EXHIBIT 8.7(ii)
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (the "Agreement") is made as of this
____ day of _____________, 1997 by and between K-TEL INTERNATIONAL INC., a
Delaware corporation ("Seller") and PLATINUM ENTERTAINMENT, INC., a Delaware
corporation ("Buyer").
WHEREAS, Concurrently with the execution and delivery of this
Agreement, Buyer is purchasing from Seller all of the issued and outstanding
shares of common stock (the "Shares"), of two of its 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"); and
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").
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. Seller acknowledges that it has knowledge and
possesses information about the Business that is special, unique, confidential
and of intellectual character 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 Seller is directly benefiting), Seller is agreeing to the
covenants set forth in this Agreement. Seller 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, Seller
hereby agrees as follows:
(a) Non-Disclosure Covenants. Seller will not, at any time,
(whether pursuant to a written agreement or otherwise), and Seller will
cause its Affiliates not to, directly or indirectly, disclose, furnish,
make available, or utilize any of the Proprietary Information. Seller'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 Seller'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 Seller.
(b) Non-Competition Covenants. Seller will not, and Seller
will cause its 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 from Seller as part of
the Business.
(c) Non-Solicitation Covenants. For a period of one year after
the execution hereof, for any reason, Seller shall not, and will 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 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 Seller or
its subsidiaries, their 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.
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 Seller 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 Seller or its Affiliates has occurred, (iii) operating any Seller'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. Seller 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 Seller or its Affiliates breaches any of the
terms of these agreements and covenants, and that in the event of Seller's or
its Affiliates' actual or threatened breach of any covenant set forth in Section
3, Buyer will have no adequate remedy at law. Seller accordingly agrees that in
the event of any actual or threatened breach by it or its 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. 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).
8. 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.
9. 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.
10. 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.
11. 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.
12. 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, Seller and Buyer have executed this Agreement as of
the date first written above.
K-TEL INTERNATIONAL, INC. PLATINUM ENTERTAINMENT, INC.
By: By:
Its: Its:
