EXHIBIT 10.46

                              AMENDED AND RESTATED
                           REVOLVING CREDIT AGREEMENT

                           Dated as of April 10, 1997

                  K-TEL INTERNATIONAL (USA), INC., a Minnesota corporation,
having its principal place of business in Plymouth, Minnesota ("K-Tel USA"),
DOMINION ENTERTAINMENT, INC., a Minnesota corporation, having its principal
place of business in Plymouth, Minnesota ("Dominion"), K-TEL PRODUCTIONS, INC.,
a Minnesota corporation, having its principal place of business in Plymouth,
Minnesota ("K-Tel Productions"), K-TEL VIDEO, INC., a Minnesota corporation,
having its principal place of business in Plymouth, Minnesota ("K-Tel Video"),
K-TEL DIRECT, INC., a Minnesota corporation, having its principal place of
business in Plymouth, Minnesota ("K-Tel Direct"), K-TEL TV, INC., a Minnesota
corporation, having its principal place of business in Plymouth, Minnesota
("K-Tel TV"), K-TEL CONSUMER PRODUCTS, INC., a Minnesota corporation, having its
principal place of business in Plymouth, Minnesota ("K-Tel Consumer Products";
K-Tel USA, Dominion, K-Tel Productions, K-Tel Video, K-Tel Direct, K-Tel TV and
K-Tel Consumer Products are sometimes herein collectively referred to as the
"Borrowers" and each is sometimes individually referred to as a "Borrower"), and
TCF NATIONAL BANK MINNESOTA, a national banking association, formerly known and
organized as TCF Bank Minnesota fsb, a federally chartered stock savings bank
(the "Bank") agree as follows:

                                    RECITALS

                  K-Tel USA, Dominion and the Bank have entered into a Revolving
Credit Agreement dated as of July 22, 1994, as amended by a First Amendment to
Revolving Credit Agreement dated as of January 30, 1995, by a Second Amendment
to Revolving Credit Agreement and to Revolving Note dated as of July 20, 1995,
by a Third Amendment to Revolving Credit Agreement dated as of October 2, 1995,
by a Fourth Amendment to Revolving Credit Agreement and to Revolving Note dated
as of November 28, 1995, by a Fifth Amendment to Revolving Credit Agreement and
to Revolving Note dated as of December 28, 1995, by a Sixth Amendment to
Revolving Credit Agreement dated as of August 23, 1996, by a Seventh Amendment
to Revolving Credit Agreement dated as of October 9, 1996 and by an Eighth
Amendment to Revolving Credit Agreement dated as of November 25, 1996 (as
amended, the "Prior Credit Agreement"), pursuant to which the Bank, subject to
the terms and conditions set forth therein, agreed to make revolving advances to
K-Tel USA and Dominion and to issue letters of credit for the account of K-Tel
USA and Dominion in the aggregate amount of up to $5,000,000.

                  The joint and several obligation of K-Tel USA and Dominion to
repay the revolving advances made by the Bank under the Prior Credit Agreement
is evidenced by the Revolving Note of K-Tel USA and Dominion dated August 23,
1996, payable to the order of the Bank in the original principal amount of
$5,000,000 (the "Prior Note").

                  K-Tel USA and Dominion have requested, among other things,
that the Bank (i) consent to the creation of K-Tel Productions, K-Tel Video,
K-Tel Direct, K-Tel TV and K-Tel Consumer Products as new wholly-owned
Subsidiaries of K-Tel International, (ii) allow K-Tel Productions, K-Tel Video,
K-Tel Direct and K-Tel Consumer Products to become co-borrowers with K-Tel USA
and Dominion, (iii) reduce the amount of the Commitment from $5,000,000 to
$1,000,000 and (iv) extend the Maturity Date from January 31, 1997 to July 31,
1997.

                  The Bank is willing to grant the requests of K-Tel USA and
Dominion pursuant to the terms of this Agreement, which shall constitute an
amendment to and a complete restatement of the Prior Credit Agreement.

                  NOW, THEREFORE, the parties hereto hereby agree as follows:


                                    ARTICLE I
                                   Definitions

                  Section 1. 1 Defined Terms. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:

                  (a) the terms defined in this Article have the meanings
         assigned to them in this Article, and include the plural as well as the
         singular; and

                  (b) all accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with GAAP.

                  "Accounts" means, as to the Borrowers, the aggregate billed
and unpaid obligations of customers and other account debtors to K-Tel USA
arising out of the sale or lease of goods or rendition of services by K-Tel USA
in the ordinary course of business of K-Tel USA, on an open account or deferred
payment basis.

                  "Advance" means an advance made by the Bank to the Borrowers
pursuant to Section 2.2 hereof.

                  "Affiliate" means (i) any Person that, either directly or
indirectly, is in control of, is controlled by, or is under common control with
the Borrowers or any of them, or (ii) any Person who is a (A) shareholder,
director, officer or employee of the Borrowers or any of them, or (B) any Person
who is a director, officer or employee of any Person described in clause (i)
above. For purposes of this definition, control of a Person shall mean the
power, direct or indirect, (X) to vote more than 50% of the securities having
ordinary voting power for the election of directors of such Person, or (Y) to
direct or cause the direction of the management and policies of such Person,
whether by contract or otherwise.

                  "Agreement" means this Amended and Restated Revolving Credit
Agreement, as the same may be supplemented, amended or restated from time to
time.

                  "Base Rate" means the fluctuating rate of interest publicly
announced by the Bank from time to time as its "base rate" or, if the Bank
ceases to announce a rate so designated, any similar successor rate designated
by the Bank. The Borrowers acknowledge that the Base Rate is a reference rate
established by the Bank for the pricing of some of its loans and that the Base
Rate does not represent the lowest rate charged by the Bank on its loans.

                  "Borrowing Base" means, at any time, the lesser of (i) the
Commitment Amount or (ii) 75% of Eligible Accounts, less Returns, computed on
the basis of the most recent Borrowing Base Certificate furnished to the Bank
under Section 5.1(e).

                  "Borrowing Base Certificate" means a certificate in the form
of Exhibit B hereto setting forth the Accounts, the Eligible Accounts and the
Borrowing Base of the Borrowers as of a particular date.

                  "Business Day" means any day other than a Saturday, Sunday or
any other day on which banks are required by law or authorized to close in
Minneapolis, Minnesota.

                  "Capital Base" of any Person means, at any date of
determination, the sum of the Tangible Net Worth of such Person plus the
Subordinated Debt of such Person at such date of determination.

                  "Capital Lease" means any lease of property (whether real,
personal or mixed) by any Borrower that, in accordance with GAAP, should be
reflected as a liability on the balance sheet of such Borrower.

                  "Closing Date" has the meaning specified in Section 2.2.

                  "Collateral Accounts" means collectively the K-Tel USA
Collateral Account, the Dominion Collateral Account, the K-Tel Productions
Collateral Account, the K-Tel Video Collateral Account, the K-Tel Direct
Collateral Account, the K-Tel TV Collateral Account and the K-Tel Consumer
Products Collateral Account.

                  "Commitment" means the Bank's obligation to make Advances to
the Borrowers under Section 2.2 hereof.

                  "Commitment Amount" means $1,000,000.

                  "Commitment Termination Date" means July 31, 1997 or the
earlier termination of the Commitment pursuant to Section 7.2 hereof.

                  "Compilation" means a work formed by the collection and
assembling of preexisting Sound Recordings or other material or data that are
selected, coordinated, or arranged in such a way that the resulting work as a
whole constitutes an original work of authorship.

                  "Composition" means a single musical, written or other
composition of any kind.

                  "Current Assets" of any Person means, the aggregate amount of
assets of such Person which, in accordance with GAAP, may be properly classified
as current assets, after deducting adequate reserves where proper, but in no
event including any real estate and in no event including any amounts due from
Affiliates.

                  "Current Liabilities" of any Person means, (i) all Debt of
such Person, due on demand or within one year from the date of determination
thereof, and (ii) all other items (including taxes accrued as estimated) which,
in accordance with GAAP, may be properly classified as current liabilities of
such Person.

                  "Debt" means (i) all items of indebtedness or liability which,
in accordance with GAAP, would be included in determining total liabilities as
shown on the liabilities side of a balance sheet as of the date on which Debt is
to be determined, (ii) indebtedness secured by property owned by any Person
whose indebtedness secured thereby shall have been assumed, and (iii) guarantees
and endorsements (other than for purposes of collection in the ordinary course
of business) and other contingent obligations in respect of, or to purchase or
otherwise acquire, indebtedness of others.

                  "Default" means any event or condition that, with notice or
lapse of time or both, would become an Event of Default.

                  "Dominion Collateral Account" means the collateral bank
account established by Dominion with the Bank under the Amended and Restated
Collateral Bank Account Agreement delivered to the Bank by Dominion pursuant to
Section 3.1(m), as the same may be amended, supplemented or restated from time
to time.

                  "Dominion's Copyright Security Agreement" means the Copyright
Security Agreement of Dominion in favor of the Bank dated as of July 22, 1994,
as the same has heretofore been amended and supplemented and as the same may
hereafter be amended, supplemented or restated from time to time.

                  "Dominion's Security Agreement" means the Amended and Restated
Security Agreement of Dominion in favor of the Bank of even date herewith, as
the same may hereafter be amended, supplemented or restated from time to time.

                  "Eligible Accounts" means all billed and unpaid Accounts of
K-Tel USA as of the date of determination, except the following shall not in any
event be deemed Eligible Accounts:

                  (a)      any Account which is unpaid more than 60 days after
                           its due date;

                  (b)      Any Account the account debtor of which is a Person
                           who (i) is not organized under the laws of the United
                           States or a state thereof or is not a resident of the
                           United States or a state thereof or (ii) has its
                           principal place of business located outside of the
                           United States;

                  (c)      any Account which is owed by the United States
                           Government or any agency of the United States
                           Government;

                  (d)      any Account which is owed by an account debtor whose
                           creditworthiness is at any time unacceptable to the
                           Bank in its sole discretion;

                  (e)      any Account which is contingent or subject to an
                           asserted dispute, offset, counterclaim or other
                           defense;

                  (f)      any Account which is owed by an account debtor that
                           is the subject of a bankruptcy proceeding or has gone
                           out of business;

                  (g)      any Account which is owed by an Affiliate of any
                           Borrower or owed by an officer, director or
                           shareholder of any Borrower or by an officer,
                           director or shareholder of any Affiliate of any
                           Borrower;

                  (h)      any Account with respect to which the Bank does not
                           have a perfected, first priority security interest;

                  (i)      any Account which is not free and clear of all liens
                           and security interests other than the first priority
                           security interest in favor of the Bank;

                  (j)      any Account which is owed by an account debtor as to
                           which 10% or more of the total amount due under
                           Accounts from such account debtor is ineligible under
                           clause (a) above or otherwise ineligible, regardless
                           of whether the particular Account is eligible; and

                  (k)      any Account which is otherwise deemed ineligible by
                           the Bank in its sole discretion.

                  "Environmental Law" means the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 et seq., the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Federal Water Pollution
Control Act, 33 U.S.C. ss. 1251 et seq., the Clean Water Act, 33 U.S.C. ss. 1321
et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq., and any other federal,
state, county, municipal, local or other statute, law, ordinance or regulation
which may relate to or deal with the environment, including such as protect
human health and natural resources, all as may be from time to time amended.

                  "Existing Advances" has the meaning specified in Section 2.1.

                  "Existing Letters of Credit" has the meaning specified in
Section 2.11.

                  "Existing Letter of Credit Applications" has the meaning
specified in Section 2.11.

                  "ERISA" means Title IV of the Employee Retirement Income
Security Act of 1974, as amended.

                  "Event of Default" has the meaning specified in Section 7.1
hereof.

                  "Floating Rate" means an annual rate equal to the sum of the
Base Rate plus the Interest Rate Spread, which Floating Rate shall change when
and as the Base Rate changes.

                  "GAAP" means, at any particular time, generally accepted
accounting principles in the United States in effect at such time.

                  "Hazardous Substances" means petroleum products and
by-products and any dangerous, toxic or hazardous pollutants, contaminants,
chemicals, material and substances listed or identified in, or regulated by, any
Environmental Laws.

                  "Interest Rate Spread" means two percent (2.00%).

                  "Inventory" means all of the inventory of any of the
Borrowers, whether now owned or hereafter acquired, whether acquired, held or
furnished for sale, for lease or under service contracts, and wherever located.

                  "K-Tel Consumer Products Collateral Account" means the
collateral bank account established by K-Tel Consumer Products with the Bank
under the Collateral Bank Account Agreement delivered to the Bank by K-Tel
Consumer Products pursuant to Section 3.1(m), as the same may be amended,
supplemented or restated from time to time.

                  "K-Tel Consumer Products' Security Agreement" means the
Security Agreement of K-Tel Consumer Products in favor of the Bank of even date
herewith, as the same may be amended, supplemented or restated from time to
time.

                  "K-Tel Direct Collateral Account" means the collateral bank
account established by K-Tel Direct with the Bank under the Collateral Bank
Account Agreement delivered to the Bank by K-Tel Direct pursuant to Section
3.1(m), as the same may be amended, supplemented or restated from time to time.

                  "K-Tel Direct's Security Agreement" means the Security
Agreement of K-Tel Direct in favor of the Bank of even date herewith, as the
same may be amended, supplemented or restated from time to time.

                  "K-Tel International" means K-Tel International, Inc., a
Minnesota corporation, having its principal place of business in Plymouth,
Minnesota, which is the parent corporation of each of the Borrowers.

                  "K-Tel International's Guaranty" means the Amended and
Restated Guaranty Agreement of K-Tel International in favor of the Bank of even
date herewith, as the same may hereafter be amended, supplemented or restated
from time to time.

                  "K-Tel International's Pledge Agreement" means the Amended and
Restated Collateral Pledge Agreement of K-Tel International in favor of the Bank
of even date herewith, as the same may hereafter be amended, supplemented or
restated from time to time.

                  "K-Tel International's Security Agreement" means the Amended
and Restated Security Agreement of K-Tel International in favor of the Bank of
even date herewith, as the same may hereafter be amended, supplemented or
restated from time to time.

                  "K-Tel Productions Collateral Account" means the collateral
bank account established by K-Tel Productions with the Bank under the Collateral
Bank Account Agreement delivered to the Bank by K-Tel Productions pursuant to
Section 3.1(m), as the same may be amended, supplemented or restated from time
to time.

                  "K-Tel Productions' Copyright Security Agreement" means the
Copyright Security Agreement of K-Tel Productions in favor of the Bank dated in
accordance with the requirements of Section 5.10 of this Agreement, in
substantially the form of Exhibit D attached hereto, as the same may hereafter
be amended, supplemented or restated from time to time.

                  "K-Tel Productions' Security Agreement" means the Security
Agreement of K-Tel Productions in favor of the Bank of even date herewith, as
the same may be amended, supplemented or restated from time to time.

                  "K-Tel TV's Security Agreement" means the Security Agreement
of K-Tel TV in favor of the Bank of even date herewith, as the same may be
amended, supplemented or restated from time to time.

                  "K-Tel TV Collateral Account" means the collateral bank
account established by K-Tel TV with the Bank under the Collateral Bank Account
Agreement delivered to the Bank by K-Tel TV pursuant to Section 3.1(m), as the
same may be amended, supplemented or restated from time to time.

                  "K-Tel USA Collateral Account" means the collateral bank
account established by K-Tel USA with the Bank under the Amended and Restated
Collateral Bank Account Agreement delivered to the Bank by K-Tel USA pursuant to
Section 3.1(m), as the same may be amended, supplemented or restated from time
to time.

                  "K-Tel USA's Copyright Security Agreement" means the Copyright
Security Agreement of K-Tel USA in favor of the Bank dated as of July 22, 1994,
as the same has heretofore been amended and supplemented and as the same may
hereafter be amended, supplemented or restated from time to time.

                  "K-Tel USA's Security Agreement" means the Amended and
Restated Security Agreement of K-Tel USA in favor of the Bank of even date
herewith, as the same may hereafter be amended, supplemented or restated from
time to time.

                  "K-Tel Video Collateral Account" means the collateral bank
account established by K-Tel Video with the Bank under the Collateral Bank
Account Agreement delivered to the Bank by K-Tel Video pursuant to Section
3.1(m), as the same may be amended, supplemented or restated from time to time.

                  "K-Tel Video's Security Agreement" means the Security
Agreement of K-Tel Video in favor of the Bank of even date herewith, as the same
may be amended, supplemented or restated from time to time.

                  "L/C Amount" means the sum of (i) the aggregate face amount of
any issued and outstanding Letters of Credit and (ii) the unpaid amount of the
Obligation of Reimbursement.

                  "Letters of Credit" has the meaning specified in Section 2.12
hereof.

                  "Letter of Credit Applications" has the meaning specified in
Section 2.12 hereof.

                  "Loan Documents" means this Agreement, the Note, the Security
Documents, the Letter of Credit Applications and all related documents from the
Borrowers or any of them or K-Tel International in favor of the Bank.

                  "Loan Party" or "Loan Parties" shall mean, individually or
collectively, as the case may be, each of the Borrowers and K-Tel International.

                  "Maturity Date" means July 31, 1997.

                  "Net Income before Taxes" of any Person means, at any date of
determination, the before-tax net income of such Person, decreased by any
extraordinary non-cash or non-operating expense or loss recorded by such Person
(Net Income before Taxes shall not be increased by any extraordinary,
non-operating or non-cash income recorded by such Person).

                  "Note" has the meaning given in Section 2.2 hereto.

                  "Obligation of Reimbursement" has the meaning specified in
Section 2.12 hereof.

                  "Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

                  "Plan" means an employee benefit plan or other plan maintained
for employees of either Borrower and covered by ERISA.

                  "Prior Credit Agreement" has the meaning specified in the
Recitals to this Agreement.

                  "Prior Note" has the meaning specified in the Recitals to this
Agreement.

                  "Reportable Event" means (i) a "reportable event" described in
Section 4043 of ERISA and the regulations issued thereunder, (ii) a withdrawal
from any Plan, as described in Section 4063 of ERISA, (iii) an action to
terminate a Plan for which a notice is required to be filed under Section 4041
of ERISA, (iv) any other event or condition that might constitute grounds for
termination of, or the appointment of a trustee to administer, any Plan, or (v)
a complete or partial withdrawal from a Multiemployer Plan as described in
Sections 4203 and 4205 of ERISA.

                  "Returns" means, as of the date of determination, 20% of K-Tel
USA's billed and unpaid Accounts generated from the sale of music products.

                  "Security Documents" means K-Tel USA's Security Agreement,
K-Tel USA's Copyright Security Agreement, Dominion's Security Agreement,
Dominion's Copyright Security Agreement, K-Tel Productions' Security Agreement,
K-Tel Productions' Copyright Security Agreement, K-Tel Video's Security
Agreement, K-Tel Direct's Security Agreement, K-Tel TV's Security Agreement,
K-Tel Consumer Products' Security Agreement, K-Tel International's Guaranty,
K-Tel International's Pledge Agreement, K-Tel International's Security Agreement
and the Collateral Account Agreements.

                  "Sound Recording" means a work that results from the fixation
of a series of musical, spoken or other sounds (including, without limitation,
any "frontline" recordings), regardless of the nature of the material object
(such as disks, tapes, phonorecords or other objects) in which they are
embodied.

                  "Special Account" means a cash collateral account maintained
by the Bank in connection with Letters of Credit, as contemplated by Section
2.12.

                  "Subordinated Debt" of any Person means indebtedness for
borrowed money of such Person which has been subordinated in right of payment to
such Person's indebtedness to the Bank on terms accepted in writing by the Bank.

                  "Subsidiary" means any corporation of which more than 50% of
the outstanding shares of capital stock having general voting power under
ordinary circumstances to elect a majority of the board of directors of such
corporation, irrespective of whether or not at the time stock of any other class
or classes shall have or might have voting power by reason of the happening of
any contingency, is at the time directly or indirectly owned by the Borrowers or
either of them, by the Borrowers or any of them and one or more other
Subsidiaries, or by one or more other Subsidiaries.

                  "Tangible Net Worth" of any Person means, the excess of:

                           (a) the tangible assets of such Person which, in
                  accordance with GAAP, are tangible assets, after deducting
                  adequate reserves in each case where, in accordance with GAAP,
                  a reserve is proper, over

                           (b) all Debt of such Person;

provided, however, that (i) Inventory shall be taken into account on the basis
of the cost or current market value, whichever is lower, (ii) in no event shall
there be included as such tangible assets, patents, trademarks, trade names,
copyrights, licenses, good will, memberships, deferred charges or treasury stock
or any securities or Debt of such Person or any other securities unless the same
are readily marketable in the United States of America or entitled to be used as
a credit against Federal income tax liabilities, (iii) securities included as
such tangible assets shall be taken into account at their current market price
or cost, whichever is lower, and (iv) any write-up in the book value of any
assets shall not be taken into account.

                                   ARTICLE II
                        Amount and Terms of the Advances

                  Section 2.1 Existing Advances. The Bank has made various
advances to K-Tel and Dominion (the "Existing Advances") pursuant to the Prior
Credit Agreement. As of the date hereof, the outstanding principal balance of
the Existing Advances is zero. Upon execution and delivery of this Agreement,
the Existing Advances shall be deemed to be Advances made pursuant to Section
2.2 and repayable in accordance with the Note. To the extent the Note evidences
the Existing Advances, the Note shall be issued in substitution for and
replacement of, but not in payment of, the Prior Note.

                  Section 2.2 The Advances. The Bank agrees, on the terms and
conditions herein set forth, to make Advances to the Borrowers from time to time
during the period from the date when all of the conditions set forth in Section
3.1 hereof are met (the "Closing Date") to and including the Commitment
Termination Date in an aggregate amount not to exceed at any time outstanding
the Borrowing Base less the L/C Amount. Within the above limits, the Borrowers
may borrow, prepay pursuant to Section 2.8 and reborrow under this Section 2.2.
The Advances made by the Bank shall be evidenced by a single promissory note of
the Borrowers, dated the Closing Date, payable to the order of the Bank
appropriately completed in substantially the form of Exhibit A attached hereto,
as the same may be renewed, extended, amended or any note shall be issued in
substitution therefor from time to time (the "Note"). The Note shall bear
interest in accordance with Section 2.4 hereof and principal of and interest on
the Note shall be due and payable as provided in Section 2.6 hereof.

                  Section 2.3  Procedures for Requesting Advances.

                  (a) The Bank must receive notice of the Borrowers' request
         for each Advance not later than 12:00 noon (Minneapolis time) on the
         Business Day of the proposed Advance. Each such request for an Advance
         may be made in writing or by telephone, shall be effective upon receipt
         by the Bank and shall specify the proposed date for the requested
         Advance (which shall be a Business Day), and the amount of the
         requested Advance (which must be at least $10,000). Unless the Bank
         determines that any condition set forth in Article III has not been
         satisfied, the Bank will make the proceeds of the Advance available to
         the Borrowers on the proposed date of such Advance by depositing the
         same to a Borrower's demand deposit account maintained with the Bank,
         as specified by the Borrowers, or in such other manner as the Bank and
         the Borrowers may from time to time agree. The Borrowers shall be
         jointly and severally obligated to repay all Advances notwithstanding
         the fact that the person requesting same was not in fact authorized so
         to do. Any request for an Advance, whether written or telephonic, shall
         be deemed to be a representation that the statements set forth in
         Section 3.2 are correct.

                  Section 2.4  Interest.

                  (a) Subject to the provisions of paragraph (b) below, the
         outstanding principal balance of the Note shall bear interest until
         fully paid at the Floating Rate.

                  (b) Notwithstanding the provisions of paragraph (a) above, if
         an Event of Default shall occur and continue for a period of 30 days
         after the Bank has given written notice to the Borrowers specifying
         such Event of Default (it being understood that such grace period and
         notice requirement are conditions only to imposing a higher interest
         rate), the Borrowers shall pay interest on the unpaid principal of the
         Note, from the first day immediately following the expiration of such
         30 day period until the earlier of full payment of such principal or
         the day on which such Event of Default is cured to the written
         satisfaction of the Bank, at an annual rate equal to three percent
         (3.00%) over the annual rate of interest that would otherwise be in
         effect had there been no occurrence of an Event of Default.

                  (c) Interest on the Note shall be computed on the basis of
         actual days elapsed in a 360 day year.

                  Section 2.5 Late Payment Fee. If any amount due under the
Note (whether principal and/or interest) is paid more than 10 days after the
stated due date for such payment, the Borrowers shall pay, on demand, to the
Bank a late payment fee equal to eight percent (8%) of the past-due payment.

                  Section 2.6 Payments of Note.

                  (a) Interest accruing under the Note shall be due and payable
         on the first day of each month with respect to interest accruing during
         the immediately preceding month, and also on the Maturity Date.

                  (b) The principal of the Note shall be payable in full on the
         Maturity Date.

                  Section 2.7 Mandatory Prepayments of Advances. The Borrowers
shall, within one Business Day following the delivery of each Borrowing Base
Certificate under Section 5.1(e) hereof, prepay the Advances in the amount, if
any, by which the sum of the outstanding principal amount of the Advances and of
the L/C Amount on the date of prepayment under this Section 2.7 exceeds the
Borrowing Base set forth in such Borrowing Base Certificate.

                  Section 2.8 Optional Prepayment of Advances. The Borrowers
may prepay the outstanding principal amount of Advances in whole or in part
without premium or penalty. Any partial prepayment shall be applied first to
payment of any late charges or other amounts due, then to unpaid accrued
interest on the Note and the balance, if any, to the principal amount
outstanding on the Note.

                  Section 2.9 Payment on Nonbusiness Days and Payments.
Whenever any payment to be made under this Agreement shall be stated to be due
on any day other than a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest. All payments of principal,
interest, fees and other amounts due under this Agreement shall be made to the
Bank in immediately available funds.

                  Section 2.10 Use of Loan Proceeds and Letters of Credit. The
Borrowers shall use the proceeds of each Advance for general working capital
purposes of the Borrowers and to make advances to Affiliates to the extent
permitted by this Agreement. The Borrowers will use each Letter of Credit for
general corporate purposes.

                  Section 2.11 Existing Letters of Credit. Pursuant to the
Prior Credit Agreement and certain existing Letter of Credit Applications (the
"Existing Letter of Credit Applications"), the Bank has issued certain Letters
of Credit for the account of K-Tel USA which are currently outstanding (the
"Existing Letters of Credit"). The letter of credit number, face amount,
beneficiary and expiry date for each of the Existing Letters of Credit are set
forth on Schedule 2.11 attached hereto. Upon execution and delivery of this
Agreement, the Existing Letters of Credit shall be deemed to be Letters of
Credit issued pursuant to Section 2.12 of this Agreement.

                  Section 2.12 Letters of Credit.

                  (a) Subject to the terms and conditions set forth in this
         Section 2.12 and in Article III, the Bank shall issue one or more
         letters of credit for the account of the Borrowers (each such letter of
         credit and each Existing Letter of Credit is herein referred to as a
         "Letter of Credit") from time to time during the period from the date
         hereof to and including the Commitment Termination Date, in an
         aggregate amount at any time outstanding not to exceed the lesser of
         (i) $500,000 or (ii) the Borrowing Base less the sum of (A) all
         outstanding Advances under this Agreement and (B) the L/C Amount.

                  (b) The Borrowers acknowledge and agree that the Letters of
         Credit issued under this Section 2.12 include the Existing Letters of
         Credit listed on Schedule 2.11 attached hereto. The Borrowers further
         acknowledge that they are jointly and severally liable for all
         reimbursement and other obligations with respect to all Letters of
         Credit, including the Existing Letters of Credit.

                  (c) Whenever the Borrowers desire to obtain issuance of a
         Letter of Credit, the Borrowers shall request the same by written
         notice to the Bank from the Borrowers, which notice or request shall
         specify the date of the requested issuance (which date shall be a
         Business Day). Prior to the requested date of issuance, the Borrowers
         shall provide the Bank with an application for letter of credit in a
         form provided by the Bank (each such letter of credit application and
         each Existing Letter of Credit Application is herein referred to as a
         "Letter of Credit Application") duly executed on behalf of the
         Borrowers. The Borrowers acknowledge and agree that (i) the Letter of
         Credit Applications include all Existing Letter of Credit Applications
         and (ii) the Borrowers are jointly and severally liable with respect to
         all obligations under the Existing Letter of Credit Applications. The
         terms and conditions set forth in each such Letter of Credit
         Application shall supplement the terms and conditions hereof, but in
         the event of any inconsistency between the terms of any such Letter of
         Credit Application and the terms hereof, the terms hereof shall
         control. Any request for the issuance of a Letter of Credit under this
         Section 2.12 shall be deemed to be a representation by the Borrowers
         that (i) the conditions set forth in this Section 2.12 have been met,
         and (ii) the statements set forth in Section 3.2 hereof are correct as
         of the time of the request.

                  (d) The Borrowers shall pay to the Bank a letter of credit
         fee in connection with each Letter of Credit issued hereunder as
         determined by the Bank on a case-by-case basis. Each such letter of
         credit fee shall be payable at the time or times determined by the
         Bank. In addition, the Borrowers agree to pay to the Bank, on written
         demand by the Bank, the administrative fees charged by the Bank in the
         ordinary course of business in connection with the honoring of drafts
         under any Letter of Credit, and all other activity with respect to the
         Letters of Credit at the then-current rates of the Bank.

                  (e) Draws under any Letter of Credit shall be reimbursed to
         the Bank in accordance with the applicable Letter of Credit Application
         and as follows:

                           (i) Whenever a draft under a Letter of Credit is
                  presented to the Bank for payment, the Borrowers hereby agree
                  to immediately reimburse the Bank for the amount paid by the
                  Bank under the Letter of Credit, plus any and all reasonable
                  charges and expenses that the Bank may pay or incur relative
                  to such draw, plus interest on all such amounts, charges and
                  expenses as set forth below (all such amounts with respect to
                  all Letters of Credit are hereinafter referred to,
                  collectively, as the "Obligation of Reimbursement").

                           (ii) The Borrowers hereby agree to pay to the Bank,
                  on demand of the Bank, interest on all amounts, charges and
                  expenses payable by the Borrowers to the Bank under this
                  Section 2.12, accrued from the date any such draft, charge or
                  expense is paid by the Bank until payment in full by the
                  Borrowers at the interest rate in effect under Section 2.4
                  hereof.

                           (iii) If the Borrowers fail to pay to the Bank
                  promptly the amount of its Obligation of Reimbursement in
                  accordance with the terms of this Agreement and in accordance
                  with the terms of the applicable Letter of Credit
                  Applications, the Bank is hereby irrevocably authorized and
                  directed, in its sole discretion, to make an Advance under
                  Section 2.2 hereof in an amount sufficient to discharge the
                  Obligation of Reimbursement, including all interest accrued
                  thereon but unpaid at the time of such Advance, and such
                  Advance shall be added to the outstanding principal balance of
                  the Note.

                  (f) On the Commitment Termination Date, the Borrowers shall
         pay to the Bank in immediately available funds for deposit in the
         Special Account an amount equal to the maximum aggregate amount
         available to be drawn under all Letters of Credit then outstanding,
         assuming compliance with all conditions for drawing thereunder. Amounts
         on deposit in the Special Account may be applied by the Bank at any
         time or from time to time to the Borrower's Obligation of Reimbursement
         or any other obligations of the Borrowers to the Bank arising under
         this Agreement or otherwise, in the Bank's sole discretion, and shall
         not be subject to withdrawal by the Borrowers so long as the Bank
         maintains a security interest therein.

                  (g) The Borrowers hereby pledge, and grant to the Bank a
         security interest in, all funds held in the Special Account from time
         to time and all proceeds thereof, as security for the payment of all
         present and future Obligations of Reimbursement and all other amounts
         due and to become due from the Borrowers to the Bank pursuant to this
         Agreement or otherwise. The Bank shall have full ownership and control
         of the Special Account, and the Borrowers shall have no right to
         withdraw the funds maintained in the Special Account.

                                   ARTICLE III
            Conditions Precedent to Advances and to Letters of Credit

                  Section 3.1 Condition Precedent to Initial Advance. The
obligation of the Bank to make its initial Advance hereunder or to issue its
initial Letter of Credit hereunder is subject to the condition precedent that
the Bank shall have received on or before the day of making such initial Advance
or of issuing such initial Letter of Credit the following, in form and substance
satisfactory to the Bank in its sole discretion:

                  (a) The Note, duly executed on behalf of the Borrowers.

                  (b) K-Tel USA's Security Agreement, dated the Closing Date,
         duly executed on behalf of K-Tel USA.

                  (c) An Amendment to K-Tel USA's Copyright Security Agreement,
         dated the Closing Date, duly executed on behalf of K-Tel USA.

                  (d) Dominion's Security Agreement, dated the Closing Date,
         duly executed on behalf of Dominion.

                  (e) An Amendment to Dominion's Copyright Security Agreement,
         dated the Closing Date, duly executed on behalf of Dominion.

                  (f) K-Tel Productions' Security Agreement, dated the Closing
         Date, duly executed on behalf of K-Tel Productions.

                  (g) K-Tel Video's Security Agreement, dated the Closing Date,
         duly executed on behalf of K-Tel Video.

                  (h) K-Tel Direct's Security Agreement, dated the Closing Date,
         duly executed on behalf of K-Tel Direct.

                  (i) K-Tel Consumer Products' Security Agreement, dated the
         Closing Date, duly executed on behalf of K-Tel Consumer Products.

                  (j) K-Tel International's Guaranty, dated the Closing Date,
         duly executed on behalf of K-Tel International.

                  (k) The K-Tel International's Security Agreement, dated the
         Closing Date, duly executed on behalf of K-Tel International.

                  (l) K-Tel International's Pledge Agreement, dated the Closing
         Date, duly executed on behalf of K-Tel International, together with the
         original stock certificates representing 100% of the issued and
         outstanding shares of stock of K-Tel USA (already in the possession of
         the Bank), Dominion (already in the possession of the Bank), K-Tel
         Productions, K-Tel Video, K-Tel Direct and K-Tel Consumer Products,
         together with stock powers duly executed in blank by K-Tel
         International (with K-Tel International's signature guaranteed by the
         Bank or another financial institution acceptable to the Bank).

                  (m) The Collateral Bank Account Agreements of K-Tel USA,
         Dominion, K-Tel Productions, K-Tel Video, K-Tel Direct, K-Tel TV and
         K-Tel Consumer Products, dated the Closing Date, duly executed on
         behalf of, respectively, K-Tel Productions, K-Tel Video, K-Tel Direct
         and K-Tel Consumer Products.

                  (n) K-Tel TV's Security Agreement, dated the Closing Date,
         duly executed on behalf of K-Tel TV.

                  (o) [Intentionally omitted].

                  (p) Loans to One Borrower Certificates, dated the Closing
         Date, duly executed on behalf of the Borrowers and K-Tel International
         in favor of the Bank.

                  (q) An Acknowledgment of Borrowers in favor of the Bank, dated
         the Closing Date, duly executed on behalf of the Borrowers.

                  (r) Financing statements duly executed on behalf of Borrowers
         and K-Tel International sufficient when filed to perfect the security
         interests granted under K-Tel USA's Security Agreement, Dominion's
         Security Agreement, K-Tel Productions' Security Agreement, K-Tel
         Video's Security Agreement, K-Tel Direct's Security Agreement, K-Tel
         TV's Security Agreement, K-Tel Consumer Products' Security Agreement
         and K-Tel International's Security Agreement, to the extent such
         security interests are capable of being perfected by filing.

                  (s) Current searches of appropriate filing offices showing
         that (i) no state or federal tax liens have been filed and remain in
         effect against any of the Borrowers or K-Tel International, and (ii) no
         financing statements have been filed and remain in effect against any
         of the Borrowers or K-Tel International except financing statements
         perfecting only security interests permitted under Section 6.1 and
         those financing statements filed by the Bank.

                  (t) A certified copy of the resolutions of the Board of
         Directors of each of the Borrowers evidencing approval of the Loan
         Documents to which such Borrower is a party and other matters
         contemplated hereby, certified by the Secretary or Assistant Secretary
         of such Borrower as being a true, correct and complete copy thereof
         which has been duly adopted and is in full force and effect, together
         with a certificate of such Secretary or Assistant of such Borrower
         certifying the names and true signatures of the officers of such
         Borrower authorized to sign each Loan Document to which such Borrower
         is a party and the other documents to be delivered by such Borrower
         hereunder.

                  (u) Copies of the Articles of Incorporation and By-Laws of
         each of the Borrowers, certified by the Secretary or Assistant
         Secretary of such Borrower as being true, correct and complete copies
         thereof.

                  (v) A certified copy of the resolutions of the Board of
         Directors of K-Tel International evidencing approval of the Loan
         Documents to which K-Tel International is a party and other matters
         contemplated hereby, certified by the Secretary or Assistant Secretary
         of K-Tel International as being a true, correct and complete copy
         thereof which has been duly adopted and is in full force and effect,
         together with a certificate of such Secretary or Assistant of K-Tel
         International certifying the names and true signatures of the officers
         of K-Tel International authorized to sign each Loan Document to which
         K-Tel International is a party and the other documents to be delivered
         by K-Tel International hereunder.

                  (w) Copies of the Articles of Incorporation and By-Laws of
         K-Tel International, certified by the Secretary or Assistant Secretary
         of K-Tel International as being true, correct and complete copies
         thereof.

                  (x) A current certificate of good standing for each of the
         Borrowers and K-Tel International from the Minnesota Secretary of
         State.

                  (y) A signed copy of an opinion of counsel for the Borrowers
         and K-Tel International, addressed to the Bank in form and content
         acceptable to the Bank and to the Bank's counsel.

                  (z) Certificates of the insurance required under K-Tel USA's
         Security Agreement, Dominion's Security Agreement, K-Tel Productions'
         Security Agreement, K-Tel Video's Security Agreement, K-Tel Direct's
         Security Agreement, K-Tel TV's Security Agreement, K-Tel Consumer
         Products' Security Agreement and K-Tel International's Security
         Agreement, each with a loss payable endorsement in favor of the Bank.

                  (aa) Payment of the costs and expenses described in Section
         8.5 which have been incurred through the Closing Date.

                  (bb) Forms W-9, dated as of the Closing Date, duly executed by
         each of the Borrowers.

                  (cc) Pro-forma balance sheets for each of the Borrowers as of
         the Closing Date.

                  (dd) Such other items as the Bank may require.

                  Section 3.2 Conditions Precedent to All Advances and to
Issuance of All Letters of Credit. The Bank's obligation to make each Advance
(including the initial Advance) and to issue any Letter of Credit shall be
subject to the further conditions precedent that on the date of making such
Advance or of issuing such Letter of Credit, the statements set forth in (a) and
(b) below shall be true (and the Borrowers' receipt of the proceeds or benefit
of such Advance or such Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrowers that such statements are true on
such date):

                  (a) The representations and warranties contained in Article
         IV of this Agreement are correct on and as of the date of such Advance
         as though made on and as of such date;

                  (b) No event has occurred and is continuing, or would result
         from the making of such Advance or the issuance of such Letter of
         Credit, which constitutes a Default or an Event of Default.

                                   ARTICLE IV
                         Representations and Warranties

                  The Borrowers represent and warrant to the Bank as follows:

                  Section 4.1 Corporate Existence, Power and Name. Each Loan
Party is a corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and is duly licensed or
qualified to transact business in all jurisdictions where the character of the
property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary, and where the failure to be so
licensed or qualified would have a materially adverse effect on the financial
condition or operation of such Loan Party. Each Loan Party has all requisite
power and authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under the Loan Documents to which it is a party. At all times since its
incorporation, K-Tel USA's correct corporate name has been "K-Tel International
(USA), Inc." and the only corporation which has been merged into K-Tel USA was
K-Tel, Inc. At all times since its incorporation, Dominion's correct corporate
name has been "Dominion Entertainment, Inc." At all times since its
incorporation, K-Tel Productions' correct corporate name has been "K-Tel
Productions, Inc." At all times since its incorporation, K-Tel Video's correct
corporate name has been "K-Tel Video, Inc." At all times since its
incorporation, K-Tel Direct's correct corporate name has been "K-Tel Direct,
Inc." At all times since its incorporation, K-Tel TV's correct corporate name
has been "K-Tel TV, Inc." At all times since its incorporation, K-Tel Consumer
Products' correct corporate name has been "K-Tel Consumer Products, Inc." As of
the date of this Agreement, K-Tel International's correct corporate name is
"K-Tel International, Inc.", and the following is a true and complete list of
all previous corporate names of K-Tel International since its incorporation and
of all other corporations merged into K-Tel International since its date of
incorporation: Imperial Products, Inc., Commonwealth Advertising, Inc., K-Tel
Entertainment, Inc., Candlelite Marketing, Inc.

                  Section 4.2 Authorization of Borrowing; No Conflict as to Law
or Agreements. The execution, delivery and performance by each Loan Party of the
Loan Documents to which it is a party and the borrowings from time to time
hereunder have been duly authorized by all necessary corporate action and do not
and will not (i) require any consent or approval of the stockholders of such
Loan Party, or any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) violate any provision of any law, rule or regulation (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System) or of any order, writ, injunction or decree presently in effect
having applicability to such Loan Party or of the Articles of Incorporation or
Bylaws of such Loan Party, (iii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease or
instrument to which such Loan Party is a party or by which it or its properties
may be bound or affected, or (iv) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature (other than the Security Documents to
which such Loan Party is a party) upon or with respect to any of the properties
now owned or hereafter acquired by such Loan Party.

                  Section 4.3 Legal Agreements. The Loan Documents to which
each Loan Party is a party constitute the legal, valid and binding obligations
of such Loan Party enforceable against such Loan Party in accordance with their
respective terms.

                  Section 4.4 Subsidiaries. K-Tel International owns 100% of
the issued and outstanding stock of each of the Borrowers and owns stock in each
of the other Subsidiaries of K-Tel International as listed on Schedule 4.4
attached hereto. None of the Borrowers has any Subsidiaries.

                  Section 4.5 Financial Condition. The Borrowers have
heretofore furnished to the Bank the following financial statements of the Loan
Parties: (i) the annual audited consolidated financial statements of K-Tel
International as of June 30, 1996, (ii) the annual unaudited consolidating
financial statements for K-Tel USA and Dominion as of June 30, 1996, (iii) the
unaudited financial statements for K-Tel International as of December 31, 1996,
and (iv) the interim monthly unaudited financial statements for K-Tel USA and
Dominion as of December 31, 1996. Those financial statements fairly present the
financial condition of K-Tel International, K-Tel USA and Dominion on the dates
thereof and the results of their respective operations and cash flows for the
periods then ended, and were prepared in accordance with GAAP.

                  Section 4.6 Adverse Change. There has been no material adverse
change in the business, properties or condition (financial or otherwise) of
K-Tel International, K-Tel USA or Dominion since the date of the latest
financial statement referred to in Section 4.5.

                  Section 4.7 Litigation. Except as set forth on Schedule 4.7
attached hereto, there are no actions, suits or proceedings pending or, to the
knowledge of any of the Borrowers, threatened against or affecting any Loan
Party or the properties of any Loan Party before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to such Loan Party, would have a
material adverse effect on the financial condition, properties, or operations of
such Loan Party.

                  Section 4.8 Regulation U. None of the Borrowers is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System), and no part of the proceeds of any Advance or of
any Letter of Credit will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any margin
stock.

                  Section 4.9 Taxes. Each Loan Party has paid or caused to be
paid to the proper authorities when due all federal, state and local taxes
required to be withheld by such Loan Party. Each Loan Party has filed all
federal, state and local tax returns which to the knowledge of the officers of
such Loan Party are required to be filed, and each Loan Party has paid or caused
to be paid to the respective taxing authorities all taxes as shown on said
returns or on any assessment received by it to the extent such taxes have become
due.

                  Section 4.10 Titles and Liens. Each Loan Party has good title
to each of the properties and assets reflected in its latest balance sheet
referred to in Section 4.5 (other than any sold, as permitted by its respective
Security Documents), free and clear of all mortgages, security interests, liens
and encumbrances, except for mortgages, security interests and liens permitted
by Section 6.1 or in favor of the Bank and covenants, restrictions, rights,
easements and minor irregularities in title which do not materially interfere
with the business or operations of such Loan Party as presently conducted. No
financing statement naming any Loan Party as debtor is on file in any office
except to perfect only security interests permitted by Section 6.1 or in favor
of the Bank.

                  Section 4.11 Plans. Except as disclosed to the Bank in
writing prior to the date hereof, no Loan Party nor any Affiliate of any Loan
Party maintains or has maintained any Plan. No Loan Party nor any Affiliate of
any Loan Party has received any notice or has any knowledge to the effect that
it is not in full compliance with any of the requirements of ERISA. No
Reportable Event or other fact or circumstance which may have an adverse effect
on the Plan's tax qualified status exists in connection with any Plan. No Loan
Party nor any Affiliate of any Loan Party has:

                  (a) Any accumulated funding deficiency within the meaning of
         ERISA; or

                  (b) Any liability or knows of any fact or circumstances which
         could result in any liability to the Pension Benefit Guaranty
         Corporation, the Internal Revenue Service, the Department of Labor or
         any participant in connection with any Plan (other than accrued
         benefits which are or which may become payable to participants or
         beneficiaries of any such Plan).

                  Section 4.12 Default. Each Loan Party is in compliance with
all provisions of all agreements, instruments, decrees and orders to which it is
a party or by which it or its property is bound or affected, the breach or
default of which could have a material adverse effect on the financial
condition, properties or operations of such Loan Party.

                  Section 4.13 Environmental Protection. Each Loan Party has
obtained all permits, licenses and other authorizations which are required under
federal, state and local Environmental Laws at such Loan Party's facilities or
in connection with the operation of its facilities. Except as previously
disclosed to the Bank in writing, each Loan Party and all activities of each
Loan Party at its facilities comply with all Environmental Laws and with all
terms and conditions of any required permits, licenses and authorizations
applicable to such Loan Party with respect thereto. Except as previously
disclosed to the Bank in writing, each Loan Party is also in compliance with all
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in Environmental Laws or
contained in any plan, order, decree, judgment or notice of which such Loan
Party is aware. Except as previously disclosed to the Bank in writing, no Loan
Party is aware of, or has received notice of, any events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance with, or which may give rise to
any liability under, any Environmental Laws.

                  Section 4.14 Submissions to Bank. All financial and other
written information provided to the Bank by or on behalf of any Loan Party in
connection with the Borrowers' request for the credit facilities contemplated
hereby is true and correct in all material respects and, as to projections,
valuations or proforma financial statements, present a good faith opinion as to
such projections, valuations and proforma condition and results.

                  Section 4.15 Fiscal Year of the Loan Parties. The fiscal year
of each of the Loan Parties ends on June 30.

                  Section 4.16  Copyrights of Dominion.

                  (a) Dominion's Registered Copyrights in Sound Recordings and
         Compositions. The Borrowers represent and warrant that Schedule 4.16(a)
         is a true and complete list of all of the registered copyrights in
         Sound Recordings and Compositions which were owned exclusively by
         Dominion as of July 22, 1994. The Borrowers represent and warrant that
         Dominion is the copyright owner of record in the U.S. Copyright Office
         with respect to each of the registered copyrights in Sound Recordings
         and Compositions listed on Schedule 4.16(a).

                  (b) Dominion's Registered Copyrights in Compilations. The
         Borrowers represent and warrant that Schedule 4.16(b) is a true and
         complete list of all of the registered copyrights in Compilations which
         were owned exclusively by Dominion as of July 22, 1994. The Borrowers
         represent and warrant that Dominion is the copyright owner of record in
         the U.S. Copyright Office with respect to each of the registered
         copyrights in Compilations listed on Schedule 4.16(b).

                  (c) Registered Copyrights in Sound Recordings and
         Compilations which are Owned by Dominion, but were Assigned of Record
         by Affiliates of Dominion to Dominion. The Borrowers represent and
         warrant that Schedule 4.16(c) is a true and complete list of all
         registered copyrights in Sound Recordings and Compilations which were
         owned by Dominion as of July 22, 1994, but which on July 22, 1994 were
         registered in the U.S. Copyright Office as being owned by an Affiliate
         of Dominion. The Borrowers represent and warrant that Dominion's
         ownership of each such copyright has now been registered in the U.S.
         Copyright Office pursuant to an assignment executed and delivered by
         the appropriate Affiliate of Dominion in favor of Dominion for
         recording in the U.S. Copyright Office pursuant to Section 3.1(gg) of
         the Prior Credit Agreement.

                  (d) Registered Copyrights in Sound Recordings and
         Compilations which are Jointly Owned by Dominion and a Person other
         than an Affiliate of Dominion. The Borrowers represent and warrant that
         Schedule 4.16(d) is a true and complete list of all of the registered
         copyrights in Sound Recordings and Compilations which were owned
         jointly or in common by Dominion and a Person other than an Affiliate
         of Dominion as of July 22, 1994. The Borrowers represent and warrant
         that to the extent Dominion's joint or common ownership of any of such
         copyright was previously not registered in the U.S. Copyright Office
         but, instead, had an existing registration in the name of an Affiliate
         of Dominion, Dominion's common or joint ownership of each such
         copyright has been now registered in the U.S. Copyright Office pursuant
         to an assignment executed and delivered by the appropriate Affiliate of
         Dominion (and such assignment has been consented to by the joint or
         common owner of each such copyright if necessary) in favor of Dominion
         for recording in the U.S. Copyright Office pursuant to Section 3.1(hh)
         of the Prior Credit Agreement.

                  (e) Dominion's Unregistered Copyrights. The Borrowers
         represent and warrant that Schedule 4.16(e) is a true and complete list
         of all of the unregistered copyrights in Sound Recordings, Compilations
         and Compositions which were exclusively owned by Dominion as of July
         22, 1994.

                  (f) K-Tel USA's Registered Copyrights in Compilations which
         are subject to Short-Term License Agreements. The Borrowers represent
         and warrant that Schedule 4.16(f) is a true and complete list of all of
         the registered copyrights in Compilations which were owned exclusively
         by K-Tel USA as of July 22, 1994. The Borrowers represent and warrant
         that K-Tel USA is the copyright owner of record in the U.S. Copyright
         Office with respect to each of the registered copyrights in
         Compilations listed on Schedule 4.16(f). The Borrowers further
         represent and warrant that each of the registered copyrights in a
         Compilation which is listed in Schedule 4.16(f) includes one or more
         Sound Recordings which are subject to a short-term license (having a
         term of 5 years or less) between a licensor who is not an Affiliate of
         K-Tel USA and K-Tel USA, as licensee.

                  (g) K-Tel USA's Unregistered Copyrights which are subject to
         Short-Term License Agreements. The Borrowers represent and warrant that
         Schedule 4.16(g) is a true and complete list of all of the unregistered
         copyrights in Compilations which were owned exclusively by K-Tel USA as
         of July 22, 1994. The Borrowers further represent and warrant that each
         of the unregistered copyrights in a Compilation which is listed in
         Schedule 4.16(g) includes one or more Sound Recordings which are
         subject to a short-term license (having a term of 5 years or less)
         between a licensor who is not an Affiliate of K-Tel USA and K-Tel USA,
         as licensee.

                  (h) Dominion's Long-Term Licenses in Copyrights. The
         Borrowers represent and warrant that Schedule 4.16(h) is a true and
         complete list of all of the copyrights in Sound Recordings and
         Compilations which were subject to long-term licenses (having a term of
         more than 5 years) pursuant to which Dominion is the licensee as of
         July 22, 1994.

                  (i) Miscellaneous Representations. The Borrowers represent
         and warrant that as of the date of this Agreement no Affiliate of
         Dominion (including, without limitation, K-Tel USA and K-Tel
         International) owns any registered or unregistered copyrights in Sound
         Recordings or Compilations other than (i) K-Tel USA's ownership of the
         registered copyrights in Compilations which are subject to short-term
         licenses as identified in Schedule 4.16(f), (ii) K-Tel USA's ownership
         of the unregistered copyrights in Compilations which are subject to
         short-term licenses as identified in Schedule 4.16(g) and (iii) K-Tel
         Productions' ownership of copyrights in Sound Recordings, Compositions
         and Compilations as contemplated by Section 5.10 of this Agreement. The
         Borrowers represent and warrant that as of the date of this Agreement
         no Affiliate of Dominion (other than Dominion with respect to the
         long-term licenses identified on Schedule 4.16(h)) is a licensor of any
         copyright in Sound Recordings or Compilations pursuant to a long-term
         license agreement (having a term of more than 5 years).

                  (j) Compliance with the Provisions of Section 5.12 of the
         Prior Credit Agreement. The Borrowers represent and warrant that
         Dominion and K-Tel USA have complied with each of the covenants and
         obligations set forth in Section 5.12 of the Prior Credit Agreement
         during the period from July 22, 1994 through the date of this
         Agreement.

                                    ARTICLE V
                     Affirmative Covenants of the Borrowers

                  So long as the Note shall remain unpaid or the Commitment
shall be outstanding, the Borrowers will comply with the following requirements,
unless the Bank shall otherwise consent in writing:

                  Section 5.1 Financial Statements. The Borrowers will deliver
or cause to be delivered to the Bank:

                  (a) As soon as available, and in any event within 90 days
         after the end of the fiscal year of each Borrower, a copy of the annual
         audit report of such Borrower with the unqualified opinion of
         independent certified public accountants selected by such Borrower and
         acceptable to the Bank, which annual report shall include the balance
         sheet of such Borrower as at the end of such fiscal year and the
         related statements of operations, retained earnings and cash flows of
         such Borrower for the fiscal year then ended, all in reasonable detail
         and all prepared in accordance with GAAP applied on a basis consistent
         with the accounting practices applied in the annual financial
         statements referred to in Section 4.5, together with (A) a report
         signed by such accountants stating that they understand that the Bank
         is relying on such audit report and further stating that in making the
         investigations necessary for said opinion they obtained no knowledge,
         except as specifically stated, of any Default or Event of Default
         hereunder and all relevant facts in reasonable detail to evidence, and
         the computations as to whether or not such Borrower is in compliance
         with the requirements set forth in Sections 5.7, 5.8 and 5.9 hereof,
         and (B) a certificate of the chief financial officer of such Borrower
         substantially in the form of Exhibit C hereto, stating (i) that such
         financial statements have been prepared in accordance with GAAP applied
         on a basis consistent with the accounting practices reflected in the
         annual financial statements referred to in Section 4.5 hereof, (ii)
         whether or not he or she has knowledge of the occurrence of any Default
         or Event of Default hereunder not theretofore reported and remedied
         and, if so, stating in reasonable detail the facts with respect
         thereto, and (iii) all relevant information called for in such
         certificate to indicate whether such Borrower is in compliance with the
         requirements set forth in Sections 5.7, 5.8 and 5.9 hereof.

                  (b) As soon as available and in any event within 30 days
         after the end of each month, the balance sheet of each Borrower as at
         the end of such month and related statements of operations and cash
         flows of such Borrower (the statements of cash flows shall be required
         only as soon as available and in any event within 45 days after the end
         of each fiscal quarter of such Borrower) for such month and for the
         year to date, in reasonable detail and stating in comparative form the
         figures for the corresponding date and period in the previous year, all
         prepared in accordance with GAAP applied on a basis consistent with the
         accounting practices reflected in the annual financial statements
         referred to in Section 4.5, provided that such financial statements
         need not contain the footnotes included in the annual financial
         statements referred to in Section 4.5 and such financial statements
         shall remain subject to year-end audit adjustments, and accompanied by
         a certificate of the chief financial officer of such Borrower
         substantially in the form of Exhibit C hereto stating (i) that such
         financial statements have been prepared in accordance with GAAP applied
         on a basis consistent with the accounting practices reflected in the
         annual financial statements referred to in Section 4.5, (ii) whether or
         not he or she has knowledge of the occurrence of any Default or Event
         of Default hereunder not theretofore reported and remedied and, if so,
         stating in reasonable detail the facts with respect thereto and (iii)
         all relevant information called for in such certificate to indicate
         whether such Borrower is in compliance with the requirements set forth
         in Sections 5.7, 5.8 and 5.9 hereof.

                  (c) As soon as available, and in any event within 90 days
         after the end of each fiscal year of K-Tel International, a copy of the
         annual audit report (audited as to the consolidated financial
         statements) of K-Tel International with the unqualified opinion of
         independent certified public accountants selected by K-Tel
         International and acceptable to the Bank, which annual report shall
         include the consolidated and consolidating balance sheets (such
         consolidating balance sheets may be unaudited) of K-Tel International
         as at the end of such fiscal year and the related consolidated and
         consolidating statements of income, operations and cash flows (such
         consolidating statements of income, operations and cash flows may be
         unaudited) of K-Tel International for the fiscal year then ended, all
         in reasonable detail and all prepared in accordance with GAAP applied
         on a basis consistent with the accounting practices applied in the
         annual financial statements referred to in Section 4.5, together with
         (A) a report signed by such accountants stating that they understand
         that the Bank is relying on such audit report, and (B) a certificate of
         the chief financial officer of K-Tel International stating that such
         financial statements have been prepared in accordance with GAAP applied
         on a basis consistent with the accounting practices reflected in the
         annual financial statements referred to in Section 4.5 hereof.

                  (d) As soon as available and in any event within 30 days
         after the end of each month, the consolidated balance sheet of K-Tel
         International (the statements of cash flows shall be required only as
         soon as available and in any event within 45 days after the end of each
         fiscal quarter of K-Tel International) as at the end of such month and
         related consolidated statements of operations and cash flows of K-Tel
         International for such month and for the year to date, in reasonable
         detail and stating in comparative form the figures for the
         corresponding date and period in the previous year, all prepared in
         accordance with GAAP applied on a basis consistent with the accounting
         practices reflected in the annual financial statements referred to in
         Section 4.5 and subject to year-end audit adjustments, and accompanied
         by a certificate of the chief financial officer of K-Tel International
         stating that such financial statements have been prepared in accordance
         with GAAP applied on a basis consistent with the accounting practices
         reflected in the annual financial statements referred to in Section
         4.5.

                  (e) On or before the fifteenth (15th) day of each month, a
         Borrowing Base Certificate as of the close of business on the last day
         of the preceding month, properly executed by the president or chief
         financial officer of each of the Borrowers. At the Borrowers' option,
         the Borrowers may update at any time the information contained in any
         Borrowing Base Certificate by submitting to the Bank a new Borrowing
         Base Certificate (or other information acceptable to the Bank in its
         sole discretion) with respect to new Accounts generated since the
         Borrowers' most recent Borrowing Base Certificate.

                  (f) Within fifteen (15) days after the end of each month,
         agings of K-Tel USA's Accounts and its accounts payable.

                  (g) Within thirty (30) days after the end of each fiscal year
         of K-Tel USA, a list of names and addresses of the account debtors of
         K-Tel USA.

                  (h) Immediately after the commencement thereof, notice in
         writing of all litigation and of all proceedings before any
         governmental or regulatory agency affecting any of the Loan Parties of
         the type described in Section 4.7.

                  (i) As promptly as practicable (but in any event not later
         than five Business Days) after an officer of any of the Borrowers
         obtains knowledge of the occurrence of any Default or Event of Default,
         notice of such occurrence, together with a detailed statement by a
         responsible officer of such Borrower of the steps being taken by the
         Borrowers to cure the effect of such event.

                  (j) Promptly upon their distribution, copies of all financial
         statements, reports and proxy statements which K-Tel International
         shall have sent to its shareholders.

                  (k) Promptly after the recording or filing thereof, copies of
         all regular and periodic financial reports which K-Tel International or
         any of the Borrowers shall file with the Securities and Exchange
         Commission or any national securities exchange.

                  (l) Such other information respecting the financial
         condition, results of operations and property of any of the Loan
         Parties as the Bank may from time to time reasonably request.

                  Section 5.2 Books and Records; Inspection and Examination.
Each Borrower will keep accurate books of record and account for itself in which
true and complete entries will be made in accordance with GAAP consistently
applied and, upon request of the Bank, will give any representative of the Bank
access to, and permit such representative to examine, copy or make extracts
from, any and all books, records and documents in its possession, to inspect any
of its properties and to discuss its affairs, finances and accounts with any of
its principal officers, all at such times during normal business hours and as
often as the Bank may reasonably request, and will permit the Bank to send and
discuss such Borrower's account debtors requests for verification of amounts
owed to such Borrower, as often as the Bank shall desire. Without limiting the
generality of the foregoing, each Borrower specifically agrees that (a) the Bank
may conduct such audits and inspections of the collateral and operations of such
Borrower during each period of 12 consecutive months, as the Bank shall deem
necessary or desirable in its sole discretion and (b) that such Borrower shall
pay the Bank on demand, all costs and expenses incurred by the Bank in
connection with any such audits or inspections. The Bank's rights under this
Section 5.2 shall be in addition to any rights under any Security Document.

                  Section 5.3 Compliance with Laws. Each Borrower will comply
with the requirements of applicable laws and regulations, the noncompliance with
which would materially and adversely affect its business or its financial
condition.

                  Section 5.4 Payment of Taxes and Other Claims. Each Borrower
will pay or discharge when due, (a) all taxes, assessments and governmental
charges levied or imposed upon it or upon any properties belonging to it, prior
to the date on which penalties attach thereto, (b) all federal, state and local
taxes required to be withheld by it, and (c) all lawful claims for labor,
materials and supplies which, if unpaid might by law become a lien or charge
upon any of its properties; provided, that such Borrower shall not be required
to pay any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings.

                  Section 5.5 Maintenance of Properties. Each Borrower will keep
and maintain all of its material properties necessary or useful in its business
in good condition, repair and working order.

                  Section 5.6 Preservation of Corporate Existence. Each
Borrower will preserve and maintain its corporate existence and all of its
rights, privileges and franchises; provided, however, that such Borrower shall
not be required to preserve any of its rights, privileges and franchises if its
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of such Borrower and that the loss
thereof is not disadvantageous in any material respect to the Bank as a holder
of the Note.

                  Section 5.7 Current Ratio of K-Tel USA. K-Tel USA will
maintain at all times the ratio of its Current Assets to Current Liabilities at
not less than (i) .86 to 1.00 at all times from the Closing Date through June
29, 1997, and (ii) .90 to 1.00 at all times from and after June 30, 1997.

                  Section 5.8 Capital Base of K-Tel USA. K-Tel USA will
maintain at all times its Capital Base in an amount not less than (i)
($2,388,000) at all times from the Closing Date through June 29, 1997, and (ii)
($1,444,000) at times from and after June 30, 1997.

                  Section 5.9 Net Income Before Taxes of K-Tel USA. K-Tel USA
will maintain at all times its Net Income before Taxes in an amount not less
than (i) $1,156,000 at all times from the Closing Date through June 29, 1997 for
the fiscal year-to-date period from July 1, 1996 through the date of
determination, and (ii) $2,100,000 on June 30, 1997 for the fiscal year-to-date
period from July 1, 1996 through June 30, 1997.

                  Section 5.10 Acquisition or Creation of New Copyrights;
Registration of Newly Acquired or Created Copyrights; Registration of Existing
Unregistered Copyrights; Acquisition of Copyrights Subject to Long-Term
Licenses.

                  (a) Acquisition or Creation of New Copyrights. The Borrowers
         covenant and agree that either Dominion or K-Tel Productions shall be
         the exclusive owner of each copyright in a Sound Recording or a
         Compilation acquired or created by any Loan Party or any Affiliate of
         any Loan Party after July 22, 1994, except that K-Tel USA may be the
         owner of copyrights in Compilations which are acquired or created by
         K-Tel USA after July 22, 1994 and which include one or more Sound
         Recordings subject to a short-term license (having a term of 5 years or
         less) between a licensor who is not an Affiliate of K-Tel USA and K-Tel
         USA, as licensee, and except for acquisitions by K-Tel International's
         subsidiary, K-Tel Entertainment (UK) Ltd. ("K-Tel UK"), which operates
         in Europe.

                  (b) Registration of Newly Acquired or Created Copyrights. The
         Borrowers covenant and agree that either Dominion or K-Tel Productions,
         as applicable, will promptly, and in any event within 60 calendar days
         after the first publication thereof, apply for registration in the U.S.
         Copyright Office for each new copyright in a Sound Recording or
         Composition which is acquired or created by Dominion or K-Tel
         Productions, as applicable, after July 22, 1994. In addition, the
         Borrowers covenant and agree that Dominion, K-Tel Productions or K-Tel
         USA, as the case may be, may in its discretion determine to apply for
         registration of copyrights in Compilations acquired or created after
         the date of this Agreement. In connection with the application for
         registration of each such newly acquired or created copyright in a
         Sound Recording, Composition or Compilation, the Borrowers covenant and
         agree that they shall provide to the Bank a copy of each application
         for registration of each such copyright and the related correspondence
         submitting such application for registration to the U.S. Copyright
         Office simultaneously with such submission to the U.S. Copyright
         Office. Within 30 days after the Borrowers' receipt from the U.S.
         Copyright Office of a registration number with respect to any such
         application for registration, the Borrowers shall submit to the Bank a
         copy of such application with the registration number stamped thereon
         and a related Supplement to Copyright Security Agreement, duly executed
         by Dominion, K-Tel Productions or K-Tel USA, as the case may be, in
         substantially the form of Exhibit E (for Dominion) Exhibit F (for K-Tel
         Productions) or Exhibit G (for K-Tel USA); provided, however, in
         connection with K-Tel Productions initial acquisition or creation of a
         Sound Recording, Composition or Compilation, simultaneously with such
         initial acquisition or creation, K-Tel Productions shall provide to the
         Bank (i) K-Tel Productions' Copyright Security Agreement, dated the
         date of such acquisition or creation, duly executed on behalf of K-Tel
         Productions, (ii) copies of searches of the U.S. Copyright Office with
         respect to all Sound Recordings, Compositions and Compilations acquired
         by K-Tel Productions, and (iii) such other items as the Bank may
         reasonably request. The Bank will, at the Borrowers' sole expense,
         undertake to file each such Copyright Security Agreement and/or
         Supplement to Copyright Security Agreement with the U.S. Copyright
         Office.

                  (c) Registration of Existing Unregistered Copyrights. The
         Borrowers covenant and agree that they may in their discretion
         determine to register any unregistered copyright in a Sound Recording,
         Composition or Compilation listed in Schedule 4.16(e) or in Schedule
         4.16(g). In connection with the registration of each such existing
         copyright in a Sound Recording, Composition or Compilation, the
         Borrowers covenant and agree that they shall provide to the Bank a copy
         of each application for registration of each such copyright and the
         related correspondence submitting such application to the U.S.
         Copyright Office simultaneously with such submission to the U.S.
         Copyright Office. In addition, if the copyright claimant on any such
         application is not Dominion or K-Tel USA, as appropriate, then in
         addition to the application for registration, the Borrowers shall also
         simultaneously submit to the U.S. Copyright Office and provide to the
         Bank an assignment from the copyright claimant in favor of Dominion
         with respect to those unregistered copyrights listed in Schedule
         4.16(e) or an assignment from the copyright claimant in favor of K-Tel
         USA with respect to those unregistered copyrights listed in Schedule
         4.16(g). Within 30 days after the Borrowers' receipt from the U.S.
         Copyright Office of a registration number with respect to each such
         application, the Borrowers shall submit to the Bank a copy of such
         application with the registration number stamped thereon and a related
         Supplement to Copyright Security Agreement, duly executed by Dominion
         or K-Tel USA, as the case may be, in substantially the form of Exhibit
         E (for Dominion) or Exhibit G (for K-Tel USA). The Bank will, at the
         Borrower's sole expense, file each such Supplement to Copyright
         Security Agreement with the U.S. Copyright Office.

                  (d) Acquisition of Copyrights Subject to Long-Term Licenses.
         The Borrowers covenant and agree that Dominion or K-Tel Productions
         shall be the licensor under any long-term license (having a term of
         more than 5 years) in any Sound Recording or Compilation entered into
         by any Loan Party or any Affiliate of any Loan Party after the date of
         this Agreement, except for licenses by K-Tel UK in connection with the
         operation of its business. The Borrowers covenant and agree that they
         will provide a copy of each such long-term license to the Bank within
         fifteen (15) days after entering into each such long-term license.
         Without the prior written consent of the Bank, neither Dominion nor
         K-Tel Productions shall enter into any such long-term license unless
         such long-term license contains the licensor's acknowledgment that such
         long-term license is subject to a security interest in favor of the
         Bank and that the Bank may enforce its security interest in such
         long-term license and sell the licensee's rights under such long-term
         license without the consent of or notice to the licensor, with such
         acknowledgment being stated substantially as provided in Schedule
         5.10(d).

                                   ARTICLE VI
                               Negative Covenants

                  So long as the Note shall remain unpaid or the Commitment
shall be outstanding, the Borrowers agree that, without the prior written
consent of the Bank:

                  Section 6.1 Liens of the Borrowers. None of the Borrowers
will create, incur, assume or suffer to exist any mortgage, deed of trust,
pledge, lien, security interest, or other charge or encumbrance of any nature on
any of its assets, now owned or hereafter acquired, or assign or otherwise
convey any right to receive income or give its consent to the subordination of
any of its rights or claims to any right or claim of any other Person;
excluding, however, from the operation of the foregoing:

                  (a) Liens for taxes or assessments or other governmental
         charges to the extent not required to be paid by Section 5.4.

                  (b) Materialmen's, merchants', carriers', worker's,
         repairer's, or other like liens arising in the ordinary course of
         business to the extent not required to be paid by Section 5.4.

                  (c) Pledges or deposits to secure obligations under worker's
         compensation laws, unemployment insurance and social security laws, or
         to secure the performance of bids, tenders, contracts (other than for
         the repayment of borrowed money) or leases or to secure statutory
         obligations or surety or appeal bonds, or to secure indemnity,
         performance or other similar bonds in the ordinary course of business.

                  (d) Zoning restrictions, easements, licenses, restrictions on
         the use of real property or minor irregularities in title thereto,
         which do not materially impair the use of such property in the
         operation of the business of such Borrower or the value of such
         property for the purpose of such business.

                  (e) Mortgages, liens, pledges and security interests on any
         property of K-Tel USA securing any indebtedness for borrowed money in
         existence on the date hereof and listed in Schedule 6.1 hereto.

                  (f) The security interests granted to the Bank under the
         Security Documents.

                  (g) Capital Leases provided that after giving effect to each
         such Capital Lease, the Borrowers shall be in compliance with all
         provisions of this Agreement.

                  (h) Short-term nonexclusive licenses (having a term of 5
         years or less) in the copyrights of a Borrower granted by such
         Borrower, as licensor, to third-party licensees in the ordinary course
         of such Borrower's business.

                  (i) The rights of third-party licensors pursuant to
         short-term license agreements (having a term of 5 years or less) under
         which a Borrower is the licensee of copyrights of such third-party
         licensors.

                  Section 6.2 Indebtedness of the Borrowers. None of the
Borrowers will incur, create, assume or permit to exist any indebtedness for
borrowed money, or any other indebtedness or liability, including, without
limitation, trade debt or other payables or Capitalized Leases, except:

                  (a) Indebtedness of the Borrowers to the Bank.

                  (b) Indebtedness of the Borrowers in existence on the date
         hereof and listed in Schedule 6.2 hereto and renewals thereof.

                  (c) Trade debt and other payables of the Borrowers incurred in
         the ordinary course of business.

                  (d) Indebtedness of K-Tel USA incurred in connection with
         foreign exchange contracts which are entered into by K-Tel USA solely
         for the purpose of protecting against exchange change rate
         fluctuations.

                  (e) Accounts payable of Dominion to attorneys who have
         represented Dominion in the ordinary course of Dominion's business.

                  (f) Royalties payable by Dominion or K-Tel USA in the ordinary
         course of Dominion's or K-Tel USA's business.

                  (g) Commissions payable by Dominion or K-Tel USA incurred in
         the ordinary course of Dominion's or K-Tel USA's business.

                  (h) Accounts payable to and advances owing to K-Tel USA by
         Dominion not to exceed zero in the aggregate at any time.

                  (i) Accounts payable to and advances owing to K-Tel USA by
         K-Tel Productions not to exceed $250,000 in the aggregate at any time;
         provided, however, in the event that K-Tel Productions acquires any
         music catalogues, the foregoing limitation shall be increased by the
         purchase price of each such purchased music catalogue to an aggregate
         amount not to exceed at any time $2,250,000.

                  (j) Accounts payable to and advances owing to K-Tel USA by
         K-Tel Video not to exceed $250,000 in the aggregate at any time.

                  (k) Accounts payable to and advances owing to K-Tel USA by
         K-Tel Direct not to exceed $500,000 in the aggregate at any time.

                  (l) Accounts payable to and advances owing to K-Tel USA by
         K-Tel TV not to exceed $250,000 in the aggregate at any time.

                  (m) Accounts payable to and advances owing to K-Tel USA by
         K-Tel Consumer Products not to exceed $1,523,000 in the aggregate at
         any time.

                  (n) Unsecured indebtedness to Philip Kives or an entity
         controlled by Philip Kives.

                  Section 6.3 Guaranties of the Borrowers. None of the
Borrowers will assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except:

                  (a) The endorsement of negotiable instruments by a Borrower
         for deposit or collection or similar transactions in the ordinary
         course of business.

                  (b) Guaranties, endorsements and other direct or contingent
         liabilities of K-Tel USA in connection with the obligations of other
         Persons in existence on the date hereof and listed in Schedule 6.3
         hereto.

                  Section 6.4 Investments of the Borrowers. None of the
Borrowers will purchase or hold beneficially any stock or other securities or
evidence of indebtedness of, make or permit to exist any loans or advances to,
or make any investment or acquire any interest whatsoever in, any other Person,
except:

                  (a) Investments in direct obligations of the United States of
         America or any agency or instrumentality thereof whose obligations
         constitute full faith and credit obligations of the United States of
         America having a maturity of one year or less, commercial paper issued
         by U.S. corporations rated "A-1" or "A-2" by Standard & Poors
         Corporation or "P-1" or "P-2" by Moody's Investors Service or
         certificates of deposit or bankers' acceptances having a maturity of
         one year or less issued by members of the Federal Reserve System having
         deposits in excess of $100,000,000.

                  (b) K-Tel USA's accounts receivable from and advances due from
         Dominion not to exceed zero in the aggregate at any time.

                  (c) K-Tel USA's accounts receivable from and advances due from
         K-Tel Productions not to exceed $250,000 in the aggregate at any time;
         provided, however, in the event that K-Tel Productions acquires any
         music catalogues, the foregoing limitation shall be increased by the
         purchase price of each such purchased music catalogue to an aggregate
         amount not to exceed at any time $2,250,000.

                  (d) K-Tel USA's accounts receivable from and advances due from
         K-Tel Video not to exceed $250,000 in the aggregate at any time.

                  (e) K-Tel USA's accounts receivable from and advances due from
         K-Tel Direct not to exceed $500,000 in the aggregate at any time.

                  (f) K-Tel USA's accounts receivable from and advances due from
         K-Tel TV not to exceed $250,000 in the aggregate at any time.

                  (g) K-Tel USA's accounts receivable from and advances due from
         K-Tel Consumer Products not to exceed $1,523,000 in the aggregate at
         any time.

                  (h) K-Tel USA's accounts receivable from and advances due from
         K-Tel International not to exceed $200,000 in the aggregate at any
         time.

                  (i) K-Tel USA's accounts receivable from and advances due from
         K-Tel Direct, Inc. not to exceed $1,125,000 in the aggregate at any
         time.

                  (j) K-Tel USA's accounts receivable from and advances due from
         K-Tel Entertainment (CAN), Inc. not to exceed $55,000 in the aggregate
         at any time.

                  (k) K-Tel USA's accounts receivable from and advances due from
         Dominion Vertriebs (Germany) not to exceed $41,000 in the aggregate at
         any time.

                  (l) K-Tel USA's accounts receivable from and advances due from
         K-Tel (UK) not to exceed $369,000 in the aggregate at any time.

                  (m) K-Tel USA's accounts receivable from and advances due from
         K-Tel International Limited not to exceed $24,000 in the aggregate at
         any time.

                  (n) K-Tel USA's accounts receivable from and foreign royalties
         due from Affiliates (not included in other subsections of this Section
         6.4) not to exceed $130,000 in the aggregate at any time.

                  (o) Travel advances to officers and employees of the Borrowers
         in the ordinary course of business.

                  (p) Advances in the form of progress payments, prepaid rent or
         security deposits.

                  Section 6.5 Restricted Payments. None of the Borrowers will,
during any fiscal year of such Borrower, pay any dividends or distributions on
any shares of any class of stock of such Borrower or directly or indirectly
apply any assets of such Borrower to the redemption, retirement, purchase or
other acquisition of any share of any class of stock of such Borrower, and none
of the Borrowers will make any other cash payment whatsoever to K-Tel
International (whether as a fee for services rendered or the purchase price of
an asset purchased, or for any other purpose; provided, however, that if and to
the extent K-Tel International (the parent corporation of the Borrowers) files
federal and state income tax returns on a consolidated basis and includes the
Borrowers as members, each Borrower may dividend cash to K-Tel International in
an amount not exceeding its share of the combined (without duplication)
liabilities of the Borrowers for federal and state income taxes that would have
been due the taxing authorities had such taxes been computed separately on
separate returns for each of the Borrowers without regard to their inclusion as
members of a consolidated group of corporations.

                  Section 6.6 Sale or Transfer of Assets; Suspension of any
Borrower's Operations. None of the Borrowers will sell, lease, assign, transfer
or otherwise dispose of (i) all or a substantial part of its assets or (ii) any
collateral of the Bank or any interest therein (whether in one transaction or in
a series of transactions) to any other Person other than (A) a Borrower's sale
of Inventory in the ordinary course of business, (B) a Borrower's granting of
short-term nonexclusive licenses (having a term of 5 years of less) in its
copyrights in the ordinary course of its business and (C) a Borrower's disposal
of obsolete equipment in the ordinary course of business. None of the Borrowers
will liquidate, dissolve or suspend business operations without the prior
written consent of the Bank.

                  Section 6.7 Consolidation and Merger; Asset Acquisitions.
None of the Borrowers will consolidate with or merge into any Person or permit
any other Person to merge into it or acquire (in a transaction analogous in
purpose or effect to a consolidation or merger) all or substantially all of the
assets of any other Person.

                  Section 6.8 Hazardous Substances. None of the Borrowers will
cause or permit any Hazardous Substance to be disposed of, in any manner which
might result in any material liability to such Borrower on, under or at any real
property which is operated by such Borrower or in which such Borrower has any
interest.

                  Section 6.9 Restrictions on Nature of Business. None of the
Borrowers will engage in any line of business materially different from that
presently engaged in by such Borrower.

                  Section 6.10 Change in Ownership. None of the Borrowers will
issue or sell any stock of such Borrower so as to change the percentage of
voting and non-voting stock of the Borrower owned by K-Tel International, which
is the sole shareholder of each Borrower, and none of the Borrowers will permit
or suffer to occur any sale, transfer, assignment, pledge or other disposition
of any or all of the issued and outstanding shares of stock of such Borrower,
except for the pledge of such stock to the Bank under K-Tel International's
Pledge Agreement.

                                   ARTICLE VII
                     Events of Default, Rights and Remedies

                  Section 7.1 Events of Default. "Event of Default", wherever
used herein, means any one of the following events:

                  (a) Default in the payment of any interest on or principal of
         the Note when due, including, without limitation, any mandatory
         prepayment required under Section 2.7 hereof, or default in the payment
         of any Obligation of Reimbursement when due.

                  (b) Default in the payment of any fees, costs, expenses or
         other amounts payable under this Agreement or any other Loan Document
         when due.

                  (c) Default in the performance, or breach, of any covenant or
         agreement on the part of the Borrowers or any of them contained in
         Sections 5.1, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12, 6.1, 6.2, 6.3, 6.4, 6.5,
         6.6, 6.7, 6.9 or 6.10 hereof.

                  (d) Default in the performance, or breach, of any covenant or
         agreement on the part of any Loan Party contained in any Loan Document
         to which it is a party (other than a covenant or agreement a default in
         whose performance or whose breach is elsewhere in this Section or
         elsewhere in such Loan Document specifically dealt with) and the
         continuance of such default or breach for a period of 30 days after
         written notice thereof has been given by the Bank to the Borrowers.

                  (e) Any representation or warranty made by any Loan Party in
         any Loan Document to which it is a party or by any Loan Party (or any
         of its officers) in any certificate, instrument, or statement
         contemplated by or made or delivered pursuant to or in connection with
         this Agreement or any other Loan Document, shall prove to have been
         incorrect in any material respect when made.

                  (f) A default under any bond, debenture, note or other
         evidence of indebtedness of any Loan Party (other than to the Bank) or
         under any indenture or other instrument under which any such evidence
         of indebtedness has been issued or by which it is governed and the
         expiration of the applicable period of grace, if any, specified in such
         evidence of indebtedness, indenture or other instrument; provided,
         however, that if such default shall be cured by such Loan Party, or
         waived by the holders of such indebtedness, in each case as may be
         permitted by such evidence of indebtedness, indenture or other
         instrument, then the Event of Default hereunder by reason of such
         default shall be deemed likewise to have been thereupon cured or
         waived.

                  (g) An event of default shall occur under any Security
         Document or under any other security agreement, mortgage, deed of
         trust, assignment or other instrument or agreement directly or
         indirectly securing any obligations of the Borrowers or any of them
         hereunder or under the Note.

                  (h) K-Tel International shall repudiate, purport to revoke,
         or fail to perform, when due, any of its obligations under K-Tel
         International's Guaranty, K-Tel International's Security Agreement or
         K-Tel International's Pledge Agreement.

                  (i) Default in the payment of any amount owed by the Borrowers
         or any of them to the Bank other than hereunder or under the Note.

                  (j) Any Loan Party shall be adjudicated a bankrupt or
         insolvent, or admit in writing its inability to pay its debts as they
         mature, or make an assignment for the benefit of creditors; or any Loan
         Party shall apply for or consent to the appointment of any receiver,
         trustee, or similar officer for it or for all or any substantial part
         of its property; or such receiver, trustee or similar officer shall be
         appointed without the application or consent of such Loan Party and
         such appointment shall continue undischarged for a period of 30 days;
         or any Loan Party shall institute (by petition, application, answer,
         consent or otherwise) any bankruptcy, insolvency, reorganization,
         arrangement, readjustment of debt, dissolution, liquidation or similar
         proceeding relating to it under the laws of any jurisdiction; or any
         such proceeding shall be instituted (by petition, application or
         otherwise) against any Loan Party; or any judgment, writ, warrant of
         attachment or execution or similar process shall be issued or levied
         against a substantial part of the property of any Loan Party and such
         judgment, writ, or similar process shall not be released, vacated or
         fully bonded within 30 days after its issue or levy.

                  (k) A petition shall be filed by or against any Loan Party
         under the United States Bankruptcy Code naming such Loan Party as
         debtor.

                  (l) The rendering against any Loan Party of a final judgment,
         decree or order for the payment of money in excess of $50,000 and the
         continuance of such judgment, decree or order unsatisfied and in effect
         for any period of 30 consecutive days without a stay of execution.

                  (m) A writ of attachment, garnishment, levy or similar
         process shall be issued against or served upon the Bank with respect to
         (i) any property of any Loan Party in the possession of the Bank, or
         (ii) any indebtedness of the Bank to any Loan Party.

                  (n) Any Reportable Event, which the Bank determines in good
         faith might constitute grounds for the termination of any Plan or for
         the appointment by the appropriate United States District Court of a
         trustee to administer any Plan, shall have occurred and be continuing
         30 days after written notice to such effect shall have been given to
         any Loan Party by the Bank; or a trustee shall have been appointed by
         an appropriate United States District Court to administer any Plan; or
         the Pension Benefit Guaranty Corporation shall have instituted
         proceedings to terminate any Plan or to appoint a trustee to administer
         any Plan; or any Loan Party shall have filed for a distress termination
         of any Plan under Title IV of ERISA; or any Loan Party shall have
         failed to make any quarterly contribution required with respect to any
         Plan under Section 412(m) of the Internal Revenue Code of 1986, as
         amended, which the Bank determines in good faith may by itself, or in
         combination with any such failures that the Bank may determine are
         likely to occur in the future, result in the imposition of a lien on
         the assets of such Loan Party in favor of the Plan.

                  Section 7.2 Rights and Remedies. If any Event of Default shall
occur and be continuing, the Bank may exercise any one or more of the rights and
remedies set forth below:

                  (a) The Bank may, by notice to the Borrowers, declare the
         Commitment to be terminated, whereupon the same shall forthwith
         terminate.

                  (b) The Bank may, by notice to the Borrowers, declare all
         indebtedness, interest, fees and other amounts due and payable under
         this Agreement, the Note and the other Loan Documents to be forthwith
         due and payable, whereupon the same shall be forthwith due and payable,
         without presentment, notice of dishonor, protest, or further notice of
         any kind, all of which are hereby expressly waived by each of the
         Borrowers.

                  (c) The Bank may, without notice to the Borrowers and without
         further action, apply any and all money owing by the Bank to the
         Borrowers or any of them to the payment of amounts owing to the Bank
         under this Agreement, the Note and the other Loan Documents, including
         interest accrued thereon, and of all other sums then owing by the
         Borrowers or any of them hereunder.

                  (d) The Bank may exercise and enforce its rights and remedies
         under any one or more of the Loan Documents.

                  (e) The Bank may exercise any other rights available to it by
         law or agreement.

Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in Section 7.1(j) or 7.1(k) hereof, the Commitment shall be
automatically terminated and the entire unpaid principal amount of the Note, all
interest accrued and unpaid thereon, and all other amounts payable under this
Agreement and/or the other Loan Documents shall be immediately due and payable
without presentment, demand, protest or notice of any kind all of which are
hereby expressly waived by each of the Borrowers.

                                  ARTICLE VIII
                                  Miscellaneous

                  Section 8.1 Amendments, Etc. No amendment or waiver of any
provision of any Loan Document, nor consent to any departure by the Borrowers or
any of them therefrom shall in any event be effective unless the same shall be
in writing and signed by the Bank and, in the case of an amendment, by the
Borrowers, and then such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.

                  Section 8.2 Notices, Etc. All notices and other communications
provided for under any Loan Document shall be in writing and mailed or
telecopied or personally delivered or delivered by overnight carrier, to the
applicable party at its address indicated below:

                  If to the Borrowers:

                  K-Tel International (USA), Inc.
                  c/o K-Tel International, Inc.
                  2605 Fernbrook Lane North
                  Plymouth, Minnesota  55447
                  Attention:  Chief Financial Officer
                  Telecopier: (612) 559-6822

                  Dominion Entertainment, Inc.
                  c/o K-Tel International, Inc.
                  2605 Fernbrook Lane North
                  Plymouth, Minnesota  55447
                  Attention:  Chief Financial Officer
                  Telecopier:  (612) 559-6822

                  K-Tel Productions, Inc.
                  c/o K-Tel International, Inc.
                  2605 Fernbrook Lane North
                  Plymouth, Minnesota  55447
                  Attention:  Chief Financial Officer
                  Telecopier:  (612) 559-6822

                  K-Tel Video, Inc.
                  c/o K-Tel International, Inc.
                  2605 Fernbrook Lane North
                  Plymouth, Minnesota  55447
                  Attention:  Chief Financial Officer
                  Telecopier:  (612) 559-6822

                  K-Tel Direct, Inc.
                  c/o K-Tel International, Inc.
                  2605 Fernbrook Lane North
                  Plymouth, Minnesota  55447
                  Attention:  Chief Financial Officer
                  Telecopier:  (612) 559-6822

                  K-Tel TV, Inc.
                  c/o K-Tel International, Inc.
                  2605 Fernbrook Lane North
                  Plymouth, Minnesota  55447
                  Attention:  Chief Financial Officer
                  Telecopier:  (612) 559-6822

                  K-Tel Consumer Products, Inc.
                  c/o K-Tel International, Inc.
                  2605 Fernbrook Lane North
                  Plymouth, Minnesota  55447
                  Attention:  Chief Financial Officer
                  Telecopier:  (612) 559-6822

                  If to the Bank:

                  TCF National Bank Minnesota
                  801 Marquette Avenue
                  Minneapolis, Minnesota 55402
                  Attention:  Richard D. Larson
                  Telecopier:  (612) 661-8504

or, as to each party, at such other address or telecopy number as shall be
designated in a written notice to the other party. Each such notice or
communication shall be effective (i) if given by mail, two Business Days after
such notice or communication is deposited in the mail with first class postage
prepaid, addressed as aforesaid, (ii) if given by telecopy, when sent, (iii) if
personally delivered, when personally delivered and (iv) if delivered by
overnight carrier, one Business Day after deposit with the overnight carrier for
next Business Day delivery, addressed as aforesaid; except that notices to the
Bank pursuant to the provisions of Section 2.3 hereof shall not be effective
until received by the Bank.

                  Section 8.3 No Waiver; Remedies. No failure on the part of
the Bank to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under any Loan Document preclude any other or further
exercise thereof or the exercise of any other right. The remedies provided in
the Loan Documents are cumulative and not exclusive of any remedies provided by
law.

                  Section 8.4 Indemnity. In addition to the payment of costs
and expenses pursuant to Section 8.5 hereof, the Borrowers agree to jointly and
severally indemnify, defend and hold harmless the Bank, and any of its
participants, parent corporations, subsidiary corporations, affiliated
corporations, successor corporations, and all present and future officers,
directors, employees and agents of the foregoing (the "Indemnitees"), from and
against (i) any and all transfer taxes, documentary taxes, assessments or
charges made by delivery of this Agreement and the other Loan Documents or the
making of the Advances, and (ii) any and all liabilities, losses, damages,
penalties, judgments, suits, claims, costs and expenses of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel) in connection with any investigative, administrative or judicial
proceedings, whether or not such Indemnitee shall be designated a party thereto,
which may be imposed on, incurred by or asserted against such Indemnitee, in any
manner relating to or arising out of or in connection with the making of the
Advances, this Agreement and all other Loan Documents or the use or intended use
of the proceeds of the Advances (the "Indemnified Liabilities"). If any
investigative, judicial or administrative proceeding arising from any of the
foregoing is brought against any Indemnitee, upon request of such Indemnitee,
the Borrowers, or counsel designated by the Borrowers and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrowers' sole cost and
expense. Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding. If the foregoing undertaking to
indemnify, defend and hold harmless may be held to be unenforceable because it
violates any law or public policy, the Borrowers shall nevertheless make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The obligation of the
Borrowers under this Section 8.4 shall survive the termination of this Agreement
and the discharge of the Borrowers' other obligations under this Agreement.

                  Section 8.5 Costs, Expenses and Taxes. The Borrowers jointly
and severally agree to pay on demand all costs and expenses related to the
preparation, execution, delivery, filing, recording and administration of the
Loan Documents and the other documents to be delivered under the Loan Documents
and any waiver or consent hereunder or any amendment hereof, including, without
limitation, the fees and expenses of counsel for the Bank (whether outside
counsel, inside counsel, or both) with respect thereto and with respect to
advising the Bank as to its rights and responsibilities under the Loan
Documents, and all costs and expenses (including counsel fees and expenses,
whether outside counsel, inside counsel, or both) in connection with the
enforcement of the Loan Documents and the other documents to be delivered under
the Loan Documents. In addition, the Borrowers shall pay any and all fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording of the Loan Documents and the other documents to be
delivered under the Loan Documents (including without limitation, any filing
fees), and agree to save the Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such fees.

                  Section 8.6 Right of Set-off. Upon the occurrence and during
the continuance of any Event of Default the Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the Bank
to or for the credit or the account of the Borrowers or any of them against any
and all of the obligations of the Borrowers or any of them now or hereafter
existing under any Loan Document, irrespective of whether or not the Bank shall
have made any demand under such Loan Document and although deposits,
indebtedness or such obligations may be unmatured or contingent. The Bank agrees
promptly to notify the Borrowers after any such set-off and application,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Bank under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Bank may have.

                  Section 8.7 Severability of Provisions. Any provision of this
Agreement or of any other Loan Document which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof or thereof or affecting the validity or unenforceability of
such provision in any other jurisdiction.

                  Section 8.8 Binding Effect; Governing Law. This Agreement
shall be binding upon and inure to the benefit of each of the Borrowers and the
Bank and their respective successors and assigns, except that none of the
Borrowers shall have the right to assign its rights hereunder or any interest
herein without the prior written consent of the Bank. This Agreement, the Note
and the other Loan Documents shall be governed by, and construed in accordance
with, the substantive laws, other than conflict laws, of the State of Minnesota.

                  Section 8.9 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which when taken together shall constitute
but one and the same agreement.

                  Section 8.10 Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

                  Section 8.11 Jurisdiction and Venue. The Borrowers consent to
the personal jurisdiction of the state and federal courts located in the State
of Minnesota in connection with any controversy related to this Agreement, the
Note, any Security Documents and/or any other Loan Document, waives any argument
that venue in any such forum is not convenient, and agrees that any litigation
initiated by the Borrowers or any of them against the Bank in connection with
this Agreement, the Note, any Security Document and/or any other Loan Document
shall be venued in either the District Court of Hennepin County, Minnesota, or
the United States District Court, District of Minnesota, Fourth Division.
Notwithstanding the foregoing, nothing in this Agreement, the Note, the Security
Documents or any other Loan Document shall affect the right of the Bank to bring
any action or proceeding against the Borrowers or any of them or its property in
the courts of any other jurisdiction.

                  Section 8.12 WAIVER OF JURY TRIAL. THE BANK AND THE BORROWERS
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT
MAY BE WAIVED AND THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL BY JURY MAY
EXCEED THE TIME AND EXPENSE REQUIRED FOR TRIAL WITHOUT A JURY. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES,
HEREBY IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF ANY ACTION,
PROCEEDING, LITIGATION OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATING TO
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, ANY RELATED AGREEMENTS OR THE
PERFORMANCE OR ENFORCEMENT OF ANY OF THE FOREGOING.

                  Section 8.13 Restatement of Prior Credit Agreement. This
Agreement constitutes an amendment to, and a complete restatement of, the Prior
Credit Agreement.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                           K-TEL INTERNATIONAL (USA), INC.


                                           By___________________________________
                                             Its________________________________


                                           DOMINION ENTERTAINMENT, INC.


                                           By___________________________________
                                             Its________________________________


                                           K-TEL PRODUCTIONS, INC.


                                           By___________________________________
                                             Its________________________________


                                           K-TEL VIDEO, INC.


                                           By___________________________________
                                             Its________________________________


                                           K-TEL DIRECT, INC.


                                           By___________________________________
                                             Its________________________________



                                           K-TEL TV, INC.


                                           By___________________________________
                                             Its________________________________


                                           K-TEL CONSUMER PRODUCTS, INC.


                                           By___________________________________
                                             Its________________________________


                                           TCF NATIONAL BANK MINNESOTA


                                           By___________________________________
                                             Its________________________________

                                           And


                                           By___________________________________
                                             Its________________________________



<TABLE>
<CAPTION>

                     SCHEDULES TO REVOLVING CREDIT AGREEMENT
<S>                   <C> 
Schedule 2.11          Existing Letters of Credit
Schedule 4.4           Subsidiaries of K-Tel International
Schedule 4.7           Litigation
Schedule 4.16(a)       Dominion's Registered Copyrights in Sound Recordings and Compositions
Schedule 4.16(b)       Dominion's Registered Copyrights in Compilations
Schedule 4.16(c)       Registered Copyrights in Sound Recordings and Compilations which are
                       Owned by Dominion, but must be Assigned of Record by Affiliates of Dominion to
                       Dominion
Schedule 4.16(d)       Registered Copyrights in Sound Recordings and Compilations which are
                       Jointly Owned by Dominion and a Person other than an Affiliate of Dominion
Schedule 4.16(e)       Dominion's Unregistered Copyrights in Sound Recordings, Compositions
                       and Compilations
Schedule 4.16(f)       K-Tel USA's Registered Copyrights in Compilations which are subject
                       to Short-Term License Agreements
Schedule 4.16(g)       K-Tel USA's Unregistered Copyrights in Compilations which are subject
                       to Short-Term License Agreements
Schedule 4.16(h)       Dominion's Long-Term Licenses in Copyrights
Schedule 5.10(d)       Form of Acknowledgment for Long-Term Licenses
Schedule 6.1           Permitted Liens of K-Tel USA
Schedule 6.2           Permitted Indebtedness of K-Tel USA
Schedule 6.3           Permitted Guaranties of K-Tel USA


                     EXHIBITS TO REVOLVING CREDIT AGREEMENT


Exhibit A              Note
Exhibit B              Borrowing Base Certificate
Exhibit C              Form of Compliance Certificate for Borrowers
Exhibit D              Form of K-Tel Productions' Copyright Security Agreement
Exhibit E              Form of Supplement to Dominion's Copyright Security Agreement
Exhibit F              Form of Supplement to K-Tel Production's Copyright Security
                       Agreement
Exhibit G              Form of Supplement to K-Tel USA's Copyright Security
                       Agreement

</TABLE>



                                  SCHEDULE 2.11
                                       TO
                           REVOLVING CREDIT AGREEMENT

  STANDBY
  NUMBER            DATE           AMOUNT          BENEFICIARY        EXPIRATION

  96-004          05/20/95       $20,000.00         BMG Music          05/31/97


DOCUMENTARY
  NUMBER            DATE           AMOUNT          BENEFICIARY        EXPIRATION

  160436          01/15/97       $142,515.40      P & C Creative       04/06/97
  160630          01/31/97       $24,613.51       Wellcare, Ltd.       03/30/97
  160643          02/06/97       $115,506.00      Hung Mei Brush       05/05/97
  160655          02/10/97       $29,760.00       Kayee MO House       03/15/97
  160682          02/24/97       $12,215.70       Kayee MO House       03/25/97
  160736          03/07/97       $29,760.00       Kayee MO House       04/08/97
  160774          03/21/97       $31,000.00      Teamwell Elect.       04/19/97
  160775          03/21/97        $7,300.00       So. Asia Int.        04/19/97
  160825          04/01/97       $13,527.00       Kayee MO House       04/23/97
    --*           04/07/97       $41,580.00       Kayee MO House       05/08/97
    --*           04/07/97       $24,336.00      Teamwell Elect.       05/10/97

--------------------------------------------------------------------------------

* These last two were submitted to First Chicago NBD on Monday, April 7, for
issuance and do not yet have L/C numbers assigned to them (they are assigned by
First Chicago).

--------------------------------------------------------------------------------




                                  SCHEDULE 4.4
                                       TO
                           REVOLVING CREDIT AGREEMENT


                          [TO BE PROVIDED BY BORROWER]







                                  SCHEDULE 4.7
                                       TO
                           REVOLVING CREDIT AGREEMENT


                          [TO BE PROVIDED BY BORROWER]







                                SCHEDULE 4.16(a)
                                       TO
                           REVOLVING CREDIT AGREEMENT


                       Dominion's Registered Copyrights in
                        Sound Recordings and Compositions
                               as of July 22, 1994


                     Dominion's Individual Sound Recordings

<TABLE>
<CAPTION>
            Title of Work                     Artist                      Registration No.
            -------------                     ------                      ----------------
<S>                                 <C>                                     <C>   
Abilene                              George Hamilton IV                      SR 151772
Don't Pull Your Love                 Hamilton, Joe Frank & Reynolds          SR 117409
Fallin' In Love                      Hamilton, Joe Frank & Reynolds          SR 115749
Batman Theme                         The Marketts                            SR 108810
No Matter What Your Shape            The T-Bones                             SR 114081
  (Your Stomach's In)
Let's Go                             The Routers                             SR 118331
Monster Mash                         Bobby "Boris" Pickett                   SR 141067
Turn Your Radio On                   The Jordanaires                         SR 140329
Why Me Lord                          The Jordanaires                         SR 140330
Wings Of A Dove                      The Jordanaires                         SR 140331
Crying In The Chapel                 The Jordanaires                         SR 140332
God Bless The USA/America 
  The Beautiful                      The Jordanaires                         SR 140333
Just A Closer Walk With Thee         The Jordanaires                         SR 141416
Will The Circle Be Unbroken          The Jordanaires                         SR 141415
Peace In The Valley                  The Jordanaires                         SR 141414
Uncloudy Day                         The Jordanaires                         SR 141417
How Great Thou Art                   The Jordanaires                         SR 141412
Amazing Grace                        The Jordanaires                         SR 141413



                                 Complete Albums
                              (including Frontline)


         Title of Work                        Artist                      Registration No.
         -------------                        ------                      ----------------

Celestial Navigations II             Celestial Navigations                   SR 108018
Bluegrass Favorites                  The Wood Brothers                       SR 166623
New Frontier                         Rick Zunigar                            SR 108799
For My Friends                       Greg Mathieson                          SR 108805
Don't Look Back                      Don Randi And Quest                     SR 108798
Gary Herbig                          Gary Herbig                             SR 108577
Friends To Lovers                    Gary Herbig                             SR 108803
Jules Broussard                      Jules Broussard                         SR 112338
Sweet Innocence                      Vinny Bianchi & Providence              SR 108804
And It Rained All Through The
  Night                              Bill Wolfer                             SR 108802
Celestial Navigations                Celestial Navigations                   SR 108814
Live At Alfonse's                    Dave Pell Octet                         SR 108794
Cool Saturdays                       Tommy Wiggins                           SR 112678
Caught In The Blue Light             Bill Wolfer                             SR 117440
You Ought to Think About Me          Jimmy McGriff                           SR 121447
Diamond Jubilee                      Frank Yankovic                          SR 121446
From Me To You                       Tom Coster                              SR 120960
Crazy Z Jaye                         Ebony Lover & D.J.                      SR 118678
Silent Night                         Bill Wolfer                             SR 124210
Seasonings                           Various Artists                         SR 124199
Wind & Sea                           Don Randi & Quest                       SR 124273
In A Blue Mood                       Jimmy McGriff                           SR 136544
How Fast Forever Goes                Gary LeMel                              SR 139037
ICE - Chapter III                    Celestial Navigations                   SR 141406
The Wood Brothers                    The Wood Brothers                       SR 145720
Memories And Me                      Paul Hale                               SR 157084
Hooked On Big Bands                  Joe Fingers Webster                     SR 157079
Hooked On Romance                    Starsound Orchestra                     SR 147678
Hooked On A Beatles Tribute          Dr. Fink & The Mystery Band             SR 141405
Hooked On Dixie 2                    Joe Fingers Webster                     SR 136412
Hooked On Country                    Wood Brothers                           SR 130767
Hooked On Polkas                     Joey Miskulin                           SR 108806
Hooked On Bluegrass                  Wood Brothers                           SR 108812
Ray Price - Greatest Hits            Ray Price                               SR 184402
The Old Rugged Cross                 Ray Price                               SR 183434
Artistically Beatles                                                         SR 157076
Time For Dreaming                                                            SR 146675
Songs For Your Wedding                                                       SR 145437
America Proud                                                                SR 133133
90's Movie Hits                                                              SR 135106
Screeches, Clanks & Howls                                                    SR 171969

</TABLE>



                                SCHEDULE 4.16(b)
                                       TO
                           REVOLVING CREDIT AGREEMENT


                Dominion's Registered Copyrights in Compilations
                               as of July 22, 1994

<TABLE>
<CAPTION>
          Title of Work                                Artist                   Registration No.
          -------------                                ------                   ----------------
<S>                                           <C>                                 <C>   
Martha Reeves/Etta James                       Martha Reeves/Etta James            SR 112687
The Gospel Soul of Etta James                  Etta James                          SR 112686
Back To The Early 50's                                                             SR 119493
Back To The 50's - Vol. II                                                         SR 119479
Back To The 50's - Vol. III                                                        SR 118079
Back To The 60's Rock `N Roll                                                      SR 119490
Back To The 60's Country                                                           SR 119480
Back To The 60's Soul                                                              SR 123309
Back To The 60's Soul - Vol. II                                                    SR 118068
Back To The 60's - Vol. II                                                         SR 119475
Back To The 60's - Vol. III                                                        SR 119477
Back To The 60's - Vol. IV                                                         SR 119472
Back To The 60's - Vol. V                                                          SR 119482
Back To The 70's Country                                                           SR 119478
Back To The 70's                                                                   SR 118097
Back To The 70's - Vol. II                                                         SR 119491
Jan & Dean - Surf City                         Jan & Dean                          SR 120062
Little Richard - His Best                      Little Richard                      SR 119484
The Best of B.J. Thomas                        B.J. Thomas                         SR 120057
The Best of Connie Smith                       Connie Smith                        SR 119474
Drifters/Coasters                              Drifters/Coasters                   SR 119473
Frankie Laine/Johnnie Ray                      Frankie Laine/Johnnie Ray           SR 119485
The Impressions/Jerry Butler                   The Impressions/Jerry Butler        SR 119471
Patti Page/Rosemary Clooney                    Patti Page/Rosemary Clooney         SR 119483
The Grass Roots                                Gary Lewis & The Playboys           SR 119476
Soul Of Sam & Dave                             Sam & Dave                          SR 119488
Tommy Roe/Bobby Vee                            Tommy Roe/Bobby Vee                 SR 118078
Lynn Anderson/Donna Fargo                      Lynn Anderson/Donna Fargo           SR 119492
Goofy Greats                                                                       SR 119486
More Gospel Country                                                                SR 119489
Country Ladies                                                                     SR 119481
Best of Christmas                                                                  SR 119487
50's Dance Party - Vol. II                                                         SR 112790
60's Dance Party - Vol. II                                                         SR 112781
Originals Still The Greatest - Vol. III                                            SR 117400
Originals Still The Greatest - Vol. IV                                             SR 117401
Golden Years I - 1955                                                              SR 121364
Golden Years II - 1956                                                             SR 121039
Golden Years III - 1957                                                            SR 121061
Golden Years IV - 1958                                                             SR 121051
Golden Years V - 1959                                                              SR 121050
Golden Years VI - 1960                                                             SR 121071
Golden Years VII - 1961                                                            SR 121072
Golden Years VIII - 1962                                                           SR 121040
Golden Years IX - 1963                                                             SR 121041
Golden Years X - 1964                                                              SR 121045
Rhythm Classical Intermediate - Vol. I                                             SR 121241
Rhythm Classical Intermediate - Vol. II                                            SR 121242
Rhythm Classical Advanced - Vol. I                                                 SR 122213
Rhythm Classical Advanced - Vol. II                                                SR 121243
Rhythm Country Intermediate - Vol. I                                               SR 122114
Rhythm Country Intermediate - Vol. II                                              SR 121244
Rhythm Country Advanced - Vol. I                                                   SR 121247
Rhythm Country Advanced - Vol. II                                                  SR 122218
Rhythm Oldies Intermediate - Vol. I                                                SR 122217
Rhythm Oldies Intermediate - Vol. II                                               SR 122215
Rhythm Oldies Advanced - Vol. I                                                    SR 122219
Rhythm Oldies Advances - Vol. II                                                   SR 122222
Remembering Johnnie Ray                                                            SR 120968
Golden Years - 1965                                                                SR 124202
Golden Years - 1966                                                                SR 124200
Golden Years - 1967                                                                SR 124203
Golden Years - 1968                                                                SR 124207
Golden Years - 1969                                                                SR 124205
Golden Years - 1970                                                                SR 124209
Golden Years - 1971                                                                SR 124201
Golden Years - 1972                                                                SR 124204
Golden Years - 1973                                                                SR 124206
Golden Years - 1974                                                                SR 124208
The Ink Spots                                                                      SR 126579
Love Letters                                   Pat Boone                           SR 126580
The Best of Brook Benton                       Brook Benton                        SR 129580
Back To The 70's - Vol. III                                                        SR 124539
The Best Of Redbone                            Red Bone                            SR 124552
Gospel's Brightest Hits                                                            SR 124553
Drifters Greatest Hits                         The Drifters                        SR 127571
Country Spotlight                              Lynn Anderson                       SR 128637
Country Spotlight                              Johnny Paycheck                     SR 128639
Country Spotlight                              Jimmy Dean                          SR 128638
Christmas Favorites                                                                SR 128636
Country Spotlight                              Roger Miller                        SR 131553
Country Spotlight                              Patsy Cline                         SR 131554
The Fabulous 50's                                                                  SR 133112
The Fabulous 60's                                                                  SR 133108
Country Spotlight                              Kitty Wells                         SR 135535
Country Spotlight                              Faron Young                         SR 135536
The Beach Boys/Jan & Dean                      The Beach Boys/Jan & Dean           SR 145474
Country Spotlight                              Donna Fargo                         SR 145802
Country Spotlight                              Don Gibson                          SR 145721
Country Jukebox                                                                    SR 147675
Country Chart-Toppers                                                              SR 147635
Super Box of Rock                                                                  SR 148589
Country Superstars                                                                 SR 149166
Country Time                                                                       SR 148616
Johnny Russell-Greatest Hits                   Johnny Russell                      SR 175663
Super 70's - Vol. I                                                                SR 182924
Super Box Of Rock - Vol. II                                                        SR 185030
Music To Remember                                                                  SR 183464
Fabulous 50's - Vol. III                                                           SR 183435
Sensational 60's - Vol. II                                                         SR 183423
Super 70's - Vol. II                                                               SR 183431
Musical Meditations                                                                SR 182914

</TABLE>



                                SCHEDULE 4.16(c)
                                       TO
                           REVOLVING CREDIT AGREEMENT


                  Registered Copyrights in Sound Recordings and
          Compilations which were Owned by Dominion as of July 22, 1994
                          and which have been Assigned
                 of Record by Affiliates of Dominion to Dominion


                              Individual Recordings

<TABLE>
<CAPTION>
     Title of Work                   Artist                        Registration       Registered Owner
     -------------                   ------                        ------------       ----------------
                                                                       No.
                                                                       ---
<S>                             <C>                                <C>              <C>
Rubber Ball                      Bobby Vee                          SR 142397        Commonwealth Music
My True Love                     Jack Scott                         SR 142428        Commonwealth Music
Honeycomb                        Jimmie Rogers                      SR 142403        Commonwealth Music
Blue Moon                        The Marcels                        SR 142422        Commonwealth Music
One Track Mind                   Bobby Lewis                        SR 142423        Commonwealth Music
Sugar Shack                      Jimmy Gilmer                       SR 142396        Commonwealth Music
Do You Wanna Dance               Bobby Freeman                      SR 142402        Commonwealth Music
Sea Cruise                       Frankie Ford                       SR 142400        Commonwealth Music
Tell Him                         The Exciters                       SR 142424        Commonwealth Music
You Can't Sit Down               The Dovells                        SR 142395        Commonwealth Music
Da Doo Ron Ron                   The Crystals                       SR 142426        Commonwealth Music
Raindrops                        Dee Clark                          SR 142405        Commonwealth Music
Just A Dream                     Jimmy Clanton                      SR 142399        Commonwealth Music
He's So Fine                     The Chiffons                       SR 142398        Commonwealth Music
One Fine Day                     The Chiffons                       SR 142425        Commonwealth Music
The Letter                       The Box Tops                       SR 142421        Commonwealth Music
My Boyfriend's Back              The Angels                         SR 142404        Commonwealth Music
My Guy                           Mary Wells                         SR 142412        K-tel Int'l
You Beat Me To The Punch         Mary Wells                         SR 142408        K-tel Int'l
A Night Has A Thousand  Eyes     Bobby Vee                          SR 142392        K-tel Int'l
Runaway                          Del Shannon                        SR 142407        K-tel Int'l
Hats Off To Larry                Del Shannon                        SR 142389        K-tel Int'l
Wooly Bully                      Sam The Sham & The Pharaohs        SR 142409        K-tel Int'l
Soul Man                         Sam & Dave                         SR 142386        K-tel Int'l
Smoke Gets In Your Eyes          The Platters                       SR 142419        K-tel Int'l
Good Morning Starshine           Oliver                             SR 142394        K-tel Int'l
Ooh! My Soul                     Little Richard                     SR 142383        K-tel Int'l
Send Me Some Lovin'              Little Richard                     SR 142378        K-tel Int'l
She's Got It                     Little Richard                     SR 142373        K-tel Int'l
The Girl Can't Help It           Little Richard                     SR 142376        K-tel Int'l
Good Golly Miss Molly            Little Richard                     SR 142418        K-tel Int'l
Long Tall Sally                  Little Richard                     SR 142381        K-tel Int'l
Tutti Frutti                     Little Richard                     SR 142382        K-tel Int'l
Slippin' & Slidin'               Little Richard                     SR 142370        K-tel Int'l
Rip It Up                        Little Richard                     SR 142371        K-tel Int'l
Keep A Knockin'                  Little Richard                     SR 142379        K-tel Int'l
Baby Face                        Little Richard                     SR 142375        K-tel Int'l
Jenny, Jenny                     Little Richard                     SR 142380        K-tel Int'l
Ready Teddy                      Little Richard                     SR 142374        K-tel Int'l
By The Light Of The Silvery      Little Richard                     SR 142377        K-tel Int'l
  Moon
Miss Ann                         Little Richard                     SR 142372        K-tel Int'l
Goin' Out Of My Head             Little Anthony & The Imperials     SR 142411        K-tel Int'l
Tossin' & Turnin'                Bobby Lewis                        SR 142413        K-tel Int'l
Surf City                        Jan & Dean                         SR 142393        K-tel Int'l
This Diamond Ring                Gary Lewis & The Playboys          SR 142410        K-tel Int'l
Everybody Loves A Clown          Gary Lewis & The Playboys          SR 142387        K-tel Int'l
C'mon And Swim                   Bobby Freeman                      SR 142415        K-tel Int'l
Rebel Rouser                     Duane Eddy                         SR 142364        K-tel Int'l
Up On The Roof                   The Drifters                       SR 142390        K-tel Int'l
Little Darlin'                   The Diamonds                       SR 142366        K-tel Int'l
Rockin' Robin                    Bobby Day                          SR 142365        K-tel Int'l
Charlie Brown                    The Coasters                       SR 142367        K-tel Int'l
Yakety Yak                       The Coasters                       SR 142420        K-tel Int'l
Hey Little Girl                  Dee Clark                          SR 142369        K-tel Int'l
Venus In Blue Jeans              Jimmy Clanton                      SR 142414        K-tel Int'l
Sweet Talkin' Guy                The Chiffons                       SR 142391        K-tel Int'l
Then You Can Tell Me Goodbye     The Casinos                        SR 142385        K-tel Int'l
Worst That Could Happen          Brooklyn Bridge                    SR 142388        K-tel Int'l
Song For My Father               Sherry Winston                     SR 103996
Symphonic Rock Suite #2          Sherry Winston                     SR 103997
That's The Way Of The World      Sherry Winston                     SR 103998
Hit It Hard                      Sherry Winston                     SR 103999
Shall We                         Sherry Winston                     SR 104000
Crazy Ladies                     Sherry Winston                     SR 104001
Love Mission                     Sherry Winston                     SR 104002
Love Madness                     Sherry Winston                     SR 104003
Anniversary Song                 Sherry Winston                     SR 104004
Metro North                      Sherry Winston                     SR 104005
Stride                           Sherry Winston                     SR 104006
Truckstar Music                                                     SR 123406        Era Records
Moments To Remember                                                 SR 120144        K-tel Int'l
Motor City Sound                                                    SR 113811        K-tel Int'l
Pure Pop                                                            SR 113864        K-tel Int'l
Street Corner Singin'                                               SR 113834        K-tel Int'l
After Dusk                                                          SR 113861        K-tel Int'l
The Baroque Connection                                              SR 37998         K-tel Int'l
Havin' An Oldies Party With                                         SR 126582        K-tel Int'l
  Sha Na Na
Originals Still The Greatest                                        SR 129398        K-tel Int'l
  Vol. I 1957-1960
Back To The 60's                                                    SR 124415        K-tel Int'l
Back To The 50's                                                    SR 124414        K-tel Int'l
Chubby's Dance Party                                                SR 118432        K-tel Int'l
Originals Still The Greatest                                        SR 113870        K-tel Int'l
  Vol. II 1960-1962
Love Songs Of The Rock & Roll                                       SR 123417        Era Records
  Era
Gospel Country                                                      SR 123391        Era Records
Great Rock & Roll Love Songs                                        SR 123407        Era Records
Surfin' USA                                                         SR 123440        Era Records
Inspirations                                                        SR 123386        Era Records
The Very Best In Country Music                                      SR 123425        Era Records
Songs of Truth                                                      SR 123444        Era Records
Gentle Side of Country                                              SR 123423        Era Records
All Time Country Superstars                                         SR 123424        Era Records
The Association/Turtles          The Association/Turtles            SR 123404        Era Records
50's Dance Party                                                    SR 123403        Era Records
Country Heartbreak                                                  SR 123395        Era Records
Juke Box Favorites                                                  SR 123405        Era Records
Soft Sounds Of The 50's                                             SR 124027        Era Records
60's Dance Party                                                    SR 124017        Era Records
Hooked On Instrumentals                                             SR 126815        K-tel Int'l

</TABLE>



                                HOOKED ON ALBUMS
                          TO BE ASSIGNED FROM 3RD PARTY

<TABLE>
<CAPTION>
                                                                             Registered
     Title of Work                  Artist          Registration No.            Owner
     -------------                  ------          ----------------         -----------
<S>                             <C>                    <C>                  <C>        
Hooked On Classics               Louis Clark            SR 32919             RCA Records
Hooked On Classics II            Louis Clark            SR 39857             RCA Records
Hooked On Classics III           Louis Clark            SR 45398             RCA Records
Hooked On Swing                  Larry Elgart           SR 45953             RCA Records
Hooked On Rock Classics                                 SR 46187             RCA Records
Hooked On Swing II               Larry Elgart           SR 46188             RCA Records
Hooked On Swing III              Larry Elgart           SR 51127             RCA Records

</TABLE>



                                SCHEDULE 4.16(d)
                                       TO
                           REVOLVING CREDIT AGREEMENT


           Registered Copyrights in Sound Recordings and Compilations
                which are Jointly Owned by Dominion and a Person
             other than an Affiliate of Dominion as of July 22, 1994

<TABLE>
<CAPTION>
                                                 Registration          Name of Other               Registered
  Title of Work           Artist                    Number                Person                      Owner
  -------------           ------                    ------                ------                      -----
<S>                  <C>                         <C>                  <C>                    <C>
Hooka Tooka          Chubby Checker               SR 147217            Ernest Evans           K-tel Int'l/Ernest Evans
Loddy Lo             Chubby Checker               SR 147218            Ernest Evans           K-tel Int'l/Ernest Evans
Twist It Up          Chubby Checker               SR 147219            Ernest Evans           K-tel Int'l/Ernest Evans
Let's Limbo Some     Chubby Checker               SR 147220            Ernest Evans           K-tel Int'l/Ernest Evans
  More
Dancin' Party        Chubby Checker               SR 147221            Ernest Evans           K-tel Int'l/Ernest Evans
Hey, Bobba Needle    Chubby Checker               SR 147223            Ernest Evans           K-tel Int'l/Ernest Evans
Birdland             Chubby Checker               SR 147224            Ernest Evans           K-tel Int'l/Ernest Evans
Popeye The           Chubby Checker               SR 147225            Ernest Evans           K-tel Int'l/Ernest Evans
  Hitchhiker
Slow Twistin'        Chubby Checker               SR 142384            Ernest Evans           K-tel Int'l/Ernest Evans
I Burn For You 12"   10db                         SR 105962            Crush Music            Dominion
Steppin' Out         10db                         SR 106648            Crush Music            Dominion
  Tonight 12"
I Second That        10db                         SR 106647            Crush Music            Dominion
  Emotion 12"
I Second That        10db                         SR 106148            Crush Music            Dominion
  Emotion
Steppin' Out         10db                         SR 106149            Crush Music            Dominion
  Tonight
You Could've Been    10db                         SR 106150            Crush Music            Dominion
  My Lady
Go-Go World          10db                         SR 106151            Crush Music            Dominion
Take Our Time        10db                         SR 106152            Crush Music            Dominion
Midsummer Slow Cut   10db                         SR 106153            Crush Music            Dominion
Inside Your Love     10db                         SR 106154            Crush Music            Dominion
I Burn For You       10db                         SR 106155            Crush Music            Dominion
Givin' Up On Love    Lenny Williams               SR 107474            Crush Music            Dominion
  12"
Master Plan -        Master Plan                  SR 107476            Crush Music            Dominion
  Stomp 12"
Layin' In Wait       Lenny Williams               SR 114169            Crush Music            Dominion/Crush Music
Smooth & Legit 12"   MC Smooth                    SR 114451            Crush Music            Dominion/Crush Music
Here's A Ticket 12"  Lenny Williams               SR 114452            Crush Music            Dominion/Crush Music
Smooth & Legit       MC Smooth                    SR 117441            Crush Music            Dominion/Crush Music
Gotta Lotta Luv 12"  Lenny Williams               SR 120308            Crush Music            Dominion/Crush Music
2 Bigg MC            2 Bigg MC                    SR 122781            Crush Music            Dominion/Crush Music

</TABLE>



                                SCHEDULE 4.16(e)
                                       TO
                           REVOLVING CREDIT AGREEMENT


             Dominion's Unregistered Copyrights in Sound Recordings,
                Compositions and Compilations as of July 22, 1994


 Title of Work       Artist or Author (if Sound            Sound Recording,
                      Recording of Composition)       Composition or Compilation



                         [TO BE COMPLETED BY BORROWERS]





                                SCHEDULE 4.16(f)
                                       TO
                           REVOLVING CREDIT AGREEMENT


                K-Tel USA's Registered Copyrights in Compilations
               which are subject to Short-Term License Agreements
                               as of July 22, 1994


                   Title of Work                        Registration No.
                   -------------                        ----------------

Awakening                                                  SR 112684
Rock N' Roll Guitar Classics                               SR 112688
Country Love                                               SR 112689
The Class Of Country                                       SR 112685
Battle Of The Bands - Vol. II                              SR 112681
The Best Of Christian Rock                                 SR 114200
Yo! Mo Rap                                                 SR 114197
Country Stars/Inspirational Hits                           SR 114195
House Afire                                                SR 114199
More 50's Jukebox Favorites                                SR 114196
More 60's Jukebox Favorites                                SR 112679
Dance Power                                                SR 112680
Power In The Spirit                                        SR 114194
Great Ladies Of Jazz                                       SR 114198
The Edge Of Rock                                           SR 112780
Lambada                                                    SR 114424
Rap Wit'Cha                                                SR 114426
Rap Wit'Cha - Vol. 2                                       SR 114427
Hot Ladies Of The 80's                                     SR 117439
Slow Dancin'                                               SR 117438
Twisted Metal                                              SR 119258
Battle Of The Bands - Vol. 4                               SR 119256
Battle Of The Bands - Vol. 3                               SR 119257
Country Music Classics - Vol. I                            SR 120923
Country Music Classics - Vol. II                           SR 120924
Country Music Classics - Vol. III                          SR 120925
Country Music Classics - Vol. IV                           SR 120926
Country Music Classics - Vol. V                            SR 120927
On The House                                               SR 121442
Stars Of Christian Rock                                    SR 121440
The Best Of Bobby Jimmy & The Critters                     SR 121450
Pop Goes The Gospel                                        SR 121448
The Chuck Wagon Gang - Greatest Hits Vol. I                SR 121036
Rap's Biggest Hits                                         SR 126306
The Soft Sound of Chad & Jeremy                            SR 122786
Rap Attack                                                 SR 122758
The Future Of Rock                                         SR 122784
Rock Classics III                                          SR 122777
Blues - The New Breed                                      SR 124222
Hooked On Classics Collection                              SR 127395
Hooked On Swing Collection                                 SR 126577
Rappin' His Word                                           SR 124546
Romantic Hits Of The 80's                                  SR 124535
100 Proof Hits                                             SR 124534
Rock Radio Vietnam                                         SR 124551
Contemporary Christian Hits                                SR 126700
1910 Fruitgum Co./Ohio Express                             SR 126583
Inspirational Christian Hits                               SR 127570
Old Times Hymns - Vol. II                                  SR 127569
Righteous Metal - Vol. II                                  SR 129498
East Vs. West                                              SR 129829
U Rap 2 It                                                 SR 129731
Music For All Occasions                                    SR 130776
60's Sock Hop                                              SR 133140
50's Sock Hop                                              SR 132337
Singin' The Good News                                      SR 133132
Tuesday's Just As Bad                                      SR 133134
Gospel Celebration                                         SR 150436
Frankie Avalon/Annette Funicello                           SR 135109
A Tribute To Elvis                                         SR 135136
Havin' A 60' Hootenanny                                    SR 135557
Best Of Southern Gospel                                    SR 135538
Best Of Bluegrass                                          SR 136411
Today's Best Country                                       SR 136543
Best Of Gene Pitney                                        SR 136408
Rap's Most Wanted                                          SR 136403
Nasty Wax                                                  SR 136404
Super Bad Is Back                                          SR 136407
Super Bad                                                  SR 136406
Son of Super Bad                                           SR 136405
Country Gospel Greats                                      SR 137797
Great Ladies of Jazz II                                    SR 137800
Wacky Weirdos                                              SR 145476
Goofy Greats                                               SR 141537
Silly Songs                                                SR 145473
Rap:  On The Lighter Tip                                   SR 145498
Rap:  Hall Of Fame                                         SR 141534
Rap:  Most Valuable Players                                SR 141532
Rap:  Straight Outta The Ghetto                            SR 141531
Country Music Classics VI                                  SR 141536
Country Music Classics VII                                 SR 141538
The Statler Brothers/The Jordanaires                       SR 141136
The Jordanaires Sing Gospel                                SR 141512
Today's Christian Favorites                                SR 141409
Southern Fried Rock                                        SR 141408
Comedy Classics                                            SR 144059
Gospel's Finest                                            SR 144060
Zydeco Party                                               SR 144058
Cajun Party                                                SR 143695
Oak Ridge Boys/J.D. Sumner & The Stamps                    SR 143758
1st Ladies of Rap                                          SR 143759
Rockin' Rebels                                             SR 145719
Saxy Rock                                                  SR 145750
Best Of The Box Rap                                        SR 146658
Rap Beat From The Street                                   SR 146896
Today's Hot Country                                        SR 147680
Great Ladies Of Country                                    SR 147674
Charlie Daniels Bank/The Marshall Tucker Band              SR 148281
The Gospel Side Of Ray Stevens                             SR 148299
Glory Bound                                                SR 148298
That Gospel Feeling                                        SR 149404
60's Sound Explosion                                       SR 149070
Solid Gold Rock N' Roll                                    SR 149365
Country Dance Party                                        SR 153046
Cowboy Gospel Classics                                     SR 153047
Country Music Classics - Vol. XVII                         SR 153058
Country Music Classics - Vol. XVIII                        SR 153045
Country Comedy Classics                                    SR 168361
Classic Country Instrumentals                              SR 157069
Discomania                                                 SR 153589
Gospel Soul                                                SR 157070
Country Line Dance Jubilee                                 SR 153593
Best Of The Choirs                                         SR 172212
Rap:  Today's Greatest Hits                                SR 171968
Rap:  Bass Assault                                         SR 172213
Let's Worship Him                                          SR 169947
Best Of The Blues                                          SR 169925
Country Music Classics - Vol. XIX                          SR 169945
Country Music Classics - Vol. XX                           SR 169934
Footprints In The Sand                                     SR 169935
How Great Thou Art                                         SR 169937
Southern Fried Rock - Second Helping                       SR 169936
Those Wonderful Instruments                                SR 175511
Country Music Classics - Vol. XXI                          SR 175680
Country Music Classics - Vol. XXII                         SR 175514
Go Tell It On The Mountain                                 SR 172047
Dumb Dittie                                                SR 175667
Hit Parader Salutes 20 Years Of Metal                      SR 182925
Best Of Reggae                                             SR 183750
Precious Memories                                          SR 183436
Working Man's Country                                      SR 183415
Psychedelic Mind Trip                                      SR 183413
Country's Greatest Singer/Songwriters                      SR 183414
The Brill Building Sound                                   SR 185413
Dance X-Theme                                              SR 185070
Club/House Explosion                                       SR 185362
World Dance Beat                                           SR 185463
GMA:  Today's Top Christian Hits                           SR 157071
GMA:  23rd Annual Dove Awards                              SR 147677
GMA:  Top Ten Christian Hits                               SR 145442
Noche Caliente - I                                         SR 182917
Noche Caliente - II                                        SR 182918
Having A "T" Party                                         SR 133136
Rap Beginnings - I                                         SR 112683
Rap Beginning - II                                         SR 112682
Best Of Chad & Jeremy                                      SR 124538




                                SCHEDULE 4.16(g)
                                       TO
                           REVOLVING CREDIT AGREEMENT


                     K-Tel USA's Unregistered Copyrights in
              Compilations which are subject to Short-Term License
                         Agreements as of July 22, 1994



Title of Work
-------------


                         [TO BE COMPLETED BY BORROWERS]






                                SCHEDULE 4.16(h)
                                       TO
                           REVOLVING CREDIT AGREEMENT



                   Dominion's Long-Term Licenses in Copyrights
                               as of July 22, 1994

<TABLE>
<CAPTION>
   Date of License          Copyright Subject                                 Name of Licensee
      Agreement            to License Agreement      Name of Licensor        (before assignment)
      ---------            --------------------      ----------------        -------------------

<S>     <C>    <C>    <C>    <C>    <C>    <C>

</TABLE>


                         [TO BE COMPLETED BY BORROWERS]






                                SCHEDULE 5.10(d)
                                       TO
                           REVOLVING CREDIT AGREEMENT


                      Form of Acknowledgment to be included
          in Long-Term Licenses of which Dominion or K-Tel Productions
                                 is the Licensee



                  [Licensor] acknowledges that [Licensee] has granted a security
interest in [this License] and all rights of [Licensee] under this [License] in
favor of TCF National Bank Minnesota or in favor of any subsequent financial
institution which shall have provided financing to [Licensee]. [Licensor] hereby
consents to such security interest and agrees that following the occurrence of
an event of default in connection with such financing such financial institution
is entitled to the benefit of all rights under this [License] and may sell or
assign its interest in this [License] and the rights under this [License]
without the consent of or notice to [Licensor].





                                  SCHEDULE 6.1
                                       TO
                           REVOLVING CREDIT AGREEMENT


                    Schedule of Permitted Liens of K-Tel USA


1.       Lease Agreement dated September 4, 1991 with Bell Atlantic TriCon
         Leasing Corporation for certain equipment.

2.       Payment Plan Equipment Schedule and Payment Agreement dated August 1,
         1989 with Hewlett-Packard Company for certain equipment.

3.       Payment Plan Equipment Schedule and Payment Agreement dated September
         24, 1990 with Hewlett-Packard Company for certain equipment.

4.       Lien in favor of Simitar Entertainment, Inc. on video production rights
         purchased from Simitar Entertainment, Inc. securing remaining balance
         of approximately $125,000.





                                  SCHEDULE 6.2
                                       TO
                           REVOLVING CREDIT AGREEMENT


                 Schedule of Permitted Indebtedness of Borrower


1.       Lease Agreement dated September 4, 1991 with Bell Atlantic TriCon
         Leasing Corporation for certain equipment.

2.       Payment Plan Equipment Schedule and Payment Agreement dated August 1,
         1989 with Hewlett-Packard Company for certain equipment.

3.       Payment Plan Equipment Schedule and Payment Agreement dated September
         24, 1990 with Hewlett-Packard Company for certain equipment.

4.       $125,000 owed to Simitar Entertainment, Inc. for purchase of certain
         video production rights.





                                  SCHEDULE 6.3
                                       TO
                           REVOLVING CREDIT AGREEMENT


                  Schedule of Permitted Guaranties of K-Tel USA



                                      None





                                                                    EXHIBIT A TO
                                                            AMENDED AND RESTATED
                                                      REVOLVING CREDIT AGREEMENT

                                 REVOLVING NOTE

$1,000,000.00                                                     April 10, 1997

                  FOR VALUE RECEIVED, the undersigned, K-TEL INTERNATIONAL
(USA), INC., a Minnesota corporation ("K-Tel USA"), DOMINION ENTERTAINMENT,
INC., a Minnesota corporation ("Dominion"), K-TEL PRODUCTIONS, INC., a Minnesota
corporation ("K-Tel Productions"), K-TEL VIDEO, INC., a Minnesota corporation
("K-Tel Video"), K-TEL DIRECT, INC., a Minnesota corporation ("K-Tel Direct"),
K-TEL TV, INC., a Minnesota corporation ("K-Tel TV"), K-TEL CONSUMER PRODUCTS,
INC., a Minnesota corporation ("K-Tel Consumer Products"; collectively K-Tel
USA, Dominion, K-Tel Productions, K-Tel Video, K-Tel Direct, K-Tel TV and K-Tel
Consumer Products are called the "Borrowers"), hereby jointly and severally
promise to pay to the order of TCF NATIONAL BANK MINNESOTA, a national banking
association, formerly known and organized as TCF Bank Minnesota fsb, a federally
chartered stock savings bank (the "Bank"), on July 31, 1997, the principal sum
of One Million Dollars ($1,000,000.00) or, if less, the aggregate unpaid
principal amount of all Advances (as defined in the Credit Agreement) made by
the Bank to the Borrowers under the Credit Agreement (defined below), together
with interest on the unpaid principal amount of the Advances until such
principal amount is paid in full at the interest rate and on the dates specified
in the Credit Agreement.

                  This Note is the Note referred to in, and is entitled to the
benefits of, and is subject to the terms of, the Amended and Restated Revolving
Credit Agreement of even date herewith by and between the Borrowers and the Bank
(such Amended and Restated Credit Agreement, as amended, supplemented, modified
or restated from time to time herein called the "Credit Agreement"), which
Credit Agreement, among other things (i) provides for the making of Advances by
the Bank to the Borrowers subject to the terms of the Credit Agreement and (ii)
contains provisions for the mandatory prepayment hereof and for acceleration of
the maturity hereof upon the happening of certain stated events.

                  This Note is issued in substitution for, and in replacement
of, but not in payment of, the Revolving Note of K-Tel USA and Dominion dated
August 23, 1996, payable to the order of the Bank in the original principal
amount of $5,000,000, as amended.

                               K-TEL INTERNATIONAL (USA), INC.


                               By__________________________________________
                                     Its___________________________________

                               DOMINION ENTERTAINMENT, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL PRODUCTIONS, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL VIDEO, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL DIRECT, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL TV, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL CONSUMER PRODUCTS, INC.


                               By__________________________________________
                                     Its___________________________________




                                                                    EXHIBIT B TO
                                                            AMENDED AND RESTATED
                                                      REVOLVING CREDIT AGREEMENT


                           BORROWING BASE CERTIFICATE
                                      AS OF
                           --------------------------


                  This Borrowing Base Certificate relates to the Amended and
Restated Revolving Credit Agreement dated as of April 10, 1997, as the same may
have been amended, supplemented, modified or restated from time to time (the
"Credit Agreement"), by and between TCF National Bank Minnesota, formerly known
and organized as TCF Bank Minnesota fsb (the "Bank") and K-Tel International
(USA), Inc. ("K-Tel USA"), Dominion Entertainment, Inc. ("Dominion"), K-Tel
Productions, Inc. ("K-Tel Productions"), K-Tel Video, Inc. ("K-Tel Video"),
K-Tel Direct, Inc. ("K-Tel Direct"), K-Tel TV, Inc. ("K-Tel TV"), K-Tel Consumer
Products, Inc. ("K-Tel Consumer Products") (collectively, K-Tel USA, Dominion,
K-Tel Productions, K-Tel Video, K-Tel Direct, K-Tel TV and K-Tel Consumer
Products are called the "Borrowers"). Terms not defined herein which are defined
in the Credit Agreement shall have the same meaning herein as specified in the
Credit Agreement.

                  As of the date set forth above, the Borrowers, after due
investigation by the duly authorized officer or Chief Financial Officer
executing this certificate, hereby warrant and certify, to the best of their
knowledge: that the Borrowers hold subject to the security interest of the Bank,
the accounts receivable set forth below and that all information contained
herein is true and correct.

           COLLATERAL AND AVAILABLE ADVANCE CALCULATION ($'S IN 000'S)

Accounts Receivable of K-Tel USA as of:  ___________________, ____.

                                                                          Total

Less than 61 days past due                                                _____
Less 10% Rule Eliminations                                               (_____)
Less Other Eliminations                                            (_____)
Less 20% Return Offset                                             (_____)
Eligible Accounts Receivable                                        _____
x 75% (available for advance)                                       _____

Total Borrowing Base
                                                                    =====

                  As of the date hereof, the Borrowers, to the best of their
knowledge, certify that all representations and warranties made by the Borrowers
in the Credit Agreement are reaffirmed and remade; that no Default or Event of
Default exists under the Credit Agreement; and that there has been no material
change except as noted in any of the amounts indicated herein and since any of
the computation dates indicated herein that would materially reduce the
collateral amounts shown above as they would be computed as of the date of this
certificate.


                               K-TEL INTERNATIONAL (USA), INC.


                               By__________________________________________
                                     Its___________________________________

                               DOMINION ENTERTAINMENT, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL PRODUCTIONS, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL VIDEO, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL DIRECT, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL TV, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL CONSUMER PRODUCTS, INC.


                               By__________________________________________
                                     Its___________________________________




                                                                    EXHIBIT C TO
                                                            AMENDED AND RESTATED
                                                      REVOLVING CREDIT AGREEMENT

                             COMPLIANCE CERTIFICATE

                  In accordance with our Amended and Restated Revolving Credit
Agreement dated as of April 10, 1997, as amended (such Revolving Credit
Agreement, together with any and all amendments, supplements or modifications
thereto or restatements thereof is herein called the "Credit Agreement"),
attached are the financial statements of K-TEL INTERNATIONAL (USA), INC. ("K-Tel
USA"), DOMINION ENTERTAINMENT, INC. ("Dominion"), K-TEL PRODUCTIONS, INC.
("K-Tel Productions"), K-TEL VIDEO, INC. ("K-Tel Video"), K-TEL DIRECT, INC.
("K-Tel Direct"), K-TEL TV, INC. ("K-Tel TV"), K-TEL CONSUMER PRODUCTS, INC.
("K-Tel Consumer Products") (collectively, K-Tel USA, Dominion, K-Tel
Productions, K-Tel Video, K-Tel Direct, K-Tel TV and K-Tel Consumer Products are
called the "Borrowers") as of and for the month and year-to-date period ended
________________, ____ (the "Current Financials").

                  I certify that the Current Financials have been prepared in
accordance with generally accepted accounting principles, subject to year-end
audit adjustments.

Defaults and Events of Default.  (check one)

         |_|      I have no knowledge of the occurrence of any Default or Event
                  of Default under the Credit Agreement which has not previously
                  been reported to you and remedied.

         |_|      Attached is a detailed description of all Defaults and Events
                  of Default of which I have knowledge and which have not
                  previously been reported to you and remedied.

                  For the date and periods covered by the Current Financials,
the Borrowers are in compliance with the covenants set forth in Sections 5.7,
5.8 and 5.9 of the Credit Agreement, except as indicated below.
The calculations made to determine compliance are as follows:

Covenant                                          Actual           Requirement

5.7)  Current Ratio of K-Tel USA

      As of month ending
      ________________________                 ____ to 1        Minimum ___ to 1

5.8)  Capital Base of K-Tel USA

      As of month ending
      ________________________                 $________        Minimum $_______

5.9)  Net Income Before Taxes of K-Tel USA

      As of month ending
      ________________________                 $________        Minimum $_______


                           K-TEL INTERNATIONAL (USA), INC.


                               By__________________________________________
                                     Its___________________________________

                               DOMINION ENTERTAINMENT, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL PRODUCTIONS, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL VIDEO, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL DIRECT, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL TV, INC.


                               By__________________________________________
                                     Its___________________________________

                               K-TEL CONSUMER PRODUCTS, INC.


                               By__________________________________________
                                     Its___________________________________




                                                                    EXHIBIT D TO
                                                            AMENDED AND RESTATED
                                                      REVOLVING CREDIT AGREEMENT

                          COPYRIGHT SECURITY AGREEMENT
                            (K-Tel Productions, Inc.)


                  This Agreement is made as of the ____ day of _______________,
____, by K-TEL PRODUCTIONS, INC., a Minnesota corporation (the "Debtor") having
a principal place of business at 2605 Fernbrook Lane North, Plymouth, Minnesota
55447, for the benefit of TCF NATIONAL BANK MINNESOTA, a national banking
association, formerly known and organized as TCF Bank Minnesota fsb, a federally
chartered stock savings bank (the "Secured Party") having a principal place of
business at 801 Marquette Avenue, Minneapolis, Minnesota 55402.

                  The Debtor, Dominion Entertainment, Inc., a Minnesota
corporation ("Dominion"), K-Tel International (USA), Inc., a Minnesota
corporation ("K-Tel USA"), K-Tel Video, Inc., a Minnesota corporation ("K-Tel
Video"), K-Tel Direct, Inc., a Minnesota corporation ("K-Tel Direct"), K-Tel TV,
Inc., a Minnesota corporation ("K-Tel TV") and K-Tel Consumer Products, Inc., a
Minnesota corporation ("K-Tel Consumer Products") (collectively, the Debtor,
K-Tel USA, Dominion, K-Tel Video, K-Tel Direct, K-Tel TV and K-Tel Consumer
Products are herein called the "Borrowers") and the Secured Party have entered
into an Amended and Restated Revolving Credit Agreement dated as of April 10,
1997 (such Amended and Restated Revolving Credit Agreement, together with any
and all amendments, supplements or modifications thereto or restatements
thereof, is herein called the "Credit Agreement") setting forth the terms on
which the Secured Party may now or hereafter make certain advances or other
financial accommodations available to the Borrowers.

                  As a further condition to making any advance or other
financial accommodation available under the Credit Agreement, the Secured Party
has required that the Debtor execute and deliver a Security Agreement of even
date herewith (such Security Agreement, together with any and all amendments,
supplements or modifications thereto or restatements thereof, is herein called
the "Security Agreement"), granting the Secured Party a security interest in
property generally described as all of the Debtor's inventory, accounts,
equipment and general intangibles, all for the purpose of securing the
Obligations (as defined below).

                  As a condition to making any advance or other financial
accommodation available under the Credit Agreement, the Secured Party has
required the execution and delivery of this Agreement by the Debtor.

                  ACCORDINGLY, in consideration of the mutual covenants
contained in the Credit Agreement and herein, the parties hereby agree as
follows:

                  1. Definitions. All terms defined in the Credit Agreement that
are not otherwise defined herein shall have the meanings given them in the
Credit Agreement. In addition, the following terms have the meanings set forth
below:

                  "Copyrights" means all of the Debtor's right, title and
         interest in and to all copyrightable works and all copyrights of the
         Debtor, whether presently existing or hereafter arising, including but
         not limited to all registered copyrights, including the registered
         copyrights listed on Schedule A, all applications to register
         copyrights and all unregistered copyrights, and all licenses of
         copyrights in favor of the Debtor (excluding only any short-term
         license (having a term of five years or less) of a copyright in favor
         of Debtor, whether presently existing or hereafter acquired, which by
         its terms is not assignable).

                  "Obligations" means each and every debt, liability and
         obligation of every type and description which the Borrowers or either
         of the Borrowers may now or at any time hereafter owe to the Secured
         Party, whether such debt, liability or obligation now exists or is
         hereafter created or incurred and whether it is or may be direct or
         indirect, due or to become due, absolute or contingent, primary or
         secondary, liquidated or unliquidated, or sole, joint, several or joint
         and several. Without limiting the generality of the foregoing, the term
         "Obligations" includes all indebtedness, liabilities and obligations of
         the Borrowers to the Secured Party which arise under or out of the
         Credit Agreement.

                  "Security Agreement" has the meaning specified in the third
         paragraph on the first page of this Agreement.

                   2. Security Interest. The Debtor hereby confirms and
acknowledges that to secure payment of the Obligations the Debtor has granted
and created (and, to the extent not previously granted under the Security
Agreement, does hereby irrevocably grant and create) a security interest (the
"Security Interest"), with power of sale to the extent permitted by law, in the
Copyrights and in each and every account, royalty and other right to payment
which now exists or hereafter arises from or in connection with any of the
Copyrights, whether such account or right to payment arises out of a sale,
lease, license or other disposition of any of the Copyrights or otherwise arises
under any contract or agreement relating to any of the Copyrights, whether such
account, royalty or other right to payment is or is not already earned by
performance, and howsoever such account, royalty or other right to payment may
be evidenced, together with all other rights and interest which the Debtor may
at any time have by law or against any account debtor or obligor obligated to
make any such payment of against any of the property of such account debtor or
other obligor, together with all proceeds thereof. The Security Interest is in
any and all rights of Debtor that may exist or hereafter arise under any
copyright law now or hereinafter in effect in the United States of America or in
any other country. This Agreement and the security interest created hereby
include and cover any and all future advances which constitute Obligations. The
Obligations are also secured by after-acquired Copyrights of the Debtor.

                   3. Representations and Warranties. The Debtor represents and
warrants that the Debtor owns each of the Copyrights free and clear of any
security interest, lien or claim, other than (i) the security interest created
by the Security Agreement and evidenced by this Agreement, (ii) short-term
nonexclusive licenses (having a term of 5 years or less) granted by the Debtor,
as licensor, to third parties, as licensees, in the ordinary course of business,
(iii) the rights of licensors pursuant to short-term license agreements (having
a term of 5 years or less) under which the Debtor is the licensee, and (iv)
perpetual nonexclusive licenses granted by the Debtor for use of Copyrights in
film, television and theatrical products.

                   4. Satisfaction. Upon full payment or satisfaction of the
Obligations, termination of any obligation of the Secured Party to make advances
to the Borrowers or either of the Borrowers and termination of any credit
facility between the Borrowers or either of the Borrowers and the Secured Party,
this Agreement, and the rights granted hereunder to the Secured Party, shall be
terminated upon demand by a written termination statement executed by the
Secured Party and providing that the Secured Party no longer claims a security
interest under this Agreement.

                   5. Administration of Copyrights. Prior to the occurrence of
an Event of Default, the Debtor may control and manage the Copyrights, including
the right to make and distribute copies of the works covered thereby and to
enter into short-term nonexclusive licenses (having a term of 5 years or less)
granted by the Debtor, as licensor, to third parties in the ordinary course of
business, and may receive and use the income, revenue, profits, and royalties
that arise from the use of the Copyrights and any licenses thereunder, in the
same manner and to the same extent as if this Agreement had not been entered
into. The Debtor shall give the Secured Party prompt notice of any change in the
status of any of the Copyrights or the Debtor's rights thereunder.

                   6. Protection of Copyrights. The Debtor covenants that it
will at its own expense protect, defend and maintain the Copyrights to the
extent reasonably advisable in its business, and if the Debtor fails to do so,
the Secured Party may (but shall have no obligation to) do so in the Debtor's
name or in the Secured Party's name, but at the Debtor's expense, and the Debtor
hereby agrees to reimburse the Secured Party in full for all expenses, including
attorney's fees incurred by the Secured Party in protecting, defending and
maintaining the Copyrights.

                   7. Events of Default. Each of the following occurrences shall
constitute an event of default under this Agreement (herein called "Event of
Default"): (i) an Event of Default shall exist under and as defined in the
Credit Agreement; (ii) the Debtor shall fail to observe or perform any covenant
or agreement herein binding on it; or (iii) any representation or warranty by
the Debtor herein or in any certificate, instrument, or statement contemplated
by or made or delivered pursuant to or in connection with this Agreement, shall
prove to have been incorrect in any material respect when made.

                   8. Remedies. Upon the occurrence of an Event of Default and
at any time thereafter while such Event of Default exists, the Secured Party may
exercise any one or more of the following remedies: (a) exercise all rights and
remedies available under the Uniform Commercial Code, as then in effect in the
State of Minnesota, or under any applicable law; (b) sell, assign, transfer,
pledge, encumber or otherwise dispose of any Copyright and any account, royalty
or other right to payment or proceeds thereof related to any Copyright; (c)
enforce any Copyright, and any licenses thereunder, and any account, royalty or
other right to payment or proceeds thereof related to any Copyright; and (d)
exercise or enforce any or all other rights or remedies available to the Secured
Party by law or agreement against the Copyrights or any account, royalty or
other right to payment or proceeds thereof related to any Copyright, against the
Debtor or against any other person or property. Upon the exercise of any remedy
by the Secured Party hereunder, the Debtor shall be deemed to have waived all of
the Debtor's rights provided in 17 U.S.C. ss. 106A or any other "moral rights of
authors." If the Secured Party shall exercise any right or remedy under this
Agreement, the Debtor shall, at the request of the Secured Party, do any and all
lawful acts and execute any and all proper documents required by the Secured
Party in aid of thereof. For the purposes of this paragraph, the Debtor appoints
the Secured Party as the Debtor's attorney with the right, but not the duty, to
endorse the Debtor's name on all applications, documents, papers and instruments
necessary for the Secured Party to (i) act in its own name or enforce or use the
Copyrights, (ii) grant or issue any exclusive or non-exclusive licenses under
the Copyrights to any third party, and/or (iii) sell, assign, transfer, pledge,
encumber or otherwise transfer title in or dispose of any Copyright. The Debtor
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney shall be irrevocable until satisfaction of
this Agreement in accordance with paragraph 4. The Debtor shall reimburse the
Secured Party for all attorney's fees and expenses of all types incurred by the
Secured Party, or its counsel, in connection with the exercise of the rights of
the Secured Party under this Agreement, together with interest thereon from the
date or dates the same were incurred at the highest rate of interest then
applicable with respect to any of the Obligations.

                  IN WITNESS WHEREOF, the Debtor has executed this Agreement as
of the date and year first above-written.


                               K-TEL INTERNATIONAL (USA), INC.


                               By__________________________________________
                                 Its_______________________________________

STATE OF MINNESOTA         )
                           )ss.
COUNTY OF HENNEPIN         )


         _________The foregoing instrument was acknowledged before me this ___
day of __________________, ____, by ________________________________, the
____________________ of K-Tel Productions, Inc., a Minnesota corporation, on
behalf of the corporation.



                               _________________________________________________
                               Notary Public




                                   SCHEDULE A


                                [TO BE COMPLETED]




                                                                    EXHIBIT E TO
                                                            AMENDED AND RESTATED
                                                      REVOLVING CREDIT AGREEMENT


                   SUPPLEMENT TO COPYRIGHT SECURITY AGREEMENT
                         (Dominion Entertainment, Inc.)


                  This Supplement is made as of the ____ day of _______________,
____, by DOMINION ENTERTAINMENT, INC., a Minnesota corporation (the "Debtor")
having a principal place of business at 2605 Fernbrook Lane North, Plymouth,
Minnesota 55447, for the benefit of TCF NATIONAL BANK MINNESOTA, a national
banking association, formerly known and organized as TCF Bank Minnesota fsb, a
federally chartered stock savings bank (the "Secured Party") having a principal
place of business at 801 Marquette Avenue, Minneapolis, Minnesota 55402.

                  The Debtor, K-Tel International (USA), Inc., a Minnesota
corporation ("K-Tel USA"), K-Tel Productions, Inc., a Minnesota corporation
("K-Tel Productions"), K-Tel Video, Inc., a Minnesota corporation ("K-Tel
Video"), K-Tel Direct, Inc., a Minnesota corporation ("K-Tel Direct"), K-Tel TV,
Inc., a Minnesota corporation ("K-Tel TV"), K-Tel Consumer Products, Inc., a
Minnesota corporation ("K-Tel Consumer Products") (collectively, the Debtor,
K-Tel USA, K-Tel Productions, K-Tel Video, K-Tel Direct, K-Tel TV and K-Tel
Consumer Products are herein called the "Borrowers") and the Secured Party have
entered into an Amended and Restated Revolving Credit Agreement dated as of
April 10, 1997 (such Revolving Credit Agreement, together with any and all
amendments, supplements or modifications thereto or restatements thereof, is
herein called the "Credit Agreement") setting forth the terms on which the
Secured Party may now or hereafter make certain advances or other financial
accommodations available to the Borrowers.

                  As a condition to making advances or other financial
accommodations, the Secured Party required, among other things, the execution
and delivery of a Copyright Security Agreement dated as of July 22, 1994 from
the Debtor in favor of the Secured Party (such Copyright Security Agreement,
together with any and all amendments, supplements or modifications thereto or
restatements thereof, is herein called the "Security Agreement").

                  The Debtor and the Secured Party desire to supplement the
Security Agreement by adding additional registered copyrights to Schedule A
attached thereto.

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereby agree as
follows:

                  1. Schedule A of the Security Agreement is hereby supplemented
by adding to such Schedule A the registered copyrights identified on Exhibit A
attached to this Supplement.

                  2. This Supplement shall constitute a supplement to the
Security Agreement to the extent necessary to subject the copyrights identified
on Exhibit A to this Supplement to all of the terms, covenants and conditions
contained in the Security Agreement.

                  3. Each and every reference in the Security Agreement to "this
Security Agreement" and in the Credit Agreement and the other Loan Documents to
"Dominion's Copyright Security Agreement" shall hereafter be deemed to refer to
the Security Agreement as supplemented by this Supplement.

                  4. All other terms and conditions of the Security Agreement
not specifically amended by this Supplement shall remain in full force and
effect.

                  5. The execution of this Supplement shall not be deemed a
waiver of any Event of Default or event which, with the giving of notice or
passing of time, or both, would be such an Event of Default under the Security
Agreement.

                  6. The Debtor hereby agrees to reimburse the Secured Party for
all fees and disbursements of counsel to the Secured Party for the services
performed by such counsel in connection with the preparation and negotiation of
this Supplement and for any and all fees payable to public officials in
connection with this Supplement and the recording hereof.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be executed as of the day and year first above written.

                                        DOMINION ENTERTAINMENT, INC.


                                        By______________________________________
                                          Its___________________________________


                                        TCF NATIONAL BANK MINNESOTA


                                        By______________________________________
                                          Its___________________________________

                                        And


                                        By______________________________________
                                          Its___________________________________



STATE OF MINNESOTA         )
                           ) ss.
COUNTY OF HENNEPIN         )


                   The foregoing instrument was acknowledged before me this ____
day of ________________________, 19__, by _______________________, the
____________________ of Dominion Entertainment, Inc., a Minnesota corporation,
on behalf of said corporation.


                                        ________________________________________
                                        Notary Public



STATE OF MINNESOTA         )
                           ) ss.
COUNTY OF HENNEPIN         )


                   The foregoing instrument was acknowledged before me this ____
day of ____________________, 19__, by ________________________ and
________________________, respectively, the _________________ and
_________________ of TCF National Bank Minnesota, a national banking
association, on behalf of said association.


                                        ________________________________________
                                        Notary Public




                                    EXHIBIT A
                                       TO
                   SUPPLEMENT TO COPYRIGHT SECURITY AGREEMENT


                            Additional Registrations


Title of Work                       Artist                    Registration No.
-------------                       ------                    ----------------





                                                                    EXHIBIT F TO
                                                            AMENDED AND RESTATED
                                                      REVOLVING CREDIT AGREEMENT


                   SUPPLEMENT TO COPYRIGHT SECURITY AGREEMENT
                            (K-Tel Productions, Inc.)


                  This Supplement is made as of the ____ day of ________, 19__,
by K-TEL PRODUCTIONS, INC., a Minnesota corporation (the "Debtor") having a
principal place of business at 2605 Fernbrook Lane North, Plymouth, Minnesota
55447, for the benefit of TCF NATIONAL BANK MINNESOTA, a national banking
association, formerly known and organized as TCF Bank Minnesota fsb, a federally
chartered stock savings bank (the "Secured Party") having a principal place of
business at 801 Marquette Avenue, Minneapolis, Minnesota 55402.

                  The Debtor, Dominion Entertainment, Inc., a Minnesota
corporation ("Dominion"), K-Tel International (USA), Inc., a Minnesota
corporation (K-Tel USA"), K-Tel Video, Inc., a Minnesota corporation ("K-Tel
Video"), K-Tel Direct, Inc., a Minnesota corporation ("K-Tel Direct"), K-Tel TV,
Inc., a Minnesota corporation ("K-Tel TV"), K-Tel Consumer Products, Inc., a
Minnesota corporation ("K-Tel Consumer Products") (collectively, the
"Borrowers") and the Secured Party have entered into an Amended and Restated
Revolving Credit Agreement dated as of April __, 1997 (such Revolving Credit
Agreement, together with any and all amendments, supplements or modifications
thereto or restatements thereof, is herein called the "Credit Agreement")
setting forth the terms on which the Secured Party may now or hereafter make
certain advances or other financial accommodations available to the Borrowers.

                  As a condition to making any advance or other financial
accommodation available under the Credit Agreement, the Secured Party required,
among other things, the execution and delivery of a Copyright Security Agreement
dated as of July 22, 1994 from the Debtor in favor of the Secured Party (such
Copyright Security Agreement, together with any and all amendments, supplements
or modifications thereto or restatements thereof, is herein called the "Security
Agreement").

                  The Debtor and the Secured Party desire to supplement the
Security Agreement by adding additional registered copyrights to Schedule A
attached thereto.

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereby agree as
follows:

                  1. Schedule A of the Security Agreement is hereby supplemented
by adding to such Schedule A the registered copyrights identified on Exhibit A
attached to this Supplement.

                  2. This Supplement shall constitute a supplement to the
Security Agreement to the extent necessary to subject the copyrights identified
on Exhibit A to this Supplement to all of the terms, covenants and conditions
contained in the Security Agreement.

                  3. Each and every reference in the Security Agreement to "this
Security Agreement" and in the Credit Agreement and the other Loan Documents to
"Dominion's Copyright Security Agreement" shall hereafter be deemed to refer to
the Security Agreement as supplemented by this Supplement.

                  4. All other terms and conditions of the Security Agreement
not specifically amended by this Supplement shall remain in full force and
effect.

                  5. The execution of this Supplement shall not be deemed a
waiver of any Event of Default or event which, with the giving of notice or
passing of time, or both, would be such an Event of Default under the Security
Agreement.

                  6. The Debtor hereby agrees to reimburse the Secured Party for
all fees and disbursements of counsel to the Secured Party for the services
performed by such counsel in connection with the preparation and negotiation of
this Supplement and for any and all fees payable to public officials in
connection with this Supplement and the recording hereof.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be executed as of the day and year first above written.


                                        K-TEL PRODUCTIONS, INC.


                                        By______________________________________
                                          Its___________________________________


                                        TCF NATIONAL BANK MINNESOTA


                                        By______________________________________
                                          Its___________________________________

                                        And


                                        By______________________________________
                                          Its___________________________________


STATE OF MINNESOTA         )
                           ) ss.
COUNTY OF HENNEPIN         )


                  The foregoing instrument was acknowledged before me this _____
day of ____________, 19__, by _______________________, the ____________________
of K-Tel Productions, Inc., a Minnesota corporation, on behalf of said
corporation.


                                        ________________________________________
                                        Notary Public



STATE OF MINNESOTA         )
                           ) ss.
COUNTY OF HENNEPIN         )


                  The foregoing instrument was acknowledged before me this _____
day of ____________, 19__, by ________________________ and
________________________, respectively, the _________________ and
_________________ of TCF National Bank Minnesota, a national banking
association, on behalf of said association.


                                        ________________________________________
                                        Notary Public




                                    EXHIBIT A
                                       TO
                   SUPPLEMENT TO COPYRIGHT SECURITY AGREEMENT


                            Additional Registrations


Title of Work                       Artist                    Registration No.
-------------                       ------                    ----------------





                                                                    EXHIBIT G TO
                                                            AMENDED AND RESTATED
                                                      REVOLVING CREDIT AGREEMENT


                   SUPPLEMENT TO COPYRIGHT SECURITY AGREEMENT
                        (K-Tel International (USA), Inc.)


                  This Supplement is made as of the ____ day of ________, ____,
by K-TEL INTERNATIONAL (USA), INC., a Minnesota corporation (the "Debtor")
having a principal place of business at 2605 Fernbrook Lane North, Plymouth,
Minnesota 55447, for the benefit of TCF NATIONAL BANK MINNESOTA, a national
banking association, formerly known and organized as TCF Bank Minnesota fsb, a
federally chartered stock savings bank (the "Secured Party") having a principal
place of business at 801 Marquette Avenue, Minneapolis, Minnesota 55402.

                  The Debtor, Dominion Entertainment, Inc., a Minnesota
corporation ("Dominion"), K-Tel Productions, Inc., a Minnesota corporation
("K-Tel Productions"), K-Tel Video, Inc., a Minnesota corporation ("K-Tel
Video"), K-Tel Direct, Inc., a Minnesota corporation ("K-Tel Direct"), K-Tel TV,
Inc., a Minnesota corporation ("K-Tel TV"), K-Tel Consumer Products, Inc., a
Minnesota corporation ("K-Tel Consumer Products") (collectively, the Debtor,
Dominion, K-Tel Productions, K-Tel Video, K-Tel Direct, K-Tel TV, K-Tel Consumer
Products are herein called the "Borrowers") and the Secured Party have entered
into an Amended and Restated Revolving Credit Agreement dated as of April 10,
1997 (such Revolving Credit Agreement, together with any and all amendments,
supplements or modifications thereto or restatements thereof, is herein called
the "Credit Agreement") setting forth the terms on which the Secured Party may
now or hereafter make certain advances or other financial accommodations
available to the Borrowers.

                  As a condition to making any advances or other financial
accommodations, the Secured Party required, among other things, the execution
and delivery of a Copyright Security Agreement dated as of July 22, 1994 from
the Debtor in favor of the Secured Party (such Copyright Security Agreement,
together with any and all amendments, supplements or modifications thereto or
restatements thereof, is herein called the "Security Agreement").

                  The Debtor and the Secured Party desire to supplement the
Security Agreement by adding additional registered copyrights to Schedule A
attached thereto.

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereby agree as
follows:

                  1. Schedule A of the Security Agreement is hereby supplemented
by adding to such Schedule A the registered copyrights identified on Exhibit A
attached to this Supplement.

                  2. This Supplement shall constitute a supplement to the
Security Agreement to the extent necessary to subject the copyrights identified
on Exhibit A to this Supplement to all of the terms, covenants and conditions
contained in the Security Agreement.

                  3. Each and every reference in the Security Agreement to "this
Security Agreement" and in the Credit Agreement and the other Loan Documents to
"Dominion's Copyright Security Agreement" shall hereafter be deemed to refer to
the Security Agreement as supplemented by this Supplement.

                  4. All other terms and conditions of the Security Agreement
not specifically amended by this Supplement shall remain in full force and
effect.

                  5. The execution of this Supplement shall not be deemed a
waiver of any Event of Default or event which, with the giving of notice or
passing of time, or both, would be such an Event of Default under the Security
Agreement.

                  6. The Debtor hereby agrees to reimburse the Secured Party for
all fees and disbursements of counsel to the Secured Party for the services
performed by such counsel in connection with the preparation and negotiation of
this Supplement and for any and all fees payable to public officials in
connection with this Supplement and the recording hereof.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be executed as of the day and year first above written.

                                        K-TEL INTERNATIONAL (USA), INC.


                                        By______________________________________
                                          Its___________________________________


                                        TCF NATIONAL BANK MINNESOTA


                                        By______________________________________
                                          Its___________________________________

                                        And


                                        By______________________________________
                                          Its___________________________________


STATE OF MINNESOTA         )
                           ) ss.
COUNTY OF HENNEPIN         )


                  The foregoing instrument was acknowledged before me this _____
day of ____________, 19__, by _______________________, the ____________________
of K-Tel International (USA), Inc., a Minnesota corporation, on behalf of said
corporation.


                                        ________________________________________
                                        Notary Public




STATE OF MINNESOTA         )
                           ) ss.
COUNTY OF HENNEPIN         )


                  The foregoing instrument was acknowledged before me this _____
day of ____________, 19__, by ________________________ and
________________________, respectively, the _________________ and
_________________ of TCF National Bank Minnesota, a national banking
association, on behalf of said association.


                                        ________________________________________
                                       Notary Public




                                    EXHIBIT A
                                       TO
                   SUPPLEMENT TO COPYRIGHT SECURITY AGREEMENT


                            Additional Registrations


Title of Work                       Artist                    Registration No.
-------------                       ------                    ----------------