**Exhibit10.1**

 

AMENDMENT TO CREDITAGREEMENT AND NOTE

 

 

                This Amendment(“Amendment”) to the September 27, 1999 Credit Agreement between K-TELINTERNATIONAL, INC., a Minnesota corporation with offices located at 5555Pioneer Creek Drive, Maple Plain, Minnesota 55359 (the “Borrower”) and K-5 LEISURE PRODUCTS, INC., a Nevadacorporation with offices located at 220 Saulteaux Crescent, Winnipeg, Canada(the “Lender”) and the $8,000,000 Promissory Note from the Borrower to theLender dated September 27, 1999 (the “Note”) is made as of February 12, 2002.

 

RECITALS

 

                The Borrower andthe Lender desire to amend the Agreement and Note as provided in thisAmendment.

 

                NOW, THEREFORE,for good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the Borrower and the Lender agree as follows:

 

                                                1.                                       Definitions.  Unless otherwise defined herein, capitalizedterms used herein shall have the meanings given to them in the Agreement.

 

                                                2.                                       Amendment toAgreement.

 

                                                                                                a.                                       The definition ofGuaranty is amended to include K-Tel Entertainment, Inc. as a Guarantor on theGuaranty.

 

                                                                                                b.                                      Section 1.10 isamended by replacing “November 20, 2001” with “July 20, 2005.”

 

                                                3.                                       Amendment to Note.   The Note is amended by extending thematurity date toJuly 20, 2005.

 

                                                4.                                       DefaultAcknowledgment.

 

                                                                                                a.                                       The partiesacknowledge that the Borrower is in default under Section 8.1.D. of theAgreement because an Event of Default has occurred under the FoothillAgreement.

 

                                                                                                b.                                      The partiesacknowledge and agree that to the extent the Borrower has any claims againstthe Lender due to or relating to the Borrower’s non-compliance or defaults ofany terms of the Loan Agreement and Amendments which occurred prior to the dateof this Agreement, the Borrower releases the Lender from any and all suchclaims.

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                                                5.                                       Security.  The Borrower and the Lender confirm that theBorrower’s obligations under the Agreement (including this Amendment) and theNote are secured by the Security Agreement and the Stock Security Agreement, asdefined in the Agreement.

 

                                                6.                                       Borrower’sWarranties.  The Borrowerwarrants that:  (1) each representation,warranty and covenant made by it in the Agreement, is true and correct on thedate hereof with the same effect as if made on such date; and (2) as of thedate hereof it is not in default under the Agreement or the Notes, nor has anyevent occurred which with notice or lapse of time or both would result in sucha default.

 

                                                7.                                       Waiver.  Notwithstanding any provision of thisAgreement to the contrary, no provision of this Agreement is intended, or shallbe construed, to be a waiver by the Lender of any rights or remedies that theLender may have due to the occurrence of any default under the Agreement or theNote that may have occurred heretofore or which may occur hereafter.

 

                                                8.                                       Borrower’sRepresentations.  The Borrowerhereby represents and warrants that (a) as of the date hereof, the Borrower hasno defenses or rights of setoff against the enforcement by the Lender of theBorrower’s obligations under the Agreement or the Note, (b) no events haveoccurred which, with the giving of notice or passage of time, or both, wouldentitle the Borrower to any such defenses or rights of setoff, and (c) theparties executing this Amendment on behalf of the Borrower are duly authorizedand empowered to do so.

 

                                                9.                                       Interpretation.  This Amendment shall be construed with andas part of the Agreement.  In the eventof any conflict between the terms of the Agreement and this Amendment, theterms of this Agreement shall be deemed to supersede and control.

 

                                                10.                                 Incorporation ofTerms.  The parties agree that exceptas specifically modified by this Amendment, all of the terms and conditions ofthe Agreement and all documents related thereto shall remain in full force andeffect.

 

                                                IN WITNESS WHEREOF,this Amendment has been executed as of the day and year first above written.

 
|   |   |   |   |   | K-TEL  INTERNATIONAL, INC.  |
|--------|--------|--------|--------|--------|-----------------------------|
|   |   |   |   |   |                        |   |
|   |   |   |   |   |                        |   |
|   |   |   |   |   | By                          | /s/  Dennis Ward |
|   |   |   |   |   | Its                         | Chief  Financial Officer |
|   |   |   |   |   |                        |   |
|   |   |   |   |   |                        |   |
|   |   |   |   |   | K-5  LEISURE PRODUCTS, INC. |
|   |   |   |   |   |                        |   |
|   |   |   |   |   |                        |   |
|   |   |   |   |   | By                          | /s/  Philip Kives |
|   |   |   |   |   | Its                         | President |

 

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