**Exhibit 10.14**

 

U.S. $8,000.000PROMISSORY NOTEgiven byK-TEL INTERNATIONAL, INC.toK-5 LEISURE PRODUCTS, INC.

 

| Dated:  September 27, 1999 |   | At: Minneapolis, Minnesota |
|---------------------------------|--------|----------------------------|

 

FOR VALUERECEIVED, UPON DEMAND, or if demand is not made before November 20, 2001, thenon November 20, 2001 (the “Maturity Date”) the undersigned K-TEL INTERNATIONAL,INC. promises to pay to the order of K-5 LEISURE PRODUCTS, INC. (“Lender”) atits principal place of business at 220 Saulteaux Crescent, Winnipeg, ManitobaR3J 3W3, Canada or at such other place as the holder hereof may from time totime designate, the principal sum of Eight Million and no/100 U.S. Dollars(U.S. $8,000,000.00) together with interest upon the unpaid principal balanceoutstanding from the date hereof at an annual rate equal to the Reference Rateof Interest (computed on the basis of actual days elapsed in a 365-day year) asthe same may change from time to time. Interest shall be payable on demand, but until such demand is made,monthly, commencing October 31, 1999 and continuing on the same day of eachsucceeding month until this Note is paid in full.

 

The term“Reference Rate of Interest” shall be that rate of interest most recentlyannounced by Norwest Bank Minnesota, National Association, or any successor thereto,as its “Reference Rate,” irrespective of whether such announced rate is thebest rate available from such financial institution.  All changes in the rate of interest due hereunder are effectiveautomatically on the same day that said bank’s Reference Rate change takeseffect.

 

All paymentsreceived hereon shall be applied first in payment of accrued interest and thebalance thereof shall be applied in reduction of principal.

 

This Note isthe Current Note referred to in that certain Credit Agreement between theundersigned and Lender dated as of the date hereof (the “Credit Agreement”) andis secured by, among other things, a Security Agreement dated the date hereof,from the undersigned as Debtor to the Lender as Secured Party (the “SecurityAgreement”), and Stock Security Agreements (as defined in the Credit Agreement)and is subject to acceleration as provided therein.

 

All of theagreements, conditions, covenants, provisions and stipulations contained in theCredit Agreement, the Security Agreement and the Stock Security Agreements arehereby made a part of this Note to the same extent and with the same force andeffect as if they were fully set forth herein. Time is of the essence hereof.

 

Theundersigned agree to pay any reasonable attorneys’ fees incurred by the Lenderin preparation, administration, collection or enforcement of this Note, theCredit Agreement, the Security Agreements and the Stock Security Agreements,whether suit be brought or not, and payment thereof may be enforced and recoveredin whole or in part at any time by one or more of the remedies provided in thisNote, the Credit Agreement, the Security Agreements and the Stock SecurityAgreement.

 

This Noteshall also become automatically due and payable (including unpaid interestaccrued hereon) without notice or demand if an Event of Default occurs underthe Credit Agreement.

 

Theundersigned and any guarantor, surety or endorser hereby waive demand,presentment, notice of nonpayment, protest, notice of protest, notice ofdishonor and diligence in collection and agree that without any notice

 

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the Lender hereof may takeand/or release additional security for this Note or the Lender hereof may, fromtime to time, release any part or parts of the property and interests subjectto the Security Agreement or the Stock Security Agreements with or withoutconsideration and that in any such case the undersigned and any guarantor,surety or endorser shall remain liable to pay the unpaid balance of theindebtedness evidenced hereby as so additionally secured, extended, renewed ormodified and notwithstanding any such release.

 

The remediesof the Lender, as provided herein and in the Credit Agreement, the SecurityAgreement and the Stock Security Agreements, shall be cumulative and concurrentand may be pursued singly, successively or together, at the sole discretion ofthe Lender, and may be exercised as often as occasion therefor shalloccur.  The Lender may, in itsdiscretion, waive any default hereunder and its consequences and rescind anydeclaration of acceleration of principal; provided, however, that no action orinaction by the Lender shall be deemed a waiver of any of the Lender’s rightsor remedies unless the Lender specifically agrees in writing that such actionor inaction shall constitute a waiver of its rights or remedies.  Any waiver shall only apply to theparticular instance for which it was agreed. No delay in exercising and no failure in exercising any right or remedyhereunder or afforded by law shall be a waiver of or preclude the exercise ofany right or remedy hereunder or provided by law, whether on such occasion orany future occasion, nor shall such delay be construed as a waiver of anydefault or acquiescence therein.  Theexercise or the beginning of the exercise of one right or remedy shall not bedeemed a waiver of the right to exercise at the same time or thereafter anyother right or remedy.

 

This Note maybe prepaid in whole or in part at any time without fee or penalty.

 

It is intendedthat this Note is made with reference to and shall be governed by and construedin accordance with the laws of the State of Minnesota, except insofar as theLender may rely on the laws of the United States to justify the interest ratecharged hereunder.

 

All agreementsbetween the Maker and the Lender are hereby expressly limited so that in nocontingency or event whatsoever, whether by reason of acceleration of maturityof the indebtedness evidenced hereby or otherwise, shall the amount paid oragreed to be paid to the Lender for the use, forbearance, loaning or detentionof the indebtedness evidenced hereby exceed the maximum rate permissible underapplicable law.  If under any circumstanceswhatsoever, performance of any obligation herein or in any security instrumentat any time given as security for the performance of such obligation shallinvolve exceeding the limit of validity prescribed by law, then the obligationto be performed shall automatically be reduced to the limit of such validityand if for any circumstances the Lender should ever receive as interest anamount which would exceed the highest lawful rate.  Such amount which would be in excess of interest at the highestlawful rate shall be applied to the reduction of the principal balanceevidenced hereby and not to the payment of interest.  This provision shall control every other provision of allagreements between maker and Lender and shall also be binding upon andavailable to any subsequent holder or endorsee of this Note.

 

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IN WITNESSWHEREOF, the undersigned has executed this Note on the date and year firstabove written.

 
|   | K-TEL  INTERNATIONAL, INC. |
|--------|----------------------------|
|   |                       |
|   |                       |
|   | By                         | /s/ Lawrence  Kieves |   |
|   | Its                        | PRESIDENT |   |
|        |                            |  |  |  |

 

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