SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (this "Agreement") is
entered into effective this 3rd day of August, 1999, among K-TEL INTERNATIONAL
INC., STRONG RIVER INVESTMENTS, INC., CATHARINE STREET, LLC and RAM CAPITAL
RESOURCES, LLC. As of the date of execution of this Agreement, all signatories
hereto are subject to the terms and conditions set forth below.
DEFINITIONS
The parties agree that the following definitions will apply to this
Agreement:
1. "K-tel"" means K-tel International, Inc., K-5 Leisure Products, Inc.
and all of their corporate parents, subsidiaries, divisions, affiliated
companies, predecessor and successor companies, present, past and future
officers, directors, employees, and stockholders, successors-in- interest, and
any and all other persons and entities acting by, through, under or in concert
with any of them.
2. "Strong River" means Strong River Investments, Inc. and all of its
present, past and future officers, directors, members, employees, and
stockholders.
3. "Catharine" means Catharine Street, LLC and all of its present, past
and future officers, directors, members, employees and stockholders.
4. "Ram" means Ram Capital Resources, LLC and all of its present, past
and future officers, directors, members, employees and stockholders.
5. "PARTIES" means K-tel, Strong River, Catharine and Ram as defined
above, and "PARTY" means any of them.
6. The "DISPUTE" means the dispute which has arisen among Strong River,
Catharine, Ram and K-tel in connection with the issuance and sale of K-tel's
common stock to Strong River and Catharine and the subsequent registration of
such common stock.
7. "Purchase Agreement" means that certain Securities Purchase
Agreement dated as of April 21, 1999 among K-tel, Strong River and Catharine.
8. "Registration Rights Agreement" means that certain Registration
Rights Agreement dated as of April 21, 1999 among K-tel, Strong River and
Catharine.
RECITALS
WHEREAS, pursuant to the Purchase Agreement, each of Strong River and
Catharine purchased 232,897 shares of K-tel's common stock (the "Shares") and
received (a) warrants
designated B-001 and B-002 to purchase 83,877 shares of K-tel's common stock
(the "Warrants") and (b) warrants designated A-001 and A-002 to purchase an
unspecified number of shares of K-tel's common stock (the "Reset Warrants");
WHEREAS, the Dispute has arisen and the Parties desire to resolve the
Dispute and to compromise and settle all claims by Strong River and Catharine
against K-tel on the terms hereinafter set forth and to mutually release all
claims based on the Purchase Agreement, the Registration Rights Agreement, the
Warrants, the Reset Warrants and that certain engagement letter, dated April 1,
1999 between Ram and K-tel (the "Engagement Letter");
NOW, THEREFORE, in consideration of and in reliance upon the aforesaid
recitals and the mutual agreements contained herein, it is agreed by and among
the Parties as set forth below:
1. LITIGATION
As promptly as practicable after the closing of this Agreement, Strong
River and Catharine shall cause the action commenced by them under the Summons
With Notice, Index No. 603256199, Supreme Court of the State of New York, County
of New York, to be dismissed with prejudice.
2. TERMINATION OF AGREEMENTS
Concurrent with the closing of this Agreement, the Purchase Agreement,
the Registration Rights Agreement, the Warrants and the Reset Warrants shall be
cancelled and terminated and all rights and obligations under the Purchase
Agreement, the Registration Rights Agreement, the Warrants and the Reset
Warrants shall be extinguished and terminated.
3. CLOSING
The closing of this Agreement shall occur on August 3, 1999 or such
other date as may be mutually agreed to by the parties. At the closing, Strong
River and Xxxxxxxxx shall deliver their respective stock certificates for the
Shares, duly endorsed in blank for transfer, free and clear of all liens or
encumbrances. Strong River shall deliver its Warrant and its Reset Warrant and
Catharine shall deliver its Reset Warrant and a Affidavit of Lost Warrant in
form reasonably acceptable to K-tel. K-tel shall pay, or cause to be paid, to
each of Strong River and Catharine, the sum of $2,300,000 by wire transfer
(pursuant to wire transfer instructions provided at least one day prior to the
closing).
4. RELEASES
In consideration of the agreements and terms set forth herein, upon
the closing of this Agreement, each of Strong River and Catharine release and
forever discharge K-tel from any and all liability whatsoever, for any and
all claims, actions, demands, liabilities, obligations, rights, or causes of
actions of every kind and nature, known and unknown, past, present and
future, including, but not limited to, consequential and punitive damages,
losses, costs, expenses, attorney's fees, which claims, actions, demands,
liabilities, obligations, rights or causes of action arise out of
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the DISPUTE, the Purchase Agreement, the Registration Rights Agreement, the
Warrants and the Reset Warrant (the "Released Matters"). Upon the closing of
this Agreement, K-tel releases and forever discharges Strong River and
Catharine from any and all liability whatsoever, for any and all claims,
actions, demands, liabilities, obligations, rights, or causes of actions of
every kind and nature, known and unknown, past, present and future,
including, but not limited to, consequential and punitive damages, losses,
costs, expenses, attorney's fees, which claims, actions, demands,
liabilities, obligations, rights or causes of action arise out of the
Released Matters. Upon the closing of this Agreement, Ram releases and
forever discharges K-tel, and K-tel releases and forever discharges Ram, from
any and all liability whatsoever, for any and all claims, actions, demands,
liabilities, obligations, rights, or causes of actions of every kind and
nature, known and unknown, past, present and future, including, but not
limited to, consequential and punitive damages, losses, costs, expenses,
attorney's fees, which claims, actions, demands, liabilities, obligations,
rights or causes of action arise out of the Released Matters or the
Engagement Letter. Notwithstanding the foregoing, the mutual releases
contained herein shall not apply to any executory provisions of this
Agreement. In the event of a failure to dismiss the litigation referred to in
Section 1 hereof, the parties agree that this Agreement may be introduced as
evidence in any such litigation to evidence the desire and intent of the
PARTIES to dismiss such litigation.
5. AGREEMENT
This Agreement prevails over any prior communications regarding the
matters contained herein among the PARTIES or their representatives. This
Agreement was drafted by counsel for the PARTIES, and there shall not be a
presumption or construction against any party hereto.
6. PARTIES TO AGREEMENT
This Agreement is intended to confer rights and benefits only on the
PARTIES and is not intended to confer any right or benefit upon any other person
or entity. No person or entity other than a PARTY shall have any legally
enforceable right under this Agreement. All rights of action any breach of this
Agreement are hereby reserved to the PARTIES.
7. ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between and among
the PARTIES with regard to the matters herein set forth. The terms of this
Agreement are contractual, and not a mere recital. There are no representations,
warranties, agreements, arrangements or undertakings, oral or written, between
or among the PARTIES relating to the subject matter of this Agreement which are
not fully expressed herein.
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8. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of
the PARTIES and their respective heirs, executors, administrators, trustors,
trustees, beneficiaries, predecessors, successors, affiliated and related
entities, officers, directors, principals, agents, employees. assigns,
representatives and all persons, firms, associations, and/or corporations
connected with them, including, without limitation, their sureties and/or
attorneys.
9. WARRANTY OF AUTHORIZED SIGNATORIES
Each of the signatories warrants and represents that he or she is
competent and authorized to enter into this Agreement on behalf of the PARTY or
PARTIES for whom his or her signature is affixed to this Agreement.
10. ATTORNEYS' FEES
The PARTIES acknowledge and agree that each of them will bear their own
attorneys' fees, costs and expenses arising out of and/or connected with the
dispute which is the subject of this Agreement and the negotiation, drafting and
execution of this Agreement, and all matters arising out of or connected
therewith, except that, in the event any action is brought by any PARTY to
enforce this Agreement, the prevailing PARTY shall be entitled to reasonable
attorneys' fees and costs, in addition to all of the relief to which that PARTY
or those PARTIES may be entitled.
11. SEVERABILITY
If any provision or any part of any provision of this Agreement is for
any reason held to be invalid, unenforceable or contrary to any public policy,
law, statute and/or ordinance, then the remainder of this Agreement shall not be
affected thereby and shall remain valid and fully enforceable, so long as the
remainder of this Agreement continues to give effect to the respective
intentions of the PARTIES.
12. BENEFIT OF COUNSEL
The advice of legal counsel has been obtained by each of the PARTIES
prior to entering into this Agreement.
13. GOVERNING LAW
This Agreement is entered into and shall be interpreted in accordance
with the laws of the State of New York.
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14. COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in counterparts, and all counterparts so
executed shall constitute an agreement which shall be binding upon all PARTIES,
not withstanding that the signatures of the PARTIES' designated representatives
do not appear on the same page. Signatures which are delivered via facsimile
transmission shall be binding upon the PARTY so delivering such a signature,
regardless of whether originally executed signatures are subsequently delivered.
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IN WITNESS WHEREOF, the Parties, intending to be bound, have duly
executed this Agreement as of the date first written above.
K-TEL INTERNATIONAL, INC. STRONG RIVER INVESTMENTS, INC.
By: ____________________________ By: ______________________________
Name: _________________________ Name: ___________________________
Title: __________________________ Title: ____________________________
CATHARINE STREET LLC
By: ______________________________
Name: ___________________________
Title: ____________________________
RAM CAPITAL RESOURCES LLC
By ______________________________
Name: ___________________________
Title: ____________________________
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