EXHIBIT 8.7(i)
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "Agreement") is made as of this
____ day of ____________, 1997 by and between XXXXXX XXXXX ("Shareholder") and
PLATINUM ENTERTAINMENT, INC., a Delaware corporation ("Buyer").
WHEREAS, Concurrently with the execution and delivery of this
Agreement, Buyer is purchasing from K-tel International, Inc., a Minnesota
corporation (the "Seller") all of the issued and outstanding shares of common
stock (the "Shares"), of two of Seller's wholly owned subsidiaries, K-tel
International (USA), Inc., a Minnesota corporation (KTI) and Dominion Music,
Inc., a Minnesota corporation ("Dominion", together with KTI, the
"Subsidiaries") pursuant to the terms and conditions of that certain Purchase
and Sale Agreement dated March 3, 1997 (the "Purchase Agreement");
WHEREAS, the execution and delivery of this Agreement is a condition to
the purchase of the Shares by Buyer;
WHEREAS, Seller is engaged in the business of recording, releasing,
licensing, publishing, distributing and otherwise exploiting recorded music
products on a worldwide basis (the "Seller's Music Business");
WHEREAS, pursuant to the Purchase Agreement, Buyer is purchasing and
Seller is selling, all of Seller's Music Business, except for the Retained Music
Business and the Excluded Assets (the "Business"); and
WHEREAS, the Shareholder is a principal shareholder and member of the
Board of Directors of Seller and has intimate and detailed knowledge of the
operations of Seller, the Subsidiaries and the Business.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties agree as follows:
1. DEFINITIONS. Capitalized terms not expressly defined in this
Agreement shall have the meanings ascribed to them in the Purchase Agreement.
2. ACKNOWLEDGEMENT. Shareholder acknowledges that, as a result of his
long-term relationship with and position as a shareholder and board member of
Seller, he has developed knowledge about the Business that is special, unique,
confidential and of intellectual character and has had access and familiarity
with business information which is considered confidential and proprietary by
the Subsidiaries and the Business, including, without limitation, projections,
prospects, strategic plans, customer lists, contractual terms and conditions and
trade secrets (the "Proprietary Information"); which information will become
confidential and proprietary information of Buyer upon consummation of the
Contemplated Transactions, the value of which would be destroyed by disclosure
to anyone other than Buyer or by its use in competition with Buyer.
3. COVENANTS. In light of the foregoing, as an inducement to, and a
requirement of, Buyer to enter into the Purchase Agreement and as additional
consideration for the consideration to be paid to Seller under the Purchase
Agreement (from which Shareholder is indirectly benefiting), Shareholder is
agreeing to the covenants set forth in this Agreement. Shareholder acknowledges
that compliance with these covenants will not preclude him from earning a living
and supporting his family during the Restricted Period (as defined below).
Accordingly, Shareholder hereby agrees as follows:
(a) Non-Disclosure Covenants. Shareholder will not, at any
time, (whether pursuant to a written agreement or otherwise), and
Shareholder will cause his respective Affiliates not to, directly or
indirectly, disclose, furnish, make available, or utilize any of the
Proprietary Information. Shareholder's obligations under this Section
3(a) with respect to particular Proprietary Information will terminate
only at such time (if any) as the Proprietary Information in question
becomes generally known to the public other than through a breach of
Shareholder's obligations under this Agreement. Notwithstanding the
preceding sentence, the term "Proprietary Information" does not include
information that is or becomes publicly available through no fault of
Shareholder.
(b) Non-Competition Covenants. Shareholder will not, and
Shareholder will cause his Affiliates not to, during the Restricted
Period, anywhere in the world, other than the Retained Territories,
Africa and the Middle East (the "Restricted Territory"), directly or
indirectly (whether as an owner, partner, shareholder, agent, officer,
director, employee, independent contractor, consultant, or otherwise):
(i) perform services for, or engage in, the Business
in any capacity; or
(ii) re-record any compositions contained in any
master recordings purchased by Buyer as part of the Business.
(c) Non-Solicitation Covenants. For a period of one year after
execution hereof, for any reason, Shareholder shall not, and
Shareholder shall cause his Affiliates not to, directly or indirectly,
as employee, agent, consultant, stockholder, director, co-partner or in
any other individual or representative capacity, employ or engage,
recruit or solicit for employment or engagement, any person who is or
becomes employed by Buyer or the Subsidiaries, or otherwise seek to
influence or alter any such person's relationship with Buyer or the
Subsidiaries, during such one-year period.
(d) Negative Comment Covenant.
(i) Shareholder will not, and Shareholder will
cause his Affiliates not to, at anytime, make any statements,
whether orally or in writing, which would bring disrepute to
Buyer or the Subsidiaries, their products or services, or
otherwise hinder the business prospects thereof.
(ii) Buyer will not, and Buyer will cause its
Affiliates not to, at anytime, make any statements, whether
orally or in writing, which would bring disrepute to
Shareholder, his products or services, or otherwise hinder the
business prospects thereof.
The term "Restricted Period" shall mean the period commencing on the
date hereof and continuing thereafter until three (3) years from the date
hereof. Nothing contained in Section 3(a) above shall be construed to prevent
Shareholder from investing in the stock of any company which operates in the
Business, but only if Shareholder is solely a passive investor and is not
involved in any manner in any aspect of the business of said corporation and if
Shareholder and his associates (as such term is defined in Regulation 14(A)
promulgated under the Securities Exchange Act of 1934, as in effect on the date
hereof), collectively, do not own more than an aggregate of two percent (2%) of
the capital stock of such corporation.
Notwithstanding the foregoing or anything else contained in this
Agreement, this Agreement shall not prohibit, limit or otherwise restrict (i)
the operation or exploitation by Shareholder of the Retained Music Business,
(ii) the realization of the rights provided under the License Agreements entered
into pursuant to the Purchase Agreement, provided no breach of the License
Agreements by Shareholder or his Affiliates has occurred (iii) operating any
Shareholder's direct response business, including the sale of entertainment and
music products, (iv) the retail sale of music products originally sold through
direct response, (v) the operation of a business which competes with the
Business in Canada, and (vi) the exploitation worldwide of the K-Tel UK music
catalog.
4. SCOPE/SEVERABILITY. The parties acknowledge that the businesses of
Buyer and the Subsidiaries are and will continue to be worldwide in scope and
thus the covenants in Section 3 would be particularly ineffective if the
covenants were to be limited to a particular geographic area except that the
covenants under Section 3 shall only apply to the Restricted Territory. If any
court of competent jurisdiction at any time deems the Restricted Period
unreasonably lengthy, or the Restricted Territory unreasonably extensive, or any
of the covenants set forth in Section 3 not fully enforceable, the other
provisions of Section 3, and this Agreement in general, will nevertheless stand
and to the full extent consistent with law continue in full force and effect,
and it is the intention and desire of the parties that the court treat any
provisions of this Agreement which are not fully enforceable as having been
modified to the extent deemed necessary by the court to render them reasonable
and enforceable and that the court enforce them to such extent (for example,
that the Restricted Period be deemed to be the longest period permissible by
law, but not in excess of the length provided for in Section 3, and the
Restricted Territory be deemed to comprise the largest territory permissible by
law under the circumstances).
5. EQUITABLE REMEDIES. Shareholder acknowledges and agrees that the
agreements and covenants set forth in this Agreement are reasonable and
necessary for the protection of Buyer's business interests, that irreparable
injury will result to Buyer if Shareholder or his Affiliates breaches any of the
terms of these agreements and covenants, and that in the event of Shareholder's
or his Affiliates' actual or threatened breach of any covenant set forth in
Section 3, Buyer will have no adequate remedy at law. Shareholder accordingly
agrees that in the event of any actual or threatened breach by him or his
Affiliates of such covenant, Buyer will be entitled to immediate injunctive and
other equitable relief, without bond and without the necessity of showing actual
monetary damages. Nothing in this Agreement will be construed as prohibiting
Buyer from pursuing any other remedies available to it for such breach or
threatened breach, including the recovery of any damages that Buyer is able to
prove.
6. INDEPENDENT COVENANTS. Each of the covenants in Section 3 will be
construed as independent of any other covenant or provision in Section 3 or in
any other part of this Agreement.
7. REPRESENTATIONS OF SHAREHOLDER. Shareholder represents and warrants
to Buyer that he has the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and to perform his respective
obligations hereunder.
8. SUCCESSORS AND ASSIGNS. Buyer may assign its rights hereunder
without consent of the other party hereto to a purchaser of Buyer whether
pursuant to a sale of substantially all of Buyer's assets or stock (by merger or
otherwise).
9. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware without regard to conflicts of
law principles.
10. NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any person.
11. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original but all of which together shall
constitute a single agreement.
12. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties, and supersedes and preempts all prior oral or
written understandings and agreements, with respect to the subject matter
hereof, except as otherwise expressly set forth in the Purchase Agreement.
13. TERMINATION. This Agreement may terminate pursuant to the terms of
Section III(A)(4) of that certain License Agreement, dated ______________, by
and between the Subsidiaries and K-tel Entertainment, Inc.
IN WITNESS WHEREOF, Shareholder and Buyer have executed this Agreement
as of the date first written above.
PLATINUM ENTERTAINMENT, INC.
By:
Xxxxxx Xxxxx Its:
