EXHIBIT 10.48
EXHIBIT A TO
OFFER TO LEND
FIRST AMENDMENT TO AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
AND TO REVOLVING NOTE
This First Amendment is made as of this ____ day of July,
1997, by and among K-TEL INTERNATIONAL (USA), INC., a Minnesota corporation,
having its principal place of business in Plymouth, Minnesota ("K-Tel USA"),
DOMINION ENTERTAINMENT, INC., a Minnesota corporation, having its principal
place of business in Plymouth, Minnesota ("Dominion"), K-TEL PRODUCTIONS, INC.,
a Minnesota corporation, having its principal place of business in Plymouth,
Minnesota ("K-Tel Productions"), K-TEL VIDEO, INC., a Minnesota corporation,
having its principal place of business in Plymouth, Minnesota ("K-Tel Video"),
K-TEL DIRECT, INC., a Minnesota corporation, having its principal place of
business in Plymouth, Minnesota ("K-Tel Direct"), K-TEL TV, INC., a Minnesota
corporation, having its principal place of business in Plymouth, Minnesota
("K-Tel TV"), K-TEL CONSUMER PRODUCTS, INC., a Minnesota corporation, having its
principal place of business in Plymouth, Minnesota ("K-Tel Consumer Products";
K-Tel USA, Dominion, K-Tel Productions, K-Tel Video, K-Tel Direct, K-Tel TV and
K-Tel Consumer Products are sometimes herein collectively referred to as the
"Borrowers" and each is sometimes individually referred to as a "Borrower"), and
TCF NATIONAL BANK MINNESOTA, a national banking association, formerly known and
organized as TCF Bank Minnesota fsb, a federally chartered stock savings bank
(the "Bank").
RECITALS
A. The Borrowers and the Bank have entered into an Amended and
Restated Revolving Credit Agreement dated as of April 10, 1997 (as may be
amended from time to time, the "Credit Agreement"), pursuant to which the Bank,
subject to the terms and conditions set forth therein, agreed to make revolving
advances to the Borrowers in the aggregate amount of up to $1,000,000.
B. The Borrowers' joint and several obligation to repay the
revolving advances made by the Bank under the Credit Agreement is evidenced by
the Borrowers' Revolving Note dated April 10, 1997, payable to the Bank's order
in the original principal amount of $1,000,000 (the "Note").
C. The Borrowers have requested, among other things, that the
Bank (i) extend the Maturity Date from July 31, 1997 to August 31, 1997 and (ii)
waive certain Events of Default.
D. The Bank is willing to grant the Borrowers' requests
subject to the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto agree as follows:
1. All capitalized terms used in this First Amendment, unless
specifically defined herein, shall have the meanings given to such terms in the
Credit Agreement.
2. Events of Default have occurred under Section 7.1(c) of the
Credit Agreement because (i) K-Tel USA's accounts receivable from and advances
due from K-Tel Video exceeded the aggregate limit of $250,000 permitted by the
Credit Agreement, (ii) K-Tel USA's accounts receivable from and advances due
from K-Tel TV exceeded the aggregate limit of $250,000 permitted by the Credit
Agreement, (iii) K-Tel USA's accounts receivable from and advances due from
K-Tel Consumer Products exceeded the aggregate limit of $1,523,000 permitted by
the Credit Agreement, (iv) K-Tel USA's accounts receivable from and advances due
from Dominion Vertriebs exceeded the aggregate limit of $41,000 permitted by the
Credit Agreement, (v) K-Tel USA's accounts receivable from and advances due from
K-Tel International Limited exceeded the aggregate limit of $24,000 permitted by
the Credit Agreement. Upon the terms and subject to the conditions set forth in
this First Amendment, the Bank hereby waives the foregoing Events of Default and
the Bank hereby prospectively waives future Events of Default arising from the
Borrowers failure to comply with the requirements of Sections 6.2 and 6.4 of the
Credit Agreement through August 31, 1997. This waiver shall be effective only in
this specific instance and for the specific purpose for which it is given, and
this waiver shall not entitle the Borrower to any other or further waiver in any
similar or other circumstances.
3. Section 1.1 of the Credit Agreement is hereby amended by
deleting the existing definitions of "Commitment Termination Date" and "Maturity
Date" and by substituting therefor the following new definitions:
"'Commitment Termination Date' means August 31, 1997 or the
earlier termination of the Commitment pursuant to Section 7.2 hereof."
"'Maturity Date' means August 31, 1997."
4. Section 1.1 of the Credit Agreement is hereby amended by
adding the following new definition of "First Amendment" in the appropriate
alphabetical location:
"'First Amendment' means that certain First Amendment to
Amended and Restated Revolving Credit Agreement dated as of July __,
1997, between the Bank and the Borrowers."
5. The Note is hereby amended by deleting the date "July 31,
1997" as it appears in the twelfth line of the first paragraph thereof and by
substituting therefor the date "August 31, 1997".
6. References. From and after the date of this First Amendment
all references in the Credit Agreement to "this Agreement" and all references in
the other Loan Documents to the Credit Agreement shall be deemed to refer to the
Credit Agreement as amended by this First Amendment. From and after the date of
this First Amendment all references in the Note to "this Note" and all
references in the other Loan Documents to "the Note" shall be deemed to refer to
the Credit Agreement as amended by this First Amendment.
7. No Other Changes. Except as explicitly amended by this
First Amendment, all of the original terms and conditions of the Credit
Agreement and the Note shall remain in full force and effect.
8. No Other Waiver. Except as explicitly set forth in
paragraph 2 of this First Amendment, the execution of this First Amendment and
acceptance of any documents related thereto shall not be deemed to be a waiver
of any existing or future Default or Event of Default under the Credit Agreement
or any other Loan Document, whether or not known to the Bank and whether or not
such Default or Event of Default exists on the date of this First Amendment.
9. Release. The Borrowers and K-Tel International, Inc. by
signing the Acknowledgment and Agreement of Guarantor set forth below, each
hereby absolutely and unconditionally releases and forever discharges the Bank,
and any and all participants, parent corporations, subsidiary corporations,
affiliated corporations, insurers, indemnitors, successors and assigns thereof,
together with all of the present and former directors, officers, agents and
employees of any of the foregoing, from any and all claims, demands or causes of
action of any kind, nature or description, whether arising in law or equity or
upon contract or tort or under any state or federal law or otherwise, which the
Borrowers or any Guarantor has had, now has or has made claim to have against
any such person for or by reason of any act, omission, matter, cause or thing
whatsoever arising from the beginning of time to and including the date of this
First Amendment, whether such claims, demands and causes of action are matured
or unmatured or known or unknown.
10. Expenses. The Borrowers hereby reaffirm their agreement
under Section 8.5 of the Credit Agreement. Without limiting the generality of
the foregoing, the Borrowers specifically agree to pay all fees and
disbursements of counsel to the Bank for the
services performed by such counsel in connection with the preparation of this
First Amendment and the documents and instruments incidental thereto.
11. Counterparts. This First Amendment and the Acknowledgment
and Agreement of Guarantor may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original and all of
which counterparts, taken together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed as of the date first above written.
K-TEL INTERNATIONAL (USA), INC.
By ______________________________________
Its___________________________________
DOMINION ENTERTAINMENT, INC.
By ______________________________________
Its___________________________________
K-TEL PRODUCTIONS, INC.
By ______________________________________
Its___________________________________
K-TEL VIDEO, INC.
By ______________________________________
Its___________________________________
K-TEL DIRECT, INC.
By ______________________________________
Its___________________________________
K-TEL TV, INC.
By ______________________________________
Its___________________________________
K-TEL CONSUMER PRODUCTS, INC.
By ______________________________________
Its___________________________________
TCF NATIONAL BANK MINNESOTA
By ______________________________________
Its___________________________________
And
By ______________________________________
Its___________________________________
ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR
The undersigned, K-Tel International, Inc., a guarantor of the
indebtedness of K-Tel International (USA), Inc., Dominion Entertainment, Inc.,
K-Tel Productions, Inc., K-Tel Video, Inc., K-Tel Direct, Inc., K-Tel TV, Inc.
and K-Tel Consumer Products, Inc. (together, the "Borrowers") to the Bank
pursuant to its Amended and Restated Guaranty dated as of April 10, 1997 (the
"Guaranty), hereby (i) acknowledges receipt of the foregoing First Amendment;
(ii) consents to the terms (including without limitation the release set forth
in paragraph 9 of the foregoing First Amendment) and execution thereof; (iii)
reaffirms its obligations to the Bank pursuant to the terms of its Guaranty, its
Amended and Restated Collateral Pledge Agreement (the "Pledge Agreement") dated
as of April 10, 1997 and its Amended and Restated Security Agreement dated as of
April 10, 1997 (the "Security Agreement"); and (iv) acknowledges and agrees that
the Bank may amend, restate, extend, renew or otherwise modify the Credit
Agreement and any indebtedness or agreement of the Borrowers, or enter into any
agreement or extend additional or other credit accommodations, without notifying
or obtaining the consent of the undersigned and without impairing the liability
of the undersigned under its Guaranty, Pledge Agreement and/or its Security
Agreement for all of the present and future indebtedness of the Borrowers to the
Bank.
K-TEL INTERNATIONAL, INC.
By ______________________________________
Its