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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) April 13, 1995
NATIONAL MEDIA CORPORATION
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(Exact name of registrant as specified in charter)
Delaware 1-6715 13-2658741
(State or other juris- (Commission File Number) (IRS Employer Identi-
diction of incorporation) fication No.)
1700 Walnut Street, Philadelphia, PA 19103
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 772-5000
N/A
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(Former name or former address, if changed since last report.)
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Exhibit Index appears on Page 7
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Item 5. Other Events.
On April 17, 1995 National Media Corporation (the
"Company") announced that the Company, ValueVision
International, Inc. ("ValueVision"), John J. Turchi,
Jr. ("Turchi"), Robert J. Johander and Mark A. Payne
had entered into a Settlement Agreement, a copy of
which is attached hereto as Exhibit 10.1 (the
"Settlement Agreement"), pursuant to which the
parties agreed to dismiss with prejudice all claims
and counterclaims which the parties have in that
certain civil action pending in the United States
District Court of the Eastern District of
Pennsylvania entitled National Media Corporation, et
al. v. ValueVision International, Inc., et al., Civil
Action No. 94-CV-2500 (the "Action"). The Settlement
Agreement shall become effective upon the earlier to
occur of (i) the date (the "Stockholder Approval
Date") upon which the shareholder approval required
by the applicable New York Stock Exchange rules and
regulations in order to consummate the Telemarketing,
Production and Post-Production Agreement dated April
13, 1995 by and between the Company and ValueVision
(the "Telemarketing Agreement") entered into in
connection with the Settlement Agreement and the
transactions related thereto has been obtained or
(ii) the date the Telemarketing Agreement becomes
effective. The Telemarketing Agreement is attached
hereto as Exhibit 10.2. In the event the Settlement
Agreement is not effective by August 31, 1995, the
Settlement Agreement shall become null and void in
its entirety.
Pursuant to the Telemarketing Agreement, ValueVision
is obligated to provide to the Company telephone
call-taking services ("Telemarketing Services") for
inbound telephone calls generated by the Company.
Such services are to be provided at such times as may
be mutually agreed upon by ValueVision and the
Company based upon ValueVision's capacity as it may
exist from time to time, provided, however, that
ValueVision is obligated to make available to the
Company sufficient capacity to provide to the Company
telephone call-taking services for a minimum of
1,000,000 telephone calls (at a rate not to exceed
100,000 telephone calls in any month) during the
first thirteen months of the Term (as defined in the
Telemarketing Agreement) and during each twelve month
period thereafter during the Term. The rates payable
to ValueVision by the Company for the Telemarketing
Services are significantly below the rates currently
being paid by the Company for similar services.
ValueVision is also obligated to provide to the
Company certain Production and PostProduction
Services (as defined in the Telemarketing Agreement)
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in exchange for consideration at a rate equal to
fifty percent of the Gross Market Rate (as defined in
the Telemarketing Agreement).
As additional consideration for the services to be
provided by ValueVision under the Telemarketing
Agreement, the Company is obligated to grant to
ValueVision, on the Effective Date, warrants (the
"Warrants") to purchase up to 500,000 shares of the
Company's Common Stock at a price of $8.865 per share
(subject to adjustment pursuant to the antidilution
provisions of the Warrants). The form of Warrant is
attached as Exhibit B to the Telemarketing Agreement.
The Warrants will vest with respect to an equal
number of shares on each of the thirteen month, 2
year and 3 year anniversaries of the Effective Date
provided that ValueVision satisfies certain
performance conditions as more fully set forth in the
Warrants. The Warrants will expire on the tenth
anniversary of the Effective Date. The Company also
will grant ValueVision certain registration rights
with respect to the shares of Common Stock issuable
upon exercise of the Warrants, as more fully set
forth in the Warrants.
The Telemarketing Agreement shall become effective
upon the later to occur of the Stockholder Approval
Date and the Certification Date (as defined in the
Telemarketing Agreement). In the event the
Stockholder Approval Date does not occur on or prior
to August 31, 1995, either the Company or ValueVision
may terminate the Telemarketing Agreement. Upon such
a termination, the Settlement Agreement shall become
null and void. In the event the Certification Date
has not occurred by the sixtieth day following the
Stockholder Approval Date, the Company may terminate
the Telemarketing Agreement. Upon such a termination,
the Company will be entitled to receive liquidated
damages in the amount of $3,000,000. The Company will
also be entitled to liquidated damages at a lesser
amount for certain other material breaches under the
Telemarketing Agreement.
As part of the settlement, the Company and
ValueVision also entered into a Joint Venture
Agreement, a copy of which is attached hereto as
Exhibit 10.3 (the "Joint Venture Agreement").
Pursuant to the Joint Venture Agreement, the Company
is required, subject to certain exceptions, to
negotiate in good faith with ValueVision to form a
joint venture to pursue home shopping opportunities
outside of the United States and Canada before
pursuing such opportunities by itself or with certain
third parties. ValueVision granted the Company
similar rights with respect to infomercial
opportunities ValueVision may have outside the United
States and Canada.
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In connection with the matters discussed above, the
Company also entered into a letter agreement with
Turchi, a significant stockholder of the Company and
the Company's former Chairman and Chief Executive
Officer, and Mergren Associates, an affiliate of
Turchi ("Mergren"). A copy of the letter agreement is
attached hereto as Exhibit 10.4. Pursuant to the
letter agreement, the Company agreed to reimburse
Turchi $50,000 for certain legal fees and associated
costs he incurred in connection with the litigation
with ValueVision and certain other legal matters to
which the Company is a party and to accelerate a
substantial portion of the payments payable to Turchi
under that certain Consulting Agreement dated
December 21, 1994 by and between Turchi and the
Company. In addition, the Company exercised its
option to terminate, effective October 31, 1997, that
certain Lease dated February 25, 1992 by and between
the Company and Mergren. The Lease covers the current
site of the Company's principal executive offices in
Philadelphia, Pennsylvania. Pursuant to the Lease,
the Company was required to pay Mergren the sum of
$219,738.12 in connection with the exercise of its
right of early termination.
The issuance of the Warrants to ValueVision required
the prior consent of the holders of the promissory
notes issued pursuant to that certain Note and
Warrant Purchase Agreement dated as of October 19,
1994 by and among the Company and the purchaser named
therein (the "Purchase Agreement"). As an inducement
to the current holders (the Noteholders") of the
Notes (as defined in the Purchase Agreement) to
permit the issuance of the Warrants, the Company has
agreed to issue the Noteholders warrants (the "Waiver
Warrants") to purchase 500,000 shares of the
Company's Common Stock at a price of $10.00 per
share. The issuance of the Waiver Warrants is subject
to the approval of the Company's stockholders.
A copy of the press release announcing the execution
of the Settlement Agreement, the Telemarketing
Agreement and the Joint Venture Agreement is attached
hereto as Exhibit 99.1.
On April 17, 1995, the Company also announced that it
had entered into agreements in principle to settle
all the consolidated shareholder class actions (i.e.,
In re National Media Corporation Shareholders
Litigation and Lachance v. Harrington, et al.)
pending against the Company and its directors in the
Delaware Chancery Court and in the United States
District Court for the Eastern District of
Pennsylvania arising out of the termination of the
Agreement and Plan of Merger to which the Company
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and ValueVision were parties and the termination of
ValueVision's amended tender offer for the Company's
outstanding shares of Common Stock associated
therewith. Pursuant to the agreements in principle,
the plaintiff classes and their attorneys will
receive an aggregate of up to $1,500,000 in cash,
approximately $1,125,000 of which will be paid by the
Company's insurer. The Company will take a charge in
the fourth quarter of its fiscal year ended March 31,
1995 for its portion of the settlements. Both
settlements are subject to court approval. A copy of
the press release announcing these settlements is
attached hereto as Exhibit 99.2.
Item 7. Financial Statements and Exhibits.
(c) Exhibits:
10.1 Settlement Agreement among National
Media Corporation, ValueVision
International, Inc., John J. Turchi,
Jr., Robert J. Johander and Mark A.
Payne, dated April 13, 1995
10.2 Telemarketing, Production and
Post-Production Agreement between
National Media Corporation and
ValueVision International, Inc., dated
April 13, 1995
10.3 Joint Venture Agreement between National
Media Corporation and ValueVision
International, Inc., dated April 13,
1995
10.4 Letter agreement among National Media
Corporation, John J. Turchi, Jr. and
Mergren Associates dated April 13, 1995
99.1 Press Release dated April 17, 1995
99.2 Press Release dated April 17, 1995
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL MEDIA CORPORATION
(Registrant)
/s/ John J. Sullivan
--------------------------
John J. Sullivan
Chief Financial Officer
Date: April 19, 1995
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EXHIBIT INDEX
(c) Exhibits:
10.1 Settlement Agreement among National
Media Corporation, ValueVision
International, Inc., John J. Turchi,
Jr., Robert J. Johander and Mark A.
Payne, dated April 13, 1995
10.2 Telemarketing, Production and
Post-Production Agreement between
National Media Corporation and
ValueVision International, Inc., dated
April 13, 1995
10.3 Joint Venture Agreement between National
Media Corporation and ValueVision
International, Inc., dated April 13,
1995
10.4 Letter agreement among National Media
Corporation, John J. Turchi, Jr. and
Mergren Associates dated April 13, 1995
99.1 Press Release dated April 17, 1995
99.2 Press Release dated April 17, 1995
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SETTLEMENT AGREEMENT
WHEREAS, on February 7, 1994, ValueVision International Inc.
("ValueVision") commenced a tender offer (the "Offer") for a majority of the
shares of common stock of National Media Corporation ("National Media"); and
WHEREAS, on March 6, 1994, ValueVision and National Media entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
ValueVision amended the terms of its tender offer for shares of common stock of
National Media (the "Amended Offer");
WHEREAS, on April 21, 1994, ValueVision announced that it was terminating
the Merger Agreement and the Amended Offer; and
WHEREAS, on April 22, 1994, National Media and John J. Turchi, Jr.
("Turchi") commenced a civil action in the United States District Court for the
Eastern District of Pennsylvania entitled National Media Corporation, et al. v.
ValueVision International Inc., Civil Action No. CA-2500 (the "Action"); and
WHEREAS, on May 17, 1994, National Media and Turchi filed an Amended
Complaint in the Action naming Robert L. Johander ("Johander") and Mark A. Payne
("Payne") as additional defendants; and
WHEREAS, on May 26, 1994, ValueVision, Johander, and Payne answered the
Amended Complaint in the Action, denying its material allegations and asserting
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affirmative defenses, and ValueVision asserted counterclaims against National
Media and Turchi; and
WHEREAS, on July 1, 1994, National Media responded to the counterclaims
asserted by ValueVision, denying their material allegations and asserting
affirmative defenses; and
WHEREAS, both ValueVision and National Media, together with certain of
their present and former officers and directors, including Turchi, Johander, and
Payne, are defendants in civil actions commenced by present or former
shareholders of National Media arising out of or relating to the existence or
termination of the Offer, the Amended Offer, or the Merger Agreement (the
"Related Litigation"); and
WHEREAS, National Media and ValueVision have entered into a Telemarketing,
Production and Post-Production Agreement dated as of April , 1995 (as executed
and as may hereafter be amended, the "Telemarketing Agreement"), the
effectiveness of which is subject, in certain respects, to approval by National
Media's shareholders; and
WHEREAS, the parties to this Settlement Agreement wish to settle and
resolve the matters in dispute between them without any party admitting any
legal liability for its conduct;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and promises contained herein, and for good and adequate consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:
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(i) This Settlement Agreement is entered into between ValueVision,
Johander, Payne, National Media, and Turchi.
(ii) Except as provided in paragraph 3 below, this Settlement
Agreement shall become effective upon (1) signature by all parties and (2)
the earlier of (a) the approval by National Media's shareholders of the
Telemarketing Agreement and the warrants to purchase up to 500,000 shares
of National Media common stock issuable to ValueVision thereunder or (b)
the occurrence of the Effective Date of the Telemarketing Agreement, as
defined in the Telemarketing Agreement. In the event that this Settlement
Agreement does not become effective on or before August 31, 1995, this
Settlement Agreement shall be null and void in its entirety,
notwithstanding signature by any or all parties.
(iii) Upon signature of this Settlement Agreement by all parties, all
proceedings in the Action, including discovery proceedings, shall be
stayed, and the parties shall take all steps necessary to effectuate such
stay of proceedings.
(iv) Promptly following the effective date of this Settlement
Agreement, the parties shall execute and file with the United States
District Court for the Eastern District of Pennsylvania a Stipulation and
Order of Dismissal in the form annexed hereto as Exhibit 1.
(v) ValueVision, for itself and for its present and former directors,
officers, employees, agents, successors, subsidiaries, affiliates, and
assigns, hereby releases and discharges Turchi, and his executors, heirs,
and assigns, and National Media, and its present and former directors,
officers, employees, agents, successors, subsidiaries, affiliates, and
assigns, from any and all claims whatsoever, known or unknown, including,
without limitation, claims for contribution or indemnity, claims that
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have been or could be asserted in the Related Litigation, claims alleged in
the Action, or claims arising out of or relating to the existence or
termination of the Offer, the Amended Offer, or the Merger Agreement, from
the beginning of the world to the day of the effective date of this
Settlement Agreement.
(vi) Johander and Payne, for themselves and for their executors,
heirs, and assigns, hereby release and discharge Turchi, and his executors,
heirs and assigns, and National Media, and its present and former
directors, officers, employees, agents, successors, subsidiaries,
affiliates, and assigns, from any and all claims whatsoever, known or
unknown, including, without limitation, claims for contribution or
indemnity, claims that have been or could be asserted in the Related
Litigation, claims alleged in the Action, or claims arising out of or
relating to the existence or termination of the Offer, the Amended Offer,
or the Merger Agreement, from the beginning of the world to the day of the
effective date of this Settlement Agreement.
(vii) National Media, for itself and for its present and former
directors, officers, employees, agents, successors, subsidiaries,
affiliates, and assigns, hereby releases and discharges Johander and Payne,
and their executors, heirs, and assigns, and ValueVision, and its present
and former directors, officers, employees, agents, successors,
subsidiaries, affiliates, and assigns, from any and all claims whatsoever,
known or unknown, including, without limitation, claims for contribution or
indemnity, claims that have been or could be asserted in the Related
Litigation, claims alleged in the Action, or claims arising out of or
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relating to the existence or termination of the Offer, the Amended Offer,
or the Merger Agreement, from the beginning of the world to the day of the
effective date of this Settlement Agreement.
(viii) Turchi, for himself and for his executors, heirs, and assigns,
hereby releases and discharges Johander and Payne, and their executors,
heirs, and assigns, and ValueVision, and its present and former directors,
officers, employees, agents, successors, subsidiaries, affiliates, and
assigns, from any and all claims whatsoever, known or unknown, including,
without limitation, claims for contribution or indemnity, claims that have
been or could be asserted in the Related Litigation, claims alleged in the
Action, or claims arising out of or relating to the existence or
termination of the Offer, the Amended Offer, or the Merger Agreement, from
the beginning of the world to the day of the effective date of this
Settlement Agreement.
(ix) Each party to this Settlement Agreement hereby represents and
warrants that it has not assigned or transferred, or purported to assign or
transfer, to any third party any claim, demand, or cause of action released
herein, and each party hereby agrees to indemnify and hold harmless each
other party from and against any and all claims arising out of any such
assignment or transfer or purported assignment or transfer.
(x) The parties acknowledge and agree that the Merger Agreement has
been terminated and is of no further force or effect, including, without
limitation, provisions therein that were to have survived the termination
of the Merger Agreement.
(xi) This Settlement Agreement is not intended as, and shall not be
construed as, an admission by any party that any other party has valid
claims or defenses.
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(xii) This Settlement Agreement shall be governed by, and interpreted
in accordance with, the laws of the Commonwealth of Pennsylvania.
(xiii) This Settlement Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, understandings, expectations, and
discussions, whether oral or written, of the parties. There are no
representations or other agreements between the parties in connection with
the subject matter hereof except as specifically set forth herein. No
amendment, modification, waiver, or termination of this Settlement
Agreement shall be binding unless executed in writing and signed by the
party to be bound.
(xiv) ValueVision and National Media each represents, by executing
this Settlement Agreement, that it is duly authorized to do so.
(xv) This Settlement Agreement may be executed in counterparts, each
of which shall be deemed an original.
VALUEVISION INTERNATIONAL INC.
By: /s/ Nicholas M. Jaksich Dated: 4/13/95
-------------------------
/s/ Robert L. Johander Dated: 4/13/95
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ROBERT L. JOHANDER
/s/ Mark A. Payne Dated: 4/13/95
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MARK A. PAYNE
NATIONAL MEDIA CORPORATION
By: /s/ Brian McAdams Dated: 4/13/95
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/s/ John J. Turchi, Jr. Dated: 4/13/95
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JOHN J. TURCHI, JR.
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TELEMARKETING, PRODUCTION AND POST-PRODUCTION AGREEMENT
THIS TELEMARKETING, PRODUCTION AND POST-PRODUCTION AGREEMENT ("Agreement")
is made this 13th day of April, 1995 between NATIONAL MEDIA CORPORATION, a
Delaware corporation ("NMC"), and VALUEVISION INTERNATIONAL, INC., a Minnesota
corporation ("VVI").
BACKGROUND
(a) NMC is in the business of, among other things, product
advertising, marketing and promotions in various media, including cable and
broadcast television and airing program length video commercials known as
"infomercials".
(b) VVI is in the business of television home shopping retailing,
which includes producing programming, sourcing and fulfillment,
telemarketing, merchandising, and programming distribution via cable
systems and owned and affiliate broadcast television stations.
(c) This Agreement is being entered into concurrently with the
Settlement Agreement of even date herewith (the "Settlement Agreement")
with respect to certain litigation to which NMC and VVI are parties and a
Joint Venture Agreement of even date herewith (the "Joint Venture
Agreement") by and between NMC and VVI.
(d) The parties wish to enter into this Agreement whereby VVI will
provide NMC access to VVI's production studios and render certain services
to NMC in connection with the production and post-production aspects of
infomercials and inbound telephone call-taking and NMC will provide VVI
with Warrants to purchase up to an aggregate of Five Hundred Thousand
(500,000) shares of NMC common stock, $.01 par value ("Common Stock"), all
subject to the terms and conditions hereof.
NOW THEREFORE, in consideration of the mutual premises and undertakings set
forth herein, and for good and valuable consideration, the adequacy of which is
hereby acknowledged and intending to be legally bound hereby, the parties agree
as follows:
1. Telemarketing Services.
(a) During the thirty-seven (37) month period commencing on the
Effective Date (as defined in Section 8), subject to earlier termination
pursuant to Section 8 (the "Term"), VVI, subject to the conditions hereof,
shall provide to NMC inbound telephone call-taking services ("Telemarketing
Services") for inbound telephone calls generated by NMC at such times as
may be mutually agreed upon by VVI and NMC based on VVI's capacity as
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it may exist from time to time; provided, however, that VVI agrees during
the term of this Agreement to make available to NMC sufficient capacity to
provide to NMC inbound telephone call-taking services for a minimum of one
million (1,000,000) inbound telephone calls (at a rate not to exceed
100,000 inbound telephone calls in any month) during the first thirteen
(13) months of the Term and for each twelve (12) month period thereafter
during the Term. The Telemarketing Services will consist of taking the
name, address, payment information (including, without limitation, credit
card information), and item number, quantity and such other information
that may be agreed upon by VVI and NMC (collectively, the "Telemarketing
Information"), from callers on toll free, long distance telephone number(s)
with an "800" prefix assigned by VVI to NMC, entering this information into
VVI's computer, and sending all such Telemarketing Information to NMC on a
regular basis (which in no event shall be greater than three (3) business
days following the date VVI receives such Telemarketing Information);
provided that VVI shall use commercially reasonable efforts to provide such
Telemarketing Information to NMC on a daily basis. The Telemarketing
Services do not include, and VVI shall have no responsibility for, credit
checks, verifying calls, order fulfillment, processing payment, credit or
chargebacks, product warranties, collections, accepting returns, customer
service, warranty service, or any other responsibilities including, without
limitation, the obligations of NMC pursuant to Section 2(g)(i) hereof,
except to the extent explicitly set forth herein.
(b) In connection with the Telemarketing Services, NMC shall direct
the public to call telephone numbers assigned to NMC by VVI. Such telephone
numbers may only be used by NMC during the Term. NMC shall provide VVI with
a schedule of Program (as hereinafter defined) broadcasts, not less than
ten (10) business days in advance of each such broadcast, including hours
to be aired, the estimated number of homes that will receive each such
broadcast, and NMC's best estimate of the number of telephone calls per
hour that will be generated by each such broadcast. VVI shall assign such
number of telephone lines for the receipt of telephone calls from each such
broadcast as it reasonably determines will be sufficient to handle the
estimated number of calls to be generated by such broadcast. VVI shall
periodically adjust the number of telephone lines assigned to a Program
broadcast based upon the actual number of calls received for prior
broadcasts of such Program.
(c) NMC shall provide VVI with the opportunity to preview each Program
and with a description of each Product (as hereinafter defined) before VVI
provides Telemarketing Services relating to each such Program or Product.
VVI may refuse to provide Telemarketing Services for any Program or Product
if such Program or Product contains any profanity, obscene, sexually
explicit or otherwise reasonably objectionable material, or if VVI
reasonably determines that the Program or Product may not comply with
Applicable Law (hereinafter defined).
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(d) Upon notice to NMC, VVI may cancel, disconnect or reassign any
telephone number assigned to NMC in the event that VVI receives no calls on
such number during any 30 day period, and in the event that VVI cancels,
disconnects or reassigns any telephone number, NMC shall no longer be
authorized to use and shall no longer direct any person or entity to call
that telephone number without VVI's prior written approval; and VVI may
direct its operators to inform any callers on that telephone number that
VVI is no longer taking calls for such Program or Product. Notwithstanding
the foregoing sentence,during the term of this Agreement, at the request of
NMC, VVI will not cancel, disconnect or reassign any such number for a one
year period regardless of the number of calls received on such number;
provided that NMC shall reimburse VVI for any costs associated with the
maintenance of such number which may be charged to VVI.
(e) NMC and VVI acknowledge that the successful provision of
Telemarketing Services by VVI hereunder is dependent upon an effective
transition by NMC from its existing providers of telemarketing services to
VVI, including the provision of Telemarketing Services to NMC on a trial
basis. During the period commencing thirty (30) days prior to NMC's
scheduled shareholder meeting for the Stockholder Vote (as defined in
Section 5(a)(iv) hereof) and ending on the earlier of the Effective Date
and the termination of this Agreement (the "Pre-effective Period"), VVI
agrees to provide Telemarketing Services to NMC, in accordance with the
terms hereof, for such Program broadcasts and for such number of in bound
telephone calls (not to exceed Three Thousand (3,000) in bound telephone
calls in any thirty (30) day period) as NMC may direct to VVI for service
hereunder. NMC and VVI further agree to assist and cooperate with each
other during the Pre-effective Period to enable VVI to provide, and NMC to
evaluate VVI's capabilities to provide, the Telemarketing Services in
accordance with the terms of this Agreement commencing on the Effective
Date; provided, however, that neither VVI nor NMC shall be required to
incur any cost or expense in connection therewith. During the Pre-effective
Period, NMC shall use its best efforts to direct such number of telephone
calls to VVI at such times as VVI may reasonably direct to facilitate VVI's
ability to service a minimum of Three Thousand (3,000) in bound telephone
calls in any thirty (30) day period of the Preeffective Period.
2. Production and Post-Production Services.
(a) General. During the Term, and subject to the terms and conditions
hereof, and to available capacity and the scheduling needs of VVI, VVI
agrees to make available VVI's production studios, equipment and employees
to NMC on an hourly basis as agreed to in a Production and Post-Production
Schedule and Budget (as hereinafter defined) for taping, editing, sound
recording, and graphic design and other related production work
("Production Services") in connection with the creation of program-length
video commercials ("Infomercials") and shorter spot video advertisements of
various lengths ("Spots") for the purpose of advertising and marketing
various consumer products which NMC may, from time to time, request of VVI.
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All such Infomercials and Spots are hereinafter collectively referred to as
"Programs" and all products advertised in and marketed via Programs are
hereinafter referred to as "Products". Subject to the availability of
space, VVI shall allow NMC to warehouse materials and equipment used by NMC
in the Production of Programs at VVI's facility. NMC shall reimburse VVI
for all out-of-pocket expenses reasonably incurred by VVI in connection
with the warehousing of any such materials and equipment; provided,
however, that NMC shall not be required to reimburse VVI for any such
expense which exceeds Five Hundred ($500.00) Dollars unless such expense
was approved in advance in writing by NMC. VVI will perform certain
post-production editing of Programs, to be agreed upon by VVI and NMC, and
will provide NMC with a master videotape of such Programs in a format
capable of being broadcast ("Post-Production Services"). NMC shall have no
obligation to utilize VVI for the provision of any Production and
Post-Production Services and VVI will have no obligation to provide any
Production or Post-Production Services, except as agreed in a Production
and PostProduction Schedule and Budget.
(b) In the event that NMC wishes to engage VVI for any Program, NMC
shall provide VVI a preproduction outline with a summary of storyline and
all Product demonstrations and Video Product Enhancements (as hereinafter
defined) that NMC proposes to include in the Program, including Production
and Post-Production Services that NMC wishes VVI to perform, the amount of
production and post-production studio time NMC wishes to reserve, and
projected equipment and crew needs. For purposes of this Agreement, "Video
Production Enhancements" shall mean video production techniques which are
used to amplify, emphasize, accelerate, clarify or otherwise portray (i) an
actual event in a fashion other than as occurs in nature, or (ii) a Product
or its properties, attributes or capabilities. Examples of Video Production
Enhancements include filming in controlled lighting conditions or
accelerating the speed of an event, amplifying the sound of an event, using
an artificial aid to reproduce an event which occurs in nature but is not
susceptible of depiction in a studio environment, and altering in any way
the natural or customary state or properties of any object used to
demonstrate a Product.
(c) Production and Post-Production Schedule and Budget. Based upon
such preproduction outline, VVI shall prepare and submit to NMC a
production and post-production schedule and an estimate of expected costs
and expenses with respect to each Program ("Production and Post-Production
Schedule and Budget") for which NMC proposes to utilize VVI's services
hereunder. Each such Production and Post-Production Schedule and Budget
shall include, without limitation, the following information:
(i) Timetable. The projected timetable for Production and
Post-Production Services in connection with such Program;
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(ii) Expenses. The projected expenses to be incurred in
connection with such Production and Post-Production Services, itemized
by category, including, without limitation, Wages and Equipment
Depreciation (each as hereinafter defined) for the estimated number of
hours of Production and Post-Production Studio Time, and VVI's
projected out-of-pocket expenses to be payable by NMC in addition to
the Gross Market Rate (the "Out-of-Pocket Expenses"), including, but
not limited to, costs for filmstock and other materials, props,
additional crew or technicians not regularly employed or engaged by
VVI, special equipment rental, location fees, travel expenses, meals,
phone, fax and courier services, as may be applicable, but excluding
normal operating expenses such as electricity and other utilities. VVI
shall direct that all Out-of-Pocket Expenses be billed to NMC to the
extent practicable. For purposes of this Agreement, the following
shall be applicable: (A) Equipment Depreciation shall be calculated
(on an hourly basis) based upon a useful life equal to the greater of
the useful life actually applied by VVI in accordance with generally
accepted accounting principles consistently applied or five (5) years;
and (B) Wages shall be calculated on an hourly basis and shall include
salary costs or hourly wages and benefits (calculated at regular
hourly rates, including overtime rates if applicable, and excluding
bonuses, stock options or other forms of compensation); and
(iii) Other Information. Such other information as NMC may
reasonably request with respect to the Production and Post-Production
Services for such Program. Each Production and Post-Production
Schedule and Budget shall be subject to written approval by NMC and
VVI. Neither VVI nor NMC shall have any obligation whatsoever to the
other with respect to any Program or any work undertaken or expenses
incurred hereunder or otherwise unless the parties shall have approved
in writing a Production and Post-Production Schedule and Budget with
respect thereto. The Production and Post-Production Schedule and
Budget for any Program may be revised from time to time, subject to
written approval of each such revision by NMC and VVI.
(d) Conduct of Production and Post-Production Services. Subject to
Section 2(e) and 2(g), VVI shall perform the Production and Post-Production
Services specifically provided for in each approved Production and
Post-Production Schedule and Budget for each Program. VVI may engage the
services of all necessary creative and technical personnel so long as each
such engagement and the expenses thereof have been included in the
Production and Post-Production Schedule and Budget for such Program and
approved by NMC.
(e) Editing; Completion. VVI shall complete all Production and
Post-Production Services in accordance with the approved Production and
Post Production Schedule and Budget and in a workmanlike manner. NMC shall
control and direct all editing, production, and post-production decisions
for each Program, including all Video Product Enhancements, in accordance
with the Production and Post Production Schedule and Budget. NMC shall have
the right to disapprove any Program, if, in NMC's reasonable judgment,
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<PAGE> 20
the Program has a technical deficiency or technical deficiencies resulting
from poor workmanship on the part of VVI, and not resulting from the
direction or editing, production, and post-production decisions of NMC,
that cause the technical quality of the Program to be unacceptable for
television broadcasting (a "Technical Deficiency"), and further provided
that NMC delivers written notice of any such disapproval, specifying the
Technical Deficiency or Technical Deficiencies, to VVI within one week
after VVI has delivered the Program to NMC. All Programs shall be deemed to
be accepted by NMC unless VVI shall have received such a written notice of
disapproval within one week after delivery of the Program to NMC. VVI shall
have one week after receipt of a written notice of disapproval to cure in
all material respects all such Technical Deficiencies to the reasonable
satisfaction of NMC. At any time during the creation of a Program, VVI may
submit any work product to NMC for approval, and, notwithstanding anything
herein to the contrary, NMC shall not have any right to disapprove a
Program based upon any Technical Deficiency in such work product except to
the extent that NMC delivered written notice of disapproval specifying such
Technical Deficiency to VVI within one week (or such other period that may
be agreed upon by the parties) after VVI delivered such work product to
NMC, and VVI did not cure in all material respects such Technical
Deficiency to the reasonable satisfaction of NMC within one week (or such
other period that may be agreed upon by the parties) thereafter. Any such
disapproval of a Program or work product pursuant to this Section 2(e)
which is not cured in all material respects within the applicable period is
referred to as a "Technical Rejection."
(f) Schedule Defaults.
(i) Generally. Subject to Section 2(f)(iii) hereof, any failure
by VVI to provide the Production and Post-Production Services for a
Program as set forth in the Production and Post-Production Schedule
and Budget for such Program shall constitute a "Schedule Default" on
the fifteenth (15th) day after NMC shall have given written notice of
such failure to VVI, unless VVI shall have remedied such failure by
such day; provided, however that NMC shall be deemed to have waived
any such failure by VVI to which NMC shall not have objected within
fifteen (15) days after the occurrence thereof.
(ii) Rights of NMC Upon a Schedule Default. Upon and following
the occurrence of a Schedule Default with respect to a Program (unless
NMC shall have waived such Schedule Default), NMC may cancel such
Program by written notice to VVI, given within fifteen (15) days after
such Schedule Default ("Cancellation Notice"). Upon receipt by VVI of
a Cancellation Notice or upon the occurrence of a Technical Rejection,
NMC shall have no obligation to accept from VVI such Program or any
work product relating thereto, or to pay any expenses incurred
thereafter with respect to such Program, except such expenses approved
by NMC prior to such date that are nonrefundable, noncancellable, or
otherwise unavoidable, and such other expenses that NMC has otherwise
6
<PAGE> 21
agreed to pay, and VVI shall have no further obligation to render any
Production or PostProduction Services with respect to any such
Program. NMC shall have no right to recover from VVI damages of any
kind or nature based solely upon the occurrence of a Schedule Default
or a Technical Rejection except for such actual damages (if any) for
which NMC is liable to third parties resulting from such Schedule
Default.
(iii) Excusable Delays. Any failure by VVI to meet the Production
and Post-Production Schedule and Budget which is occasioned by (i)
NMC's failure to timely approve or proceed with any work product or
any phase of production, editing or post-production; (ii) any editing,
production, and post-production decisions of NMC; or (iii) otherwise
beyond the reasonable control of VVI (including any failure resulting
from a Force Majeure (as defined below)) shall not constitute a
Schedule Default. For purposes of this Agreement, a "Force Majeure"
shall be deemed to occur if, during the time when VVI is rendering or
is obligated to render services pursuant to an approved Production or
Post-Production Schedule and Budget by reason of any present or future
law, order, judgement or decree (whether legislative, executive or
judicial, and whether or not valid), act of God, earthquake, flood,
fire, tornado, epidemic, accident, explosion, casualty, lock-out,
boycott, strike, labor controversy (including without limitation,
threat of walkout, boycott or strike), riot, civil disturbance, war or
armed conflict (whether or not there has been official declaration of
war or official statement as to the existence of a state of war),
invasion, occupation, intervention of military forces, act of a public
enemy, embargo, delay of a common carrier, inability without fault on
VVI's part to obtain sufficient material, labor, transportation,
power, production studio, talent or other essential items required or
by reason of any cause or causes of any similar nature beyond VVI's
control.
(g) Legal Compliance.
(i) Generally. NMC shall ensure that (A) all Product information
contained in the Programs is accurate in all material respects and
complies in all material respects, and (B) the Programs (including any
Video Product Enhancements) and the Products comply in all material
respects, with all applicable laws and regulations relating to the
advertisement, sale, use and effects of Products ("Applicable Law").
NMC shall have the sole obligation and duty (and VVI shall have no
liability, obligation or duty) to determine the following matters in
connection with each Program, Video Product Enhancement, and Product:
(a) Proof of Product Claims. Substantiation by adequate
proof of each and every claim (whether express or implied)
regarding all Products and their respective attributes;
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<PAGE> 22
(b) Verification of Testimonials. Verification of the
truthfulness and reliability of all testimonials and
endorsements, whether by consumers or experts;
(c) Product Demonstration and Video Product Enhancement
Disclosure. Determination of whether Product demonstrations and
Video Product Enhancements must be accompanied by a visual
display of words such as "dramatization," "simulation" or the
like;
(d) Terms of Sale. Truthfulness, accuracy and content of all
statements regarding pricing of Products and additional costs,
terms of sale, adequacy of inventory to fulfill orders, identity
and combinations of Products offered for sale, and method and
timing of shipment of Products;
(e) Warranties. The nature, manner of performance,
conditions, limitations, charges imposed, and terms of disclosure
of any warranty or guaranty of Products, whether express or
implied; and
(f) Credits; Returns. The correctness, timeliness and
adequacy of any credit, chargeback, return or the like arising
with respect to the sale of Products.
(ii) Oversight. In order to fulfill its responsibilities as set
forth in Section 2(g) hereof, NMC shall have the right to preapprove
every aspect of the Production and Post-Production Services being
provided by VVI hereunder, provided that NMC shall be deemed to have
determined that the Production and Post-Production services being
provided by VVI in accordance with any Production and Post-Production
Schedule and Budget comply with Applicable Law unless NMC provides
prior written notice of any non-compliance prior to the performance of
such services.
(iii) NMC shall secure all hosts, product demonstrators and all
other talent, and all necessary rights and licenses for each Program,
and pay all fees associated therewith, including, without limitation,
for the use of musical compositions and performances and all other
intellectual property which are incorporated into any Program.
3. Compensation.
(a) Telemarketing Services. VVI shall provide Telemarketing Services
to NMC at the following rates (the "Base Cost"):
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<PAGE> 23
For each inbound telephone
call not to exceed one minute
in length: Information Omitted and filed
separately with the Securities and
Exchange Commission in
connection with an application for
confidential treatment.
For each inbound telephone
call greater than one minute
in length: Information Omitted and filed
separately with the Securities and
Exchange Commission in
connection with an application for
confidential treatment.
VVI currently is not charged set-up costs or line maintenance fees for (800)
telephone numbers. In the event that VVI is charged for such costs or fees
during the term of this Agreement, NMC shall pay or reimburse VVI for the
associated set-up costs and line maintenance fees for each (800) telephone
number assigned by VVI to an NMC Program.
(b) Production and Post-Production Services.
(i) VVI and NMC shall select a mutually satisfactory appraisal
consultant of national reputation with experience in the national
infomercial industry (the "Consultant"). The Consultant shall
estimate, as a percentage, the portion of a typical fair market value
charge for studio rental, production and post-production services of
the type being provided by VVI to NMC pursuant to this Agreement that
is comprised of equipment depreciation and employee wages and salaries
(the "Percentage"). Such estimate shall be based on a national average
of such percentage in the United States. The determination of the
Percentage shall be binding on both NMC and VVI. The Consultant's fee
will be shared equally by VVI and NMC.
(ii) VVI's Equipment Depreciation and Wages for any Program
divided by the Percentage is hereinafter referred to as the "Gross
Market Rate".
(iii) VVI shall provide Production and Post-Production Services
to NMC at an hourly rate equal to fifty percent (50%) of the Gross
Market Rate for such Program (the "Rate"). An example of a Rate
calculation is set forth on Exhibit A attached hereto.
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<PAGE> 24
(iv) NMC shall be responsible for the prompt payment or
reimbursement of all Out-of-Pocket Expenses specifically set forth in
an approved Production and Post-Production Schedule and Budget (as the
same may be amended from time-to-time) or of any expenses that were
subsequently incurred with the prior written approval of NMC, which
VVI shall have substantiated to NMC's reasonable satisfaction through
submission of invoices, receipts, or other documentary evidence
thereof. NMC acknowledges that it is difficult to estimate with
certainty the expenses associated with a Program. Accordingly,
notwithstanding anything herein to the contrary, NMC shall be
responsible for the payment or reimbursement, as the case may be, of
expenses beyond those set forth in an approved Production and
Post-Production Schedule and Budget, but only to the extent that such
additional expenses for any program, in the aggregate, do not exceed
10% of the approved Production and Post-Production Schedule and
Budget, as amended from time-to-time.
(c) Issuance of Warrants; Cost Differential.
(i) On the Effective Date, NMC shall issue to VVI Warrants in the
form of Exhibit B attached hereto (the "Warrants") to purchase up to
five hundred thousand (500,000) shares (the "Warrant Shares") of NMC
Common Stock at an exercise price of Eight Dollars and Eighty-six and
one-half cents ($8.865) per share. Subject to Section 8(b) and (c)
hereof and the terms and conditions set forth in the Warrants, the
Warrants shall vest and become exercisable with respect to one hundred
sixty-six thousand six hundred sixty-seven (166,667) Warrant Shares on
each Vesting Date (as defined in the Warrants).
(ii) In the event that VVI's actual charges to NMC for
Telemarketing Services are less than the Base Cost (the difference
between the Base Cost and such actual charges is referred to herein as
the "Telemarketing Differential"), VVI and permitted assigns shall
have the right to apply the aggregate Telemarketing Differential as a
dollar-for-dollar credit against the exercise price for all or any
part of the Warrants, but in no event shall the amount of such credit
(together with any credit taken for the Production and Post-Production
Differential (as hereinafter defined)) exceed the exercise price of
the Warrants.
(iii) In the event that VVI's actual charges to NMC for
Production and Post-Production Services attributable to any Program
are less than the Rate for such Program (the difference between the
Rate and such actual charges is referred to herein as the "Production
and Post-Production Differential"), VVI and permitted assigns shall
have the right to apply the aggregate Production and Post-Production
Differential as a dollar-for-dollar credit against the exercise price
for all or any part of the Warrants, but in no event shall the amount
of such credit (together with any credit taken for the Telemarketing
Differential) exceed the exercise price of the Warrants.
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<PAGE> 25
(iv) In lieu of applying the Telemarketing Differential and/or
the Production and Post-Production Differential as a credit to the
exercise price of the Warrants, VVI may present to NMC invoices for
such amounts, which NMC shall pay to VVI in accordance with the
payment provisions hereof; provided, however, NMC shall have no
obligation to reimburse VVI for any Telemarketing Differential and/or
Production and Post-Production Differential for which an invoice is
not presented prior to the expiration of the Warrants.
(v) The Telemarketing Differential and the Production and
Post-Production Differential are not transferable or assignable by
VVI, except to VVI's subsidiaries or affiliates, or successor in
interest to VVI. For purposes of this Agreement, an affiliate is a
person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with a party.
(vi) The provisions of this Section 3(c) shall survive the
termination of this Agreement until the expiration or exercise in full
of the Warrants.
(d) Payment.
(i) VVI shall render monthly or other periodic invoices for the
Telemarketing and Production and Post-Production Services rendered
hereunder and Out-of-Pocket Expenses not billed directly to NMC. NMC
shall pay the entire amount of such invoices within thirty (30) days
from the date of each invoice. In the event NMC fails to pay any
amount payable pursuant to an invoice within such thirty (30) day
period, VVI shall have the right to terminate this Agreement in
accordance with the provisions set forth in Section 8(b) if such
amount remains unpaid for more than thirty (30) days after NMC's
receipt of written notice from VVI specifying such failure. Any
amounts remaining unpaid for more than sixty (60) days after the date
of an invoice shall be subject to interest thereon, both before and
after judgment, equal to the lesser of one percent (1%) per month and
the highest amount permitted under applicable law. Such invoices shall
also specify the amount of Telemarketing and/or Production and
Post-Production Differential, if any.
(ii) All payments shall be made in lawful money of the United
States which at the time of such payment shall be legal tender for the
payment of public and private debts, and shall be paid to VVI via
first class mail postage paid at the address specified herein for
notices to VVI or in such other manner or at such other place as VVI
may from time to time designate by written notice to NMC. Payment
shall be considered credited to the account of NMC when received by
VVI.
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(e) No Right of Offset. NMC may not delay or avoid in any way the
timely payment of any amount when and as due under Section 3 on the basis
of, or under any alleged or actual right to, offset, set-off or take a
deduction from the amount so due.
4. Intellectual Property; Competing Programs and Products.
(a) Generally. VVI acknowledges that all right, title and interest
(including, without limitation, all rights arising under the United States
Copyright Act, 17 U.S.C. Section 101 et seq., the United States Trademark
Act 15 U.S.C. Section 1051 et seq., and all other applicable laws) in and
to the entire editorial, visual, audio, musical and graphic content of all
Programs and ancillary materials developed in connection with the
activities of the parties under this Agreement, including, without
limitation: (i) all Programs; (ii) all scripts, raw video footage and
completed master videotapes created pursuant to this Agreement and the
performances recorded thereon; (iii) all trademarks, trade names and other
identifying designations for Products developed or controlled by NMC
("NMC's Trademarks"); (iv) all musical compositions included in each
Program; and (v) all packaging designs developed by NMC for Products, and
all other proprietary or other intellectual property rights attached to any
of the foregoing (collectively, "NMC's Intellectual Property") shall be and
remain the sole property of NMC, and neither VVI nor any third party shall
acquire any right, title or interest in NMC's Intellectual Property by
virtue of this Agreement or otherwise. Any unauthorized use of any of NMC's
Intellectual Property by VVI or any of its employees or agents who had
access to such Intellectual Property in connection with the provision of
services hereunder shall be deemed an infringement of the rights of NMC
therein. VVI shall not in any way or at any time dispute or attack the
validity or harm or contest the rights of NMC in or to any of NMC's
Intellectual Property.
(b) Duties of VVI. Any and all goodwill arising from the use of NMC's
Trademarks shall inure exclusively to the benefit of NMC, and VVI shall
have no right, title or interest therein. VVI hereby agrees to execute and
deliver or cause to be executed and delivered to NMC all such further and
other documents as may be necessary to evidence or perfect NMC's rights in
the NMC Intellectual Property.
(c) Competing Products and Programs. NMC acknowledges and agrees that
VVI has and shall retain the right to: (i) perform telemarketing services
for third parties who may be in direct competition with NMC; (ii) offer on
its television home shopping programming products that are similar or
identical to, and may compete with, Products; and (iii) produce, cause to
be produced, perform production and post-production services relating to
and/or broadcast or distribute, infomercials, television home shopping, or
other direct response television retailing for itself or for third parties
which may include programs that may be in direct competition with NMC.
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<PAGE> 27
5. Representations, Warranties and Covenants.
(a) Representations, Warranties and Covenants by VVI and NMC. VVI and
NMC each represent and warrant to and covenant and agree with the other as
follows (which representations and warranties shall be true as of the date
hereof and as of the Effective Date):
(i) Corporate Existence. Each of the parties represents and
warrants to the other that it is duly organized and validly existing
under the laws of its respective state of incorporation.
(ii) Power; Enforceability. Each of the parties represents and
warrants to the other that (A) it has the requisite power and
authority (corporate and otherwise) to enter into this Agreement and
has duly authorized by all necessary action the execution and delivery
hereof by the officer or individual whose name is signed on its behalf
below and (B) this Agreement has been duly executed and delivered by
it and constitutes the legal, valid and binding obligation of it
enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement
of creditors' rights generally and by general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iii) No Conflict. Each of the parties represents and warrants to
each other that its execution and delivery of this Agreement and the
performance of its obligations hereunder do not and will not conflict
with or result in a breach of or a default under its respective
organizational instruments or any agreement, instrument, order, law or
regulation applicable to it or by which it may be bound.
(iv) Stockholder Approval. NMC covenants and agrees to use its
best efforts to present this Agreement and the issuance of the
Warrants contemplated hereby to a vote of its stockholders as may be
required under applicable rules of the New York Stock Exchange (a
"Stockholder Vote") in no event later than August 31, 1995, VVI agrees
to vote all of its shares of NMC Common Stock in any Stockholder Vote
in favor of any proposal to approve this Agreement and the
transactions contemplated hereby. VVI acknowledges that NMC shall have
the right to include all such information in the Stockholder Vote
soliciting materials as NMC shall deem advisable, in its sole and
absolute discretion, to comply with all applicable legal and
regulatory requirements.
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<PAGE> 28
(b) Additional Representations and Covenants of VVI. VVI represents
and warrants to and covenants and agrees with NMC as follows (which
representations and warranties shall be true as of the date hereof and as
of the Effective Date):
(i) Purchase Entirely for One's Own Account. The Warrants to be
acquired by VVI will be acquired by VVI for investment, for VVI's own
account and not as a nominee or agent of any other person or with a
view to the resale or distribution of any part thereof and VVI has no
present intention of selling, granting any participation in, or
otherwise distributing or disposing of any of such Warrants, subject
always to the limitation that the disposition of VVI's property shall
be within its control. By its execution and delivery of this
Agreement, VVI further represents and warrants that VVI does not have
any contract, undertaking, agreement or arrangement, written or oral,
with any other person to sell, transfer or grant participation in any
Warrants to be acquired by VVI or any Warrant Shares issuable to VVI
upon exercise of the Warrants, to any other person.
(ii) Disclosure of Information. VVI has had the opportunity to
ask questions of and receive answers from NMC regarding NMC, its
operations and activities, and the terms and conditions of the
Warrants.
(iii) Investment Experience. VVI is an experienced investor and
acknowledges that it is able to fend for itself, can bear the economic
risk of its investment and has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of its investment in the Warrants.
(iv) Restricted Securities. VVI understands that the Warrants and
Warrant Shares are "restricted securities" under the federal
securities laws and that under such laws and applicable regulations
the Warrants and Warrant Shares may not be resold in the absence of
registration under the Securities Act of 1933, as amended (with the
regulations promulgated thereunder, the "Securities Act") or an
exemption from such registration. In this connection, subject to
applicable registration rights contained in the Warrants, VVI
represents and warrants that it is familiar with Rule 144 under the
Securities Act, as presently in effect, and understands the resale
limitations imposed by such Rule and by the Securities Act.
(v) Additional Limitations on Disposition. Without in any way
limiting its representations and warranties set forth above, VVI
agrees not to make any disposition of all or any portion of the
Warrants or Warrant Shares purchased by it hereunder unless and until:
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<PAGE> 29
(A) There is then in effect a Registration State- ment under
the Securities Act covering such proposed disposition and such
disposition is made in accordance with such Registration
Statement; or
(B) VVI shall have notified NMC of its intention to make the
proposed disposition and shall have furnished NMC with a detailed
statement of the circumstances surrounding the proposed
disposition and, if reasonably requested by NMC, VVI shall have
furnished to NMC an opinion of counsel, in form and substance
reasonably satisfactory to NMC, to the effect that such
disposition will not require registration of such securities
under the Securities Act, it being agreed that NMC will not
require opinions of counsel for transactions made pursuant to
Rule 144 by VVI; and
(C) notwithstanding the provisions of paragraphs (A) and (B)
above, no such registration statement or opinion of counsel shall
be necessary for a transfer by VVI at any time after the
provisions of subparagraph (k) of Rule 144 are applicable to such
transfer.
(vi) Legends. It is understood that the certificates evidencing
the Warrant Shares and the Warrants shall bear the following
legend:
"These securities have not been registered under the Securities
Act of 1933. They may not be sold, pledged or hypothecated in the
absence of a registration statement in effect with respect to the
securities under such Act or pursuant to an exemption from such
registration requirement.
These securities are held subject to the terms, covenants and
conditions of a Telemarketing, Production and Post-Production
Agreement dated April 13, 1995 by and among the Company and
ValueVision International, Inc. and may not be sold in an open
market transaction except in accordance with the terms and
provisions thereof. A copy of said agreement is on file and may
be inspected at the principal executive offices of the Company."
(vii) Authorization. All corporate or other action on the part of
VVI, its officers, directors and shareholders necessary for the due
authorization, execution and delivery of this Agreement and the
performance of all obligations of VVI under this Agreement has been
taken.
(viii) Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation,
declaration or filing (including, without limitation, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder (collectively, the
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<PAGE> 30
"HSR Act") with, any federal, state, local or provincial governmental
authority is required (other than those consents, approvals, orders or
authorizations which have been obtained) on the part of VVI in
connection with the execution of this Agreement and the Warrants and
the consummation of the transactions contemplated hereby and thereby.
Notwithstanding the foregoing, no representation or warranty is made
hereby in respect of compliance with the notification or other
requirements of the HSR Act, upon exercise by VVI of the Warrants.
(c) Additional Representations and Covenants of NMC. NMC
represents and warrants to VVI as follows (which representation and
warranties shall be true as of the date hereof and as of the Effective
Date:
(i) Governmental Consents. Other than those previously obtained
or made and the New York Stock Exchange requirements that NMC obtain
the approval of its stockholders in order to issue the Warrants and
the Warrant Shares and that the Warrant Shares be approved for listing
thereon, no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with,
any federal, state, local or provincial governmental authority or the
New York Stock Exchange is required on the part of NMC in connection
with the execution of this Agreement and the Warrants and the
consummation of the transactions contemplated hereby and thereby.
Without limiting the generality of the foregoing, the execution and
delivery of this Agreement by NMC do not, and the issuance and sale by
NMC of the Warrants and Warrant Shares as contemplated hereby will
not, require any action by or in respect of, or filing with, any
governmental body, agency or official, nor any consent or approval of
any other individual or entity (other than the approval of NMC's
stockholders and the New York Stock Exchange).
(ii) Authorization. Except for the approval of NMC's stockholders
for the issuance of the Warrants and the Warrant Shares and the
approval of the New York Stock Exchange to list the Warrant Shares
thereon, all corporate or other action on the part of NMC, its
officers, directors and stockholders necessary for the due
authorization, execution and delivery of this Agreement and the
Warrants, the performance of all obligations of NMC under each of this
Agreement and the Warrants, and the authorization, issuance (or
reservation for issuance) and delivery of the Warrant Shares has been
duly taken, and this Agreement and the Warrants constitute (or in the
case of the Warrants upon the execution and deliver thereof will
constitute) the legal, valid and binding obligations of NMC
enforceable against NMC in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement
of creditors rights generally and by general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law). The Warrant Shares have been, or will be prior to
issuance, approved for listing, subject only to official notice of
issuance. The Board of Directors of NMC have approved the transactions
contemplated by this Agreement, including, without limitation, the
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<PAGE> 31
issuance of the Warrants and the Warrant Shares and have approved the
preparation of proxy materials for the Stockholder Vote which will
include its recommendation to NMC's shareholders that they approve the
execution of this Agreement and the transactions contemplated hereby.
(iii) Valid Issuance of Securities. The Warrants when issued,
sold and delivered to VVI in accordance with the terms hereof will be
duly and validly issued, fully paid and nonassessable and, assuming
the accuracy of the representations of VVI contained in this
Agreement, will be issued in compliance with all applicable securities
laws of the United States and each of the states whose securities laws
may be applicable thereto (all of the foregoing federal and state laws
collectively, the "Applicable Securities Laws"). The Warrant Shares,
upon their issuance to VVI, will be duly and validly issued, fully
paid and non-assessable and, assuming the accuracy of the
representations and warranties of VVI as set forth herein, will be
issued in compliance with all Applicable Securities Laws. All such
shares will be issued free of any preemptive or other similar right
and will be free and clear of any lien, restriction on transfer or
voting, option, charge, security interest, shareholder agreement,
preemptive or similar right, charge or other encumbrance or covenant.
The Warrant Shares have been duly and validly reserved for issuance.
6. Confidentiality.
(a) Generally. All customer lists, price lists, written and unwritten
marketing plans, and trade secrets, including trade secret techniques,
methods and data, shall constitute confidential information of the
disclosing party provided that such confidential information is designated
in writing as "Confidential," or any confidential information disclosed
orally or visually, provided that such information is designated in writing
as "Confidential" within five (5) days after such disclosure ("Confidential
Information"). Each party shall hold all Confidential Information disclosed
by the other party in the strictest confidence and shall protect all such
Confidential Information with the same degree of care that it exercises
with respect to its own proprietary information. Without the prior written
consent of the disclosing party, the receiving party shall not use,
disclose, divulge or otherwise disseminate any Confidential Information to
any person or entity, except for the receiving party's attorney and such
other professionals as the receiving party may retain in order for it to
enforce the provisions of this Agreement.
(b) Exceptions. Notwithstanding Section 6(a) hereof, the receiving
party shall have no obligations with respect to any Confidential
Information which (i) is or becomes within the public domain through no act
of the receiving party in breach of this Agreement, (ii) was lawfully in
the possession of the receiving party without any restriction on use or
disclosure prior to its disclosure hereunder, (iii) is lawfully received
from another source subsequent to the date of this Agreement without any
restriction on use or disclosure, (iv) is deemed in writing by the
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<PAGE> 32
disclosing party no longer to be Confidential Information (v) is
independently developed by the receiving party or (vi) is required to be
disclosed by order of any court of competent jurisdiction or other
governmental authority; provided, however, that in the case of clause (vi)
of this Section 6(b), the receiving party shall timely inform the
disclosing party of all such legal or governmental proceedings so that the
disclosing party may attempt by appropriate legal means to limit such
disclosure, and the receiving party shall further use its reasonable
efforts to limit the disclosure and maintain confidentiality to the maximum
extent reasonably possible).
(c) Public Statements. Neither party shall make any public
announcement, by press release or otherwise, of this Agreement or the
arrangements contemplated hereby, without first obtaining the other party's
approval of such public announcement or press release (except as may be
legally required in the reasonable judgment of the disclosing party's
counsel, after consultation with the other party), which approval shall not
be unreasonably withheld. In order to ensure the observance of the parties'
respective obligations of confidentiality pursuant to Section 6 hereof and
prevent inaccuracies in the publicizing of the parties' efforts hereunder,
VVI shall not publicly comment on any Program via press release or any
other public statement which VVI intends or understands will be reported in
any news, advertising or marketing medium or publication (whether print or
electronic) without NMC's prior approval (except as may be legally required
in the reasonable judgment of counsel to VVI, but only after consultation
with NMC).
7. Indemnification.
(a) By NMC.
(i) Generally. Subject to Section 7(a)(ii) hereof, NMC shall
defend, indemnify and hold harmless VVI, its affiliates and their
respective officers, directors, employees, agents, successors and
assigns from and against any and all liabilities, losses, obligations,
deficiencies, and expenses whatsoever, including, without limitation,
accounts, suits, proceedings, claims, actions, causes of action,
demands, interest, penalties, assessments, damages, judgments, awards,
settlements, investigations, reasonable costs and reasonable attorneys
fees and disbursements (collectively "Claims") which any of them may
incur or become obligated to pay arising out of or resulting from (i)
the alleged or actual noncompliance of any Program with any Applicable
Law, (ii) the use, misuse, or effect (known or unknown) of any
Product, without regard as to whether such claims arise in connection
with regulatory enforcement or consumer claims, (iii) the breach by
NMC of any of its representations, warranties, covenants, obligations,
agreements or duties under this Agreement (including, without
limitation, failure to secure all necessary rights and licenses for
each Program and to pay all fees associated therewith); or (iv) the
performance by NMC (or any of its respective employees or agents) of
its duties under this Agreement.
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<PAGE> 33
(ii) Exceptions. NMC shall have no duty under Section 7(a)(i)
hereof or otherwise to defend, indemnify or hold harmless with respect
to any Claims which arise out of or result from any negligence, fraud,
knowing misrepresentation or deception by or on behalf of VVI with
respect to any Product advertised in any Program, (ii) arise out of or
result from the breach by VVI of any of its representations,
warranties, covenants, obligations, agreements or duties under this
Agreement; or (iii) are subject to VVI's duty to defend, indemnify and
hold harmless pursuant to Section 7(b) hereof.
(b) By VVI.
(i) Generally. Subject to Section 7(b)(ii) hereof, VVI shall
defend, indemnify and hold harmless NMC, its affiliates and their
respective officers, directors, employees, agents, successors and
assigns from and against any and all Claims which any of them may
incur or become obligated to pay arising out of or resulting from (i)
the performance by VVI (or any of its respective employees or agents)
of its duties pursuant to this Agreement, or (ii) the breach by VVI of
any of its representations, warranties, covenants, obligations,
agreements or duties under this Agreement.
(ii) Exceptions. VVI shall have no duty under Section 7(b)(i)
hereof or otherwise to defend, indemnify or hold harmless with respect
to any Claims which (i) arise out of or result from any negligence,
fraud, knowing misrepresentation or deception by or on behalf of NMC
with respect to the attributes or depiction of any Product advertised
in any Program, (ii) arise out of or result from the breach by NMC of
any of its representations, warranties, covenants, obligations,
agreements or duties under this Agreement, or (iii) are subject to
NMC's duty to defend, indemnify and hold harmless pursuant to Section
7(a) hereof.
(c) Indemnification Procedure. Promptly after receipt of any demand or
claim which may give rise to rights under this Section 7, any person
seeking to enforce such rights (a "Claiming Person") shall give written
notice of such matter to the party against whom enforcement of such rights
is sought (the "Indemnifying Party"). The Claiming Party shall cooperate
with the Indemnifying Party in the negotiation, compromise and defense of
any such matter. The Indemnifying Party shall promptly undertake the
defense of such matter and shall control such negotiations, compromise and
defense, provided that the Indemnifying Party shall promptly notify the
Claiming Person of all developments in the matter. If the defendants in any
such matter include both the Claiming Party and the Indemnifying Party, and
if the Claiming Party shall have reasonably concluded that there are
defenses available to it that may conflict with those available to the
Indemnifying Party, the Claiming party shall have the right to select
separate counsel (reasonably acceptable to the Indemnifying Party) to
assert such defenses and otherwise to participate in the defense of any
such matter on its own behalf, and the fees and expenses of such counsel
shall be included in the amount which the Claiming Party is entitled to
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<PAGE> 34
recover hereunder. In no event shall a Claiming Party compromise or settle
any matter for which it is claiming indemnification hereunder without the
prior written consent of the Indemnifying Party, which shall not be bound
by any such compromise or settlement absent its prior consent, which
consent will not be unreasonably withheld.
(d) This Section 7 shall survive the termination of this Agreement
indefinitely.
8. Effective Date; Termination.
(a) Effective Date.
(i) The Effective Date of this Agreement shall be the later of
(A) the date (the "Stockholder Approval Date") upon which the Company
shall have obtained stockholder approval of this Agreement to the
extent required under the rules of the New York Stock Exchange and (B)
such date (the "Certification Date") that VVI has provided, in
accordance with the terms and conditions of this Agreement,
Telemarketing Services during any thirty (30) consecutive day period
during the Pre-effective Period for the lesser of Three Thousand
(3,000) inbound telephone calls and such number of inbound telephone
calls that NMC has directed to VVI for service hereunder during such
period.
(ii) NMC shall use its best efforts to obtain the stockholder
approval referred to in Section 8(a)(i)(A); provided, however, that if
such stockholder approval shall not have been obtained on or prior to
August 31, 1995, either party may terminate this Agreement prior to
the Effective Date by delivering written notice of such termination to
the other. Upon such termination, neither party shall have any
liability of any kind arising out of this Agreement except for
obligations arising under Section 3(a) or Section 7 hereof.
(iii) In the event the Effective Date shall not have occurred on
or prior to the sixtieth day following the Stockholder Approval Date
because of the non-occurrence of the Certification Date, NMC may
terminate this Agreement upon ten (10) days prior written notice if
the Certification Date does not occur in such ten (10) days notice
period. Upon any termination of this Agreement pursuant to this
Section 8(a)(iii), all Warrants shall automatically expire and VVI
shall have no further rights thereto and NMC shall be entitled to the
Liquidated Damages set forth in Section 14(d) hereof.
(b) Termination Upon Breach. Either party may terminate this Agreement
upon thirty (30) days prior written notice thereof to the other party upon
the material breach by the other party of any of the other party's
representations, warranties, covenants or agreements (including, without
limitation, any failure by NMC to timely make payments required under
Section 3 hereof) contained in this Agreement. Upon the expiration
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<PAGE> 35
of such notice period, this Agreement shall terminate without the need for
further action by either party; provided, however, that if the breach upon
which such notice of termination is based shall have been cured in all
material respects to the reasonable satisfaction of the nonbreaching party
within such thirty (30) day period, then such notice of termination shall
be deemed rescinded, and this Agreement shall be deemed reinstated and in
full force and effect. Such right of termination shall be in addition to
such other rights and remedies as the terminating party may have under
applicable law. In the event this Agreement is terminated before its
scheduled termination as the result of a material breach by VVI and NMC is
not in material breach of this Agreement at such time, all Warrants not
then vested shall automatically expire and VVI shall have no further rights
thereto.
(c) Termination by VVI. VVI may terminate this Agreement by delivering
thirty (30) days prior written notice of the effective date of such
termination to NMC within the ten (10) day period following a Termination
Event. For purposes of this Agreement, a "Termination Event" shall mean the
sixtieth (60th) consecutive trading day upon which the Quoted Price of
NMC's Common Stock is less than Five ($5.00) Dollars per share (subject to
appropriate adjustment for any subdivisions, splits or combinations of NMC
Common Stock after the date hereof), provided that neither VVI nor, to
VVI's actual knowledge any of its affiliates (as such term is defined in
Rule 405 of Regulation D under the Securities Act), has transferred for
value any NMC Common Stock (in the open market or in private sales) during
the sixty (60) trading day period ending on the date upon which the
Termination Event occurred. The "Quoted Price" of NMC's Common Stock is the
last reported sale price of NMC's Common Stock as reported by the New York
Stock Exchange (or on any national securities exchange if not so listed),
or if not so listed on such a national securities exchange, the last
reported sale price of the Common Stock as reported by the NASDAQ National
Market System, or if not so reported, the last reported bid price of the
Common Stock. In the absence of one or more such quotations, the Quoted
Price shall equal the fair market value of a share of NMC Common Stock as
determined by NMC's Board of Directors in good faith. In the event this
Agreement is terminated by VVI before its scheduled termination pursuant to
this Section 8(c), all Warrants not then vested shall automatically expire
and VVI shall have no further rights thereto.
(d) Generally. Upon any termination of this Agreement, and subject to
Section 14(j) hereof, the obligations of the parties hereunder shall cease,
except that (i) NMC shall remain obligated to make all payments to VVI
required pursuant to Section 3 hereof; (ii) VVI shall be obligated to turn
over to NMC all of NMC's Intellectual Property then in VVI's possession
(including, without limitation, completed master videotapes, raw video
footage, and scripts and script materials created pursuant to this
Agreement), together with all filmstock, props and other materials the cost
of which has been or is thereafter paid by NMC and (iii) NMC shall remain
obligated to perform its obligations under the Warrants (to the extent
vested). Upon termination of this Agreement, the parties shall have no
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<PAGE> 36
further rights or obligations hereunder except pursuant to those provisions
hereof which expressly survive the termination of this Agreement.
9. Right of First Refusal
(a) Offer to NMC. If VVI shall at any time intend to sell all or any
of its Warrant Shares in a broker or dealer transaction through a
securities exchange or an interdealer quotation system (an "Open Market
Sale"), VVI shall provide NMC written notice (the "Sale Notice") of such
intent. The Sale Notice shall set forth the number of Warrant Shares (the
"Offered Shares") VVI proposes to sell. Transmittal of the Sale Notice to
NMC shall constitute an offer by VVI to sell all of the Offered Shares to
NMC. For a period of three (3) business days commencing on the date that
NMC receives the Sale Notice, NMC shall have the option, exercisable by
written notice to VVI (the "Exercise Notice"), to accept VVI's offer as to
all or any part of the Offered Shares at a price per share equal to the
highest Quoted Price during the period from VVI's transmittal of the Sale
Notice to VVI's receipt of the Exercise Notice (the "Purchase Price").
(b) VVI's Right to Sell. In the event NMC does not exercise its option
with respect to all of the Offered Shares in accordance with Section 9(a),
VVI shall be free during the twenty (20) business day period beginning on
the expiration of the three (3) business day option period referred to in
Section 9(a), to sell all or any portion of the Offered Shares not
purchased by NMC.
(c) Settlement.
(i) Settlement for the purchase of the Offered Shares by NMC
pursuant to the option granted in Section 9(a) shall be made within
ten (10) business days following the date of the Exercise Notice. The
purchase price shall be payable in full on the settlement date by wire
transfer to a bank in the United States specified by VVI for the
account of VVI, against delivery of certificates representing the
Offered Shares, duly executed for transfer and free of all liens and
encumbrances. The certificates for the Offered Shares may contain such
legends as may be reasonably required, in the opinion of counsel to
VVI, to permit the Offered Shares to be transferred to NMC.
(ii) All settlements for the purchase and sale of Offered Shares
shall, unless otherwise agreed to by NMC and VVI, be held at the
principal executive offices of NMC during regular business hours. The
precise date and hour of settlement shall be fixed by NMC (within the
time limits allowed by the provisions of this Agreement) and set forth
in the Exercise Notice.
(d) Other Transfers. Subject to the terms and provisions set forth in
Section 5 hereof, VVI shall have the right to sell, assign, transfer, or
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<PAGE> 37
otherwise dispose of its Warrant Shares in any manner whatsoever (other
than through an Open Market Sale) without complying with the provisions of
this Section 9.
(e) Notwithstanding anything herein to the contrary, the rights and
obligations of NMC and VVI under this Section 9 shall survive the
termination of this Agreement until the earlier to occur of (i) April 13,
2005 and (ii) such date that VVI beneficially owns less than three (3%)
percent of NMC's outstanding Common Stock (calculated in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, but
assuming that all Warrants not then vested have become vested).
10. Independent Contractor. No party nor any of its officers, employees,
agents or representatives is an employee or agent of any other party for any
purpose whatsoever. Rather, each party is and shall at all times remain an
independent contractor. Each party shall have sole control of the matter and
means of performing its respective obligations under this Agreement. Except as
otherwise specifically provided herein, each party shall be responsible for all
expenses and disbursements which it incurs in connection with this Agreement. No
party has, nor shall it hold itself out at as having, any right, power or
authority to create any contract or obligation, either express or implied, on
behalf of, in the name of, or binding upon any other party, unless such other
party shall consent thereto in writing. Each party shall have the right to
appoint and shall be solely responsible for its own employees, agents and
representatives, who shall be at such party's own risk, expense and supervision
and shall not have any claim against any other party for compensation or
reimbursement except as otherwise specifically provided herein.
11. Dispute Resolution. Subject to Section 14(c) hereof, all claims and
disputes related to or arising from this Agreement, or the performance hereof,
shall be referred for binding arbitration if good faith negotiations between the
parties do not resolve such claim or dispute within 45 days. Such arbitration
shall take place in Chicago, Illinois in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA") then
pertaining, under the supervision of the AAA, or such other neutral party that
may be selected by the parties. The governing law shall be as set forth in
Section 14(h). Written notice of demand for arbitration shall be filed with the
other party. The arbitration shall be conducted before three arbitrators,
selected within 20 days after such notice. Each party shall select an
arbitrator, and a third, neutral arbitrator shall be selected by mutual
agreement of the party-selected arbitrators. The parties shall be entitled to
engage in reasonable discovery in accordance with the United States Federal
Rules of Civil Procedure, with any disputes relating to such discovery to be
resolved by the arbitrators in their sole discretion. The parties will have the
opportunity to present written and oral evidence. It is the parties' desire that
the arbitration be speedily conducted with the hearing to take place and the
awards to be made within one hundred twenty (120) days after the filing of any
demand for arbitration. A determination by a majority of the arbitration panel
shall be final, conclusive and binding upon the parties, and judgment may be
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<PAGE> 38
entered in any court of competent jurisdiction upon the arbitration results. The
costs of the arbitration, which shall include enforcing the results of the
arbitration, including attorneys' fees and expenses, shall be shared by the
parties as determined by the arbitrators. Notwithstanding anything in this
Section 11, either party may exercise any right to terminate this Agreement
pursuant to Section 8(b) or (c) hereof without first submitting any dispute to
arbitration, or during the pendency of any such arbitration.
12. Insurance. For so long as NMC or any of its affiliated companies
continue to sell Products or VVI is providing services hereunder, NMC shall
maintain commercial general liability insurance, on an occurrence basis, that
includes coverage for product liability insurance with respect to all Products
in amounts and of a type customarily maintained by similarly situated retailers,
but in any event, not less than $1 million per occurrence. NMC shall cause VVI
to be named as an additional insured on all such insurance policies.
13. Further Actions. The parties agree to execute such additional documents
and to perform all such other and further acts as may be necessary or desirable
to carry out the purpose and intent of this Agreement.
14. Miscellaneous.
(a) Notices. All notices, requests, instructions, consents and other
communications to be given pursuant to this Agreement shall be in writing
and shall be deemed received (i) on the same day if delivered in person, by
same-day courier or by telegraph, telex or facsimile transmission, (ii) on
the next day if delivered by overnight mail or courier, or (iii) on the
date indicated on the return receipt, or if there is no such receipt, on
the third calendar day (excluding Saturdays and Sundays) if delivered by
certified or registered mail, postage prepaid, to the party for whom
intended to the following addresses:
If to NMC:
National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Attention: President
Telecopy: 215/772-5013
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With copies to:
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
Attention: Leonard M. Klehr, Esquire
Telecopy: 215-568-6603
If to VVI:
ValueVision International, Inc.
6740 Shady Oak Road
Minneapolis, MN 55344-3433
Attention: President
Telecopy: 612-947-0188
With copies to:
Maslon Edelman Borman & Brand,
a Professional Limited Liability Partnership
3700 Norwest Center
Minneapolis, MN 55402
Attention: William Mower
Telecopy: 612-672-8397
Any party may by written notice given to the other in accordance with this
Agreement change the address to which notices to such party are to be delivered.
(b) Entire Agreement. This Agreement and the Warrant of even date
herewith contains the entire understanding of the parties with respect to
the subject matter hereof and supersedes all prior agreements and
understandings between them with respect to the subject matter hereof.
(c) Injunctive Relief. Each party acknowledges that a material breach
of any of the covenants contained in Section 4(a) and (b) (regarding
Intellectual Property) or Section 6 (regarding Confidential Information)
hereof by the other party will result in irreparable and continuing damage
to the non-breaching party. Accordingly, in the event of any such breach,
the non-breaching party shall be entitled to injunctive relief and/or an
order for specific performance with respect to such breach. The breaching
party shall not oppose such relief on the grounds that there is an adequate
remedy at law, and such right shall be cumulative and in addition to any
other remedies at law or in equity (including monetary damages) which the
non-breaching party may have pursuant to Section 11 hereof.
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<PAGE> 40
(d) Liquidated Damages. If NMC terminates this Agreement pursuant to
Section 8(b) hereof as a result of VVI's material breach of its obligations
to provide Telemarketing Services in accordance with Section 1(a) hereof or
pursuant to Section 8(a)(iii) hereof and provided NMC is not in material
breach of its obligations hereunder, NMC shall be entitled to receive
liquidated damages in the amount of $ 81,081.08 for each month (with such
amount pro rated for any partial month based on the number of days
remaining in such month) in the period beginning on the date (the "Notice
Date") NMC delivers notice of such termination to VVI pursuant to Section
8(b) or 8(a)(iii) hereof and ending on the last day of the thirty-seventh
month following the earlier of the Effective Date and the Notice Date (the
"Liquidated Damages"). NMC's right to Liquidated Damages hereunder shall be
NMC's exclusive remedy for a breach by VVI of its obligations under Section
1 hereof and shall be in lieu of any other damages or recovery against VVI
to which NMC may otherwise be entitled as a result of such breach.
(e) Amendment. No amendment of this Agreement shall be effective
unless embodied in a written instrument executed by all of the parties.
(f) Waiver of Breach. The failure of any party hereto at any time to
enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor in any way to affect
the validity of this Agreement or any provisions hereof or the right of any
party hereto to thereafter enforce each and every provision of this
Agreement. No waiver of any breach of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument
executed by the party against whom or which enforcement of such waiver is
sought; and no waiver of any such breach shall be construed or deemed to be
a waiver of any other or subsequent breach.
(g) Binding Effect; Assignability. This Agreement shall be binding on
and inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns; provided, however, that no party
hereto may assign this Agreement or any rights hereunder, except as
specifically provided herein, to any person or entity without the prior
written consent of the other party, and any attempted assignment without
such consent shall be void.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Minnesota without
regard to conflict of laws principles; provided, however, that all issues
with respect to the issuance, exercise, interpretation or enforcement of
the Warrants or the Warrant Shares shall be governed by and construed in
accordance with the internal laws of the State of Delaware without regard
to conflict of laws principles. This Section 14(h) shall survive the
termination of this Agreement indefinitely.
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<PAGE> 41
(i) Severability. All of the provisions of this Agreement are intended
to be distinct and severable. If any provision of this Agreement is or is
declared to be invalid or unenforceable in any jurisdiction, it shall be
ineffective in such jurisdiction only to the extent of such invalidity or
unenforceability. Such invalidity or unenforceability shall not affect
either the balance of such provision, to the extent it is not invalid or
unenforceable, or the remaining provisions hereof, nor render invalid or
unenforceable such provision in any other jurisdiction.
(j) Survival. The provisions of Section 3(c) (regarding the Warrants
and the Telemarketing Differential and Production and Post-Production
Differential), Section 4(a) and (b) (regarding Intellectual Property),
Section 6 (regarding Confidential Information), Section 7 (regarding
Indemnification), Section 8(d) (regarding the parties' post-termination
obligations), Section 9 (regarding NMC's Right of First Refusal), Section
11 (regarding arbitration), Section 14(c) (regarding injunctive relief),
Section 14(d) (regarding Liquidated Damages) and Section 14(h) (Governing
Law) shall survive the termination of this Agreement for a period of two
(2) years except as otherwise provided in this Agreement.
(k) No Third Party Beneficiaries. Notwithstanding anything to the
contrary contained herein, no provision of this Agreement is intended to
benefit any party other than the signatories hereto and their permitted
successors and assigns and shall not be enforceable by, nor inure to the
benefit of, any other party.
(l) Headings. The headings of sections and subsections have been
included for convenience only and shall not be considered in interpreting
this Agreement.
(m) Interpretation and Construction. This Agreement has been fully and
freely negotiated by all of the parties hereto, shall be considered as
having been drafted jointly by all of the parties hereto, and shall be
interpreted and construed as if so drafted, without construction in favor
of or against any party on account of its participation in the drafting
hereof.
(n) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of
which together shall constitute one and the same Agreement. This Agreement
may be executed and delivered via electronic facsimile transmission with
the same force and effect as if it were executed and delivered by the
parties simultaneously in the presence of one another.
IN WITNESS WHEREOF, the parties have caused this Telemarketing, Production
and Post-Production Agreement to be duly executed on the date first written
above.
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ATTEST: NATIONAL MEDIA CORPORATION
By: /s/ Marshall A. Fleisher By: /s/ Brian McAdams
------------------------------ --------------------------------
Name: Marshall A. Fleisher Name: Brian McAdams
Title Secretary Title: Chairman & CEO
[Corporate Seal]
ATTEST: VALUEVISION INTERNATIONAL, INC.
By: /s/ Mark A. Payne By: /s/ Nicholas M. Jaksich
------------------------------ --------------------------------
Name: Mark A. Payne Name: Nicholas M. Jaksich
Title: Chief Financial Officer Title: President
[Corporate Seal]
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EXHIBIT A
Production and Post-Production Rate Calculation Example
From Section 3(b) beginning on page 8 of the Agreement.
The Consultant estimates that equipment depreciation and employee wages and
salaries constitute 25% of the total cost of a typical fair market value charge
for studio rental, production and post-production services of the type being
provided by VVI to NMC pursuant to the Agreement. The "Percentage" is therefore
25%.
The Rate for each hour of Production Services under the Agreement shall be
calculated separately and shall be determined as follows:
VVI calculates that its production and post-production facilities have
$500,000 of equipment with a 5 year life. Therefore, the hourly rate for this
equipment equals $500,000 divided by 5 years equals $100,000 per year. $100,000
divided by 260 working days equals $384.62 per day. $384.62 divided by 8 hours
per day equals $48.08 per hour for the depreciation. In no event shall NMC be
charged for more than 8 hours depreciation for equipment in any one day.
VVI calculates that there are 4 people employed by VVI providing Production
Services during the hour in question at a total hourly rate of $50.00.
Therefore, the total hourly rate calculated by VVI for equipment depreciation
and wages and salaries for this hour of Production Services is $98.08.
The $98.08 per hour divided by the "Percentage" of 25% equals $392.32 which
is the "Gross Market Rate". This rate times 50% equals $196.16 per hour which is
the "Rate" payable to VVI for the provision of Production Services during this
hour.
<PAGE> 44
FORM OF WARRANT Exhibit B
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF NOR ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR IN ANY OTHER MANNER TRANSFERRED OR DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND THE TERMS AND CONDITIONS HEREOF. THE HOLDER OF THIS
WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO THE
RESTRICTIONS HEREIN SET FORTH.
THESE SECURITIES ARE HELD SUBJECT TO THE TERMS, COVENANTS AND CONDITIONS OF
TELEMARKETING, PRODUCTION AND POST-PRODUCTION AGREEMENT DATED APRIL 13, 1995 BY
AND AMONG THE COMPANY AND VALUEVISION INTERNATIONAL, INC. AND MAY NOT BE SOLD IN
AN OPEN MARKET TRANSACTION EXCEPT IN ACCORDANCE WITH THE TERMS AND PROVISIONS
THEREOF. A COPY OF SAID AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
VOID AFTER 5:00 P.M., PHILADELPHIA, PENNSYLVANIA TIME, ___________ __,
2005
***************************************
WARRANT
to
PURCHASE COMMON STOCK
of
NATIONAL MEDIA CORPORATION
***************************************
This certifies that, for good and valuable consideration, National Media
Corporation, a Delaware corporation (the "Company"), grants to ValueVision
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International, Inc. ("VVI") or permitted registered assigns (the "Warrantholder"
or "Warrantholders"), the right to subscribe for and purchase from the Company,
at $8.865 per share (the "Exercise Price"), from and after 9:00 A.M.
Philadelphia, Pennsylvania time on the first anniversary of the date hereof (the
"Initial Exercise Date"), and to and including 5:00 P.M. New York City time on
__________ __, 2005 (the "Expiration Date"), 500,000 shares, as such number of
shares may be adjusted from time to time (the "Warrant Shares"), of the
Company's Common Stock, par value $0.01 per share (the "Common Stock"), subject
to the provisions and upon the terms and conditions herein set forth. The
Exercise Price and the number of Warrant Shares are subject to adjustment from
time to time as provided in Section 6.
SECTION 1. Exercise of Warrant; Limitation on Exercise; Payment of Taxes.
1.1 Exercise of Warrant.
(a) Subject to Section 1.1(d) hereof, this Warrant shall vest and
become exercisable with respect to 166,667 Warrant Shares on the date which
is thirteen (13) months after the date hereof and on the date which is two
(2) years after the date hereof and with respect to 166,666 Warrant Shares
on the date which is three (3) years after the date hereof (each date on
which Warrants may vest is referred to herein as a "Vesting Date"). At any
time and from time to time after the Initial Exercise Date, the
Warrantholder may exercise this Warrant, in whole or in part (subject to
the vesting of the Warrant as set forth in the immediately preceding
sentence), by presentation and surrender of this Warrant to the Company at
its principal executive offices or at the office of its stock transfer
agent, if any, with the Subscription Form annexed hereto duly executed and
accompanied by cash payment of the full Exercise Price for each Warrant
Share to be purchased (subject to VVI's ability to apply certain amounts
payable by the Company to VVI under the Telemarketing Agreement (as defined
in Section 1.1(d) hereof) against the Exercise Price as set forth in
Section 1.3 hereof).
(b) Upon receipt of this Warrant, with the Subscription Form duly
executed and accompanied by payment of the aggregate Exercise Price for the
Warrant Shares for which this Warrant is then being exercised, the Company
shall cause to be issued certificates for the total number of whole shares
of Common Stock for which this Warrant is being exercised (adjusted to
reflect the effect of the antidilution provisions contained in Section 6
hereof, if any, and as provided in Sections 5 and 8.8 hereof) in such
denominations as are requested for delivery to the Warrantholder, and the
Company shall thereupon deliver such certificates to the Warrantholder. The
stock certificates so delivered shall be in such denominations as may be
specified by the Warrantholder and shall be issued in the name of the
Warrantholder or, if permitted by Section 5 and in accordance with the
provisions thereof, such other name as shall be designated in the
Subscription Form. The Warrantholder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock
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<PAGE> 46
shall not then be actually delivered to the Warrantholder. If at the time
this Warrant is exercised, a registration statement is not in effect to
register under the Securities Act of 1933, the Warrant Shares issuable upon
exercise of this Warrant, the Company may require the Warrantholder to make
such customary representations, and may place such customary legends on
certificates representing the Warrant Shares, as may be reasonably required
in the opinion of counsel to the Company to permit the Warrant Shares to be
issued without such registration.
(c) If this Warrant shall have been exercised only in part, the
Company shall, at the time of delivery of the certificates for the Warrant
Shares, deliver to the Warrantholder a new Warrant evidencing the rights to
purchase the remaining Warrant Shares, which new Warrant shall in all other
respects be identical with this Warrant. No adjustments or payments shall
be made on or in respect of Warrant Shares issuable on the exercise of this
Warrant for any regular cash dividends paid or payable to holders of record
of Common Stock prior to the date as of which the Warrantholder shall be
deemed to be the record holder of such Warrant Shares.
(d) Notwithstanding anything herein to the contrary, no Warrants shall
vest on a Vesting Date in the event (i) VVI shall be in material breach of
that certain Telemarketing, Production and Post-Production Agreement dated
April 13, 1995 by and between the Company and VVI (the "Telemarketing
Agreement") on such Vesting Date unless the Company shall thereafter fail
to terminate the Telemarketing Agreement as a result of such breach; (ii)
the Company shall terminate the Telemarketing Agreement pursuant to Section
8(a)(iii) thereof; (iii) any representation made by VVI in Section 9 of
that certain Settlement Agreement dated April 13, 1995 by and between the
Company and VVI (the "Settlement Agreement") shall not be true on such
Vesting Date or (iv) VVI shall have failed, after receiving written notice
of such failure from the Company at least sixty (60) days prior to such
Vesting Date, to make available to NMC sufficient capacity to provide to
NMC inbound telephone calltaking services for at least one million
(1,000,000) inbound telephone calls (at a rate not to exceed 100,000
inbound telephone calls in any month) during the thirteen (13) month period
(in the case of the first Vesting Date hereunder) or the twelve (12) month
period (in the case of the second and third Vesting Dates hereunder)
preceding such Vesting Date in accordance with Section 1(a) of the
Telemarketing Agreement.
1.2 Limitation on Exercise. If this Warrant is not exercised prior to 5:00
P.M. on the Expiration Date (or the next succeeding Business Day, if the
Expiration Date is a Saturday, Sunday or a day on which the New York Stock
Exchange is authorized to close or on which the Company is otherwise closed for
business (a "Nonbusiness Day"), this Warrant, or any new Warrant issued pursuant
to Section 1.1, shall cease to be exercisable and shall become void and all
rights of the Warrantholder hereunder shall cease. This Warrant shall not be
exercisable and no Warrant Shares shall be issued hereunder, prior to 9:00 A.M.
New York City time on the Initial Exercise Date.
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1.3 Payment of Exercise Price. Payment of the Exercise Price shall be made
to the Company in cash; by certified or official bank check payable in United
States dollars to the order of the Company; or by any combination of the
foregoing. Notwithstanding the foregoing, VVI may apply all or any part of the
aggregate amount of any Telemarketing Differential (as defined in the
Telemarketing Agreement) and any Production and Post Production Differential (as
defined in the Telemarketing Agreement) against payment of the Exercise Price by
providing irrevocable notice of such election to the Company on the Subscription
Form. Any election by VVI to apply Telemarketing Differential or Production and
Post Production Differential against all or any portion of the Exercise Price
due hereunder shall be irrevocable and shall reduce the amount of Telemarketing
Differential and Production and Post Production Differential available for
application against future exercises of this Warrant.
1.4 Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax in respect thereto; provided, however, that the Warrantholder
shall be required to pay any and all taxes which may be payable in respect to
any transfer involved in the issuance and delivery of any certificates for
Warrant Shares in a name other than that of the then Warrantholder as reflected
upon the books of the Company.
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SECTION 2. Reservation and Listing of Shares, Etc.
All Warrant Shares which are issued upon the exercise of the rights
represented by this Warrant shall, upon issuance and payment of the Exercise
Price, be validly issued, fully paid and nonassessable and free from all taxes,
liens, security interests, charges and other encumbrances with respect to the
issue thereof other than taxes in respect of any transfer occurring
contemporaneously with such issue. During the period within which this Warrant
may be exercised, the Company shall at all times have authorized and reserved,
and keep available free from preemptive rights, a sufficient number of shares of
Common Stock to provide for the exercise of this Warrant, and if at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the exercise of this Warrant (and all other Warrants and securities of
the Company convertible into or exercisable or exchangeable for Common Stock),
in addition to such other remedies as shall be available to a Warrantholder, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes. In addition,
prior to the issuance of any Warrant Shares, the Company shall at its expense
procure the listing of the Warrant Shares (or any other issues of capital stock
issuable upon the exercise of this Warrant if such other class of capital stock
is then so listed) which shall be issued upon exercise of this Warrant (subject
to official notice of issuance) as then may be required on all stock exchanges
or interdealer quotation systems on which the Common Stock is then listed and
shall maintain such listing if and so long as any shares of the same class shall
be listed on such stock exchanges or interdealer quotation systems. The Company
shall, from time to time, take all such action as may be required to assure that
the par value per share of the Warrant Shares is at all times equal to or less
than the then effective Exercise Price.
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SECTION 3. Exchange, Loss or Destruction of Warrant.
If permitted by Section 5 and in accordance with the provisions thereof,
upon surrender of this Warrant to the Company with a duly executed instrument of
assignment and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant of like tenor in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be cancelled. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of such
mutilation, upon surrender and cancellation of this Warrant, the Company will
execute and deliver a new Warrant of like tenor. The term "Warrant" as used
herein includes any Warrants issued in substitution or exchange of this Warrant.
SECTION 4. Ownership of Warrant; Certain Rights of Warrantholders.
(a) The Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing hereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer as provided in
subsection 1.1, Section 3 or Section 5.
(b) Nothing contained in this Warrant shall be construed as conferring upon
the Warrantholder or its transferees the right to vote or to receive dividends
or to consent or to receive notice as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or of any other
matter, or any rights whatsoever as stockholders of the Company. The Company
shall give notice to the Warrantholder by registered mail if at any time prior
to the expiration or exercise in full of the Warrants, any of the following
events shall occur:
(i) the Company shall authorize the payment of any dividend payable in
any securities upon shares of Common Stock or authorize the making of any
distribution (other than a regular cash dividend paid out of net profits
legally available therefor) to all holders of Common Stock;
(ii) the Company shall authorize the issuance to all holders of Common
Stock of any additional shares of Common Stock or securities that are
convertible into or exercisable for shares of Common Stock ("Common Stock
Equivalents") or of rights, options or warrants to subscribe for or
purchase Common Stock or Common Stock Equivalents or of any other
subscription rights, options or warrants;
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<PAGE> 50
(iii) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation, merger, or sale or conveyance of
the property of the Company as an entirety or substantially as an
entirety); or
(iv) a capital reorganization or reclassification of the Common Stock
(other than a subdivision or combination of the outstanding Common Stock
and other than a change in the par value of the Common Stock) or any
consolidation or merger of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification or
change of Common Stock outstanding) or in the case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety.
Such giving of notice shall be initiated at least 20 days prior to the date
fixed as a record date or effective date or the date of closing of the Company's
stock transfer books for the determination of the stockholders entitled to such
dividend, distribution, issuance or subscription rights, or for the
determination of the stockholders entitled to vote on such proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing the stock transfer
books, as the case may be. Failure to provide such notice shall not affect the
validity of any action taken in connection with such dividend, distribution,
issuance or subscription rights, or proposed merger, consolidation, sale,
conveyance, dissolution, liquidation or winding up.
SECTION 5. Split-Up, Combination, Exchange and Transfer of Warrants.
(a) Subject to the provisions of Section 5(b), this Warrant may be split
up, combined or exchanged for another Warrant or Warrants containing the same
terms to purchase a like aggregate number of Warrant Shares. If the
Warrantholder desires to split up, combine or exchange this Warrant, he, she or
it shall make such request in writing delivered to the Company and shall
surrender to the Company this Warrant and any other Warrants to be so split up,
combined or exchanged. Upon any such surrender for a split up, combination or
exchange, the Company shall execute and deliver to the person entitled thereto a
Warrant or Warrants, as the case may be, as so requested. The Company shall not
be required to effect any split up, combination or exchange which will result in
the issuance of a warrant entitling the Warrantholder to purchase upon exercise
a fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Warrantholder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split up,
combination or exchange of Warrants.
(b) Prior to the termination of the Telemarketing Agreement, neither this
Warrant nor any of Warrantholder's rights hereunder may be disposed of or
encumbered (any such action, a "Transfer") without the prior written consent of
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<PAGE> 51
the Company. Neither this Warrant not the Warrant Shares may be Transferred
except in accordance with and subject to the provisions of the Securities Act
and the rules and regulations promulgated thereunder. If at the time of a
Transfer, a registration statement is not in effect to register this Warrant or
the Warrant Shares, the Company may require the Warrantholder to make such
customary representations, and may place such customary legends on certificates
representing this Warrant, as may be reasonably required in the opinion of
counsel to the Company to permit a Transfer without such registration.
SECTION 6. Certain Adjustments.
(a) If at any time or from time to time the Company shall (i) take a record
of the holders of the Common Stock for the purpose of entitling them to receive
a dividend payable in, or other distribution of, shares of Common Stock, (ii)
subdivide the outstanding shares of Common Stock into a larger number of shares
of Common Stock or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares of Common Stock, then the number of shares of Common
Stock thereafter issuable upon exercise of this Warrant and the Exercise Price
then in effect shall be adjusted so that this Warrant shall be exercisable for
the same number of shares that a record holder of the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to the happening
of such event would own or be entitled to receive after the happening of such
event and so that the aggregate Exercise Price payable for the purchase of all
Warrant Shares pursuant to this Warrant shall remain unchanged. Any adjustments
required by this Section 6(a) shall be made whenever and as often as any
specified event requiring an adjustment shall occur. If the Company shall take a
record of the holders of the Common Stock for the purpose of effecting such
distribution, subdivision or combination and shall, thereafter and before such
distribution, subdivision, or combination, legally abandon its plan to pay or
deliver such distribution or effect such subdivision or combination, then
thereafter no adjustment shall be required by reason of the taking of such
record and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
(b) If at any time prior to the exercise of this Warrant in full, the
Company shall (i) issue or sell any Common Stock or Common Stock Equivalents
without consideration or for consideration per share (in cash, property or other
assets) less than the current market price per share on the date of such
issuance or sale as determined pursuant to Section 6(d) or (ii) fix a record
date for the issuance of subscription rights, options or warrants to all holders
of Common Stock entitling them to subscribe for or purchase Common Stock (or
Common Stock Equivalents (as hereinafter defined)) at a price (or having an
exercise or conversion price per share) less than the current market price of
the Common Stock (as determined pursuant to Section 6(d)) on the record date
described below, the Exercise Price shall be adjusted so that the Exercise Price
shall equal the price determined by multiplying the Exercise Price in effect
immediately prior to the date of such sale or issuance (which date in the event
of a distribution to stockholders shall be deemed to be the record date set by
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<PAGE> 52
the Company to determine stockholders entitled to participate in such
distribution) by a fraction, the numerator of which shall be (i) the number of
shares of Common Stock outstanding on the date of such sale or issuance, plus
(ii) the number of additional shares of Common Stock which the aggregate
consideration received by the Company upon such issuance or sale (plus the
aggregate of any additional amount to be received by the Company upon the
exercise of such subscription rights, options or warrants) would purchase at
such current market price per share of the Common Stock and the denominator of
which shall be (i) the number of shares of Common Stock outstanding on the date
of such issuance or sale, plus (ii) the number of additional shares of Common
Stock offered for subscription or purchase (or into which the Common Stock
Equivalents so offered are exercisable or convertible). Whenever the Exercise
Price payable upon exercise of this Warrant is adjusted pursuant to this Section
6(b), the number of Warrant Shares issuable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the number of Warrant Shares issuable
upon exercise of this Warrant by the Exercise Price in effect on the date of
such adjustment and dividing the product so obtained by the Exercise Price, as
adjusted. Any adjustments required by this Section 6(b) shall be made
immediately after such issuance or sale or record date, as the case may be. Such
adjustments shall be made successively whenever such event shall occur. To the
extent that shares of Common Stock (or Common Stock Equivalents) are not
delivered in connection with such subscription rights, options or warrants, the
Exercise Price shall be readjusted to the Exercise Price which would then be in
effect had the adjustments made upon the issuance of such rights, options or
warrants been made upon the basis of delivery of only the number of shares of
Common Stock (or Common Stock Equivalents) actually delivered. In the case of an
issue of additional Common Stock or Common Stock Equivalents for cash, the
consideration received by the Company therefor, before deducting therefrom any
discount or commission or other expenses allowed, paid or incurred by the
Company for underwriting of, or otherwise in connection with, the issuance
thereof, shall be deemed to be the amount received by the Company therefor. In
the case of an issue of additional Common Stock or Common Stock Equivalents for
consideration in whole or in part other than cash, the consideration other than
cash shall be deemed to be the fair value thereof as reasonably determined by
the Company's Board of Directors, irrespective of any accounting treatment. No
adjustments to the Exercise Price or the number of Warrant Shares issuable upon
exercise of this Warrant shall be made pursuant to this Section 6(b) for (x) any
transaction for which adjustment thereto is required to be made pursuant to
Section 6(a) hereof, (y) the exercise of Warrants or (2) the conversion,
exchange or exercise of any Common Stock Equivalents.
(c) For purposes of this Section 6, "Common Stock Equivalents" shall mean
any options, warrants or other securities or rights convertible into, or
exercisable or exchangeable for, shares of Common Stock.
(d) For the purpose of any computation under this Section 6, the current
market price per share of Common Stock at any date shall be deemed to be the
average of the daily closing prices for the 20 consecutive trading days
immediately preceding such date.
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The closing price for each day shall be the last sale price of the Common Stock
or, in case no such reported sales take place on such day, the average of the
last reported bid and asked prices of the Common Stock in either case on the
principal national securities exchange on which the Common Stock is admitted to
trading or listed, or if not listed or admitted to trading on any such exchange,
the representative closing bid price of the Common Stock as reported by NASDAQ,
or other similar organization if NASDAQ is no longer reporting such information,
or if not so available, the fair market price of the Common Stock as determined
by the Company's Board of Directors. The term "issue" shall include the sale
other disposition of shares held by or on account of the Company or in the
treasury of the Company but until so sold or otherwise disposed of such shares
shall not be deemed outstanding.
(e) In the event that at any time, as a result of any adjustment made
pursuant to Section 6, the Warrantholder thereafter shall become entitled to
receive any shares of the Company other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of any Warrant shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in
Section 6.
(f) In case of any reclassification, capital reorganization or other change
of outstanding shares of Common Stock (other than a dividend, distribution,
subdivision or combination of the outstanding Common Stock provided for in
Section 6(a) and other than a change in the par value of the Common Stock or in
case of any consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary in which the Company is the
continuing corporation and that does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant)) or in case of any sale, lease,
transfer or conveyance to another corporation of the property and assets of the
Company as an entirety or substantially as an entirety, the Company shall, as a
condition precedent to such transaction, cause such successor or purchasing
corporation, as the case may be, to execute with the Warrantholder an agreement
granting the Warrantholder the right thereafter, upon payment of the Exercise
Price in effect immediately prior to such action, to receive upon exercise of
this Warrant the kind and amount of shares and other securities and property
which it, he or she would have owned or have been entitled to receive after the
happening of such reclassification, change, consolidation, merger, sale or
conveyance had this Warrant been exercised immediately prior to such action.
Such agreement shall provide for adjustments in respect of such shares of stock
and other securities and property, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 6. In the event that
in connection with any such reclassification, capital reorganization, change,
consolidation, merger, sale or conveyance, additional shares of Common Stock
shall be issued in exchange, conversion, substitution or payment, in whole or in
part, for, or of, a security of the Company other than Common Stock, any such
issue shall be treated as an issue of Common Stock covered by the provisions of
this Section 6. The provisions of this Section 6 shall similarly apply
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to successive reclassifications, capital reorganizations, consolidations,
mergers, sales or conveyances.
(g) Liquidating Dividends, Etc. If the Company at any time while Warrants
are outstanding and unexpired makes a distribution of its assets to the holders
of its Common Stock as a dividend in liquidation or by way of return of capital
or other than as a dividend payable out of earnings or surplus legally available
for dividends under applicable law or any distribution to such holders made in
respect of the sale of all or substantially all of the Company's assets (other
than under the circumstances provided for in the foregoing subsections (a)
through (f)), the holder of this Warrant shall be entitled to receive upon the
exercise hereof, in addition to the shares of Common Stock receivable upon such
exercise, and without payment of any consideration other than the Exercise
Price, an amount in cash equal to the value of such distribution per share of
Common Stock multiplied by the number of shares of Common Stock which, on the
record date for such distribution, are issuable upon exercise of this Warrant
(with no further adjustment being made following any event which causes a
subsequent adjustment in the number of shares of Common Stock issuable upon the
exercise hereof), and an appropriate provision therefor should be made as part
of any such distribution. The value of a distribution which is paid in other
than cash shall be determined in good faith by the Board of Directors.
(h) If at any time prior to the date of the original issuance of this
Warrant, or at any time thereafter while this Warrant is outstanding, a
Distribution Date (as defined in the Company's Rights Agreement as of January 3,
1994 by and between the Company and Mellon Securities Trust Company (the "Rights
Plan") shall occur and all of the Rights (as defined in the Rights Plan) then
issued and outstanding pursuant to such Rights Plan shall not be redeemed by the
Company for nominal consideration of $.001 per Right within the redemption
period provided for in Section 23 of the Rights Plan, then in such event there
shall be promptly issued to the holder of this Warrant, that number of Rights
under the Rights Plan as would have been issued to such holder if immediately
prior to the Distribution Date the holder had exercised his right to purchase,
and the Company had issued to him, all Warrant Shares issuable to him upon
exercise of this Warrant and he was the record owner of such Warrant Shares on
the date provided for in the Rights Plan for determining the stockholders of
record entitled to receive Rights Certificates (as defined in the Rights Plan).
If the Company shall be prohibited from issuing such Rights to the Warrant
holder by law or by the terms of the Rights Plan, then the Warrant Holder shall
have the right under this paragraph (h) to purchase or acquire (by exchange of
securities or otherwise) the same number and class of equity securities of the
Company as such holder would have had the right to so purchase or otherwise
acquire if the Rights described in the preceding sentence had been issued to
him, for the same consideration as the holder would have paid or tendered under
such Rights and on the same other terms and conditions as would have been
applicable under such Rights if such Rights had been issued to such holder as
provided in the preceding sentence. The intent of this paragraph (h) is to
protect the holder of the Warrant from the dilution of and diminution in the
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value of his investment in the Company that would occur if the Rights under the
Rights Plan become exercisable or exchangeable for stock of the Company
following the occurrence of a Distribution Date and the provisions of this
Warrant shall be liberally interpreted in order to give effect to this
intention. The Board of Directors of the Company shall also take such other
actions as may be necessary to carry out the purpose and intent of this
paragraph.
(i) No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrantholders against
impairment.
(j) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Exercise Price pursuant to this Section 6, the Company,
at its expense, shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and prepare and furnish to each Warrantholder a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based. The Company
shall, upon the written request at any time of any Warrantholder, furnish or
cause to be furnished to such holder a like certificate setting forth (A) such
adjustment and readjustment, (B) the Exercise Price at the time in effect, and
(C) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the exercise of this Warrant.
SECTION 7. Registration Rights. Each present and future holder of Warrant
Shares shall be entitled to the benefits of the registration rights granted
pursuant to this Section 7.
The Company covenants and agrees as follows:
(a) Definitions. For purposes of this Section 7:
(i) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act,
and the declaration or ordering of effectiveness of such registration
statement or document;
(ii) The term "Registrable Securities" means the Warrant Shares
and all shares of Common Stock issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which
is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, any of the Warrant Shares excluding
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in all cases, however, any Registrable Securities (x) sold by a person
in a transaction in which his rights under this Section 7 are not
assigned, (y) sold in a public offering registered under the
Securities Act or (z) sold pursuant to Rule 144 promulgated under the
Securities Act;
(iii) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common
Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable or convertible securities which
are, Registrable Securities;
(iv) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in
accordance with Section 5(b) hereof; and
(v) The term "Form S-3" means such form under the Securities Act
as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion
or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
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(b) Request for Registration.
(i) If the Company shall receive at any time, on or after the
first anniversary hereof, a written request from the Holders of a
majority of the Registrable Securities then outstanding that the
Company file a registration statement under the Securities Act
covering the registration of at least sixty percent (60%) of the
Registrable Securities then outstanding, then the Company shall,
within ten (10) business days of the receipt thereof, give written
notice of such request to all Holders, and shall, subject to the
limitations of Section 7(b)(ii), effect as soon as practicable, and in
any event within 90 days of the receipt of such request, the
registration under the Securities Act of the Registrable Securities
which the Holders request to be registered within twenty (20) days of
the mailing of such notice by the Company. If within fifteen (15) days
of the exercise of a demand registration right granted under this
Section 7(b), the Company notifies the Holders of the Registrable
Securities making such demand that the Company wishes to register
securities of the same class for its own account on the registration
statement being filed pursuant to the demand for offering to the
public via a firm commitment underwriting, then the Company may
include securities for its own account in such registration statement;
provided, however, that if the managing underwriter determines and
advises in writing that the inclusion of any or all such securities
for the Company's account in the registration statement covered by the
requests for registration made under this Section 7(b)(ii) would be
detrimental to the offering of the Registrable Securities being sold
in such registration, then the requisite number of securities for the
Company's account shall be excluded from registration hereunder and,
provided, further, that if the Company includes any securities for its
own account on the registration statement filed pursuant to this
Section 7(b), such registration shall not be counted as one of
Holders' demand registrations pursuant to this Section 7(b) and the
Holders shall not be required to reimburse the Company for any
expenses incurred by it in connection with such registration.
(ii) If the Holders initiating the registration request hereunder
(the "Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant
to this Section 7(b) and the Company shall include such information in
the written notice referred to in Section 7(b)(i). In such event, the
right of any Holder to include its, his or her Registrable Securities
in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such
Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together
with the Company as provided in Section 7(d)(v)) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest
of the Initiating Holders. VVI acknowledges that the Preference
Holders (as hereinafter defined) have the right to include certain
securities in any registration under this Section 7(b).
Notwithstanding any other provision of this Section 7(b), if the
underwriter advises the Initiating Holders in writing that
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marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of securities that may be included in
the underwriting shall be allocated first among all holders (the
"Preference Holders") of Company securities covered by the
registration rights ("Other Securities") granted pursuant to either
that certain Securities Purchase Agreement dated as of September 30,
1994 (as amended as of December 19, 1994) by and among the Company and
the purchasers named therein or that certain Registration Rights
Agreement dated as of December 19, 1994 by and among the Company and
the other signatories thereto or those certain Warrants to purchase an
aggregate of up to 66,264 shares of the Company's Common Stock issued
pursuant to that certain Release and Settlement Agreement dated
February 10, 1995 by and between the Company and The Wall Street
Group, Inc. (the "Preferred Rights"); and next among all Initiating
Holders and other Holders who have been provided the notice required
by Section 7(b)(i) in proportion (as nearly as practicable) to the
number of shares of Registrable Securities requested to be included in
such registration by such Holder and which would be eligible for
inclusion in the registration but for the application of this
sentence. In the event Holders are not permitted to include at least
seventy-five (75%) percent of the shares of Registrable Securities
that they requested pursuant to Section 7(b)(i) to be included in a
demand registration as a result of the application of the immediately
preceding sentence, such registration shall not be counted as one of
the Holders' demand registrations pursuant to this Section 7(b) and
the Holders shall not be required to reimburse the Company for any
expenses incurred by it in connection with such registration. In the
event, as a result of the second immediately preceding sentence,
Holders are permitted to include at least seventy-five (75%) percent
but less than one hundred (100%) percent of the shares of Registrable
Securities that they requested pursuant to Section 7(b)(i) to be
included in any registration which would be the last demand
registration to which the Holders would be entitled pursuant to this
Section 7(b) but for the application of this sentence, the Holders
shall be entitled to effect an additional demand registration in
accordance with the provisions set forth in this Section 7(b) and the
Holders shall not be required to reimburse the Company for any
expenses incurred by it in connection with any such additional
registration.
(iii) Subject to the last sentences of Sections 7(b)(ii) and (v)
hereof, the Company is obligated to effect only two (2) registrations
pursuant to this Section 7(b).
(iv) Notwithstanding the foregoing, the Company shall not be
required to file a registration statement pursuant to a request of the
Initiating Holders during either (i) the one hundred twenty (120) day
period following the effective date of any registration of Company
securities which includes Registrable Securities or Other Securities
or (ii) the period of time beginning on the date the Company files a
registration statement with the SEC covering Other Securities in a
firm commitment underwriting and ending on the earlier to occur of (x)
the date which is 120 days after such registration becomes effective,
(y) the date on which the Company withdraws such registration with the
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SEC or (z) the date which is 180 days after the date the Company files
such registration statement. In addition, if the Company shall furnish
to Holders requesting a registration statement pursuant to this
Section 7(b) a certificate signed by the President of the Company
stating that in the good faith judgment of the board of directors of
the Company it would be seriously detrimental to the Company and its
stockholders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration
statement, the Company shall have the right to defer such filing for a
period of not more than ninety (90) days after receipt of the request
of the Initiating Holders; provided, however, that the Company may not
utilize this right more than once in any twelve (12) month period.
(v) VVI acknowledges that the Company has granted the Preferred
Holders the right to participate in registrations of the Company's
securities required to be undertaken pursuant to this Section 7(b). If
within forty-five (45) days of the exercise of a demand registration
right granted pursuant to this Section 7(b), the Company notifies the
Holders of the Registrable Securities that the Preferred Holders wish
to include Other Securities for their account in such registration,
then the Company may include Other Securities for the account of such
Preferred Holders in such registration and, in the case of an
underwritten offering, may reduce the number of shares of Registrable
Securities included in such registration in accordance with the
provisions set forth in Section 7(b)(ii); provided, however, that if
the Holders are not permitted to include at least seventy-five (75%)
percent of the shares of Registrable Securities that they requested
pursuant to Section 7(b)(i) to be included in a demand registration as
a result of the applications of this sentence, such registration shall
not be counted as one of Holders' demand registrations pursuant to
this Section 7(b) and the Holders shall not be required to reimburse
the Company for any expenses incurred by it in connection with such
registration. In the event, as a result of the immediately preceding
sentence, Holders are permitted to include at least seventy-five (75%)
percent but less than one hundred (100%) percent of the shares of
Registrable Securities that they requested pursuant to Section 7(b)(i)
to be included in any registration which would be the last demand
registration to which the Holders would be entitled pursuant to this
Section 7(b) but for the application of this sentence, the Holders
shall be entitled to effect an additional demand registration in
accordance with the provisions set forth in this Section 7(b) and the
Holders shall not be required to reimburse the Company for any
expenses incurred by it in connection with any such additional
registration.
(vi) In the event that the Warrant would expire at any time when
the Holders have requested registration of Registrable Securities
pursuant to Section 7(b)(i) and either (x) NMC is not required to file
a registration statement during such time pursuant to Section 7(b)(iv)
or (y) the Holders are not permitted to include all of the Registrable
Securities that they requested to be included in such demand
registration pursuant to Section 7(b)(ii) or (v), then the term of the
Warrant (but only with respect to Registrable Securities that were not
included in such demand registration by reason of the circumstances
described in clause (x) or (y)) shall be extended until a registration
statement registering such Registrable Securities is effective.
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(c) Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any shares
of its Common Stock under the Securities Act in connection with the public
offering of such securities solely for cash (other than a registration
relating solely to the sale of securities to employees pursuant to stock
option awards and/or to participants in a Company employee benefit or stock
plan, or a registration on any form which does not include substantially
the same information, other than information related to the selling
stockholders or their plan of distribution, as would be required to be
included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each Holder
written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the
Company, the Company shall, subject to the provisions of the immediately
preceding sentence and Section 7(h) hereof, cause to be registered under
the Securities Act all of the Registrable Securities that each such Holder
has requested to be so registered. Notwithstanding anything herein to the
contrary, in the case of a registration required to be undertaken by the
Company pursuant to the Preferred Rights (a "Limited Piggyback
Registration"), the Company shall not be required to include any
Registrable Securities in such Limited Piggyback Registration if either (i)
the Preferred Holders (whose determination shall be made by Preferred
Holders holding a majority of the securities covered by such demand
registration rights which are to be included in such registration) or the
managing underwriter (in the case of an underwritten offering) determine in
good faith that the inclusion of any or all of the Registrable Securities
would be detrimental to the offering of the Preferred Holders' securities
or any securities to be sold in such registration for the Company's account
or (ii) the number of Other Securities to be included in such registration
would be reduced by the inclusion of the Registrable Securities in such
registration. In the event the number of shares of Registrable Securities
requested by Holders to be included in a registration is reduced by
application of the immediately preceding sentence, the number of
Registrable Securities to be included in the registration statement shall
be allocated among the Holders who have provided the notice required by
this Section 7(c) in proportion (as nearly as practicable) to the number of
Registrable Securities requested to be included in such registration by
such Holder and which would be eligible for inclusion in such registration
but for the application of the immediately preceding sentence.
(d) Obligations of the Company. Whenever required under this Section 7
to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(i) Prepare and file with the Securities and Exchange Commission
(the "SEC") a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration
statement to become effective, and, upon the request of the Holders of
a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred twenty
(120) days.
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(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.
(iii) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they
may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(iv) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested
by the Holders, provided that the Company shall not be required to
qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(v) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering.
Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
(vi) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening
of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing.
(vii) In the case of an underwritten public offering, furnish, at
the request of any Holder requesting registration of Registrable
Securities pursuant to this Section 7, on the date that such
Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 7, (A) an
opinion, dated such date, of the counsel representing the Company for
the purposes of such registration, in such form and substance as is
customarily given to underwriters in an underwritten public offering,
addressed to the underwriters and (B) a letter dated such date, from
the independent certified public accountants of the Company, in such
form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering,
addressed to the underwriters.
(e) Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 7
with respect to the Registrable Securities of any selling Holder that such
Holder shall have furnished to the Company such information regarding
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itself, the Registrable Securities held by it, and the intended method of
disposition of such securities as shall be required to effect the
registration of such Holder's Registrable Securities.
(f) Expenses of Demand Registration. Except as set forth in this
Section 7(f), the Company shall bear and pay all expenses incurred by it in
connection with any registrations, filings or qualifications pursuant to
Section 7(b), including without limitation all registration, filing and
qualification fees, printers, and accounting fees, and fees and
disbursements of counsel for the Company; provided, however, that (subject
to Sections 7(b)(ii) and (v) hereof) the Holders participating in any
registration pursuant to Section 7(b) shall reimburse the Company for (i)
all such expenses (up to a maximum of Twenty Five Thousand ($25,000.00)
Dollars per registration) pro rata based upon the number of Registrable
Securities included in such registration by all Holders (excluding,
however, any expenses attributable to the inclusion of any other securities
therein, including, without limitation, any Other Securities) and (ii) for
any expenses of any registration proceeding begun pursuant to Section 7(b)
if the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (in
which case all Holders participating in such withdrawn registration shall
bear such expenses pro rata based upon the number of Registrable Securities
to be included in such registration), unless the Holders of a majority of
the Registrable Securities agree to forfeit their right to one demand
registration pursuant to Section 7(b); provided further, however, that, in
the case of clause (ii) hereof, if at the time of such withdrawal the
Holders have learned of a material adverse change in the condition,
business, or prospects of the Company from that known to the Holders at the
time of their request, then the Holders shall not be required to reimburse
the Company for any of such expenses and shall retain their rights pursuant
to Section 7(b). In no event shall the Company be required to pay any
expenses incurred by a Holder in connection with any registration, filing
or qualification pursuant to Section 7(b).
(g) Expenses of Company Registration. The Company shall bear and pay
all expenses incurred by it in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 7(c), including without limitation all registration,
filing, and qualification fees, printers and accounting fees and all fees
and disbursements of counsel for the Company relating or allocable thereto.
The Company shall not pay any expenses incurred by a Holder in connection
with any such registration, filing or qualification, including, but not
limited to underwriting discounts and commissions relating to Registrable
Securities and the fees and disbursements of any professional advisors
(including attorneys and accountants) utilized by the selling Holders in
connection with such registration, filing or qualification.
(h) Reduction of Registrable Securities Included in Piggyback
Registration Statement. In connection with any offering involving an
underwriting of shares being issued by the Company, the Company shall not
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be required under Section 7(c) hereof to include any of the Holders'
securities in such underwriting unless they accept the customary and
reasonable terms of the underwriting as agreed upon between the Company and
the underwriters selected by it, and then only in such quantity as will
not, in the opinion of the underwriters, jeopardize the success of the
offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company
that the underwriters reasonably believe compatible with the success of the
offering, then the Company shall be required to include in the offering
only that number of such securities, including Registrable Securities,
which the underwriters believe will not jeopardize the success of the
offering (the securities so included to be allocated first among all
holders of Other Securities and next apportioned pro rata among the Holders
who have provided notice required by Section 7(c) and all other holders
(other than holders of Other Securities) of securities subject to
registration rights granted by the Company in proportion (as nearly as
practicable) to the number of shares of securities requested to be included
in such registration by such Holder and such other holders and which would
have been eligible for inclusion in such registration but for the
application of this sentence, or in such other proportions as shall
mutually be agreed to by such selling stockholders). For purposes of the
provision of the preceding sentence concerning pro rata apportionment
amongst the selling stockholders, for any selling stockholder which is a
partnership or corporation, the partners, retired partners and stockholders
of such Holder, or the estates and family members of any such partners and
retired partners and any trusts for the benefit of any of the foregoing
persons shall be deemed to be a single "selling stockholder," and any pro
rata reduction with respect to such "selling stockholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "selling stockholder," as
defined in this sentence.
(i) Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any registration by
the Company as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 7.
(j) Indemnification and Contribution. In the event any Registrable
Securities are included pursuant to a registration statement under this
Section 7:
(i) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the
Securities Act) and each person if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act") against any
losses, claims, damages or liabilities (joint or several) to which
they or any of them may become subject under the Securities Act, the
Exchange Act or any other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (A) any untrue
statement or alleged untrue statement of a material fact contained
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in such registration statement, including any preliminary prospectus
(but only if such is not corrected in the final prospectus) contained
therein or any amendments or supplements thereto, (B) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading (but only if such is not corrected in the final
prospectus), or (C) any violation or alleged violation by the Company
in connection with the registration of Registrable Securities under
the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange
Act or any state securities law; and the Company will pay to each such
Holder, underwriter or controlling person, as incurred, any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in
this Section 7(j)(i) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement
is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a violation which occurs
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such
Holder, underwriter or controlling person.
(ii) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each
of its officers who has signed the registration statement, each
person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter, any other Holder selling securities
in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity
with written information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this Section 7(j)(ii),
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 7(j)(ii) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided
that in no event shall any indemnity under this Section 7(j)(ii)
exceed the net proceeds from the offering received by such Holder.
(iii) Promptly after receipt by an indemnified party under this
Section 7(j) of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
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this Section 7(j), deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to
the parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between
such indemnified party and any other party represented by such counsel
in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
such action, if prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the
indemnified party under this Section 7(j), but the omission so to
deliver written notice to the indemnifying party will not relieve it
of any liability that it may have to any indemnified party otherwise
than under this Section 7(j).
(iv) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in Section
7(j)(i) and (ii) is applicable but for any reason is held to be
unavailable from the Company with respect to all Holders or any
Holder, the Company and the Holder or Holders, as the case may be,
shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted) to which the
Company and one or more of the Holders may be subject in such
proportion as is appropriate to reflect the relative fault of the
Company on the one hand, and the Holder or Holders on the other, in
connection with statements or omissions which resulted in such losses,
claims, damages or liabilities. Notwithstanding the foregoing, no
Holder shall be required to contribute any amount in excess of the net
proceeds received by such Holder from the Registrable Securities as
the case may be, sold by such Holder pursuant to the registration
statement. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. Each person, if any, who controls a Holder within
the meaning of the Securities Act shall have the same rights to
contribution as such Holder.
(v) The obligations of the Company and Holders under this Section
7(j) shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 7 or
otherwise.
(k) Reports Under the Exchange Act. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities Act
and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration
or pursuant to a registration on Form S-3, the Company agrees to:
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(i) make and keep public information available, as those terms
are understood and defined in Rule 144 of the SEC;
(ii) at all times take all such action as may be necessary or
advisable to enable the Holders to utilize Form S-3 for the sale of
their Registrable Securities;
(iii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the
Exchange Act; and
(iv) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon its request (i) a written
statement by the Company as to its compliance with the reporting
requirements of SEC Rule 144, the Securities Act and the Exchange Act,
or as to its qualified status as a registrant whose securities may be
resold pursuant to Form S-3, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
(l) Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding
Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow
such holder or prospective holder (i) to include such securities in
any registration filed under Section 7(b) hereof, unless under the
terms of such agreement, such holder or prospective holder may include
such securities in any such registration only to the extent that the
inclusion of this securities will not reduce the amount of the
Registrable Securities of the Holders which is included in such
registration; (ii) to make a demand registration which could result in
such registration statement being declared effective within one
hundred twenty (120) days after the effective date of any registration
effected pursuant to Section 7(b) hereof or (iii) to include such
securities in any registration in which the Holders may include
Registrable Securities pursuant to Section 7(c) hereof, unless under
the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only on a basis no
more favorable than pro rata with all Holders of Registrable
Securities in proportion (as nearly as practicable) to the number of
shares of securities to be included in such registration by such
Holder and such other holders.
(m) The provisions of this Section 7 shall survive any expiration
of the Warrants evidenced hereby until the earlier to occur of (i) the
date that all Warrant Shares held by all Holders may be sold for
resale pursuant to Rule 144 under the Exchange Act without reduction
as a result of Rule 144(e) thereunder and (ii) the date that no
Warrants or Warrant Shares are held by any Holder.
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SECTION 8. Miscellaneous.
8.1 Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholders with respect to this Warrant and
Warrant Shares.
8.2 Binding Effects; Benefits. This Warrant shall inure to the benefit of
and shall be binding upon the Company, the Warrantholders and holders of Warrant
Shares and their respective heirs, legal representatives, successors and
assigns. Nothing in this Warrant, expressed or implied, is intended to or shall
confer on any person other than the Company, the Warrantholders and holders of
Warrant Shares, or their respective heirs, legal representatives, successors or
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Warrant or the Warrant Shares.
8.3 Amendments and Waivers. This Warrant may not be modified or amended
except by an instrument in writing signed by the Company and Warrantholders that
hold Warrants entitling them to purchase at least 50% of the Warrant Shares. The
Company, any Warrantholder or holders of Warrant Shares may, by an instrument in
writing, waive compliance by the other party with any term or provision of this
Warrant on the part of such other party hereto to be performed or complied with.
The waiver by any such party of a breach of any term or provision of this
Warrant shall not be construed as a waiver of any subsequent breach.
8.4 Section and Other Headings. The section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning or interpretation of this Warrant.
8.5 Further Assurances. Each of the Company, the Warrantholders and
holders of Warrant Shares shall do and perform all such further acts and things
(including, without limitation, any required filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended) and execute and deliver all such
other certificates, instruments and/or documents (including without limitation,
such proxies and/or powers of attorney as may be necessary or appropriate) as
any party hereto may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Warrant.
8.6 Notices. All demands, requests, notices and other communications
required or permitted to be given under this Warrant shall be in writing and
shall be deemed to have been duly given if delivered personally or sent by
United States certified or registered first class mail, postage prepaid, to the
parties hereto at the following addresses or at such other address as any party
hereto shall hereafter specify by notice to the other party hereto:
B-24
<PAGE> 68
(a) if to the Company, addressed to:
National Media Corporation
1700 Walnut Street
Philadelphia, Pennsylvania 19103
Attention: Chairman
(b) if to any Warrantholder or holder of Warrant Shares, addressed to
the address of such person appearing on the books of the Company.
Except as otherwise provided herein, all such demands, requests, notices
and other communications shall be deemed to have been received on the date of
personal delivery thereof or on the third business day after the mailing
thereof.
8.7 Separability. Any term or provision of this Warrant which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable any other term or provision of this Warrant
or affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.
8.8 Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Warrantholder an amount in cash equal to such fraction
multiplied by the current market price (as determined as of the date of
exercise, and with reference to the applicable trading market, in accordance
with Section 1.1(a)(ii)) of a share of such stock as of the date of such
exercise.
8.9 Rights of the Holder. The Warrantholder shall not, solely by virtue of
this Warrant, be entitled to any rights of a stockholder of the Company, either
at law or in equity.
8.10 Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and performed in Delaware.
B-25
<PAGE> 69
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
duly authorized officer.
NATIONAL MEDIA CORPORATION
By:_________________________________
Name:
Title:
Dated: _________________, 1995
B-26
<PAGE> 70
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, ____________________ hereby sells, assigns and
transfers unto _____________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint _________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number
of Warrants set forth below, with full power of substitution in the premises:
Name(s) of
Assignee(s) Address No. of Warrant Shares
- ----------- -------- ---------------------
And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants represented by said
Warrant Certificate.
Dated: ________________, 19___
------------------------------------------
Note: The above signature should
correspond exactly with the name on
the face of this Warrant Certificate.
B-27
<PAGE> 71
SUBSCRIPTION FORM
(To be executed upon exercise of Warrant
pursuant to Section 1.1(a))
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
shares of Common Stock, as provided for therein, and delivers payment in full of
the Exercise Price in the amount of $ __________ as follows:
Cash $__________
Certified or Official bank check $__________
Application of Telemarketing Differential
and Production and Post Production
Differential $__________
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional share to:
Name: ______________________________________
Address: ______________________________________
______________________________________
______________________________________
Social Security No.: ______________________________________
(Please Print Name, Address and Social Security No.)
Signature: ________________________________________
NOTE: The above signature should
correspond exactly with the name
on the first page of this Warrant
Certificate or with the name of
the assignee appearing in the
assignment form delivered
herewith.
B-28
<PAGE> 72
And if said number of shares shall not be all the shares purchasable under
the within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder rounded up to the next higher number of shares.
B-29
<PAGE> 73
JOINT VENTURE AGREEMENT
This Joint Venture Agreement (this "Agreement") is made this 13th day of
April, 1995, by and between National Media Corporation, a Delaware corporation
("National Media"), and ValueVision International, Inc., a Minnesota corporation
("ValueVision"). National Media and ValueVision are sometimes referred to herein
individually as a "Partner" and collectively as the "Partners."
W I T N E S S E T H:
WHEREAS, ValueVision is engaged in Television Home Shopping (as defined
below), among other things, in the United States and elsewhere and wishes to
pursue opportunities to develop, produce and distribute Infomercial Marketing
(as defined below) in markets outside of the United States and Canada, and
National Media is engaged in Infomercial Marketing, among other things, in the
United States and elsewhere and wishes to pursue opportunities to develop,
produce and distribute Television Home Shopping in markets outside of the United
States and Canada. For purposes of this Agreement, "Television Home Shopping"
means the marketing of numerous products through programs broadcast live (which
programs may be rebroadcast at later times) to consumers who are encouraged to
order products while the program is being broadcast, but shall not include
Infomercial Marketing or other marketing methods (other than Television Home
Shopping) which may be employed from time to time by National Media; and
"Infomercial Marketing" means the marketing of one or a group of related
products through the broadcast of a prerecorded program specifically dedicated
to such product or group of related products (which program is designed to be
broadcast numerous times after the program's production) to customers who are
encouraged to order products during or after such program broadcast, but shall
not include Television Home Shopping or other marketing methods (other than
Infomercial Marketing) which may be employed from time to time by ValueVision;
and
WHEREAS, National Media and ValueVision agree to negotiate with each other
to combine their respective expertise in the development, production and
distribution of Television Home Shopping and Infomercial Marketing in markets
outside of the United States and Canada on the terms and conditions set forth
herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, the Partners agree
as follows:
<PAGE> 74
SECTION 1
OPTION; TERM
1.1 Option.
(a) If at any time prior to the fourth anniversary of this Agreement, (i)
ValueVision intends to conduct (directly or through one or more of its
Affiliates (as hereinafter defined)) Infomercial Marketing in any geographical
market outside of the United States and Canada or (ii) National Media intends to
conduct (directly or indirectly through one or more of its Affiliates)
Television Home Shopping in any geographical market outside of the United States
and Canada, such Partner (the "Initiating Partner") shall provide the other
Partner (the "Other Partner") written notice (the "Expansion Notice") of such
intent at least thirty (30) days prior to the Initiating Partner's intended
commencement of such Television Home Shopping or Infomercial Marketing
operations (as the case may be); provided, however, that no Partner shall be
required to give an Expansion Notice hereunder at any time that such Partner
believes, in its sole and absolute discretion, that the provision of such notice
will adversely affect its expansion opportunities or result in undesired
disclosure of such Partner's trade secrets or strategic plan. The Expansion
Notice shall contain a brief description of the Initiating Partner's proposed
Television Home Shopping or Infomercial Marketing operations (as the case may
be), including the geographical market (the "Target Market") in which such
operations will be conducted, and the expected commencement date of such
operations. For purposes of this Agreement, the term "Affiliate" means, with
respect to any Partner, any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by, or is under common control
with, such Partner but shall not include Montgomery Ward & Co., Incorporated, an
Illinois corporation ("Montgomery Ward") or any of its Affiliates which would
not be an Affiliate of VVI but for the fact that (i) it is an Affiliate of
Montgomery Ward or (ii) an Affiliate of such Person was designated by Montgomery
Ward as a director or director-nominee of ValueVision. For the purposes of this
definition, the term "control" shall mean, with respect to any Person, the
beneficial ownership of ten (10%) percent or more of the beneficial ownership of
any interests in such Person, and the term "Person" means any individual, trust,
corporation, partnership, limited liability company, proprietorship or other
association or entity. Notwithstanding anything contained herein to the
contrary, a Partner will not be deemed to be conducting Television Home Shopping
or Infomercial Marketing operations solely by its sale of inventory to a Third
Party (as defined in Section 1.1(d) hereof) which conducts Television Home
Shopping or Infomercial Marketing for resale by such Third Party.
(b) Delivery of the Expansion Notice shall constitute an offer to the Other
Partner to commence negotiations with the Initiating Partner to establish a
joint venture by and between the Other Partner and the Initiating Partner to
pursue the Television Home Shopping or Infomercial Marketing opportunity set
forth in the Expansion Notice on such terms and conditions as the parties hereto
may hereinafter agree. The Other Partner may exercise such option by delivering
written notice of such exercise to the Initiating Partner at any time during the
thirty (30) day period following the Other Party's receipt of the Expansion
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<PAGE> 75
Notice. In the event the Other Partner exercises the option granted to it
pursuant to this Section 1.1(b), the Initiating Partner and the Other Partner
shall commence negotiations as soon as commercially practicable. Each such joint
venture formed hereunder shall be referred to herein as a "Joint Venture."
(c) In the event the Other Partner (i) fails to exercise the option granted
to it under Section 1.1(b) or (ii) the parties are unable, for any reason or no
reason at all after good faith negotiations, to reach an agreement with respect
to the Joint Venture for the Target Market set forth in the Expansion Notice
within thirty (30) days after the date of the Expansion Notice, the Initiating
Partner and the Other Partner shall each have the right to conduct Television
Home Shopping and Infomercial Marketing (as the case may be) in the Target
Market in any manner whatsoever at any time following the date of the Expansion
Notice, and neither the Initiating Partner nor the Other Partner shall
thereafter have any obligation to comply with the provisions of this Section 1
with respect to any Television Home Shopping or Infomercial Marketing operations
in the Target Market.
(d) Subject to the proviso contained in the last sentence of this Section
1.1(d), the Partners acknowledge that National Media or any of its Affiliates
may pursue Television Home Shopping opportunities and ValueVision or any of its
Affiliates may pursue Infomercial Marketing opportunities with a person which is
not an Affiliate of either Partner (a "Third Party"). In the event National
Media or any of its Affiliates proposes to pursue or conduct Television Home
Shopping operations with a Third Party outside of the United States and Canada
or ValueVision or any of its Affiliates proposes to pursue or conduct
Infomercial Marketing operations with a Third Party outside of the United States
and Canada, such Partner shall use its good faith and commercially reasonable
efforts to obtain the Third Party's consent to permit such Partner to comply
with the provisions of Section 1.1 hereof with respect to such proposed
operations. Notwithstanding anything to the contrary contained herein, in the
event such Partner is unable to obtain such consent, such Partner may thereafter
pursue such opportunities and conduct Television Home Shopping and Infomercial
Marketing operations (as the case may be) in any geographical area with such
Third Party without complying with the terms of this Section 1; provided,
however, that in no event shall National Media conduct Television Home Shopping
operations in any geographical market outside of the United States and Canada
with Home Shopping Network, Inc., QVC Network, Inc., VIA TV, Inc. or any United
States-based entity which is engaged in Television Home Shopping as a principal
business and has annual sales from Television Home Shopping operations conducted
in the United States in excess of One Hundred Million ($100,000,000.00) Dollars
(each a "Major Domestic Provider") or any Affiliate of a Major Domestic Provider
without first complying with the provisions of Section 1.1 hereof unless such
Major Domestic Provider or one of its Affiliates solicited National Media to
pursue such opportunity and National Media did not initiate such solicitation.
(e) Each Partner and each of such Partner's respective Affiliates may
engage in other business ventures and activities of every nature and description
(including, without limitation, Infomercial Marketing, Television Home Shopping
3
<PAGE> 76
and other marketing activities) independently or with others, even if such
ventures or activities are competitive with the Joint Venture's business, and
the engagement in such activities shall not be deemed wrongful or improper;
provided, however, that National Media may not conduct (directly or indirectly
through one or more of its Affiliates) Television Home Shopping and ValueVision
may not conduct (directly or indirectly through one or more of its Affiliates)
Infomercial Marketing in any geographical market outside of the United States
and Canada except as set forth in Section 1.1(d) hereof, unless it has complied
with the provisions contained in this Section 1.1. Each Partner expressly
acknowledges and agrees that, except for the negotiation rights granted pursuant
to this Section 1.1 with respect to Television Home Shopping and Infomercial
Marketing operations outside of the United States and Canada, neither Partner
shall have any right to participate with the other Partner or any of its
Affiliates in any activity or venture in which such Partner may from time to
time participate, and that such Partner's and/or its Affiliate's participation
in such activities or ventures shall not, under any circumstances, be deemed a
conflict of interest, breach of fiduciary duty or usurpation of a business
opportunity.
1.2 Purpose and Operations.
Each Joint Venture formed pursuant to this Agreement shall conduct
Television Home Shopping operations or Infomercial Marketing (as the case may
be) in the Target Market and such other activities as the Partners may hereafter
agree. Each Partner shall use its best efforts to promote the best interests of
each Joint Venture, with ValueVision primarily responsible for the provision of
advisory services relating to television production, programming and product
merchandising and National Media primarily responsible for the provision of
advisory services relating to product distribution and fulfillment and
operations in countries outside of the United States and Canada.
1.3 Term.
This Agreement shall terminate upon the earlier to occur of (a) the second
anniversary of this Agreement in the event that there does not then exist a
Joint Venture established pursuant to the terms of this Agreement which is
broadcasting Television Home Shopping or Infomercial Marketing programs, (b) the
delivery by a Partner who experiences a Change of Control (as hereinafter
defined) of written notice of the termination of this Agreement to the other
Partner within sixty (60) days of the occurrence of such Change of Control, or
(c) the fourth anniversary of this Agreement; provided, however, that the
provisions of Section 3 shall survive any such termination. For purposes of this
Agreement, a "Change of Control" shall be deemed to have occurred if (i) all or
substantially all of a Partner's assets are sold, leased or otherwise
transferred in one or a series of related transactions, to any person or group
(as such term is used in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended) or (ii) any person or group (as defined above) (other than any
underwriter or group of underwriters in connection with a bona fide public
offering) beneficially owns capital stock of a Partner possessing 35% or more
4
<PAGE> 77
of the voting power of the voting stock of such Partner (calculated in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended). Any Partner experiencing a Change of Control shall provide the other
Partner written notice of such occurrence within ten (10) business days after
such Change of Control.
SECTION 2
REPRESENTATIONS
Each of the Partners warrants and represents to the other Partner that the
execution of this Agreement and the performance of its respective duties
pursuant to this Agreement have been authorized by all necessary legal action
and do not conflict with nor will otherwise result in a breach of the
Certificate of Incorporation or By-Laws, or any other contract, agreement or
instrument to which such Partner is subject or its properties are bound.
SECTION 3
PRIVILEGED AND CONFIDENTIAL INFORMATION: PUBLICITY
(a) Unless approved in writing by the other Partner, each Partner and its
respective Affiliates shall maintain the confidentiality of all matters relating
to each Joint Venture established hereunder. All memoranda, proposals, notes,
records or other documents made or compiled in connection with the formation or
operation of, or on behalf of, any Joint Venture by any Partner (and its
Affiliates) relating to such Joint Venture and the Joint Venture's
opportunities, activities and projects, and the Joint Venture's trade secrets,
shall be the Joint Venture's property and shall, at the request of either
Partner, be delivered to and held by the Joint Venture at its offices. No
Partner shall use for itself or on behalf of any other person and/or entity
(other than the Joint Venture or on the Joint Venture's behalf), the trade
secrets or any knowledge, data or other information relating to any of the Joint
Venture's activities, projects or opportunities, except as necessary and
appropriate in the development of a Joint Venture opportunity or activity,
unless authorized in writing by the other Partners. Notwithstanding the
foregoing, a Partner shall be entitled to divulge information which it in good
faith believes necessary to comply with governmental laws, rules or regulations
applicable to it, but only after consultation with the other Partner. Nothing
contained herein shall be construed so as to prohibit either Partner from
engaging in any activities permitted pursuant to Section 1.1(e) of this
Agreement.
(b) The Partners may at appropriate times issue press releases and/or other
public announcements relating to a Joint Venture and such Joint Venture's
activities. However, neither of the Partners nor any of their Affiliates shall,
without approval by the other Partner, issue any press release or other public
announcement with respect thereto; provided, however, that this provision shall
not be deemed to prohibit either Partner from making any and all legally
required disclosure(s) but then only after consultation with the other Partner.
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<PAGE> 78
SECTION 4
GENERAL PROVISIONS
4.1 Amendments.
No amendments of this Agreement shall be binding unless such amendment is
in writing and signed by all of the Partners.
4.2 Indulgences, Etc.
Neither the failure of nor any delay on the part of any party hereto to
exercise any right, remedy, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise of the
same or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed
by the party asserted to have granted such waiver.
4.3 Controlling Law.
This Agreement and all questions relating to its validity, interpretation,
performance and enforcement shall be governed by and construed in accordance
with the substantive laws of the State of Delaware notwithstanding any
conflict-of-law provisions to the contrary.
4.4 Injunctive Relief.
Each Partner, for itself and on behalf of its respective Affiliates,
acknowledges that the obligations of, and restrictions upon, such Partner and
its Affiliates (including, without limitation, the restrictions contained in
Sections 1 and 3 hereof), in view of the nature of the business in which the
Partners and their Affiliates are engaged and intend to engage, are reasonable
and necessary in order to protect the legitimate interests of the Partners and
their Affiliates, and that any violation thereof would result in irreparable
injury to the Partners, their Affiliates and any Joint Ventures established
pursuant hereto. Therefore, each Partner and its respective Affiliates
acknowledge that, in the event of a violation of any of its obligations or
restrictions contained in this Agreement, any Partner, any Joint Venture or any
of their respective Affiliates shall be entitled to obtain from any court of
competent jurisdiction preliminary and permanent injunctive relief as well as
damages and an equitable accounting of all earnings, profits and other benefits
arising from such violation or threatened violation, which rights shall be
cumulative and in addition to any other rights or remedies to which the Partner,
the Joint Venture or any of their respective Affiliates may be entitled.
6
<PAGE> 79
4.5 Notices.
All notices, demands, requests, consents, approvals or other communications
(collectively, "Notices") required or permitted to be given hereunder or which
are or may be given with respect to this Agreement shall be in writing and shall
be personally served or deposited in the mails, registered or certified, return
receipt requested, postage prepaid, or sent for delivery within one business day
by a reputable courier service with charges prepaid, or transmitted by hand
delivery, telegram or facsimile, addressed as set forth below, or to such other
address as such party shall have specified most recently by written notice.
Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram or facsimile. Notice otherwise sent
as provided herein shall be deemed given on the second business day following
the deposit of such Notice at the post office or the delivery of such Notice to
a reputable courier service. Until otherwise specified by the party to be
notified, all such Notices shall be addressed as follows:
(a) If to National Media:
National Media Corporation
1700 Walnut Street
Philadelphia, PA 19103
Attention: President
Fax: (215) 772-5013
With a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers
1401 Walnut Street
Philadelphia, PA 19102
Attention: Leonard M. Klehr, Esquire
Fax: (215) 568-6603
(b) If to ValueVision:
ValueVision International, Inc.
6740 Shady Oak Road
Minneapolis, Minnesota 55344
Attention: President
Fax: (612) 947-0188
7
<PAGE> 80
With a copy to:
Maslon Edelman Borman & Brand,
a Professional Limited Liability Partnership
3700 Norwest Center
Minneapolis, MN 55402
Attention: William Mower
Fax: (612) 672-8397
4.6 Binding Nature of Agreement.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that no party
may assign or transfer its rights or obligations under this Agreement in any
manner without the prior written consent of the other Party hereto.
4.7 Execution in Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original as against any party whose signature appears
thereon, and all of which shall together constitute one and the same instrument.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories.
4.8 Provisions Separable.
The provisions of this Agreement are independent of and separate from each
other, and no provision shall be affected or rendered invalid or unenforceable
by virtue of the fact that for any reason any other or others of them may be
invalid or unenforceable in whole or in part.
4.9 Entire Agreement.
This Agreement contains the entire understanding among the parties hereto
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
4.10 Paragraph Headings.
The paragraph headings in this Agreement are for convenience only; they
form no part of this Agreement and shall not affect its interpretation.
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<PAGE> 81
4.11 Gender, Etc.
Words used in this Agreement, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.
4.12 Number of Days.
In computing the number of days for purposes of this Agreement, all days
shall be counted, including Saturdays, Sundays and holidays; provided, however,
that if the final day of any time period falls on a Saturday, Sunday or United
States holiday, then the final day shall be deemed to be the next day which is
not a Saturday, Sunday or United States holiday.
4.13 Interpretation.
No provision of this Agreement is to be interpreted for or against any
party because that party or that party's legal representative drafted such
provision.
4.14 Further Assurances.
In addition to the documents and instruments to be delivered as herein
provided, each of the Partners hereto shall, from time to time at the request of
the Partners, execute and deliver such instruments and shall take such other
action as may be required to more effectively carry out the terms of this
Agreement.
9
<PAGE> 82
4.15 Third Party Beneficiaries.
Notwithstanding anything to the contrary contained herein, no provision of
this Agreement is intended to benefit any party other than the signatories
hereto and their permitted successors and assigns and the Joint Venture and
shall not be enforceable by any other party.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
ATTEST: NATIONAL MEDIA CORPORATION
By: /s/ Marshall A. Fleisher By: /s/ Brian McAdams
----------------------------- ----------------------------------
Name: Marshall A. Fleisher Name: Brian McAdams
Title: Secretary Title: Chairman & CEO
ATTEST: VALUEVISION INTERNATIONAL, INC.
By: /s/ Mark A. Payne By: /s/ Nicholas M. Jaksich
----------------------------- ----------------------------------
Name: Mark A. Payne Name: Nicholas M. Jaksich
Title: Chief Financial Officer Title: President
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<PAGE> 83
Brian McAdams
Chairman and Chief Executive Officer
Direct Dial: 215/772-5082
Fax: 215/772-5013
April 13, 1995
Mr. John J. Turchi, Jr.
1700 Walnut Street
Philadelphia, PA 19103
Re: Certain Agreements with National Media Corporation
Dear Mr. Turchi:
This letter is intended to set forth the terms of certain agreements which
National Media Corporation (the "Company") has today reached with you and
Mergren Associates ("Mergren").
1. Settlement of ValueVision Litigation.
(a) Reference is made to the case of National Media Corporation and John J.
Turchi, Jr. v. ValueVision International, Inc. ("ValueVision"), Robert L.
Johander and Mark A. Payne, currently pending in the United States District
Court for the Eastern District of Pennsylvania at No. 94-CV-2500 (the
"ValueVision Litigation"). The parties to the ValueVision Litigation have
concluded negotiations for the settlement thereof and the release of all claims
and counterclaims asserted therein, and they have prepared a Settlement
Agreement, a copy of which previously has been provided to you and is attached
hereto as Exhibit "A" (the "ValueVision Settlement Agreement").
(b) By your execution and delivery of this letter agreement, you hereby
acknowledge your receipt and approval of the ValueVision Settlement Agreement.
You further expressly confirm and agree that you will:
(1) execute and deliver the ValueVision Settlement Agreement
concurrently with the execution thereof by all other parties thereto;
(2) cause your counsel to execute and deliver a stipulation and order
of dismissal dismissing with prejudice all claims and counterclaims among
you, ValueVision, Robert L. Johander and Mark A. Payne asserted in the
ValueVision Litigation (the date on which your counsel shall have executed
such stipulation of dismissal and all parties to the ValueVision Litigation
shall have executed and delivered the ValueVision Settlement Agreement
being hereinafter referred to as the "Execution Date");
<PAGE> 84
John J. Turchi, Jr.
April 13, 1995
Page 2
(3) vote (or cause to be voted) all shares of the Company's stock
which you own or otherwise control in favor of (i) the Telemarketing,
Production and Post-Production Agreement dated as of the Execution Date
between the Company and ValueVision (the "Telemarketing Agreement") and the
issuance of warrants for shares of the Company's common stock thereunder,
(ii) the Joint Venture Agreement dated as of the Execution Date between the
Company and ValueVision, and (iii) all other transactions contemplated by
such agreements and by the ValueVision Settlement Agreement, to the extent
that shareholder approval thereof is required; and
(4) in the event that the Telemarketing Agreement is not approved by
the Company's shareholders, affirmatively support and cooperate fully with,
and take no action in opposition to, any other agreement or agreements
which the Company, ValueVision and the other parties to the ValueVision
Litigation may propose for and in connection with the settlement of the
ValueVision Litigation, so long as such agreement(s) do not require you to
pay or otherwise contribute any money or other property.
2. Amendment of Consulting Agreement. Reference is hereby made to the
consulting agreement between the Company and you dated December 21, 1994 (the
"Consulting Agreement"). Effective upon the Execution Date, the Consulting
Agreement shall be deemed amended in the following particulars:
(a) Paragraph 2 of the Consulting Agreement (regarding compensation
for consulting services) shall be deemed amended such that:
(1) the Company shall pay you the sum of $277,500 upon the
Execution Date;
(2) subject to the continued faithful observance of your
obligations under the Consulting Agreement, the Company shall pay you
the sum of $500 on the twentieth day of each month during the period
from April 20, 1995 through December 20, 1997, inclusive.
(3) the payments referred to in subparagraphs (1) and (2) above,
plus those payments previously made by the Company under Paragraph 2
of the Consulting Agreement for the months January through March, 1995
(receipt of which you hereby acknowledge) shall be in lieu of all
other payments called for under the Consulting Agreement.
(b) The Consulting Agreement shall be deemed amended by the addition
thereto of the following new Paragraph 4:
"4. During the term of this consulting agreement, you agree to (and to
cause your representatives to) affirmatively support and cooperate fully
with all, and take no action whatsoever in opposition to any, actions which
the Company may take in connection with the settlement of all litigation
and administrative proceedings to which the Company is a party as of April
13, 1995 (including, without limitation, the cases specifically referred to
in Paragraph 5 of the letter agreement between you and the Company dated on
or about April 13, 1995), so long as such actions do not require you to pay
or otherwise contribute any money or other property."
<PAGE> 85
John J. Turchi, Jr.
April 13, 1995
Page 3
(c) Paragraph 3 of the Consulting Agreement (regarding
noncancellability thereof) is hereby amended and restated in its entirety
as follows:
"3. Absent a determination by a court of competent jurisdiction that
you have breached any of the covenants set forth in Paragraph 4 hereof,
this consulting agreement may not be cancelled by the Company prior to the
expiration of the thirty-six month consulting period specified herein."
3. Exercise of Early Lease Termination Right.
(a) Reference is hereby made to the Lease dated February 25, 1992 by
and between Mergren and the Company, as amended by that certain Amendment
No. 1 dated May 10, 1993 by and between Mergren and the Company (the
"Lease"). This letter agreement shall constitute due notice, in accordance
with Section 29(b) of the Lease, of the Company's election to terminate the
Lease and all obligations of the parties thereunder at the end of the fifth
year of the term thereof (i.e., effective October 31, 1997). On the
Execution Date, the Company shall pay to Mergren the sum of $219,738.12,
constituting the early termination fee required under Section 29(b) of the
Lease. Upon payment of such amount, the Company shall be deemed to have
duly exercised its right of early termination of the Lease effective as of
October 31, 1997, and both the landlord and tenant under the Lease shall be
relieved of all their obligations under the Lease from and after October
31, 1997, excepting only those which expressly survive termination.
(b) Absent any event of default in the future thereunder, the Lease
shall be and remain valid and in full force and effect as of the date
hereof and until such effective date of termination. Moreover, the parties
hereby acknowledge and agree that no event has occurred and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default by either landlord or tenant under the Lease. In
addition, upon the Execution Date, Mergren and the Company shall be deemed
to have resolved all disputes concerning (i) the aggregate number of
rentable square feet contained in the demised premises under the lease, and
(ii) the amount of minimum rent and additional rent due and owing by the
Company under the Lease as of the Execution Date as the result of any error
in the measurement of the rentable square feet contained in the demised
premises, it being hereby agreed that the annual minimum rent shall be as
set forth in Section 3(a) of the Lease (as amended by Amendment No. 1 dated
May 10, 1993 referred to above). Furthermore, as of the Execution Date,
Mergren and the Company shall each be deemed to have hereby expressly
waived any and all claims arising under the Lease prior to and including
the Execution Date which each may now or hereafter have, including, without
limitation, all claims for unpaid rent and all claims with respect to the
due execution, effectiveness or validity of the Lease (and, in particular,
Amendment No. 1 dated May 10, 1993, referred to above).
<PAGE> 86
John J. Turchi, Jr.
April 13, 1995
Page 4
(c) Notwithstanding anything contained in this letter agreement or the
Lease to the contrary, following any future default by the Company under
the Lease, Mergren shall have the right (in addition to all other remedies
provided for in the Lease), after not less than ten (10) business days
written notice to the Company designating its intention to invoke this
remedy, to confess judgment against the Company for (i) rent and all other
charges, payments, costs and expenses payable under the Lease (but
excluding the early termination fee paid pursuant to Paragraph 3(a) hereof)
through the expiration of the term thereof (i.e., October 31, 1997), and
(ii) possession of the demised premises. Accordingly, effective as of the
Execution Date, the following provisions shall be deemed added to the Lease
as Section 14(j) thereof:
"(j) Amicable Actions. If rent and/or any charges, payments,
costs or expenses payable to Landlord are not paid when due, Tenant
empowers any Prothonotary, Clerk or attorney of any court of record,
after not less than ten (10) business days written notice to Tenant
designating Landlord's intention to invoke this remedy, to appear for
Tenant in any and all actions which may be brought for rent and/or the
charges, payments, costs and expenses reserved as rent, or agreed to
be paid by Tenant, and to sign for Tenant an agreement for entering in
any competent court an amicable action or actions for the recovery of
rent or other charges or expenses, and in said suits or in said
amicable action or actions to confess judgment against Tenant for all
or any part of the rent specified in this Lease and then unpaid
including, at Landlord's option, the rent for the entire unexpired
balance of the term (i.e., through October 31, 1997) and/or other
charges, payments, costs and expenses reserved as rent or agreed to be
paid by Tenant, and for interest and costs, together with an
attorney's commission of ten percent (10%). Such authority shall not
be exhausted by one exercise thereof, but judgment may be confessed as
aforesaid from time to time as often as any of said rent and/or other
charges, payments, costs or expenses shall be due or be in arrears,
and such powers may be exercised as well after the expiration of the
term.
When this Lease shall be determined by condition broken, at any
time during the term and also when and as soon as the term shall have
expired, it shall be lawful for and Tenant hereby empowers any
attorney as attorney for Tenant, after not less than ten (10) business
days written notice to Tenant designating Landlord's intention to
invoke this remedy, to file an agreement for entering in any competent
court an amicable action in ejectment against Tenant and all persons
claiming under Tenant for the recovery by Landlord of possession of
the Demised Premises, for which this Lease shall be his sufficient
warrant, whereupon, if Landlord so desires, a writ of execution or
possession may issue forthwith, without any writ or proceedings
whatsoever; and provided that if for any reason after such action
<PAGE> 87
John J. Turchi, Jr.
April 13, 1995
Page 5
shall have been commenced the same shall be determined and the
possession of the Demised Premises remain in or be restored to Tenant,
Landlord shall have the right upon any subsequent default or defaults,
or upon the termination of this Lease as hereinbefore set forth, to
bring one or more amicable action or actions as hereinbefore set forth
to recover possession of the Demised Premises.
In any amicable action of ejectment and/or for rent in arrears,
Landlord shall first cause to be filed in such action an affidavit
made by it or someone acting for it setting forth the facts necessary
to authorize the entry of judgment of which facts such affidavit shall
be conclusive evidence, and if a true copy of this Lease (and of the
truth of the copy such affidavit shall be sufficient evidence) be
filed in such action, it shall not be necessary to file the original
as a warrant of attorney, any rule of court, custom or practice to the
contrary notwithstanding."
(d) To the extent that any of the terms and conditions of the Lease
conflict or are inconsistent with the terms and conditions of this letter
agreement, the terms and conditions of this letter agreement shall govern
and control such other provisions.
4. Attorney's Fees.
(a) On the Execution Date, the Company shall pay you the sum of
$50,000, constituting reimbursement in full of all legal fees and
associated costs incurred by you personally in connection with (i) the
ValueVision Litigation, and (ii) the legal matters described in Paragraph 5
herein (collectively, the "Legal Matters").
(b) The Company shall have no other or further obligation to advance,
reimburse or otherwise pay legal fees or costs which you may incur in
respect of the Legal Matters, and you hereby expressly waive any and all
claims which you may now or hereafter have for payment or reimbursement of
such fees or costs (provided, however, that the Company shall continue to
provide you with legal representation in the cases specifically identified
in Paragraph 5 hereof by the counsel identified in such paragraph).
(c) You further hereby agree to indemnify, defend and hold harmless
the Company, its affiliated companies and their respective officers,
directors, shareholders, employees, successors and assigns from and against
any and all claims for legal fees and associated costs arising from or in
connection with the rendition of legal services to you personally in
connection with the Legal Matters, including, without limitation, any and
all claims which may be asserted by Spector, Gadon and Rosen (but
<PAGE> 88
John J. Turchi, Jr.
April 13, 1995
Page 6
excepting claims for legal fees and costs incurred on your behalf in the
cases specifically identified in Paragraph 5 hereof by the counsel
identified in such paragraph).
5. Settlement of Other Litigation. You hereby acknowledge and agree that
you will (and you will cause your representatives to) affirmatively support and
cooperate fully with all, and take no action whatsoever in opposition to any,
efforts which the Company may take to settle and resolve pending litigation and
administrative proceedings to which the Company is a party, including, without
limitation, the following pending cases: (i) the ValueVision Litigation; (ii) In
re National Media Corporation Shareholders Litigation presently pending before
the Delaware Chancery Court at Consolidated Civil Action No. 13339; (iii)
Lachance v. Harrington et al., presently pending before the U.S. District Court
for the Eastern District of Pennsylvania at 94-CV- 4383; (iv) Efron et al. v.
Harrington et al., presently pending before the U.S. District Court for the
Eastern District of Pennsylvania at 94-CV-6800; (v) In re National Media
Securities Litigation presently pending before the U.S. District Court for the
Eastern District of Pennsylvania at 93-CV- 2977; and (vi) Campbell v. National
Media Corporation and John J. Turchi, Jr., presently pending before the U.S.
District Court for the Eastern District of Pennsylvania at Civil Action No.
94-4590; provided, however, that your obligations hereunder with respect to the
cases identified in subclauses (ii)--(iv) above are subject to settlement of
those cases on the terms summarized in the letter of Willkie, Farr and Gallagher
dated April 12, 1995 attached hereto as Exhibit "B," or on terms not
substantially more onerous to the defendants in such litigation than the terms
summarized in such letter. You further hereby acknowledge and consent to being
personally represented by Willkie, Farr and Gallagher in the cases noted in
subclauses (i)--(iv) above, by Klehr, Harrison, Harvey, Branzburg and Ellers in
the case noted in subclause (v) above, and Duane, Morris and Heckscher in the
case noted in subclause (vi) above.
6. Employment Agreement. Reference is made to the Employment Agreement
between you and the Company dated as of September 23, 1993 (the "Employment
Agreement"). Except for the obligations of the Company under Section 6(c) of the
Employment Agreement (with respect to the filing and maintenance of the
effectiveness of a registration statement on Form S-8 covering the stock options
referred to in the Employment Agreement), the Employment Agreement shall in all
other respects hereby be deemed null and void. The Company further hereby agrees
to cause such registration statement to be filed within 90 days of the date of
this letter agreement.
7. Further Actions. You hereby agree to execute such additional documents
and to perform all such other and further acts as may be necessary or desirable
to carry out the purposes and intents of this letter agreement.
8. Entire Agreement. This letter agreement, plus the ValueVision Settlement
Agreement, the Consulting Agreement and the Lease, contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, whether
<PAGE> 89
John J. Turchi, Jr.
April 13, 1995
Page 7
written or oral, between them with respect to the subject matter hereof and
thereof. Each party has executed this letter agreement without reliance upon any
promise, representation or warranty other than those expressly set forth herein.
Each party acknowledges that (i) it has carefully read this letter agreement;
(ii) it has had the assistance of legal counsel of its choosing (and such other
professionals and advisors as it has deemed necessary) in the review and
execution hereof; (iii) the meaning and effect of the various terms and
provisions hereof have been fully explained to it by such counsel; (iv) it has
conducted such investigation, review and analysis as it has deemed necessary to
understand the provisions of this letter agreement and the transactions
contemplated hereby; and (v) it has executed this Agreement of its own free
will, intending to be legally bound hereby.
9. Binding Effect. This letter agreement shall be binding on and inure to
the benefit of the parties hereto and their respective heirs, representatives,
successors and assigns.
10. Governing Law. This letter agreement shall be governed by and construed
in accordance with the internal substantive and procedural laws of the
Commonwealth of Pennsylvania without regard to conflict of laws principles.
11. Headings. The headings of sections and subsections have been included
for convenience only and shall not be considered in interpreting this letter
agreement.
12. Counterparts. This letter agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument.
13. Interpretation and Construction. This letter agreement has been fully
and freely negotiated by the parties hereto, shall be considered as having been
drafted jointly by the parties hereto, and shall be interpreted and construed as
if so drafted, without construction in favor of or against any party on account
of its participation in the drafting hereof.
<PAGE> 90
John J. Turchi, Jr.
April 13, 1995
Page 8
If the foregoing accurately reflects your understanding of our agreements,
please sign this letter agreement on your behalf personally and on behalf of
Mergren Associates where indicated below.
Sincerely,
s/ Brian McAdams
Brian McAdams
for NATIONAL MEDIA CORPORATION
ACCEPTED AND AGREED AS OF
THE DATE INDICATED ABOVE:
s/ John J. Turchi, Jr.
- ---------------------------------
John J. Turchi, Jr.
MERGREN ASSOCIATES
s/ John J. Turchi, Jr,
By:______________________________
John J. Turchi, Jr.
<PAGE> 91
The following is a summary of all omitted Exhibits to the foregoing letter
agreement.
Exhibit A ValueVision Settlement Agreement (filed as Exhibit 10.1 to the
Form 8-K).
Exhibit B Letter of Willkie, Farr & Gallagher dated April 12, 1995
The Registrant hereby agrees to furnish supplementally to the Commission a
copy of Exhibit B upon request of the Commission.
<PAGE> 92
Contact:
John J. Sullivan
Chief Financial Officer
(215)772-5033
FOR IMMEDIATE RELEASE
NATIONAL MEDIA AND VALUEVISION AGREE TO SETTLE LITIGATION,
ENTER TELEMARKETING, PRODUCTION AND
INTERNATIONAL JOINT VENTURE AGREEMENTS
PHILADELPHIA, PA, MINNEAPOLIS, MN, April 17, 1995...National Media Corporation
(NYSE:NM) and ValueVision International, Inc. (NASDAQ:VVTVA) announced today
that they have agreed to settle their yearlong litigation and have entered into
agreements by which they plan to leverage their combined strengths through
telemarketing, production and international joint venture agreements.
As part of the three-year accord, ValueVision has agreed to provide National
Media its telemarketing capability to service a minimum of one million phone
calls per year for National Media's infomericals. National Media expects to
realize a minimum of $3 million in cost savings from this aspect of the
agreement alone. Under the agreement, ValueVision is entitled to receive
warrants to purchase 500,000 shares of National Media's common stock at a price
of $8.865 per share, for a total of over $4 million. These ten-year warrants
vest evenly over the three-year term of the agreement. ValueVision currently
owns 7.5% of National Media's common stock. The agreement also provides for
National Media to utilize ValueVision's state-of-the-art production and post
production capabilities.
The companies disclosed that the telemarketing and production services will be
furnished at prices in excess of ValueVision's costs, but significantly lower
than market prices now being paid by National Media.
Finally, as part of the accord, ValueVision will have certain rights of first
refusal to negotiate joint ventures with National Media for international home
shopping opportunities identified by National Media, and National Media will
have similar rights for international infomercial opportunities identified by
ValueVision.
The agreement is subject to approval of ValueVision's stock purchase rights by
National Media's shareholders. John J. Turchi, Jr., former chairman and chief
executive officer of National Media and a party to the litigation, has joined
the settlement.
<PAGE> 93
April 17, 1995
Page 2
Robert L. Johander, Chairman and Chief Executive Officer of ValueVision, said,
"The cooperative efforts of our companies drawing on each other's strengths make
this agreement a plus for both parties. ValueVision brings readily available
television production and telemarketing capacity to National Media, and National
Media's strong international distribution is expected to help identify potential
foreign joint venture prospects. We are excited by the opportunities opened to
us once the litigation is behind us, and we are looking forward to working
together to more effectively develop our business in the U.S. and abroad."
Brian McAdams, Chairman and Chief Executive Officer of National Media, said,
"The decision to terminate the litigation and pursue meaningful joint business
ventures represents a win-win for both companies. The agreement will
dramatically reduce National Media's costs of doing business, enhance its
competitiveness and contribute to the company's profitability. Clearly, working
together is more logical and productive than the uncertainty of costly,
prolonged litigation."
ValueVision International, Inc. is the third largest television home shopping
retailer in the United States. The company recently announced signing definitive
operating, equity, license and service agreements with Montgomery Ward, the
largest privately held retailer in the U.S. Currently, the company's 24-hour per
day programming is available to approximately 13.0 million cable homes equalling
approximately 8.6 million full-time equivalent cable homes.
National Media Corporation is the worldwide leader in the home shopping
infomerical industry, now doing business in over 40 countries around the world,
in addition to the U.S. and Canada.
* * *
<PAGE> 94
Contact:
John J. Sullivan
Chief Financial Officer
(215)772-5033
FOR IMMEDIATE RELEASE
NATIONAL MEDIA ANNOUNCES TENTATIVE SETTLEMENT
OF CLASS ACTIONS
Philadelphia, PA, April 17, 1995...National Media Corporation (NYSE:NM)
announced today that in connection with its agreement to settle its litigation
with ValueVision International, Inc., it had also entered into agreements in
principle to settle all of the shareholder class actions pending against the
Company and its directors in the Delaware Chancery Court and in the Federal
Court for the Eastern District of Pennsylvania arising out of the withdrawn
tender offer by ValueVision last year. The total cash consideration to be paid
by National Media under the proposed settlements is $1.5 million, 75% of which
will be paid by its insurer. National Media said that it will take a charge in
the fourth quarter of its fiscal year ending March 31, 1995 for its portion of
the settlements. The settlements in both courts are subject to court approval.
Brian McAdams, Chairman and Chief Executive Officer of National Media, said,
"Settling these cases will clean the slate of the remaining class actions
pending against National Media and makes eminent sense. It will free us of the
burden and distraction of litigation and enable us to focus all our attention on
expanding our international marketing efforts and continuing to build value for
our shareholders."
National Media Corporation is the worldwide leader in the home shopping
infomercial industry, now doing business in over 40 countries around the world,
in addition to the U.S. and Canada.
* * *
