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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
SEPTEMBER 10, 1999
Date of report (Date of earliest event reported)
K-TEL INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in Charter)
MINNESOTA 0-6664 41-0946588
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
2605 FERNBROOK LANE NORTH
PLYMOUTH, MINNESOTA 55447
(Address of Principal Executive Offices, including Zip Code)
(612) 559-6800
(Registrant's Telephone Number, including Area Code)
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ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
On September 10, 1999, K-tel International, Inc. (the "Company") sold
its subsidiary in Finland, K-tel International (Finland) Oy, to Edel Music AG
("Edel") of Hamburg, Germany, for $6,350,000 in cash. K-tel International
(Finland) Oy formerly served as a subsidiary in the Company's music segment
which was responsible for the sale of music in Scandinavia. The purchase price
was established through negotiations between the parties.
ITEM 7 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
10.1 Sale and Purchase Agreement relating to K-tel
International (Finland) Oy by and between K-tel
International, Inc. and Edel Music AG, dated
September 10, 1999.
10.2 Letter Agreement relating to K-tel International
(Finland) Oy by and between K-tel International, Inc.
and Edel Music AG, dated September 10, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on September 24, 1999.
K-TEL INTERNATIONAL, INC.
By: /s/ Steven A. Kahn
------------------------------------------------
Steven A. Kahn
Vice President and Chief Financial Officer
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<C> <S>
10.1 Sale and Purchase Agreement relating to K-tel International (Finland)
Oy by and between K-tel International, Inc. and Edel Music AG, dated
September 10, 1999.
10.2 Letter Agreement relating to K-tel International (Finland) Oy by and
between K-tel International, Inc. and Edel Music AG, dated
September 10, 1999.
</TABLE>
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EXHIBIT 10.1
THIS AGREEMENT is made the 10th day of September 1999
BETWEEN
(1) K-TEL INTERNATIONAL INC whose principal place of business is at 2605
Fernbrook Lane North, Minneapolis, MN, USA (the "Vendor")
(2) EDEL MUSIC AG whose principal place of business is at Wichmannstrasse 4
22607 Hamburg Germany (the "Purchaser")
(3) K-TEL ENTERTAINMENT (UK) LIMITED whose registered office is situate at 12
Fairway Drive, Greenford, Middlesex UB6 8PW, England ("K-Tel UK")
INTRODUCTION
(A) K-Tel International (Finland) Oy (the "Company") was incorporated in
Finland on 10th April 1989 with registered number 461.792 and at the
date of this agreement has an authorised share capital of FIM500,000
divided into 500 shares of FIM 1,000 each all of which have been issued
fully paid and are legally and beneficially owned with full title
guarantee by the Vendor. Further details of the Company are set out in
Schedule 1.
(B) The Vendor has agreed to sell and the Purchaser has agreed to purchase
the entire issued share capital of the Company subject to and on the
terms of this agreement.
AGREED TERMS
1. DEFINITIONS AND INTERPRETATION
1.1 In this agreement, unless the context otherwise requires, the following
words and expressions have the meanings set out opposite them:
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"Accounting Requirements" means good Finnish accounting
practice (as adopted by the Finnish
Accounting Board (KILA)) and generally
accepted Finnish accounting principles
as consistently applied by the Company;
"Accounts" means the audited accounts of the
Company for the financial year ended
on the Balance Sheet Date including
the auditors' and directors'
reports, the balance sheet, the
profit and loss account and the
notes to them;
"Act" means the Companies Act 1985 as amended
by the Companies Act 1989;
"Affiliate" means in relation to any company, any
other person who or which for the time
being is directly or indirectly
Controlled by, or (whether by itself or
together with any connected person)
Controlling, that company;
"Ancillary Rights" means all rights to dividends and other
distributions of whatsoever nature
declared after the Balance Sheet Date
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<S> <C>
in respect of the Sale Shares and all
other rights and advantages belonging
to or accruing on the Sale Shares as at
and from that date;
"Balance Sheet Date" means 30th June 1999;
"Business Day" means any day, other than a Saturday or
a Sunday, on which banks are generally
open in the City of London for business;
"Compilation Agreements" means those written non-exclusive
compilation album license agreements in
respect of Recordings entered into prior
to the date hereof between the Company
and the Vendor's Group on customary
terms in the ordinary course of
business;
"Completion" means completion of the sale and
purchase of the Sale Shares in
accordance with the parties' respective
obligations under clause 5;
"Completion Date" means today's date or such other date as
the Vendor and the Purchaser may agree;
"Completion Documents" means the documents in the agreed form
referred to in Schedule 2;
"Compositions" means the musical works listed in
Schedule 9 (including but not limited to
the titles words lyrics music libretti
musical scores and all interpolations
collections compilations and all
arrangements adaptations versions
editions and translations thereof) in
existence at Completion in which the
Company owns or controls the copyright
and/or other rights in the nature of
copyright and/or which the Company
exploits as at Completion and/or which
were acquired in pursuance of any Music
Contract;
"Consideration Shares" means the Purchaser's Shares to be
allotted pursuant to clause 3.3;
"Control" has the meaning ascribed to it in
section 840 of the Income and
Corporation Taxes Act 1988
"Covenant" means the covenant given by the Vendor,
in the Tax Deed;
"Disclosure Letter" means the letter of today's date from
the Warrantors to the Purchaser;
"Distribution Contracts" means the manufacturing distribution
licensing and marketing agreements set
out in Schedule 4;
"Employees" means the persons employed by the
Company whose names and job titles are
set out in Schedule 3;
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<S> <C>
"Encumbrance" means any option, right of pre-emption,
mortgage, pledge, charge, hypothecation,
encumbrance, lien, equity, title
retention, title transfer, security,
assignment, trust arrangement,
preferential right, security interest or
any other agreement or arrangement or
right of whatsoever nature having a
commercial effect analogous to the
conferring of security;
"Intellectual Property Rights" means all:
(a) patents, trade marks, trade
names and designs, whether
registered or not including
all registrations of, or
applications for the
registration of the same;
(b) inventions, confidential
processes and computer
programs together with all
applications or in connection
with the same;
(c) copyright, design right,
related rights and other
protectable rights;
(d) know-how and other
confidential information;
(e) other types of intellectual
property; and
(f) licences and permissions in
connection with such matters;
"Inter-company Indebtedness" means the net sum of $0 owed by
the Company to the Vendor's Group;
"Inter-company means the termination deed between the
Termination Deed " Vendor and the Company with effect from
the Completion Date in the agreed form;
"Key Employees" means Jorma Kosonen - managing director
Raimo Salin - financial controller;
"Key Service Agreements" means the service agreements with the
Key Employees in the agreed form;
"License Agreements" means (a) the license agreement between
K-Tel UK (1) and the Purchaser (2)
pursuant to which K-Tel UK has agreed to
non-exclusively license rights in its
catalogue to the Purchaser in the agreed
form and (b) the license agreement
between Dominion Entertainment Inc
("Dominion") (1) and the Purchaser (2)
pursuant to which Dominion has agreed to
exclusively license rights in its
catalogue to the Purchaser in the agreed
form;
"Music Contracts" means the Distribution Contracts, the
Recording Contracts, the Producer
Contracts the Publishing Contracts, the
Sub-publishing Agreements and any other
agreements by which the Company has
acquired or purported to acquire the
Music Rights or any of them and any
other agreements entered into by the
Company with any person or persons
relating to (a) the making of any
Recordings or the
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provision of any services by any
person or persons in connection with
the making of any Recordings including
agreements with performers, vocalists,
musicians, conductors, producers,
consultants, directors and engineers
and/or (b) the writing, composing
and/or making of any Compositions or
the provision of any services by any
person or persons in connection with
the writing, composing and/or making of
any Compositions
"Music Rights" means the whole and entire copyright and
all rights in the nature of copyright
and all other Intellectual Property
Rights and record video and film,
reproduction, exploitation and use
rights and all other rights whether now
or hereafter known in (a) the Recordings
(including derivative works thereof,
re-mixes and arrangements) and in the
performances embodied or fixed therein
and/or (b) the Compositions (to the
extent of the Company's interest therein
as specified in Schedule 9) throughout
the world for the full term thereof
including all renewals, extensions,
reversions and revisions thereof (or for
such shorter term as specified in
Schedules 4, 5, 6, 7, 9, 10 and/or 11
hereto) whether now existing or
hereafter conferred or created and all
rights to secure renewals and extensions
of copyright and including all vested
and contingent and future rights of
copyright (subject in each case to the
rights of local Finnish collecting
societies (PRS/PPL/MCPS equivalents) and
their affiliated societies throughout
the world) together with all rights of
action (including the right to sue for
past infringements), powers and benefits
to the same belonging or accrued;
"Press Release" means the written statement in relation
to the subject matter of this agreement,
in the agreed form;
"Producer Contracts" means the agreements set out in Schedule
6;
"Products" means the compact discs vinyl disc
records cassettes mini-discs DVDs videos
CD-ROMs and any other audio visual
devices manufactured by or for the
Company and supplied and/or sold by the
Company;
"Property" means Building No. 2, Site No. 3, Block
No. 36012, District No. 36 Viikki, City
of Helsinki, Finland;
"Property Lease Agreement" means the agreement defined in
sub-clause 3.1 of Part B of Schedule 8
"Publishing Contracts" means the agreements set out in Schedule
10;
"Purchaser's Group" means the Purchaser and any other
subsidiary undertaking or parent
undertaking (as those expression are
defined in section 258 of the Act) of
the Purchaser and any subsidiary
undertaking of any such parent
undertaking;
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"Purchaser Shares" means ordinary shares of one (1) euro
each in the capital of the Purchaser;
"Purchaser's solicitors" means Russells of Regency House, 1/4
Warwick Street, London W1R 6LJ;
"Recording Contracts" means the agreements set out in Schedule
5;
"Recordings" means the sound recordings, films and
videos listed in Schedule 7 and any
other sound recordings, films and videos
in existence at Completion in which the
Company owns or controls the copyright
and/or other rights in the nature of
copyright and/or which the Company
exploits as at Completion and/or which
were made in pursuance of any Music
Contract;
"Relevant Claim" means a Warranty Claim and/or claim
under the Tax Deed
"Sale Shares" means the 500 issued ordinary shares of
FIM 1,000 each in the Company;
"Sub-publishing Agreements" means the agreements which relate to the
exploitation of the Compositions set out
in Schedule 11;
"Subscription Price" means the price per Purchaser Share at
which the Purchaser Shares are offered
for sale pursuant to the proposed share
offering of the Purchaser Shares
"subsidiary" means a subsidiary company as defined in
section 736 of the Act
"Taxes" means all income tax, value added tax
and any other taxes and similar charges
(including, without limitation, social
security charges and pension payments)
imposed by any authority, including all
penalties and interests, under the laws
of Finland;
"Tax Deed" means the tax deed of covenant between
the parties to this agreement in the
agreed form to be entered into on
Completion;
"Trademark License" means the trademark license between the
Vendor and the Company with effect from
the Completion Date in the agreed form
"Vendor's Group" means the Vendor and any other
subsidiary undertaking or parent
undertaking (as those expression are
defined in section 258 of the Act) of
the Vendor and any subsidiary
undertaking of any such parent
undertaking;
"Vendor's solicitors" means Denton Hall of Clifford's Inn, 5
Chancery Lane, London EC4A 1BU;
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"Warranties" means the statements contained in
Schedule 8 and "Warranty" means any such
statement;
"Warranty Claim" means a claim in respect of any breach
of any of the Warranties; and
"Warrantors" and "Covenantors" means the Vendor and K-Tel UK
</TABLE>
1.2 In this agreement unless the context otherwise requires, any reference
to:
(a) any statute or statutory provision includes a reference to that statute
or statutory provision as amended, extended or re-enacted and to any
regulation, order, instrument or subordinate legislation under the
relevant statute or statutory provision in force at the date hereof;
(b) the introduction, any clause, sub-clause or schedule is to the
introduction or a schedule to or (as the case may be) to a clause or
sub-clause of this agreement;
(c) a person includes individuals, companies, bodies corporate wherever
incorporated or established or carrying on business, unincorporated
associations, governmental entities and partnerships and with respect
to any party who is an individual, his legal personal
representative(s);
(d) reference to the singular includes a reference to the plural and vice
versa and a reference to any gender includes all other genders;
(e) the word "including" shall be construed as being by way of illustration
only and shall not limit or prejudice the generality of any preceding
word or words and accordingly the word "including" shall be read and
construed as meaning "including, but expressly without limitation";
(f) the awareness, belief or knowledge of the Warrantors in relation to the
subject matter or matters of a Warranty includes such awareness, belief
or knowledge at the material time of the employees and/or officers of
the Company and/or the Vendor and such additional awareness as the
Warrantors would have after having made all due and diligent enquiry as
is reasonable in the particular circumstances of the case (including
such enquiry of the Vendor's solicitors in relation to legal matters);
(g) a document "in the agreed form" is to a document in the form of the
draft agreed between the parties and initialled by or on behalf of the
parties for the purposes of identification;
1.3 The introduction and schedules form part of this agreement and shall
have the same force and effect as if expressly set out in the body of
this agreement. Accordingly, any reference to this agreement shall
include the body of this agreement, the introduction and schedules as
amended or supplemented from time to time.
2. SALE AND PURCHASE
2.1 The Vendor agrees to sell with full title guarantee and the Purchaser
agrees to purchase the Sale Shares and Completion shall take place at
2.00 p.m. (or such other time as may be agreed by the parties) on the
Completion Date at the offices of the Purchaser's solicitors.
2.2 The Vendor and the Warrantors undertake to the Purchaser that all of
the Sale Shares shall be sold free of all Encumbrances and together
with all Ancillary Rights.
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3. CONSIDERATION
3.1 The total value of the consideration for the sale of the Sale Shares
shall be US$6,350,000 ("the Consideration") for all of the Sale Shares
3.2 US$6,032,500 of the Consideration shall be paid by the Purchaser on
Completion in accordance with sub-clause 5.4(a)
3.3 US$317,500 of the Consideration shall be satisfied by the allotment
and issue within three (3) months after Completion to the Vendor of
such number of Purchaser Shares credited as fully paid in accordance
with the following formula:-
317,500 = B
-------
A
Where A equals the Subscription Price (converted to US dollars at the
middle market rate at close of business in Frankfurt on the date of
the share offering of the Purchaser Shares) and B equals the number of
Purchaser Shares to be allotted to the Vendor hereunder Provided That
if by applying the aforesaid formula a fraction of a share arises then
the number of Purchaser Shares to be allotted to the Vendor shall be
the nearest number of whole shares ignoring such fraction Provided
Further That in the event that the applicable number of Purchaser
Shares have not been allotted to the Vendor within three (3) months
after Completion then in lieu of the obligation to allot and issue
Purchaser Shares as aforesaid the Purchaser shall pay the aforesaid
US$317,500 of the Consideration to the Vendor in cash by electronic
bank transfer or by bankers draft on the first Business Day after the
expiry of such three (3) month period.
3.4 Intentionally Deleted
3.5 The Vendor undertakes to the Purchaser that it will not for a period
of three (3) months after the date of allotment of the Consideration
Shares (if applicable) dispose of any of the Consideration Shares to
which the Vendor shall become entitled under this Agreement. For the
purposes of this clause 3.5 the Vendor shall be deemed to dispose of a
Consideration Shares if the Vendor ceases in any circumstances
whatsoever to be the absolute beneficial owner of it
3.6 The Purchaser warrants that where allotted the Consideration Shares
shall be validly issued, admitted to trading on the Neuer Markt, free
from any lien, charge, option or Encumbrance and credited as fully paid
so as to rank pari passu with all Purchaser Shares in issue on or
before the date of this Agreement and together with all rights and
privileges attaching to the Purchaser Shares at the date of this
Agreement, including without limitation the full benefit of any
dividend or distribution and any rights issue or bonus issue payable or
to be taken up or made on or after the date of allotment thereof
4. CONDITION
Completion is conditional on delivery of each of the Completion
Documents, which shall be in form and substance satisfactory to
Purchaser and Purchaser's solicitors in their reasonable judgement, to
the Purchaser's solicitors prior to Completion duly executed by the
parties thereto (where required) and no such party or other person
providing a Completion Document having withdrawn its consent to the
unconditional delivery to the Purchaser or the Purchaser's solicitors
of a Completion Document. The Purchaser or the Purchaser's solicitors
shall be entitled to date the Completion Documents (where required) at
Completion.
5. COMPLETION
5.1 On Completion the Vendor shall:-
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(a) deliver or cause to be delivered to the Purchaser:
(i) the share certificates of the Sale Shares duly endorsed in
blank (together with any coupons and/or talons appertaining
thereto);
(ii) resignations of Arne Jan Erik Waselius and Tarja Wist as
directors of the Company in the agreed form duly executed by
each person resigning;
(iii) the statutory books of the Company complete and accurate up to
Completion including share and shareholders' registers of the
Company; Articles of Association duly reflecting the true and
complete information of the Company in force at Completion,
and all cheque books of the Company;
(iv) the Tax Deed duly executed by the Covenantors;
(v) the Disclosure Letter;
(vi) the License Agreements duly executed by K-Tel UK and Dominion
Entertainment Inc (as applicable);
(vii) a copy of the board minutes certified by Leonard Street &
Deinard (and an up to date copy of the memorandum and articles
of association) of the Vendor approving the entering into of
this agreement and any other documents referred to in this
agreement and authorising its officers or other appointees or
attorneys to sign this agreement on the Vendor's behalf;
(viii) the Inter-company Termination Deed duly executed by the Vendor
and the Company
(ix) the Trademark License duly executed by the Vendor and the
Company
(b) repay or procure the repayment in full of all amounts owing (even if
not due for repayment) to the Company by any of the Vendor's Group or
any connected persons or associates or directors of them or any of them
and shall procure that all indemnities given by or binding on the
Company in respect of any liabilities or obligations (actual or
contingent) of any of the Vendor's Group or and of such connected
persons or associates or directors are fully and effectively released
without cost to the Company
5.2 Immediately after Completion the Purchaser shall procure the holding of
a meeting of the board of directors or the shareholders of the Company,
as the case may be, at which the present members of the board of
directors of the Company shall, to the extent required by the
Purchaser, as of the Completion Date be by the Vendor substituted with
new members appointed by the Purchaser
5.3 Intentionally Deleted
5.4 On Completion the Purchaser shall:
(a) pay to the Vendor the sum of US$6,032,500 in cash by electronic bank
transfer or by bankers draft as part consideration for the Sale Shares
in accordance with clause 3.2;
(b) intentionally deleted
(c) deliver to the Vendor or the Vendor's solicitors a counterpart of the
Tax Deed duly executed by the Purchaser;
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(d) deliver to the Vendor or the Vendor's solicitors a duplicate of the
Disclosure Letter signed on behalf of the Purchaser to acknowledge
receipt of the same;
(e) deliver or cause to be delivered to the Vendor or the Vendor's
solicitors a copy of the Power of Attorney duly certified by the
Purchases Solicitors appointing Dr Hans-Martin Gutsch to enter into of
this agreement and any other documents referred to in this agreement on
the Purchaser's behalf
6. WARRANTIES AND UNDERTAKINGS
6.1 Subject to sub-clause 6.3 the Warrantors jointly and severally warrant
to the Purchaser that the Warranties are true as at the date hereof.
6.2 The benefit of the Warranties may be assigned in whole or in part and
without restriction to any member of the Purchaser's Group to which the
Sale Shares are transferred Provided That such benefit shall be
reassigned to the Purchaser prior to the assignee leaving the
Purchaser's Group.
6.3 The Vendor shall have no liability to the Purchaser in respect of the
Warranties to the extent that the facts or matters complained of as
being untrue are fairly disclosed in the Disclosure Letter or fairly
disclosed in documents attached to or expressly incorporated by
reference into the Disclosure Letter. The liability of the Vendor and
the rights and remedies of the Purchaser in respect of the Warranties
shall not be affected by any knowledge by the Purchaser as a result of
the Purchaser's examination of Company but only the facts or matters
disclosed by the Vendor in the Disclosure Letter, as stated above.
6.4 Each of the Warranties shall be construed as a separate and independent
warranty and (save where expressly provided to the contrary) shall not
be governed, limited or restricted by reference to or inference from
any other terms of this agreement or any other Warranty.
6.5 Intentionally Deleted
6.6 The Warrantors undertake to the Purchaser that they will promptly upon
becoming aware of the same disclose in writing to the Purchaser any
event or circumstance which becomes known to them after the date of
this agreement and prior to Completion, which is inconsistent with any
of the Warranties or the contents of the Disclosure Letter.
6.7 The Warrantors agree with the Purchaser to waive any right which they
may have in respect of any misrepresentation, inaccuracy or omission in
or from any information or advice supplied or given by the Company or
any of its officers, employees or advisers in connection with the
Warranties, the Disclosure Letter and/or this agreement.
6.8 The Purchaser acknowledges that it has not relied on or been induced to
enter into this agreement by any representation, warranty or
undertaking other than those set out in this agreement, the Tax Deed or
the Completion Documents and the Purchaser shall not be entitled to
make any claim against any Warrantors in respect of any representation,
warranty or undertaking arising out of or in connection with this
agreement unless the representation, warranty or undertaking is set out
in this agreement or the Tax Deed provided that this clause shall not
exclude any liability for fraudulent misrepresentation.
6.9 Any payment made by the Warrantors to the Purchaser in respect of
claims under the Warranties or under the Tax Deed shall so far as is
possible be treated by the Vendor and the Purchaser as a reduction in
the purchase price payable for the Sale Shares.
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7. LIMITATIONS
7.1 The rights of the Purchaser in respect of any of the Warranties (other
than Warranties relating to Taxes or under the Tax Deed) shall only be
enforceable if notice in writing (giving insofar as may then be
practicable the amount and reasonable details of the claim) shall be
given to any of the Warrantors on or before 30 June 2003.
7.2 The rights of the Purchaser in respect of any of the Warranties
relating to Taxes or under the Tax Deed shall only be enforceable if
notice in writing (giving insofar as may then be practicable the amount
and reasonable details of the claim) shall be given to the Warrantors
on or before the expiry of a period of seven (7) years from Completion.
7.3 In respect of any liability under any Warranty or under the Tax Deed
which in either case is based upon a liability which is contingent then
the Purchaser shall not be entitled to pursue the claim until the
liability becomes an actual liability but the fact of it being
contingent shall not operate to avoid a claim in respect of a
contingent liability made before the expiry of the relevant period
specified in sub-clauses 7.1 or 7.2 if details of such claim have been
delivered (insofar as may then be practicable) before the expiry of
such period and provided that such liability shall become an actual
liability no later than two (2) years after the expiry of the relevant
period Provided That in the event that proceedings in respect of any
such claim are issued at any time prior to the expiry of the aforesaid
two (2) year period then the Warrantors liability in respect of such
claim shall not be avoided by virtue of the expiry of the aforesaid two
(2) year period.
7.4 If the Warrantors are liable both in respect of a breach of Warranty
and under the Tax Deed, the Purchaser shall be entitled to claim in
respect of either or both. The Purchaser shall not however be entitled
to recover from the Warrantors under the Warranties or the Tax Deed
more than once in respect of the same damage suffered, and accordingly
the Warrantors shall not be liable in respect of any breach of the
Warranties if and to the extent that the loss is or has been included
in a claim under the Tax Deed which has been satisfied to the extent
that it has been so satisfied, nor shall the Warrantors be liable in
respect of a claim under the Tax Deed if and to the extent that the
loss is or has been included in a claim for breach of the Warranties
which has been satisfied to the extent that it has been so satisfied.
7.5 Notwithstanding any other provision of this agreement, no limitations
of any kind whatsoever (including the limitations provided in this
clause 7 on making claims within particular time periods) shall apply
to any claim under this agreement or under the Tax Deed against the
Warrantors when it can be demonstrated that such claim is based on any
dishonest or fraudulent act or dishonest or fraudulent omission,
concealment or misrepresentation of, or by, the Warrantors prior to
Completion.
7.6 The Warrantors shall not be liable in respect of any Relevant Claim
unless the liability in respect of such Relevant Claims exceeds
US$2,000 (but for these purposes aggregating Relevant Claims arising
out of circumstances which are of a like nature or otherwise connected
with each other in determining whether such US$2,000 sum has been
exceeded) (each such claim a "Qualifying Claim") in which event
(subject to sub-clause 7.7) the Warrantors shall be liable for the
whole of such liability and not merely for the excess. Notwithstanding
the foregoing, the Warrantors shall not be liable for any returns of
Products made in the ordinary course of business.
7.7 The Warrantors shall not be liable in respect of any Relevant Claim
unless and until the aggregate cumulative liability of the Warrantors
in respect of all Qualifying Claims exceeds US$50,000 (in which event
the Warrantors shall be liable for the whole of such liability and not
merely for the excess). The maximum liability of the Warrantors in
respect of all Qualifying Claims shall not exceed US$6,350,000.
7.8 A Relevant Claim other than a Relevant Claim relating to Taxes or under
the Tax Deed (if it has not been previously satisfied, settled or
withdrawn) shall be deemed to have been withdrawn and shall be fully
barred and unenforceable on the date falling six (6) months after the
date specified in sub-clause 7.1
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unless proceedings shall have been issued and served on any of the
Warrantors on or prior to the expiry of such six (6) month period.
7.9 A Relevant Claim relating to Taxes or under the Tax Deed (if it has not
been previously satisfied, settled or withdrawn) shall be deemed to
have been withdrawn and shall be fully barred and unenforceable on the
date falling six months after the date specified in sub-clause 7.2 in
relation to Relevant Claims unless proceedings shall have been issued
and served on any of the Warrantors on or prior to the expiry of such
six (6) month period.
7.10 The Warrantors shall not be liable in respect of a Relevant Claim to
the extent that the Relevant Claim would not have arisen but for any
voluntary act or omission of the Purchaser or any members of the
Purchaser's Group or the Company after Completion effected otherwise
than in the normal and usual course of business and which the Purchaser
knew or ought reasonably to have known would give rise to a Relevant
Claim and which is not an act or omission which:
(a) is a necessary consequence of any act or omission of any Warrantors or
the Company on or before Completion, or
(b) has been agreed in writing by any of the Warrantors.
7.11 The Warrantors shall not be liable in respect of a Relevant Claim if
and to the extent that the Relevant Claim relates to an amount which
the Company is entitled to recover from a person other than a
Warrantors (a "Third Party") unless the Company shall have used all
reasonable endeavours to recover such sum from such Third Party
provided that nothing in this clause shall require the Company or the
Purchaser to issue proceedings against any person. Any amounts net of
any Taxes recovered from a Thirty Party as aforesaid shall be deducted
from the amount of such aforesaid Relevant Claim.
7.12 Where the Warrantors are liable in respect of Relevant Claim and the
Company has a right of recovery from a Third Party in respect of such
Relevant Claim but notwithstanding the provisions of sub-clause 7.11
the Company shall not have recovered the same, the Purchaser shall at
the request of the Warrantors and upon discharge by the Warrantors of
their liability in relation to such Relevant Claim at the cost of the
Warrantors, assign or so far as possible procure to be assigned to the
Warrantors for no consideration the benefit of such right.
7.13 The Purchaser shall pay to the Vendor any amount recovered from a Third
Party in respect of a matter the subject of a Relevant Claim which the
Vendor has paid to the Purchaser in respect of such Relevant Claim such
amount not to exceed the amount so recovered by the Purchaser from the
Vendor
7.14 The Warrantors shall not be liable in respect of a Relevant Claim
(other than a Relevant Claim relating to Taxes and/or under the Tax
Deed, Accounts and/or accounting records) to the extent that the
Relevant Claim would not have arisen but for any change after
Completion:
(a) in law or the interpretation of law in relevant jurisdiction; or
(b) in Accounting Requirements.
7.15 The Warrantors shall not be liable in respect of a Relevant Claim
relating to Taxes and/or the Tax Deed, Accounts and/or accounting
records to the extent that the Relevant Claim would not have arisen but
for:
(a) any change after Completion:
(i) in law or the interpretation of law as evidenced by any
published statement or practice or concession existing at the
Completion Date in any jurisdiction inside and/or outside
Finland,
11
<PAGE>
enacted or made after the Completion Date, or as a result of
the withdrawal or amendment of any extra statutory concession
or practice made by a Finnish tax authority after that date;
or
(ii) in Accounting Requirements.
(b) a change in the accounting policy or policy related to Taxes policy or
practice of the Purchaser after Completion other than a change to a
policy complying with Accounting Requirements in force at the date of
this agreement from a policy which was not in accordance with such
Accounting Requirements, including the treatment of any Taxes
attributable to timing differences or the treatment of assets or
recognition of profits in any future accounts of the Company or the
Purchaser, different to the treatment in the Accounts other than where
such change is to a policy complying with Accounting Requirements in
force at the date of this agreement from a policy which was not in
accordance with such Accounting Requirements.
7.16 If any claim is received by the Company or the Purchaser for which the
Warrantors may be liable the Purchaser shall make no settlement of or
compromise of such claim without the consent of the Warrantors (such
consent not to be unreasonably withheld or delayed) provided that if
the Warrantors shall withhold or fail to provide their consent (whether
or not such consent has been unreasonably withheld or delayed) to any
settlement or compromise which the Purchaser wishes to accept, the
Warrantors shall on being required so to do by the Purchaser provide
security to the Purchaser in a form reasonably satisfactory to the
Purchaser against all the Purchaser's good faith estimate of the amount
of the claim and all costs and expenses (including legal costs and
expenses) in relation to the defence of such claim. If the Warrantors
fail to provide such security within 21 days of being required to do
so, the Purchaser shall be entitled to settle and compromise the claim
in question and to recover from the Warrantors without any impediment.
7.17 If the Purchaser becomes aware of circumstances giving rise to a
Relevant Claim it shall:
(a) promptly give written notice of such circumstances giving rise to the
Relevant Claim as are then known to the Purchaser;
(b) consult with the Warrantors insofar as is reasonably practicable with
respect of the Relevant Claim;
(c) give the Warrantors and their professional advisers reasonable access
on reasonable prior notice and during business hours to the premises of
the Company (if any) and the opportunity to examine and at the
Warrantors' expense to copy relevant documents and records within the
control of the Company or photograph relevant assets within the control
of the Company and the Warrantors shall and shall procure that their
professional advisers shall keep confidential the content of all
documents and records so examined and shall not use any such
information for any purpose other than for the purpose of investigating
the Relevant Claim or determining the amount of such Relevant Claim,
Provided that the Purchaser shall not be required to do anything under
this clause which would prejudice any claim to privilege in respect of
any relevant documents.
7.18 The Warrantors shall not be liable in respect of any Relevant Claim if
and to the extent that provision or reserve in respect thereof or of
the event or circumstance giving rise thereto has been made in the
Accounts or payments or discharge of the relevant matter has otherwise
been taken into account in the Accounts.
7.19 The Warrantors shall not be liable in respect of any Relevant Claim if
such claim would not have arisen but for a cessation after the date
hereof of the business or trade or any part thereof of the Company or
any change in the nature of such business or trade or a sale or
disposal of any share or any interest therein in the Company after
Completion.
12
<PAGE>
8. RESTRICTIONS
8.1 In the case of the Vendor, by way of further consideration of the
Purchaser agreeing to buy the Sale Shares from the Vendor and in the
case of K-Tel UK in consideration of the sum of (pound)1 paid to K-Tel
UK (receipt of which K-Tel UK hereby acknowledges) and for other good
and valuable consideration each of the Covenantors covenants with the
Purchaser that it will not and shall procure that no member of the
Vendor's Group shall for a period of two (2) years from Completion
whether alone or jointly with or as agent of any person or persons
directly or indirectly:
(a) either on his own behalf or on behalf of any other person or persons
canvass, solicit or approach or cause to be canvassed, solicited or
approached any of the artists who are parties to the Recording
Contracts and/or any of the writers and/or composers who are parties to
the Publishing Contracts at the Completion Date in respect of their
services as a recording artist or songwriter/composer (as applicable);
or
(b) solicit or entice or endeavour to solicit or entice away from the
Company any person holding a managerial or senior position in the
Company as at Completion; or
(c) in Finland engage in any capacity in any business concern (of whatever
kind) which shall be in competition with the business of the Company at
Completion provided that nothing in this clause shall prevent the
Covenantors holding as an investment in aggregate not more than 5% of
the issued share capital of any company quoted on a recognised
investment exchange (as that expression is defined in section 207 of
the Financial Services Act 1986); or
(d) Intentionally Deleted
8.2 By way of further consideration of the Purchaser agreeing to buy the
Sale Shares from the Vendor each of the Covenantors covenants with the
Purchaser that it will not and shall procure that no member of the
Vendor's Group shall:
(a) in relation to any Recording Contract set out in Schedule 5,
during the continuance of that Recording Contract whether
alone or jointly with or as agent of any person or persons
directly or indirectly either on its own behalf or on behalf
of any other person or persons canvass, solicit or approach or
cause to be canvassed, solicited or approached any of the
artists who are parties to that Recording Contract at the
Completion Date in respect of their services as a recording
artist and/or
(b) in relation to any Publishing Contract set out in Schedule 10,
during the continuance of that Publishing Contract whether
alone or jointly with or as agent of any person or persons
directly or indirectly either on its own behalf or on behalf
of any other person or persons canvass, solicit or approach or
cause to be canvassed, solicited or approached any of the
writers and/or composers who are parties to that Publishing
Contract at the Completion date in respect of their services
as a songwriter and/composer
8.3 The Covenantors hereby acknowledge and declare that the restrictions in
sub-clauses 8.1 and 8.2 are reasonable in all the circumstances as at
today's date; that such restrictions are integral to the terms on which
the Purchaser has agreed to purchase the Sale Shares; and that each of
such restrictions shall be construed and take effect independently of
the others.
8.4 The parties agree and declare that if any one or more of the
restrictions in sub-clause 8.1 or 8.2 shall be judged to be void as
going beyond what is reasonable in all the circumstances for the
protection of the interests of the Purchaser and the Company, but would
be valid if part of the wording of that restriction were deleted or the
period of that restriction were reduced or the range of activities or
area covered by that
13
<PAGE>
restriction were reduced in scope, then the
restrictions shall be deemed to apply with such modifications as may be
necessary to make them valid and effective, and any such modification
shall not affect the validity of any other restriction contained in
this agreement.
8.5 If any breach or violation of the provisions of sub-clause 8.1 or 8.2
occurs, the Covenantors and the Purchaser agree that damages may not to
be sufficient compensation and that injunctive or other equitable
relief may be essential to safeguard the interests of the Purchaser and
of the Company.
9. EVENTS SINCE BALANCE SHEET DATE
9.1 In addition and without limiting clause 6 but so that any claim in
respect of this clause 9 shall be treated as a Warranty Claim for all
purposes and the limitations in clause 7 shall apply the Vendor
warrants that, from the Balance Sheet Date until Completion, the
business of the Company has been carried on in the usual and normal
course in all material respects and that the Company has not entered
into any contract or commitment or done anything which, in any such
case, is either out of the ordinary and usual course of its business or
of a material nature without the prior consent in writing of the
Purchaser. In particular, but without limiting the foregoing, the
Vendor warrants that from the Balance Sheet Date until Completion the
Company has not:
(a) made any alteration to its trade register information or articles of
association or any other document or agreement establishing, evidencing
or relating to its constitution or operation;
(b) altered the nature or scope of its business;
(c) managed its business otherwise than in accordance with its accounting
practice business and trading policies and practice to date as
disclosed to the Purchaser, except as may be necessary to comply with
any tax or legislative changes;
(d) entered into any agreement or arrangement or permit any action whereby
another company becomes its subsidiary or subsidiary undertaking;
(e) entered into any transaction other than on arm's length terms;
(f) acquired or entered into any agreement to acquire (whether by one
transaction or by a series of transactions) the whole or a substantial
or material part of the business, undertaking or assets of any other
person;
(g) disposed of or entered into any agreement to dispose of (whether by one
transaction or by a series of transactions) the whole or any
substantial or material part of its business, undertaking or any of its
assets (except in the ordinary course of business and at arm's length);
(h) incurred or agreed to incur any capital expenditure in excess of
US$5,000 in aggregate;
(i) taken or agreed to take any loans, borrowings or other form of funding
or financial facility or assistance, or enter into or agree to enter
into any foreign exchange contracts, interest rate swaps, collars,
guarantees or agreements or other interest rate instruments;
(j) granted or agreed to grant any loans or other financial facilities or
assistance to or any guarantees or indemnities for the benefit of any
person in excess of US$5,000 in aggregate or create or allow to subsist
any mortgage, charge or other encumbrance over the whole or any part of
its undertaking, property or assets;
14
<PAGE>
(k) entered into or agreed to enter into any joint venture, partnership or
agreement or arrangement for the sharing of profits or assets;
(l) entered into or agreed to enter into any death, retirement, profit
sharing, bonus, share option, share incentive or other scheme for the
benefit of any of its officers or Employees or make any variation
(including, but without limitation, any increase in the rates of
contribution) to any such existing scheme or effect any key man
insurance;
(m) commenced, compromised or discontinued any legal or arbitration
proceedings (other than routine debt collection);
(n) prematurely repaid or prepaid any loans, borrowings or other financial
facilities or assistance made available to it;
(o) terminated the employment or office of any of its directors or senior
Employees or appointed any new director or senior employee or
consultant or materially alter the terms of employment or engagement of
any director, senior employee or consultant;
(p) declared, made or paid any dividend or distribution (whether of
capital or of profits);
(q) made or agreed to any amendment, variation, deletion, addition, renewal
or extension to or of, or terminated or given any notice or intimation
of termination of, or breached or failed to comply with the terms of
any contract or arrangement with any regulatory authority supervising
the Company;
(r) paid or agreed to pay any remuneration, fee or other sum to the Vendor,
any person connected with or controlled by any Vendor (other than
remuneration properly accrued due or reimbursement of business expenses
properly incurred, in each case as disclosed in the Disclosure Letter);
(s) entered into any transaction or assumed or incurred any liabilities or
made any payment except in the ordinary course of business at arm's
length;
(t) paid any cash payments received by the Company to any entity other
than into its accounts with its bankers;
(u) allotted or issued or agreed to be issued any share or loan capital or
other security giving rise to a right over the capital of the Company;
(v) redeemed or purchased or agreed to redeem or purchase any of its share
capital.
10. CONFIDENTIALITY AND PUBLICITY
Except:
(a) as may be required by law or the regulations of any recognised
investment or stock exchange; or
(b) as may be required in relation to any registration of this agreement or
any arrangement of which it forms part under the Restrictive Trade
Practices Act 1976; or
(c) as contained in the Press Release;
the provisions of this agreement and all negotiations relating to this
agreement are strictly confidential and no announcement or disclosure
of or publicity relating to the sale and purchase hereunder and terms
of
15
<PAGE>
this agreement shall be made by the parties to any third party
(other than their professional advisers and bankers) without the
written agreement of the other parties.
11. NOTICES
11.1 Any notice or other written communication given under or in connection
with this agreement may be delivered personally or sent by recorded
delivery post (airmail if overseas) or by facsimile.
11.2 The address for service of any party shall be its registered office
marked for the attention of the Company Secretary and notices shall be
served in duplicate one such notice to be marked for the attention of
the Chief Executive and the other such notice to be marked for the
attention of the Head of Legal and Business Affairs.
11.3 Any such notice or other written communication shall be deemed to have
been served:
(a) if delivered personally, at the time of delivery;
(b) if posted, at the expiry of two (2) Business Days or in the case of
airmail five (5) Business Days after it was posted;
(c) if sent by facsimile message, at the time of transmission in the case
of transmissions within or to the United Kingdom (if sent on a Business
Day during normal business hours, that is 9.30 to 17.30 local time) or
(if not sent on a Business Day during such normal business hours) at
the beginning of the next Business Day in the place to which it is sent
and in the case of transmissions from the United Kingdom to the United
States of America, at the time of receipt (if received on a normal
working day during normal business hours in that part of the United
States to which it is sent) or (if not received on a normal working day
during normal business hours) at the beginning of the next normal
working day in that part of the United States to which it is sent.
11.4 In proving such service it shall be sufficient to prove that personal
delivery was made, or that such notice or other written communication
was properly addressed stamped and posted or in the case of a facsimile
message that an activity or other report from the sender's facsimile
machine can be produced in respect of the notice or other written
communication showing the recipient's facsimile number and the number
of pages transmitted.
12. MISCELLANEOUS
12.1 No waiver by any of the parties to this agreement of any requirements
of this agreement or of any of such party's rights under this agreement
shall be valid unless such waiver is in writing and signed by or on
behalf of each of the parties so wishing to waive.
12.2 The rights and remedies conferred on the Purchaser in this agreement
are save as otherwise provided herein cumulative and in addition to and
without prejudice to all other rights and remedies available to the
Purchaser. No failure to exercise, and no delay in exercising, on the
part of the Purchaser any right or remedy under this agreement shall
operate as a waiver of such right or remedy nor shall any single or
partial exercise of any right or remedy preclude the exercise of any
other right or remedy.
12.3 This agreement shall so far as it remains to be performed hereafter
continue in full force and effect notwithstanding Completion and, in
particular, the rights and remedies of the Purchaser in respect of the
Warranties and/or the Tax Deed shall not be affected by Completion.
12.4 Each party shall bear its own costs incurred in the negotiations
leading up to and in the preparation of this agreement and of matters
incidental to this agreement.
16
<PAGE>
12.5 No term or provision of this agreement shall be varied or modified by
any prior or subsequent statement conduct or act of any party, except
that after signing and exchanging this agreement the parties may amend
this agreement by agreement in writing signed by all of the parties.
12.6 The headings to the clauses and any underlining in this agreement and
in the schedules are for ease of reference only and shall not form any
part of this agreement for the purposes of construction.
12.7 This agreement and any document executed pursuant to it sets out the
entire agreement and understanding between the parties in connection
with the sale and purchase of the Sale Shares.
12.8 The parties hereto shall insofar as each is able procure that any other
necessary party shall execute and do all such documents acts and things
as may reasonably be required subsequent to Completion for implementing
the provisions of this agreement.
12.9 This agreement may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts
shall together constitute one and the same instrument.
12.10 If at any time any term or provision in this agreement shall be held to
be illegal, invalid or unenforceable, in whole or in part, under any
rule of law or enactment, such term or provision or part shall to that
extent be deemed not to form part of this agreement, but the
enforceability of the remainder of this agreement shall not be
affected.
12.11 If there is a provision of this agreement, or of any agreement or
arrangement of which this agreement may form part, which (if it is not
non-notifiable) causes or would cause this agreement or any other
agreement or arrangement to be subject to registration under the
Restrictive Trade Practices Act 1976, then that provision shall not
take effect until the date after particulars of this agreement (or of
that agreement or arrangement, as the case may be) have been furnished
to the Director General of Fair Trading pursuant to section 24 of the
Restrictive Trade Practices Act 1976.
12.12 The Purchaser (for so long as the Purchaser shall have a controlling
interest in the Company) shall upon reasonable notice in writing and
subject to a duty of confidentiality by the Warrantors provide or (so
far as it is reasonably able) procure the Company to provide to the
Warrantors such working papers ledgers accounts records and other
documents for all years and periods ending on or before Completion as
are reasonably necessary to enable the Warrantors to complete and file
any tax or customs and excise or similar returns or reports, to carry
out any tax audit or other proceeding or otherwise to fulfil any
requirements of any law or regulation binding on the Warrantors and for
this purpose the Purchaser agrees that it will and will cause the
Company to use all reasonable endeavours to retain and maintain all
such working papers ledgers accounts records and other documents for
all years and periods ending on or before Completion (to the extent the
Company has the same on Completion) for a period of not less than the
applicable limitation period prescribed by the applicable Finnish
statute of limitations in respect of taxation claims
12.13 Save as provided in the Inter-Company Termination Agreement the entry
by the parties into this agreement shall not terminate or otherwise
amend the provisions of any Compilation Agreements
12.14 After Completion the Purchasers remedy shall be limited to damages
save as required to implement clause 12.8 or in the case of fraud
17
<PAGE>
13. LAW AND JURISDICTION
13.1 This agreement shall be governed by and construed in accordance with
English law and each party to this agreement submits to the exclusive
jurisdiction of the English courts.
13.2 The Covenantors and the Purchaser hereby agree that any legal action or
proceeding arising out of or in connection with this deed shall be
brought in the High Court of Justice in England and the Covenantors and
the Purchaser hereby irrevocably submit to the exclusive jurisdiction
of such court in connection with any such legal action or proceedings.
The Covenantors agree that any writ, judgment or other notice of legal
process in connection with any such legal action or proceedings shall
be sufficiently served if delivered to it care of K-Tel UK.
13.3 The Covenantors hereby agree that they shall not oppose or seek to
oppose in any part of the world outside of England (including in
particular but without limitation the United States of America) in any
manner (including whether on merits by the institution of legal or
similar proceedings or otherwise) any judgment and/or order of
whatsoever nature (including without limitation a default judgment) of
the High Court of Justice in England obtained by the Purchaser against
the Covenantors or either of them and that they will submit to any
judgment and/or order obtained against them in the High Court of
Justice without objection
18
<PAGE>
SCHEDULE 1
THE COMPANY
<TABLE>
<S> <C>
1. Name: K-Tel International (Finland) Oy
2. Company Number: 461.792
3. Registered office: Saynaslahdentie 12, 00560 Helsinki
4. Accounting reference date: June 30th
5. Last accounts filed: June 30th 1998
6. Last annual return: For the fiscal period ended June 30th 1998
7. Directors:
</TABLE>
Board of Directors
------------------
ordinary member - Arne Jan Erik Waselius
deputy member - Tarja Wist
Management Members
------------------
managing director - Jorma Kosonen
19
<PAGE>
SCHEDULE 2
COMPLETION DOCUMENTS
1. A release and waiver in the agreed form by the Vendor on behalf of
itself and the rest of the Vendor Group in favour of the Company of all
sums owed to it by the Company excluding the Inter-company Indebtedness
but including all other loans, guarantees or undertakings (save
pursuant to the Compilation Agreements and for the avoidance of doubt
the License Agreements ) made by it.
2. Two (2) copies of the Accounts of the Company in respect of the period
ended on the Balance Sheet Date duly signed by the directors of the
Company and the Company's auditors together with the original minutes
of the board of directors at which such accounts were approved and
authorities given to sign such accounts.
3. A certificate from each of the bankers to the Company certifying the
credit balance or debit balance, as the case requires, of each of the
Company's bank accounts as at the close of banking business on the
Business Day prior to the Completion Date, together with a statement
prepared by the Vendor containing full details of all payments made
into or out of such bank accounts in the period from the close of
banking business aforesaid to Completion and also containing full
details of:
(a) all cheques or other payments received by the Company in
such period which have not been presented for payment or paid into a
bank account of the Company; and
(b) all cheques or other payments drawn by the Company on
any of its bank accounts in such period which have not been debited to
any bank account of the Company.
4. The title deeds of the Property.
5. The documentation required on Completion pursuant to clause 5.
6. Key Service Agreements (receipt of which is acknowledged by the Purchaser
prior to Completion)
20
<PAGE>
SCHEDULE 3
EMPLOYEES
<TABLE>
<CAPTION>
Salary and fringe
benefits as well as
Commenced applicable collective
Name Position Employment bargaining agreements
- ---------------- ----------- ---------- ---------------------
<S> <C> <C> <C>
Auvinen Leena secretary 7.4.1986 8,800
Bernardi-Pohjanen Kristina promotion manager 20.2.1995 11,500
Jokinen-Stockell Asko warehouse man 1.6.1998 8,750
Komulainen Pekka product manager 22.10.1993 13,000
(non-music)
Kosonen Jorma managing director 1.11.1978 33,500
Lehto Mika sales rep 18.12.1989 13,700
Nyqvist Peter sales rep 1.10.1989 13,300
Ovaska Ulla accountant 9.3.1988 12,800
Sahlberg Kim sales rep (non music) 29.4.1996 8,800
Salin Raimo controller 3.3.1986 25,500
Winkler Jukka telly sales 23.1.1989 11,200
Ylaouttnen Jari product manager (rock) 1.8.1989 11,400
Haikio Sami promotion assistant 11.6.1999 per hour 54 fim
Kosonen Janne warehouse man 12.7.1999 per hour 40 fim
Lappalainen Jani warehouse man 3.6.1999 per hour 42 fim
</TABLE>
21
<PAGE>
SCHEDULE 4
PART A
Manufacturing Agreements
<TABLE>
<CAPTION>
Date of Principal Commercial
No. Contract Parties Term Terms
- ---- -------- ---------- ------- ------------------------
<S> <C> <C> <C> <C>
1.3. 1994 Sony Dadc Austria 1 year 2,88 - 3,78 FIM
1999 CD-Linja Finland 4,05 FIM Incl All
</TABLE>
PART B
Distribution Agreements
Co-operation Contracts/Marketing Deals
Import Deals
<TABLE>
<CAPTION>
Artist Date of Principal Commercial
Product Contract Parties Term Terms
- -------------- ----------- ----------------- ------------ --------------------------
<S> <C> <C> <C> <C>
7 Taivas 16.3.1998 About Pop Records 9.3.98-8.3.99 18% Club & Wholesale 15%
Romales 10.12.1997 Alba Records 10.12.97-9.12.98 20% Club & Wholesale 15%
Various 23.4.1999 Allstar Music 1.6.99-1.6.2001 14%
Jorma Kalevi 16.6.1999 Amda S.L. 16.6.99-31.5.2000 20%
Various Antti Sarpila Oy 30%
Ville Ja Pinja 26.3.1999 Avalant 26.3.99-31.3.2000 15%
Frank Robson 13.11.1998 Amber Records 13.11.98-31.12.99 20% Club & Wholesale 15%
Martin Ilmoni 8.10.1998 Beehive 8.10.98-7.10.99 20% Club & Wholesale 15%
Various Daigado 25%
Nature Sounds 26.2.1999 Keijo Takala 26.2.99-29.2.2000 20% Club & Wholesale 16%
Gladiaattorit 15.4.1999 Eketo-Expertit 15.4.99-30.4.2000 15%
Various 23.10.1997 Er-Eurorecords 23.10.97-22.10.98 18% Club & Wholesale 12%
Various Goofin' Records 25%
Spelarit 1.9.1998 Hels.Pitajan
Tanhuajat 1.9.98-31.8.99 25%
Twilight
Paradise 25.5.1998 Hip-O-Deli 25.5.98-24.5.99 25% Club & Wholesale 15%
Robin 31.12.1998 Hollowood 31.12.98-31.12.99 20% Club & Wholesale 15%
Various 25.5.1998 Huti 25.5.98-24.5.99 20% Club & Wholesale 15%
Various 15.5.1997 Hallstrom 15.5.97-14.5.98 25% Club & Wholesale 15%
Sonja Lumme &
Timo Turpeinen 25.9.1998 Inmusic 25.9.98-24.9.99 20% Club & Wholesale 15%
Marja Mattlar MM Music 25%
Various 2.4.1998 Image Data Suomi 2.4.98-1.4.99 18% Club & Wholesale 12%
Jarkko Toivonen Jacaranda Music 30%
Jaska Makynen 13.11.1998 JM-Musa For Now 20% Club & Wholesale 15%
Hurmio 22.4.1999 Koivula Reijo 22.4.99-30.4.2000 20%
Nadir Namedoff 10.2.1998 Life Music 10.2.98-9.2.99 25% Club & Wholesale 15%
22
<PAGE>
<S> <C> <C> <C> <C>
Various 1.9.1998 Erik Lindstrom
Kustannus 1.9.98-31.8.99 20% Club & Wholesale 15%
Loaded Dice 2.2.1999 Loaded Dice 2.2.99-31.1.2000 20% Club & Wholesale 15%
Finnish Boys 6.4.1999 Made In Europe 6.4.99-30.4.2000 17%
Marina & Marino 4.6.1999 Marina & Marino
Heinonen 4.6.99-30.6.2000 20%
Various 1.9.1998 Melske 1.9.98-31.8.99 20% Club & Wholesale 15%
Various Mosala
Kansanmusiikki-Instit 25%
Various 20.4.1999 Motley 20.4.99-30.4.2000 25% Club & Wholesale 15%
Various MTR-Music 17% Club & Wholesale 11%
Erikki Jantunen 6.5.1999 Mutkamusic 6.5.99-31.5.2000 25%
Kaffilajengi 30.3.1999 Multibase 30.3.99-31.3.2000 20%
Various 7.7.1999 MTV Musiikki 7.7.99-30.6.2000 17%
Various Olarin Musiikki 25%
Various Polarvox 18% Club & Wholesale 12%
Polyteknikkojen
Kuoro Polyteknikkojen
15.4.1999 Kuoro Ry 15.4.99-30.4.2000 20% Club & Wholesale 15%
The Poppoo 3.9.1998 Pori Jazz 3.9.98-2.9.99 20 % Club & Wholesale 15%
Various 8.10.1996 Profile Records 8.10.96-7.10.97 20% Club & Wholesale 15%
Various 29.1.1999 PR Sea Sound 29.1.99-31.1.2000 20% Club & Wholesale 15%
Naiskala 11.5.1998 Qrecords Viihde 11.5.98-10.5.98 20% Club & Wholesale 15%
Frederik 2.2.1999 Reetu Records 2.2.99-31.1.2000 17% Club & Wholesale 15%
Folkkarit 14.10.1997 Seita Music 30.9.97-29.9.98 25% Club & Wholesale 15%
Scratch 29.6.1999 Soundset 28.6.99-30.6.2000 18%
Various 10.5.1999 Sounds Good Music 10.5.99-31.5.2000 20%
Various Syrene Music 25%
Laura Repo 24.5.1999 Paula Syvaniemi 24.5.99-31.5.2000 20%
Urpo Ja Turpo Kustannusosakeyhtio
2.6.1998 Tammi 2.6.98-1.6.99 18% Club & Wholesale 15%
Various Top Records 25%
Mukaralla
Yhtye 24.3.1999 TR Music 24.3.99-31.3.2000 20%
Mukaralla
Yhtye 14.4.1997 Yle Tallennepalvelu 14.4.97-13.4.98 20% Club & Wholesale 12%
Various 12.6.1998 Arcade Music Comp
Sweden 17% Club & Wholesale 8%
Various 28.6.1996 Edel Records Sweden 1.7.96-30.6.97 17%
Various 14.10.1996 MTM Music
Scandinavia 2 Years 22%
Kenny Rogers 22.4.1999 Norske Gram 22.4.99-21.4.2000 18% TV Advertised 15%
Honey B & The ESA Kuloniemi & Aija
T-Bones 19.12.1997 Puurtinen 2 Years 15% of PPD
Janina 9.4.1999 JFR-Advertising
Management 4 Years 17.5% of PPD after 5000
units sales 35%
Juha Laitila 26.3.1999 Fast Move 4 Years 15% of PPD after 5000
units sales 33%
23
<PAGE>
<S> <C> <C> <C> <C>
Songs Of
Helsinki 18.2.1999 Multimedia 3 Years 30% of PPD
Ville Ja Pinja 15.4.1999 Avalant 4 Years 15% of PPD
Various Scandinavian Records 2000-Units CD 44,00 Nok,
Various Remixed Records MC 34, 00 Nok
Various Ace Records Ltd, UK
Various Blaricum CD Company NV
Various Castle Music Ltd
Various Eagle Rock Entertainment
Various Grand Records, UK
Various Iceberg Records, Denmark
Various Sanctuary Music Productions
Various Shift Music Germany
Various Snapper Music, UK
Various ZYX Music, Germany
</TABLE>
PART C
Licensing Out Agreements
<TABLE>
<CAPTION>
Date of Principal
Artist Title Licensor Contract Term Commercial Terms
- ----------------- --------------------- --------- ------- ------------------
<S> <C> <C> <C> <C>
Babe/Oh My Little
Baby Boy ZYX Music, Germany 1.4.1999 5 Years 18% of PPD
Babe/Oh My Little
Baby Boy Alpha Music, Taiwan 1.9.1998 3 Years 20% of PPD
Babe/Oh My Little
Baby Boy Avex Inc, Japan 13.5.1999 5 Years 16% Of PPD
10% PAC. DED.,
TV. ADV 14%
101/Aamuyo Dominion, Germany 15.4.1998 3 Years DEM 0.06 per title
Babe/Oh My Little
Baby Boy Hitland SRL Italy 1.2.1999 3 Years 18% of PPD
Babe/Call me Magic Records, Poland 1.3.1999 3 Years 18% of PPD
Babe/Oh My Little
Baby Boy Tempo Music, Spain 17.3.1999 3 Years 18% of PPD
JS16/Stomp to
My Beat Magic Records, Poland 18% of PPD
JS16/Stomp to
My Beat Priority Rec, USA
</TABLE>
PART D
Licensing In Agreements
<TABLE>
<CAPTION>
Date of Principal Commercial
Artist License Contract Term Terms
- -------------- ---------- -------------- ------------------ ----------------------
<S> <C> <C> <C> <C>
Various Toco, Holland New 1 Year 25% of PPD, TV ADV 18%
DJ Bobo Eams, Germany New 1.8.99-30.6.2002 23% of PPD, TV ADV 21%
DJ. Visage NR-Music, Austria New 1999-2002 19% of PPD, TV ADV 18%
24
<PAGE>
<S> <C> <C> <C> <C>
The Black Great Vision Intl,
Sweden 10.3.1998 3 Years 20% of PPD, TV ADV 18%
Ouriel Clark Evento Musica, Italy 5.2.1999 3 Years 18% of PPD
Gibson
Brothers Intl A Management,
Holland 1.6.1998 3 Years 20% of PPD
Loca Selsdon Intl,
Switzerland 21.12.1998 3 Years 18% of PPD
N.Y.City
Beats ZYX Music, Germany 25.11.1998 3 Years 18% of PPD, TV ADV 17%
Rapublic Eams, Germany 9.12.1998 3 Years 23% of PPD, 3rd Party 18%
Rockamour Evento Musica, Italy 8.4.1998 3 Years 18% of PPD, TV ADV 17%
Radiorama
Ken Laszlo
Heaven &
Earth S.A.I.F.A.M, Italy 7.4.1998 3 Years 18% of PPD, TV ADV 17%
S.I.B. VS The
Tokens Feat
Jay Seigel ITWHY SAS, Italy 9.2.1999 3 Years 19% of PPD, TV ADV 17%
</TABLE>
<TABLE>
<CAPTION>
Plus Compilations
- -----------------
<S> <C>
Cool Dance
Cool Love Ballads
Double Dynamite Dance
Energy of Visions
Energy X-Travadance
F1-99
Hittiparaati 2
Hockey Nigh 2nd
Millenium Party
Cool Screen Club
Tuplabestis
Finnish 4
Swedish 2
Norwegian 3
Danish 1
</TABLE>
25
<PAGE>
SCHEDULE 5
RECORDING CONTRACTS
<TABLE>
<CAPTION>
Date of
Artist Parties Contract Term Principle Commercial Terms
- -------------- ---------------- -------------- -------- ----------------------------------
<S> <C> <C> <C> <C>
Babe Jani Kaariainen 11.2.1998 8% of PPD, Singles 10%
Club Disease Sasu Saaristo
Pasi Haavisto 18.5.1999 4 Years 8% of PPD, Singles 10%
Toni Halme Toni Halme 6.4.1999 4 Years 15% of PPD
Inez Ines Reingold 28.7.1998 6 Years 10% of PPD
K-System Kimmo Kauppinen 26.5.1999 4 Years 8% of PPD, Singles 10%
Housut Pois AC-Team 14.5.1999 4 Years 10% of PPD
Sergei M Plastman Oy, Jari
Miettinen 25.5.1999 15% of PPD, Singles 10%
</TABLE>
26
<PAGE>
SCHEDULE 6
PRODUCER CONTRACTS
<TABLE>
<CAPTION>
Copyright Period
(if less than Principal Commercial
No. Date Parties Artist Term life of copyright) Terms
- ---------- ---------- ---------- -------- ------------- ------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
NONE
</TABLE>
27
<PAGE>
SCHEDULE 7
SCHEDULE OF RECORDINGS IN WHICH COPYRIGHT IS OWNED
BY THE COMPANY WITH FULL TITLE GUARANTEE
THROUGHOUT THE WORLD IN PERPETUITY
<TABLE>
<CAPTION>
Catalogue Album/
Number Single/Video Artist Titles
- ------ ------------ ------ ------
<S> <C> <C> <C>
Inez Transparent O
Inez X-Tato-Holic
TV-316 CD Single Toni Halme Viikinki
MK-320 CD Single Matti Kyllonen Hakkinen On Ykkonen
YX-8218 CD 101 Aamuyo
YX-9218 MC 101 Aamuyo
JA-8241 CD Jazmine Nightfall
JA-9241 MC Jazmine Nightfall
JA-239 CD Maxi Jazmine Love Like Never Befor
JA-263 CD Maxi Jazmine Love Takes Me
JA-270 CD Maxi Jazmine Woman in Love
BA-302 CD Maxi Babe Oh My Little Baby Boy
CD-321 CD Maxi Club Disease Rock This Beat
K-System To Be Released
PO-307 CD Single Pikkuoravat Kuuraketti-99
</TABLE>
28
<PAGE>
SCHEDULE 8
PART A - COMMERCIAL WARRANTIES
1. INFORMATION PROVIDED
1.1 Intentionally Deleted.
1.2 The facts set out in the introduction and in the schedules to this
agreement are true and accurate in all respects.
2. OWNERSHIP OF SALE SHARES
2.1 The Vendor is entitled to sell and transfer to the Purchaser on the
terms of this agreement and without the consent of any other party the
full legal and beneficial ownership of and in the Sale Shares with full
title guarantee free and clear from all Encumbrances and all
restrictions on the ability to vote the Sale Shares.
3. AUTHORITY AND CAPACITY OF THE VENDOR
3.1 The Vendor has full power and authority to enter into this agreement
and the Tax Deed (and the other documents referred to in the agreement
to which it is a party) and when executed each of this agreement and
the Tax Deed (and the other documents referred to in the agreement to
which it is a party) will constitute binding obligations on the Vendor
in accordance with their respective terms.
3.2 The execution and delivery of, and the performance by the Vendor of its
obligations under, this agreement and the Tax Deed will not result in a
breach of any provision of the memorandum or articles of association of
the Vendor and/or the Company or in a breach of any agreement,
arrangement, order, judgment or decree of any court or any governmental
agency to which the Vendor and/or the Company is a party or by which
the Vendor and/or the Company or any of their assets are bound.
4. ACCOUNTS
4.1 The copies of the Accounts delivered to the Purchaser are complete and
accurate copies of the originals thereof in all respects.
4.2 The Accounts comply with the provisions of all relevant statutes and
have been prepared in accordance with and comply with all relevant
Accounting Requirements.
4.3 The Accounts:
(a) give in accordance with good accounting practice a true and fair view
of the assets and liabilities of the Company as at the Balance Sheet
Date and of its income for the financial period ended on the Balance
Sheet Date and do not materially overstate the value of any such
assets;
(b) Intentionally deleted
(c) make proper provision or reserve for all liabilities and capital
commitments of the Company outstanding at the Balance Sheet Date,
including to the extent required contingent, unqualified or disputed
liabilities (e.g. any liabilities for accounting, salaries and
premiums, Taxes, pension, retirement or similar obligations) in
accordance with applicable Accounting Requirements;
(d) make provision or reserve for deferred Taxes in accordance with
applicable Accounting Requirements;
29
<PAGE>
(e) contain all disclosures required by the Accounting Requirements and
Finnish law; and
(f) make adequate provision for all bad and doubtful debts at the Balance
Sheet Date.
4.4 The bases and policies of accounting, adopted for the purpose of
preparing the Accounts, are the same as those adopted in preparing the
audited accounts of the Company in respect of the last three (3)
preceding accounting periods.
4.5 The Company has not failed to file its annual accounts with the
relevant authorities in Finland, as required under the laws of Finland
4.6 All of the receivables (save for an allowance of up to US$10,000 in
aggregate for bad debts which have not been specifically provided for
in the Accounts) of the Company (accounts receivable) are good and
fully collectible within ninety (90) days from the date when they
become due and payable at the recorded amounts together with interest
thereon
5. ACCOUNTING RECORDS
5.1 The accounts, books, ledgers and financial and other records of
whatsoever kind of the Company (including invoices) have in all
material respects been properly kept in accordance with the
requirements under the laws of Finland and are in the possession of the
Company or under its control, and all transactions relating to its
business are reflected therein and such accounts, books, ledgers and
financial and other records taken together give and reflect a true and
fair view of the financial, contractual and trading position of the
Company and the state of its current and fixed assets and liabilities .
6. GUARANTEES, OVERDRAFT FACILITIES AND CHARGES
6.1 Save for the Inter-company Indebtedness there are not at today's date
any guarantees, loans, undertakings, commitments on capital account or
(save in the ordinary course of business) liabilities, actual or
contingent, or (save in the ordinary course of business) comfort
arrangements (whether or not legally binding) which have been made,
given, entered into or incurred by or on behalf of the Company or
binding on the Company (and whether to procure the solvency of any
other person or otherwise).
6.2 The Company has no bank overdraft facilities, acceptance credits or
other financial facilities outstanding or available to it.
6.3 The Company has not factored any of its debts or engaged in financing
of a type which would not require to be shown or reflected in the
Accounts.
6.4 The amounts borrowed by the Company do not exceed any limitation on its
borrowing contained in any debenture or other deed or document binding
upon the Company.
6.5 The Company has not received notice to repay under any agreement
relating to any borrowing or indebtedness in the nature of borrowing on
the part of the Company which is repayable on demand, and so far as the
Vendor and/or the key Employees are aware there has not occurred any
event of default under any agreement relating to any other borrowing or
indebtedness in the nature of borrowing on the part of the Company or
any event which with the giving of notice and/or the lapse of time
and/or a relevant determination would constitute such an event of
default.
6.6 The Company has not incurred any outstanding indebtedness except
indebtedness arising in the ordinary course of trading.
6.7 The Company has not entered into or agreed to enter into any
performance or other bonds.
30
<PAGE>
6.8 There is not at today's date:
(a) except for the registered charges details of which are set out in the
Disclosure Letter, any mortgage, charge or lien or other form of
Encumbrance or security or equity of any nature (including a
conditional obligation) on or affecting the Sale Shares or the Property
or save for Encumbrances arising in the normal course of business and
subject as aforesaid the assets or property or any part of the assets
or property of the Company or any debenture or floating charge whether
secured or otherwise;
(b) in issue any loan capital of the Company.
7. DEBTS, INTER-COMPANY INDEBTEDNESS
7.1 The Inter-company Indebtedness is the only indebtedness of the Company
owed to the Vendor and/or any other members of the Vendor Group.
8. GRANTS
8.1 Except as disclosed in the Disclosure Letter, the Company has not
outstanding any governmental or regional grant whatsoever.
9. BANK ACCOUNTS
9.1 A true and accurate statement of the bank accounts and all other
investment accounts of the Company as at the close of business on the
day prior to the Completion Date is annexed to the Disclosure Letter.
10. PLANT AND MACHINERY
10.1 All vehicles and office furniture and equipment and machinery (if
any) and computer hardware and software and other assets used by the
Company are its property both legally and beneficially and are in a
reasonable state of repair and condition (fair wear and tear excepted).
10.2 The Company is not a party to any maintenance agreement in respect of
any of its assets the cost of which maintenance agreement exceeds
US$6,000 per annum and no maintenance agreement to which the Company is
a party is for a period in excess of five (5) years from the date of
its commencement.
10.3 No outstanding notices in relation to any statutory obligation have
been served on the Company in respect of any of its assets or in
respect of any contravention or non-compliance with or alleged
contravention or non-compliance with any obligation or otherwise.
10.4 Save as set out in the Accounts the Company has not entered into any
hire purchase, conditional purchase or credit sale agreement or leased
or hired any of its assets from or to a third party nor will it do so
pending Completion.
10.5 The Company is not in default in the performance or observance of any
of the provisions of any hire purchase or credit sale or leasing or
hiring agreements disclosed in the Disclosure Letter.
11. STOCK
11.1 The Company's stock in trade as at close of business on the Business
Day prior to Completion is as set out in Schedule 5 of the Disclosure
Letter but with an allowance in respect of each stock item (on a
catalogue number by catalogue number or product identification code by
product identification code basis (as applicable)) of up to two per
cent (2%) more or less of such stock item.
31
<PAGE>
12. EMPLOYEES AND CONSULTANTS
12.1 There are no outstanding offers of employment or engagement made to any
person intended to be a permanent member of the Company's staff by the
Company and there is no such person who has accepted an offer of
employment or engagement made by the Company but who has not yet taken
up that employment or engagement. Schedule 3 contains a true and
current list of all Employees of the Company and the salaries, wages,
applicable collective bargaining agreements and fringe benefits paid or
granted to the Employees of the Company at the date hereof and there
have been no increases in such salaries, wages and/or fringe benefits
of such Employees after the Balance Sheet Date, except as may be
required by relevant Finnish collective bargaining agreement(s) applied
to the Employees
12.2 Proper provision has been made in the Accounts for the amount of all
present and future liabilities in respect of employment or pension
undertakings to be paid to current or former directors, officers or
other employees of the Company.
12.3 The Company is not involved in any industrial or trade dispute or any
dispute or negotiation regarding a claim or the dismissal, suspension,
disciplining or varying of the terms and conditions of employment of
any present or former director or consultant or employee, with any
trade union or association of trade unions, work council, staff
association or other organisation or body of employees and there are no
facts known, or which on reasonable enquiry would be known, to the
Company or the Warrantors which might indicate that there may be any
such dispute or negotiation. The Company has not received any kind of
notice, which notice remains current, of any claim that it has not
complied with any applicable employment labour or related laws of
Finland, there are no pending or current and no threatened claims or
labour litigation in respect of the Company. No negotiations are
required to be held by the Company with trade unions under applicable
Finnish collective bargaining agreements on otherwise as a result of
the transactions contemplated by this agreement and no information
relating thereto is required to be conveyed to such trade unions under
applicable Finnish collective bargaining agreements or otherwise.
12.4 The Company has not entered into any union membership, security of
employment, redundancy, recognition or other collective bargaining
agreement (whether legally binding or not) with a trade union,
association of trade unions, works council, staff association or other
organisation or body of employees, nor has the Company in respect of
any employee entered into any collective agreement with any trade union
or other employee body representing employees concerning the
introduction of new equipment or technology.
12.5 No disciplinary action has been taken against and no written grievance
or complaint of sex, race or disability discrimination has been made to
the Company by any employee in the twelve (12) months ending on the
date of this agreement.
12.6 No past or present director, employee or consultant has made any
written claim against the Company for loss of office or arising out of
the termination of his office or employment or in respect of any
accident or injury which is not fully covered by insurance.
12.7 No liability has been or will be incurred by the Company for any
existing breach of any contract of service for redundancy payments,
protective awards or for compensation for wrongful dismissal or unfair
dismissal or for failure to comply with any order for the reinstatement
or re-engagement of any employee or for any other liability accruing
from the actual or proposed termination or variation of any contract of
employment or for services other than for the sums paid to the
Employees prior to the execution of this agreement.
12.8 No gratuitous payment has been made or promised by the Company:
32
<PAGE>
(a) in respect of or contingent upon the sale of the Sale Shares; or
(b) in connection with the actual or proposed termination or suspension of
employment or engagement or variation of any contract of employment or
engagement of any present or former director, consultant or employee.
12.9 There is no person previously employed by the Company who now has a
right to return to his work or a right to be reinstated by the Company
under the provisions of the Finnish labour laws.
12.10 The Company is not under any present future or contingent liability to
provide any goods, services, accommodation or personal insurances in
excess of compulsory insurances, as provided for under the laws of
Finland, or benefit whatsoever (whether by way of remuneration or
otherwise) to any of its employees, former employees or in each case
any Warrantors' Affiliate to any such employee or former employee,
except for as listed in Schedule 3 hereto.
12.11 The Company has not made any loans or quasi loans (as defined in the
Act) to or entered into any credit transaction (as so defined) with any
of its directors or Employees.
12.12 No person has been employed who requires a work permit without such a
permit being in force.
12.13 The Company has in relation to each of its directors and Employees (and
so far as relevant to each of its former directors and employees)
complied with all obligations imposed on it by Article 119 of the
Treaty of Rome, the Finnish Act on Employment Contracts No 320/1970 as
amended and all other statutes, regulations, codes of conduct and
practices relevant to the relations between the Company and its
directors and employees under Finnish law and the Company has
maintained adequate and suitable records regarding their service.
12.14 Within the period of one year preceding today's date the Company has
not been a party to any relevant transfer as defined in the Finnish Act
on Employment Contracts No 320/1970 as amended or elsewhere in Finnish
labour law and statutes and regulations.
12.15 The Company has not engaged persons as independent or self employed
contractors.
12.16 No Employee having management responsibility has given formal notice
of his or her termination of his or her employment with the Company
13. CONNECTED TRANSACTIONS
13.1 Save as may be released, waived or paid in connection with or pursuant
to this agreement, there are no:
(a) loans made by the Company to the Vendor or any Affiliate of the Vendor
or any member of the Vendor's Group or to any person connected with the
Vendor;
(b) debts owing to the Company by any of the persons referred to in (a)
above.
13.2 There are no mortgages, charges, guarantees or other security
arrangements entered into by the Company in respect of any loans, debts
or other obligations of any of the persons referred to in Warranty
13.1(a)
13.3 There are no existing contracts, formal or informal arrangements (such
as but not limited to inter-company arrangements between the Company
and the Vendor or any Affiliate of the Vendor or any member of the
Vendor's Group or any person connected with the Vendor or any member of
the Vendor's Group) to which the Company is a party and in which any of
the persons and/or entities referred to in Warranty 13.1(a) are
interested whether directly or indirectly.
33
<PAGE>
13.4 Intentionally Deleted
14. COMPUTER SYSTEMS AND RECORDS
14.1 There are in existence maintenance and support agreements in respect of
all hardware. and all in-licensed software used by the Company and
software licences in respect of all software used by the Company and
the Company has not done, or omitted to do, any act which will entitle
the provider of the maintenance and support services of the licensor of
the software to terminate such agreements or to withhold or refuse to
supply any services thereunder; and the Company is not in dispute with
such provider regarding its maintenance and support obligations or with
any such licensor.
14.2 The Company has none of its records, systems, controls, data or
information, recorded, stored, maintained, operated or otherwise wholly
or partly dependent on or held by any means (including any electronic,
mechanical or photographic process whether computerised or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company.
14.3 Neither the performance nor the functionality of the computer
equipment, the computer software or any other information technology
owned or used by the Company is or will be affected by dates prior to,
during or after the year 2000 and in particular (but without
limitation: (i) no value for current date causes or will cause any
interruption in operation; (ii) datebased functionality behaves and
will behave consistently for dates prior to, during and after the year
2000; (iii) in all interfaces and data storages, the century in any
date is and will be specified either explicitly or by unambiguous
algorithms on interfacing rules; and (iv) the year 2000 is and will be
recognised as a leap year
15. AGREEMENTS AND COMMITMENTS
15.1 There are no agency, distributorship agreements, management, licence,
or co-operation agreements to which the Company is a party and under
which the Company has any continuing obligation or liability
15.2 The Company is not and will not on Completion be a party to any long
term contract (that is, a contract not capable in the ordinary course
of business of complete performance in accordance with its terms within
six months from the date on which it was entered into) or to any
contract not entered into in the normal course of business.
15.3 There are no agreements in force restricting the freedom of the Company
to provide and take goods and services by such means and from and to
such persons as it may from time to time think fit.
15.4 There is not outstanding any:
(a) agreement or arrangement entered into by the Company otherwise than by
way of bargain on arm's length terms;
(b) sale or purchase option or similar agreement or arrangement affecting
any assets owned or used by the Company or by which the Company is
bound;
(c) joint venture, consortium, partnership or profit sharing agreement or
arrangement to which the Company is a party;
(d) power of attorney or other arrangement with any person pursuant to
which such person is granted the authority to act for or on behalf of
the Company.
34
<PAGE>
15.5 Neither the entering into of this agreement nor Completion does nor
will result in the breach of or constitute a default under any
agreement, to which the Company is now a party or any loan to or
mortgage created by the Company or relieve any other party to a
contract with the Company of such other party's obligations under such
contract or entitle such other parry either to terminate such contract,
whether summarily or by notice, or to exercise any rights or any
option.
15.6 No agreement or transaction to which the Company is a party is invalid
unenforceable or ultra vires and there are no grounds for rescission,
breach, avoidance or repudiation of any agreement or other transaction
to which the Company is a party as a result of the acts or omissions of
the Company.
15.7.1 So far as the Vendor is aware no party with whom the Company has
entered into any agreement or arrangement is in default thereunder,
being a default which would have a material and adverse effect on the
financial or trading position or prospectus of the Company; and there
are no circumstances which are likely to give rise to any default as a
result of the acts or omissions of the Company.
15.7.2 No party with whom the Company has entered into any agreement or
arrangement is with the knowledge of either of the Key Employees in
default thereunder, being a default which would have a material and
adverse effect on the financial or trading position or prospects of the
Company; and, there are no circumstances which are likely to give rise
to any default as a result of the acts or omissions of the Company.
15.8 Intentionally Deleted
16. INTELLECTUAL PROPERTY RIGHTS
16.1 The Company has not done or omitted to do any act which has resulted
or will result in the breach of any other person's intellectual
property rights.
16.2 The Intellectual Property Rights owned or used by the Company comprises
all such rights necessary to permit the operation of the Company's
business as now being conducted in all material respects
16.3 Subject to sub-clause 16.4 and the Trademark License all Intellectual
Property Rights owned or used by the Company are vested absolutely in
the Company free from Encumbrance and the Company has not granted any
third party rights in respect thereof
Insofar as the Recordings or any of them are concerned:
16.4 The Recordings are subject only to the options, liens, charges, claims,
equities, and encumbrances and restrictions contained in the Music
Contracts.
16.5 The Company is at Completion the absolute beneficial owner of the Music
Rights in the Recordings made and/or acquired pursuant to the Recording
Contracts.
16.6 All producers and directors of Recordings made and/or acquired pursuant
to the Recording Contracts or the Producer Contracts and all performers
whose performances are embodied or fixed in such Recordings have
assigned to the Company all their rights of any kind (including all
Music Rights) in and in respect of such performances and Recordings.
16.7 Save for the requirement of the Company to pay mechanical royalties in
respect of works embodied on the Recordings and save for the rights (if
any) of the local Finnish collecting society equivalent to PPL and of
affiliated societies around the world no person other than the Company
has or may validly claim a proprietary, administrative or participatory
interest in the Recordings made and/or acquired pursuant to them
Recording Contracts
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16.8 The Company has all necessary rights, power, legal capacity and
authority and all necessary corporate action on the part of the Company
and its shareholders has been duly and validly taken to authorise the
Company to own, use and exploit the Recordings and Music Rights.
16.9 No person holds a power of attorney on behalf of the Company
affecting, directly or indirectly, any Recordings or Music Rights.
16.10 No written notice has been received by the Company to the effect that
it is claimed that the rights in and to any Recording or any Music
Rights therein must be re-assigned to any person whether by virtue of a
breach, failure to exploit a Recording or otherwise.
16.11 Inducement letters have been obtained from each artist, consultant,
director, producer and each other person where a service company has
entered into a Music Contract in respect of any services or the product
of any services of such artist, consultant, director, producer or other
person.
16.12 The Company has all necessary rights to use and exploit and to
authorise others to use and exploit all artwork and materials used or
intended to be used in the packaging for or otherwise in connection
with any Recording or any advertising or promotional material relating
to any Recording.
Insofar as the Compositions or any of them are concerned:
16.13 The Compositions are subject only to options, liens, charges, claims,
equities and encumbrances and restrictions contained in the Music
Contracts.
16.14 The Company is at Completion the absolute beneficial owner of the
Music Rights in the Compositions.
16.15 All writers and/or composers of Compositions have assigned to the
Company all their rights of any kind (including all Music Rights) in
and in respect of such Compositions.
16.16 Subject to the rights of the local Finnish collecting society
equivalent of the PRS and of affiliated societies around the world no
person other than the Company has or may validly claim a proprietary,
administrative or participatory interest in any Compositions.
16.17 The Company has all necessary rights, power, legal capacity and
authority and all necessary corporate action on the part of the Company
and its shareholders has been duly and validly taken to authorise the
Company to own, use and exploit the Compositions and Music Rights.
16.18 No person holds a power of attorney on behalf of the Company
affecting, directly or indirectly, any Compositions or Music Rights.
16.19 No written notice has been received by the Company and/or Companion
Music/ Scandinavian Songs AB to the effect that it is claimed that the
rights in and to any Composition or any Music Rights therein must be
re-assigned to any person whether by virtue of a breach, failure to
exploit a Composition or otherwise.
16.20 Inducement letters have been obtained from each writer and/or composer
and each other person where a service company has entered into a Music
Contract in respect of any services or the product of any services of
such writer and/or composer or other person.
16.21 The Company has all necessary rights to use and exploit and to
authorise others to use and exploit all artwork and materials used or
intended to be used in connection with any Composition or any
advertising or promotional material relating to any Composition.
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17. CONSENTS AND WAIVERS
17.1 All necessary permissions, consents, licences, rights and authorities
required in respect of the making and exploitation of the Recordings
made and/or acquired pursuant to the Recording Contracts and the Music
Rights therein have been obtained and no third party has the right of
first negotiation or first refusal or any option with respect to the
aforesaid Recordings or the aforesaid Music Rights.
17.2 The Company has secured a warranty from its licensors as to the effect
that all necessary permissions, consents, licences, rights and
authorities required in respect of the exploitation of all other
Recordings and the Music Rights therein by or on behalf of the Company
in Finland (or such other parts of the world as the Company may have
acquired the aforesaid rights) have been obtained and that no third
party has the right of first negotiation of first refusal or any option
for Finland (or such other parts of the world as the Company may have
acquired rights in the Recordings as aforesaid) with respect to the
aforesaid Recordings or the aforesaid Music Rights.
17.3 All necessary permissions, consents, licences, rights and authorities
required in respect of the writing and/or composition and exploitation
of the Compositions written and/or composed and/or acquired pursuant to
the Publishing Contracts and the Music Rights therein have been
obtained and no third party has the right of first negotiation or first
refusal or any option with respect to the aforesaid Compositions or the
aforesaid Music Rights.
17.4 All necessary permissions, consents, licences, rights and authorities
required in respect of the exploitation of the Compositions and the
Music Rights therein by or on behalf of the Company in Finland (or such
other parts of the world as the Company may have acquired the aforesaid
rights) have been obtained and no third party has the right of first
negotiation or first refusal or any option for Finland (or such other
parts of the world as the Company may have acquired rights in the
Compositions as aforesaid) with respect to the aforesaid Compositions
or the aforesaid Music Rights.
18. ADVANCES AND PAYMENTS
In respect of the Recordings:
18.1 The balances of all unrecouped advances or (similar payment which is
recoupable from royalties, fees or other sums) in respect of each of
the Recordings are set out in the notes to the Accounts.
18.2 Intentionally Deleted
18.3 The Company does not have, any debt, liability, or obligation of any
nature, whether accrued, absolute, contingent or otherwise, and whether
due or to become due, with respect to or affecting the Recordings or
the Music Rights.
18.4 The Company is not legally obliged at any time to pay any further
advances in respect of the Recordings or the Music Rights.
18.5 All royalty statements produced by the Company have been produced for
and sent to those entitled to receive them by the dates on which they
were due to be submitted, were accompanied by payment to the recipient
of the sum shown on the statement to be due to the recipient and were
complete and accurate in all material respects.
18.6 All persons other than the artists, producers and consultants
contracting with the Company under the Music Contracts who provided any
services whether as performer or otherwise in connection with making of
any Recording agreed to provide their services in return for a one-off
buy-out fee and are not entitled to any royalty residual or other
similar sum in any circumstances.
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18.7 Where the Company has licensed or permitted any third party to exercise
or exploit any Music Rights the Company is not obliged under any
agreement to account for or pay any royalties or other sums in respect
of any such use or exploitation to any person unless the Company has
first received payment or a credit in respect thereof in Finland.
18.8 No Recording made and/or acquired pursuant to the Recording Contracts
was made under any agreement involving any union or unions which
agreements require any royalty or residual or similar payments to be
made to any person in respect of the reproduction, use or exploitation
of the Recording in question.
18.9 All recording and other costs incurred in connection with the making of
the Recordings under the Recording Contracts have been paid in full.
18.10 The Company has not made any loans or granted or committed itself to
make any payments to or for any party.
18.11 The Company is free to exploit and use and to authorise others to
exploit and use the Recordings in any manner and by any means and in
any medium subject only to the payment of advances and/or royalties in
accordance with the Music Contracts, any restrictions in the Music
Contracts and the rights of any person owning any rights in the musical
or literary work embodied in the Recordings and to the rights of the
local Finnish equivalent to PPL or affiliated societies around the
world.
In respect of the Compositions:
18.12 The balances of all unrecouped advances (or similar payment which is
recoupable from royalties, fees or other sums) in respect of each of
the Compositions are set out in the notes to the Accounts.
18.13 Intentionally Deleted.
18.14 The Company does not have, any debt, liability, or obligation of any
nature, whether accrued, absolute, contingent or otherwise, and whether
due or to become due, with respect to or affecting the Compositions or
the Music Rights.
18.15 The Company is not legally obliged at any time to pay any further
advances in respect of the Compositions or the Music Rights.
18.16 All royalty statements produced by the Company have been produced for
and sent to those entitled to receive them by the dates on which they
were due to be submitted, were accompanied by payment to the recipient
of the sum shown on the statement to be due to the recipient and were
complete and accurate in all material respects.
18.17 All persons (if any) other than the writers and/or composers
contracting with the Company under the Music Contracts who provided any
services in connection with any of the Compositions agreed to provide
their services in return for a one-off buy-out fee and are not entitled
to any royalty residual or other similar sum in any circumstances.
18.18 Where the Company has licensed or permitted any third party to exercise
or exploit any Music Rights (and although the Company may be obliged to
account on a so-called "at source" basis) the Company is not obliged
under any agreement to account for or pay any royalties or other sums
in respect of any such use or exploitation to any person unless the
Company has first received payment or a credit in respect thereof in
Finland.
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18.19 No Composition was made under any agreement involving any union or
unions which agreements require any royalty or residual or similar
payments to be made to any person in respect of the reproduction, use
or exploitation of the Composition in question.
18.20 All costs (if any) payable by the Company in connection with the
writing and/or composition of the Compositions have been paid in full.
18.21 The Company has not made any loans or granted or committed itself to
make any payments to or for any party other than as provided in the
Music Contracts.
18.22 The Company is free to exploit and use and to authorise others to
exploit and use the Compositions in any manner and by any means and in
any medium subject only to the payment of advances and/or royalties in
accordance with the Music Contracts and any restrictions in the Music
Contracts and to the rights of the local Finnish equivalents of MCPS
and PRS and affiliated societies around the world.
19. MUSIC CONTRACTS
In respect of the Recordings:
19.1 Part D of Schedule 4 and Schedules 5 and 6 together contain a complete
list of all agreements by which the Company has acquired or purported
to acquire the Music Rights or any of them and any other agreements
entered into by the Company with any person or persons relating to the
making of any Recordings or the provision of any services by any person
or persons in connection with the making of any Recordings including
but not limited to agreements with performers, vocalists, musicians,
conductors, producers, consultants, directors and engineers.
19.2 Schedule 4 contains a complete list of all the manufacturing
distribution licensing and marketing agreements entered into by the
Company under which the Company has any continuing obligation or
liability.
19.3 Schedule 7 contains a complete list of the sound recordings, films and
videos in which the Company owns the copyright with full title
guarantee throughout the world in perpetuity and which were made in
pursuance of any Recording Contract and all facts and matters contained
in Schedule 7 are true.
19.4 True copies of all the written Music Contracts and any alterations,
variations or modifications thereof have been supplied by the Company
to the Purchaser and the original signed engrossments belong to and are
in the possession of the Company.
19.5 Intentionally Deleted
19.6 The Company is not bound by any agreement, understanding or arrangement
concerning the use, distribution or other exploitation of any of the
Recordings or the Products in any country, including the United Kingdom
and the United States, other than those concerning non-exclusive
performing rights.
19.7 All the grants of rights, conveyances, consents and permissions
contained in the Music Contracts are in full force and effect and all
the Music Contracts and other instruments are valid, enforceable and
subsisting and are not void or voidable for any reason.
19.8 The Company has fully performed all of its material obligations in
respect of the Music Contracts and is not in material breach of or in
material default with respect of any such agreements. Without
limitation to the generality of the foregoing the Company has accounted
to and paid all royalties and other sums due to the persons so entitled
under the Music Contracts and/or other person in accordance with the
terms of all such agreements.
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19.9 All works embodied in the Recordings are licensed to the Company for
mechanical use at standard industry rates on standard terms in each
territory of the world and all first mechanical licences in respect of
such works have been granted at standard industry rates on standard
terms.
19.10 No agreement to which the Company is a party will be affected or varied
or breached or terminated by virtue of the parties entering into or
performing this agreement or the transactions referred to herein or as
a result of Completion or as a result of the termination of any
contract of employment with any Employee nor will any such events give
rise to any right for any person to terminate any such agreement.
19.11 None of the Music Contracts contain any so-called "key-man" provisions
19.12 The Music Contracts, the contracts of employment of the Employees, the
Key Service Agreements and the Property Lease Agreement are the only
agreements under which the Company has any obligations or liabilities
entered into by the Company in connection with and for the purpose of
carrying on its business.
19.13 The facts and matters relating to the Music Contracts set out in
Schedules 4, 5 and 6 are true.
In respect of the Compositions:
19.14 Part B of Schedule 11 and Schedule 10 together contain a complete list
of all agreements by which the Company has acquired or purported to
acquire the Music Rights or any of them in connection with the
Compositions.
19.15 Schedule 11 contains a complete list of all sub-publishing and
licensing agreements entered into by the Company under which the
Company has any continuing obligation or liability.
19.16 Schedule 9 contains a complete list of the musical works in which the
Company owns or controls the copyright and/or other rights in the
nature of copyright and/or which the Company exploits as at Completion
and/or which were made and/or acquired in pursuance of any Music
Contract.
19.17 True copies of all the written Music Contracts and any alterations,
variations or modifications thereof have been supplied by the Company
to the Purchaser and the original signed engrossments belong to and are
in the possession of the Company.
19.18 Intentionally Deleted
19.19 The Company is not bound by any agreement, understanding or arrangement
concerning the use and/or exploitation of any of the Compositions in
any country, including the United Kingdom and the United States, other
than the those concerning non-exclusive performing rights.
19.20 All the grants of rights, conveyances, consents and permissions
contained in the Music Contracts are in full force and effect and all
the Music Contracts and other instruments are valid, enforceable and
subsisting and are not void or voidable for any reason.
19.21 The Company has fully performed all of its material obligations in
respect of the Music Contracts and is not in material breach of or in
material default with respect of any such agreements. Without
limitation to the generality of the foregoing the Company has accounted
to and paid all royalties and other sums due to the persons so entitled
under the Music Contracts and/or other person in accordance with the
terms of all such agreements.
19.22 No agreement to which the Company is a party will be affected or varied
or breached or terminated by virtue of the parties entering into or
performing this agreement or the transactions referred to herein or
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as a result of Completion or as a result of the termination of any
contract of employment with any Employee nor will any such events give
rise to any right for any person to terminate any such agreement.
19.23 None of the Music Contracts contain any so-called "key-man" provisions
19.24 The Music Contracts, the contracts of employment of the Employees, the
Key Service Agreements and the Property Lease Agreement are the only
agreements under which the Company has any obligations or liabilities
entered into by the Company in connection with and for the purpose of
carrying on its business.
19.25 The facts and matters relating to the Music Contracts set out in
Schedules 10 and 11 are true.
20. CLAIMS
20.1.1 The Company has not received any written notice that any party to the
Music Contracts intends to cancel rescind or claim a breach of any
provision thereof or to challenge the validity or the enforceability of
any such agreement.
20.1.2 Neither of the Key Employees have knowledge that any party to the Music
Contracts intends to cancel rescind or claim a breach of any provision
thereof or to challenge the validity or the enforceability of any such
agreement
20.2 There is or has been in the specified period prior to Completion no
claim action or other legal proceedings now pending or threatened
against the Company involving:-
(a) the Recordings or the Compositions or any rights or interests of the
Company therein, including the copyrights therein; or
(b) the Music Contracts; or
(c) the Music Rights.
The specified period shall mean three (3) years.
20.3.1 No written notice of any adverse claim of any nature, kind or
description has been received by the Company and no suit, action,
arbitration, or legal administrative or other proceeding, or
governmental investigation is known to the Company to be pending,
threatened or anticipated with respect to any of:-
(a) the Recordings or the Compositions or any rights or interests of the
Company or any predecessor in title of the Company therein, including
without limitation the copyrights therein; or
(b) the Music Contracts; or
(c) the Music Rights.
20.3.2 Neither of the Key Employees has knowledge of any adverse claim of any
nature, kind or description or of any suit, action, arbitration, or
legal administrative or other proceedings, or governmental
investigation pending, threatened or anticipated with respect to any
of:-
(a) the Recordings or the Compositions or any rights or interests of the
Company or any predecessor in title of the Company therein, including
without limitation the copyrights therein; or
(b) the Music Contracts; or
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(c) the Music Rights.
20.4 The Company has not received any written notification from any person
as at the date hereof of their intention to audit or inspect the books
and records of the Company pertaining to the Recordings or the
Compositions or the Music Contracts or the Music Rights or pertaining
to any works of any kind embodied in any Recording.
20.5 There are no current disputes between the Company and any party to any
Music Contract or with any performer or any other person who has
provided any services in connection with the making of any Recording or
with any writer or composer or any other person who has provided
services in connection with the Compositions.
20.6 So far as the Vendor and/or the Key Employees are aware no party to a
Music Contract is in breach or in default of its obligations under
such Contract.
20.7 The Company has duly exercised all options which have arisen up to
Completion under the Recording Contracts and all such Recording
Contracts are subsisting and their terms have not expired and will not
expire for at least three months after Completion.
20.8 No producer, mixer, remixer and/or engineer has or shall in respect of
the Recordings specified in Schedule 7 be entitled to make any claim
including without limitation a claim for payment of any monies fees
and/or royalties in respect of the use and/or exploitation by or on
behalf of the Company of the aforesaid Recordings.
21. RECORDINGS AND COMPOSITIONS
21.1 Intentionally Deleted
21.2 The Company has secured a warranty from the performers of the works
embodied on the Recordings made or acquired under the Recording
Contracts to the effect that they are not subject to any contractual
restriction prohibiting or inhibiting them from and that they are fully
empowered to grant and do grant all rights in their performance to the
Company free and clear of any option, lien, claim, equity or
encumbrance and free of any contractual restriction of any kind binding
on the performer and a similar warranty to such effect from its
licensors of the other Recordings.
21.3 The Company is a member in good standing of each of Gramex Oy and any
other similar collection societies in respect of recordings in Finland
and of the International Federation of the Phonographic Industry. In
Finland and those parts of the world where the same have been released
by or on behalf of the Company all of the Recordings are properly
registered with all such organisations and with all other collecting
societies and similar organisations in those parts of the world where
the same have been released as aforesaid.
21.4 The Company has in its possession master recordings and films of as
good a quality technically as could reasonably be obtained at the time
they were made of all the Recordings, suitable for the production of
compact discs and videos (as the case requires) of a quality sufficient
to satisfy all technical requirements for commercial release of first
class copies for sale to the public.
21.5 To the best of the knowledge information and belief of the Warrantors
there has been no illegal or unauthorised production, copying, sale,
distribution, importation or other use or exploitation of any of the
Recordings.
21.6 The Company has not granted any synchronisation licence or compilation
use licence to any third party allowing use of any of the Recordings on
an exclusive basis.
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21.7 All published editions of the Recordings released by or on behalf of
the Company have carried a notice satisfying the requirements of the
Universal Copyright Convention and the Rome Convention and are
protected under the copyright or similar laws of each country
throughout the world.
21.8 Intentionally Deleted
21.9 All the Recordings were made or licensed or distributed or marketed
(as applicable) in pursuance of the Music Contracts.
21.10 Neither the Company nor any entity on the Company's behalf has granted
to any third party any rights in or to the Recordings in contravention
of any of the rights restrictions and/or obligations of the Company
pursuant to the Music Contracts. Schedule 7 contained a complete list
of the Recordings and all facts and matters thereon contained are true.
21.11 The Company has obtained a warranty from the writers or composers or
publishers of the Compositions to the effect that the Compositions are
original and do not infringe upon any other works or any rights of any
third party.
21.12 The Company has obtained a warranty from the writers and/or composers
of the Compositions to the effect that they are not subject to any
contractual restriction prohibiting or inhibiting them from and that
they are fully empowered to grant and do grant all rights in the
Compositions to the Company free and clear of any option, lien, claim,
equity or encumbrance and free of any contractual restriction of any
kind binding on such writers and/or composers.
21.13 The Company is a member in good standing of Gramex Oy and any other
similar collection societies in respect of compositions . In Finland
and those parts of the world where the Compositions have been exploited
such Compositions are properly registered with all such organisations
and with all other collecting societies and similar organisations
throughout the world.
21.14 The Company has in its possession a lead sheet and demonstration
recording of each Composition.
21.15 To the best of the knowledge information and belief of the Warrantors
there has been no illegal or unauthorised copying or other use or
exploitation of any of the Compositions.
21.16 The Company has not granted any synchronisation licence or similar use
licence to any third party allowing use of any of the Compositions on
an exclusive basis.
21.17 All published editions of the Compositions exploited by or on behalf of
the Company have carried a notice satisfying the requirements of the
Berne Convention and are protected under the copyright or similar laws
of each country throughout the world.
21.18 Intentionally Deleted.
21.19 All the Compositions were written and/or licensed in pursuance of the
Music Contracts.
21.20 Schedule 9 contains a complete list of the Compositions and all facts
and matters therein contained are true.
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21.21 Neither the Company nor any entity on the Company's behalf has granted
to any third party any rights in or to the Compositions in
contravention of any of the rights restrictions and/or obligations of
the Company pursuant to the Music Contracts.
22. RESTRICTIVE CONTRACTS AND PRACTICES
22.1 The Company has obtained all applicable authorisations and approvals
which are required under Finnish law to enable it to conduct its
business as presently carried on. The Company is not a party to any
agreement, arrangement or concerted practice and is not carrying on any
practice which in whole or in part:
(a) contravenes Articles 85 or 86 of the Treaty of Rome or which has been
notified to the European Commission for a negative clearance or
exemption;
(b) constitutes an anti-competitive practice as defined in the Finnish
Competition Act 1992 or according to which the Company would be bound
by any non-competition undertakings;
(c) contravenes the Finnish Act on Unfair Business Practices 1978 or the
Finnish Data Protection Act 1987 or elsewhere where the Company
carries on business; or
(d) contravenes or is invalidated by any anti-trust, fair trading, consumer
protection or similar legislation in Finland including terms and
conditions set in any authorisations and approvals held by the Company.
The Company complies with and has complied with the requirements of all
applicable agencies and authorities in Finland which are responsible
for the administration and regulation of anti-trust, fair trading,
consumer protection or similar legislation in Finland.
23. CAPITALISATION, ORGANISATION AND GOOD STANDING
23.1 The Sale Shares are and will at Completion constitute the whole of the
legally and validly issued and allotted share capital of the Company
and all the Sale Shares are duly authorised and fully paid up.
23.2 There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance on, over or affecting the Sale
Shares; no claim has been made by any person to be entitled to any of
the foregoing; the Company has not exercised or claimed to exercise any
lien over any of the Sale Shares; no call on the Sale Shares is
outstanding; and no person has the right (whether exercisable now or in
the future and whether or not contingent) to call for the allotment,
conversion, issue, sale or transfer of any shares or loan capital in
the Company by reason of any agreement, conversion rights, rights of
pre-emption or howsoever otherwise.
23.3 The Company is a corporation duly organised and validly existing under
the laws of Finland, and has full power under its constitution to carry
on the business as now being conducted.
23.4 The Company has no tangible assets outside Finland or a branch, agency
or place of business or any permanent establishment (as that expression
is defined in the relevant double Taxes relief orders current at the
date of this agreement) outside Finland.
23.5 The Company has not now and never has had any subsidiary or shares or
other securities in any other company and has not now and never has had
any interest by way of subsidiary or shares or other securities or
partnership or joint venture in any other business and has not agreed
to acquire any such shares or securities or interest.
23.6 All corporate documentation of the Company, including without
limitation, share registers, board meeting minutes, minutes of the
shareholders' meetings, exist and in all material respects is safely
kept, correct, complete and up-to-date.
23.7 Intentionally Deleted
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23.8 The Company has not received any notice of any application or intended
application for the rectification of its registered corporate
information in Finland.
23.9 The only directors of the Company are the persons whose names are
listed in Schedule 1 and the Company has no shadow directors.
23.10 The Company has not provided any financial assistance within Chapter
12, Section 7 of the Finnish Companies Act (1978) or otherwise directly
or indirectly for the purchase or the proposed purchase of its shares.
23.11 All returns, particulars, resolutions and other documents required to
be filed with or delivered to the Finnish Trade Register in respect of
the Company have been filed or delivered within the required time
limits and no fines or penalties are outstanding or known to be due.
23.12 The copies of the registration certificates and articles of association
of the Company annexed to the Disclosure Letter are up to date, true
and accurate and contain full details of the rights and restrictions
attached to the share capital of the Company.
24. BUSINESS
24.1 No order has been made, petition presented, resolution passed or
meeting convened for the winding up of the Company or for an
administration order in respect of the Company; no receiver, receiver
and manager, administrative receiver or liquidator has been appointed
of the business or the whole or any part of the assets or undertaking
of the Company; and there are no circumstances presently existing
pursuant to the relevant laws of Finland likely to give rise to the
appointment of any such receiver, receiver and manager, administrative
receiver or liquidator.
24.2 There are no unfulfilled or unsatisfied judgments or court orders
outstanding against the Company or by which it may be affected.
24.3 No distress, distraint, charging order, garnishee order, execution or
other process which a court or a similar body may use to enforce
payment of a debt has been levied or applied for in respect of the
whole or any part of the property, assets or undertaking of the
Company.
24.4 No event has occurred causing, or which upon intervention or notice by
any third party will cause, any floating charge created by the Company
to crystallise or any charge created by it to become enforceable, nor
has any crystallisation occurred or is any such enforcement in process.
24.5 In relation to any property or assets held by the Company under any
hire purchase, conditional sale, chattel leasing or retention of title
agreement or otherwise belonging to a third party, no event has
occurred which entitles, or which upon intervention or notice by the
third party will entitle, the third party to repossess the property or
assets concerned or to terminate the agreement or any licence in
respect thereof.
24.6 The Company has not stopped payment of its creditors generally nor,
after the Purchaser has fulfilled its obligations under sub-clause
5.4(e) will it be insolvent or unable to pay its debts.
24.7 The Company has not either to its knowledge nor to the knowledge of the
Key Employees been a party to any transaction with any third party
which, in the event of such third party going into liquidation or an
administration order or a bankruptcy order being made in relation to it
or to him, would constitute (in whole or in part) a transaction at an
undervalue, a preference, an invalid floating charge or an extortionate
credit transaction or part of a general assignment of debts.
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24.8 No person, firm or company is or will be entitled to receive from the
Company any fee, brokerage or commission in connection with the sale
and purchase of the Sale Shares.
24.9 To the best of the knowledge and information and belief of the
Warrantors the Company has not committed any breach of statutory duty
or any tortuous or other unlawful act which could lead to a claim for
damages or an injunction being made against it; and there has been no
contravention by the Company of any law of Finland or of any law of any
other jurisdiction in consequence of which an unfavourable judgment,
decision, ruling or order will materially and adversely affect the
financial or trading position or prospects of the Company.
24.10 The Company during the limitation period prescribed by the applicable
Finnish statute of limitations carried on its business and affairs in
all respects in accordance with its registration certificates and
articles of association; the Company has been granted and there are now
in force all necessary approvals, permits, authorities, consents and
licences for the carrying on of its business in the places and in the
manner in which such business is carried on and the Company has
complied with all conditions attached thereto; and there are no
investigations, proceedings, enquiries or other circumstances which
indicate that any regulatory approvals, permits, authorities, consents
and licences held by the Company are likely to be revoked, cancelled,
suspended or not renewed.
24.11 There have not been and so far as the Vendor and/or the Key Employees
are aware are not pending, or in existence, any investigations or
enquiries by, or on behalf of, any governmental or administrative or
other body in respect of the affairs of the Company in any jurisdiction
where the Company carries on business.
24.12 The Company has not paid any commission or made any payment whether to
secure business or otherwise to any person, firm or company which in
the hands of such person, firm or company would in accordance with the
relevant law under any jurisdiction where the Company carries on
business be regarded as illegal or improper.
24.13 No director, officer, agent, employee or other person acting on behalf
of the Company has been party to the use of any assets of the Company
for unlawful contributions, unlawful gifts, unlawful entertainment or
other unlawful expenses relating to political or other activity, or to
the establishment or maintenance of any unlawful or unrecorded fund of
monies or other assets, or to the making of any false or fictitious
entries in the books or records of the Company, or to the making of any
unlawful payment and the Company has not made any gift or donation to
any political party.
24.14 No written disclosure has been made by the Vendor of any of the
financial or trade secrets of the Company or of its list of clients or
customers (save to the Purchaser and save in the ordinary course of
business after having secured the confidential nature of any such
disclosure).
25. LITIGATION
25.1 Save as disclosed in the Disclosure Letter, the Company is not a party
(whether as claimant or defendant or otherwise) to any claim,
litigation, arbitration, prosecution or other legal or quasi legal
proceedings or enquiry (except as claimant in the collection of debts
arising in the ordinary course of business, none of which exceeds
(pound)1000); and there are no claims or actions (whether criminal or
civil) pending or threatened against the Company or any of its
directors or employees in relation to the Company.
25.2. There are no investigations, disciplinary proceedings or so far as the
Vendor and/or the Key Employees are aware other facts or circumstances
likely to lead to any claim, action, proceeding, suit, litigation,
prosecution, investigation or enquiry involving the Company.
46
<PAGE>
26. ENVIRONMENTAL, HEALTH AND SAFETY CONSIDERATIONS
26.1 To the best of the knowledge information and belief of the Warrantors
the Company has during the limitation period prescribed by the
applicable Finnish statute of limitations complied with all applicable
laws of Finland and elsewhere relating to pollution and protection of
the environment and to health and safety matters relating to it, its
business and the Property, and in particular has obtained and complied
with the terms and conditions of all permits, licences and other
authorisations, and has filed all notifications, which are required
under any such laws.
26.2 Intentionally Deleted
26.3 So far as the Vendor and/or the Key Employees are aware there is no
liability (actual, or contingent and material) in relation to the
Property which gives rise to any liability to make good, repair,
reinstate or clean up.
27. INSURANCE
27.1 The Company (and its assets of an insurable nature including the
Property) is/are adequately insured against fire and other risks
normally insured against by persons carrying on the same business as
that carried on by the Company (including product liability, employer's
liability and public liability insurances).
27.2 The Company (and its assets including the Property) is and are at
present insured against such risks and in such sums as are disclosed
in the Disclosure Letter.
27.3 All premiums due in respect of such insurances have been fully paid.
27.4 All such insurances are currently in full force and effect, and nothing
has been done or omitted to be done by the Company which will make any
policy of insurance void or voidable.
27.5. No claim is outstanding or in respect of claims exceeding US$2,000 is
likely to be made under any of such insurances and to the Vendor's
and/or the Key Employees' no circumstances exist which are likely to
give rise to any such claim.
27.6 There are no claims against the Company by an Employee, consultant,
artist, producer, workman or any other third party, in respect of any
accident or injury, which are not fully covered by insurance.
28. POSITION SINCE THE BALANCE SHEET DATE
28.1 Other than in the ordinary course of business since the Balance Sheet
Date:
(a) there has been no reduction in the value of net assets of the
Company determined in accordance with the same accounting
policies as those applied in the Accounts (and on the basis that
each of the assets of the Company is valued at a figure no
greater than the value attributed to it in the Accounts or, in
the case of any of the said assets acquired by the Company after
the Balance Sheet Date, at a figure no greater than cost);
(b) there has been no adverse change in the financial or trading
position or prospects of the Company including, but not limited
to, any adverse change in respect of turnover, profits, margins
of profitability, liabilities (actual or contingent) or expenses
(direct or indirect) of the Company;
(c) no resolution of the shareholders of the Company has been passed;
47
<PAGE>
(d) other than pursuant to the Management Services Agreement
referred to in the Inter-Company Termination Deed no
management or similar charge has become payable or been paid
by the Company; and
(e) save for basic remuneration paid under employment agreements
no bonus, pension or other payments have been made by the
Company to, (or benefit conferred (directly or indirectly) by
the Company on) the Vendor or any past or present director of
the Company and/or any person who is or was at the relevant
time connected with the Vendor or any such director
29. PENSIONS
29.1 There is no scheme, agreement, arrangement or practice (formal or
informal) in relation to which the Company has incurred or will incur
any liability (including liability for contributions or expenses or for
shortfall in funding and including liability as trustee or
responsibility as to any discretionary power for or in relation to the
provision of any benefit (including any pension, annuity, lump sum or
gratuity) to be given on or after in anticipation of retirement,
death, disability, life assurance or medical benefits or leaving
service or change in nature of service to or for any present or former
director or employee of or person who has agreed to render services to
the Company or to or for any other person by reference to any such
director officer employee or person in excess to the compulsory
insurances and pensions under Finnish law or as listed in Schedule 3
hereto.
PART B - PROPERTY WARRANTIES
1. GENERAL
1.1 The Property is free of mortgages or other encumbrances.
1.2 The Property is the only property occupied or otherwise use in
connection with its business by the Company.
1.3 The Property is occupied and used by the Company on a stand-alone
basis in connection with its business.
2. Condition
2.1 To the knowledge information and belief of the Warrantors and the Key
Employees (a) since 17th March 1998 there has been no deterioration in
the condition of the buildings and any other structure on the Property
or of which the Property forms part other than normal wear and tear and
(b) the improvements set out in Exhibit `A' of Schedule 8 have been
carried out prior to Completion and (c) the present use of the Property
is not restricted by any material restriction or condition and conforms
to all applicable planning regulations, fire and safety regulations, to
the requirement of the relevant local authorities and to statutes
governing the Property or use thereof and (d) all requested permissions
have been obtained and are valid and subsisting for all developments or
alterations to or other works on all in relation to any of the
Property, and all conditions or restrictions imposed in or by any such
permissions have been complied with and nothing further remains to be
done thereunder.
3. PROPERTY LEASE
3.1 The Company has paid all payments and performed all of the covenants
and conditions on the part of the lessee to be performed and complied
with pursuant to the property lease agreement between the City of
Helsinki (1) ("the Landlord") and the Company (2) dated June 26, 1979
as amended (the "Property Lease Agreement") as well as all official
fees related to the registration of the Property Lease Agreement and
thereto related mortgages and other encumbrances with the appropriate
property register.
48
<PAGE>
3.2 All licensees, consents and approvals (if any) required from the
Landlord or relevant authorities under the Property Lease Agreement of
Finnish law and regulations have been obtained duly performed and
observed by the Company.
3.3 There is no outstanding unobserved or unperformed obligation necessary
to comply with, any notice or other requirement given by or on behalf
of the Landlord to the Company.
3.4 There is no outstanding or unobserved registration obligation or
requirements with regard to claiming title to the Property and the
Property Lease Agreement.
3.5 There exists no restriction in the Property Lease Agreement that would
give the Landlord a right to terminate or alter the Property Lease
Agreement due to the transfer or ownership of the Sale Shares.
3.6 To the best knowledge of the Warrantors and the Key Employees, there
exists no plan for a change of the use of the land subject to the
Property Lease Agreement.
3.7 The Property Lease Agreement does not expire prior to December 31st 2020
PART C - TAX WARRANTIES
1. RESERVE FOR TAXES IN THE ACCOUNTS
1.1 The Accounts reserve or provide in full for all Taxes for which the
Company was in respect of all periods up to the Balance Sheet date
liable or able to be made liable;
1.2 The Accounts reserve for or contain a note regarding any contingent
liability or possible deferred liability to Taxes to the extent
required by Accounting Requirements.
2. RETURNS AND PAYMENT OF TAXES
2.1 The Company has filed with the appropriate tax authorities in Finland
all tax returns and reports in respect of any and all Taxes required to
be filed under Finnish laws with such tax authorities and to the best
of the knowledge, information and belief of the Warrantor there are no
facts or circumstances accordingly to which the above stated would not
be true.
2.2 Computations of the profits and losses of the Company and its liability
to Taxes for each of the accounting periods ending within the six
calendar years prior to the Balance Sheet Date have been agreed with
the Finnish tax authorities and there is no unsettled appeal in respect
of any year of assessment nor any back duty claim or other dispute with
the Finnish tax or customs authorities as at the date of this agreement
and to the best of the knowledge, information and belief of the
Warrantor's there are no facts or circumstances that may result in any
such appeal, claim or dispute.
2.3 There are no tax audits currently pending against the Company.
2.4 No Tax will be levied on the Company with respect to events taking
place or having taken place prior to the Completion Date except to the
extent properly accounted for in the Accounts or with respect to Tax
arising in the ordinary course of business of the Company for the
period between the Balance Sheet Date and the Completion Date.
2.5 No transaction has been entered into by the Company since the Balance
Sheet Date in respect of which the Company is required to make a
specific return or to provide information (other than of a routine or
49
<PAGE>
periodic nature) to a relevant tax authority and in respect of which
the time for making such return or providing such information will
expire on or after the Completion.
3. BASE VALUES AND ACQUISITION COSTS
3.1 The Company does not own and has not agreed to acquire any material
asset, nor has it received or agreed to receive any material services
or facilities (including the benefit of any licences or agreements)
during the last two (2) years the consideration for the acquisition or
provision of which was or will be otherwise than on an arm's length
basis.
3.2 The Company has not disposed nor agreed to dispose of any material
asset, not has it provided or agreed to provide any material services
or facilities (including the benefit of any licences or agreements)
during the last two (2) years the consideration for the disposal or the
provision of which was or will be otherwise than on an arm's length
basis.
4. DISTRIBUTIONS AND PAYMENTS
4.1 The Company has not in the three (3) calendar years prior to Completion
repaid, or agreed to repay, or redeemed, or agreed to redeem, or
purchased or agreed to purchase any of its share capital, or
capitalised or agreed to capitalise, in the form of redeemable shares,
any profits or reserves of any class or description; and the Company
has also not issued any share capital as paid up otherwise than by the
receipt of new consideration.
5. STATUS
5.1 To the best of the Warrantors' knowledge and belief the Company carried
on an activity at the date of this agreement which is a trade for the
purposes of Taxes and has not ceased or agreed to cease as a result of
any contract, agreement or arrangement entered into before Completion
to carry on such activity.
6. CORPORATION TAX ON CHARGEABLE GAINS
6.1 No claim has been made or is capable of being made by any other company
which affects or could affect the amount of value of the consideration
for the acquisition of any assets by the Company which is to be taken
into account in calculating any gain on subsequent disposal.
7. TAX AVOIDANCE
7.1 The Company has not entered into or been party to any transaction,
scheme or arrangement designed wholly or partly for the purposes of
avoiding Taxes.
8. VALUE ADDED TAX
8.1 The Company:
(a) is duly registered for the purposes of VAT and has been so registered
at all times when it has been required to be registered by the relevant
legislation in any jurisdiction where the Company carries on business.
(b) has complied fully with all statutory requirement, orders, provisions,
directions, or conditions relating to VAT, including (for the avoidance
of doubt) the terms of any agreement reached with Customs and Excise in
accordance with the relevant legislation in any jurisdiction where the
Company carries on business;
50
<PAGE>
(c) maintains and has at all times maintained complete, correct and
up-to-date records for the purposes of the legislation relating to VAT
and has preserved such records in such firm and for such periods as are
required by such legislation in any jurisdiction where the Company
carried on business;
(d) is not in arrears with any payment or returns required under any
legislation relating to VAT, or liable to any abnormal or non-routine
payment, or any forfeiture or penalty or default surcharge, or to the
operation of any penal provision relating to VAT or to pay any interest
as a result of making last VAT returns in any jurisdiction where the
Company carries on business ;
(e) has not been required by Customs and Excise to give security in any
jurisdiction where the Company carries on business;
8.2 The Company is not and has not at any time been treated as a member of
a group of companies for VAT purposes and no application for it to be
so treated has at any time been made in any jurisdiction where the
Company carries on business.
8.3 No act or transaction has been effected in consequence whereof the
Company is or may be held liable for any VAT chargeable against any
other company in any jurisdiction where the Company carries on business
activities;
8.4 The Company holds or controls;
(a) full details of all claims made by the Company in the two (2) years
immediately preceding the date of this agreement in respect of which a
refund of VAT has been received by the Company in any jurisdiction
where the Company carries on business;
(b) all particulars of any claim for bad debt relief made in the two (2)
years immediately preceding the date of this agreement, or which may be
made, in respect of the supply of goods or services for which the whole
or part of the consideration has been written off in the accounts of
the Company;
(c) the records or documents required under relevant jurisdiction to be
held so that a claim may be made at the date hereof or subsequently for
a refund of VAT in respect of the supply of any goods or services.
9. STAMP DUTY, TRANSFER TAX AND STAMP DUTY RESERVE TAX
9.1 The Company has duly paid all stamp duty, transfer tax and all stamp
duty reserve tax for which it has at any time been liable, and all
documents which require to be stamped and which form part of the
Company's title to assets reflected in the Accounts have been duly
stamped.
10. GENERAL
10.1 The Company has not acquired all or any of the assets or undertakings
of another company in the course of any reconstruction or liquidation
of that company or any amalgamation of that and any other company.
10.2 The Company is not and has not been the legal or beneficial owner of or
had any beneficial interest in any share or securities of any other
company.
10.3 No act or transaction has been effected in consequence whereof the
Company has, is or may be held liable for any Taxes primarily
chargeable against some other person.
10.4 No member of the Vendor's Group (other than the Company) is a debtor
of the Company in respect of a loan which is not a normal commercial
loan and the Company is not a debtor of any Group Company in respect
of a loan which is not such a normal commercial loan.
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<PAGE>
10.5 To the best of the Warrantor's knowledge and belief, there has not been
not has there been any plans for a release or waiver of any loan of the
Company, the release or waiver of which would or could give rise to any
deemed receipt of profit.
52
<PAGE>
SCHEDULE 9
SCHEDULE OF COMPOSITIONS OWNED AND/OR CONTROLLED BY THE COMPANY
<TABLE>
<CAPTION>
TITLE WRITER/COMPOSER
- ----- ---------------
<S> <C>
As per Exhibit As per Exhibit A
A annexed hereto annexed hereto
</TABLE>
53
<PAGE>
SCHEDULE 10
PUBLISHING CONTRACTS
<TABLE>
<CAPTION>
Principal Commercial
No. Date Parties Writer Terms Terms
- ------ -------- ---------- -------------- ------------ --------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
The contracts pursuant to which the Compositions were acquired by the Company
54
<PAGE>
SCHEDULE 11
SUB-PUBLISHING AGREEMENTS
PART A
Sub-publishing Out
<TABLE>
<CAPTION>
Principal
Date of Commercial
No. Contract Parties Term Terms
- ------ -------- ----------------------------- ----------------- ------------
<S> <C> <C> <C> <C>
01.01. 1985 Scandinavian Songs AB trading 3 Years with 50% receipts
as Companion Music (1) and subsequent
K-Tel Finland AB trading as 1 year extensions
Ice-Cream Music (2)
</TABLE>
PART B
Sub-publishing In
<TABLE>
<CAPTION>
Principal
Date of Commercial
No. Contract Parties Term Terms
- ------ -------- ----------------------------- ----------------- ------------
<S> <C> <C> <C> <C>
NONE
</TABLE>
55
<PAGE>
This document has been executed and delivered by the parties as a deed on the
date written above.
<TABLE>
<S> <C>
EXECUTED and DELIVERED as a Deed by )
K-TEL INTERNATIONAL INC ) /s/ K-TEL INTERNATIONAL, INC.
acting by the signature of ) ----------------------------------
duly authorised in the presence of:-
EXECUTED and DELIVERED as a Deed by )
EDEL MUSIC AG ) /s/ EDEL MUSIC AG
acting by the signature of ) --------------------------
duly authorised in the presence of:-
EXECUTED and DELIVERED as a Deed by )
K-TEL ENTERTAINMENT (UK) LIMITED ) /s/ K-TEL ENTERTAINMENT (UK) LIMITED
acting by: ) ---------------------------------------
</TABLE>
56
<PAGE>
DATED SEPTEMBER 10, 1999
------------------------
(1) K-TEL INTERNATIONAL INC
(2) EDEL MUSIC AG
(3) K-TEL ENTERTAINMENT (UK) LIMITED
--------------------------------------
SALE AND PURCHASE AGREEMENT
RELATING TO
K-TEL INTERNATIONAL (FINLAND) OY
---------------------------------------
RUSSELLS
REGENCY HOUSE
1/4 WARWICK STREET
LONDON W1R 6LJ
TEL: 0171 439 8692
FAX: 0171 494 3582
57
<PAGE>
EXHIBIT 10.2
SIDE LETTER
(ON K-TEL LETTERHEAD)
Edel Music AG
Wichmammstrasse 4
22607 Hamburg
GERMANY
10 September 1999
Dear Sirs
K-TEL INTERNATIONAL (FINLAND) OY
We refer to the Share Sale Agreement to be entered into today between
ourselves, you and K-Tel Entertainment (UK) Limited (the "Agreement").
We confirm that notwithstanding Clause 3.3 of the Agreement we are agreeable
to receiving the entire purchase consideration of US $6,350,000 in cash and
that we shall not be requiring you to issue any shares in Edel Music AG to
ourselves as contemplated by that clause.
All other terms of the Agreement remain in full force and effect.
Yours faithfully
/s/ P. Kives
K-TEL ENTERTAINMENT INC.
/s/ EDEL MUSIC AG
- -------------------------------
agreed and accepted
EDEL MUSIC AG
