
IF YOU DON'T KNOW ME BY NOW HAROLD MELVIN &
THE BLUENOTES
***SINGING THE BLUES GUY MITCHELL
***I'LL BE HOME PAT BOONE
***ROCKY DICKEY LEE
***OH LONESOME ME DON GIBSON
(**) -- CASSETTE/LP ONLY
(***) -- COMPACT DISC ONLY
(**) -- CASSETTE/LP ONLY
(***) -- COMPACT DISC ONLY
TERRITORY: MEXICO
ADVANCE: $.0
ROYALTY: $.04 Per Licensed Master per Album
CONFIGURATION: Audio cassettes and compact discs
RELEASE DATE:
LABEL CREDIT: Courtesy of Dominion Entertainment, Inc.
DOMINION ENTERTAINMENT, INC. K-5 LEISURE PRODUCTS
BY __________________________________ BY _________________________________
SCHEDULE B
Annexed to and forming part of Agreement dated _________________ , 1995
ALBUM TITLE: ROCK BOX
CATALOG NUMBER:
LICENSED MASTERS:
TITLE ARTIST
YAKETY YAK THE COASTERS
ALLEY OOP* HOLLYWOOD ARGYLES
MR. CUSTER* LARRY VERN
PAPA-OOM MOW MOW RIVINGTONS
SEVEN LITTLE GIRLS PAUL EVANS
(SITTING IN THE BACK SEAT)
DOES YOUR CHEWING GUM LOSE ITS FLAVOR LONNIE DONEGAN
ON THE BEDPOST OVERNIGHT?
THE BIRDS & THE BEES* JEWEL AKENS
SURFIN' BIRD TRASHMEN
MONSTER MASH SHA NA NA
WILD THING THE TROGGS
HE'S SO FINE CHIFFONS
KEEP A KNOCKIN' LITTLE RICHARD
SHEILA TOMMY ROE
SPLISH SPLASH SHA NA NA
PERSONALITY LLOYD PRICE
THE GREAT PRETENDER THE PLATTERS
WILD ONE BOBBY RYDELL
HEY LITTLE GIRL (IN THE HIGH DEE CLARK
SCHOOL SWEATER)
LITTLE DARLIN' THE DIAMONDS
HE'S A REBEL CRYSTALS
THE LETTER THE BOX TOPS
LET'S HAVE A PARTY WANDA JACKSON
DA DOO RON RON CRYSTALS
LONG TALL SALLY LITTLE RICHARD
STAGGER LEE LLOYD PRICE
JAMBALAYA JOHNNY RUSSELL
SLOW TWISTIN' CHUBBY CHECKER
RED RIVER ROCK JOHNNY & THE
HURRICANES
THE STROLL THE DIAMONDS
DO YOU WANNA DANCE? BOBBY FREEMAN
MASHED POTATO TIME DEE DEE SHARP
PEPPERMINT TWIST JOEY DEE & THE
STARLITERS
SHAKIN' ALL OVER CHAD ALLEN (FORMERLY
OF THE GUESS WHO)
BRISTOL STOMP DOVELLS
LUCILLE LITTLE RICHARD
LEADER OF THE PACK SHANGRI-LAS
BLUE MOON THE MARCELS
AIN'T THAT A SHAME PAT BOONE
CHAPEL OF LOVE DIXIE CUPS
PARTY DOLL BUDDY KNOX
HIPPY HIPPY SHAKE SWINGIN' BLUE JEANS
REBEL ROUSER DUANE EDDY
TELL HIM THE EXCITERS
UNDER THE BOARDWALK THE DRIFTERS
MY BOYFRIEND'S BACK THE ANGELS
STAND BY ME BEN E. KING
GOOD GOLLY MISS MOLLY LITTLE RICHARD
RUNAWAY DEL SHANNON
HEY PAULA* PAUL & PAULA
WHEN A MAN LOVES A WOMAN PERCY SLEDGE
HURT TIMI YURO
THEN HE KISSED ME THE CRYSTALS
SAVE THE LAST DANCE FOR ME THE DRIFTERS
MY GUY MARY WELLS
ONE FINE DAY THE CHIFFONS
PATCHES CLARENCE CARTER
MY TRUE LOVE JACK SCOTT
GOIN OUT OF MY MIND LITTLE ANTHONY
DEDICATED TO THE ONE I LOVE THE SHIRELLES
MY HEART IS AN OPEN BOOK CARL DOBKINS
WHISPERING GRASS INK SPOTS
VENUS* FRANKIE AVALON
RAINDROPS KEEP FALLING ON MY HEAD B.J. THOMAS
CHARLIE BROWN THE COASTERS
OH BOY WANDA JACKSON
THE HUCKLEBUCK CHUBBY CHECKER
PEPINO THE ITALIAN MOUSE JOEY CHEDDAR
STUPID CUPID WANDA JACKSON
HATS OFF TO LARRY DEL SHANNON
SUSIE DARLING ROBIN LUKE
LET'S TWIST AGAIN CHUBBY CHECKER
SPEEDY GONZALES PAT BOONE
IF I HAD A HAMMER TRINI LOPEZ
TEQUILA ACE CANNON
COME SOFTLY TO ME FLEETWOODS
JUST WALKING IN THE RAIN JOHNNY RAY
RHYTHM OF THE RAIN CASCADES
WHAT'S A MATTER BABY TIMI YURO
TERRITORY: MEXICO
ADVANCE: $.0
ROYALTY: $.04 Per Licensed Master per Album
CONFIGURATION: Audio cassettes and compact discs
RELEASE DATE:
LABEL CREDIT: Courtesy of Dominion Entertainment, Inc.
DOMINION ENTERTAINMENT, INC. K-5 LEISURE PRODUCTS
BY __________________________________ BY _________________________________
SCHEDULE C
Annexed to and forming part of Agreement dated ________________________ , 1995
ALBUM TITLE: POP HISTORY
CATALOG NUMBER:
LICENSED MASTERS:
TITLE ARTIST
SUGAR BABY LOVE RUBETTES
BEAUTIFUL SUNDAY DANIEL BOONE
LOVE GROWS WHERE MY ROSEMARIE GOES EDISON LIGHTHOUSE
COME AND GET IT BADFINGER
UNDERCOVER ANGEL ALAN O'DAY
EVERLASTING LOVE ROBERT KNIGHT
HOOKED ON A FEELING B.J. THOMAS
*DANCING ON A SATURDAY NIGHT BARRY BLUE
THE NIGHT CHICAGO DIED PAPER LACE
INDIAN RESERVATION DON FARDON
ARIZONA MARK LINDSAY
BILLY DON'T BE A HERO PAPER LACE
ME AND YOU AND A DOG NAMED BOO LOBO
SAN BERNADINO CHRISTIE
YELLOW RIVER CHRISTIE
I'D LOVE YOU TO WANT ME LOBO
DON'T EXPECT ME TO BE YOUR FRIEND LOBO
IF YOU DON'T KNOW ME BY NOW HAROLD MELVIN & THE BLUENOTES
DON'T LET THE SUN CATCH YOU CRYING GERRY & THE PACEMAKERS
GOODBYE MARY HOPKINS
MR. BOJANGLES GLENN YARBOROUGH
ONE TIN SOLDIER ORIGINAL CASTE
DO YOU WANNA MAKE LOVE? PETER MCCANN
DRIFT AWAY DOBIE GRAY
RIDE CAPTAIN RIDE BLUES IMAGE
SOONER OR LATER GRASSROOTS
PIED PIPER CHRISTIAN ST. PETERS
BEG STEAL OR BORROW NEW SEEKERS
*IT AIN'T ME BABE TURTLES
*ELENORE TURTLES
LAY DOWN MELANIE
OB LA DI OB LA DA MARMALADE
THE LETTER THE BOX TOPS
HERE COMES MY BABY TREMELOES
BUILD ME UP BUTTERCUP FOUNDATIONS
LADY WILLPOWER GARY PUCKET & THE
UNION GAP
GOOD MORNING STARSHINE OLIVER
IN THE SUMMERTIME MUNGO JERRY
JUDY IN DISGUISE JOHN FRED & HIS
PLAYBOY BAND
BABY COME BACK EQUALS
BEND ME SHAPE ME AMERICAN BREED
DIZZY TOMMY ROE
**LIGHTNING STRIKES LOU CHRISTIE
**SATISFACTION GUARANTEED HAROLD MELVIN & THE BLUENOTES
***SURF CITY JAN & DEAN
***HITCHIN' A RIDE VANITY FAIR
TERRITORY: MEXICO
ADVANCE: $.0
ROYALTY: $.04 Per Licensed Master per Album
CONFIGURATION: Audio cassettes and compact discs
RELEASE DATE:
LABEL CREDIT: Courtesy of Dominion Entertainment, Inc.
DOMINION ENTERTAINMENT, INC. K-5 LEISURE PRODUCTS
BY __________________________________ BY _________________________________