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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 5, 1998
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NATIONAL MEDIA CORPORATION
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(Exact name of registrant as specified in charter)
Delaware I-6715 13-2658741
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(State or Other Juris- (Commission File Number) (IRS Employer Identi-
diction of Incorporation) fication No.)
Eleven Penn Center, Ste. 1100, 1835 Market Street, Philadelphia, PA 19103
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(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code 215-988-4600
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N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
The Registrant's Press Release dated January 5, 1998, which is filed as
Exhibit 99.1 to this Current Report on Form 8-K/A, is incorporated herein
by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits
10.1 Agreement and Plan of Reorganization dated January 5, 1998, by and
among ValueVision International, Inc. ("ValueVision"), the
Registrant and V-L Holdings Corp.
10.2 Stock Option Agreement (ValueVision), dated as of January 5, 1998
between ValueVision and the Registrant.
10.3 Stock Option Agreement (National Media), dated as of January 5,
1998 between the Registrant and ValueVision.
10.4 Redemption and Consent Agreement, dated January 5, 1998, by and
between the Registrant, ValueVision, Capital Ventures International
and RGC International Investors, LDC.
10.5 Consent Waiver and Amendment, dated as of January 5, 1998, by and
between Corestates Bank, N.A., the Registrant, Quantum North
America, Inc., Quantum International Limited, Positive Response
Television, Inc. and DirectAmerica Corporation.
10.6 $10,000,000 Demand Promissory Note, dated January 5, 1998 issued by
the Registrant to ValueVision.
10.7 Subsidiary Guaranty, dated as of January 5, 1998, by Quantum North
America, Inc., Quantum International Limited, Quantum Far East Ltd.,
Quantum Marketing International, Inc., Quantum International Japan
Company Ltd., DirectAmerica Corporation, Positive Response
Television, Inc., Quantum Productions AG, Suzanne Paul (Australia)
Pty Limited and National Media Holdings, Inc., for the benefit of
ValueVision.
10.8 Warrant Agreement by and between the Registrant and ValueVision,
dated as of January 5, 1998.
10.9 Warrant Certificate No. 1, dated January 5, 1998, issued by the
Registrant to ValueVision to purchase 250,000 shares of the
Registrant's common stock.
10.10 Registration Rights Agreement by and between the Registrant and
ValueVision, dated as of January 5, 1998.
99.1 Press Release dated January 5, 1998
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL MEDIA CORPORATION
(Registrant)
Date: January 16, 1998 By: /s/ Brian J. Sisko
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Name: Brian J. Sisko
Title: Senior Vice President and
General Counsel
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EXHIBIT INDEX
10.1 Agreement and Plan of Reorganization dated January 5, 1998, by and
among ValueVision International, Inc. ("ValueVision"), the
Registrant and V-L Holdings Corp. ("V-L Holdings").
10.2 Stock Option Agreement (ValueVision), dated as of January 5, 1998
between ValueVision and the Registrant.
10.3 Stock Option Agreement (National Media), dated as of January 5,
1998 between the Registrant and ValueVision.
10.4 Redemption and Consent Agreement, dated January 5, 1998, by and
between the Registrant, ValueVision, Capital Ventures International
and RGC International Investors, LDC.
10.5 Consent Waiver and Amendment, dated as of January 5, 1998, by and
between Corestates Bank, N.A., the Registrant, Quantum North
America, Inc., Quantum International Limited, Positive Response
Television, Inc. and DirectAmerica Corporation.
10.6 $10,000,000 Demand Promissory Note, dated January 5, 1998 issued by
the Registrant to ValueVision.
10.7 Subsidiary Guaranty, dated as of January 5, 1998, by Quantum North
America, Inc., Quantum International Limited, Quantum Far East Ltd.,
Quantum Marketing International, Inc., Quantum International Japan
Company Ltd., DirectAmerica Corporation, Positive Response
Television, Inc., Quantum Productions AG, Suzanne Paul (Australia)
Pty Limited and National Media Holdings, Inc., for the benefit of
ValueVision.
10.8 Warrant Agreement by and between the Registrant and ValueVision,
dated as of January 5, 1998.
10.9 Warrant Certificate No. 1, dated January 5, 1998, issued by the
Registrant to ValueVision to purchase 250,000 shares of the
Registrant's common stock.
10.10 Registration Rights Agreement by and between the Registrant and
ValueVision, dated as of January 5, 1998.
99.1 Press Release dated January 5, 1998
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EXHIBIT 10.1
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
BY AND AMONG
VALUEVISION INTERNATIONAL, INC.,
NATIONAL MEDIA CORPORATION,
AND
V-L HOLDINGS CORP.
___________________________________
DATED AS OF JANUARY 5, 1998
____________________________________
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TABLE OF CONTENTS
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ARTICLE I. THE MERGERS 2
Section 1.1. Certificate of Incorporation and Bylaws of Parent. 2
Section 1.2. The ValueVision Merger. 2
Section 1.3. The National Media Merger. 2
Section 1.4. Effective Time of the Mergers. 2
Section 1.5. Closing. 3
Section 1.6. Effect of the Mergers. 3
Section 1.7. Articles or Certificate of Incorporation and Bylaws
of the Surviving Corporations. 4
Section 1.8. Directors and Officers of the Surviving Corporations. 4
ARTICLE II. CONVERSION OF SECURITIES 4
Section 2.1. Conversion of ValueVision Capital Stock. 4
Section 2.2. Conversion of National Media Capital Stock. 5
Section 2.3. Cancellation of Parent Common Stock. 7
Section 2.4. Exchange of Certificates. 7
Section 2.5. Dissenting Shares. 10
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF VALUEVISION 10
Section 3.1. Organization of ValueVision. 11
Section 3.2. ValueVision Capital Structure. 11
Section 3.3. Authority; No Conflict; Required Filings and Consents. 12
Section 3.4. SEC Filings; Financial Statements. 14
Section 3.5. No Undisclosed Liabilities. 15
Section 3.6. Absence of Certain Changes or Events. 15
Section 3.7. Taxes. 15
Section 3.8. Properties. 16
Section 3.9. Intellectual Property. 17
Section 3.10. Agreements, Contracts and Commitments. 17
Section 3.11. Litigation. 17
Section 3.12. Environmental Matters. 18
Section 3.13. Employee Benefit Plans. 18
Section 3.14. Compliance With Laws. 21
Section 3.15. Accounting and Tax Matters. 21
Section 3.16. Registration Statement; Joint Proxy Statement/Prospectus. 21
Section 3.17. Labor Matters. 22
Section 3.18. Insurance. 22
Section 3.19. Opinion of Financial Advisor. 22
Section 3.20. No Existing Discussions. 22
Section 3.21. Sections 302A.671 and 302A.673 of the MBCA Not Applicable. 22
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF NATIONAL MEDIA 23
Section 4.1. Organization of National Media. 23
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Section 4.2. National Media Capital Structure. 24
Section 4.3. Authority; No Conflict; Required Filings and Consents. 25
Section 4.4. SEC Filings; Financial Statements. 26
Section 4.5. No Undisclosed Liabilities. 27
Section 4.6. Absence of Certain Changes or Events. 27
Section 4.7. Taxes. 28
Section 4.8. Properties. 29
Section 4.9. Intellectual Property. 29
Section 4.10. Agreements, Contracts and Commitments. 29
Section 4.11. Litigation. 29
Section 4.12. Environmental Matters. 29
Section 4.13. Employee Benefit Plans. 30
Section 4.14. Compliance With Laws. 33
Section 4.15. Accounting and Tax Matters. 33
Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus. 34
Section 4.17. Labor Matters. 34
Section 4.18. Insurance. 34
Section 4.19. Opinion of Financial Advisor. 35
Section 4.20. No Existing Discussions. 35
Section 4.21. Section 203 of the DGCL and Sections 2538, 2555, and
2564 of the Pennsylvania Business Corporation Law Not
Applicable. 35
Section 4.22. National Media Rights Plan. 35
ARTICLE V. COVENANTS 35
Section 5.1. Conduct of Business. 35
Section 5.2. Cooperation; Notice; Cure. 37
Section 5.3. No Solicitation. 38
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement. 39
Section 5.5. Nasdaq Quotation and NYSE Listing. 40
Section 5.6. Access to Information. 40
Section 5.7. Stockholders Meetings. 40
Section 5.8. Legal Conditions to Merger. 40
Section 5.9. Public Disclosure. 41
Section 5.10. Tax-Free Reorganization and Transfer. 42
Section 5.11. Affiliate Agreements. 42
Section 5.12. National Listing or Nasdaq Quotation. 42
Section 5.13. Stock Plans. 43
Section 5.14. Brokers or Finders. 44
Section 5.15. Indemnification. 44
Section 5.16. Letter of National Media's Accountants. 45
Section 5.17. Letter of ValueVision's Accountants. 45
Section 5.18. Stock Option Agreements. 45
Section 5.19. Post-Merger Parent Corporate Governance. 45
Section 5.20. Name of Parent. 47
Section 5.21. Parent Stockholder Rights Plan. 47
Section 5.22. The Warrants. 47
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Section 5.23. Conveyance Taxes. 48
Section 5.24. Stockholder Litigation. 48
Section 5.25. Annual Reports for Welfare Benefit Plans. 48
Section 5.26. Employment Agreements. 48
Section 5.27. Funding Advance for Redemption Agreement. 48
ARTICLE VI. CONDITIONS TO MERGER 49
Section 6.1. Conditions to Each Party's Obligation to Effect the Mergers. 49
Section 6.2. Additional Conditions to Obligations of ValueVision. 51
Section 6.3. Additional Conditions to Obligations of National Media. 52
ARTICLE VII. TERMINATION AND AMENDMENT 53
Section 7.1. Termination. 53
Section 7.2. Effect of Termination. 54
Section 7.3. Fees and Expenses. 55
Section 7.4. Amendment. 56
Section 7.5. Extension; Waiver. 57
ARTICLE VIII. MISCELLANEOUS 57
Section 8.1. Nonsurvival of Representations, Warranties and Agreements. 57
Section 8.2. Notices. 57
Section 8.3. Interpretation. 58
Section 8.4. Counterparts. 58
Section 8.5. Entire Agreement; No Third Party Beneficiaries. 59
Section 8.6. Governing Law. 59
Section 8.7. Assignment. 59
Section 8.8. References to "Stockholders". 59
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EXHIBITS
Exhibit A ValueVision Stock Option Agreement
Exhibit B National Media Stock Option Agreement
Exhibit C Restated Certificate of Incorporation of Parent
Exhibit D Amended and Restated Bylaws of Parent
Exhibit E Certificate of Designations of Parent Series B
Convertible Preferred Stock
Exhibit F Form of Affiliate Agreement
Exhibit G Form of Demand Note
Exhibit H Form of Warrant Agreement
Exhibit I Form of Registration Rights Agreement
Exhibit J Form of Amendment to National Media Rights Plan
Exhibit K Form of Redemption Agreement
Exhibit L Form of Series B Consent Agreement
Exhibit M Form of CoreStates Consent Agreement
Exhibit N Form of Amendments to Hammer and Costalas Employment
Agreements
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Exhibit O Form of Parent Stock Plan
Exhibit P Form of Parent Rights Plan
Exhibit Q Form of Subsidiary Guaranty
Exhibit R Form of ValueVision Guaranty
TABLE OF DEFINED TERMS
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CROSS REFERENCE
TERMS IN AGREEMENT
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Acquisition Proposal Section 5.3.(a)
Affiliate Section 5.11.
Affiliate Agreement Section 5.11.
Agreement Preamble
Alternative Transaction Section 7.3.(e)
Annual Report Section 5.25
Bankruptcy and Equity Exception Section 3.3.(a)
Benefit Arrangement Section 3.13.(a)
Certificate of Designations Section 4.2(b)
Certificates Section 2.4.(b)
Closing Section 1.5.
Closing Date Section 1.5.
Code Preamble
Communications Act Section 3.3.(c)
Confidentiality Agreement Section 5.3.(a)
CoreStates Consent Agreement Section 3.3(a)
Costs Section 5.15.(a)
Court Section 6.1(m)
Current Premium Section 5.15.(b)
DGCL Section 1.3.
Demand Note Section 3.3(a)
Dissenting Shares Section 2.5.
Effective Time Section 1.4.(c)
Employee Benefit Plan Section 3.13.(a)
Environmental Law Section 3.12.(b)
ERISA Section 3.13.(a)
ERISA Affiliate Section 3.13.(a)
Exchange Act Section 3.3.(c)
Exchange Agent Section 2.4.(a)
Exchange Fund Section 2.4.(a)
FCC Section 3.3.(c)
FCC Consent Application Section 5.8.(a)
Final Order Section 6.1.(c)
Governmental Entity Section 3.3.(c)
Hazardous Substance Section 3.12.(c)
HSR Act Section 3.3.(c)
Indemnified Parties Section 5.15.(a)
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CROSS REFERENCE
TERMS IN AGREEMENT
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IRS Section 3.7.(b)
Joint Proxy Statement/Prospectus Section 3.16.
Material Adverse Change Section 3.6.
MBCA Section 1.2.
Mergers Section 1.3.
Merger Sub 1 Section 1.2.
Merger Sub 2 Section 1.3.
National Media 10-K Section 4.6
National Media Balance Sheet Section 4.4.(b)
National Media Certificate of Merger Section 1.4.(b)
National Media Common Stock Section 1.3.
National Media Convertible Preferred Stock Section 4.2.(a)
National Media Director Section 5.19.(a)
National Media Disclosure Schedule ARTICLE IV.
National Media Employee Plans Section 4.13.(a)
National Media ERISA Affiliate Section 4.13.(a)
National Media Exchange Ratio Section 2.2.(c)
National Media Material Adverse Effect Section 4.1.
National Media Material Contracts Section 4.10.
National Media Merger Section 1.3.
National Media Parachute Agreements Section 4.13(e)
National Media Rights Plan Section 4.2.(b)
National Media SEC Reports Section 4.4.(a)
National Media Stock Option Section 2.2(e)
National Media Stock Option Agreement Preamble
National Media Stock Plans Section 4.2.(a)
National Media Stockholders' Meeting Section 3.16.
National Media Surviving Corporation Section 1.6.
National Media Warrants Section 4.2.(a)
NYSE Section 5.5.
Order Section 5.8.(b)
Outside Date Section 7.1.(b)
Parent Preamble
Parent Common Stock Section 1.2.
Parent Material Adverse Effect Section 6.1.(h)
Parent Series B Convertible Preferred Stock Section 2.2 (d)
Parent Stock Plan 5.13(f)
PBCL Section 4.21
PBGC Section 4.13.(c)
Pension Plan Section 4.13.(c)
Redemption Agreement Section 3.3(a)
Registration Rights Agreement Section 3.3(a)
Registration Statement Section 3.16.
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CROSS REFERENCE
TERMS IN AGREEMENT
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Rule 145 Section 5.11.
SEC Section 3.3.(c)
Securities Act Section 3.1(a)
Series B Convertible Preferred Stock Section 4.2(a)
Series B Consent Agreement Section 3.3(a)
Series C Convertible Preferred Stock Section 4.2(a)
Series C Note Section 3.3(a)
Settlement Agreement Section 6.1(m)
Stock Option Agreements Preamble
Subsidiary Section 3.1.
Surviving Corporations Section 1.6.
Tax Section 3.7.(a)
Taxes Section 3.7.(a)
Third Party Section 7.3.(e)
Transaction Documents Section 3.3(a)
ValueVision 10-K Section 3.6
ValueVision Articles of Merger Section 1.4.(a)
ValueVision Balance Sheet Section 3.4.(b)
ValueVision Common Stock Section 1.2.
ValueVision Director Section 5.19.(a)
ValueVision Disclosure Schedule ARTICLE III.
ValueVision Employee Plans Section 3.13.(a)
ValueVision ERISA Affiliate Section 3.13.(a)
ValueVision Exchange Ratio Section 2.1.(c)
ValueVision Guaranty Section 6.3(d)
ValueVision Material Adverse Effect Section 3.1.
ValueVision Material Contracts Section 3.10.
ValueVision Merger Section 1.2.
ValueVision Parachute Agreements Section 3.13(e)
ValueVision SEC Reports Section 3.4.(a)
ValueVision Stock Option Section 2.1(d)
ValueVision Stock Option Agreement Preamble
ValueVision Stock Plans Section 3.2.(a)
ValueVision Stockholders' Meeting Section 3.16.
ValueVision Surviving Corporation Section 1.6.
ValueVision Warrants Section 3.2.(a)
Warrants Section 4.2.(a)
Warrant Agreement Section 3.3(a)
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (the "Agreement"), dated
as of January 5, 1998, by and among VALUEVISION INTERNATIONAL, INC. a Minnesota
corporation ("ValueVision"), NATIONAL MEDIA CORPORATION, a Delaware corporation
("National Media"), and V-L HOLDINGS CORP., a newly-formed Delaware
corporation, one-half of the issued and outstanding capital stock of which is
owned by each of ValueVision and National Media ("Parent").
WHEREAS, the Boards of Directors of ValueVision and National Media deem it
advisable and in the best interests of each corporation and its respective
stockholders that ValueVision and National Media combine in a "merger of
equals" in order to advance the long-term business interests of ValueVision and
National Media;
WHEREAS, the combination of ValueVision and National Media shall be
effected by the terms of this Agreement through (i) a merger of a wholly-owned
subsidiary of Parent with and into ValueVision and (ii) a merger of another
wholly-owned subsidiary of Parent with and into National Media such that
ValueVision and National Media become wholly-owned subsidiaries of Parent and
the stockholders of ValueVision and National Media become stockholders of
Parent;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to each of ValueVision's and National Media's
willingness to enter into this Agreement, ValueVision and National Media have
entered into (i) a Stock Option Agreement dated as of the date of this
Agreement and attached hereto as Exhibit A (the "ValueVision Stock Option
Agreement"), pursuant to which National Media granted ValueVision an option to
purchase shares of common stock of National Media under certain circumstances,
and (ii) a Stock Option Agreement dated as of the date of this Agreement and
attached hereto as Exhibit B (the "National Media Stock Option Agreement" and,
together with the ValueVision Stock Option Agreement, the "Stock Option
Agreements"), pursuant to which ValueVision granted National Media an option to
purchase shares of common stock of ValueVision under certain circumstances;
WHEREAS, for Federal income tax purposes, it is intended that (i) the
ValueVision Merger (as defined in Section 1.2) shall qualify as a
reorganization described in Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code") and, taken together with the National Media
Merger (as defined in Section 1.3), as a transfer of property to Parent by
holders of ValueVision Common Stock (as defined in Section 1.2) described in
Section 351 of the Code, and (ii) the National Media Merger shall, taken
together with the ValueVision Merger, qualify as a transfer of property to
Parent by holders of National Media Common Stock (as defined in Section 1.3)
described in Section 351 of the Code; and
WHEREAS, the Boards of Directors of ValueVision and National Media have
approved this Agreement and each of the Transaction Documents to which its
company is a party (as defined in Section 3.3).
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NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I.
THE MERGERS
Section 1.1. Certificate of Incorporation and Bylaws of Parent. The
Certificate of Incorporation and Bylaws of Parent shall be amended prior to the
Effective Time (as defined in Section 1.4) to be substantially in the form of
Exhibit C and Exhibit D attached hereto, respectively. From the date hereof
until the Effective Time, ValueVision and National Media shall consult with
each other prior to causing or permitting Parent to take any action and neither
shall cause or permit Parent to take any action inconsistent with the
provisions of this Agreement without the written consent of the other.
Section 1.2. The ValueVision Merger. ValueVision and National Media shall
cause Parent to form a wholly-owned subsidiary named ValueVision Acquisition
Corp. ("Merger Sub 1") under the laws of the State of Minnesota. ValueVision
and National Media shall cause Parent to cause Merger Sub 1 to execute and
deliver this Agreement. Upon the terms and subject to the provisions of this
Agreement, and in accordance with the Minnesota Business Corporation Act (the
"MBCA"), Merger Sub 1 will merge with and into ValueVision (the "ValueVision
Merger") at the Effective Time, and each outstanding share of Common Stock, par
value $.01 per share, of ValueVision ("ValueVision Common Stock") shall be
converted into 1.19 shares of common stock, par value $.01 per share, of Parent
(the "Parent Common Stock") (as described in Section 2.1(c)). Merger Sub 1
will be formed solely to facilitate the ValueVision Merger and will conduct no
business or activity other than in connection with the ValueVision Merger.
Section 1.3. The National Media Merger. ValueVision and National Media
shall cause Parent to form a wholly-owned subsidiary named National Media
Acquisition Corp. ("Merger Sub 2") under the laws of the State of Delaware.
ValueVision and National Media shall cause Parent to cause Merger Sub 2 to
execute and deliver this Agreement. Upon the terms and subject to the provisions
of this Agreement, and in accordance with the Delaware General Corporation Code
(the "DGCL"), Merger Sub 2 shall merge with and into National Media (the
"National Media Merger" and together with the ValueVision Merger, the "Mergers")
at the Effective Time, and each outstanding share of Common Stock, par value
$.01 per share, of National Media ("National Media Common Stock") shall be
converted into 1.00 share of Parent Common Stock (as described in Section
2.2(c)). Merger Sub 2 will be formed solely to facilitate the National Media
Merger and will conduct no business or activity other than in connection with
the National Media Merger.
Section 1.4. Effective Time of the Mergers.
(a) The ValueVision Merger. Subject to, and consistent with, the
provisions of this Agreement, articles of merger with respect to the
ValueVision Merger in such form as is required by the relevant provisions of
the MBCA (the "ValueVision Articles of Merger") shall be
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duly prepared, executed and acknowledged and thereafter delivered to the
Secretary of State of the State of Minnesota for filing, as provided in the
MBCA as early as practicable on the Closing Date (as defined in Section 1.5).
The ValueVision Merger shall become effective upon the filing of the
ValueVision Articles of Merger with the Secretary of State of the State of
Minnesota
(b) The National Media Merger. Subject to, and consistent with, the
provisions of this Agreement, a certificate of merger (the "National Media
Certificate of Merger") with respect to the National Media Merger in such form
as is required by the relevant provisions of the DGCL shall be duly prepared,
executed and acknowledged and thereafter delivered to the Secretary of State of
the State of Delaware for filing, as provided in the DGCL as early as
practicable on the Closing Date. The National Media Merger shall become
effective upon the filing of the National Media Certificate of Merger with the
Secretary of State of the State of Delaware.
(c) The Effective Time. The time at which both Mergers have become fully
effective is hereinafter referred to as the "Effective Time."
Section 1.5. Closing. The closing of the Mergers (the "Closing") will
take place at 11:00 a.m., Eastern Standard Time, on a date to be specified by
National Media and ValueVision, which shall be no later than the third business
day after satisfaction or, if permissible, waiver of the conditions set forth in
Article VI (the "Closing Date"), at the offices of Latham & Watkins, 885 Third
Avenue, Suite 1000, New York, New York 10022-4802, unless another date, place or
time is agreed to in writing by National Media and ValueVision.
Section 1.6. Effect of the Mergers. As a result of the ValueVision
Merger, the separate corporate existence of Merger Sub 1 shall cease and
ValueVision shall continue as the surviving corporation (the "ValueVision
Surviving Corporation"). As a result of the National Media Merger, the separate
corporate existence of Merger Sub 2 shall cease and National Media shall
continue as the surviving corporation (the "National Media Surviving
Corporation" and together with ValueVision Surviving Corporation, the "Surviving
Corporations"). Upon becoming effective, the Mergers shall have the effects set
forth in the MBCA and the DGCL, as the case may be. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, (i) all
properties, rights, privileges, powers and franchises of ValueVision and Merger
Sub 1 shall vest in ValueVision Surviving Corporation, and all debts,
liabilities and duties of ValueVision and Merger Sub 1 shall become the debts,
liabilities and duties of the ValueVision Surviving Corporation and (ii) all
properties, rights, privileges, powers and franchises of National Media and
Merger Sub 2 shall vest in National Media Surviving Corporation, and all debts,
liabilities and duties of National Media and Merger Sub 2 shall become the
debts, liabilities and duties of National Media Surviving Corporation.
Section 1.7. Articles or Certificate of Incorporation and Bylaws of the
Surviving Corporations. At the Effective Time, (i) the Articles of
Incorporation and Bylaws of ValueVision Surviving Corporation shall be the
Articles of Incorporation and Bylaws, respectively, of ValueVision, as in
effect immediately prior to the Effective Time, in each case until duly amended
in accordance with applicable law, and (ii) the Certificate of Incorporation
and Bylaws of National Media Surviving Corporation shall be the Certificate of
Incorporation and Bylaws, respectively, of National Media, as in effect
immediately prior to the Effective Time, in each case until duly amended in
accordance with applicable law.
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Section 1.8. Directors and Officers of the Surviving Corporations.
(a) ValueVision Surviving Corporation. The officers and directors of
ValueVision immediately prior to the Effective Time shall be the initial
officers and directors of ValueVision Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and Bylaws of
ValueVision Surviving Corporation.
(b) National Media Surviving Corporation. The officers and directors of
National Media immediately prior to the Effective Time shall be the initial
officers and directors of National Media Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of
National Media Surviving Corporation.
ARTICLE II.
CONVERSION OF SECURITIES
Section 2.1. Conversion of ValueVision Capital Stock. At the Effective
Time, by virtue of the ValueVision Merger and without any action on the part of
any of the parties hereto or the holders of any shares of ValueVision Common
Stock or capital stock of Merger Sub 1:
(a) Capital Stock of Merger Sub 1. Each issued and outstanding share of
the capital stock of Merger Sub 1 shall be converted into and become one fully
paid and nonassessable share of Common Stock, par value $.01 per share, of
ValueVision Surviving Corporation.
(b) Cancellation of Treasury Stock and National Media-Owned Stock. All
shares of ValueVision Common Stock that are owned by ValueVision or any
Subsidiary (as defined in Section 3.1) of ValueVision and any shares of
ValueVision Common Stock (including any options, warrants or other securities
convertible into or exchangeable for such shares) owned by National Media,
Merger Sub 2 or any other Subsidiary of National Media shall be canceled and
retired and shall cease to exist and no stock of Parent or other consideration
shall be delivered in exchange therefor.
(c) Exchange Ratio for ValueVision Common Stock. Subject to Section
2.4(e), each issued and outstanding share of ValueVision Common Stock (other
than shares to be canceled in accordance with Section 2.1(b) and Dissenting
Shares (as defined in Section 2.5)) shall be converted into the right to receive
1.19 shares (the "ValueVision Exchange Ratio") of Parent Common Stock. All such
shares of ValueVision Common Stock, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive the shares
of Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock to be issued or paid in consideration therefor and an amount equal to
certain dividends and distributions described in Section 2.4(c), in each case,
upon the surrender of such certificate in accordance with Section 2.4 and
without interest.
(d) ValueVision Stock Options. At the Effective Time, each outstanding
option to purchase shares of ValueVision Common Stock (a "ValueVision Stock
Option") under the
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ValueVision Stock Plans (as defined in Section 3.2(a)), whether vested or
unvested, shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such ValueVision Stock Option the same
number of shares of Parent Common Stock as the holder of such ValueVision Stock
Option would have been entitled to receive pursuant to the ValueVision Merger
had such holder exercised such option in full immediately prior to the
Effective Time (rounded downward to the nearest whole number), at a price per
share (rounded downward to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of ValueVision Common Stock purchasable pursuant
to such ValueVision Stock Option immediately prior to the Effective Time
divided by (z) the number of full shares of Parent Common Stock deemed
purchasable pursuant to such ValueVision Stock Option in accordance with the
foregoing.
(e) ValueVision Warrants. At the Effective Time, each ValueVision Warrant
(as defined in Section 3.2(a)) shall thereafter solely represent the right to
acquire, on the terms and conditions as are currently applicable under the
ValueVision Warrants, the same number of shares of Parent Common Stock as a
holder of the ValueVision Warrants would have been entitled to receive pursuant
to the ValueVision Merger had such holder exercised such ValueVision Warrants
in full immediately prior to the Effective Time (rounded downward to the
nearest whole number), at the price per share (rounded downward to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of
ValueVision Common Stock purchasable pursuant to the ValueVision Warrants
immediately prior to the Effective Time divided by (z) the number of full
shares of Parent Common Stock deemed purchasable pursuant to the ValueVision
Warrants in accordance with the foregoing.
Section 2.2. Conversion of National Media Capital Stock. At the Effective
Time, by virtue of the National Media Merger and without any action on the part
of any of the parties hereto or the holders of any shares of National Media
Common Stock or capital stock of Merger Sub 2:
(a) Capital Stock of Merger Sub 2. Each issued and outstanding share of
the capital stock of Merger Sub 2 shall be converted into and become one fully
paid and nonassessable share of Common Stock, par value $.01 per share, of
National Media Surviving Corporation.
(b) Cancellation of Treasury Stock and ValueVision-Owned Stock. All
shares of National Media Common Stock that are owned by National Media or any
Subsidiary of National Media (including treasury stock) and any shares of
National Media Common Stock (including any options, warrants or other securities
convertible into or exchangeable for such shares) owned by ValueVision, Merger
Sub 1 or any other Subsidiary of ValueVision shall be canceled and retired and
shall cease to exist and no stock of Parent or other consideration shall be
delivered in exchange therefor.
(c) Exchange Ratio for National Media Common Stock. Subject to Section
2.4(e), each issued and outstanding share of National Media Common Stock
(including the rights associated with the Series A Junior Participating
Preferred Stock issued pursuant to the National Media Rights Plan (as defined
in Section 4.2(b)) (other than shares to be canceled in accordance with Section
2.2(b)) shall be converted into the right to receive 1.00 share (the "National
Media
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Exchange Ratio") of Parent Common Stock. All such shares of National Media
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
be issued or paid in consideration therefor and an amount equal to certain
dividends and distributions described in Section 2.4(c), in each case, upon the
surrender of such certificate in accordance with Section 2.4 and without
interest.
(d) Exchange Ratio for Series B Convertible Stock. Each issued and
outstanding share of Series B Convertible Preferred Stock (as defined in
Section 4.2(a)) shall be converted into the right to receive 1.00 share of
Parent Series B Convertible Preferred Stock, par value $.01 per share (the
"Parent Series B Convertible Preferred Stock"), with the designations,
preferences and rights set forth in the Certificate of Designations of the
Parent Series B Convertible Preferred Stock in the form attached hereto as
Exhibit E. All such shares of Series B Convertible Preferred Stock, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of Parent Series B Convertible
Preferred Stock upon the surrender of such certificate in accordance with
procedures to be established by Parent and without interest.
(e) National Media Stock Options. At the Effective Time, each outstanding
option to purchase shares of National Media Common Stock (a "National Media
Stock Option") under the National Media Stock Plans (as defined in Section
4.2(a)), whether vested or unvested, shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such
National Media Stock Option the same number of shares of Parent Common Stock as
the holder of such National Media Stock Option would have been entitled to
receive pursuant to the National Media Merger had such holder exercised such
option in full immediately prior to the Effective Time (rounded downward to the
nearest whole number), at a price per share (rounded downward to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of
National Media Common Stock purchasable pursuant to such National Media Stock
Option immediately prior to the Effective Time divided by (z) the number of
full shares of Parent Common Stock deemed purchasable pursuant to such National
Media Stock Option in accordance with the foregoing.
(f) National Media Warrants. At the Effective Time, each National Media
Warrant (as defined in Section 4.2(a)) shall thereafter solely represent the
right to acquire, on the terms and conditions as are currently applicable under
the National Media Warrants, the same number of shares of Parent Common Stock
as a holder of the National Media Warrants would have been entitled to receive
pursuant to the National Media Merger had such holder exercised such National
Media Warrants in full immediately prior to the Effective Time (rounded
downward to the nearest whole number), at the price per share (rounded downward
to the nearest whole cent) equal to (y) the aggregate exercise price for the
shares of National Media Common Stock purchasable pursuant to the National
Media Warrants immediately prior to the Effective Time divided by (z) the
number of full shares of Parent Common Stock deemed purchasable pursuant to the
National Media Warrants in accordance with the foregoing.
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Section 2.3. Cancellation of Parent Common Stock. At the Effective
Time, by virtue of the Mergers and without any action on the part of any holder
of any capital stock of ValueVision, National Media or Parent, each share of
Parent Common Stock issued and outstanding immediately prior to the Effective
Time shall be canceled, and no consideration shall be delivered in exchange
therefor.
Section 2.4. Exchange of Certificates. The procedures for exchanging
shares of ValueVision Common Stock and National Media Common Stock for Parent
Common Stock outstanding immediately prior to the Effective Time pursuant to the
Mergers are as follows:
(a) Exchange Agent. As of the Effective Time, Parent shall deposit with a
bank or trust company designated by National Media and ValueVision (the
"Exchange Agent"), for the benefit of the holders of shares of ValueVision
Common Stock outstanding immediately prior to the effective time and the holders
of shares of National Media Common Stock outstanding immediately prior to the
Effective Time, for exchange in accordance with this Section 2.4, through the
Exchange Agent, certificates representing the shares of Parent Common Stock
issuable pursuant to Sections 2.1 and 2.2 in exchange for outstanding shares of
ValueVision Common Stock and National Media Common Stock, respectively (such
shares of Parent Common Stock, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of ValueVision Common Stock or National Media
Common Stock (including the Series A Junior Participating Preferred Stock
associated with the National Media Common Stock and issued pursuant to the
National Media Rights Plan) (the "Certificates") whose shares were converted
pursuant to Section 2.1 or Section 2.2 into the right to receive shares of
Parent Common Stock (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as ValueVision and
National Media may reasonably specify), and (ii) instructions for effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock (plus cash in lieu of fractional shares, if any, of
Parent Common Stock as provided below). Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares of Parent
Common Stock which such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so surrendered shall
immediately be canceled. In the event of a transfer of ownership of
ValueVision Common Stock or National Media Common Stock prior to the Effective
Time which is not registered in the transfer records of ValueVision or National
Media, respectively, a certificate representing the proper number of shares of
Parent Common Stock may be issued to a transferee if the Certificate
representing such ValueVision Common Stock or National Media Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Immediately after the Effective Time, each
outstanding
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Certificate which theretofore represented shares of ValueVision Common Stock or
National Media Common Stock shall represent only the right to receive the
shares of Parent Common Stock pursuant to the terms hereof and shall not be
deemed to evidence ownership of the number of shares of Parent Common Stock
into which such shares of ValueVision Common Stock or National Media Common
Stock would be or were, as the case may be, converted into the right to receive
until the Certificate therefor shall have been surrendered in accordance with
this Section 2.4.
(c) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Common Stock with a record date after the Effective Time shall be paid to
the holder of any unsurrendered Certificate with respect to the shares of Parent
Common Stock the holder thereof is entitled to receive in respect thereof and no
cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to subsection (e) below until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the record
holder of the certificates representing whole shares of Parent Common Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Common Stock to which such holder is entitled pursuant to subsection (e)
below and the amount of dividends or other distributions with a record date
after the Effective Time previously paid with respect to such whole shares of
Parent Common Stock, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in ValueVision Common Stock and National
Media Common Stock. All shares of Parent Common Stock issued upon the surrender
for exchange of Certificates in accordance with the terms hereof (including any
cash paid pursuant to subsection (c) or (e) of this Section 2.4) shall be deemed
to have been issued in full satisfaction of all rights pertaining to the shares
of ValueVision Common Stock or National Media Common Stock theretofore
represented by such Certificates, subject, however, to the applicable Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been declared or
made by ValueVision on such shares of ValueVision Common Stock or by National
Media on such shares of National Media Common Stock, as the case may be, in
accordance with the terms of this Agreement (to the extent permitted under
Section 5.1) prior to the date hereof and which remain unpaid at the Effective
Time, and from and after the Effective Time there shall be no further
registration of transfers on the stock transfer books of the ValueVision
Surviving Corporation or the National Media Surviving Corporation, as the case
may be, of the shares of ValueVision Common Stock or National Media Common
Stock, respectively, which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to one of the
Surviving Corporations or Parent for any reason, such Certificates shall be
canceled and exchanged as provided in this Section 2.4.
(e) No Fractional Shares. No certificate or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange
of Certificates, and such
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fractional share interests will not entitle the owner thereof to vote or to any
other rights of a stockholder of Parent. Notwithstanding any other provision
of this Agreement, each holder of shares of ValueVision Common Stock or shares
of National Media Common Stock outstanding immediately prior to the Effective
Time exchanged pursuant to the Mergers who would otherwise have been entitled
to receive a fraction of a share of Parent Common Stock (after taking into
account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash (without interest) in an amount equal to such fractional part of
a share of Parent Common Stock multiplied by the per share sales price of
Parent Common Stock (as reported by the national securities exchange or market
on which such Parent Common Stock is traded or quoted) on the first day of
trading of Parent Common Stock on such exchange or market after the Effective
Time.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the former stockholders of ValueVision or National
Media on the 180th day after the Effective Time shall be delivered to Parent
upon demand, and any former stockholder of ValueVision or National Media who
has not previously complied with this Section 2.4 shall thereafter look only to
Parent for payment of such stockholder's claim for Parent Common Stock, any
cash in lieu of fractional shares of Parent Common Stock and any dividends or
distributions with respect to Parent Common Stock.
(g) No Liability. None of ValueVision, National Media or Parent shall be
liable to any holder of shares of ValueVision Common Stock or National Media
Common Stock, as the case may be, for any shares of Parent Common Stock (or
cash in lieu of fractional shares of Parent Common Stock or any dividends or
distributions with respect thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Parent and each of the Surviving Corporations
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of ValueVision Common
Stock or National Media Common Stock such amounts as it is required to deduct
and withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Parent or one of the Surviving Corporations, as the case may be,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the shares of ValueVision Common Stock or
National Media Common Stock, as the case may be, in respect of which such
deduction and withholding was made.
(i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent or
one of the Surviving Corporations, the posting by such person of a bond in such
reasonable amount as Parent or such Surviving Corporation may direct as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate, the shares of Parent Common Stock, any cash in lieu of
fractional shares, and any unpaid dividends and distributions on shares of
Parent Common Stock deliverable in respect thereof pursuant to this Agreement.
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(j) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any Affiliate (as defined in Section
5.11) of ValueVision or National Media shall not be exchanged until Parent has
received an Affiliate Agreement (as defined in Section 5.11) substantially in
the form of Exhibit F attached hereto from such Affiliate.
Section 2.5. Dissenting Shares. Any ValueVision Common Stock held by a
holder who dissents from the ValueVision Merger and becomes entitled to obtain
payment for the value of such ValueVision Common Stock pursuant to the
applicable provisions of Minnesota law shall be herein called "Dissenting
Shares." Any Dissenting Share shall not, after the Effective Time, be entitled
to vote for any purpose or receive any dividends or other distributions and
shall not be converted into Parent Common Stock; provided, however, that
ValueVision Common Stock held by a dissenting shareholder who subsequently
withdraws a demand for payment, fails to comply fully with the requirements of
Minnesota law, or otherwise fails to establish the right of such shareholder to
be paid the value of such shareholder's shares under Minnesota law shall be
deemed to be have been converted into Parent Common Stock pursuant to the terms
and conditions referred to above.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF VALUEVISION
ValueVision represents and warrants to National Media that the statements
contained in this Article III are true and correct except as set forth herein
and in the disclosure schedules delivered by ValueVision to National Media on
or before the date of this Agreement (the "ValueVision Disclosure Schedule").
The ValueVision Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
III and the disclosure in any paragraph shall qualify other paragraphs in this
Article III only to the extent that it is reasonably apparent from a reading of
such disclosure that it also qualifies or applies to such other paragraphs.
Section 3.1. Organization of ValueVision. Each of ValueVision and
ValueVision's Material Subsidiaries (as defined below) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
business, properties, financial condition or results of operations of
ValueVision and its Subsidiaries, taken as a whole (a "ValueVision Material
Adverse Effect"). Except as set forth in the ValueVision SEC Reports (as
defined in Section 3.4) filed prior to the date hereof or on the ValueVision
Disclosure Schedule, neither ValueVision nor any of its Subsidiaries directly
or indirectly owns (other than ownership interests in ValueVision or in one or
more of its Subsidiaries) any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity, excluding
securities in any publicly traded company held for investment by ValueVision
and comprising less than five percent (5%) of the outstanding stock of such
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company. A true, correct and complete copy of the Articles of Incorporation
and Bylaws of ValueVision and each of ValueVision's Material Subsidiaries (as
defined below) has been delivered to National Media. As used in this
Agreement, the word "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with respect
to such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries. "ValueVision's Material
Subsidiaries" shall mean those Subsidiaries of ValueVision set forth on the
ValueVision Disclosure Schedule, which Subsidiaries constitute all of
ValueVision's "significant subsidiaries" as defined in Rule 1-02 of Regulation
S-X under the Securities Act of 1933, as amended (the "Securities Act").
Section 3.2. ValueVision Capital Structure.
(a) The authorized capital stock of ValueVision consists of 100,000,000
shares of undesignated capital stock. As of the date hereof, (i) 28,035,778
shares of ValueVision Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable and (ii) no shares of ValueVision
Common Stock were held in the treasury of ValueVision or by Subsidiaries of
ValueVision. The ValueVision Disclosure Schedule shows the number of shares of
ValueVision Common Stock reserved for future issuance pursuant to stock options
granted and outstanding as of the date hereof, the plans under which such
options were granted and award agreements pursuant to which "non-plan" options
were granted (collectively, the "ValueVision Stock Plans"), and the entities or
persons to whom such options were granted. The ValueVision Disclosure Schedule
also shows the agreements under which the warrants to purchase an aggregate of
4,242,143 shares of ValueVision Common Stock granted and outstanding as of the
date hereof (collectively, the "ValueVision Warrants") were issued and to whom
such warrants were issued. As of the date hereof, no other shares of capital
stock are issued and outstanding. All shares of ValueVision Common Stock
subject to issuance as specified above are duly authorized and, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, shall be validly issued, fully paid and nonassessable. Except as set
forth on the ValueVision Disclosure Schedule, there are no obligations,
contingent or otherwise, of ValueVision or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of ValueVision Common Stock
or the capital stock of any Subsidiary or to provide funds to or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any such Subsidiary or any other entity other than guarantees of bank
obligations of Subsidiaries entered into in the ordinary course of business. All
of the outstanding shares of capital stock of each of ValueVision's Subsidiaries
are duly authorized, validly issued, fully paid and nonassessable and all such
shares (other than directors' qualifying shares in the case of foreign
Subsidiaries) are owned by ValueVision or another Subsidiary free and clear of
all security interests, liens, claims, pledges, agreements, limitations in
ValueVision's voting rights, charges or other encumbrances of any nature.
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(b) Except as set forth in this Section 3.2 or as reserved for future
grants of options under the ValueVision Stock Plans or the National Media Stock
Option Agreement, (i) there are no equity securities of any class of ValueVision
or any of its Subsidiaries, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or outstanding; (ii) there
are no options, warrants, equity securities, calls, rights, commitments or
agreements of any character to which ValueVision or any of its Subsidiaries is a
party or by which it is bound obligating ValueVision or any of its Subsidiaries
to issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of ValueVision or any of its Subsidiaries or obligating
ValueVision or any of its Subsidiaries to grant, extend, accelerate the vesting
of or enter into any such option, warrant, equity security, call, right,
commitment or agreement; and (iii) to the best knowledge of ValueVision, there
are no voting trusts, proxies or other voting agreements or understandings with
respect to the shares of capital stock of ValueVision.
Section 3.3. Authority; No Conflict; Required Filings and Consents.
(a) ValueVision has all requisite corporate power and authority to enter
into this Agreement and each of the Transaction Documents (as defined below) to
which it is a party and to consummate the transactions contemplated by this
Agreement and each of the Transaction Documents to which it is a party. The
execution and delivery of this Agreement and each of the Transaction Documents
to which it is a party and the consummation of the transactions contemplated by
this Agreement and each of the Transaction Documents to which it is a party by
ValueVision have been duly authorized by all necessary corporate action on the
part of ValueVision, subject only to the approval and adoption of this Agreement
by ValueVision's stockholders under the MBCA. This Agreement and each of the
Transaction Documents to which it is a party have been duly executed and
delivered by ValueVision and constitute the valid and binding obligations of
ValueVision, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equitable principles (the "Bankruptcy and Equity Exception"). "Transaction
Documents" means the Stock Option Agreements, the $10 million Promissory Demand
Note by National Media for the benefit of ValueVision in the form of Exhibit G
attached hereto (the "Demand Note"), the promissory demand note by National
Media for the benefit of ValueVision which will be substantially in the form of
the Demand Note and which will evidence the loan from ValueVision to National
Media to fund the redemption under the Redemption Agreement (as defined below)
(the "Series C Note"), the Warrant Agreement between National Media and
ValueVision in the form of Exhibit H attached hereto (the "Warrant Agreement"),
the Registration Rights Agreement between National Media and ValueVision in the
form of Exhibit I attached hereto (the "Registration Rights Agreement"), the
Amendment to the National Media Rights Plan (as defined in Section 4.2(b)) in
the form of Exhibit J attached hereto, the Redemption and Consent Agreement
between National Media and the holders of the Series C Convertible Preferred
Stock in the form of Exhibit K attached hereto (the "Redemption Agreement"), the
Series B Consent Agreement between National Media and holders of at least 60% of
the outstanding shares of the Series B Convertible Preferred Stock in the form
of Exhibit L attached hereto (the "Series B Consent Agreement"), the Consent,
Waiver and Amendment between CoreStates Bank, N.A. ("CoreStates") and National
Media and certain of its Subsidiaries in the form of Exhibit M
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attached hereto (the "Corestates Consent Agreement") and the Amendments to the
Hammer and Costalas Employment Agreements in the forms of Exhibit N attached
hereto, each dated as of the date hereof.
(b) Except as set forth on the ValueVision Disclosure Schedule, the
execution and delivery of this Agreement and each of the Transaction Documents
to which it is a party by ValueVision does not, and the consummation of the
transactions contemplated by this Agreement and each of the Transaction
Documents to which it is a party will not, (i) conflict with, or result in any
violation or breach of, any provision of the Articles of Incorporation or Bylaws
of ValueVision or any of its Subsidiaries, (ii) result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which ValueVision or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound, or (iii)
conflict with or violate any permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
ValueVision or any of its Subsidiaries or any of its or their properties or
assets, except in the case of (ii) and (iii) for any such conflicts, violations,
defaults, terminations, cancellations or accelerations which are not,
individually or in the aggregate, reasonably likely to have a ValueVision
Material Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to ValueVision or any of its Subsidiaries in
connection with the execution and delivery of this Agreement and each of the
Transaction Documents to which it is a party or the consummation of the
transactions contemplated hereby or thereby, except for (i) the filing of the
pre-merger notification report under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act"), (ii) the filing of an
Articles of Merger with respect to the ValueVision Merger with the Minnesota
Secretary of State, (iii) the filing of the Joint Proxy Statement/Prospectus
(as defined in Section 3.16 below) with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (iv) applicable approvals of the Federal Communications
Commission (the "FCC") pursuant to the Communications Act of 1934, as amended,
and any regulations promulgated thereunder (the "Communications Act"), (v) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state or foreign securities laws,
and (vi) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not be reasonably likely to
have a ValueVision Material Adverse Effect.
Section 3.4. SEC Filings; Financial Statements.
(a) ValueVision has filed and made available to National Media all forms,
reports and documents filed or required to be filed by ValueVision with the SEC
since January 1, 1995 (collectively, the "ValueVision SEC Reports"). Except as
set forth on the ValueVision
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Disclosure Schedule, the ValueVision SEC Reports (i) at the time filed,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in such ValueVision SEC Reports or necessary in order to make the
statements in such ValueVision SEC Reports, in the light of the circumstances
under which they were made, not misleading. None of ValueVision's Subsidiaries
is required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the ValueVision SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, in conformity with
the requirements of Form 10-Q under the Exchange Act) and fairly presented in
all material respects the consolidated financial position of ValueVision and its
Subsidiaries as of the dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
audited balance sheet of ValueVision as of January 31, 1997 is referred to
herein as the "ValueVision Balance Sheet."
Section 3.5. No Undisclosed Liabilities. Except as set forth on the
ValueVision Disclosure Schedule, and except as disclosed in the ValueVision SEC
Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since January 31, 1997 in the ordinary course of business
consistent with past practices, ValueVision and its Subsidiaries do not have
any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles), and whether due or to become due, which
individually or in the aggregate are reasonably likely to have a ValueVision
Material Adverse Effect.
Section 3.6. Absence of Certain Changes or Events. Except as disclosed
in the ValueVision SEC Reports filed prior to the date hereof or on the
ValueVision Disclosure Schedule, since the date of the ValueVision Balance
Sheet, ValueVision and its Subsidiaries have conducted their businesses only in
the ordinary course and in a manner consistent with past practice and, since
such date, there has not been (i) any material adverse change in the financial
condition, results of operations, business or properties (a "Material Adverse
Change") of ValueVision and its Subsidiaries, taken as a whole (other than
changes that are the effect or result of economic factors affecting the economy
as a whole or the industry (as described in the ValueVision 10-K for the fiscal
year ended January 31, 1997 (the "ValueVision 10-K") in which ValueVision
competes), or any development or combination of developments of which the
management of ValueVision is aware that, individually or in the aggregate, has
had, or is reasonably likely to have, a ValueVision Material Adverse Effect
(other than changes that are the effect or result of economic factors affecting
the economy as a whole or the industry (as described in the ValueVision 10-K) in
which ValueVision competes); (ii) any damage, destruction or loss (whether or
not covered by insurance) with respect to ValueVision or any of
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its Subsidiaries having a ValueVision Material Adverse Effect; (iii) any
material change by ValueVision or its Subsidiaries in their respective
accounting methods, principles or practices to which National Media has not
previously consented in writing; (iv) any revaluation by ValueVision or its
Subsidiaries of any of their respective assets having a ValueVision Material
Adverse Effect; or (v) any other action or event that would have required the
consent of National Media pursuant to Section 5.1 of this Agreement had such
action or event occurred after the date of this Agreement and that,
individually or in the aggregate, has had or is reasonably likely to have a
ValueVision Material Adverse Effect.
Section 3.7. Taxes.
(a) For the purposes of this Agreement, a "Tax" or, collectively, "Taxes,"
means any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts. For purposes of this
Agreement, "Taxes" also includes any obligations under any agreements or
arrangements with any other person with respect to Taxes of such other person
(including pursuant to Treas. Reg. Section 1.1502-6 or comparable provisions
of state, local or foreign tax law) and including any liability for Taxes of
any predecessor entity.
(b) ValueVision and each of its Subsidiaries have (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that are not reasonably likely, individually or
in the aggregate, to have a ValueVision Material Adverse Effect. There are no
audits known by ValueVision to be pending or contemplated with respect to
ValueVision's tax returns. Neither the Internal Revenue Service (the "IRS")
nor any other taxing authority has asserted any claim for Taxes, or to the
actual knowledge of the executive officers of ValueVision, is threatening to
assert any claims for Taxes, which claims, individually or in the aggregate,
are reasonably likely to have a ValueVision Material Adverse Effect.
ValueVision and each of its Subsidiaries have withheld or collected and paid
over to the appropriate governmental authorities (or are properly holding for
such payment) all Taxes required by law to be withheld or collected, except for
amounts that are not reasonably likely, individually or in the aggregate, to
have a ValueVision Material Adverse Effect. Neither ValueVision nor any of its
Subsidiaries has made an election under Section 341(f) of the Code, except for
any such elections that are not reasonably likely, individually or in the
aggregate, to have a ValueVision Material Adverse Effect. There are no liens
for Taxes upon the assets of ValueVision or any of its Subsidiaries (other than
liens for Taxes that are not yet due or that are being contested in good faith
by appropriate proceedings), except for liens that are not reasonably likely,
individually or in the aggregate, to have a ValueVision Material Adverse
Effect. No extension of a statute of limitations relating to any Taxes is in
effect with respect to ValueVision and its Subsidiaries.
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(c) Neither ValueVision nor any of its Subsidiaries has been a member of an
affiliated group of corporations filing a consolidated federal income tax
return (or a group of corporations filing a consolidated, combined or unitary
income tax return under comparable provisions of state, local or foreign tax
law) for any taxable period beginning on or after February 1, 1991, other than
a group the common parent of which was ValueVision or any Subsidiary of
ValueVision.
(d) Neither ValueVision nor any of its Subsidiaries has any obligation
under any agreement or arrangement with any other person with respect to Taxes
of such other person (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign tax law) and including any
liability for Taxes of any predecessor entity, except for obligations that are
not reasonably likely, individually or in the aggregate, to have a ValueVision
Material Adverse Effect.
(e) Neither ValueVision nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
Section 3.8. Properties.
(a) Neither ValueVision nor any of its Subsidiaries is in default under
any of their respective leases for real property, except where the existence of
such defaults, individually or in the aggregate, is not reasonably likely to
have a ValueVision Material Adverse Effect.
(b) Except as set forth on the ValueVision Disclosure Schedule, with
respect to each item of real property that ValueVision or any of its
Subsidiaries owns, except for such matters that, individually or in the
aggregate, are not reasonably likely to have a ValueVision Material Adverse
Effect: (i) ValueVision or the identified Subsidiary has good and clear record
and marketable title to such property, insurable by a recognized national title
insurance company at standard rates, free and clear of any lien, encumbrance,
security interest, easement, covenant or other restriction, except for recorded
easements, covenants and other restrictions which do not materially impair the
current uses or occupancy of such property; and (ii) the improvements
constructed on such property are in good condition, and all mechanical and
utility systems servicing such improvements are in good condition, free in each
case of material defects.
Section 3.9. Intellectual Property. Each of ValueVision and its
Subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use, all trademarks, trade names, service marks, copyrights, and any
applications for such trademarks, trade names, service marks and copyrights,
know-how, computer software programs or applications and tangible or intangible
proprietary information or material that are necessary to conduct the business
of each of ValueVision and its Subsidiaries as currently conducted, subject to
such exceptions that would not be reasonably likely to have a ValueVision
Material Adverse Effect. Neither ValueVision nor any of its Subsidiaries has
any knowledge of any assertion or claim challenging the validity of any of such
intellectual property, except such assertions or claims that, individually or in
the aggregate, are not reasonably likely to have a ValueVision Material Adverse
Effect.
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Section 3.10. Agreements, Contracts and Commitments. Neither ValueVision
nor any of its Subsidiaries has breached, or received in writing any claim or
notice that it has breached, any of the terms or conditions of any material
agreement, contract or commitment filed or required to be filed as an exhibit
to the ValueVision SEC Reports ("ValueVision Material Contracts") in such a
manner as, individually or in the aggregate, is reasonably likely to have a
ValueVision Material Adverse Effect. Each ValueVision Material Contract that
has not expired by its terms is in full force and effect.
Section 3.11. Litigation. Except as described in the ValueVision SEC
Reports filed prior to the date hereof or except as set forth on the
ValueVision Disclosure Schedule, there is no action, suit or proceeding, claim,
arbitration or investigation against ValueVision or any of its Subsidiaries
pending or as to which ValueVision or any of its Subsidiaries has received any
written notice of assertion, which, individually or in the aggregate, is
reasonably likely to have a ValueVision Material Adverse Effect or a material
adverse effect on the ability of ValueVision to consummate the transactions
contemplated by this Agreement.
Section 3.12. Environmental Matters.
(a) To the knowledge of ValueVision and its Subsidiaries, except as
disclosed in the ValueVision SEC Reports filed prior to the date hereof or on
the ValueVision Disclosure Schedule and except for such matters that,
individually or in the aggregate, are not reasonably likely to have a
ValueVision Material Adverse Effect: (i) ValueVision and its Subsidiaries are
in material compliance with all applicable Environmental Laws (as defined in
Section 3.12(b)); (ii) the properties currently owned or operated by
ValueVision and its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances (as defined in Section 3.12(c)); (iii) the properties formerly owned
or operated by ValueVision or any of its Subsidiaries were not contaminated
with Hazardous Substances during the period of ownership or operation by
ValueVision or any of its Subsidiaries; (iv) neither ValueVision nor its
Subsidiaries are subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) neither ValueVision nor any of
its Subsidiaries has been associated with any release or threat of release of
any Hazardous Substance; (vi) neither ValueVision nor any of its Subsidiaries
has received any written notice, demand, letter, claim or request for
information alleging that ValueVision or any of its Subsidiaries may be in
violation of or liable under any Environmental Law; (vii) neither ValueVision
nor any of its Subsidiaries is subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity or is subject to any indemnity
or other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving ValueVision or any of its Subsidiaries
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of any
property of ValueVision pursuant to any Environmental Law.
(b) As used in this Agreement, the term "Environmental Law" means any
federal, state, local or foreign law, regulation, order, decree, permit,
authorization, common law or agency requirement relating to: (A) the
protection, investigation or restoration of the environment, health and safety,
or natural resources, (B) the handling, use, presence, disposal,
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release or threatened release of any Hazardous Substance or (C) noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to persons
or property.
(c) As used in this Agreement, the term "Hazardous Substance" means any
substance that is: (A) listed, classified or regulated pursuant to any
Environmental Law; (B) any petroleum product or by-product, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which is the subject
of regulatory action by any Governmental Entity pursuant to any Environmental
Law.
Section 3.13. Employee Benefit Plans.
(a) ValueVision has listed on the ValueVision Disclosure Schedule all
employee benefit plans ("Employee Benefit Plans"), as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and all other material benefit arrangements that are not Employee Benefit
Plans, including, but not limited to any employment or consulting agreement,
any arrangement providing insurance benefits, any incentive bonus or deferred
bonus arrangement, any arrangement providing termination allowance, severance
or similar benefits, any equity compensation plan, any deferred compensation
plan, and any compensation policy or practice ("Benefit Arrangements"), (i)
which are maintained, contributed to or required to be contributed to by
ValueVision or any entity that, together with ValueVision as of the relevant
measuring date under ERISA, is or was required to be treated as a single
employer under Section 414 of the Code ("ValueVision ERISA Affiliate") or under
which ValueVision or any ValueVision ERISA Affiliate may incur any liability,
and (ii) which cover the employees, former employees, directors or former
directors of ValueVision or any ValueVision ERISA Affiliate ("ValueVision
Employee Plans").
(b) A true and complete copy of each written ValueVision Employee Plan that
covers employees or former employees of ValueVision or any Subsidiary of
ValueVision, including, if applicable, each amendment thereto and any trust
agreement, insurance contract, collective bargaining agreement, or other
funding or investment arrangements for the benefits under such ValueVision
Employee Plan, has been delivered to National Media. In addition, with respect
to each such ValueVision Employee Plan to the extent applicable, ValueVision
has delivered to National Media the most recently filed Federal Forms 5500, the
most recent summary plan description (including any summaries of material
modifications), the most recent IRS determination letter, if applicable, the
most recent actuarial report or valuation, if applicable, and all material
employee communications with respect to each such ValueVision Employee Plan.
(c) Except as set forth on the ValueVision Disclosure Schedule:
(i) neither ValueVision nor any ValueVision ERISA Affiliate sponsors
or has previously sponsored, maintained, contributed to or incurred an
obligation to contribute to any Employee Benefit Plan regulated under Title IV
of ERISA, including any "multiemployer plan," as defined in Sections 3(37) and
4001(a)(3) of ERISA;
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(ii) neither ValueVision nor any ValueVision ERISA Affiliate
sponsors or has previously sponsored, maintained, contributed to or incurred an
obligation to contribute to any Employee Benefit Plan that provides or will
provide benefits described in Section 3(1) of ERISA to any former employee or
retiree of ValueVision or any ValueVision ERISA Affiliate, except as required
under Part 6 of Title I of ERISA and Section 4980B of the Code;
(iii) all ValueVision Employee Plans that cover or have covered
employees or former employees of ValueVision have been maintained and operated,
and currently are, in compliance in all material respects with their terms, the
requirements prescribed by any and all applicable laws (including ERISA and the
Code), orders, or governmental rules and regulations in effect with respect
thereto, and ValueVision and the ValueVision ERISA Affiliates have performed
all material obligations required to be performed by them under, are not in any
material respect in default under or in violation of, and have no knowledge of
any default or violation by any other party to, any of the ValueVision Employee
Plans;
(iv) each ValueVision Employee Plan that covers or has covered
employees or former employees of ValueVision and is intended to qualify under
Section 401(a) of the Code and each trust established pursuant to each such
ValueVision Employee Plan that is intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination letter from the IRS, a
copy of which has been delivered to National Media, and, to ValueVision's
knowledge, nothing has occurred which may reasonably be expected to impair such
determination or otherwise adversely affect the tax-qualified status of such
ValueVision Employee Plan;
(v) ValueVision and the ValueVision ERISA Affiliates have made full
and timely payment of all amounts required to be contributed under the terms of
each ValueVision Employee Plan and applicable law or required to be paid as
expenses under such ValueVision Employee Plan; and
(vi) other than claims for benefits in the ordinary course, there is
no claim, suit, action, dispute, arbitration or legal, administrative or other
proceeding or governmental investigation or audit pending, or, to the knowledge
of ValueVision, threatened, alleging any breach of the terms of any ValueVision
Employee Plan or of any fiduciary duty thereunder or violation of any
applicable law with respect to any such ValueVision Employee Plan.
(d) With respect to the ValueVision Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of ValueVision, there
exists no condition or set of circumstances in connection with which
ValueVision could be subject to any liability that is reasonably likely to have
a ValueVision Material Adverse Effect under ERISA, the Code or any other
applicable law.
(e) Except as set forth on the ValueVision Disclosure Schedule and except
as disclosed in the ValueVision SEC Reports filed prior to the date of this
Agreement, and except as provided for in this Agreement, neither ValueVision
nor any of its Subsidiaries is a party to any oral or written (i) agreement
with any officer or other key employee of ValueVision or any of its
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Subsidiaries, the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving ValueVision
of the nature contemplated by this Agreement, (ii) agreement with any officer
of ValueVision providing any term of employment or compensation guarantee
extending for a period longer than one year from the date hereof and for the
payment of compensation in excess of $100,000 per annum, or (iii) agreement or
plan, including any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. None of the execution and
delivery of this Agreement or any of the Transaction Documents or the
consummation of the transactions contemplated hereunder or thereunder will
trigger any "change of control" or similar provisions resulting in the
acceleration of benefits or compensation with respect to any agreements with
any officer or other key employee of ValueVision or any of its Subsidiaries
except for such applicable agreements as set forth on the ValueVision
Disclosure Schedule (the "ValueVision Parachute Agreements"). The aggregate
amounts payable under the ValueVision Parachute Agreements as a result of the
transactions contemplated by this Agreement and each of the Transaction
Documents will not exceed $0.
Section 3.14. Compliance With Laws. Each of ValueVision and its
Subsidiaries has complied with, is not in violation of, and has not received
any notices of violation with respect to, any federal, state or local statute,
law or regulation with respect to the conduct of its business, or the ownership
or operation of its business, except for failures to comply or violations
which, individually or in the aggregate, have not had and are not reasonably
likely to have a ValueVision Material Adverse Effect.
Section 3.15. Accounting and Tax Matters.
(a) To the knowledge of ValueVision and its Subsidiaries, after consulting
with its independent auditors, neither ValueVision nor any of its Affiliates
(as defined in Section 5.12) has taken or agreed to take any action which would
prevent the ValueVision Merger from constituting a transaction qualifying as a
reorganization under Section 368 of the Code or the Mergers from constituting
transactions qualifying as transfers under Section 351 of the Code.
(b) To the knowledge of ValueVision and its Subsidiaries, the
stockholders of ValueVision have no present plan, intention or arrangement to
sell or otherwise dispose of any of the Parent Common Stock received in the
ValueVision Merger that would cause the ValueVision Merger to fail to qualify
as a reorganization under Section 368 of the Code or the Mergers to fail to
qualify as transfers under Section 351 of the Code.
Section 3.16. Registration Statement; Joint Proxy Statement/Prospectus.
The information to be supplied by ValueVision or its Subsidiaries or about
ValueVision or its Subsidiaries by ValueVision's agents for inclusion in the
registration statement on Form S-4 pursuant to which shares of Parent Common
Stock issued in the Mergers will be registered under the Securities Act (the
"Registration Statement"), shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact
or omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make
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the statements in the Registration Statement, in light of the circumstances
under which they were made, not misleading. The information supplied by
ValueVision or its Subsidiaries for inclusion in the joint proxy
statement/prospectus to be sent to the stockholders of National Media and
ValueVision in connection with the meeting of ValueVision' stockholders (the
"ValueVision Stockholders' Meeting") and the meeting of National Media's
stockholders (the "National Media Stockholders' Meeting") to consider this
Agreement and the Mergers (the "Joint Proxy Statement/Prospectus") shall not,
on the date the Joint Proxy Statement/Prospectus is first mailed to
stockholders of ValueVision or National Media, at the time of the ValueVision
Stockholders' Meeting and the National Media Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement/Prospectus not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the ValueVision Stockholders' Meeting or the National Media
Stockholders' Meeting which has become false or misleading. If at any time
prior to the Effective Time any event relating to ValueVision or any of its
Affiliates, officers or directors should be discovered by ValueVision which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, ValueVision shall promptly
inform National Media.
Section 3.17 Labor Matters. Except as disclosed in the ValueVision SEC
Reports filed prior to the date hereof, neither ValueVision nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is ValueVision or any of its
Subsidiaries the subject of any material proceeding asserting that ValueVision
or any of its Subsidiaries has committed an unfair labor practice or is seeking
to compel it to bargain with any labor union or labor organization nor, as of
the date of this Agreement, is there pending or, to the knowledge of the
executive officers of ValueVision, threatened, any material labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving ValueVision or
any of its Subsidiaries.
Section 3.18. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by ValueVision or any of its Subsidiaries
are with reputable insurance carriers, provide full and adequate coverage for
all normal risks incident to the business of ValueVision and its Subsidiaries
and their respective properties and assets, and are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except for any such failures
to maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a ValueVision Material Adverse Effect.
Section 3.19. Opinion of Financial Advisor. The financial advisor of
ValueVision, Bear Stearns & Co., has delivered to ValueVision an opinion dated
the date of this Agreement to the effect that the ValueVision Exchange Ratio is
fair to the holders of ValueVision Common Stock from a financial point of view.
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Section 3.20. No Existing Discussions. As of the date hereof, neither
ValueVision nor any of its Affiliates is engaged, directly or indirectly, in
any discussions or negotiations with any other party with respect to an
Acquisition Proposal (as defined in Section 5.3).
Section 3.21. Sections 302A.671 and 302A.673 of the MBCA Not Applicable.
The Board of Directors of ValueVision has taken all actions necessary under the
MBCA, including approving the transactions contemplated by the Agreement and
each of the Transaction Documents to which it is a party, to ensure that
Section 302A.673 of the MBCA applicable to a "business combination" does not,
and will not, apply to the transactions contemplated hereunder and thereunder.
The restrictions contained in Section 302A.671 of the MBCA applicable to
"control share acquisitions" will not apply to the authorization, execution,
delivery and performance of this Agreement or each of the Transaction Documents
by ValueVision to which it is a party or the consummation of the ValueVision
Merger by ValueVision. No other "fair price," "moratorium," or other similar
anti-takeover statute or regulation is applicable to ValueVision or (by reason
of ValueVision's participation therein) the ValueVision Merger or the other
transactions contemplated by this Agreement or the other Transaction Documents
to which it is a party.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF NATIONAL MEDIA
National Media represents and warrants to ValueVision that the statements
contained in this Article IV are true and correct, except as set forth on the
disclosure schedules delivered by National Media to ValueVision on or before
the date of this Agreement (the "National Media Disclosure Schedule"). The
National Media Disclosure Schedule shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained in this Article
IV and the disclosure in any paragraph shall qualify other paragraphs in this
Article IV only to the extent that it is reasonably apparent from a reading of
such document that it also qualifies or applies to such other paragraphs.
Section 4.1. Organization of National Media. Each of National Media and
National Media's Material Subsidiaries (as defined below) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
business, properties, financial condition or results of operations of National
Media and its Subsidiaries, taken as a whole (a "National Media Material
Adverse Effect"). Except as set forth on the National Media Disclosure
Schedule or in the National Media SEC Reports (as defined in Section 4.4) filed
prior to the date hereof, neither National Media nor any of its Subsidiaries
directly or indirectly owns (other than ownership interests in National Media
or in one or more of its Subsidiaries) any equity or similar interest in, or
any interest that is mandatorily convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity, excluding securities in any publicly traded company held
for investment by National Media and comprising less than
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five percent (5%) of the outstanding stock of such company. A true, correct
and complete copy of the Certificate of Incorporation and other similar
organizational documents of National Media and each of National Media's
Material Subsidiaries (as defined below) has been delivered to ValueVision.
"National Media's Material Subsidiaries" shall mean those subsidiaries of
National Media set forth on the National Media Disclosure Schedule, which
Subsidiaries constitute all of National Media's "significant subsidiaries" as
defined in Rule 1-02 of Regulation S-X under the Securities Act.
Section 4.2. National Media Capital Structure.
(a) The authorized capital stock of National Media consists of 75,000,000
shares of Common Stock, $.01 par value, and 10,000,000 shares of Preferred
Stock, $.01 par value. As of the date hereof, (i) 25,507,436 shares of
National Media Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and (ii) 705,280 shares of
National Media Common Stock were held in the treasury of National Media or by
Subsidiaries of National Media. The National Media Disclosure Schedule shows
the number of shares of National Media Common Stock reserved for future
issuance pursuant to stock options granted and outstanding as of the date
hereof, the plans under which such options were granted and award agreements
pursuant to which "non-plan" options were granted (collectively, the "National
Media Stock Plans"), and the entities or persons to whom such options were
granted. The National Media Disclosure Schedule also shows the agreements
under which the warrants to purchase an aggregate of 7,093,413 shares of
National Media Common Stock granted and outstanding as of the date hereof (the
"National Media Warrants," and together with the ValueVision Warrants, the
"Warrants") were issued and to whom such warrants were granted. As of the date
hereof, an aggregate number of 86,250 shares of Series B Convertible Preferred
Stock, par value $.01 per share, of National Media, which are currently
convertible into 862,500 shares of National Media Common Stock and which are
currently entitled to vote on all matters submitted to the stockholders of
National Media (with the exception of the election of directors) on an "as
converted" basis (the "Series B Convertible Preferred Stock") and 20,000 shares
of Series C Convertible Preferred Stock, par value $.01 per share, of National
Media which are currently convertible into 3,300,330 (the quotient of $20
million divided by $6.06) shares of National Media Common Stock, plus the
number of shares of National Media Common Stock equal to the quotient of the
Accrued Premium (as defined in the Certificate of Designations (as defined
below)) divided by $6.06 (the "Series C Convertible Preferred Stock" and,
together with the Series B Convertible Preferred Stock the "National Media
Convertible Preferred Stock") are issued and outstanding. All shares of
National Media Common Stock subject to issuance as specified above are duly
authorized and, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be validly issued, fully
paid and nonassessable. Except as set forth on the National Media Disclosure
Schedule, there are no obligations, contingent or otherwise, of National Media
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of National Media Common Stock or the capital stock of any Subsidiary or
to provide funds to or make any material investment (in the form of a loan,
capital contribution or otherwise) in any such Subsidiary or any other entity
other than guarantees of bank obligations of Subsidiaries entered into in the
ordinary course of business. Except as set forth on the National Media
Disclosure Schedule, all of the outstanding shares of capital stock of each of
National Media's Subsidiaries are duly authorized, validly issued, fully
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paid and nonassessable and all such shares (other than directors' qualifying
shares in the case of foreign Subsidiaries) are beneficially owned by National
Media or another Subsidiary free and clear of all security interests, liens,
claims, pledges, agreements, limitations in National Media's voting rights,
charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.2 or as reserved for future
grants of options under the National Media Stock Plans or the ValueVision Stock
Option Agreement, and except for the Series A Junior Participating Preferred
Stock issued and issuable under the Rights Agreement dated as of January 3,
1994 between National Media and Mellon Securities Trust Company, as amended
(the "National Media Rights Plan") or as disclosed on the National Media
Disclosure Schedule, (i) there are no equity securities of any class of
National Media or any of its Subsidiaries, or any security exchangeable into or
exercisable for such equity securities, issued, reserved for issuance or
outstanding; (ii) except as set forth in the Certificate of Designations,
Preferences and Rights of the Series C Convertible Preferred Stock (the
"Certificate of Designations") and the Registration Rights Agreement dated as
of September 4, 1997 among National Media and the holders of the Series C
Convertible Preferred Stock, there are no options, warrants, equity securities,
calls, rights, commitments or agreements of any character to which National
Media or any of its Subsidiaries is a party or by which it is bound obligating
National Media or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of National
Media or any of its Subsidiaries or obligating National Media or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, call, right, commitment or agreement; and
(iii) to the best knowledge of National Media, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of National Media.
Section 4.3. Authority; No Conflict; Required Filings and Consents.
(a) National Media has all requisite corporate power and authority to enter
into this Agreement and each of the Transaction Documents to which it is a
party and to consummate the transactions contemplated by this Agreement and
each of the Transaction Documents to which it is a party. The execution and
delivery of this Agreement and each of the Transactions Documents to which it
is a party and the consummation of the transactions contemplated by this
Agreement and each of the Transaction Documents to which it is a party by
National Media have been duly authorized by all necessary corporate action on
the part of National Media, subject only to the approval and adoption of this
Agreement by National Media's stockholders under the DGCL. This Agreement and
each of the Transaction Documents to which it is a party have been duly
executed and delivered by National Media and constitute the valid and binding
obligations of National Media, enforceable in accordance with their terms,
subject to the Bankruptcy and Equity Exception.
(b) Except as set forth on the National Media Disclosure Schedule, the
execution and delivery of this Agreement and each of the Transaction Documents
to which it is a party by National Media does not, and the consummation of the
transactions contemplated by this Agreement and each of the Transaction
Documents to which it is a party will not, (i) conflict with, or result in any
violation or breach of, any provision of the Certificate of Incorporation or
Bylaws of National Media or any of its Subsidiaries, (ii) result in any
violation or breach of, or
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constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which National Media or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound (including
the Series C Convertible Preferred Stock), or (iii) conflict with or violate
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to National Media or any of its
Subsidiaries or any of its or their properties or assets, except in the case of
(ii) and (iii) for any such conflicts, violations, defaults, terminations,
cancellations or accelerations which are not, individually or in the aggregate,
reasonably likely to have a National Media Material Adverse Effect. The
Redemption Agreement pursuant to which holders of the outstanding shares of
Series C Convertible Preferred Stock consent to the authorization, execution
and delivery of this Agreement and each of the Transaction Documents and the
consummation of the transactions contemplated hereunder and thereunder, is
being entered into concurrently with the execution of this Agreement and a form
is attached hereto as Exhibit K. The Series B Consent Agreement pursuant to
which holders of the outstanding shares of National Media Series B Convertible
Preferred Stock consent to the authorization, execution and delivery of this
Agreement and each of the Transaction Documents and the consummation of the
transactions contemplated hereunder and thereunder, is being entered into
concurrently with the execution of this Agreement and a form is attached hereto
as Exhibit L. The CoreStates Consent Agreement pursuant to which CoreStates
consents to the authorization, execution and delivery of this Agreement and
each of the Transaction Documents and the consummation of the transactions
contemplated hereunder and thereunder, is being entered into concurrently with
the execution of this Agreement and a form is attached hereto as Exhibit M.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to National Media or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and each of the Transaction Documents
to which it is a party or the consummation of the transactions contemplated
hereby or thereby, except for (i) the filing of the pre-merger notification
report under the HSR Act, (ii) the filing of a Certificate of Merger with
respect to the National Media Merger with the Delaware Secretary of State,
(iii) the filing of the Joint Proxy Statement/Prospectus with the SEC in
accordance with the Exchange Act, (iv) applicable approvals of the FCC pursuant
to the Communications Act, (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required
under applicable state or foreign securities laws, and (vi) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not be reasonably likely to have a National Media
Material Adverse Effect.
Section 4.4. SEC Filings; Financial Statements.
(a) National Media has filed and made available to ValueVision all forms,
reports and documents filed or required to be filed by National Media with the
SEC since January 1, 1995 (collectively, the "National Media SEC Reports").
The National Media SEC Reports (i) except as set forth on the National Media
Disclosure Schedule, at the time filed, complied in
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all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
National Media SEC Reports or necessary in order to make the statements in such
National Media SEC Reports, in the light of the circumstances under which they
were made, not misleading. None of National Media's Subsidiaries is required
to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the National Media SEC Reports complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited statements, in
conformity with the requirements of Form 10-Q under the Exchange Act) and
fairly presented in all material respects the consolidated financial position
of National Media and its Subsidiaries as of the dates and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount. The audited balance sheet of National Media as of March
31, 1997 is referred to herein as the "National Media Balance Sheet."
Section 4.5. No Undisclosed Liabilities. Except as disclosed in the
National Media SEC Reports filed prior to the date hereof or on the National
Media Disclosure Schedule, and except for normal or recurring liabilities
incurred since March 31, 1997 in the ordinary course of business consistent
with past practices, National Media and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise (whether or not required
to be reflected in financial statements in accordance with generally accepted
accounting principles), and whether due or to become due, which individually or
in the aggregate, are reasonably likely to have a National Media Material
Adverse Effect.
Section 4.6. Absence of Certain Changes or Events. Except as disclosed
in the National Media SEC Reports filed prior to the date hereof or on the
National Media Disclosure Schedule, since the date of the National Media
Balance Sheet, National Media and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any Material Adverse
Change in National Media and its Subsidiaries, taken as a whole (other than
changes that are the effect or result of economic factors affecting the economy
as a whole or the industry (as described in National Media's Form 10-K for the
fiscal year ended March 31, 1997 (the "National Media 10-K") in which National
Media competes) or any development or combination of developments of which the
management of National Media is aware that, individually or in the aggregate,
has had, or is reasonably likely to have, a National Media Material Adverse
Effect (other than changes that are the effect or result of economic factors
affecting the economy as a whole or the industry (as described in the National
Media 10-K) in which National Media competes); (ii) any damage, destruction or
loss (whether or not covered by insurance) with
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respect to National Media or any of its Subsidiaries having a National Media
Material Adverse Effect; (iii) any material change by National Media or its
Subsidiaries in their respective accounting methods, principles or practices to
which ValueVision has not previously consented in writing; (iv) any revaluation
by National Media or its Subsidiaries of any of their assets having a National
Media Material Adverse Effect; or (v) any other action or event that would have
required the consent of ValueVision pursuant to Section 5.1 of this Agreement
had such action or event occurred after the date of this Agreement and that,
individually or in the aggregate, has had or is reasonably likely to have a
National Media Material Adverse Effect.
Section 4.7. Taxes.
(a) National Media and each of its Subsidiaries have (i) filed all federal,
state, local and foreign Tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account all applicable
extensions), (ii) paid or accrued all Taxes due and payable, and (iii) paid or
accrued all Taxes for which a notice of assessment or collection has been
received (other than amounts being contested in good faith by appropriate
proceedings), except in the case of clauses (i), (ii) or (iii) for any such
filings, payments or accruals that are not reasonably likely, individually or
in the aggregate, to have a National Media Material Adverse Effect. There are
no audits known by National Media to be pending or contemplated with respect to
National Media's tax returns. Neither the IRS nor any other taxing authority
has asserted any claim for Taxes, or to the actual knowledge of the executive
officers of National Media, is threatening to assert any claims for Taxes,
which claims, individually or in the aggregate, are reasonably likely to have a
National Media Material Adverse Effect. National Media and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected, except for amounts that are not
reasonably likely, individually or in the aggregate, to have a National Media
Material Adverse Effect. Neither National Media nor any of its Subsidiaries
has made an election under Section 341(f) of the Code, except for any such
elections that are not reasonably likely, individually or in the aggregate, to
have a National Media Material Adverse Effect. There are no liens for Taxes
upon the assets of National Media or any of its Subsidiaries (other than liens
for Taxes that are not yet due or that are being contested in good faith by
appropriate proceedings), except for liens that are not reasonably likely,
individually or in the aggregate, to have a National Media Material Adverse
Effect. No extension of a statute of limitations relating to any Taxes is in
effect with respect to National Media and its Subsidiaries.
(b) Neither National Media nor any of its Subsidiaries has been a member
of an affiliated group of corporations filing a consolidated federal income tax
return (or a group of corporations filing a consolidated, combined or unitary
income tax return under comparable provisions of state, local or foreign tax
law) for any taxable period beginning on or after April 1, 1991, other than a
group the common parent of which was National Media or any Subsidiary of
National Media.
(c) Neither National Media nor any of its Subsidiaries has any obligation
under any agreement or arrangement with any other person with respect to Taxes
of such other person (including pursuant to Treas. Reg. Section 1.1502-6 or
comparable provisions of state, local or foreign
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tax law) and including any liability for Taxes of any predecessor entity,
except for obligations that are not reasonably likely, individually or in the
aggregate, to have an National Media Material Adverse Effect.
(d) Neither National Media nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
Section 4.8. Properties.
(a) Neither National Media nor any of its Subsidiaries is in default
under any of their respective leases for real property, except where the
existence of such defaults, individually or in the aggregate, is not reasonably
likely to have a National Media Material Adverse Effect.
(b) Neither National Media nor any of its Subsidiaries owns any real
property.
Section 4.9. Intellectual Property. Other than as set forth on the
National Media Disclosure Schedule, each of National Media and its Subsidiaries
owns, or is licensed or otherwise possesses legally enforceable rights to use,
all trademarks, trade names, service marks, copyrights, and any applications
for such trademarks, trade names, service marks and copyrights, know-how,
computer software programs or applications, and tangible or intangible
proprietary information or material that are necessary to conduct the business
of each of National Media and its Subsidiaries as currently conducted, subject
to such exceptions that would not be reasonably likely to have a National Media
Material Adverse Effect. Other than as set forth on the National Media
Disclosure Schedule, neither National Media nor any of its Subsidiaries has any
knowledge of any assertion or claim challenging the validity of any of such
intellectual property, except such assertions or claims that, individually or
in the aggregate, are not reasonably likely to have a National Media Material
Adverse Effect.
Section 4.10. Agreements, Contracts and Commitments. Neither National
Media nor any of its Subsidiaries has breached, or received in writing any
claim or notice that it has breached, any of the terms or conditions of any
material agreement, contract or commitment filed or required to be filed as an
exhibit to the National Media SEC Reports ("National Media Material Contracts")
in such a manner as, individually or in the aggregate, is reasonably likely to
have a National Media Material Adverse Effect. Each National Media Material
Contract that has not expired by its terms is in full force and effect.
Section 4.11. Litigation. Except as described in the National Media SEC
Reports filed prior to the date hereof or as set forth on the National Media
Disclosure Schedule, there is no action, suit or proceeding, claim, arbitration
or investigation against National Media or any of its Subsidiaries pending or
as to which National Media or any of its Subsidiaries has received any written
notice of assertion, which, individually or in the aggregate, is reasonably
likely to have a National Media Material Adverse Effect or a material adverse
effect on the ability of National Media to consummate the transactions
contemplated by this Agreement.
Section 4.12. Environmental Matters. To the knowledge of National Media
and its Subsidiaries, except as disclosed in the National Media SEC Reports
filed prior to the date hereof
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and except for such matters that, individually or in the aggregate, are not
reasonably likely to have a National Media Material Adverse Effect: (i)
National Media and its Subsidiaries are in material compliance with all
applicable Environmental Laws; (ii) the properties currently owned or operated
by National Media and its Subsidiaries (including soils, groundwater, surface
water, buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by National Media
or any of its Subsidiaries were not contaminated with Hazardous Substances
during the period of ownership or operation by National Media or any of its
Subsidiaries; (iv) neither National Media nor its Subsidiaries are subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither National Media nor any of its Subsidiaries has been
associated with any release or threat of release of any Hazardous Substance;
(vi) neither National Media nor any of its Subsidiaries has received any
written notice, demand, letter, claim or request for information alleging that
National Media or any of its Subsidiaries may be in violation of or liable
under any Environmental Law; (vii) neither National Media nor any of its
Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving National Media or any of its Subsidiaries
that could reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of any
property of National Media pursuant to any Environmental Law.
Section 4.13. Employee Benefit Plans.
(a) National Media has listed on the National Media Disclosure Schedule all
Employee Benefit Plans, as defined in Section 3.13(a) of this Agreement, and
all Benefit Arrangements, as defined in Section 3.13(a) of this Agreement, (i)
which are maintained, contributed to or required to be contributed to by
National Media or any entity that, together with National Media as of the
relevant measuring date under ERISA, is or was required to be treated as a
single employer under Section 414 of the Code ("National Media ERISA
Affiliate") or under which National Media or any National Media ERISA Affiliate
may incur any liability, and (ii) which cover the employees, former employees,
directors or former directors of National Media or any National Media ERISA
Affiliate ("National Media Employee Plans").
(b) A true and complete copy of each written National Media Employee Plan
that covers employees or former employees of National Media or any Subsidiary
of National Media, including each amendment thereto and any trust agreement,
insurance contract, collective bargaining agreement, or other funding or
investment arrangements for the benefits under such National Media Employee
Plan, has been delivered to ValueVision. In addition, with respect to each
such National Media Employee Plan to the extent applicable, National Media has
delivered to ValueVision the most recently filed Federal Forms 5500 (solely
with respect to the National Media 401(k) Plan), the most recent summary plan
description (including any summaries of material modifications), the most
recent IRS determination letter, if applicable, the most recent actuarial
report or valuation, if applicable, and all material employee communications
with respect to each such National Media Employee Plan.
(c) Except as set forth on the National Media Disclosure Schedule:
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(i) Neither National Media nor any National Media ERISA Affiliate
sponsors, maintains, contributes to, or has any obligation to contribute to any
Employee Benefit Plan regulated under Title IV of ERISA, other than a
"multiemployer plan," as defined in Sections 3(37) and 4001(a)(3) of ERISA,
("Pension Plan"); with respect to any Pension Plan previously sponsored,
maintained or contributed to by National Media or any National Media ERISA
Affiliate or with respect to which National Media or any National Media ERISA
Affiliate previously incurred an obligation to contribute:
(A) As of the last day of the last plan year of each such Pension
Plan and as of the Closing Date, the "amount of unfunded benefit
liabilities" as defined in Section 4001(a)(18) of ERISA (but excluding
from the definition of "current value" of "assets" of such Pension Plan,
accrued but unpaid contributions) did not and will not exceed zero.
(B) No such Pension Plan has been terminated so as to subject,
directly or indirectly, National Media or any National Media ERISA
Affiliate to any liability, contingent or otherwise, or the imposition
of any lien under Title IV of ERISA;
(C) No proceeding has been initiated by any person, including the
Pension Benefit Guaranty Corporation ("PBGC"), to terminate any such
Pension Plan;
(D) No liability to the PBGC exists or is reasonably expected to be
incurred with respect to any such Pension Plan that could subject,
directly or indirectly, National Media or any National Media ERISA
Affiliate to any liability, contingent or otherwise, or the imposition
of any lien under Title IV of ERISA, whether to the PBGC or to any other
person;
(E) No "reportable event," as defined in Section 4043 of ERISA (to
the extent the reporting of such event to the PBGC has not been waived)
has occurred and is continuing with respect to any such Pension Plan;
(F) No such Pension Plan which is subject to Section 302 of ERISA
or Section 412 of the Code has incurred an "accumulated funding
deficiency," within the meaning of Section 302 of ERISA and 412 of the
Code, whether or not such deficiency has been waived;
(G) Neither National Media nor any National Media ERISA Affiliate
has, at any time, (i) ceased operations at a facility so as to become
subject to the provisions of Section 4068(e) of ERISA, (ii) withdrawn as
a substantial employer so as to become subject to the provisions of
Section 4063 of ERISA, or (iii) ceased making contributions on or before
the Closing Date to any Pension Plan subject to Section 4064(a) of ERISA
to which National Media or any National Media ERISA Affiliate made
contributions during the five years prior to the Closing Date.
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(ii) neither National Media nor any National Media ERISA Affiliate
sponsors or has previously sponsored, maintained, contributed to or incurred an
obligation to contribute to any "multiemployer plan," as defined in Sections
3(37) and 4001(a)(3) of ERISA;
(iii) neither National Media nor any National Media ERISA
Affiliate sponsors or has previously sponsored, maintained, contributed to or
incurred an obligation to contribute to any Employee Benefit Plan that provides
or will provide benefits described in Section 3(1) of ERISA to any former
employee or retiree of National Media or any National Media ERISA Affiliate,
except as required under Part 6 of Title I of ERISA and Section 4980B of the
Code;
(iv) all National Media Employee Plans that cover or have covered
employees or former employees of National Media have been maintained and
operated, and currently are, in compliance in all material respects with their
terms, the requirements prescribed by any and all applicable laws (including
ERISA and the Code), orders, or governmental rules and regulations in effect
with respect thereto, and National Media and the National Media ERISA
Affiliates have performed all material obligations required to be performed by
them under, are not in any material respect in default under or in violation
of, and have no knowledge of any default or violation by any other party to,
any of the National Media Employee Plans;
(v) each National Media Employee Plan that covers or has covered
employees or former employees of National Media and is intended to qualify
under Section 401(a) of the Code and each trust established pursuant to each
such National Media Employee Plan that is intended to qualify under Section
501(a) of the Code is the subject of a favorable determination letter from the
IRS, a copy of which has been delivered to ValueVision, and, to National
Media's knowledge, nothing has occurred which may reasonably be expected to
impair such determination or otherwise adversely affect the tax-qualified
status of such National Media Employee Plan;
(vi) National Media and the National Media ERISA Affiliates have
made full and timely payment of all amounts required to be contributed under
the terms of each National Media Employee Plan and applicable law or required
to be paid as expenses under such National Media Employee Plan; and
(vii) other than claims for benefits in the ordinary course,
there is no claim, suit, action, dispute, arbitration or legal, administrative
or other proceeding or governmental investigation or audit pending, or, to the
knowledge of National Media, threatened, alleging any breach of the terms of
any National Media Employee Plan or of any fiduciary duty thereunder or
violation of any applicable law with respect to any such National Media
Employee Plan.
(d) With respect to the National Media Employee Plans, individually and
in the aggregate, no event has occurred, and to the knowledge of National
Media, there exists no condition or set of circumstances in connection with
which National Media could be subject to any liability that is reasonably
likely to have a National Media Material Adverse Effect under ERISA, the Code
or any other applicable law.
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(e) Except as disclosed in the National Media SEC Reports filed prior to
the date of this Agreement or on the National Media Disclosure Schedule, and
except as provided for in this Agreement, neither National Media nor any of its
Subsidiaries is a party to any oral or written (i) agreement with any officer
or other key employee of National Media or any of its Subsidiaries, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving National Media of the nature
contemplated by this Agreement, (ii) agreement with any officer of National
Media providing any term of employment or compensation guarantee extending for
a period longer than one year from the date hereof and for the payment of
compensation in excess of $100,000 per annum, or (iii) agreement or plan,
including any stock option plan, stock appreciation right plan, restricted
stock plan or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement. None of the execution or
delivery of this Agreement or any of the Transaction Documents to which it is a
party or the consummation of the transactions contemplated hereunder or
thereunder will trigger any "change in control" or similar provisions resulting
in an acceleration of benefits or compensation thereunder with respect to any
agreements with any officer or other key employee of National Media or any of
its Subsidiaries except for such applicable agreements as set forth on the
National Media Disclosure Schedule (the "National Media Parachute Agreements").
Except as set forth on the National Media Disclosure Schedule, the aggregate
amounts payable under the National Media Parachute Agreements as a result of
the transactions contemplated by this Agreement and each of the Transaction
Documents will not exceed $600,000.
Section 4.14. Compliance With Laws. Except as disclosed on the National
Media Disclosure Schedule, each of National Media and its Subsidiaries has
complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state or local statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a National Media Material Adverse Effect.
Section 4.15. Accounting and Tax Matters.
(a) To the knowledge of National Media and its Subsidiaries, after
consulting with its independent auditors, neither National Media nor any of its
Affiliates (as defined in Section 5.12) has taken or agreed to take any action
which would prevent the Mergers from constituting transactions qualifying as
transfers under Section 351 of the Code.
(b) To the knowledge of National Media and its Subsidiaries, the
stockholders of National Media have no present plan, intention or arrangement
to sell or otherwise dispose of any of the Parent Common Stock received in the
National Media Merger that would cause the Mergers to fail to qualify as
transfers under Section 351 of the Code.
(c) None of National Media's non-United States Subsidiaries have, excluding
the effects of any guarantees made by any such Subsidiaries with respect to the
Demand Note, any
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"applicable earnings" for purposes of Section 956 of the Code as of the end of
each such Subsidiary's tax year ending on or after the date hereof.
Section 4.16. Registration Statement; Joint Proxy Statement/Prospectus. The
information to be supplied by National Media or its Subsidiaries or about
National Media or its Subsidiaries by National Media's agents for inclusion in
the Registration Statement shall not at the time the Registration Statement is
declared effective by the SEC contain any untrue statement of a material fact
or omit to state any material fact required to be stated in the Registration
Statement or necessary in order to make the statements in the Registration
Statement, in light of the circumstances under which they were made, not
misleading. The information to be supplied by National Media or its
Subsidiaries or about National Media or its Subsidiaries by National Media's
agents for inclusion in the Joint Proxy Statement/Prospectus shall not, on the
date the Joint Proxy Statement/Prospectus is first mailed to stockholders of
National Media or ValueVision, at the time of the National Media Stockholders'
Meeting and the ValueVision Stockholders' Meeting and at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, omit to state any material fact necessary in order to make the
statements made in the Joint Proxy Statement/Prospectus not false or
misleading, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the National Media Stockholders' Meeting or the ValueVision
Stockholders' Meeting which has become false or misleading. If at any time
prior to the Effective Time any event relating to National Media or any of its
Affiliates, officers or directors should be discovered by National Media which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, National Media shall
promptly inform ValueVision.
Section 4.17. Labor Matters. Except as disclosed in the National Media SEC
Reports filed prior to the date hereof, neither National Media nor any of its
Subsidiaries is a party to or otherwise bound by any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is National Media or any of its
Subsidiaries the subject of any material proceeding asserting that National
Media or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization nor,
as of the date of this Agreement, is there pending or, to the knowledge of the
executive officers of National Media, threatened, any material labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving National Media
or any of its Subsidiaries.
Section 4.18. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by National Media or any of its
Subsidiaries are with reputable insurance carriers, provide full and adequate
coverage for all normal risks incident to the business of National Media and
its Subsidiaries and their respective properties and assets, and are in
character and amount at least equivalent to that carried by persons engaged in
similar businesses and subject to the same or similar perils or hazards, except
for any such failures to maintain insurance policies that, individually or in
the aggregate, are not reasonably likely to have a National Media Material
Adverse Effect.
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Section 4.19. Opinion of Financial Advisor. The financial advisor of
National Media, Lehman Brothers, Inc., has delivered to National Media an
opinion dated the date of this Agreement to the effect that the National Media
Exchange Ratio is fair to the holders of National Media Common Stock from a
financial point of view.
Section 4.20. No Existing Discussions. As of the date hereof, neither
National Media nor any of its Affiliates is engaged, directly or indirectly, in
any discussions or negotiations with any other party with respect to an
Acquisition Proposal.
Section 4.21. Section 203 of the DGCL and Sections 2538, 2555, and 2564
of the Pennsylvania Business Corporation Law Not Applicable. The Board of
Directors of National Media has taken all actions necessary under the DGCL and
the Pennsylvania Business Corporation Law ("PBCL"), including approving the
transactions contemplated by this Agreement and each of the Transaction
Documents to which it is a party, to ensure that Section 203 of the DGCL
applicable to a "business combination" (as defined in Section 203 of the DGCL)
and Sections 2538, 2555 and 2564 of the PBCL applicable to a "business
combination," "control share acquisitions and transaction with "interested
shareholders," do not, and will not, apply to the transactions contemplated
hereunder and thereunder. No other "fair price," "moratorium," "control share
acquisition" or other similar anti-takeover statute or regulation is applicable
to National Media or (by reason of National Media's participation therein) the
National Media Merger or the other transactions contemplated by this Agreement
or the other Transaction Documents to which it is a party.
Section 4.22. National Media Rights Plan. Under the terms of the
National Media Rights Plan, the transactions contemplated by this Agreement
will not cause a Distribution Date to occur or cause the rights issued pursuant
to the National Media Rights Plan to become exercisable and all such rights
shall become non-exercisable at the Effective Time.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of Business. Except as set forth on Section 5.1 of
the ValueVision Disclosure Schedule or the National Media Disclosure Schedule,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, ValueVision
and National Media each agrees as to itself and its respective Subsidiaries
(except to the extent that the other party shall otherwise consent in writing)
to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform its other obligations when due, and, to the extent consistent with
such business, use all reasonable efforts consistent with past practices and
policies to (i) preserve intact its present business organization, (ii) keep
available the services of its present officers and key employees and (iii)
preserve its relationships with customers, suppliers, distributors, and others
having business dealings with it. Except as expressly contemplated by this
Agreement (including the Exhibits attached hereto) or as set forth on Section
5.1 of the ValueVision Disclosure Schedule or the National Media Disclosure
Schedule, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the Effective Time,
ValueVision and National Media each shall
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not (and shall not permit any of its respective Subsidiaries to), without the
written consent of the other party:
(a) Accelerate, amend or change the period of exercisability of options or
restricted stock granted under any employee stock plan of such party or
authorize cash payments in exchange for any options granted under any of such
plans, except as required by the terms of such plans or any related agreements
in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock, except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service to such
party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities convertible
into or exchangeable for shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than (i) the grant of options consistent with past practices
to employees, officers, directors or consultants, but in no event grant more
than the total number of authorized options available under such party's stock
option plans and (ii) the issuance of shares of ValueVision Common Stock or
National Media Common Stock, as the case may be, pursuant to the exercise of
options, warrants or the National Media Convertible Preferred Stock outstanding
on the date of this Agreement;
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership
or other business organization or division, or otherwise acquire or agree to
acquire any assets (other than inventory and other items in the ordinary course
of business), except for any such acquisitions involving aggregate
consideration of not more than $1,000,000;
(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions in the ordinary course of
business; provided, however, that in no event shall either party enter into any
agreement, option or other arrangements (including without limitation any joint
venture) involving the licensing of such party's name or system in any foreign
country, except for transactions in the ordinary course of business;
(f) (i) Increase or agree to increase the compensation payable or to become
payable to its directors, officers, employees or consultants, except for
increases in salary or wages of employees (other than officers) in accordance
with past practices, (ii) grant any additional severance or termination pay to,
or enter into any employment or severance agreements with, any consultants,
employees, officers or directors (iii) enter into any collective bargaining
agreement (other than as required by law or extensions to existing agreements
in the ordinary course of business), or (iv) establish, adopt, enter into or
amend any bonus, profit
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sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or other
plan, trust, fund, policy or arrangement for the benefit of any directors,
officers, employees or consultants;
(g) Amend or propose to amend its Certificate of Incorporation or
Articles of Incorporation, as the case may be, or Bylaws;
(h) Incur any indebtedness for borrowed money other than in the ordinary
course of business;
(i) Take any action that would or is reasonably likely to result in a
material breach of any provision of this Agreement or any of the Transaction
Documents to which it is a party or in any of its representations and
warranties set forth in this Agreement or any of the Transaction Documents to
which it is a party being untrue on and as of the Closing Date;
(j) Make or rescind any material express or deemed election relating to
Taxes, settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to Taxes,
or change any of its methods of reporting income or deductions for federal
income Tax purposes from those employed in the preparation of its federal
income tax return for the taxable year ending January 31, 1997 with respect to
ValueVision and March 31, 1997 with respect to National Media, except as may be
required by applicable law;
(k) Settle any stockholder litigation relating to the transactions
contemplated hereby; or
(l) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (k) above.
Section 5.2. Cooperation; Notice; Cure. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of
ValueVision and National Media shall confer on a regular and frequent basis
with one or more representatives of the other party to report on the general
status of ongoing operations and shall promptly provide the other party or its
counsel with copies of all filings made by such party with the SEC or with any
Governmental Entity in connection with this Agreement, the Mergers and the
transactions contemplated hereby and thereby. Each of ValueVision and National
Media shall notify the other of, and will use all commercially reasonable
efforts to cure before the Closing Date, any event, transaction or
circumstance, as soon as practical after it becomes known to such party, that
causes or will cause any covenant or agreement of ValueVision or National Media
under this Agreement to be breached or that renders or will render untrue any
representation or warranty of ValueVision or National Media contained in this
Agreement. Each of ValueVision and National Media also shall notify the other
in writing of, and will use all commercially reasonable efforts to cure, before
the Closing Date, any violation or breach, as soon as practical after it
becomes known to such party, of any representation, warranty, covenant or
agreement made by ValueVision or National Media. No notice given pursuant to
this paragraph shall have any effect on the representations, warranties,
covenants or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein. Notwithstanding anything to
the
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contrary in this Agreement, (i) neither ValueVision nor any of its Subsidiaries
nor National Media nor any of its Subsidiaries shall be obligated to sell or
otherwise transfer any of its broadcast assets to obtain the FCC Consent
Application (as defined in Section 5.8(a)) and (ii) if any of National Media's
Directors (as defined in Section 5.19(a)) are not approved of by the FCC, then
National Media shall as expeditiously as possible upon notice of such
nonapproval replace any such director with another National Media Director
until all of National Media's Directors have been approved of by the FCC.
Section 5.3. No Solicitation.
(a) ValueVision and National Media each shall not, directly or indirectly,
through any officer, director, employee, financial advisor, representative or
agent of such party (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transaction involving such
party or any of its Subsidiaries, other than the transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being referred to
in this Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions with any third party concerning, or provide any non-public
information to any person or entity relating to, any Acquisition Proposal, or
(iii) agree to or recommend any Acquisition Proposal; provided, however, that
nothing contained in this Agreement shall prevent ValueVision or National
Media, or their respective Board of Directors, from (A) furnishing non-public
information to, or entering into discussions or negotiations with, any person
or entity in connection with an unsolicited bona fide written Acquisition
Proposal by such person or entity or modifying or withdrawing its
recommendation with respect to the transactions contemplated hereby or
recommending an unsolicited bona fide written Acquisition Proposal to the
stockholders of such party, if and only to the extent that (1) the Board of
Directors of such party believes in good faith (after consultation with its
financial advisor) that such Acquisition Proposal is reasonably capable of
being completed on the terms proposed and, after taking into account the
strategic benefits anticipated to be derived from the Mergers and the long-term
prospects of ValueVision and National Media as a combined company, would, if
consummated, result in a transaction more favorable to the stockholders of such
party over the long term than the transaction contemplated by this Agreement
and the Board of Directors of such party determines in good faith after
consultation with outside legal counsel that such action is required for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law and (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such person or entity, such
Board of Directors receives from such person or entity an executed
confidentiality and standstill agreement with terms no less favorable to such
party than those contained in the Confidentiality Agreement dated August 19,
1997 between National Media and ValueVision (the "Confidentiality Agreement");
or (B) complying with Rule 14e-2 promulgated under the Exchange Act with regard
to an Acquisition Proposal. Each of ValueVision and National Media agrees not
to release any third party from, or waive any provision of, any standstill
agreement to which it is a party or any confidentiality agreement between it
and another person who has made, or who may reasonably be considered likely to
make, an Acquisition Proposal, unless its Board of Directors determines in good
faith after
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consultation with outside legal counsel that such action is necessary for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law.
(b) ValueVision and National Media shall each notify the other party
immediately after receipt by ValueVision or National Media (or their advisors)
of any Acquisition Proposal or any request for nonpublic information in
connection with an Acquisition Proposal or for access to the properties, books
or records of such party by any person or entity that informs such party that
it is considering making, or has made, an Acquisition Proposal. Such notice
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contact. Such party shall continue to keep the other party hereto informed,
on a current basis, of the status of any such discussions or negotiations and
the terms being discussed or negotiated.
Section 5.4. Joint Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practicable after the execution of this Agreement,
ValueVision and National Media shall prepare and file with the SEC the Joint
Proxy Statement/Prospectus and will cause Parent to prepare and file with the
SEC the Registration Statement in which the Joint Proxy Statement/Prospectus
will be included as a prospectus. ValueVision and National Media shall use all
reasonable efforts to cause the Registration Statement to become effective as
soon after such filing as practical. The Joint Proxy Statement/Prospectus
shall include the recommendation of the Board of Directors of ValueVision in
favor of this Agreement and the ValueVision Merger and the recommendation of
the Board of Directors of National Media in favor of this Agreement and the
National Media Merger; provided that the Board of Directors of either party may
modify or withdraw such recommendation if such Board of Directors believes in
good faith after consultation with outside legal counsel that the modification
or withdrawal of such recommendation is necessary for such Board of Directors
to comply with its fiduciary duties under applicable law.
(b) ValueVision and National Media shall make all necessary filings with
respect to the Merger under the Securities Act, the Exchange Act, applicable
state blue sky laws and the rules and regulations thereunder.
(c) ValueVision and National Media shall use their best efforts to
furnish to each other all information required for any application or other
filing to be made pursuant to the rules and regulations of any applicable law
(including all information required to be included in the Joint Proxy
Statement/Prospectus and the Registration Statement) in connection with the
transactions contemplated by this Agreement.
Section 5.5. Nasdaq Quotation and NYSE Listing. ValueVision agrees to
use its reasonable best efforts to continue the quotation of ValueVision Common
Stock on Nasdaq during the term of this Agreement and National Media agrees to
use its reasonable best efforts to continue the quotation and listing of
National Media Common Stock on the New York Stock Exchange (the "NYSE") during
the term of this Agreement.
Section 5.6. Access to Information. Upon reasonable notice, ValueVision
and National Media shall each (and shall cause each of their respective
Subsidiaries to) afford to the officers,
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employees, accountants, counsel and other representatives of the other, access,
during normal business hours during the period prior to the Effective Time, to
all its personnel, properties, books, contracts, commitments and records and,
during such period, each of ValueVision and National Media shall, and shall
cause each of their respective Subsidiaries to, furnish promptly to the other
(a) a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to the requirements of
federal securities laws and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. The
parties will hold any such information which is nonpublic in confidence in
accordance with the Confidentiality Agreement. No information or knowledge
obtained in any investigation pursuant to this Section 5.6 shall affect or be
deemed to modify any representation or warranty contained in this Agreement or
the conditions to the obligations of the parties to consummate the Merger.
Section 5.7. Stockholders Meetings. ValueVision and National Media each
shall call a meeting of its respective stockholders to be held as promptly as
practicable for the purpose of voting, in the case of ValueVision, upon this
Agreement and the ValueVision Merger and, in the case of National Media, upon
this Agreement and the National Media Merger. Subject to Sections 5.3 and 5.4,
ValueVision and National Media shall, through their respective Boards of
Directors, recommend to their respective stockholders approval of such matters
and shall coordinate and cooperate with respect to the timing of such meetings
and shall use their best efforts to hold such meetings on the same day and as
soon as practicable after the date hereof. Unless otherwise required to comply
with the applicable fiduciary duties of the respective directors of ValueVision
and National Media, as determined by such directors in good faith after
consultation with outside legal counsel, each party shall use all reasonable
efforts to solicit from stockholders of such party proxies in favor of such
matters.
Section 5.8. Legal Conditions to Merger.
(a) ValueVision and National Media shall each use all reasonable efforts to
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary and proper under applicable law to consummate and
make effective the transactions contemplated hereby as promptly as practicable,
(ii) obtain from any Governmental Entity or any other third party any consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be
obtained or made by ValueVision or National Media or any of their Subsidiaries
in connection with the authorization, execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby including, without
limitation, the Mergers, and (iii) as promptly as practicable, make all
necessary filings, and thereafter make any other required submissions, with
respect to this Agreement and the Mergers required under (A) the Securities Act
and the Exchange Act, and any other applicable federal or state securities
laws, (B) the HSR Act and any related governmental request thereunder, (C) the
Communications Act (including the filing of one or more requisite applications
with the FCC requesting its written consent to the transactions contemplated
hereby (the "FCC Consent Application"), and (D) any other applicable law.
ValueVision and National Media shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the non-filing party and its advisors prior to filing and, if
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requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith.
(b) ValueVision and National Media agree, and shall cause each of their
respective Subsidiaries, to cooperate and to use their respective best efforts
to obtain any government clearances required for Closing (including through
compliance with the HSR Act and any applicable foreign government reporting
requirements), to respond to any government requests for information, and to
contest and resist any action, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") that restricts, prevents or prohibits the consummation
of the Mergers or any other transactions contemplated by this Agreement. The
parties hereto will consult and cooperate with one another, and consider in
good faith the views of one another, in connection with any analyses,
appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act, the Communications Act or
any other federal, state or foreign antitrust or fair trade law. ValueVision
and National Media shall cooperate and work together in any proceedings or
negotiations with any Governmental Entity relating to any of the foregoing.
Notwithstanding anything to the contrary in this Section 5.8, neither
ValueVision nor National Media, nor any of their respective Subsidiaries, shall
be required to take any action that would reasonably be expected to
substantially impair the overall benefits expected, as of the date hereof, to
be realized from the consummation of the Mergers.
(c) Each of ValueVision and National Media shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, all reasonable efforts to obtain
any third party consents related to or required in connection with the Mergers.
(d) National Media shall duly comply with all of its obligations under, and
shall diligently prosecute all of its rights under, the Redemption Agreement.
Section 5.9. Public Disclosure. ValueVision and National Media shall
agree on the form and content of the initial press release regarding the
transactions contemplated hereby and thereafter shall consult with each other
before issuing, and use all reasonable efforts to agree upon, any press release
or other public statement with respect to any of the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation.
Section 5.10. Tax-Free Reorganization and Transfer. ValueVision and
National Media shall each use all reasonable efforts to cause the ValueVision
Merger to be treated as a reorganization within the meaning of Section 368 of
the Code and the Mergers to be treated as transfers within the meaning of
Section 351 of the Code.
Section 5.11. Affiliate Agreements. Upon the execution of this Agreement,
ValueVision and National Media will provide each other with a list of those
persons who are, in ValueVision's or National Media's respective reasonable
judgment, "affiliates" of ValueVision or National Media, as the case may be,
within the meaning of Rule 145 (each such person who is
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an "affiliate" of ValueVision or National Media within the meaning of Rule 145
is referred to as an "Affiliate") promulgated under the Securities Act ("Rule
145"). ValueVision and National Media shall provide each other such
information and documents as the other party shall reasonably request for
purposes of reviewing such list and shall notify the other party in writing
regarding any change in the identity of its Affiliates prior to the Closing
Date. ValueVision and National Media shall each use all reasonable efforts to
deliver or cause to be delivered to each other by January 30, 1998 (and in any
case prior to the Effective Time) from each of its Affiliates, an executed
Affiliate Agreement, substantially similar to the form attached hereto as
Exhibit F, by which each Affiliate of ValueVision and each Affiliate of
National Media agrees to comply with the applicable requirements of Rule 145
and for the ValueVision Merger to qualify as a tax-free reorganization within
the meaning of Section 368 and the Mergers to qualify as transfers within the
meaning of Section 351 of the Code (an "Affiliate Agreement"). Parent shall be
entitled to place appropriate legends on the certificates evidencing any Parent
Common Stock to be received by such Affiliates of ValueVision or National Media
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for Parent Common Stock, consistent with the
terms of the Affiliate Agreements (provided that such legends or stop transfer
instructions shall be removed, when such shares of Parent Common Stock are
generally transferable without any restrictions imposed by Rule 145, upon the
request of any stockholder that is not then an Affiliate of Parent).
Section 5.12. National Listing or Nasdaq Quotation. ValueVision and
National Media shall cause Parent to promptly prepare and submit an application
to the NYSE, if Parent is eligible for such listing, or, if not so eligible, to
another national securities exchange or market to list or quote the shares of
Parent Common Stock to be issued in the Mergers and upon exercise or conversion
of ValueVision Stock Options, the ValueVision Warrants, the National Media
Stock Options and the National Media Warrants, and shall use all reasonable
efforts to cause such shares to be approved for listing or quotation on the
NYSE or such other exchange or market, as the case may be, prior to the
Effective Time, subject to official notice of issuance.
Section 5.13. Stock Plans.
(a) At the Effective Time, each outstanding ValueVision Stock Option
under the ValueVision Stock Plans and each outstanding National Media Stock
Option under the National Media Stock Plans, in each case whether vested or
unvested, shall be deemed to constitute an option to acquire, on the same terms
and conditions as were applicable under such ValueVision Stock Option or
National Media Stock Option, as the case may be the same number of shares of
Parent Common Stock as the holder of such ValueVision Stock Option or National
Media Stock Option, as the case may be, would have been entitled to receive
pursuant to the ValueVision Merger or the National Media Merger, respectively,
had such holder exercised such option in full immediately prior to the
Effective Time (rounded downward to the nearest whole number), at a price per
share (rounded downward to the nearest whole cent) equal to (y) the aggregate
exercise price for the shares of ValueVision Common Stock or National Media
Common Stock, as the case may be, purchasable pursuant to such ValueVision
Stock Option or such National Media Stock Option immediately prior to the
Effective Time divided by (z) the number of full shares of Parent Common Stock
deemed purchasable pursuant to such ValueVision Stock Option or National Media
Stock Option, as the case may be, in accordance with the foregoing.
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(b) As soon as practicable after the Effective Time, Parent shall deliver
to the participants in the ValueVision Stock Plans and the National Media Stock
Plans appropriate notice setting forth such participants' rights pursuant
thereto and the grants pursuant to ValueVision Stock Plans or National Media
Stock Plans, as the case may be, shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 5.13 after
giving effect to the Mergers).
(c) Parent shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery
under ValueVision Stock Plans and National Media Stock Plans assumed in
accordance with this Section 5.13. As soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-8 (or any successor
or other appropriate forms), or another appropriate form with respect to the
shares of Parent Common Stock subject to such options and shall use its best
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
(d) The Board of Directors of each of ValueVision and National Media shall,
prior to or as of the Effective Time, take all necessary actions, pursuant to
and in accordance with the terms of the ValueVision Stock Plans and the
instruments evidencing the ValueVision Stock Options, or the National Media
Stock Plans and the instruments evidencing the National Media Stock Options, as
the case may be, to provide for the conversion of the ValueVision Stock Options
and the National Media Stock Options into options to acquire Parent Common
Stock in accordance with this Section 5.13, and that no consent of the holders
of the ValueVision Stock Options or National Media Stock Options is required in
connection with such conversion.
(e) The Board of Directors of each of ValueVision and National Media shall,
prior to or as of the Effective Time, take appropriate action to approve the
deemed disposition of the ValueVision Stock Options or National Media Stock
Options, as the case may be, for purposes of excepting such disposition under
Rule 16b-3(e) promulgated under the Exchange Act. The Board of Directors of
Parent shall, prior to or as of the Effective Time, take appropriate action to
approve the deemed grant of options to purchase Parent Common Stock under the
ValueVision Stock Options and the National Media Stock Options (as converted
pursuant to this Section 5.13) for purposes of excepting such grant under Rule
16b-3(d) promulgated under the Exchange Act.
(f) At the Effective Time, the Parent shall adopt the stock plan (the
"Parent Stock Plan") substantially in the form attached hereto as Exhibit O.
Section 5.14. Brokers or Finders. Each of National Media and ValueVision
represents, as to itself, its Subsidiaries and its Affiliates, that no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement,
except Bear Stearns & Co. Incorporated, whose fees and expenses will be paid by
ValueVision in accordance with ValueVision's agreement with such firm (a copy
of which has been delivered by ValueVision to National Media prior to the date
of this Agreement), and Lehman Brothers, Inc., whose fees and expenses will be
paid by National Media in accordance with National Media's agreement with such
firm (a copy of which has been delivered by
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National Media prior to the date of this Agreement); provided, however, that if
the Mergers are consummated, such fees shall be paid by ValueVision in
accordance with Section 7.3 hereof. Each of National Media and ValueVision
agrees to indemnify and hold the other harmless from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions
or expenses asserted by any person on the basis of any act or statement alleged
to have been made by such party or any of its Affiliates.
Section 5.15. Indemnification.
(a) From and after the Effective Time, Parent agrees that it will, and will
cause the Surviving Corporations to, indemnify and hold harmless each present
and former director and officer of ValueVision and National Media (the
"Indemnified Parties"), against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities or amounts paid
in settlement (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that
ValueVision or National Media, as the case may be, would have been permitted
under Minnesota law and Delaware law, as the case may be, and its articles or
certificate of incorporation, as the case may be, or bylaws in effect on the
date hereof to indemnify such Indemnified Party (and Parent and the Surviving
Corporation shall also advance expenses as incurred to the fullest extent
permitted under applicable law, provided the Indemnified Party to whom expenses
are advanced provides an undertaking to repay such advances if it is ultimately
determined that such Indemnified Party is not entitled to indemnification).
(b) For a period of six years after the Effective Time, Parent shall
maintain or shall cause the Surviving Corporations to maintain (to the extent
available in the market) in effect a directors' and officers' liability
insurance policy covering those persons who are currently covered by
ValueVision's or National Media's directors' and officers' liability insurance
policy (copies of which have been heretofore delivered by ValueVision and
National Media to each other) with coverage in amount and scope at least as
favorable as ValueVision's or National Media's existing coverage; provided that
in no event shall Parent or the Surviving Corporations be required to expend in
excess of 200% of the annual premium currently paid by ValueVision or National
Media, as the case may be, for such coverage (in either case, the "Current
Premium"); and if such premium would at any time exceed 200% of the Current
Premium, then the Surviving Corporations shall maintain insurance policies
which provide the maximum and best coverage available at an annual premium
equal to 200% of the Current Premium.
(c) The provisions of this Section 5.15 are intended to be in addition to
the rights otherwise available to the current officers and directors of
ValueVision and National Media by law, charter, statute, bylaw or agreement,
and shall operate for the benefit of, and shall be enforceable by, each of the
Indemnified Parties, their heirs and their representatives.
Section 5.16. Letter of National Media's Accountants. National Media
shall use all reasonable efforts to cause to be delivered to ValueVision and
National Media a letter of Ernst & Young LLP, National Media's independent
accountants, dated a date within two business days before the date on which the
Registration Statement shall become effective and addressed to
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ValueVision, in form reasonably satisfactory to ValueVision and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
Section 5.17. Letter of ValueVision's Accountants. ValueVision shall use
all reasonable efforts to cause to be delivered to National Media and
ValueVision a letter of Arthur Andersen LLP, ValueVision's independent
accountants, dated a date within two business days before the date on which the
Registration Statement shall become effective and addressed to National Media,
in form reasonably satisfactory to National Media and customary in scope and
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
Section 5.18. Stock Option Agreements. National Media and ValueVision each
agree to fully perform their respective obligations under the Stock Option
Agreements.
Section 5.19. Post-Merger Parent Corporate Governance.
(a) At the Effective Time, the total number of persons serving on the
Board of Directors of Parent shall be ten (unless otherwise agreed in writing
by ValueVision and National Media prior to the Effective Time), five of whom
shall be ValueVision Directors, five of whom shall be National Media Directors
(as such terms are defined below), all of which ValueVision Directors and
National Media Directors shall be spread as evenly as possible among Parent's
three classes of Directors; provided, however, that if the Board of Directors
shall have elected a Chief Executive Officer to succeed the interim Chief
Executive Officer identified in Section 5.19(b)(i) below prior to the Effective
Time and such officer takes office prior to such date, then the Board of
Directors of Parent shall be expanded to 11 members and such officer shall be
appointed to the Board of Directors to fill the vacancy created by such
expansion of the Board. The persons to serve initially on the Board of
Directors of Parent at the Effective Time who are ValueVision Directors shall
be selected solely by and at the absolute discretion of the Board of Directors
of ValueVision prior to the Effective Time; and, subject to the second
following sentence, the persons to serve initially on the Board of Directors of
Parent at the Effective Time who are National Media Directors shall be selected
solely by and at the absolute discretion of the Board of Directors of National
Media prior to the Effective Time. In the event that, prior to the Effective
Time, any person so selected to serve on the Board of Directors of Parent after
the Effective Time is unable or unwilling to serve in such position, the Board
of Directors which selected such person shall designate another of its members
to serve in such person's stead in accordance with the provisions of the
immediately preceding sentence. To the extent any holder of National Media's
or Parent's Series B Convertible Preferred Stock is entitled to designate any
director to the Board of Directors of Parent, such director shall be deemed to
be a National Media Director. The term "ValueVision Director" means any person
serving as a Director of ValueVision or any of its Subsidiaries on the date
hereof who becomes a Director of Parent at the Effective Time and any successor
director appointed or elected pursuant to Article III, Section 1 of the Bylaws
of Parent; and the term "National Media Director" means any person serving as a
Director of National Media or any of its Subsidiaries on the date hereof who
becomes a Director of Parent at the Effective Time and any successor director
appointed or elected pursuant to Article III, Section 1 of the Bylaws of
Parent.
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(b) Subject to Section 8.5, at the Effective Time, (i) Robert L.
Johander, the current Chief Executive Officer of ValueVision, shall hold the
position of interim Chief Executive Officer and Co-Chairman of the Board of
Parent, (ii) Frederick S. Hammer, a current director of National Media, shall
hold the position of Co-Chairman of the Board of Parent, (iii) Nicholas M.
Jaksich, the current President and Chief Operating Officer of ValueVision,
shall hold the position of President and Chief Operating Officer of Parent and
(iv) Stuart R. Romenesko, the current Chief Financial Officer of ValueVision,
shall hold the position of Chief Financial Officer of Parent. If any of the
persons identified in the preceding sentence is unable or unwilling to hold
such offices as set forth above, his successor shall be selected by the Board
of Directors of Parent in accordance with the Bylaws of Parent.
(c) Subject to Section 8.5, at the Effective Time and continuing until the
third anniversary of the Effective Time, Parent shall have an Executive
Committee which shall always be comprised of three ValueVision Directors (who
initially shall be Marshall S. Geller, Nicholas M. Jaksich and Robert L.
Johander) and two National Media Directors (who initially shall be Frederick S.
Hammer and Robert N. Verratti). Until the third anniversary of the Effective
Time, the Executive Committee shall have responsibility for recommending to the
full Board of Directors a successor Chief Executive Officer (and any successor
thereto) to the interim Chief Executive Officer of the Parent, which search for
such successor Chief Executive Officer shall commence as promptly as reasonably
practicable, and shall have, to the fullest extent permitted by Delaware law,
all of the powers, duties and responsibilities (including, without limitation,
those relating to any and all issues relating to the FCC and any assets subject
to its regulation) of the entire Board of Directors of Parent (except with
respect to those actions that require a Supermajority Vote as set forth and
defined in the Bylaws of Parent).
(d) Subject to Section 8.5, at the Effective Time and continuing until the
third anniversary of the Effective Time, Parent shall have a Compensation
Committee which shall always be comprised of two ValueVision Directors and one
National Media Director, each of whom shall meet the requirements of
independence as established by the exchange or market on which Parent's stock
is then traded or quoted. Until the third anniversary of the Effective Time,
the Compensation Committee shall have responsibility for (i) reviewing the
compensation and employee benefit policies of Parent, (ii) recommending to the
Executive Committee base salary amounts and incentive awards for all elected
officers of Parent and setting guidelines for the administration of all
salaries, (iii) administering incentive compensation and awarding stock options
to employees under any Parent stock option or compensation plan and amending or
modifying any provisions of such stock option or compensation plan that may be
amended or modified without stockholder approval and (iv) supervising all
administrative matters with respect to the foregoing.
(e) Each of ValueVision and National Media shall take such action as shall
reasonably be deemed by either thereof to be advisable to give effect to the
provisions set forth in this Section 5.19, including without limitation
incorporating such provisions in the Bylaws of Parent in effect at the
Effective Time.
Section 5.20. Name of Parent. Prior to the Effective Time, ValueVision and
National Media shall use reasonable efforts to decide on a new corporate name
for Parent.
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Section 5.21. Parent Stockholder Rights Plan. Prior to the Effective Time,
ValueVision and National Media shall cause Parent to adopt a Stockholder Rights
Plan (the "Parent Rights Plan") that is substantially in the form of the
Stockholders Rights Agreement attached hereto as Exhibit P.
Section 5.22. The Warrants. At the Effective Time, each Warrant shall
thereafter solely represent the right to acquire, on the same terms and
conditions as are currently applicable under the Warrants, the same number of
shares of Parent Common Stock as a holder of the Warrants would have been
entitled to receive pursuant to the ValueVision Merger or the National Media
Merger, as the case may be, had such holder exercised the Warrants in full
immediately prior to the Effective Time (rounded downward to the nearest whole
number), at the price per share (rounded downward to the nearest whole cent)
equal to (y) the aggregate exercise price for the shares of ValueVision Common
Stock or the National Media Common Stock, as the case may be, purchasable
pursuant to the Warrants immediately prior to the Effective Time divided by (z)
the number of full shares of Parent Common Stock deemed purchasable pursuant to
the Warrants in accordance with the foregoing. At the Effective Time, Parent
shall agree to issue any required shares of Parent Common Stock upon exercise
of the Warrants in accordance with the foregoing.
Section 5.23. Conveyance Taxes. ValueVision and National Media shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar
taxes which become payable in connection with the transactions contemplated by
this Agreement that are required or permitted to be filed on or before the
Effective Time. ValueVision shall pay, and National Media shall pay, without
deduction or withholding from any amount payable to the holders of ValueVision
Common Stock or National Media Common Stock, as the case may be, any such taxes
or fees imposed by any Governmental Entity (and any penalties and interest with
respect to such taxes and fees), which become payable in connection with the
transactions contemplated by this Agreement, on behalf of their respective
stockholders.
Section 5.24. Stockholder Litigation. Each of ValueVision and National
Media shall give the other the reasonable opportunity to participate in the
defense of any stockholder litigation against ValueVision or National Media, as
applicable, and its directors relating to the transactions contemplated hereby.
Section 5.25. Annual Reports for Welfare Benefit Plans. Prior to the
Closing Date, National Media shall cause to be filed any Annual Return/Report
Federal Form 5500 ("Annual Report") for any National Media Employee Plan that
is an "employee welfare benefit plan" within the meaning of Section 3(1) of
ERISA with respect to which: (i) a filing obligation exists under Section 101
of ERISA or Section 6039D of the Code and (ii) no Annual Report has been timely
filed. National Media further agrees to cause any such filing to be made and
civil penalties paid in accordance with the procedures outlined by the U.S.
Department of Labor for the Delinquent Filer Voluntary Compliance Program at 60
Federal Register 20874, dated April 27, 1995.
Section 5.26. Employment Agreements. Except as set forth on the
National Media Disclosure Schedule, National Media shall, and shall cause each
of its relevant Subsidiaries to,
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take any and all necessary action to prevent the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder from
triggering any "change of control" or similar provisions resulting in an
acceleration of benefits or compensation thereunder with respect to any
agreements with any officer or other key employee of National Media or any of
its Subsidiaries.
Section 5.27. Funding Advance for Redemption Agreement.If all of the
conditions to ValueVision's obligations as set forth in Sections 6.1 and 6.2
hereof (other than the second sentence of Section 6.2(e)) have been satisfied,
then ValueVision shall concurrently with the Closing, advance to National
Media, pursuant to the Series C Note, in immediately available funds, such
amounts as are necessary to consummate the transactions contemplated by the
Redemption Agreement.
ARTICLE VI.
CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the Mergers.
The respective obligations of each party to this Agreement to effect the
Mergers shall be subject to the satisfaction or waiver in writing by each of
National Media and ValueVision prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. This Agreement, the ValueVision Merger and the
National Media Merger shall have been approved in the manner required under the
MBCA and the DGCL, as the case may be, by the respective holders of the issued
and outstanding shares of capital stock of ValueVision and National Media.
(b) HSR Act. The waiting period applicable to the consummation of the
Mergers under the HSR Act shall have expired or been terminated.
(c) FCC Consents. Subject to the last sentence of Section 5.2, the FCC
shall have granted by Final Order the FCC Consent Application, without
conditions, qualifications or other restrictions that are likely to have a
material adverse effect immediately after the Closing Date on Parent or any of
its Subsidiaries, whether imposed by the FCC or any other Governmental Entity.
"Final Order" means an order, action or decision of a Governmental Entity that
has not been reversed, stayed, or enjoined and as to which the time to appeal,
petition for certiorari or seek reargument or rehearing or administrative
reconsideration or review has expired and as to which no appeal, reargument,
petition for certiorari or rehearing or petition for reconsideration or
application for review is pending or as to which any right to appeal, reargue,
petition for certiorari or rehearing or reconsideration or review has been
waived in writing by each party having such a right or, if any appeal,
reargument, petition for certiorari or rehearing or reconsideration or review
thereof has been sought, the order or judgment of the court or agency has been
affirmed by the highest court (or the administrative entity or body) to which
the order was appealed or from which the argument or rehearing or
reconsideration or review was sought, or certiorari has been denied, and the
time to take any further appeal or to seek certiorari or further reargument or
rehearing, or reconsideration or review, has expired.
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(d) Approvals. Other than the filing provided for by Section 1.4, all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental Entity the
failure of which to file, obtain or occur is reasonably likely to have a
ValueVision Material Adverse Effect or a National Media Material Adverse Effect
shall have been filed, obtained or occurred.
(e) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
(f) No Injunctions. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction or statute, rule, regulation which is in effect and
which has the effect of making the Mergers illegal or otherwise prohibiting
consummation of the Mergers.
(g) National Listing or Nasdaq Quotation. The shares of Parent Common
Stock to be issued in the Merger and upon exercise or conversion of ValueVision
Options, the ValueVision Warrants, the National Media Options, and the National
Media Warrants shall have been approved for listing on a national securities
exchange or for quotation on The Nasdaq Stock Market, subject to official
notice of issuance.
(h) Consents Under ValueVision Agreements. ValueVision shall have obtained
the consent or approval of any person whose consent or approval shall be
required under any agreement or instrument in order to permit the consummation
of the transactions contemplated hereby, except those of which, if not
obtained, would not, individually or in the aggregate, have (i) a ValueVision
Material Adverse Effect or (ii) a material adverse effect on the business,
properties, financial condition or results of operations of Parent after the
Merger (a "Parent Material Adverse Effect").
(i) Consents Under National Media Agreements. National Media shall have
obtained the consent or approval of any person whose consent or approval shall
be required under any agreement or instrument in order to permit the
consummation of the transactions contemplated hereby, except those which, if
not obtained, would not, individually or in the aggregate, have (i) a National
Media Material Adverse Effect or (ii) a Parent Material Adverse Effect.
(j) Corporate Governance. ValueVision and National Media shall have taken
all actions necessary so that (i) not later than the Effective Time, the
Certificate of Incorporation and Bylaws of Parent shall have been amended to be
substantially in the form of Exhibit C and Exhibit D attached hereto; and (ii)
at the Effective Time, the composition of the Board of Directors of Parent and
of each Committee of the Board of Directors of Parent shall comply with Section
5.19 hereof (assuming ValueVision has designated the ValueVision Directors and
National Media has designated the National Media Directors, in each case as
contemplated by Section 5.19(a) hereof) and (iii) not later than the Effective
Time, Parent shall have adopted the Parent Rights Plan.
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(k) No Trigger of National Media Rights Plan. No event shall have occurred
that has or would result in the triggering of any right or entitlement of
stockholders of National Media under the National Media Rights Plan, or will
occur as a result of the consummation of the Mergers.
(l) Dissenters' Rights. Holders of no more than 5% of the issued and
outstanding shares of ValueVision Common Stock shall have made the demands and
given the notices required under Minnesota law to assert dissenters' appraisal
rights.
(m) Montgomery Ward. The transactions contemplated by the Stipulation
between Montgomery Ward & Co., Incorporated and ValueVision regarding the
Assumption and Modification of Executory Contracts and Related Agreements (the
"Settlement Agreement") shall have been approved by the United States
Bankruptcy Court for the District of Delaware (the "Court") on terms
substantially similar to those set forth in the Settlement Agreement; provided,
that, this condition shall be deemed to be satisfied if National Media does not
object to the terms of any approval by the Court within three business days
after any such approval becomes final and non-appealable. ValueVision shall
have consummated the repurchase of the securities contemplated by the
Settlement Agreement.
Section 6.2. Additional Conditions to Obligations of ValueVision. The
obligation of ValueVision to effect the ValueVision Merger is subject to the
satisfaction of each of the following conditions prior to the Effective Time,
any of which may be waived in writing exclusively by ValueVision:
(a) Representations and Warranties. The representations and warranties of
National Media set forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date, except for, (i) changes contemplated by this
Agreement and (ii) inaccuracies which, individually or in the aggregate, have
not had and are not reasonably likely to have a National Media Material Adverse
Effect (without regard to any materiality limitations contained in any such
representation or warranty), or a material adverse effect upon the consummation
of the transactions contemplated hereby; provided, however, that the last three
sentences in Section 4.3(b) must be true and correct in all respects; and
ValueVision shall have received a certificate signed on behalf of National
Media by the chief executive officer and the chief financial officer of
National Media to such effect.
(b) Performance of Obligations of National Media. National Media shall
have performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
ValueVision shall have received a certificate signed on behalf of National
Media by the chief executive officer and the chief financial officer of
National Media to such effect.
(c) Tax Opinion. ValueVision shall have received the opinion of Latham &
Watkins, counsel to ValueVision, to the effect that, for Federal income tax
purposes, the ValueVision Merger will be treated as a tax-free reorganization
within the meaning of Section 368 of the Code and each of the Mergers will be
treated as transfers within the meaning of
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Section 351 of the Code (it being agreed that National Media shall provide
reasonable cooperation, including the delivery of such certifications as shall
be reasonably requested, to Latham & Watkins to enable it to render such
opinion).
(d) Termination of Telemarketing, Production and Post-Production Agreement.
The Telemarketing, Production and Post-Production Agreement dated as of April
13, 1995 by and between National Media and ValueVision, as amended, shall have
been terminated and all liabilities, obligations and amounts owed or incurred
by ValueVision to National Media thereunder shall have been released and
forever discharged.
(e) Series C Convertible Preferred Stock. Each of the holders of the
Series C Convertible Preferred Stock shall have duly executed the Redemption
Agreement in the form attached hereto as Exhibit K, which Agreement shall be in
full force and effect and no material breach shall have occurred thereunder as
of the Closing Date. National Media shall have, as of the Effective Time,
redeemed all of the outstanding shares of the Series C Convertible Preferred
Stock (and the Series D Convertible Preferred Stock issued in exchange
therefore) pursuant to such Redemption Agreement and none of such shares shall
remain outstanding as of the Effective Time.
(f) Transaction Documents. National Media shall have executed each of the
Transaction Documents to which it is a party, each of which shall be in full
force and effect and legally binding against National Media and no material
breach by National Media shall have occurred thereunder as of the Closing Date.
Each of National Media's Subsidiaries shall have executed the Subsidiary
Guarantee in the form attached hereto as Exhibit Q, which shall be in full
force and effect and legally binding against such Subsidiaries.
Section 6.3. Additional Conditions to Obligations of National Media. The
obligations of National Media to effect the National Media Merger are subject
to the satisfaction of each of the following conditions prior to the Effective
Time, any of which may be waived in writing exclusively by National Media:
(a) Representations and Warranties. The representations and warranties of
ValueVision set forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made
on and as of the Closing Date, except for, (i) changes contemplated by this
Agreement, (ii) inaccuracies which relate to the Settlement Agreement or the
failure to consummate the transactions contemplated thereby and (iii)
inaccuracies which, individually or in the aggregate, have not had and are not
reasonably likely to have a ValueVision Material Adverse Effect (without regard
to any materiality limitations contained in any such representation or
warranty), or a material adverse effect upon the consummation of the
transactions contemplated hereby; and National Media shall have received a
certificate signed on behalf of ValueVision by the chief executive officer and
the chief financial officer of ValueVision to such effect.
(b) Performance of Obligations of ValueVision. ValueVision shall have
performed in all material respects all material obligations required to be
performed by it under this Agreement at or prior to the Closing Date; and
National Media shall have received a
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certificate signed on behalf of ValueVision by the chief executive officer and
the chief financial officer of ValueVision to such effect.
(c) Tax Opinion. National Media shall have received a written opinion from
Drinker, Biddle & Reath, LLP, tax counsel to National Media, to the effect that
each of the Mergers will be treated for Federal income tax purposes as
transfers within the meaning of Section 351 of the Code (it being agreed that
ValueVision shall provide reasonable cooperation, including the delivery of
such certifications as shall be reasonably requested, to Drinker, Biddle &
Reath, LLP to enable it to render such opinion).
(d) Transaction Documents. ValueVision shall have duly executed each of
the Transaction Documents to which it is a party, and the Guaranty attached
hereto as Exhibit R (the "VVI Guaranty"), and such Transaction Documents and
VVI Guaranty shall be in full force and effect and legally binding against
ValueVision and no material breach by ValueVision shall have occurred
thereunder as of the Closing Date.
ARTICLE VII.
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 7.1(b) through 7.1(g), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Mergers by the
stockholders of ValueVision or National Media:
(a) by mutual written consent of ValueVision and National Media; or
(b) by either ValueVision or National Media if the Mergers shall not have
been consummated by June 1, 1998 (the "Outside Date"); provided, however, that
if the Mergers shall have not been consummated by the Outside Date due to the
failure of the condition set forth in Section 6.1(c), the Outside Date shall be
extended to August 31, 1998; and provided, further, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Mergers to occur on or before
such date; or
(c) by either ValueVision or National Media if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action, in
each case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Mergers; or
(d) (i) by ValueVision, if, at the National Media Stockholders' Meeting
(including any adjournment or postponement thereof), the requisite vote of the
stockholders of National Media in favor of the approval and adoption of this
Agreement and the National Media Merger shall not have been obtained; or (ii)
by National Media if, at the ValueVision Stockholders' Meeting (including any
adjournment or postponement thereof), the requisite vote of the stockholders of
ValueVision in favor of the approval and adoption of this Agreement and the
ValueVision Merger shall not have been obtained; or
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(e) by ValueVision, if (i) the Board of Directors of National Media shall
have withdrawn or modified its recommendation of this Agreement or the National
Media Merger; (ii) after the receipt by National Media of an Acquisition
Proposal, ValueVision requests in writing that the Board of Directors of
National Media reconfirm its recommendation of this Agreement and the National
Media Merger to the stockholders of National Media and the Board of Directors
of National Media fails to do so within 10 business days after its receipt of
ValueVision's request; (iii) the Board of Directors of National Media shall
have recommended to the stockholders of National Media an Alternative
Transaction (as defined in Section 7.3(e)); (iv) a tender offer or exchange
offer for 20% or more of the outstanding shares of National Media Common Stock
is commenced (other than by ValueVision or an Affiliate of ValueVision) and the
Board of Directors of National Media recommends that the stockholders of
National Media tender their shares in such tender or exchange offer; or (v) for
any reason National Media fails to call and hold the National Media
Stockholders' Meeting by the Outside Date (provided that ValueVision's right to
terminate this Agreement under such clause (v) shall not be available if at
such time National Media would be entitled to terminate this Agreement under
Section 7.1(g)); or
(f) by National Media, if (i) the Board of Directors of ValueVision shall
have withdrawn or modified its recommendation of this Agreement or the
ValueVision Merger; (ii) after the receipt by ValueVision of an Acquisition
Proposal, National Media requests in writing that the Board of Directors of
ValueVision reconfirm its recommendation of this Agreement and the ValueVision
Merger to the stockholders of National Media and the Board of Directors of
ValueVision fails to do so within 10 business days after its receipt of
National Media's request; (iii) the Board of Directors of ValueVision shall
have recommended to the stockholders of ValueVision an Alternative Transaction;
(iv) a tender offer or exchange offer for 20% or more of the outstanding shares
of ValueVision Common Stock is commenced (other than by National Media or an
Affiliate of National Media) and the Board of Directors of ValueVision
recommends that the stockholders of ValueVision tender their shares in such
tender or exchange offer; or (v) for any reason ValueVision fails to call and
hold the ValueVision Stockholders' Meeting by the Outside Date (provided that
National Media's right to terminate this Agreement under such clause (v) shall
not be available if at such time ValueVision would be entitled to terminate
this Agreement under Section 7.1(g)); or
(g) by ValueVision or National Media, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (i) will cause the conditions set
forth in Section 6.2(a) or (b) (in the case of termination by ValueVision) or
6.3(a) or (b) (in the case of termination by National Media) not to be
satisfied, and (ii) shall not have been cured within 20 business days following
receipt by the breaching party of written notice of such breach from the other
party.
Section 7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of ValueVision,
National Media, Parent or their respective officers, directors, stockholders or
Affiliates, except as set forth in Sections 5.15 and 7.3 and except that such
termination shall not limit liability for a willful breach of this Agreement;
provided that, the provisions of Sections 5.15 and 7.3 of this Agreement, the
Stock Option
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Agreements, the Demand Note, the Series C Note, the Warrant Agreement, the
Registration Rights Agreement and the Confidentiality Agreement shall remain in
full force and effect and survive any termination of this Agreement.
Section 7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, if the Mergers are
not consummated; provided, however, that if the Mergers are consummated,
ValueVision shall pay for all fees and expenses incurred by National Media in
connection with the Mergers and the transactions contemplated hereunder.
(b) ValueVision shall pay National Media a termination fee of $5.0 million
upon the earliest to occur of the following events:
(i) the termination of this Agreement by National Media pursuant to
Section 7.1(d)(ii), but only if a proposal for an Alternative Transaction
involving ValueVision shall have been publicly announced prior to the
ValueVision Stockholders' Meeting and either a definitive agreement for an
Alternative Transaction is entered into, or an Alternative Transaction is
consummated, within eighteen months of such termination; or
(ii) the termination of this Agreement by National Media pursuant to
Section 7.1(f), if a proposal for an Alternative Transaction involving
ValueVision shall have been made prior to the ValueVision Stockholders'
Meeting.
ValueVision's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of National Media against ValueVision
and any of its Subsidiaries and their respective directors, officers,
employees, agents, advisors or other representatives with respect to the
occurrences giving rise to such payment; provided that this limitation shall
not apply in the event of a willful breach of this Agreement by ValueVision.
Notwithstanding the foregoing, if and to the extent that National Media has
purchased shares of ValueVision Common Stock pursuant to the National Media
Stock Option Agreement, the amount payable to National Media under this Section
7.3(b), together with (i) (x) the amount received by National Media pursuant to
ValueVision' repurchase of Shares (as defined in the National Media Stock
Option Agreement) pursuant to Section 7 of the National Media Stock Option
Agreement, less (y) National Media's purchase price for such Shares, and (ii)
(x) the net cash amounts received by National Media pursuant to the sale of
Shares (or any other securities into which such Shares are converted or
exchanged) to any unaffiliated party, less (y) National Media's purchase price
for such Shares, shall not exceed $7.5 million.
(c) National Media shall pay ValueVision a termination fee of $5.0 million
upon the earliest to occur of the following events:
(i) the termination of this Agreement by ValueVision pursuant to
Section 7.1(d)(i), but only if a proposal for an Alternative Transaction
involving National Media shall have been publicly announced prior to the
National Media Stockholders' Meeting and
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either an Alternative Transaction is entered into, or an Alternative
Transaction is consummated, within eighteen months of such termination; or
(ii) the termination of this Agreement by ValueVision pursuant to Section
7.1(e), if a proposal for an Alternative Transaction involving National Media
shall have been made prior to the National Media Stockholders' Meeting.
National Media's payment of a termination fee pursuant to this subsection
shall be the sole and exclusive remedy of ValueVision against National Media
and any of its Subsidiaries and their respective directors, officers,
employees, agents, advisors or other representatives with respect to the
occurrences giving rise to such payment; provided that this limitation shall
not apply in the event of a willful breach of this Agreement by National Media.
Notwithstanding the foregoing, if and to the extent that ValueVision has
purchased shares of National Media Common Stock pursuant to the ValueVision
Stock Option Agreement, the amount payable to ValueVision under this Section
7.3(c), together with (i) (x) the amount received by ValueVision pursuant to
National Media's repurchase of Shares (as defined in the ValueVision Stock
Option Agreement) pursuant to Section 7 of the ValueVision Stock Option
Agreement, less (y) ValueVision' purchase price for such Shares, and (ii) (x)
the net cash amounts received by ValueVision pursuant to the sale of Shares (or
any other securities into which such Shares are converted or exchanged) to any
unaffiliated party, less (y) ValueVision' purchase price for such Shares, shall
not exceed $7.5 million.
(d) The expenses and fees, if applicable, payable pursuant to
Section 7.3(b) or 7.3(c) shall be paid concurrently with the first to occur of
the events described in Section 7.3(b)(i) or (ii) or 7.3(c)(i) or (ii).
(e) As used in this Agreement, "Alternative Transaction" means either (i) a
transaction pursuant to which any person (or group of persons) other than
ValueVision or National Media or their respective affiliates (a "Third Party"),
acquires more than 20% of the outstanding shares of ValueVision Common Stock or
National Media Common Stock, as the case may be, pursuant to a tender offer or
exchange offer or otherwise, (ii) a merger or other business combination
involving ValueVision or National Media pursuant to which any Third Party
acquires more than 20% of the outstanding shares of ValueVision Common Stock or
National Media Common Stock, as the case may be, or the entity surviving such
merger or business combination, (iii) any other transaction pursuant to which
any Third Party acquires control of assets (including for this purpose the
outstanding equity securities of Subsidiaries of ValueVision or National Media,
and the entity surviving any merger or business combination including any of
them) of ValueVision or National Media having a fair market value (as
determined by the Board of Directors of ValueVision or National Media, as the
case may be, in good faith) equal to more than 20% of the fair market value of
all the assets of ValueVision or National Media, as the case may be, and their
respective Subsidiaries, taken as a whole, immediately prior to such
transaction, or (iv) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the foregoing.
Section 7.4. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection
with the Mergers by the stockholders of
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ValueVision or National Media, but, after any such approval, no amendment shall
be made which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto; provided,
however, that this Agreement may be amended in writing without obtaining the
signatures of ValueVision, National Media or Parent solely for the purpose of
adding Merger Sub 1 and Merger Sub 2 as parties to this Agreement.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties of
the other parties hereto contained herein or in any document delivered pursuant
hereto and (iii) waive compliance with any of the agreements or conditions of
the other parties hereto contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 1.6, 1.7, 1.8, 2.1, 2.2,
2.3, 2.4, 2.5, 5.10, 5.13, 5.14, 5.15, 5.18, 5.19, 5.22, 5.23, 5.24, 5.25 and
5.26 and this Article VIII, and the agreements of the Affiliates delivered
pursuant to Section 5.11. The Confidentiality Agreement shall survive the
execution and delivery of this Agreement.
Section 8.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to ValueVision, to
ValueVision International, Inc.
6740 Shady Oak Road
Eden Prairie, Minnesota 55344-3433
Attention: General Counsel
Telecopy: (612) 947-0141
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with a copy to
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071-2007
Attention: Michael W. Sturrock, Esq.
Telecopy: (213) 891-8763
(b) if to National Media, to
National Media Corporation
Eleven Penn Center
Suite 1100
1835 Market Street
Philadelphia, Pennsylvania 19103
Attention: General Counsel
Telecopy: (215) 988-4900
with a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, Pennsylvania 19102-3163
Attention: Stephen T. Burdumy, Esq.
Telecopy (215) 568-6603
Section 8.3. Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available
if requested by the party to whom such information is to be made available.
The phrases "the date of this Agreement", "the date hereof," and terms of
similar import, unless the context otherwise requires, shall be deemed to refer
to January 5, 1998.
Section 8.4. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 8.5. Entire Agreement; No Third Party Beneficiaries. This
Agreement and all documents and instruments referred to herein (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof and thereof, and (b) except as provided in Section 5.15, are not
intended to confer upon any person (including, without limitation, the
individuals identified in Section 5.19) other than the parties hereto any
rights or remedies hereunder; provided that the Confidentiality Agreement shall
remain in full force and effect until the Effective Time. Each
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party hereto agrees that, except for the representations and warranties
contained in this Agreement, neither ValueVision nor National Media makes any
other representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement
or the transactions contemplated hereby, notwithstanding the delivery or
disclosure to the other or the other's representatives of any documentation or
other information with respect to any one or more of the foregoing.
Section 8.6. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard
to any applicable conflicts of law.
Section 8.7. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 8.8 References to "Stockholders". All references to "stockholder"
or "stockholders" in this Agreement shall be deemed to refer to "shareholder"
or "shareholders," respectively, with respect to ValueVision.
[Signature Page to Follow]
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IN WITNESS WHEREOF, ValueVision, National Media and Parent have caused
this Agreement to be signed by their respective duly authorized officers as of
the date first written above.
VALUEVISION INTERNATIONAL, INC.
/s/ Robert L. Johander
---------------------------------
By: Robert L. Johander
Its: Chairman and Chief Executive
Officer
NATIONAL MEDIA CORPORATION
/s/ Robert N. Verratti
---------------------------------
By: Robert N. Verratti
Its: President and Chief Executive
Officer
V-L HOLDINGS CORP.
/s/ Robert L. Johander
---------------------------------
By: Robert L. Johander
Its: Chief Executive Officer
S-1
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EXHIBIT 10.2
STOCK OPTION AGREEMENT (VALUEVISION)
STOCK OPTION AGREEMENT, dated as of January 5, 1998 (the "Agreement"),
between VALUEVISION INTERNATIONAL, INC., a Minnesota corporation (the
"Grantee"), and NATIONAL MEDIA CORPORATION, a Delaware corporation (the
"Grantor").
WHEREAS, the Grantee, V-L HOLDINGS CORP., a newly-formed Delaware
corporation ("Parent"), and the Grantor are entering into an Agreement and Plan
of Reorganization and Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the merger (the "National
Media Merger") of a wholly-owned subsidiary of Parent with and into the Grantor
and the merger (the "ValueVision Merger") of another wholly-owned subsidiary of
Parent with and into the Grantee, such that the Grantor and the Grantee will
become wholly-owned subsidiaries of Parent and the stockholders of the Grantor
and the Grantee will become stockholders of Parent (the National Media Merger
and the ValueVision Merger collectively, the "Mergers");
WHEREAS, pursuant to a Stock Option Agreement dated as of the date
hereof between the Grantee and the Grantor, the Grantee has granted the Grantor
an option to acquire shares of common stock of the Grantee on terms that are
substantially similar to the terms of this Agreement (the "National Media
Option");
WHEREAS, as a condition and inducement to their willingness to enter
into the Merger Agreement and the National Media Option, the Grantee and Parent
have requested that the Grantor grant to the Grantee an option to purchase
5,075,979 shares of Common Stock, par value $0.01 per share, of the Grantor
(the "Common Stock"), upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce the Grantee to enter into the Merger
Agreement and grant the National Media Option, the Grantor is willing to grant
the Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments; Payment of Spread.
(a) Contemporaneously herewith the Grantee, Parent and the
Grantor are entering into the Merger Agreement. Subject to the other terms and
conditions set forth herein, the Grantor hereby grants to the Grantee an
irrevocable option (the "Option") to purchase up to 5,075,979 (as adjusted as
provided herein) shares of Common Stock (together with the associated purchase
rights issued with respect thereto pursuant to the Rights Agreement dated as of
January 3, 1994 between the Grantor and Mellon Securities Trust Company (the
"Grantor Rights Plan")) (the "Shares") at a per share cash purchase price equal
to the lower of (i) $3.4375 per Share or (ii) the average closing sales price
of the Common Stock on the New York Stock Exchange ("NYSE") Composite Tape for
the five consecutive trading days beginning on and
<PAGE>
including the day that the Mergers are publicly announced (as adjusted as
provided herein) (such lower price being the "Purchase Price"). The Option may
be exercised by the Grantee, in whole or in part, at any time, or from time to
time, following the occurrence of one of the events set forth in Section 2(c)
hereof and prior to the termination of the Option in accordance with the terms
of this Agreement.
(b) In the event the Grantee wishes to exercise the Option,
the Grantee shall send a written notice to the Grantor (the "Stock Exercise
Notice") specifying a date (subject to the HSR Act (as defined below)) not
later than 10 business days and not earlier than the next business day
following the date such notice is given for the closing of such purchase. In
the event of any change in the number of issued and outstanding shares of
Common Stock by reason of any stock dividend, stock split, split-up,
reclassification, recapitalization, merger or other change in the corporate or
capital structure of the Grantor (including the occurrence of a Distribution
Date under the Grantor Rights Plan), the number of Shares subject to this
Option and the purchase price per Share shall be appropriately adjusted to
restore the Grantee to its rights hereunder, including its right to purchase
Shares representing 19.9% of the capital stock of the Grantor entitled to vote
generally for the election of the directors of the Grantor which is issued and
outstanding immediately prior to the exercise of the Option at an aggregate
purchase price equal to the Purchase Price multiplied by 5,075,979. In the
event that any additional shares of Common Stock are issued after the date of
this Agreement (other than pursuant to an event described in the preceding
sentence), the number of Shares subject to this Option shall be increased by
19.9% of the number of the additional shares of Common Stock so issued (and
such additional Shares shall have a purchase price per share equal to the
Purchase Price).
(c) If at any time the Option is then exercisable pursuant
to the terms of Section 1(a) hereof, the Grantee may elect, in lieu of
exercising the Option to purchase Shares provided in Section 1(a) hereof, to
send a written notice to the Grantor (the "Cash Exercise Notice") specifying a
date not later than 20 business days and not earlier than 10 business days
following the date such notice is given on which date the Grantor shall pay to
the Grantee an amount in cash equal to the Spread (as hereinafter defined)
multiplied by all or such portion of the Shares subject to the Option as
Grantee shall specify. As used herein "Spread" shall mean the excess, if any,
over the Purchase Price of the higher of (x) if applicable, the highest price
per share of Common Stock (including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by any person in an Alternative Transaction
(as defined in clause (i), (ii) or (iii) of Section 7.3(e) of the Merger
Agreement) (the "Alternative Purchase Price") or (y) the closing sales price of
the shares of Common Stock on the NYSE Composite Tape on the last trading day
immediately prior to the date of the Cash Exercise Notice (the "Closing
Price"). If the Alternative Purchase Price includes any property other than
cash, the Alternative Purchase Price shall be the sum of (i) the fixed cash
amount, if any, included in the Alternative Purchase Price plus (ii) the fair
market value of such other property. If such other property consists of
securities with an existing public trading market, the average of the closing
sales prices (or the average of the closing bid and asked prices if closing
sales prices are unavailable) for such securities in their principal public
trading market on the five trading days ending five days prior to the date of
the Cash Exercise Notice shall be deemed to equal the fair market value of such
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property. If such other property consists of something other than cash or
securities with an existing public trading market and, as of the payment date
for the Spread, agreement on the value of such other property has not been
reached, the Alternative Purchase Price shall be deemed to equal the Closing
Price. Upon exercise of the Grantee's right to receive cash pursuant to this
Section 1(c) and the payment of such cash to the Grantee, the obligations of
the Grantor to deliver Shares pursuant to Section 3 shall be terminated with
respect to such number of Shares for which the Grantee shall have elected to be
paid the Spread.
2. Conditions to Delivery of Shares. The Grantor's obligation to
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the United
States prohibiting the delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have
expired or been terminated and all other consents, approvals, orders,
notifications or authorizations, the failure of which to obtain or make would
have the effect of making the issuance of the Shares illegal (collectively, the
"Regulatory Approvals") shall have been obtained or made; and
(c) (i) a proposal for an Alternative Transaction involving
the Agreement is terminated pursuant to the terms thereof (the "Merger
Termination Date") and one or more of the following events shall have occurred
on or after the time of the making of such proposal: (A) the requisite vote of
the stockholders of the Grantor in favor of adoption and approval of the Merger
Agreement shall not have been obtained at the National Media Stockholders'
Meeting (as defined in Section 3.16 of the Merger Agreement) or any adjournment
or postponement thereof; (B) the Board of Directors of the Grantor shall have
withdrawn or modified its recommendation of the Merger Agreement or the
National Media Merger or failed to confirm its recommendation of the Merger
Agreement or the National Media Merger to the stockholders of the Grantor
within ten business days after a written request by the Grantee to do so; (C)
the Board of Directors of the Grantor shall have recommended to the
stockholders of the Grantor an Alternative Transaction; (D) a tender offer or
exchange offer for 20% or more of the outstanding shares of Grantor Common
Stock shall have been commenced (other than by the Grantee or an affiliate of
the Grantee) and the Board of Directors of the Grantor shall have recommended
that the stockholders of the Grantor tender their shares in such tender or
exchange offer; or (E) for any reason the Grantor shall have failed to call and
hold the National Media Stockholders' Meeting by the Outside Date (as defined
in Section 7.1(b) of the Merger Agreement); provided, however, that the Option
may not be exercised if the Grantee is in material breach of any of its
material representations, warranties, covenants or agreements contained in this
Agreement or in the Merger Agreement; or (ii) the Merger Agreement shall have
been terminated by the Grantee pursuant to Section 7.1(g) of the Merger
Agreement.
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3. The Closing.
(a) Any closing hereunder shall take place on the date
specified by the Grantee in its Stock Exercise Notice or Cash Exercise Notice,
as the case may be, at 11:00 A.M., Eastern Standard Time, at the offices of
Latham & Watkins, 885 Third Avenue, Suite 1000, New York, NY 10022-4802, or, if
the conditions set forth in Section 2(a) or 2(b) have not then been satisfied,
on the second business day following the satisfaction of such conditions, or at
such other time and place as the parties hereto may agree (the "Closing Date").
On the Closing Date, (i) in the event of a closing pursuant to Section 1(b)
hereof, the Grantor will deliver to the Grantee a certificate or certificates,
duly endorsed (or accompanied by duly executed stock powers), representing the
Shares in the denominations designated by the Grantee in its Stock Exercise
Notice and the Grantee will purchase such Shares from the Grantor at the price
per Share equal to the Purchase Price or (ii) in the event of a closing
pursuant to Section 1(c) hereof, the Grantor will deliver to the Grantee cash
in an amount determined pursuant to Section 1(c) hereof. Any payment made by
the Grantee to the Grantor, or by the Grantor to the Grantee, pursuant to this
Agreement shall be made by certified or official bank check or by wire transfer
of federal funds to a bank designated by the party receiving such funds.
(b) The certificates representing the Shares may bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
4. Representations And Warranties of the Grantor. The Grantor
represents and warrants to the Grantee that (a) the Grantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to enter
into and perform this Agreement; (b) the execution and delivery of this
Agreement by the Grantor and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Grantor and this Agreement has been duly executed and delivered by a duly
authorized officer of the Grantor and constitutes a valid and binding
obligation of the Grantor, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; (c) the Grantor has taken all
necessary corporate action to authorize and reserve the Shares issuable upon
exercise of the Option and the Shares, when issued and delivered by the Grantor
upon exercise of the Option, will be duly authorized, validly issued, fully
paid and non-assessable and free of preemptive rights; (d) except as otherwise
required by the HSR Act and other than any filings required under the blue sky
laws of any states or by the NYSE, the execution and delivery of this Agreement
by the Grantor and the issuance of Shares upon exercise of the Option do not
require the consent, waiver, approval or authorization of or any filing with
any person or public authority and will not violate, result in a breach of or
the acceleration of any obligation under, or constitute a default under, any
provision of any charter or by-law, indenture, mortgage, lien, lease,
agreement, contract, instrument, order, law, rule, regulation, judgment,
ordinance, or decree, or restriction by which the Grantor or any of its
subsidiaries or any of their respective properties or assets is bound; (e) no
"fair price",
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"moratorium", "control share acquisition" or other form of antitakeover statute
or regulation (including, without limitation, the restrictions on "business
combinations" set forth in Section 203 of the Delaware General Corporation Law)
is or shall be applicable to the acquisition of Shares pursuant to this
Agreement (and the Board of Directors of Grantor has taken all action to
approve the acquisition of the Shares to the extent necessary to avoid such
application) and (f) the Grantor has taken all corporate action necessary so
that the grant and any subsequent exercise of the Option by the Grantee will
not result in the separation or exercisability of rights under the Grantor
Rights Plan.
5. Representations and Warranties of the Grantee. The Grantee
represents and warrants to the Grantor that (a) the execution and delivery of
this Agreement by the Grantee and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantee and will constitute a
valid and binding obligation of Grantee; and (b) the Grantee is acquiring the
Option after the Grantee has been afforded the opportunity to obtain, and has
obtained, sufficient information regarding the Grantor to make an informed
investment decision with respect to the Grantee's purchase of the Shares
issuable upon the exercise thereof, and, if and when the Grantee exercises the
Option, it will be acquiring the Shares issuable upon the exercise thereof for
its own account and not with a view to distribution or resale in any manner
which would be in violation of the Securities Act.
6. Listing of Shares; HSR Act Filings; Regulatory Approvals.
Subject to applicable law and the rules and regulations of the NYSE, the
Grantor will promptly file an application to have the Shares listed on the NYSE
and will use its best efforts to obtain approval of such quotation and to file
all necessary filings by the Grantor under the HSR Act, provided, however, that
if the Grantor is unable to effect such listing on the NYSE by the Closing
Date, the Grantor will nevertheless be obligated to deliver the Shares upon the
Closing Date. Each of the parties hereto will use its best efforts to obtain
consents of all third parties and all Regulatory Approvals, if any, necessary
to the consummation of the transactions contemplated.
7. Repurchase of Shares; Sale of Shares. At any time following the
Grantor's receipt of a Stock Exercise Notice, the Grantor shall have, on or
after the closing date of the purchase under the Stock Exercise Notice, the
right to purchase (the "Repurchase Right") all, but not less than all, of the
Shares then beneficially owned by the Grantee or any of its affiliates at a
price per share equal to the greater of (i) the Purchase Price, or (ii) the
average of the closing sales prices for shares of Common Stock on the twenty
trading days ending five days prior to the date the Grantor gives written
notice of its intention to exercise the Repurchase Right. If the Grantor does
not exercise the Repurchase Right within thirty days following the Grantor's
receipt of a Stock Exercise Notice, the Repurchase Right terminates. In the
event the Grantor wishes to exercise the Repurchase Right, the Grantor shall
send a written notice to the Grantee specifying a date (not later than 10
business days and not earlier than the next business day following the date
such notice is given) for the closing of such purchase.
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8. Registration Rights.
(a) In the event that the Grantee shall desire to sell any
of the Shares within two years after the purchase of such Shares pursuant
hereto, and such sale requires, in the opinion of counsel to the Grantee, which
opinion shall be reasonably satisfactory to the Grantor and its counsel,
registration of such Shares under the Securities Act, the Grantor will
cooperate with the Grantee and any underwriters in registering such Shares for
resale, including, without limitation, promptly filing a registration statement
which complies with the requirements of applicable federal and state securities
laws and entering into an underwriting agreement with such underwriters upon
such terms and conditions as are customarily contained in underwriting
agreements with respect to secondary distributions; provided that the Grantor
shall not be required to have declared effective more than two registration
statements hereunder and shall be entitled to delay the filing or effectiveness
of any registration statement for up to 120 days if the offering would, in the
judgment of the Board of Directors of the Grantor, require premature disclosure
of any material corporate development or otherwise interfere with or adversely
affect any pending or proposed offering of securities of the Grantor or any
other material transaction involving the Grantor.
(b) If the Common Stock is registered pursuant to the
provisions of this Section 8, the Grantor agrees (i) to furnish copies of the
registration statement and the prospectus relating to the Shares covered
thereby in such numbers as the Grantee may from time to time reasonably request
and (ii) if any event shall occur as a result of which it becomes necessary to
amend or supplement any registration statement or prospectus, to prepare and
file under the applicable securities laws such amendments and supplements as
may be necessary to keep effective for at least 180 days a prospectus covering
the Common Stock meeting the requirements of such securities laws, and to
furnish the Grantee such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. The
Grantor shall bear the cost of the registration, including, but not limited to,
all registration and filing fees, printing expenses, and fees and disbursements
of counsel and accountants for the Grantor, except that the Grantee shall pay
the fees and disbursements of its counsel, the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by the Grantee. The
Grantor shall indemnify and hold harmless Grantee, its affiliates and its
officers, directors and controlling persons from and against any and all
losses, claims, damages, liabilities and expenses arising out of or based upon
any statements contained or incorporated by reference in, and omissions or
alleged omissions from, each registration statement filed pursuant to this
paragraph; provided, however, that this provision does not apply to any loss,
liability, claim, damage or expense to the extent it arises out of any untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Grantor by the Grantee, its affiliates and its
officers expressly for use in any registration statement (or any amendment
thereto) or any preliminary prospectus filed pursuant to this paragraph. The
Grantor shall also indemnify and hold harmless each underwriter and each person
who controls any underwriter within the meaning of either the Securities Act or
the Securities Exchange Act of 1934, as amended, against any and all losses,
claims, damages, liabilities and expenses arising out of or based upon any
statements contained or incorporated by
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reference in, and omissions or alleged omissions from, each registration
statement filed pursuant to this paragraph; provided, however, that this
provision does not apply to any loss, liability, claim, damage or expense to
the extent it arises out of any untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Grantor by the
underwriters expressly for use in any registration statement (or any amendment
thereto) or any preliminary prospectus filed pursuant to this paragraph.
9. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement,
in no event shall the Grantee's Total Profit (as hereinafter defined) exceed
$7.5 million and, if it does exceed such amount, the Grantee, at its sole
election, shall, within five business days, either (a) deliver to the Grantor
for cancellation Shares (valued, for the purposes of this Section 9(a), at the
average closing sales price of the Common Stock on the NYSE Composite Tape for
the twenty consecutive trading days preceding the day on which the Grantee's
Total Profit exceeds $7.5 million) previously purchased by the Grantee, (b) pay
cash or other consideration to the Grantor or (c) undertake any combination
thereof, so that the Grantee's Total Profit shall not exceed $7.5 million after
taking into account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount of cash
received by the Grantee pursuant to Section 7.3(c) of the Merger Agreement and
Section 1(c) hereof, (ii)(x) the net cash amount received by the Grantee
pursuant to the Grantor's repurchase of Shares pursuant to Section 7 hereof,
less (y) the Grantee's purchase price for such Shares, and (iii)(x) the amount
received by the Grantee pursuant to the sale of Shares (or any other securities
into which such Shares are converted or exchanged), less (y) the Grantee's
purchase price for such Shares.
10. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise specifically
provided herein.
11. Specific Performance. The Grantor acknowledges that if the
Grantor fails to perform any of its obligations under this Agreement immediate
and irreparable harm or injury would be caused to the Grantee for which money
damages would not be an adequate remedy. In such event, the Grantor agrees
that the Grantee shall have the right, in addition to any other rights it may
have, to specific performance of this Agreement. Accordingly, if the Grantee
should institute an action or proceeding seeking specific enforcement of the
provisions hereof, the Grantor hereby waives the claim or defense that the
Grantee has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law
exists. The Grantor further agrees to waive any requirements for the securing
or posting of any bond in connection with obtaining any such equitable relief.
12. Notice. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given and made if in
writing and if served by personal delivery upon the party for whom it is
intended or delivered by registered or certified
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mail, return receipt requested, or if sent by facsimile transmission, upon
receipt of oral confirmation that such transmission has been received, to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
If to the Grantee:
ValueVision International, Inc.
6740 Shady Oak Road
Eden Prairie, Minnesota 55344-3433
Attention: General Counsel
Telecopy: (612) 947-0141
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attention: Michael W. Sturrock, Esq.
Telecopy: (213) 891-8763
If to the Grantor:
National Media Corporation
Eleven Penn Center
Suite 1100
1835 Market Street
Philadelphia, Pennsylvania 19103
Attention: General Counsel
Telecopy: (215) 988-4871
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With a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, Pennsylvania 19102-3163
Attention: Stephen T. Burdumy, Esq.
Telecopy: (215) 568-6603
13. Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties named herein and their respective permitted
successors and assigns; provided, however, that such successor in interest or
assigns shall agree to be bound by the provisions of this Agreement. Except as
set forth in Section 8, nothing in this Agreement, express or implied, is
intended to confer upon any person other than the Grantor or the Grantee, or
their successors or assigns, any rights or remedies under or by reason of this
Agreement.
14. Entire Agreement; Amendments. This Agreement, together with
the Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such transactions. This
Agreement may not be changed, amended or modified orally, but may be changed
only by an agreement in writing signed by the party against whom any waiver,
change, amendment, modification or discharge may be sought.
15. Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the Grantee may assign its rights and
obligations hereunder to any of its direct or indirect wholly owned
subsidiaries, but no such transfer shall relieve the Grantee of its obligations
hereunder if such transferee does not perform such obligations. Any assignment
made in violation of this Section 15 shall be void.
16. Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise govern under applicable Delaware principles of
conflicts of law).
19. Termination. The right to exercise the Option granted pursuant
to this Agreement shall terminate at the earlier of (i) the Effective Time (as
defined in the Merger Agreement), (ii) the date on which the Grantee realizes a
Total Profit of $7.5 million, (iii) the
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date on which the Merger Agreement is terminated; provided that the Option is
not exercisable at such time and does not become exercisable simultaneous with
such termination and (iv) 90 days after the date the Option becomes exercisable
(the date referred to in clause (iv) being hereinafter referred to as the
"Option Termination Date"); provided that, if the Option cannot be exercised or
the Shares cannot be delivered to the Grantee upon such exercise because the
conditions set forth in Section 2(a) or Section 2(b) hereof have not yet been
satisfied, the Option Termination Date shall be extended until thirty days
after such impediment to exercise has been removed.
All representations and warranties contained in this Agreement shall
survive delivery of and payment for the Shares.
20. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
21. Public Announcement. The Grantee will consult with the Grantor
and the Grantor will consult with the Grantee before issuing any press release
with respect to the initial announcement of this Agreement, the Option or the
transactions contemplated hereby and neither party shall issue any such press
release prior to such consultation except as may be required by law.
[Signature Page to Follow]
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Signature Page for Stock Option Agreement (ValueVision)
IN WITNESS WHEREOF, the Grantee and the Grantor have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first written above.
NATIONAL MEDIA CORPORATION
/s/ Robert N. Verratti
---------------------------------------
By: Robert N. Verratti
Its: President and Chief Executive
Officer
VALUEVISION INTERNATIONAL, INC.
/s/ Robert L. Johander
---------------------------------------
By: Robert L. Johander
Its: Chairman and Chief Executive
Officer
S-1
<PAGE>
EXHIBIT 10.3
STOCK OPTION AGREEMENT (NATIONAL MEDIA)
STOCK OPTION AGREEMENT, dated as of January 5, 1998 (the "Agreement"),
between NATIONAL MEDIA CORPORATION, a Delaware corporation (the "Grantee"), and
VALUEVISION INTERNATIONAL, INC., a Minnesota corporation (the "Grantor").
WHEREAS, the Grantee, V-L HOLDINGS CORP., a newly-formed Delaware
corporation ("Parent"), and the Grantor are entering into an Agreement and Plan
of Reorganization and Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the merger (the "National
Media Merger") of a wholly-owned subsidiary of Parent with and into the Grantee
and the merger (the "ValueVision Merger") of another wholly-owned subsidiary of
Parent with and into the Grantor, such that the Grantee and the Grantor will
become wholly-owned subsidiaries of Parent and the stockholders of the Grantee
and the Grantor will become stockholders of Parent (the National Media Merger
and the ValueVision Merger collectively, the "Mergers");
WHEREAS, pursuant to a Stock Option Agreement dated as of the date
hereof between the Grantee and the Grantor, the Grantee has granted the Grantor
an option to acquire shares of common stock of the Grantee on terms that are
substantially similar to the terms of this Agreement (the "ValueVision
Option");
WHEREAS, as a condition and inducement to their willingness to enter
into the Merger Agreement and the ValueVision Option, the Grantee and Parent
have requested that the Grantor grant to the Grantee an option to purchase
5,579,119 shares of Common Stock, par value $0.01 per share, of the Grantor
(the "Common Stock"), upon the terms and subject to the conditions hereof; and
WHEREAS, in order to induce the Grantee to enter into the Merger
Agreement and grant the ValueVision Option, the Grantor is willing to grant the
Grantee the requested option.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
1. The Option; Exercise; Adjustments; Payment of Spread.
(a) Contemporaneously herewith the Grantee, Parent and the
Grantor are entering into the Merger Agreement. Subject to the other terms and
conditions set forth herein, the Grantor hereby grants to the Grantee an
irrevocable option (the "Option") to purchase up to 5,579,119 as adjusted as
provided herein) shares of Common Stock (the "Shares") at a per share cash
purchase price equal to the lower of (i) $3.875 per Share or (ii) the average
closing sales price of the Common Stock on the Nasdaq National Market
("Nasdaq") for the five consecutive trading days beginning on and including the
day that the Mergers are publicly announced (as adjusted as provided herein)
(such lower price being the "Purchase Price"). The Option may be exercised by
the Grantee, in whole or in part, at any time, or from time to time,
<PAGE>
following the occurrence of one of the events set forth in Section 2(c) hereof
and prior to the termination of the Option in accordance with the terms of this
Agreement.
(b) In the event the Grantee wishes to exercise the Option,
the Grantee shall send a written notice to the Grantor (the "Stock Exercise
Notice") specifying a date (subject to the HSR Act (as defined below)) not
later than 10 business days and not earlier than the next business day
following the date such notice is given for the closing of such purchase. In
the event of any change in the number of issued and outstanding shares of
Common Stock by reason of any stock dividend, stock split, split-up,
reclassification, recapitalization, merger or other change in the corporate or
capital structure of the Grantor, the number of Shares subject to this Option
and the purchase price per Share shall be appropriately adjusted to restore the
Grantee to its rights hereunder, including its right to purchase Shares
representing 19.9% of the capital stock of the Grantor entitled to vote
generally for the election of the directors of the Grantor which is issued and
outstanding immediately prior to the exercise of the Option at an aggregate
purchase price equal to the Purchase Price multiplied by 5,579,119. In the
event that any additional shares of Common Stock are issued after the date of
this Agreement (other than pursuant to an event described in the preceding
sentence), the number of Shares subject to this Option shall be increased by
19.9% of the number of the additional shares of Common Stock so issued (and
such additional Shares shall have a purchase price per share equal to the
Purchase Price).
(c) If at any time the Option is then exercisable pursuant
to the terms of Section 1(a) hereof, the Grantee may elect, in lieu of
exercising the Option to purchase Shares provided in Section 1(a) hereof, to
send a written notice to the Grantor (the "Cash Exercise Notice") specifying a
date not later than 20 business days and not earlier than 10 business days
following the date such notice is given on which date the Grantor shall pay to
the Grantee an amount in cash equal to the Spread (as hereinafter defined)
multiplied by all or such portion of the Shares subject to the Option as
Grantee shall specify. As used herein "Spread" shall mean the excess, if any,
over the Purchase Price of the higher of (x) if applicable, the highest price
per share of Common Stock (including any brokerage commissions, transfer taxes
and soliciting dealers' fees) paid by any person in an Alternative Transaction
(as defined in clause (i), (ii) or (iii) of Section 7.3(e) of the Merger
Agreement) (the "Alternative Purchase Price") or (y) the closing sales price of
the shares of Common Stock on the Nasdaq on the last trading day immediately
prior to the date of the Cash Exercise Notice (the "Closing Price"). If the
Alternative Purchase Price includes any property other than cash, the
Alternative Purchase Price shall be the sum of (i) the fixed cash amount, if
any, included in the Alternative Purchase Price plus (ii) the fair market value
of such other property. If such other property consists of securities with an
existing public trading market, the average of the closing sales prices (or the
average of the closing bid and asked prices if closing sales prices are
unavailable) for such securities in their principal public trading market on
the five trading days ending five days prior to the date of the Cash Exercise
Notice shall be deemed to equal the fair market value of such property. If
such other property consists of something other than cash or securities with an
existing public trading market and, as of the payment date for the Spread,
agreement on the value of such other property has not been reached, the
Alternative Purchase Price shall be deemed to equal the Closing Price. Upon
exercise of the Grantee's right to receive cash pursuant to this Section 1(c)
and the payment of such cash to the Grantee, the obligations of the Grantor to
deliver Shares pursuant to
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Section 3 shall be terminated with respect to such number of Shares for which
the Grantee shall have elected to be paid the Spread.
2. Conditions to Delivery of Shares. The Grantor's obligation to
deliver Shares upon exercise of the Option is subject only to the conditions
that:
(a) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction in the United
States prohibiting the delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") shall have
expired or been terminated, applicable approvals of the Federal Communications
Commission ("FCC") pursuant to the Communications Act of 1934, as amended (the
"Communications Act") shall have been obtained, and all other consents,
approvals, orders, notifications or authorizations, the failure of which to
obtain or make would have the effect of making the issuance of the Shares
illegal (collectively, the "Regulatory Approvals") shall have been obtained or
made; and
(c) (i) a proposal for an Alternative Transaction involving
the Grantor shall have been publicly announced prior to the time the Merger
Agreement is terminated pursuant to the terms thereof (the "Merger Termination
Date") and one or more of the following events shall have occurred on or after
the time of the making of such proposal: (A) the requisite vote of the
stockholders of the Grantor in favor of adoption and approval of the Merger
Agreement shall not have been obtained at the ValueVision Stockholders' Meeting
(as defined in Section 3.16 of the Merger Agreement) or any adjournment or
postponement thereof; (B) the Board of Directors of the Grantor shall have
withdrawn or modified its recommendation of the Merger Agreement or the
ValueVision Merger or failed to confirm its recommendation of the Merger
Agreement or the ValueVision Merger to the stockholders of the Grantor within
ten business days after a written request by the Grantee to do so; (C) the
Board of Directors of the Grantor shall have recommended to the stockholders of
the Grantor an Alternative Transaction; (D) a tender offer or exchange offer
for 20% or more of the outstanding shares of Grantor Common Stock shall have
been commenced (other than by the Grantee or an affiliate of the Grantee) and
the Board of Directors of the Grantor shall have recommended that the
stockholders of the Grantor tender their shares in such tender or exchange
offer; or (E) for any reason Grantor shall have failed to call and hold the
ValueVision Stockholders' Meeting by the Outside Date (as defined in Section
7.1(b) of the Merger Agreement; provided, however, that the Option may not be
exercised if the Grantee is in material breach of any of its material
representations, warranties, covenants or agreements contained in this
Agreement or in the Merger Agreement; or (ii) the Merger Agreement shall have
been terminated by the Grantee pursuant to Section 7.1(g) of the Merger
Agreement.
3. The Closing.
(a) Any closing hereunder shall take place on the date
specified by the Grantee in its Stock Exercise Notice or Cash Exercise Notice,
as the case may be, at 11:00 A.M., Eastern Standard Time, at the offices of
Latham & Watkins, 885 Third Avenue, Suite 1000, New
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York, NY 10022-4802, or, if the conditions set forth in Section 2(a) or 2(b)
have not then been satisfied, on the second business day following the
satisfaction of such conditions, or at such other time and place as the parties
hereto may agree (the "Closing Date"). On the Closing Date, (i) in the event
of a closing pursuant to Section 1(b) hereof, the Grantor will deliver to the
Grantee a certificate or certificates, duly endorsed (or accompanied by duly
executed stock powers), representing the Shares in the denominations designated
by the Grantee in its Stock Exercise Notice and the Grantee will purchase such
Shares from the Grantor at the price per Share equal to the Purchase Price or
(ii) in the event of a closing pursuant to Section 1(c) hereof, the Grantor
will deliver to the Grantee cash in an amount determined pursuant to Section
1(c) hereof. Any payment made by the Grantee to the Grantor, or by the Grantor
to the Grantee, pursuant to this Agreement shall be made by certified or
official bank check or by wire transfer of federal funds to a bank designated
by the party receiving such funds.
(b) The certificates representing the Shares may bear an
appropriate legend relating to the fact that such Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
4. Representations And Warranties of the Grantor. The Grantor
represents and warrants to the Grantee that (a) the Grantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota and has the requisite corporate power and authority to enter
into and perform this Agreement; (b) the execution and delivery of this
Agreement by the Grantor and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Grantor and this Agreement has been duly executed and delivered by a duly
authorized officer of the Grantor and constitutes a valid and binding
obligation of the Grantor, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles; (c) the Grantor has taken all
necessary corporate action to authorize and reserve the Shares issuable upon
exercise of the Option and the Shares, when issued and delivered by the Grantor
upon exercise of the Option, will be duly authorized, validly issued, fully
paid and non-assessable and free of preemptive rights; (d) except as otherwise
required by the HSR Act and other than any filings required under the blue sky
laws of any states or by the Communications Act and Nasdaq, the execution and
delivery of this Agreement by the Grantor and the issuance of Shares upon
exercise of the Option do not require the consent, waiver, approval or
authorization of or any filing with any person or public authority and will not
violate, result in a breach of or the acceleration of any obligation under, or
constitute a default under, any provision of any charter or by-law, indenture,
mortgage, lien, lease, agreement, contract, instrument, order, law, rule,
regulation, judgment, ordinance, or decree, or restriction by which the Grantor
or any of its subsidiaries or any of their respective properties or assets is
bound; and (e) no "fair price", "moratorium" or other form of antitakeover
statute or regulation (including, without limitation, the restrictions on
"business combinations" and "control share acquisitions" set forth in Section
302A.673 and 302A.671, respectively, of the Minnesota Business Corporation Act)
is or shall be applicable to the acquisition of Shares pursuant to this
Agreement (and the Board of Directors of Grantor has taken all action to
approve the acquisition of the Shares to the extent necessary to avoid such
application).
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5. Representations and Warranties of the Grantee. The Grantee
represents and warrants to the Grantor that (a) the execution and delivery of
this Agreement by the Grantee and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantee and will constitute a
valid and binding obligation of Grantee; and (b) the Grantee is acquiring the
Option after the Grantee has been afforded the opportunity to obtain, and has
obtained, sufficient information regarding the Grantor to make an informed
investment decision with respect to the Grantee's purchase of the Shares
issuable upon the exercise thereof, and, if and when the Grantee exercises the
Option, it will be acquiring the Shares issuable upon the exercise thereof for
its own account and not with a view to distribution or resale in any manner
which would be in violation of the Securities Act.
6. Quotation of Shares; HSR Act Filings; Regulatory Approvals.
Subject to applicable law and the rules and regulations of the Nasdaq, the
Grantor will promptly file an application to have the Shares quoted on the
Nasdaq and will use its best efforts to obtain approval of such quotation and
to file all necessary filings by the Grantor under the HSR Act and the
Communications Act; provided, however, that if the Grantor is unable to effect
such quotation on the Nasdaq by the Closing Date, the Grantor will nevertheless
be obligated to deliver the Shares upon the Closing Date. Each of the parties
hereto will use its best efforts to obtain consents of all third parties and
all Regulatory Approvals, if any, necessary to the consummation of the
transactions contemplated.
7. Repurchase of Shares; Sale of Shares. At any time following the
Grantor's receipt of a Stock Exercise Notice, the Grantor shall have, on or
after the closing date of the purchase under the Stock Exercise Notice, the
right to purchase (the "Repurchase Right") all, but not less than all, of the
Shares then beneficially owned by the Grantee or any of its affiliates at a
price per share equal to the greater of (i) the Purchase Price, or (ii) the
average of the closing sales prices for shares of Common Stock on the twenty
trading days ending five days prior to the date the Grantor gives written
notice of its intention to exercise the Repurchase Right. If the Grantor does
not exercise the Repurchase Right within thirty days following the Grantor's
receipt of a Stock Exercise Notice, the Repurchase Right terminates. In the
event the Grantor wishes to exercise the Repurchase Right, the Grantor shall
send a written notice to the Grantee specifying a date (not later than 10
business days and not earlier than the next business day following the date
such notice is given) for the closing of such purchase.
8. Registration Rights.
(a) In the event that the Grantee shall desire to sell any
of the Shares within two years after the purchase of such Shares pursuant
hereto, and such sale requires, in the opinion of counsel to the Grantee, which
opinion shall be reasonably satisfactory to the Grantor and its counsel,
registration of such Shares under the Securities Act, the Grantor will
cooperate with the Grantee and any underwriters in registering such Shares for
resale, including, without limitation, promptly filing a registration statement
which complies with the requirements of applicable federal and state securities
laws, entering into an underwriting agreement with such underwriters upon such
terms and conditions as are customarily contained in underwriting
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agreements with respect to secondary distributions; provided that the Grantor
shall not be required to have declared effective more than two registration
statements hereunder and shall be entitled to delay the filing or effectiveness
of any registration statement for up to 120 days if the offering would, in the
judgment of the Board of Directors of the Grantor, require premature disclosure
of any material corporate development or otherwise interfere with or adversely
affect any pending or proposed offering of securities of the Grantor or any
other material transaction involving the Grantor.
(b) If the Common Stock is registered pursuant to the
provisions of this Section 8, the Grantor agrees (i) to furnish copies of the
registration statement and the prospectus relating to the Shares covered
thereby in such numbers as the Grantee may from time to time reasonably request
and (ii) if any event shall occur as a result of which it becomes necessary to
amend or supplement any registration statement or prospectus, to prepare and
file under the applicable securities laws such amendments and supplements as
may be necessary to keep effective for at least 180 days a prospectus covering
the Common Stock meeting the requirements of such securities laws, and to
furnish the Grantee such numbers of copies of the registration statement and
prospectus as amended or supplemented as may reasonably be requested. The
Grantor shall bear the cost of the registration, including, but not limited to,
all registration and filing fees, printing expenses, and fees and disbursements
of counsel and accountants for the Grantor, except that the Grantee shall pay
the fees and disbursements of its counsel, the underwriting fees and selling
commissions applicable to the shares of Common Stock sold by the Grantee. The
Grantor shall indemnify and hold harmless Grantee, its affiliates and its
officers, directors and controlling persons from and against any and all
losses, claims, damages, liabilities and expenses arising out of or based upon
any statements contained or incorporated by reference in, and omissions or
alleged omissions from, each registration statement filed pursuant to this
paragraph; provided, however, that this provision does not apply to any loss,
liability, claim, damage or expense to the extent it arises out of any untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Grantor by the Grantee, its affiliates and its
officers expressly for use in any registration statement (or any amendment
thereto) or any preliminary prospectus filed pursuant to this paragraph. The
Grantor shall also indemnify and hold harmless each underwriter and each person
who controls any underwriter within the meaning of either the Securities Act or
the Securities Exchange Act of 1934, as amended, against any and all losses,
claims, damages, liabilities and expenses arising out of or based upon any
statements contained or incorporated by reference in, and omissions or alleged
omissions from, each registration statement filed pursuant to this paragraph;
provided, however, that this provision does not apply to any loss, liability,
claim, damage or expense to the extent it arises out of any untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Grantor by the underwriters expressly for use in any
registration statement (or any amendment thereto) or any preliminary prospectus
filed pursuant to this paragraph.
9. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement,
in no event shall the Grantee's Total Profit (as hereinafter defined) exceed
$7.5 million and, if it does
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exceed such amount, the Grantee, at its sole election, shall, within five
business days, either (a) deliver to the Grantor for cancellation Shares
(valued, for the purposes of this Section 9(a), at the average closing sales
price of the Common Stock on the Nasdaq for the twenty consecutive trading days
preceding the day on which the Grantee's Total Profit exceeds $7.5 million)
previously purchased by the Grantee, (b) pay cash or other consideration to the
Grantor or (c) undertake any combination thereof, so that the Grantee's Total
Profit shall not exceed $7.5 million after taking into account the foregoing
actions.
(b) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount of cash
received by the Grantee pursuant to Section 7.3(c) of the Merger Agreement and
Section 1(c) hereof, (ii)(x) the net cash amount received by the Grantee
pursuant to the Grantor's repurchase of Shares pursuant to Section 7 hereof,
less (y) the Grantee's purchase price for such Shares, and (iii)(x) the amount
received by the Grantee pursuant to the sale of Shares (or any other securities
into which such Shares are converted or exchanged), less (y) the Grantee's
purchase price for such Shares.
10. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise specifically
provided herein.
11. Specific Performance. The Grantor acknowledges that if the
Grantor fails to perform any of its obligations under this Agreement immediate
and irreparable harm or injury would be caused to the Grantee for which money
damages would not be an adequate remedy. In such event, the Grantor agrees
that the Grantee shall have the right, in addition to any other rights it may
have, to specific performance of this Agreement. Accordingly, if the Grantee
should institute an action or proceeding seeking specific enforcement of the
provisions hereof, the Grantor hereby waives the claim or defense that the
Grantee has an adequate remedy at law and hereby agrees not to assert in any
such action or proceeding the claim or defense that such a remedy at law
exists. The Grantor further agrees to waive any requirements for the securing
or posting of any bond in connection with obtaining any such equitable relief.
12. Notice. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended or delivered
by registered or certified mail, return receipt requested, or if sent by
facsimile transmission, upon receipt of oral confirmation that such
transmission has been received, to the person at the address set forth below,
or such other address as may be designated in writing hereafter, in the same
manner, by such person:
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If to the Grantee:
National Media Corporation
Eleven Penn Center
Suite 1100
1835 Market Street
Philadelphia, Pennsylvania 19103
Attention: General Counsel
Telecopy: (215) 988-4871
With a copy to:
Klehr, Harrison, Harvey, Branzburg & Ellers LLP
1401 Walnut Street
Philadelphia, Pennsylvania 19102-3163
Attention: Stephen T. Burdumy, Esq.
Telecopy: (215) 568-6603
If to the Grantor:
ValueVision International, Inc.
6740 Shady Oak Road
Eden Prairie, Minnesota 55344-3433
Attention: General Counsel
Telecopy: (612) 947-0141
With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Attention: Michael W. Sturrock, Esq.
Telecopy: (213) 891-8763
13. Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties named herein and their respective
permitted successors and assigns; provided, however, that such successor in
interest or assigns shall agree to be bound by the provisions of this
Agreement. Except as set forth in Section 8, nothing in this Agreement,
express or implied, is intended to confer upon any person other than the
Grantor or the Grantee, or their successors or assigns, any rights or remedies
under or by reason of this Agreement.
14. Entire Agreement; Amendments. This Agreement, together with the
Merger Agreement and the other documents referred to therein, contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements and
understandings, oral or written, with respect to such
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transactions. This Agreement may not be changed, amended or modified orally,
but may be changed only by an agreement in writing signed by the party against
whom any waiver, change, amendment, modification or discharge may be sought.
15. Assignment. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, except that the Grantee may assign its rights and
obligations hereunder to any of its direct or indirect wholly owned
subsidiaries, but no such transfer shall relieve the Grantee of its obligations
hereunder if such transferee does not perform such obligations. Any assignment
made in violation of this Section 15 shall be void.
16. Headings. The section headings herein are for convenience only
and shall not affect the construction of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed, shall be deemed to be an original
and all of which together shall constitute one and the same document.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise govern under applicable Delaware principles of
conflicts of law).
19. Termination. The right to exercise the Option granted pursuant
to this Agreement shall terminate at the earlier of (i) the Effective Time (as
defined in the Merger Agreement), (ii) the date on which the Grantee realizes a
Total Profit of $7.5 million, (iii) the date on which the Merger Agreement is
terminated; provided that the Option is not exercisable at such time and does
not become exercisable simultaneous with such termination and (iv) 90 days
after the date the Option becomes exercisable (the date referred to in clause
(iv) being hereinafter referred to as the "Option Termination Date"); provided
that, if the Option cannot be exercised or the Shares cannot be delivered to
the Grantee upon such exercise because the conditions set forth in Section 2(a)
or Section 2(b) hereof have not yet been satisfied, the Option Termination Date
shall be extended until thirty days after such impediment to exercise has been
removed.
All representations and warranties contained in this Agreement shall
survive delivery of and payment for the Shares.
20. Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
21. Public Announcement. The Grantee will consult with the Grantor
and the Grantor will consult with the Grantee before issuing any press release
with respect to the initial announcement of this Agreement, the Option or the
transactions contemplated hereby and neither party shall issue any such press
release prior to such consultation except as may be required by law.
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[SIGNATURE PAGE TO FOLLOW]
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Signature page for Stock Option Agreement (National Media)
IN WITNESS WHEREOF, the Grantee and the Grantor have caused this
Agreement to be signed by their respective duly authorized officers as of the
date first written above.
NATIONAL MEDIA CORPORATION
/s/ Robert N. Verratti
---------------------------------------
By: Robert N. Verratti
Its: President and Chief Executive
Officer
VALUEVISION INTERNATIONAL, INC.
/s/ Robert L. Johander
---------------------------------------
By: Robert L. Johander
Its: Chairman and Chief Executive
Officer
S-1
<PAGE>
EXHIBIT 10.4
REDEMPTION AND CONSENT AGREEMENT
THIS REDEMPTION AND CONSENT AGREEMENT (this "Agreement") is entered
into as of this 5th day of January, 1998, by and between National Media
Corporation, a Delaware corporation ("NMC"), Value Vision International, Inc.,
a Minnesota corporation ("VVI") (for the limited purposes set forth herein),
and Capital Ventures International and RGC International Investors, LDC
(collectively, the "Class C Holders").
RECITALS
WHEREAS, NMC and the Class C Holders entered into that certain
Securities Purchase Agreement dated as of September 4, 1997 (the "Purchase
Agreement") with respect to, among other things, the purchase of NMC's Series C
Convertible Preferred Stock, $.01 par value per share (collectively, with the
securities for which such shares of preferred stock may be exchanged as
contemplated by Section 5.2(d) below, the "Class C Stock"). All capitalized
terms not defined in this Agreement shall have the meaning set forth in the
Purchase Agreement;
WHEREAS, NMC has been engaged in discussions with VVI, and NMC has
indicated to the Class C Holders that VVI has expressed an interest in
proceeding with a business combination with NMC pursuant to the Agreement and
Plan of Reorganization and Merger attached hereto as Exhibit A (collectively,
with the Exhibits and Schedules thereto, the "Merger Agreement"). All
references to the Merger Agreement in this Agreement shall include any
amendments thereto which have been adopted in compliance with Section 1.3(b) of
this Agreement;
WHEREAS, pursuant to the Merger Agreement, NMC and VVI would each merge
with subsidiaries of V-L Holdings Corp., newly-formed Delaware corporation,
one-half of the issued and outstanding capital stock of which will initially be
owned by each of NMC and VVI ("V-L"), and the common shareholders of each NMC
and VVI would receive shares of V-L common stock in exchange for the shares
they currently hold in NMC and VVI; and
WHEREAS, NMC has advised the Class C Holders that VVI requires as a
condition precedent to the consummation of the transactions contemplated by
the Merger Agreement, the Class C Holders agree to the matters set forth below.
NOW THERFORE, in consideration of the premises and intending to be
legally bound, the parties hereby agree as follows:
<PAGE>
ARTICLE I.
THE REDEMPTION AND CONSENT
SECTION 1.1. SALE AND PURCHASE OF CLASS C STOCK
Upon the terms and subject to the conditions contained herein, the
Class C Holders will sell, convey, transfer, assign and deliver to NMC, and
NMC will acquire (the "Purchase") on the Closing Date (as defined in Section
1.5 below), all of the outstanding shares of the Class C Stock other than those
which may have been converted prior to the Closing Date not in violation of this
Agreement. Neither NMC nor the Class C Holders shall have an obligation to
effect the Purchase from and after the Merger Termination Date (as defined in
Section 1.2(b) below).
SECTION 1.2. PURCHASE PRICE FOR THE CLASS C STOCK
(a) As consideration for the Purchase, NMC shall pay a per share
purchase price equal to the sum of (i) $1,000, plus (ii) the accrued Premium
(as defined in the Certificate of Designation) thereon from (but excluding)
September 18, 1997 through (but excluding) the Closing Date, plus (iii) an
amount equal to 18% per annum on the sum of (i) and (ii) calculated from (but
excluding) September 18, 1997 through (but excluding) the Closing Date, plus
(iv) any other amounts which may become payable to the Class C Holders pursuant
to Paragraph A of Article VI of the Certificate of Designation after the date
hereof and prior to the Closing Date (the "Purchase Price").
(b) Provided that the Merger Agreement has not been terminated in
accordance with the provisions thereunder (such termination date, the "Merger
Termination Date") and subject to the terms and conditions set forth in Section
5.27 of the Merger Agreement, in the event NMC does not have adequate funds to
pay the Purchase Price when due, VVI agrees that it shall advance to NMC the
full amount of the Purchase Price on or before the Closing Date, or otherwise
take reasonable steps to assure payment of the Purchase Price.
SECTION 1.3. CONSIDERATION FOR EXECUTING THIS AGREEMENT
(a) Upon the terms and subject to the conditions contained herein,
as consideration for the execution of this Agreement by the Class C Holders, NMC
hereby issues to the Class C Holders stock purchase warrants (the "New
Warrants") evidencing the right to purchase an aggregate of 500,000 shares of
common stock, $.01 par value per share, of NMC (the "Common Stock"). The New
Warrants will be substantially identical to the Warrants and will be exercisable
for five years from the date hereof, will have a per share exercise price of
$6.82, subject to certain adjustments as provided therein, and will be delivered
to the Class C Holders within five business days of the date of this Agreement.
(b) As further consideration for the execution of this Agreement by
the Class C Holders, NMC and VVI each agree with each of the Class C Holders
that they will
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not, without the prior written consent of each of the Class C Holders, which
consent will not be unreasonably withheld, agree to (i) an amendment to Section
7.1 of the Merger Agreement, (ii) an amendment to Section 5.27 of the Merger
Agreement, (iii) an amendment to Sections 1,2,3 and 6 of the Demand Note (as
defined in the Merger Agreement), (iv) the addition of any material conditions
to those set forth in Article VI of the Merger Agreement or, (v) a waiver of
the condition set forth in Section 6.2 (e) of the Merger Agreement.
SECTION 1.4. CONSENT TO THE MERGER
Each of the Class C Holders hereby consents to the execution and
delivery of the Merger Agreement by NMC and VVI, and to the consummation of the
transactions contemplated thereby, subject to their right to consent to certain
amendments and changes as set forth in Section 1.3 (b) above. Each of the Class
C Holders hereby acknowledges that all notices required to be given to it
pursuant to the Purchase Agreement, the Registration Rights Agreement, the
Certificate of Designation, the Warrants or otherwise as a result of the
execution and delivery of the Merger Agreement (and, pursuant to the Purchase
Agreement and the Certificate of Designation, to the consummation of the
transactions contemplated thereby) by NMC and VVI have been duly given.
SECTION 1.5. THE CLOSING
The closing of the Purchase (the "Closing") will take place on the same
date that the closing of the transactions contemplated by the Merger Agreement
take place (the "Closing Date"), at the offices of Latham & Watkins, 885 Third
Avenue, Suite 1000, New York, New York 10022-4802, unless another date, place
or time is agreed to in writing by NMC and VVI. NMC shall give the Class C
Holders at least three (3) business days prior written notice of the Closing
Date and time and place of Closing. The Purchase Price shall be paid to the
Class C holders at Closing (as defined below) by wire transfer of immediately
available funds, against delivery to NMC of duly endorsed certificates
evidencing the Class C Stock subject to the Purchase. Any transfer or similar
taxes due upon completion of the Purchase but not income or similar taxes)
shall be paid by NMC. At the Closing, each of the Class C Holders shall deliver
to NMC and VVI, and each of NMC and VVI shall deliver to each of the Class C
Holders, a release in the form attached hereto as Exhibit B.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.1 REPRESENTATIONS BY NMC VVI
AND CLASS C HOLDERS
Each of NMC and VVI hereby represents and warrants to each of the
Class C Holders, and each of the Class C Holders hereby represents and warrants
to each of NMC and VVI, that the following statements with respect to itself
are true and correct as of the date hereof: (a) such party has all requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereunder, (b) the execution and delivery of this
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Agreement and the consummation of the transactions hereunder have been duly
authorized by all necessary action by such party, (c) this Agreement has been
duly executed and delivered by such party, and constitutes the valid and
binding obligations of such party, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equitable principles, and (d) the execution
and delivery of this Agreement by such party and the announcement of the
transactions contemplated thereby does not, and the consummation of the
transactions contemplated by this Agreement will not (1) conflict with, or
result in any violation or breach of, any provisions of the charter, bylaws or
other governing documents of such party or any of its subsidiaries (or
controlled affiliates), (2) assuming the execution and delivery of this
Agreement by the parties hereto, result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or
give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any contract,
agreement, instrument or obligation to which such party or any of its
subsidiaries (or controlled affiliates) is a party or by which any of them or
any of their properties or assets may be bound, or (3) conflict with or violate
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to such party or any of its
subsidiaries (or controlled affiliates) and of its or their properties or
assets, except in the case of (2) and (3), such conflicts, violations,
defaults, terminations, cancellations or accelerations which would not,
individually or in the aggregate, prevent or delay such party's ability to
timely consummate the transactions herein contemplated.
SECTION 2.2 TITLE
Each of the Class C Holders represents and warrants to NMC that the
following statements with respect to itself are true and correct as of the date
hereof: (a) such Class C Holder is the beneficial and record owner of the
number of the shares of the Class C Stock set forth next to such Class C
Holder's name on the signature pages hereto free and clear of any liens,
charges, encumbrances, security interests and rights of others except as set
forth on Schedule 2.2 hereto, and that, upon consummation of the Purchase at
Closing, NMC will acquire good and marketable title to all of the shares of
Class C Stock then owned by such Class C Holder free and clear of any liens,
charges, encumbrances, security interests and rights of others whatsoever, and
(b) except for this Agreement and the Merger Agreement, there are no
outstanding agreements, options, warrants or rights to purchase or acquire or
agreements (whether voting or otherwise) relating to any of the shares of Class
C Stock owned by such Class C Holder.
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SECTION 2.3 REPRESENTATIONS AND COVENANTS OF NMC
NMC hereby represents, warrants, covenants and agrees to and with each
of the Class C Holders that: (a) no document, agreement, statement or
certificate made or delivered to the Class C Holders in connection with the
transactions contemplated by the Merger Agreement or the negotiation and
preparation of this Agreement contains any untrue statement of a material fact,
taking into account the circumstances under which such statements were made or
delivered, or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made when
considered in the aggregate, not misleading, (b) except as set forth on
Schedule 2.3 attached hereto, no employee, officer or director of or consultant
to NMC, or any affiliate of such person, shall receive compensation of any type
in connection with or as a result of the transactions contemplated by the Merger
Agreement, (c) NMC shall use its commercially reasonable best efforts to
fulfill all of its obligations under the Merger Agreement such that the
transactions contemplated by the Merger Agreement are consummated in accordance
with the terms thereof,(d) NMC shall request one or more advances under and
subject to the Demand Note promptly at such time(s) as it determines a need for
the funds available to it under such Note, and shall otherwise diligently
prosecute all its rights under the Merger Agreement and the Demand Note, (e)
NMC hereby agrees to indemnify and hold harmless each Class C Holder, its
partners, shareholders, members, officers, directors, employees, agents and
affiliates from and against any and all losses, claims, liabilities, expenses
and damages (including any and all investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under state or federal securities laws or state
corporation laws, insofar as such losses, claims, liabilities, expenses or
damages arise out of or are based on this Agreement, the Merger Agreement or
the transactions contemplated hereby or thereby other than those losses,
claims, liabilities, expenses or damages that arise out of or are based on any
Class C Holder's fraud, or wilfull or reckless misconduct, and (f) no less
than $7,000,000 has been advanced to NMC by VVI pursuant to the terms of the
Demand Note prior to or simultaneous with the execution of this Agreement.
SECTION 2.4 REPRESENTATIONS AND COVENANTS OF THE CLASS
C HOLDERS
Each of the Class C Holders hereby represents, warrants and covenants
to and with NMC that such Class C Holder: (i) is an "Accredited Investor" as
that term is defined in Rule 501 of Regulation D, (ii) and its counsel, if any,
have been furnished all materials relating to the business, finances and
operations of NMC and materials relating to the Purchase which have been
specifically requested by such Class C Holder or its counsel, (iii) and its
counsel have been afforded the opportunity to ask questions of NMC and have
received what each of the Class C Holders believes to be satisfactory answers
to any such inquiries, and (iv) prior to the Adjustment Date (as defined in
Section 3.1 below) will not assert or threaten to assert a claim against NMC
for a breach of NMC's representation set forth in Section 2.3 (a) above.
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SECTION 2.5 REPRESENTATIONS AND COVENANTS OF VVI
VVI hereby represents, warrants, covenants and agrees to and with each
of the Class C Holders that: (i) no less than $7,000,000 has been advanced to
NMC by VVI pursuant to the terms of the Demand Note prior to or simultaneous
with the execution of this Agreement, and (ii) VVI will not exercise any
"piggyback" or similar right it may otherwise have to include any securities
owned by or issuable to VVI in any registration statement filed by NMC at the
demand or request of the Class C Holders. VVI is entitled to exercise "demand"
or similar rights it may have to request a registration statement to be filed by
NMC for VVI's benefit.
ARTICLE III
COVENANTS
SECTION 3.1 EXERCISE OF RIGHTS UNDER CLASS C STOCK
During the period beginning of the date hereof and continuing until the
"Adjustment Date," which shall be the earliest to occur of (w) June 1, 1998,
(x) the date it is publicly announced that VVI is unwilling to proceed with the
transactions contemplated by the Merger Agreement on the terms then set forth
therein, (y) the Merger Termination Date, or (z) the date on which demand is
made upon NMC for payment of principal pursuant to the Demand Note, each of the
Class C Holders hereby: (A) agrees not to exercise the conversion privileges of
the Class C Stock at a conversion price below $6.06 per share of Common Stock,
and (B) waives its rights, benefits and claims under the Purchase Agreement, the
Registration Rights Agreement, and the Certificate of Designation to the extent
set forth on Schedule 3.1 hereto; provided, however, that all waivers set forth
on Schedule 3.1 shall be null and void ab initio on the Adjustment Date. In
addition, all waivers set forth on Schedule 3.1 shall be of no further force
and effect following the Closing Date. Notwithstanding the foregoing, the
date set forth in (w) above shall be extended to no later than August 31, 1998
if, on June 1, 1998, NMC and VVI shall deliver to each of the Class C Holders a
certification executed by the chief executive officer of each of NMC and VVI to
the effect that all conditions precedent to completion of the transactions
contemplated by the Merger Agreement have been satisfied or waived, excepting
only the consent required pursuant to Section 6.1 (c) of the Merger Agreement.
Such certification shall not preclude a termination of the Merger Agreement in
accordance with its terms subsequent to June 1, 1998 on the basis of events
which occur or first become known after June 1, 1998 which, had they occurred or
been known on June 1, 1998 would have precluded delivery of the certificate.
SECTION 3.2 CONVERSION PRICE ADJUSTMENTS
On the Adjustment Date, Section III.D. of the certificate of designation
defining the shares then held by the Class C Holders in exchange for the Class
C Stock as contemplated by Section 5.2 (d) below shall provide that, effective
upon the Adjustment Date, the Fixed Conversion Price shall mean the lower of
(x) 101% of the closing bid price of the Common Stock on June 1, 1998, (y) 101%
of the closing bid price of the Common Stock on the first
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trading day after the Merger Termination Date, or (z) the Fixed Conversion
Price at the close of business on the trading day immediately prior to the
Adjustment Date.
SECTION 3.3 EXERCISE PRICE ADJUSTMENT
On the Adjustment Date, each of the Warrants and the New
Warrants shall be amended to provide that, effective upon the Adjustment Date,
the exercise prices therein shall be the lowest of (x) 101% of the closing bid
price of the Common Stock on June 1, 1998, (y) 101% of the closing bid price of
the Common Stock on the first trading day after the Merger Termination Date, or
(z) the Exercise Price (as defined in the Warrants) at the close of business on
the trading day immediately prior to the Adjustment Date; provided, however,
that upon consummation of the transactions contemplated by the Merger Agreement,
the adjustments to the exercise prices provided for in the foregoing clause
shall be nullified and voided, and such exercise prices shall be readjusted to
$6.82 per share (or to such other price as would have been in effect had the
aforesaid adjustment not taken place so long as such other price was not
adjusted as a result of the execution and delivery of the Merger Agreement and
the other Transaction Documents (as defined in the Merger Agreement) and the
consummation of the transactions contemplated thereby or the public announcement
of any of the foregoing). Except as set forth herein and notwithstanding
anything to the contrary in the Warrants, if the Closing occurs no other
adjustments to the exercise price of the Warrants or the New Warrants will be
made (or required to be made), before or after the Closing, as a result of the
execution and delivery of the Merger Agreement and the Transaction Documents by
NMC and VVI, the announcement of the transactions contemplated thereby and the
consummation by NMC and VVI of the transactions contemplated thereby.
SECTION 3.4 CERTAIN ACTIONS BY CLASS C HOLDERS
During the period beginning on the date hereof and continuing
until the Merger Termination Date, each Class C Holder, jointly and severally,
covenants and agrees with NMC as follows:
(a) Except as provided for in Section 3.1 (A) and Section 5.2 (d),
such Class C Holder shall not sell, assign, transfer, encumber (except as set
forth on Schedule 2.2) or otherwise disposed of any shares of Class C Stock or
enter into any contract, agreement or understanding with respect to the direct
or indirect acquisition or sale, assignment, transfer, encumbrance or other
disposition of any shares of Class C Stock, or grant proxies or enter into any
voting trust or any other agreement or arrangement with respect to any shares
of Class C Stock, except pursuant to the terms hereof;
(b) Such Class C Holder shall not take or cause to be taken any of
the following actions, the result of any of which could be reasonably expected
to prevent or delay the transactions contemplated hereunder or under the Merger
Agreement: (i) make or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Securities and
Exchange Commission) to vote or seek to advise or influence in any manner
whatsoever any person or entity with respect to the voting of any securities of
NMC, (ii)
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otherwise act, whether alone or in concert with others, to seek to control,
change or influence the management, Board of Directors or policies of NMC, or
nominate any person as a Director of NMC who is not nominated by the then
incumbent Directors, or propose any matter to be voted upon by the shareholders
of NMC, or (iii) advise, assist or encourage any other person in connection
with or announce an intention to, or enter into any discussion, negotiations,
arrangements or understandings with any third party with respect to any of the
foregoing clauses (i) through (iii); and,
(c) Such Class C Holder shall not take or commit to take any action
that would cause or make any of its representations and warranties contained in
Article II herein inaccurate in any material respect.
ARTICLE IV.
CONDITIONS TO THE CLOSING
SECTION 4.1 CONDITIONS TO OBLIGATIONS OF NMC AND VVI
The obligation of NMC to effect the Purchase (and of VVI to
provide the Purchase Price, as necessary) is subject to the satisfaction of
each of the following conditions prior to the Closing Date, any of which may be
waived in writing exclusively by both NMC and VVI;
(a) Representations and Warranties. The representations and
warranties of the Class C Holders set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except for, (x) changes contemplated by
this Agreement or (y) which would not, individually or in the aggregate,
prevent or delay the Class C Holders' ability to timely consummate the
transactions herein contemplated; and NMC shall have received a certificate
signed on behalf of each Class C Holder by a duly authorized agent of each
Class C Holder to such effect.
(b) Performance of Obligations of the Class C Holders. Each of the
Class C Holders shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing
Date, and NMC shall have received a certificate signed on behalf of each Class
C Holder by a duly authorized agent of each Class C Holder to such effect.
(c) Merger Agreement. The transactions contemplated by the Merger
Agreement shall be effected concurrently with the consummation of the
transactions contemplated by this Agreement.
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SECTION 4.2. CONDITIONS TO OBLIGATIONS OF THE
CLASS C HOLDERS
The obligation of the Class C Holders to effect the Purchase is
subject to the satisfaction of each of the following conditions prior to the
Closing Date, any of which may be waived in writing exclusively by all of the
Class C Holders:
(a) Representations and Warranties. The representations and warranties of
NMC and VVI set forth in this Agreement shall be true and correct as of the date
of this Agreement and (except to the extent such representations speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date, except for, (x) changes contemplated by this Agreement or (y) which would
not, individually or in the aggregate, prevent or delay NMC's ability to timely
consummate the transactions herein contemplated; and the Class C Holders shall
have received certificates signed on behalf of each of VVI and NMC by their
respective chief executive and chief financial officers.
(b) Performance of Obligations of NMC. NMC and VVI shall have performed
in all material respects all obligations required to be performed by them under
this Agreement at or prior to the Closing Date, and the Class C Holders shall
have received certificates signed on behalf of each of VVI and NMC by their
respective chief executive and chief financial officers.
(c) Merger Agreement. The transactions contemplated by the Merger
Agreement shall be effected concurrently with the consummation of the
transactions contemplated by this Agreement.
ARTICLE V.
MISCELLANEOUS
SECTION 5.1. SURVIVAL
The provisions set forth in Sections 1.4, 2.1, 2.2, 2.3(e), 2.4, 3.3,
5.2(c), 5.2(a), 5.2(b), 5.2(d), 5.3, 5.4 and 5.7 shall survive the Closing
Date. Any obligations of NMC or VVI which survive Closing shall be deemed to be
obligations of V-L, and the Merger Agreement shall so provide.
SECTION 5.2. SCOPE OF AGREEMENT
(a) This Agreement reflects only the Class C Holders' agreement to the
matters herein set forth. Except as specifically set forth herein, nothing
contained in this Agreement or otherwise shall be construed as a waiver or
release of any other right or benefit that the Class C Holders may have under
the Purchase Agreement, the Registration Rights Agreement, the Certificate of
Designation and the Warrants.
(b) Except as specifically set forth herein, nothing contained in this
Agreement or otherwise shall be construed to amend any term or provision of the
Purchase Agreement, the
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Registration Rights Agreement, the Certificate of Designation and the Warrants.
Each of such agreements shall continue in full force and effect in accordance
with its terms, except as specifically set forth herein.
(c) Except as specifically set forth herein, this Agreement and all
documents and instruments referred to herein (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and thereof, and (b)
are not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
(d) In order to accomplish the changes to the Certificate of Designation
contemplated by Article III above, NMC shall issue to the Class C Holders shares
of a newly designated preferred stock providing rights substantially identical
to those of the Class C Stock, but with the appropriate rights, preferences,
etc. as reflected in this Agreement, in exchange for the Class C Stock then held
by the Class C Holders (the "Exchange"). NMC shall prepare and submit to the
Class C Holders for their approval certificate(s) of designation promptly after
execution of this Agreement. NMC hereby agrees to use its best efforts to have
the S-3 Registration Statement No. 333- 36637 (the "Registration Statement")
declared effective as promptly as possible after the date hereof (the "Effective
Date"), and will in any event (unless the Registration Statement has previously
been declared effective) within ten days after the date hereof file a
pre-effective amendment to the Registration Statement which is responsive to all
outstanding staff comments. So long as NMC continues to use its best efforts as
aforesaid, the Class C holders hereby waive (subject to the following proviso)
the right to receive the payments that might otherwise be due them pursuant to
Section 2.b of the Registration Rights Agreement (the "Payments"); provided,
however, that if NMC fails to use its best efforts as aforesaid or if the
Effective Date does not occur prior to the first to occur of (x) the Adjustment
Date or (y) January 30, 1998 (or, if the Securities and Exchange Commission
("SEC") staff subjects the Registration Statement to substantial review, or
requires the inclusion of pro forma financial information reflecting the
proposed merger or other information not then readily available to NMC, February
27, 1998), then the Class C Holders shall be entitled to receive all Payments
due them effective from January 2, 1998 through the Effective Date. NMC shall
promptly after the date hereof file with the SEC a registration statement on
Form S-3 for the shares to be issued to the Class C Holders in the Exchange (the
"New S-3"), and shall have the New S-3 declared effective within ten business
days after the date on which it is filed (unless the New S-3 is subject to
review by the SEC staff, in which event it shall be effective within ninety
days of the date of this Agreement). The Exchange will occur simultaneous with
the New S-3 being declared effective. Simultaneous with the Exchange, NMC and
the Class C Holders shall either amend the Registration Rights Agreement or
enter into a substantially identical agreement covering both the shares issued
in the Exchange and the New Warrants.
Notwithstanding anything to the contrary in the Purchase Agreement, the
Registration Rights Agreement, any new registration rights agreement entered
into pursuant to Section 5.2(d), the Certificate of Designation, the Warrants or
the New Warrants, each of the Class C Holders hereby consents to, and hereby
waive any claims, benefits or rights with respect to, the failure of VVI and V-L
to have a registration statement covering the shares of V-L
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common stock issuable upon exercise of the Warrants and the New Warrants
effective during the 120 days following the Closing; provided, however, that
such consent and waiver are contingent upon such registration statement being
filed with the SEC within thirty days after the Closing, and being declared
effective by the SEC within one hundred twenty days after the Closing.
(e) Each of the parties hereto acknowledges that the obligation to
effect the Purchase is conditioned upon the concurrent consummation of the
transactions contemplated by the Merger Agreement. Accordingly, immediately
upon the Merger Termination Date, there shall be no further obligation or
liability hereunder on the part of either VVI or the Class C Holders, or their
respective officers, directors, stockholders or Affiliates (as defined in the
Merger Agreement), except for wilfull breaches of this Agreement.
SECTION 5.3. FURTHER ASSURANCES, COOPERATION
AND NOTICE
Each of the Class C Holders and NMC and VVI will use its best
efforts and cooperate with each other in executing and delivering any and all
documents, amendments and other agreements that may be necessary to evidence or
effect the agreements set forth in this Agreement. Each of NMC and VVI and the
Class C Holders shall notify the other of, and will use all commercially
reasonable efforts to cure before the Closing Date, any event, transaction or
circumstance, as soon as practicable after it becomes known to such party, that
causes or will cause any covenant or agreement of NMC, VVI or the Class C
Holders under this Agreement to be breached or that renders or will render
untrue any representation or warranty of NMC, VVI or the Class C Holders
contained in this Agreement. Each of NMC, VVI and the Class C Holders also
shall notify the other in writing of, and will use all commercially reasonable
efforts to cure, before the Closing Date, any violation or breach, as soon as
practicable after it becomes known to such party, of any representations,
warranty, covenant or agreement made by NMC, VVI or the Class C Holders. No
notice given pursuant to this paragraph shall have any effect on the
representations, warranties, covenants or agreements contained in this
Agreement for purposes of determining satisfaction of any condition contained
herein.
SECTION 5.4 ATTORNEY'S FEES
NMC shall, promptly upon presentation of detailed invoices
therefore, reimburse the Class C Holders for all of the Class C Holders'
reasonable expenses, including but not limited to counsel fees and
disbursements incurred in connection with this Agreement and the matters
contemplated hereby; provided, however, that NMC shall not be obligated to
reimburse more than $35,000 in such expenses.
SECTION 5.5 COUNTERPARTS
This Agreement may be executed in two or more counterparts, all
of which shall be considered one and the same agreement and shall become
effective when two or more
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counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
SECTION 5.6 GOVERNING LAW
This Agreement shall be governed and construed in accordance
with the laws of the State of Delaware without regard to any applicable
conflicts of law.
SECTION 5.7 ASSIGNMENT; BINDING EFFECT
Except for any assignments by NMC or VVI arising by operation
of law as a result of the consummation of the transactions contemplated by the
Merger Agreement, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the
other parties. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable only by the parties
and their respective successors and assigns, and no person or entity not a
party to a provision herein set forth is intended to be a beneficiary of such
provision.
[Signature Page to Follow]
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IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
have executed this Agreement as of the day and date first above written.
CAPITAL VENTURES INTERNATIONAL
(15,000 shares of Class C Stock)
By: Heights Capital Management, its authorized agent
By: /s/ Andrew Frost, President
--------------------------------------------
Heights Capital Management, Inc.
RGC INTERNATIONAL INVESTORS, LDC
(5,000 shares of Class C Stock)
By: Rose Glen Capital Management, L.P.,
Investment Manager
By: RGC General Partner Corp., General Partner
By: /s/ Gary Kaminsky
--------------------------------------------
NATIONAL MEDIA CORPORATION
By: /s/ Brian J. Sisko
--------------------------------------------
Sr. Vice President
VALUEVISION INTERNATIONAL, INC
By: /s/ David T. Quinby
--------------------------------------------
Vice President
EXHIBITS AND SCHEDULES
EXHIBIT A - The Merger Agreement
EXHIBIT B - Form of Release to be delivered to NMC at Closing pursuant to
Section 1.5
SCHEDULE 2.2 - Encumbrances on Class C Stock
SCHEDULE 2.3 - Compensation in Connection with Merger
SCHEDULE 3.1 - Waiver of Certain Rights by Class C Holders
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EXHIBIT 10.5
CONSENT, WAIVER, AND AMENDMENT
This Consent, Waiver, and Amendment, dated as of January 5,
1998 is made by and between CoreStates Bank, N.A., a national banking
association ("Lender") and National Media Corporation, a Delaware corporation
("NMC"), Quantum North America, Inc., formerly known as Media Arts
International, Ltd., Quantum International Limited, Positive Response
Television, Inc. and DirectAmerica Corporation (collectively, with NMC, the
"Loan Parties") in reference to the Amended and Restated Loan and Security
Agreement dated as of June 26, 1996 between NMC, certain of the Loan Parties and
Meridian Bank, as lender (the "Amended and Restated Loan Agreement"), the
Secured Subordinated Notes issued by NMC and dated December 1, 1994 and April 1,
1995, respectively in the original principal amount of $5 million (the "Notes")
and the Loan Modification Agreement dated as of September 18, 1997 by and among
NMC, certain of the Loan Parties and Lender (the "Loan Modification Agreement"),
and any other indebtedness, guaranties, collateral or other agreements between
Lender and any of the Loan Parties existing as of the date hereof (collectively,
with the Amended and Restated Loan Agreement, the Notes and the Loan
Modification Agreement, the "Loan Documents").
In consideration of the premises contained herein and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
1. Effective as of the date hereof, Lender hereby (i) consents to and
approves the transactions described in the Agreement and Plan of Reorganization
and Merger (the "Merger Agreement") dated as of the date hereof by and among
NMC, ValueVision International, Inc., a Minnesota corporation ("ValueVision")
and V-L Holdings Corp., a Delaware corporation, and the related documents
attached as exhibits thereto (collectively, with the Merger Agreement, the
"Merger Documents") (including, without limitation, the $10 Million Demand
Promissory Note dated as of the date hereof between NMC and ValueVision (the
"Demand Promissory Note")), which consent and approval is hereby deemed to
constitute and satisfy any consents required under the Loan Documents as a
result of and in connection with the transactions described in the Merger
Documents, including any consents required under the Amended and Restated Loan
Agreement with respect to the incurrence of any indebtedness under the Demand
Promissory Note (Section 8.3); the issuance of any guaranties (Section 8.5); the
entry into any mergers, consolidations or other acquisition transactions
(Section 8.7); and any failure to comply with the financial covenants set forth
in Article 9 to the extent such failure is attributable to the incurrence of
indebtedness under the Demand Promissory Note, and/or any expenses or
expenditures incurred or accrued in connection with or as a result of the
execution or consummation of the transactions described in the Merger Documents
in an aggregate amount up to, but not in excess of, $5.0 million, and/or foreign
exchange translation adjustments since June 30, 1997 and/or deferred taxes; and
any consents required under Section 13 of the Loan Modification Agreement to a
person other than Robert Verratti acting as the President and/or Chief Executive
Officer of NMC following the consummation of the merger contemplated in the
Merger Agreement, and (ii) waives any provisions under the Loan Documents which
would otherwise be violated as a result of or in connection with the
transactions described in the
<PAGE>
Merger Documents. Notwithstanding the foregoing, if NMC fails to comply with the
provisions of Paragraphs 2-6 below or there is a failure to comply with
Paragraphs 7 or 8, this Consent, Waiver, and Amendment shall terminate and shall
be null and void and Lender shall be entitled to exercise all rights and
remedies it may have under the Loan Documents or applicable law.
2. Effective as of the date hereof, the Accrued Interest (as defined in the
Loan Modification Agreement) for the period from September 18, 1997 through
December 31, 1997 shall be paid on the date hereof. As of and after the date
hereof, interest shall be paid monthly in accordance with the Loan Modification
Agreement but at a rate equal to the Prime Rate (as defined in the Loan
Modification Agreement) plus the Contract Rate Margin (as defined in the Loan
Modification Agreement).
3. NMC shall not make any voluntary pre-payment of the principal amounts
outstanding under the Demand Promissory Note, without obtaining the prior
consent of Lender, which consent shall not be unreasonably withheld.
4. The warrant certificate representing the right to acquire 125,000 shares
of common stock of NMC which right was issued pursuant to the terms of the Loan
Modification Agreement, shall be finalized in accordance with the Loan
Modification Agreement and executed and delivered as of even date herewith.
5. Upon the termination of the ASB Bank Limited Facility Agreement between
ASB Bank Limited and Prestige Marketing Limited, a New Zealand corporation and a
subsidiary of NMC ("Prestige") or any extension thereof, and the satisfaction of
Prestige's obligations thereunder, Prestige shall (at Lender's option) guaranty
the Obligations (as defined below) or become a co-borrower under the Loan
Documents and NMC and Prestige shall grant Lender a security interest in the
collateral that secured such facility pursuant to substantially similar
documentation, to the extent of NMC's obligations with respect to principal,
interest, fees or expenses under the Loan Documents (collectively, the
"Obligations").
6. The proceeds of any fees received by NMC from ValueVision pursuant to
Section 7.3(b) of the Merger Agreement shall be first applied to the
satisfaction of any Obligations outstanding under the Loan Documents.
7. Contemporaneously with the consummation of the transactions contemplated
by the Merger Agreement, Lender will receive a guaranty executed by V-L Holdings
Corp., ValueVision and its operating subsidiaries of NMC's obligations under the
Loan Documents, in substantially the form attached hereto.
8. During the period commencing on the date hereof and until the
consummation of the transactions contemplated by the Merger Agreement,
ValueVision will not (i) create, incur or permit to exist any mortgage, pledge,
encumbrance, lien, security interest or charge of any kind (including liens or
charges upon properties acquired or to be acquired under conditional sales
agreements or other title retention devices) ("Liens") on its property or
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<PAGE>
assets, whether now owned or hereafter acquired or upon any income, profits or
proceeds therefrom, except: (a) Liens existing on the date hereof (none of which
cover ValueVision's inventory and/or receivables, as a whole, and to the extent
that any such Liens exist, such Liens are not, in the aggregate, material with
respect to the aggregate value of ValueVision's inventory and/or receivables),
(b) Liens incurred or deposits made in the ordinary course of business,
including (x) in connection with worker's compensation, unemployment insurance,
social security and other like laws or (y) to secure the performance of
statutory obligations, not incurred in connection with either the borrowing of
money or the deferred purchase price of goods or inventory, or (c) encumbrances
consisting of zoning restrictions, easements, restrictions on the use of real
property or minor irregularities of title thereto, none of which impairs the use
of such property by ValueVision in the operation of its business, (ii) merge
into or consolidate with any person (other than any of its subsidiaries, parent
company or any subsidiary of such parent company) or sell or otherwise dispose
of more than 85% of ValueVision's total assets to any person (other than any of
its subsidiaries, parent company or any subsidiary of such parent company),
which percentage shall be measured by dividing the aggregate book value of the
assets sold by the aggregate book value of the total assets of ValueVision as of
the date of such transaction, or (iii) pay dividends or make other distributions
on account of its capital stock.
9. The Loan Documents, as amended by this Consent, Waiver and
Amendment, constitute the entire agreement between the parties pertaining to the
subject matter hereof and fully supersedes any and all prior or contemporaneous
agreements or understandings between the parties hereto pertaining to the
subject matter hereof.
10. Except as expressly contemplated and modified in this Consent, Waiver,
and Amendment, the Loan Documents shall remain in full force and effect.
11. This Consent, Waiver and Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, each of the undersigned have caused this Consent,
Waiver and Amendment to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.
CORESTATES BANK, N.A.
/s/ Patricia A. Barfory
----------------------------
By: Patricia A. Barfory
Its: Vice President
NATIONAL MEDIA CORPORATION
/s/ Robert N. Verratti
----------------------------
By: Robert N. Verratti
Its: President and Chief
Executive Officer
QUANTUM NORTH AMERICA
/s/ Brian J. Sisko
----------------------------
By: Brian J. Sisko
Its: Sr. Vice President
QUANTUM INTERNATIONAL LIMITED
/s/ Jack Sullivan
----------------------------
By: Jack Sullivan
Its: Director
POSITIVE RESPONSE TELEVISION, INC.
/s/ Brian J. Sisko
----------------------------
By: Brian J. Sisko
Its: Sr. Vice President
DIRECTAMERICA CORPORATION
/s/ Brian J. Sisko
----------------------------
By: Brian J. Sisko
Its: Sr. Vice President
S-1
<PAGE>
EXHIBIT 10.6
DEMAND PROMISSORY NOTE
$10,000,000 January 5, 1998
FOR VALUE RECEIVED, the undersigned, National Media Corporation, a
Delaware corporation ("Borrower"), promises to pay on demand, which demand may
be made at any time after the occurrence of the Triggering Event (as defined
below), to ValueVision International, Inc., a Minnesota corporation ("Lender"),
at its office at 6740 Shady Oak Road, Eden Prairie, MN 55344-3433 or at such
other place as Lender may designate in writing, in lawful money of the United
States of America and in immediately available funds (except as otherwise
expressly provided in Section 2(b) below), the lesser of (i) the principal
amount of Ten Million Dollars ($10,000,000), and (ii) the unpaid principal
amount of all amounts loaned by Lender to Borrower hereunder. In addition,
Borrower agrees:
1. INTEREST.
a. Generally. Borrower promises to pay interest on the principal,
expenses and other amounts due hereunder (all such amounts due hereunder,
including any interest thereon, collectively referred to as the "Obligations").
Interest shall accrue on the Obligations from the date such Obligations are
advanced or otherwise due hereunder until paid in full at the Prime Rate (as
defined below) in effect from time to time, plus 1.5% per annum. "Prime Rate"
shall mean the prime, reference or other comparable rate announced from time to
time by Norwest Bank, N.A. ("Norwest Bank"), as reasonably determined by Lender,
with the understanding that the Prime Rate is intended by the parties to be one
of Norwest Bank's base rates and may serve as the basis upon which effective
rates of interest are calculated for those loans making reference thereto. When
interest is determined in relation to the Prime Rate, each change in the rate of
interest hereunder shall become effective on the date each Prime Rate change is
announced by Norwest Bank. Interest shall be due and payable in immediately
available funds (i) quarterly, on January 1, April 1, July 1 and October 1, and
(ii) as of any date in which any principal payment is due and payable hereunder
(whether in cash or otherwise, as provided herein).
b. Default Interest. During the occurrence of an Event of Default
(as defined below), the Obligations shall bear interest until paid in full in
immediately available funds at an increased rate per annum equal to the Prime
Rate in effect from time to time, plus three percent (3.0%) per annum.
2. PAYMENTS GENERALLY.
a. Repayment. Principal shall be due and payable on written demand,
which demand may be made by Lender for full or partial payment at any time after
the occurrence of the Triggering Event. "Triggering Event" means the earliest to
occur of (i) January 1, 1999, (ii) termination of the Agreement and Plan of
Reorganization and Merger dated as of the date hereof between Lender and
Borrower, as may be amended from time to time (the "Merger Agreement") if such
termination results from a breach of any covenant by Borrower or the
<PAGE>
inaccuracy of any representation or warranty of Borrower or in the event the
shareholders of Borrower do not approve the terms of the proposed merger as
contemplated by the Merger Agreement, (iii) the announcement of a material
transaction involving Borrower (such as a merger, share exchange, a sale of all
or substantially all of the assets of Borrower or another similar event), (iv) a
Change of Control (as defined below) of Borrower, or (v) the acceleration of the
Obligations pursuant to Section 6(b)(i) hereof. "Change of Control" shall mean
an event as a result of which: (a) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934 (the
"Exchange Act")), other than ValueVision and/or any affiliate of ValueVision, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act, except that a person shall be deemed to have "beneficial ownership" of all
securities that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 20% of the total voting power of the voting stock of
the Company; (b) the Company consolidates with, or merges with or into another
corporation (other than ValueVision and/or any affiliate of ValueVision), or
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of its assets to any person (other than ValueVision and/or any
affiliate of ValueVision), or any corporation (other than ValueVision and/or any
affiliate of ValueVision) consolidates with, or merges with or into, the
Company, in any such event pursuant to a transaction in which the outstanding
voting stock of the Company is changed into or exchanged for cash, securities or
other property, other than any such transaction where (A) the outstanding voting
stock of the Company is changed into or exchanged for (x) voting stock of the
surviving or transferee corporation or (y) cash, securities (whether or not
including voting stock) or other property, and (B) the holders of the voting
stock of the Company immediately prior to such transaction own, directly or
indirectly, not less than 50% of the voting power of the voting stock of the
surviving corporation immediately after such transaction; (c) during any period
of two consecutive years (beginning as of the date hereof), individuals who at
the beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Company was approved by
a vote of 66-2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of the Directors of the Company then in office; provided,
however, that any individual who ceases to be a member of the Board of Directors
of the Company by reason of voluntary resignation and such resignation is not
taken in connection with an extraordinary transaction involving the Company
(including, without limitation, a merger, acquisition, disposition or
reorganization) or in connection with an actual or threatened proxy contest,
shall not be counted for purposes of determining whether a Change of Control
under this clause (c) has occurred, or (d) the Company is liquidated or
dissolved or adopts a plan of liquidation.
Borrower shall pay the demanded amount within five Business Days (as
defined below) of demand. In the event Lender makes a demand for repayment and
Borrower cannot repay the demanded amount in cash, Lender may, in its sole
discretion, elect repayment of any or all of the principal and/or interest in
shares of the common stock of Borrower, par value $.01 per share (the "Common
Stock"), which have been duly and validly issued, fully paid and non-assessable,
with each such share being deemed to have a value equal to the lower of the
Fixed Conversion Price (as defined in, and determined in accordance with, the
Certificate of
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Designations, Preferences and Rights of the Series C Convertible Preferred
Stock, a copy of which is attached hereto as Exhibit A (the "Series C
Preferred Stock Certificate") and the Variable Conversion Price (as defined in,
and determined in accordance with, the Series C Preferred Stock Certificate).
b. Prepayment. Borrower may prepay principal on any portion of this
Note at any time, in any amount and without penalty; provided, however, that any
such prepayments shall, in Lender's sole discretion, be paid in immediately
available funds and/or shares of Common Stock which have been duly and validly
issued, fully paid and non-assessable, with each such share deemed to have a
value equal to the higher of the Fixed Conversion Price and the Variable
Conversion Price.
c. Payment of Certain Obligations. Any Obligations (other than
principal and interest) due hereunder by Borrower to Lender shall be due and
payable within five (5) Business Days after notice thereof is sent by Lender to
Borrower.
d. Application of Payments. Each cash payment made on this Note
shall be credited first, to any indemnity, expense, fee or other obligations due
hereunder; second, to interest then due; and third, to the outstanding principal
balance hereof.
e. Payment Procedures; Calculations. Borrower shall make all
payments, or cause all payments to be made, which are due and payable under
this Note or any guaranty, security agreement or other agreement, certificate,
instrument or other document entered into in connection herewith, including,
without limitation, the Warrant Agreement dated as of the date hereof between
Lender and Borrower and the Registration Rights Agreement dated as of the
date hereof between Lender and Borrower (collectively, together with this Note,
as each may be amended from time to time, the "Loan Documents") not later than
2:00 P.M. (Minnesota time) on the day when due, in immediately available funds
(except as expressly provided herein), to Lender at its address. Except
as otherwise provided herein, all Obligations shall be paid in lawful money of
the United States of America. Interest and any fees that may accrue hereunder
shall be computed on the basis of a 360-day year and the actual number of days
elapsed. Each determination by Lender of an interest rate, fees, expenses or
other payments hereunder shall be conclusive and presumptively binding for all
purposes, absent manifest error.
f. Business Days. If a payment hereunder would otherwise be due
and payable on a day other than on a Business Day, the due date thereof shall be
extended to the next succeeding Business Day, and interest shall be payable
thereon during such extension. "Business Day" shall mean any day, except a
Saturday, Sunday or any other day designated as a holiday under Federal or
Minnesota statute or regulation.
3. CONDITIONS PRECEDENT.
a. Conditions to Initial Loan. Subject to Section 3(c) below, the
obligation of Lender to advance Seven Million Dollars ($7,000,000) on the later
of the date hereof and the Borrower's receipt of all required consents to such
advance, is subject to the satisfaction or waiver of the following conditions
precedent:
3
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(1) Note and Other Loan Documents. Lender shall have received
executed and delivered copies of this Note, any guaranties and any other Loan
Documents reasonably requested thereby, and opinions of counsel in substantially
the form set forth in Schedule A attached hereto, each in form and substance
satisfactory to Lender, in its reasonable discretion, and each Loan Document
shall be in full force and effect, without any defenses thereto.
(2) Merger Agreement. Lender shall have received an executed and
delivered copies of the Merger Agreement (as amended from time to time with the
prior written consent of Lender, the "Merger Agreement") and all documents to be
entered into in connection therewith (collectively, together with the Merger
Agreement, as each may be amended from time to time with the prior written
consent of Lender, the "Merger Documents"), in form and substance satisfactory
to Lender, in its sole discretion, and each Merger Document shall be in full
force and effect.
(3) Compliance with Agreements, Representations. Each Borrower
and any guarantor hereof (collectively, "Loan Parties" and individually, "Loan
Party") shall be in compliance with all covenants and agreements contained in
this Note, any other Loan Documents, the Merger Agreement or any other Merger
Documents. All representations and warranties contained in this Note, any other
Loan Documents, the Merger Agreement or any other Merger Documents shall be true
and correct on and as of the date hereof, as if then made, other than
representations and warranties that relate solely to an earlier date (but which
shall have been true and correct as of such earlier date). No Event of Default
shall exist or default under the Merger Agreement or would exist as a result of
the passage of time or giving of notice, as of the date of such advance or after
giving effect thereto.
(4) Insolvency Event. No Insolvency Event (as defined below)
shall have occurred with respect to any Loan Party or any corporation or other
entity in which such Loan Party directly or indirectly owns or controls the
shares of stock or other ownership interests having ordinary voting power to
elect a majority of the board of directors or appoint other managers of such
corporation or other entity (a "Subsidiary"). An "Insolvency Event" with respect
to any entity is any of the following: (a) a voluntary or involuntary petition
for bankruptcy or other relief involving such entity, its assets or its
liabilities under Title 11 of the U.S. Code (11 U.S.C. ss.ss. 101 et seq.), as
amended from time to time and any successor statute, or any similar statute, (b)
an assignment of its assets for the benefit of creditors, (c) its failure or
suspension of business operations, (d) appointment of a receiver or trustee for
it or a substantial portion of its assets, or (e) general failure to pay its
debts as they become due.
b. Conditions Precedent to any Subsequent Loan. Subject to Section
3(c) below, the obligation of Lender to make any subsequent advances after the
date hereof (which advances shall not exceed Three Million Dollars ($3,000,000)
in the aggregate) is subject to the satisfaction of the following conditions
precedent:
(1) Note, Other Loan Documents, Merger Agreement. This Note, the
other Loan Documents, the Merger Agreement and the other Merger Documents shall
be in full force and effect, without any defenses thereto.
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<PAGE>
(2) Request for Advance. Borrower shall have delivered a written
request for an advance, executed by Borrower and each other Loan Party, setting
forth the requested amount of the advance, the requested advance date,
certification that the conditions to such advance have been satisfied and any
other information reasonably requested by Lender related to such request for an
advance, which Lender shall have received no less than ten Business Days prior
to the requested advance date.
(3) Compliance with Agreements, Representations. Each Loan Party
shall be in compliance with all covenants and agreements contained in this Note,
any other Loan Documents, the Merger Agreement or any Merger Documents. All
representations and warranties contained in this Note, any other Loan Documents,
the Merger Agreement or any Merger Documents shall be true and correct on and as
of the date of such advance, as if then made, other than representations and
warranties that relate solely to an earlier date (but which shall have been true
and correct as of such earlier date). No Event of Default or default under the
Merger Agreement shall exist or could exist as a result of the passage of time
or giving of notice, as of the date of such advance or after giving effect
thereto.
(4) Insolvency Event. No Insolvency Event shall have occurred
with respect to any Loan Party or any of its Subsidiaries.
c. Termination of Advancement Obligation. The obligation of Lender
to advance any funds hereunder shall terminate on the earliest to occur of (i)
the termination of the Merger Agreement unless such termination is the result
of (a) a breach of any covenant by Lender or the inaccuracy of any
representation or warranty of Lender; (b) the failure to obtain the written
consent of the Federal Communications Commission ("FCC") to the transactions
contemplated by the Merger Agreement (so long as Lender has used all
reasonable efforts to obtain such consent); or (c) in the event the
shareholders of Lender do not approve the terms of the proposed merger as
contemplated by the Merger Agreement, (ii) the Effective Time (as such term is
defined in the Merger Agreement) and (iii) December 31, 1998.
4. REPRESENTATIONS AND WARRANTIES. To induce Lender to enter into this
Note and to make advances hereunder, Borrower represents and warrants to Lender
that the following are true, correct and complete.
a. Authority. Borrower and each other Loan Party has all requisite
corporate power and authority to enter into and perform its obligations under
each of the Loan Documents to which it is a party. The execution, delivery and
performance of each of the Loan Documents have been duly authorized by all
necessary corporate action on the part of Borrower and each other Loan Party
that is party thereto.
b. Enforceability. This Note and each other Loan Document constitute
the valid and binding obligations of each Loan Party which is a party thereto,
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar law of general
applicability relating to or affecting creditors' rights and to general
equitable principles.
5
<PAGE>
c. No Conflict. The execution, delivery and performance of each
Loan Document by any Loan Party will not (i) conflict with, or result in any
violation or breach of, any provision of the certificate of incorporation,
articles of incorporation, bylaws or other corporate governance documents of
such Loan Party, (ii) result in any violation or breach of, or constitute
(with or without notice or lapse of time, or both) a default (or give rise to
a right of termination, cancellation or acceleration of any obligation or
loss of any material benefit) under, or require a consent or waiver under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture
(collectively, "Debt Documents"), lease, contract or other agreement,
instrument or obligation to which such Loan Party is a party or by which any
of its properties or assets may be bound, or (iii) conflict with or violate
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to any Loan Party which is a
party thereto or any of its properties or assets, except in the case of (ii)
(other than Debt Documents), and (iii) any such conflicts, violations,
defaults, terminations, or cancellations which are not, individually or in the
aggregate, reasonable likely to have a material adverse effect on the
business, properties, financial condition or results of operations of either
Borrower or Borrower and the other Loan Parties, taken as a whole, or prevent
or materially delay or impair Loan Party's ability to perform its obligations
hereunder or Lender's ability to enforce its rights hereunder (a "Material
Adverse Effect").
d. Consents and Filings. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality is required by or with respect to any Loan Party in connection
with the execution, delivery and performance of any Loan Document, except those
that have been obtained or made, a copy of which has been delivered to Lender
and which is satisfactory to Lender in its sole and absolute discretion, and
such other consents, authorizations, filings, approvals and registrations
which,if not obtained or made, would not be reasonably likely to have a
Material Adverse Effect.
e. Government Regulation. None of the Loan Parties is subject to
regulation under any requirement of law that limits its ability to incur
indebtedness or its ability to consummate the transactions contemplated in any
Loan Document.
f. Solvency. After giving effect to the receipt of proceeds of any
advances hereunder, the fair saleable value of the assets of Borrower exceeds
all its probable liabilities, including those to be incurred pursuant to this
Note and the other Loan Documents. After giving effect to the receipt of
proceeds of any advances hereunder, Borrower (i) will not have unreasonably
small capital in relation to the business in which it is or proposes to be
engaged and (ii) does not believe it will have incurred debts beyond its
ability to pay as such debts become due.
g. Merger Agreement Representations. All representations and
warranties made under or pursuant to the Merger Agreement or any other Merger
Document are true and correct and are hereby incorporated by reference,
regardless of whether any of such documents have been or are subsequently
terminated. Such representations and warranties shall survive the termination of
any Loan Document, Merger Agreement or other Merger Document delivered.
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<PAGE>
5. COVENANTS. Until termination of this Note and repayment in full of
all Obligations pursuant hereto, Borrower shall, and shall cause each other Loan
Party to, comply with the following covenants:
a. Use of Proceeds. The advances hereunder shall be used by
Borrower for working capital and other general corporate purposes, to the extent
permitted by the Merger Agreement; provided, however, that such proceeds shall
not be applied to the costs and expenses of the consummation of the transactions
contemplated by the Merger Agreement.
b. Ordinary Course Payments. Except such payments as are agreed to
and acknowledged by the parties as set forth in Disclosure Schedule 5.1 to the
Merger Agreement, none of Borrower, any other Loan Party or any of their
respective Subsidiaries shall make any payments outside of the ordinary course
of business, including, without limitation, severance or other "parachute" type
payments in any amount greater than $50,000, settlement of any threatened or
pending litigation matters involving, in the aggregate including all such
matters, consideration in excess of $100,000, repayment of any debt for borrowed
money (except with respect to scheduled amortization payments), payment of any
dividends, redemption or repurchase of any equity or debt securities, in each
case, without the prior written consent of Lender. Upon request by Borrower for
Lender's consent to any payments that are otherwise prohibited hereunder, Lender
shall not unreasonably delay the consideration of such request, which
consideration shall be in its sole discretion. The payment by Borrower of
accrued but unpaid liabilities existing as of the date hereof (including any
accrued and unpaid settlement payments) shall not be deemed to be outside the
ordinary course of business for purposes of this Section 5(b).
c. Conduct of Business. Except as set forth in Disclosure Schedule
5.1 to the Merger Agreement, each Loan Party shall carry on its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted (including to not grant any interest in its assets or incur
additional indebtedness (unless such indebtedness is adequately subordinated to
the Obligations on terms reasonably satisfactory to Lender), without the prior
written consent of Lender), to pay its debts and taxes when due subject to good
faith disputes over such debts or taxes, to pay or perform its other obligations
when due, and to the extent consistent with such business, use all reasonable
efforts consistent with past practices and policies to (i) preserve intact its
present business organization, (ii) keep available the services of its present
officers and key employees and (iii) preserve its relationships with customers,
suppliers, distributors, and others having business dealings with it.
d. Merger Agreement Covenants. Each Loan Party shall perform and
comply with all covenants and agreements contained in the Merger Agreement or
any other Merger Document, and each such covenant and agreement is hereby
incorporated by reference, regardless of whether any of such documents have been
or are subsequently terminated. The obligation to perform such covenants and
agreements shall survive the termination of any Loan Document, Merger Agreement
or other Merger Document.
e. Further Assurances. Borrower shall take, and shall cause each of
the other Loan Parties to take, all such further actions (including, without
limitation, delivery of any
7
<PAGE>
information reasonably requested by Lender relating to any of the Loan
Documents or the business, properties, financial condition or results of
operations of any Loan Party) and execute all such further documents and
instruments as Lender may at any time determine in its sole discretion to be
necessary or desirable to further carry out and consummate the transactions
contemplated by the Loan Documents.
6. EVENTS OF DEFAULT.
a. Events of Default Defined. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(1) Failure to Pay. Any Loan Party shall fail to pay any amount
hereunder or any other Loan Document when due.
(2) Breach of Covenant. Any Loan Party shall fail to comply with any
covenant or agreement contained herein or in any other Loan Document to which it
is a party or (after giving effect to any applicable notice requirements and
cure period set forth in the Merger Agreement) in any Merger Document to which
it is a party.
(3) Breach of Representation or Warranty. Any representation or
warranty made or deemed to be made by any Loan Party in any Loan Document to
which it is a party or in any Merger Document to which it is a party, or in any
statement or certificate given pursuant hereto or thereto, shall be false or
misleading in any material respect when made or deemed to be made (and, with
respect to any such representation or warranty under the Merger Agreement, after
giving effect to any applicable notice requirements and cure period set forth in
the Merger Agreement).
(4) Insolvency Event. Any Loan Party shall become subject to an
Insolvency Event.
(5) Cross Default. A default or event of default (after giving effect
to any applicable notice requirements and cure period set forth therein) shall
occur under any note, agreement or instrument evidencing any other indebtedness
owing to (i) CoreStates Bank, N.A. ("CoreStates") or any lender which is a party
to any credit facility or syndicate in which Corestates is a party or
participant or (ii) any lender which refinances any indebtedness to any of the
lenders described in the foregoing clause (i); provided, however, that if there
is a failure to comply with any of the covenants contained in Article 9 of the
Amended and Restated Loan and Security Agreement dated June 26, 1996 by and
among CoreStates, as successor to Meridian Bank, Borrower and certain of
Borrower's subsidiaries (the "Amended and Restated Loan Agreement"), as amended
by Section 8 of the Loan Modification Agreement dated September 18, 1997 by and
among CoreStates, Borrower and certain of Borrower's subsidiaries, and such
failure amounts to less than 10% of the applicable dollar amount or ratio, as
the case may be, set forth in such covenant (e.g., if the Working Capital Ratio
(as defined in the Amended and Restated Loan Agreement) falls below 2.0 to 1.0
but is greater than 1.8 to 1.0), such failure shall not constitute an Event of
Default under this Section 6(a)(5) unless and until
8
<PAGE>
any of the remedies set forth under the Loan Documents, including Section 14.2
of the Amended and Restated Loan Agreement, are exercised by CoreStates or any
lender that is party thereto.
(6) Failure of Enforceability of Loan Document. Any covenant,
agreement or obligation of any Loan Party contained in or evidenced by any of
the Loan Documents shall cease to be enforceable, or shall be determined to be
unenforceable, in accordance with its terms; or any Loan Party shall deny or
disaffirm its obligations under any of the Loan Documents or any rights granted
in connection therewith.
b. Remedies. Upon the occurrence of an Event of Default, Lender may
take any or all of the following actions, without prejudice to the rights of
Lender to enforce its claims against Borrower:
(1) Acceleration. Upon delivery of written notice to Borrower,
all Obligations shall be declared to be immediately due and payable (except with
respect to any Event of Default set forth in Section 6(a)(5) hereof, in which
case all Obligations shall automatically become immediately due and payable
without the necessity of any notice or other demand to Borrower), without
presentment, demand, protest or any other action or obligation of Lender.
(2) Termination of Obligation to Advance. Upon delivery of
written notice to Borrower, Lender shall no longer be obligated to make any
additional advances or loans hereunder.
(3) Right of Setoff. Lender shall have the right to appropriate
and apply to the payment of the Obligations all obligations then or thereafter
owing by Lender to such Loan Party.
(4) Deficiencies; Remedies Cumulative. The cash proceeds
resulting from Lender's exercise of any of the foregoing rights shall be applied
by Lender in accordance herewith. Borrower shall remain liable to Lender for any
deficiencies. The foregoing remedies are not intended to be exhaustive and the
full or partial exercise of any of them shall not preclude the full or partial
exercise of any other available remedy hereunder or any other Loan Document, at
equity or at law.
7. MISCELLANEOUS.
a. GOVERNING LAW. THIS NOTE AND THE OTHER LOAN DOCUMENTS, AND ANY
DISPUTE ARISING OUT OF OR IN CONNECTION THEREWITH, SHALL BE GOVERNED BY THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF MINNESOTA.
b. SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG ANY LOAN PARTY AND
LENDER SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN MINNESOTA,
AND THE COURTS TO WHICH AN APPEAL
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<PAGE>
THEREFROM MAY BE TAKEN. BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY LENDER.
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH LENDER HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
c. SERVICE OF PROCESS. BORROWER HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEM, INC., NO. 405, SECOND AVENUE SOUTH, MINNEAPOLIS, MN 55401,
AS THE DESIGNEE, APPOINTEE AND AGENT OF BORROWER TO RECEIVE, FOR AND ON BEHALF
OF BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO ANY LOAN DOCUMENTS. IT IS UNDERSTOOD THAT A
COPY OF SUCH PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY
FORWARDED BY MAIL TO BORROWER, BUT FAILURE OF BORROWER TO RECEIVE SUCH COPY
SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
d. WAIVER OF JURY TRIAL. ANY DISPUTES HEREUNDER OR UNDER ANY OF THE
OTHER LOAN DOCUMENTS SHALL BE RESOLVED IN A BENCH TRIAL. ANY RIGHT TO A JURY
TRIAL IS WAIVED.
e. LIMITATION OF LIABILITY. LENDER SHALL NOT HAVE ANY LIABILITY TO
BORROWER FOR LOSSES SUFFERED BY BORROWER IN CONNECTION WITH, ARISING OUT OF, OR
IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS
NOTE OR ANY OTHER LOAN DOCUMENT EXCLUDING THE MERGER CONTEMPLATED BY THE MERGER
AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER
BINDING ON LENDER THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
f. Delays. No delay or omission of Lender to exercise any right or
remedy hereunder shall impair any such right or operate as a waiver thereof.
g. Notices. Except as otherwise provided herein, all notices and
correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, or by telex or facsimile
transmission, or by overnight delivery service, with all charges prepaid, if to
Lender, then to Chief Executive Officer, 6740 Shady Oak Road, Eden Prairie, MN
55344-3433, and if to Borrower, then to Chief Executive Officer, Eleven Penn
Center, Suite 1100, 1835 Market Street, Philadelphia, PA 19103, or by facsimile
transmission, promptly confirmed in writing sent by first class mail, if to
Lender, at (612) 947-0141, and if to Borrower at (215) 988-4869. All such
notices and correspondence shall be deemed given (i) if sent by certified or
registered mail, three Business Days after being postmarked, (ii) if sent by
overnight delivery service, when received at the above stated addresses or when
delivery is
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refused, and (iii) if sent by telex or facsimile transmission, when
receipt of such transmission is acknowledged.
h. Indemnification; Reimbursement of Expenses. Borrower hereby
indemnifies and agrees to defend and hold harmless Lender and its directors,
officers, agents, employees and counsel from and against any and all losses,
claims, damages (other than consequential damages), liabilities, deficiencies,
judgments or expenses incurred by any of them (except to the extent that it is
finally judicially determined to have resulted from their own gross negligence
or willful misconduct) arising out of or by reason of (a) any litigations,
investigations, claims or proceedings which arise out of or are in any way
related to (i) this Note, any other Loan Document or the transactions
contemplated hereby or thereby, (ii) any actual or proposed use by Borrower of
the proceeds of the loans advanced hereunder, or (iii) Lender's entering into
this Note, the other Loan Documents or any other agreements and documents
relating hereto, including, without limitation, amounts paid in settlement,
court costs and the fees and disbursements of counsel incurred in connection
with any such litigation, investigation, claim or proceeding or any advice
rendered in connection with any of the foregoing and (b) any remedial or other
action taken by Borrower or Lender in connection with compliance by Borrower or
any other Loan Party, or any of their respective properties, with any federal,
state or local environmental laws, acts, rules, regulations, orders, directions,
ordinances, criteria or guidelines. In addition, Borrower shall, within five
Business Days after written notice is sent by Lender to Borrower, pay to Lender
all costs and expenses (including the reasonable fees and disbursements of
counsel and other professionals) paid or incurred by Lender in (i) negotiating,
preparing, executing and delivering any of the Loan Documents, including any
amendments, modifications or waivers hereto or thereto, (ii) enforcing or
defending its rights under or in respect of this Note, the other Loan Documents
or any other document or instrument now or hereafter executed and delivered in
connection herewith, (iii) collecting the loans or other Obligations hereunder,
and (iv) obtaining any legal, accounting or other advice in connection with any
of the foregoing.
i. Guaranties. To the extent legally permissible, the Obligations
shall be unconditionally guaranteed by each Subsidiary of Borrower designated
as a "Material Subsidiary" in Disclosure Schedule 4.1 to the Merger Agreement,
pursuant to a guaranty in form and substance satisfactory to Lender, in its
sole discretion; provided that upon the termination of the ASB Bank Facility
Agreement between ASB Bank Limited and Prestige Marketing Limited, a New
Zealand corporation and a subsidiary of Borrower ("Prestige") or any extension
thereof, and the satisfaction of Prestige's obligations thereunder, Prestige
shall guaranty the Obligations and execute a guaranty in form and substance
substantially identical to the guaranty executed as of the date hereof by
certain of Borrower's other Subsidiaries.
j. Waiver of Notice. Borrower and all other Loan Parties, and their
successors and assigns, hereby waive presentment, demand, protest and notice
thereof or of dishonor, and agree that they shall remain liable for all amounts
due hereunder notwithstanding any extension of time or change in the terms of
payment of this Note granted by Lender, any change, alteration or release of any
property now or hereafter securing the payment hereof or any delay or failure by
Lender to exercise any rights under this Note.
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k. Amendments and Waivers. No amendment or waiver of any provision of
this Note or any other Loan Document shall be effective, unless in writing and
signed by Borrower and Lender. In no event shall any of the provisions hereof,
and none of Lender's rights or remedies hereunder on account of any past or
future Events of Default, be deemed to have been waived by Lender's acceptance
of any past due installments or by any indulgence or waiver granted by Lender of
Borrower.
l. Severability; Termination of Merger Agreement. In case any
provision in or obligation under this Note or any other Loan Document shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations shall not in any
way be affected or impaired thereby. Termination of the Merger Agreement shall
not affect any of Borrower's obligations hereunder.
m. Maximum Rate. Notwithstanding anything to the contrary contained
elsewhere in this Note or in any other Loan Document, Borrower agrees that all
agreements among Borrower and Lender, this Note and the other Loan Documents,
whether now existing or hereafter arising and whether written or oral, are
expressly limited so that in no contingency or event whatsoever shall the amount
paid, or agreed to be paid, to Lender for the use, forbearance, or detention of
the money loaned to Borrower and evidenced hereby or thereby or for the
performance or payment of any covenant or obligation contained herein or
therein, exceed the Highest Lawful Rate (as defined below). If due to any
circumstance whatsoever, fulfillment of any provisions of this Note or any of
the other Loan Documents at the time performance of such provision shall be due
shall exceed the Highest Lawful Rate, then, automatically, the obligation to be
fulfilled shall be modified or reduced to the extent necessary to limit such
interest to the Highest Lawful Rate, and if from any such circumstance Lender
should ever receive anything of value deemed interest by applicable law which
would exceed the Highest Lawful Rate, such excessive interest shall be applied
to the reduction of the principal amount then outstanding hereunder or on
account of any other then outstanding obligations hereunder and not to the
payment of interest, or if such excessive interest exceeds the principal unpaid
balance then outstanding hereunder and such other then outstanding obligations,
such excess shall be refunded to Borrower. All sums paid or agreed to be paid
Lender for the use, forbearance, or detention of the obligations and other
Indebtedness of Borrower to Lender, to the extent permitted by applicable law,
shall be amortized, prorated, allocated and spread throughout the full term of
such Indebtedness, until payment in full thereof, so that the actual rate of
interest on account of all such Indebtedness does not exceed the Highest Lawful
Rate throughout the entire term of such Indebtedness. The terms and provisions
of this section shall control every other provision of this Note and all
agreements among Borrower and Lender. "Highest Lawful Rate" shall mean, at any
given time during which any obligations shall be outstanding hereunder, the
maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
obligations, under the laws of the State of Minnesota (or the law of any
other jurisdiction whose laws may be mandatorily applicable notwithstanding
other provisions of this Note and the other Loan Documents), or under
applicable federal laws which may presently or hereafter be in effect and
which allow a higher maximum nonusurious interest rate than under Minnesota
(or such other jurisdiction's) law, in any case after taking into account, to
the extent permitted by applicable
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<PAGE>
law, any and all relevant payments or charges under this Note and any other
Loan Documents executed in connection herewith, and any available exemptions,
exceptions and exclusions.
n. Set-Offs. Subject to Section 7(e), Borrower shall not have the
right to appropriate and apply to the payment of the Obligations any obligations
then or thereafter owing by Lender (or any affiliate thereof) to Borrower.
o. Entire Agreement; Successors and Assigns. This Note and the other
Loan Documents constitute the entire agreement among Borrower and Lender,
supersedes any prior agreements among them, and shall bind and benefit Borrower
and Lender, and their respective successors and assigns. Notwithstanding the
foregoing, (i) Borrower shall not assign this Note or any rights or obligations
hereunder, without the prior written consent of Lender, and (ii) Lender may
assign any or all of its rights or obligations hereunder to (a) any bank,
savings and loan association, insurance company or other financial institution;
or (b) any other Person, subject to the prior written consent of Borrower and
CoreStates Bank, N.A., a national banking association, which consent, in either
case, shall not be unreasonably withheld; provided, however, that if such
Person's principal business activity is in the infomercial industry in any
domestic or international market in which Borrower currently operates, any such
assignment shall be subject to the prior consent of Borrower, in its sole
discretion. Notwithstanding the foregoing sentence, if a proposed assignment is
for an aggregate consideration that is less than the then outstanding principal
amount (together with any interest thereon) under this Note, in the reasonable
determination of Lender, Borrower shall have a right of first refusal with
respect to such proposed assignment (on exactly the same terms and conditions as
proposed to such other Person) for a ten-day period commencing from the date
Lender gives notice to Borrower of such proposed assignment. If Borrower has not
accepted in writing such proposed assignment for itself and tendered the
requisite consideration prior to the expiration of such ten-day period, Lender
may make such proposed assignment to other Persons, subject to any rights
Borrower may have to consent to such assignment as set forth in the immediately
preceding sentence. "Person" shall mean any individual, corporation,
partnership, joint venture, firm, association, trust, unincorporated
organization, government or governmental agency or political subdivision or any
other entity, whether acting in an individual, fiduciary or other capacity.
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IN WITNESS WHEREOF, this Demand Promissory Note shall be deemed to be
executed and delivered in Minnesota by proper and duly authorized officers as of
the date set forth above.
NATIONAL MEDIA CORPORATION,
a Delaware corporation
By: /s/Robert N. Verratti
-------------------------
Name: Robert N. Verratti
Title: President and Chief
Executive Officer
S-1
<PAGE>
SCHEDULE A
FORM OF OPINIONS OF COUNSEL
1. The execution, delivery and performance of the Loan Documents have
been duly authorized by all necessary corporate action of each Loan Party(1)
that is party thereto, and the Loan Documents have been duly executed and
delivered by such Loan Party.
2. The execution, delivery and performance of the Loan Documents by each
Loan Party that is party thereto and the incurrence of the indebtedness under
the Loan Documents do not (i) conflict with or violate any federal or
Pennyslvania statute, rule or regulation applicable to National Media
Corporation, (ii) conflict with or violate any of the provisions of the
charter, bylaws or other corporate governance documents,(1) (iii) result in a
conflict with, breach of or default under any of the Debt Documents or
Material Agreements, or (iv) require any consents, approvals, authorizations,
registrations, declarations or filings by National Media Corporation under any
applicable federal or Pennsylvania statute, rule or regulation.
- - --------
1 The preceding portion of Opinion No. 1 and clause (ii) opinion No. 2 will
be made only with respect to all domestic Loan Parties.
<PAGE>
EXHIBIT 10.7
SUBSIDIARY GUARANTY
THIS SUBSIDIARY GUARANTY, dated as of January 5, 1998, is made and
entered into by Quantum North America, Inc., a Delaware corporation, Quantum
International Limited, a United Kingdom corporation, Quantum Far East Ltd., a
New Zealand corporation, Quantum Marketing International, Inc., a Delaware
corporation, Quantum International Japan Company Ltd., a Japan corporation,
DirectAmerica Corporation, a Delaware corporation, Positive Response Television
Inc., a Delaware corporation, Quantum Productions AG, a Switzerland
corporation, Suzanne Paul (Australia) Pty Limited, an Australia corporation,
and National Media Holdings, Inc., a Delaware corporation (each a "Guarantor"
and collectively "Guarantors"), for the benefit of ValueVision International,
Inc., a Minnesota corporation ("Lender").
RECITALS
A. National Media Corporation, a Delaware corporation ("Borrower"), has
executed for the benefit of Lender, a Note dated as of even date herewith (as
the same may hereafter be amended, restated, or otherwise modified from time to
time, the "Note"), pursuant to which Lender has agreed, subject to the
conditions therein, to make loans to Borrower in the original principal amount
of Ten Million Dollars ($10,000,000) (the "Loan").
B. It is a condition precedent to the obligation of Lender to advance
funds pursuant to the terms of the Note that this Guaranty be executed and
delivered by Guarantors.
C. Each Guarantor is a direct or indirect wholly owned subsidiary of
Borrower.
D. Borrower agrees to apply the proceeds of the advances under the Note
for working capital and other general corporate purposes, to the extent
permitted by the Agreement and Plan of Reorganization and Merger dated as of
the date hereof between Borrower and Lender (the "Merger Agreement"); provided,
however, that such proceeds shall not be applied to the costs and expenses of
the consummation of the transactions contemplated by the Merger Agreement.
E. Guarantors expect to derive benefits from the loan to Borrower and
find it advantageous, desirable and in the best interests of Guarantors to
comply with the requirement that the Guarantors enter into and be bound by this
Guaranty.
NOW, THEREFORE, in exchange for good, adequate and valuable
consideration, the receipt of which Guarantors acknowledge, Guarantors agree as
follows:
Section 1. Defined Terms.
1(a) As used in this Guaranty, the following terms shall have the
meanings indicated:
<PAGE>
"Co-Guarantor" means, as to each Guarantor, any person (other than
Borrower and such Guarantor) who guaranties the Loan, whether by executing this
Guaranty or by executing any other guaranty of the Loan, or by otherwise
assuming personal liability for the Guaranteed Obligations (as defined below)
or any part thereof.
"Guaranteed Obligations" shall mean (a) any and all liabilities and
obligations (including the Obligations) of Borrower to Lender of every kind,
nature and description, whether direct or indirect, arising under any of the
Loan Documents, and (b) all liabilities of Guarantors under this Guaranty, and
in all of the foregoing cases whether due or to become due, and whether now
existing or hereafter arising or incurred.
"Person" shall mean any individual, corporation, partnership, joint
venture, firm, association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity, whether
acting in an individual, fiduciary or other capacity.
1(b) Undefined Terms Herein. All capitalized terms used in this
Guaranty that are not specifically defined herein shall have the meaning
ascribed to them in the Note.
1(c) Singular/Plural, Etc. Unless the context of this Guaranty
otherwise clearly requires, references to the plural include the singular and
the plural (for example, references to "Guarantors" include each and every
Guarantor, jointly and severally) and "or" has the inclusive meaning
represented by the phrase "and/or." The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The words "hereof," "herein," "hereunder," and similar terms in this Guaranty
refer to this Guaranty as a whole and not to any particular provision of this
Guaranty. References to Sections are references to Sections in this Guaranty
unless otherwise provided.
Section 2. Guaranty of Payment and Performance. Guarantors, jointly
and severally, hereby absolutely and unconditionally guarantee to Lender the
payment when due (whether at a stated maturity or earlier by reason of
acceleration or otherwise) in full in cash and performance of the Guaranteed
Obligations. This Guaranty is an absolute, unconditional, complete and
continuing guaranty of payment and performance of the Guaranteed Obligations
(and not a guaranty of collection or collectibility), and none of the
obligations of Guarantors hereunder shall be released, in whole or in part, by
any action or thing which might, but for this provision, be deemed a legal or
equitable discharge of a surety or guarantor, other than irrevocable payment
and performance in full of the Guaranteed Obligations or as otherwise provided
by the Note, it being the purpose and intent of this Guaranty that the
Guaranteed Obligations constitute the direct and primary obligations of
Guarantors hereunder be absolute, unconditional and irrevocable. No notice of
the Guaranteed Obligations to which this Guaranty may apply or of any renewal
or extension thereof need be given to any of Guarantors. Nothing herein shall
preclude a proper party in interest from seeking and obtaining specific
performance against any of Guarantors for any failure to comply with any term,
condition, covenant or Guaranty herein. This section shall not be construed to
release or impair the indebtedness or any obligations of Borrower to Lender.
2
<PAGE>
Section 3. Changes in Loan Documents. Without notice to, or consent
by, any of Guarantors, and in Lender's sole and absolute discretion and without
prejudice to Lender or in any way limiting or reducing any of Guarantors'
liability under this Guaranty, Lender may: (a) grant extensions of time,
renewals or other indulgences or modifications to Borrower, any Co-Guarantor or
any other party under any of the Loan Documents, (b) change the rate of
interest under the Note, (c) change, amend or modify any Loan Documents, (d)
discharge or release any party or parties liable under the Loan Documents or
any collateral that secures any of the Guaranteed Obligations, (e) accept or
make compositions or other arrangements or file or refrain from filing a claim
in any Insolvency Event, (f) make other or additional loans to Borrower in such
amounts and at such times as Lender may determine in its sole discretion, (g)
credit payments in such manner and order of priority to principal, interest or
other obligations as Lender may determine in its discretion, and (h) otherwise
deal with Borrower and any Co-Guarantor and any other party related to the Loan
as Lender may determine in its sole and absolute discretion. Without limiting
the generality of the foregoing, Guarantors' liability under this Guaranty
shall continue even if Lender alters any obligations under the Loan Documents
in any respect or Lender's or Guarantors' remedies or rights against Borrower
are in any way impaired or suspended without Guarantors' consent. If Lender
performs any of the actions described in this paragraph, then each of
Guarantors' liability shall continue in full force and effect even if Lender's
actions impair, diminish or eliminate Guarantors' subrogation, contribution or
reimbursement rights (if any) against Borrower or any Co-Guarantor, or
otherwise adversely affect any of Guarantors or expand any of Guarantors'
liability hereunder.
Section 4. Nature of Guaranty. Guarantors' liability under this
Guaranty is a guaranty of payment of the Note and the Loan, and is not a
Guaranty of collection or collectibility. Guarantors' liability under this
Guaranty is not conditioned or contingent upon the genuineness, validity,
regularity or enforceability of any of the Loan Documents. Guarantors'
liability under this Guaranty is a continuing, absolute, and unconditional
obligation under any and all circumstances whatsoever (except as expressly
stated, if at all, in this Guaranty), without regard to the validity,
regularity or enforceability of any of the Guaranteed Obligations. Guarantors
acknowledge that they are fully obligated under this Guaranty even if Borrower
had no liability at the time of execution of the Loan Documents or later ceases
to be liable under any Loan Document, whether pursuant to Insolvency Events or
otherwise. Guarantors shall not be entitled to claim, and irrevocably covenant
not to raise or assert, any defenses against the Guaranteed Obligations that
would or might be available to Borrower, other than actual payment and
performance of all Obligations in full in accordance with their terms.
Guarantors waive any right to compel Lender to proceed first against Borrower
before proceeding against any of Guarantors. Guarantors agree that if any of
the Obligations are or become void or unenforceable (because of inadequate
consideration, lack of capacity, Insolvency Events, or for any other reason),
then each of Guarantors' liability under this Guaranty shall continue in full
force with respect to all Obligations as if they were and continued to be
legally enforceable. Guarantors also recognize and acknowledge that their
respective liability under this Guaranty may be more extensive in amount and
more burdensome than that of Borrower. Guarantors waive any defenses to this
Guaranty arising or purportedly arising from the manner in which Lender
disburses the Loan to Borrower or otherwise, or any waiver of the terms of any
Loan Document by Lender or other failure of Lender to require full compliance
with the Loan Documents.
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Guarantors' liability under this Guaranty shall continue until all sums due
under the Loan Documents have been paid in full and all other performance
required under the Loan Documents shall have been rendered in full, except as
expressly provided otherwise in this Guaranty.
Section 5. Full Knowledge. Guarantors acknowledge, represent and
warrant that each of Guarantors have had a full and adequate opportunity to
review the Loan Documents, the transaction contemplated by the Loan Documents
and all underlying facts relating to such transaction. Guarantors represent
and warrant that Guarantors fully understand: (a) the remedies Lender may
pursue against Borrower in the event of a default under the Loan Documents, and
(b) Borrower's financial condition and ability to perform under the Loan
Documents. Guarantors agree to keep themselves fully informed regarding all
aspects of Borrower's financial condition and the performance of Borrower's
obligations to Lender. Guarantors agree that Lender has no duty, whether now
or in the future, to disclose to any of Guarantors any information pertaining
to Borrower.
Section 6. Claims in Insolvency Event. No Guarantor shall file any
claim in any Insolvency Event affecting Borrower unless such Guarantor
simultaneously assigns and transfers such claim to Lender, without additional
consideration at the time of such assignment, pursuant to documentation
satisfactory to Lender. Guarantors shall automatically be deemed to have
assigned and transferred such claim to Lender whether or not Guarantors execute
documentation to such effect, and by executing this Guaranty hereby authorizes
Lender to execute and file such assignment and transfer documentation on
Guarantors' behalf. Lender shall have the sole right to vote, receive
distributions, and exercise all other rights with respect to any such claim,
provided, however, that if and when the Obligations have been paid in full
Lender shall release to Guarantors any further payments received on account of
any such claim.
Section 7. Lender Appointed Attorney-in-Fact. If Guarantors at any
time fail to perform or observe any of the agreements set forth in this
Guaranty or otherwise in connection with Section 6 above, each of Guarantors
hereby appoint Lender Guarantors' attorney-in-fact, coupled with an interest,
and hence irrevocable, with full authority in the place and stead of such
Guarantors and in the name of such Guarantors or otherwise, from time to time
in Lender's good-faith discretion, to take any action and to execute any
instrument that Lender may reasonably believe necessary or advisable to cure or
correct such failure or to perform, or cause performance of, any such Guaranty,
in a manner consistent with the terms hereof. In such case the reasonable
expenses of Lender incurred in connection therewith shall be payable by each of
Guarantors, jointly and severally, as a Guaranteed Obligation hereunder.
Section 8. Costs and Expenses; Indemnity. Guarantors, jointly and
severally, shall pay or reimburse Lender within five days following demand for
all out-of-pocket expenses (including in each case all filing and recording
fees and taxes and all reasonable fees and expenses of counsel and of any
experts and agents) incurred by Lender in connection with the preparation,
administration, continuance, amendment or enforcement of this Guaranty. Each
of Guarantors, jointly and severally, shall indemnify and hold Lender harmless
from and against any and all claims, losses and liabilities (including
reasonable attorneys' fees) growing out of or resulting from this Guaranty
(including enforcement of this Guaranty) or Lender's actions
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<PAGE>
pursuant hereto, except claims, losses or liabilities resulting from Lender's
gross negligence or willful misconduct as determined by a final nonappealable
judicial order. Any liability of any of Guarantors to indemnify and hold
Lender harmless pursuant to the preceding sentence shall be part of the
Guaranteed Obligations. The obligations of Guarantors under this Section shall
survive any termination of this Guaranty.
Section 9. Waivers and Amendments; Remedies. This Guaranty can be
waived, modified, amended, terminated or discharged only explicitly in a
writing signed by Lender. A waiver so signed shall be effective only in the
specific instance and for the specific purpose given. Mere delay or failure to
act shall not preclude the exercise or enforcement of any rights and remedies
available to Lender. All rights and remedies of Lender shall be cumulative and
may be exercised singly in any order or sequence, or concurrently, at Lender's
option, and the exercise or enforcement of any such right or remedy shall
neither be a condition to nor bar the exercise or enforcement of any other.
Section 10. Other Waiver of Defenses. Guarantors waive the benefit of
any and all defenses and discharges available to a guarantor, surety, endorser
or accommodation party, dependent on its character as such. Without limiting
the generality of the foregoing, each of Guarantors (in such capacity) waives
presentment, demand for payment, and notice of nonpayment or protest of the
Note or any other instrument evidencing any of the Guaranteed Obligations.
Lender shall not be required, before exercising its rights under this Guaranty,
to first resort for payment of any of the Guaranteed Obligations to Borrower or
any other Persons, its or their properties or estates, or any collateral,
property, liens, charges, encumbrances or other rights or remedies whatsoever.
Until the date that is 1 year and 1 day following the date on which all of the
Guaranteed Obligations have been paid in full, Guarantors hereby waive any
right of contribution, recourse, subrogation or reimbursement available to any
of Guarantors against Borrower or any other Person or property. Guarantors
hereby waive any rights Guarantors may have at equity or in law to require
Lender to apply any rights of marshaling or other equitable doctrines in the
circumstances. Each of Guarantors expects to derive benefits from the
transactions resulting in the creation of the Guaranteed Obligations. Lender
may rely conclusively on the continuing warranty, hereby made, that each of
Guarantors continues to be benefited by Lender's extension of credit
accommodations to Borrower and Lender shall have no duty to inquire into or
confirm the receipt of any such benefits, and this Guaranty shall be effective
and enforceable by Lender without regard to the receipt, nature or value of any
such benefits.
Section 11. Representations and Warranties. Guarantors hereby
represent and warrant to Lender that:
11(a) Each Guarantor is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation
and has all requisite corporate power to own, lease and operate its properties
and to carry on its business as now being conducted and as proposed to be
conducted and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which the failure to be so
qualified would
5
<PAGE>
have a material adverse effect on the business, properties, financial condition
or results of operations of the Guarantors, taken as a whole.
11(b) Each Guarantor has all requisite corporate power and authority
to enter into and perform its obligations under this Guaranty. The execution,
delivery and performance of this Guaranty have been duly authorized by all
necessary corporate action by such Guarantor.
11(c) This Guaranty has been duly executed and delivered by each
Guarantor and constitutes the valid and binding obligation of each Guarantor,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equitable principles.
11(d) The execution, delivery and performance of this Guaranty will
not (i) conflict with, or result in any violation or breach of, any provision
of the certificate of incorporation, articles of incorporation, bylaws or other
corporate governance documents of any of Guarantors, (ii) result in any
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation, or
acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms conditions or provisions of
any note, bond, mortgage, indenture (collectively, the "Debt Documents"),
lease, contract or other agreement, instrument or obligation to which such Loan
Party is a party or by which any of its properties or assets may be bound,, or
(iii) conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to any of the Guarantors or any of their respective properties or assets,
except in the case of (ii) (other than Debt Documents), and (iii) any such
conflicts, violations, defaults, terminations or cancellations which are not,
individually or in the aggregate, reasonably likely to have a material adverse
effect on the business, properties, financial condition or results of
operations on the Borrower and the Guarantors, taken as a whole, or prevent or
materially delay or impair any Guarantor's ability to perform its obligations
hereunder or Lender's ability to enforce its rights hereunder (a "Material
Adverse Effect").
11(e) No consent, approval, order or authorization of, or
registration, declaration or filing with, or exemption by, any court,
administrative agency or commission or other governmental authority or
instrumentality is required by or with respect to any of Guarantors to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
this Guaranty, except such consents, approvals, orders authorizations,
registrations, declarations and filings as have already been made or which, if
not obtained or made, would not be reasonably likely to have a Material Adverse
Effect.
11(f) Except as described in forms, reports and documents filed or
required to be filed by Borrower with the Securities and Exchange Commission
since January 1, 1995, or in Disclosure Schedule 4.11 to the Merger Agreement,
there are no actions, suits or proceedings pending or, to the knowledge of
Guarantors, threatened against or affecting any of Guarantors or
6
<PAGE>
any of its properties before any court or arbitrator, or any governmental
department, board, agency or other instrumentality which, if determined
adversely to any of Guarantors, would have a Material Adverse Effect.
Section 12. Reinstatement. Guarantors agree that this Guaranty shall
continue to be effective or be reinstated, as the case may be, if at any time
payment or performance of any of the Obligations, or any part thereof, is
avoided, rescinded or waived and must otherwise be restored, disgorged,
reimbursed or repaid by Lender upon the bankruptcy, insolvency or
reorganization of Borrower or otherwise and shall continue in full force and
effect as long as there exists a possibility that any payment or performance of
any of the Obligations may be avoided, rescinded or waived and so restored,
disgorged, reimbursed or repaid.
Section 13. Covenants. From the date hereof and so long as any Note
remains outstanding, Guarantors agree to comply with all provisions in the Note
applicable to any of Guarantors.
Section 14. Guarantors Acknowledgments. Guarantors hereby acknowledge
that (a) Guarantors have been advised by counsel in the negotiation, execution
and delivery of this Guaranty, (b) Lender has no fiduciary relationship to any
Guarantor, the relationship being solely that of debtor and creditor, and (c)
no joint venture exists between any Guarantor and Lender.
Section 15. Assignability. Lender may assign this Guaranty together
with any one or more of the Loan Documents, without in any way affecting any
Guarantor's or Borrower's liability. Upon request in connection with any such
assignment, Guarantors shall deliver a Confirmation Certificate to the
transferee in a form reasonably satisfactory to such transferee. Lender may
from time to time designate any Affiliate as a successor or assignee of any or
all of Lender's rights and remedies under this Guaranty. Lender may assign any
or all of its rights or obligations hereunder on the same terms and conditions
that Lender may assign the Note, as set forth in Section 7(o) of the Note.
SECTION 16. GOVERNING LAW AND CONSTRUCTION. THIS GUARANTY, AND ANY
DISPUTE ARISING OUT OF OR IN CONNECTION THEREWITH, SHALL BE GOVERNED BY THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF MINNESOTA. Whenever possible, each provision of this Guaranty and
any other statement, instrument or transaction contemplated hereby or relating
hereto shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this Guaranty or any other
statement, instrument or transaction contemplated hereby or relating hereto
shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Guaranty or any other statement, instrument or
transaction contemplated hereby or relating hereto.
SECTION 17. SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN ANY
GUARANTOR AND LENDER SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED
IN MINNESOTA, AND THE COURTS
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<PAGE>
TO WHICH AN APPEAL THEREFROM MAY BE TAKEN. EACH OF GUARANTORS AGREES THAT IT
WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS, OR CROSS-CLAIMS IN ANY
PROCEEDING BROUGHT BY LENDER. EACH OF GUARANTORS WAIVE ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT IN WHICH LENDER HAS COMMENCED A
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON FORUM NON CONVENIENS.
SECTION 18. WAIVER OF JURY TRIAL. ANY DISPUTES HEREUNDER OR UNDER ANY
OF THE OTHER LOAN DOCUMENTS SHALL BE RESOLVED IN A BENCH TRIAL. ANY RIGHT TO A
JURY TRIAL IS WAIVED.
Section 19. Notices. Except as otherwise provided for herein, all
notices and correspondences hereunder shall be in writing and sent by certified
or registered mail, return receipt requested, or by telex or facsimile
transmission or by overnight delivery service, with all charges prepaid, if to
Lender then to Chief Executive Officer, ValueVision International, Inc., 6740
Shady Oak Road, Eden Prairie, MN 55344-3433, and if to Guarantors, then to
Chief Executive Officer, National Media Corporation, Eleven Penn Center, Suite
1100, 1835 Market Street, Philadelphia, PA 19103 or by facsimile transmission,
promptly confirmed in writing sent by first class mail, if to Lender, at (612)
947-0141, and if to Guarantors, at (215) 988-4900. All such notices and
correspondence shall be deemed given (i) if sent by certified or registered
mail, three Business Days after being postmarked, (ii) if sent by overnight
delivery service, when received at the above stated addresses or when delivery
is refused, and (iii) if sent by telex or facsimile transmission, when receipt
of such transmission is acknowledged.
Section 20. Joint and Several Liability. Each of Guarantors shall be
jointly and severally liable for the Guaranteed Obligations.
Section 21. Severability. The provisions of this Guaranty are
severable, and if any clause or provision shall be held invalid or
unenforceable (including, without limitation, as a result of a finding of
fraudulent transfer or conveyance) in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such jurisdiction and shall not in any manner
affect such clause or provision in any other jurisdiction, or any other clause
or provision of this Guaranty in any jurisdiction. The amount of the
Guaranteed Obligations of an applicable Guarantor shall be reduced to the
extent a court of competent jurisdiction has determined that the amount of the
Guaranteed Obligations for such Guarantor would otherwise make this Guaranty
unenforceable; provided, however, that the amount of the Guaranteed Obligations
for such Guarantor shall subsequently increase to the extent permitted by law.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, each of Guarantors have caused this Subsidiary
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
Quantum North America, Inc., Quantum International Limited,
a Delaware corporation a United Kingdom corporation
By: /s/ Brian J. Sisko By: /s/ Jack Sullivan
------------------------------------- ----------------------------------
Title: Senior Vice President Title: Director
---------------------------------- -------------------------------
Quantum Far East Ltd., Quantum Marketing International, Inc.,
a New Zealand corporation a Delaware corporation
By: /s/ Brian J. Sisko By: /s/ Brian J. Sisko
------------------------------------- ----------------------------------
Title: Senior Vice President Title: Senior Vice President
---------------------------------- -------------------------------
Quantum International Japan Company DirectAmerica Corporation,
Ltd., a Japan corporation a Delaware corporation
By: /s/ Brian J. Sisko By: /s/ Brian J. Sisko
------------------------------------- ----------------------------------
Title: Senior Vice President Title: Senior Vice President
---------------------------------- -------------------------------
S-1
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Positive Response Television, Inc., Quantum Productions AG,
a Delaware corporation a Switzerland corporation
By: /s/ Brian J. Sisko By: /s/ Brian J. Sisko
------------------------------------- ----------------------------------
Title: Senior Vice President Title: Senior Vice President
---------------------------------- -------------------------------
National Media Holdings, Inc. Suzanne Paul (Australia) Pty Limited,
a Delaware corporation an Australia corporation
By: /s/ Brian J. Sisko By: /s/ Brian J. Sisko
------------------------------------- ----------------------------------
Title: Senior Vice President Title: Senior Vice President
---------------------------------- -------------------------------
SIGNATURE PAGE TO GUARANTY
S-2
<PAGE>
EXHIBIT 10.8
================================================================================
WARRANT AGREEMENT
BY AND BETWEEN
NATIONAL MEDIA CORPORATION
AND
VALUEVISION INTERNATIONAL, INC.
DATED AS OF JANUARY 5, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 1. Warrant Certificates.................................................. 1
SECTION 2. Execution of Warrant Certificates..................................... 1
SECTION 3. Warrant Register...................................................... 1
SECTION 4. Registration of Transfers and Exchanges............................... 1
SECTION 5. Warrants; Exercise of Warrants........................................ 2
SECTION 6. Payment of Taxes...................................................... 4
SECTION 7. Mutilated or Missing Warrant Certificates............................. 4
SECTION 8. Reservation of Warrant Shares; Rights................................. 4
SECTION 9. Obtaining Stock Exchange Listings ................................... 5
SECTION 10. Adjustment of Exercise Price and Number of Warrant Shares Issuable.... 5
(a) Adjustment for Change in Capital Stock................................ 5
(b) Adjustment for Rights Issue........................................... 6
(c) Adjustment for Other Distributions.................................... 7
(d) Adjustment for Below Market Issuances of Common Stock................. 8
(e) Adjustment for Below Market Issuances of Convertible or
Exchangeable Securities............................................... 9
(g) Consideration Received................................................ 11
(h) When De Minimis Adjustment May Be Deferred............................ 12
(i) When No Adjustment Required........................................... 12
(j) Notice of Adjustment.................................................. 12
(k) Voluntary Reduction................................................... 12
(l) Notice of Certain Transactions........................................ 13
(m) Reorganization of Company............................................. 13
(n) [Intentionally Omitted]............................................... 14
(o) When Issuance or Payment May Be Deferred.............................. 14
(p) Adjustment in Number of Shares........................................ 14
(q) Form of Warrants...................................................... 15
SECTION 11. Fractional Interests.................................................. 15
SECTION 12. Notices to Warrant holders............................................ 15
SECTION 13. Notices to Company and ValueVision.................................... 16
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
SECTION 14. Supplements and Amendments............................................ 17
SECTION 15. Successors............................................................ 17
SECTION 16. Governing Law......................................................... 17
SECTION 17. Benefits of This Agreement............................................ 17
SECTION 18. Counterparts.......................................................... 17
EXHIBIT A.......................................................................... 19
</TABLE>
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THIS WARRANT AGREEMENT (the "Agreement") is dated as of January 5, 1998
and entered into by and between NATIONAL MEDIA CORPORATION, a Delaware
corporation (the "Company"), and ValueVision International, Inc., a Minnesota
corporation ("ValueVision").
WHEREAS, the Company proposes to issue to ValueVision, or its designee,
Common Stock Warrants, as hereinafter described (the "Warrants"), to purchase up
to an aggregate of 250,000 shares of Common Stock, $.01 par value per share, of
the Company (the "Common Stock") (the Common Stock issuable on exercise of the
Warrants being referred to herein as the "Warrant Shares").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The certificates evidencing the
Warrants (the "Warrant Certificates") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the form set
forth in Exhibit A attached hereto.
SECTION 2. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board or its
President or a Vice President and by its Secretary or an Assistant Secretary
under its corporate seal. Each such signature upon the Warrant Certificates may
be in the form of a facsimile signature of the present or any future Chairman of
the Board, President, Vice President, Secretary or Assistant Secretary and may
be imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, President, Vice President, Secretary or
Assistant Secretary, notwithstanding the fact that at the time the Warrant
Certificates shall be delivered or disposed of he shall have ceased to hold such
office. The seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been disposed of by the Company, such Warrant
Certificates nevertheless may be delivered or disposed of as though such person
had not ceased to be such officer of the Company; and any Warrant Certificate
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificate, shall be a proper officer of the
Company to sign such Warrant Certificate, although at the date of the execution
of this Warrant Agreement any such person was not such officer.
SECTION 3. Warrant Register. The Company shall number and
register the Warrant Certificates in a register as they are issued.
SECTION 4. Registration of Transfers and Exchanges. The Company
shall from time to time register the transfer of any outstanding Warrant
Certificates in a Warrant register to be maintained by the Company upon
surrender of such Warrant Certificates accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, duly
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executed by the registered holder or holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled and
disposed of by the Company.
The Warrant holders agree that each certificate representing Warrant
Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS."
Warrant Certificates may be exchanged at the option of the holder(s)
thereof, when surrendered to the Company at its office for another Warrant
Certificate or other Warrant Certificates of like tenor and representing in the
aggregate a like number of Warrants (in denominations representing a multiple of
25,000 shares). Warrant Certificates surrendered for exchange shall be
cancelled and disposed of by the Company.
If, at the time of the surrender of any of the Warrants in connection
with any exercise, transfer, or exchange of any of the Warrants, the
Company may require, as a condition of allowing such exercise, transfer or
exchange that the holder or transferee of the Warrants, as the case may be,
furnish to the Company a written opinion of counsel (which opinion shall be in
form, substance and scope customary for opinions of counsel in comparable
transactions) to the effect that such exercise, transfer, or exchange may be
made without registration under the Securities Act of 1933, as amended (the
"Securities Act").
SECTION 5. Warrants; Exercise of Warrants. (a) Subject to the
terms of this Agreement, at any time after the earlier to occur of (1) the 75th
day after termination of the Agreement and Plan of Reorganization and Merger
dated as of the date hereof by and among ValueVision, the Company and V-L
Holdings Corp. (the "Merger Agreement") and (2) a default under the $10.0
million Demand Promissory Note between ValueVision and the Company dated as of
the date hereof (the "Demand Note"), each holder of the Warrants shall have the
right, which may be exercised commencing at the opening of business on the
foregoing date and until the earlier of (i) 5:00 p.m., New York City time, on
January 5, 2003 and (ii) the occurrence of a Termination Event (as defined
below) (the "Exercise Period"), to receive from the Company the number of fully
paid and nonassessable Warrant Shares which the holder may at the time be
entitled to receive on exercise of such Warrants and payment to the Company of
the Exercise Price (as defined below) then in effect for such Warrant Shares.
Each Warrant not exercised prior to the earlier of (i) 5:00 p.m., New York City
time, on January 5, 2003 and (ii) the occurrence of a Termination Event, shall
become null and void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time.
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<PAGE>
For purposes of this Agreement, "Termination Event" shall mean (i) the
consummation of the transactions contemplated by the Merger Agreement or (ii)
the termination by the Company of the Merger Agreement, if such termination
results from a breach of any covenant thereunder by ValueVision or in the event
the shareholders of ValueVision do not approve the terms of the proposed merger
as contemplated under the Merger Agreement; provided, however, that if (x)
within seventy-five days after the occurrence of the Termination Event, the
Company has not paid in full in cash all of its obligations (including any
interest thereon) under the Demand Note or (y) a default by the Company occurs
under the Demand Note during such seventy-five day period, no Termination Event
shall be deemed to have occurred.
(b) A Warrant may be exercised by surrender to the Company at its office
designated for such purpose (the address of which is set forth in Section 13
hereof) of the certificate or certificates evidencing the Warrants to be
exercised with the form of election to purchase on the reverse thereof duly
filled in and signed, which signature shall be guaranteed by a bank or trust
company having an office or correspondent in the United States or a broker or
dealer which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc., and upon payment to the Company of the
exercise price (the "Exercise Price") which is set forth in the form of Warrant
Certificate attached hereto as Exhibit A, subject to adjustment pursuant to
Section 10, for the number of Warrant Shares in respect of which such Warrants
are then exercised. Payment of the aggregate Exercise Price shall be made (i)
in cash or by certified or official bank check payable to the order of the
Company or (ii) in the manner provided in Section 5(a).
Subject to the provisions of Section 6 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash as provided in Section 11;
provided, however, that if any capital reorganization or reclassification of
capital stock or consolidation, merger or lease or sale of assets is proposed to
be effected by the Company as described in subsection (m) of Section 10 hereof,
or a tender offer or an exchange offer for shares of Common Stock of the Company
shall be made, upon such surrender of Warrants and payment of the Exercise Price
as aforesaid, the Company shall, as soon as possible, but in any event not later
than two business days thereafter, issue and cause to be delivered the full
number of Warrant Shares issuable upon the exercise of such Warrants in the
manner described in this sentence together with cash as provided in Section 11.
Such certificate or certificates shall be deemed to have been issued and any
person so designated to be named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part and, in the event that a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued and delivered pursuant to the provisions of this
Section and of Section 2 hereof.
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<PAGE>
All Warrant Certificates surrendered upon exercise of Warrants shall be
cancelled and disposed of by the Company. The Company shall keep copies of this
Agreement and any notices given or received hereunder available for inspection
by the Warrant holders during normal business hours at its office.
SECTION 6. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer
involving the issue of any Warrant Certificates or any certificates for Warrant
Shares in a name other than that of the registered holder of a Warrant
Certificate surrendered upon the exercise of a Warrant, and the Company shall
not be required to issue or deliver such Warrant Certificates or certificates
for Warrant Shares unless and until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
SECTION 7. Mutilated or Missing Warrant Certificates. In case any
of the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue, in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent number of
Warrants, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also reasonably satisfactory to it. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Company may
prescribe.
SECTION 8. Reservation of Warrant Shares; Rights. The Company
will at all times reserve and keep available, free from preemptive rights, out
of the aggregate of its authorized but unissued Common Stock or its authorized
and issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company shall issue, together with each Warrant Share issued upon
exercise of a Warrant, one Right (as defined in the Merger Agreement) (or other
securities in lieu thereof), and any rights issued to holders of Common Stock in
addition thereto or in replacement therefor, whether or not such rights shall be
exercisable at such time, but only if such rights are issued and outstanding and
held by other holders of Common Stock at such time and have not expired.
The Company or, if appointed, the transfer agent for the Common Stock
(the "Transfer Agent") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
and with every subsequent transfer agent for any shares of the Company's capital
stock issuable upon the exercise of the rights of purchase represented by the
Warrants. The
4
<PAGE>
Company will furnish such Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder pursuant to Section
12 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 10 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares at the Exercise
Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
SECTION 9. Obtaining Stock Exchange Listings. The Company shall
from time to time take all action which may be necessary so that the Warrant
Shares, immediately upon their issuance upon the exercise of Warrants, will be
listed on the principal securities exchanges and markets within the United
States of America, if any, on which other shares of Common Stock are then
listed.
SECTION 10. Adjustment of Exercise Price and Number of Warrant
Shares Issuable. The Exercise Price and the number of Warrant Shares issuable
upon the exercise of each Warrant are subject to adjustment from time to time
upon the occurrence of the events enumerated in this Section 10. For purposes
of this Section 10, "Common Stock" means shares now or hereafter authorized of
any class of common stock of the Company and any other stock of the Company,
however designated, that has the right (subject to any prior rights of any class
or series of preferred stock) to participate in any distribution of the assets
or earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares; or
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
then the Exercise Price in effect immediately prior to such action shall be
proportionately adjusted in accordance with the formula:
Where:
5
<PAGE>
O
E' = E x -
A
E'= the adjusted Exercise Price
E = the current Exercise Price
O = the number of shares of Common Stock outstanding prior to such action
A = the number of shares of Common Stock outstanding immediately after
such action
In the case of a dividend or distribution the adjustment shall become
effective immediately after the record date for determination of holders of
shares of Common Stock entitled to receive such dividend or distribution, and in
the case of a subdivision or combination, the adjustment shall become effective
immediately after the effective date of such corporate action.
If after an adjustment a holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 10.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them at any time after the record date
mentioned below to purchase shares of Common Stock at a price per share less
than the Current Market Price (as defined in Section 10(f)) per share on that
record date, the Exercise Price shall be adjusted in accordance with the
formula:
N x P
O + -----
M
E' + E x ---------
O + N
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<PAGE>
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
N = the number of additional shares of Common Stock issuable upon exercise
of the rights, options or warrants offered.
P = the exercise price per share of the additional shares issuable upon
exercise of the rights, options or warrants.
M = the Current Market Price per share of Common Stock on the record date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, (i) not all rights, options or
warrants shall have been exercised, or (ii) the exercise price per share for
which shares of Common Stock are issuable pursuant to such rights, options or
warrants shall be increased or decreased solely by virtue of provisions therein
contained for an automatic increase or decrease in such exercise price per share
upon the occurrence of a specified date or event, then, the Exercise Price shall
be immediately readjusted to what it would have been if, in the case of clause
(i) above, "N" in the above formula had been the number of shares actually
issued or, in the case of clause (ii) above, "P" in the above formula had been
the exercise price per share, as so increased or decreased, as the case may be.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of
its assets (including but not limited to cash), debt securities, preferred
stock, or any rights or warrants to purchase debt securities, preferred stock,
assets or other securities of the Company, the Exercise Price shall be adjusted
in accordance with the formula:
M - F
E' = E x -----
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
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<PAGE>
M = the Current Market Price per share of Common Stock on the record date
mentioned below.
F = the Fair Market Value (as defined in Section 10(f)) on the record date
of the assets, securities, rights or warrants applicable to one share
of Common Stock.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection does not apply to rights, options or warrants referred
to in subsection (b) of this Section 10 or distributions of business units of
the Company covered by subsection (n) of this Section 10.
(d) Adjustment for Below Market Issuances of Common Stock.
If the Company issues shares of Common Stock for a consideration per
share less than the Current Market Price per share on the date the Company fixes
the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the formula:
P
O + -
M
E' = E x -----
A
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance of
such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the Current Market Price per share on the date of issuance of such
additional shares.
A = the number of shares outstanding immediately after the issuance of
such additional shares.
8
<PAGE>
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
This subsection (d) does not apply to:
(1) any of the transactions described in subsections (b) and (c) of
this Section 10,
(2) the exercise of the Warrants, or
(3) Common Stock issued upon the exercise of rights or warrants issued
to the holders of Common Stock for which rights or warrants an adjustment
has been made pursuant to Section 10(b) or Section 10(e),
No duplicative adjustment shall be made in the event of a right,
warrant or convertible or exchangeable security requiring an adjustment
hereunder and the subsequent exercise or conversion of such right, warrant or
convertible or exercisable security.
(e) Adjustment for Below Market Issuances of Convertible or Exchangeable
Securities.
If the Company issues any securities convertible into or exchangeable
for Common Stock (other than securities issued in transactions described in
subsections (b) and (c) of this Section 10) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the Current Market Price per share on the date of issuance
of such convertible or exchangeable securities, the Exercise Price shall be
adjusted in accordance with this formula:
P
O + -
M
E' = E x -----
O + D
where:
E' = the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the issuance of
such convertible or exchangeable securities.
P = the aggregate consideration received for the issuance of such
convertible or exchangeable securities.
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<PAGE>
M = the Current Market Price per share on the date of issuance of such
convertible or exchangeable securities.
D = the maximum number of shares deliverable upon conversion or in exchange
for such convertible or exchangeable securities at the initial
conversion or exchange rate.
The adjustment shall be made successively whenever any such issuance is
made, and shall become effective immediately after such issuance.
If (i) all of the Common Stock deliverable upon conversion or exchange
of such securities have not been issued when such securities are no longer
outstanding, or (ii) the exercise price per share for which shares of Common
Stock are issuable pursuant to such securities shall be increased or decreased
solely by virtue of provisions therein contained for an automatic increase or
decrease in such exercise price per share upon the occurrence of a specified
date or event, then the Exercise Price shall promptly be readjusted in
accordance with the formula in this Section 10(e) to the Exercise Price which
would then be in effect had the adjustment upon the issuance of such securities
been made on the basis of, in the case of clause (i) above, the actual number of
shares of Common Stock issued upon conversion or exchange of such securities or,
in the case of clause (ii) above, the exercise price per share, as so increased
or decreased, as the case may be.
(f) Certain Definitions.
(1) Current Market Price.
In subsections (b), (c), (d) and (e) of this Section 10, the
current market price per share of Common Stock on any date is:
(i) if the Common Stock is not registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), then the Fair
Market Value of the Common Stock based upon the Fair Market Value of
100% of Company if sold as a going concern and without regard to any
discount for the lack of liquidity or on the basis that the relevant
shares of the Common Stock do not constitute a majority or controlling
interest in Company and assuming, if applicable, the exercise or
conversion of all in-the-money warrants, convertible securities,
options or other rights to subscribe for or purchase any additional
shares of capital stock of Company or securities convertible or
exchangeable into such capital stock; or
(ii) if the Common Stock is registered under the Exchange Act, the
average of the Quoted Prices of the Common Stock for 20 consecutive
trading days immediately preceding the date in question. The "Quoted
Price" of the Common Stock is the last reported sales price of the
Common Stock on the New York Stock Exchange ("NYSE"), or if the Common
Stock is reported by Nasdaq National Market System, as reported by
Nasdaq National Market System, or if the Common Stock is listed on a
national securities exchange other than the
10
<PAGE>
NYSE, the last reported sales price of the Common Stock on such
exchange (which shall be for consolidated trading if applicable to such
exchange), or if neither so reported or listed, the last reported bid
price of the Common Stock.
(2) Fair Market Value. Fair Market Value means the value obtainable
upon a sale in an arm's length transaction to a third party under usual
and normal circumstances, with neither the buyer nor the seller under
any compulsion to act, with equity to both, as determined by the Board
of Directors of the Company (the "Board") in good faith; provided,
however, that if ValueVision shall dispute the Fair Market Value as
determined by the Board, ValueVision may undertake to have it and the
Company retain an Independent Expert. The determination of Fair Market
Value by the Independent Expert shall be final, binding and conclusive
on the Company and ValueVision. All costs and expenses of the
Independent Expert shall be borne by ValueVision unless the
determination of Fair Market Value by the Independent Expert is more
than 5% more favorable to Company than the Fair Market Value determined
by the Board, in which event the cost of the Independent Expert shall
be shared equally by ValueVision and Company, or more than 10% more
favorable to Company than the Fair Market Value determined by the
Board, in which event the cost of the Independent Expert shall be borne
solely by Company.
(3) Independent Expert. Independent Expert means an investment banking
firm reasonably agreeable to Company and ValueVision who does not (and
whose Affiliates do not) have a financial interest in Company or any of
its Affiliates.
(g) Consideration Received.
For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) of this Section 10, the following shall
apply:
(1) in the case of the issuance of shares of Common Stock for cash, the
consideration shall be the amount of such cash, provided that in no case
shall any deduction be made for any commissions, discounts or other expenses
incurred by the Company for any underwriting of the issue or otherwise in
connection therewith;
(2) in the case of the issuance of shares of Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the Fair Market Value thereof;
(3) in the case of the issuance of securities convertible into or
exchangeable for shares, the aggregate consideration received therefor shall
be deemed to be the consideration received by the Company for the issuance
of such securities at the date of such issuance plus the additional
consideration as of the date of such issuance, if any, to be received by the
Company upon the conversion or exchange thereof (the consideration in each
case to be determined in the same manner as provided in clauses (1) and (2)
of this subsection).
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<PAGE>
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the adjustment
would require an increase or decrease of at least 1% in the Exercise Price. Any
adjustments that are not made shall be carried forward and taken into account
in any subsequent adjustment.
All calculations under this Section shall be made to the nearest cent
or to the nearest 1/100th of a share, as the case may be.
(i) When No Adjustment Required.
No adjustment need be made for rights to purchase Common Stock
pursuant to a Company plan for reinvestment of dividends or interest.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
No adjustment will be made for shares issued upon the exercise of
the Warrants, upon the conversion of the Demand Note, upon conversion of the
Series C Convertible Preferred Stock outstanding on the date hereof (or the
Series D Convertible Preferred Stock issuable in exchange therefore) or upon the
exercise of the 750,000 options owned by Robert Verratti as of the date hereof.
To the extent the Warrants become convertible into cash, no adjustment
need be made thereafter as to the cash. Interest will not accrue on the cash.
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide the
notices required by Section 12 hereof.
(k) Voluntary Reduction.
The Company from time to time may reduce the Exercise Price by any
amount for any period of time if the period is at least 20 days and if the
reduction is irrevocable during the period; provided, however, that in no event
may the Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price does not change or adjust the
Exercise Price otherwise in effect for purposes of subsections (a), (b), (c),
(d) and (e) of this Section 10.
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<PAGE>
(l) Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an adjustment in
the Exercise Price pursuant to subsections (a), (b), (c), (d) or (e) of this
Section 10 and if the Company does not arrange for Warrant holders to
participate pursuant to subsection (i) of this Section 10;
(2) the Company takes any action that would require a supplemental
Warrant Agreement pursuant to subsection (m) of this Section 10; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the proposed record
date for a dividend or distribution or the proposed effective date of a
subdivision, combination, reclassification, consolidation, merger, transfer,
lease, liquidation or dissolution. The Company shall mail the notice at least
15 days before such date. Failure to mail the notice or any defect in it shall
not affect the validity of the transaction.
(m) Reorganization of Company.
If the Company effects a capital reorganization or recapitalization of
its capital stock or consolidates or merges with or into, or transfers or leases
all or substantially all its assets to, any person, then, as a condition
precedent to the consummation of such transaction, lawful and adequate
provisions shall be made whereby the Warrant holder shall thereafter have the
right to purchase and receive upon the basis and the terms and conditions
specified in this Agreement and in lieu of the shares of Common Stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities, cash or other
assets which the holder of a Warrant would have received immediately after the
reorganization, recapitalization, consolidation, merger, transfer or lease if
the holder had exercised such Warrant immediately before the effective date of
the transaction, and in any case appropriate provision shall be made with
respect to the rights and interests of the holders thereof to the end that the
provisions hereof (including without limitation provisions for adjustments of
the number of shares of Common Stock purchasable and receivable upon the
exercise of the Warrants) shall thereafter be applicable, as nearly as may be,
in relation to any shares of stock, securities, cash or assets thereafter
deliverable upon the exercise thereof. The Company shall not effect any such
consolidation, merger, transfer or lease, unless, prior to the consummation
thereof, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or
conveyance shall have been made, shall enter into and deliver to the holders of
Warrants at the last address thereof appearing on the books of the Company, a
supplemental Warrant Agreement so providing and further providing for
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section.
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<PAGE>
If the issuer of securities deliverable upon exercise of Warrants under
the supplemental Warrant Agreement is an affiliate of the formed, surviving,
transferee or lessee corporation, that issuer shall join in the supplemental
Warrant Agreement.
If this subsection (m) applies, subsections (a), (b), (c), (d) and (e)
of this Section 10 do not apply.
(n) [Intentionally Omitted]
(o) When Issuance or Payment May Be Deferred.
In any case in which this Section 10 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event (i)
issuing to the holder of any Warrant exercised after such record date the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 11; provided, however, that the Company shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(p) Adjustment in Number of Shares.
Upon each adjustment of the Exercise Price pursuant to this Section 10,
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to the
nearest hundredth) obtained from the following formula:
E
N' = N x -
E'
where:
N' = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number or Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price immediately prior to
adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price immediately prior to adjustment.
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<PAGE>
(q) Form of Warrants.
Irrespective of any adjustments in the Exercise Price or the number or
kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 11. Fractional Interests. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the same
holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section 11,
be issuable on the exercise of any Warrants (or specified portion thereof), the
Company shall pay an amount in cash equal to the Current Market Price (as
defined in Section 10(f)) on the day immediately preceding the date the Warrant
is presented for exercise, multiplied by such fraction.
SECTION 12. Notices to Warrant holders. Upon any adjustment of the
Exercise Price pursuant to Section 10, the Company shall promptly thereafter (i)
cause to be filed with the Secretary of the Company a certificate of the Chief
Operating Officer and Chief Financial Officer of the Company setting forth the
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based and
setting forth the number of Warrant Shares (or portion thereof) issuable after
such adjustment in the Exercise Price, upon exercise of a Warrant and payment of
the adjusted Exercise Price, which certificate shall, absent manifest error, be
conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register written notice of
such adjustments and a copy of such certificate by first-class mail, postage
prepaid. Where appropriate, such notice may be given in advance and included as
a part of the notice required to be mailed under the other provisions of this
Section 12.
In case:
(a) the Company shall authorize the issuance to all holders of shares
of Common Stock of rights, options or warrants to subscribe for or purchase
shares of Common Stock or of any other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other
than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 10 hereof); or
(c) of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the
15
<PAGE>
Warrants (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer for shares of Common
Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
(e) the Company proposes to take any action (other than actions of the
character described in Section 10(a)) which would require an adjustment of
the Exercise Price pursuant to Section 10; or
(f) the Company proposes to participate in any transaction described in
either Section 10(m) or Section 10(n);
then the Company shall cause to be given to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant register, at
least 10 business days prior to the applicable record date hereinafter
specified, or promptly in the case of events for which there is no record date,
by first-class mail, postage prepaid, a written notice stating (i) the date as
of which the holders of record of shares of Common Stock to be entitled to
receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer
or exchange offer for shares of Common Stock, or (iii) the date on which any
such consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the
notice required by this Section 12 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 13. Notices to Company and ValueVision. Any notice or
demand authorized by this Agreement to be given or made by the registered holder
of any Warrant Certificate to or on the Company shall be sufficiently given or
made when and if deposited in the mail, first class or registered, postage
prepaid, addressed to the office of the Company expressly designated by the
Company at its office for purposes of this Agreement (until the Warrant holders
are otherwise notified in accordance with this Section by the Company), as
follows:
if to the Company, initially at Eleven Penn Center, Suite 1100, 1835
Market Street, Philadelphia, Pennsylvania 19103, Attention: General Counsel
and thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 13, with a copy to Klehr, Harrison,
Harvey, Branzburg & Ellers LLP, 1401
16
<PAGE>
Walnut Street, Philadelphia, Pennsylvania 19102, Attention: Stephen T.
Burdumy, Esq.
Any notice pursuant to this Agreement to be given by the Company to the
registered holder(s) of any Warrant Certificate shall be sufficiently given
when and if deposited in the mail, first-class or registered, postage
prepaid, addressed (until the Company is otherwise notified in accordance
with this Section by such holder) to such holder at the following address:
if to a registered holder of any Warrant Certificate, at the most
current address given by such holder to the Company in accordance with the
provisions of this Section 13, which address initially is, with respect to
ValueVision, 6740 Shady Oak Road, Eden Praire, Minnesota 55344-3433,
Attention: General Counsel, with a copy to Latham & Watkins, 633 West Fifth
Street, Los Angeles, California 90071, Attention: Michael Sturrock, Esq.
SECTION 14. Supplements and Amendments. This Agreement may be
supplemented or amended from time to time subject to approval by the parties
hereto.
SECTION 15. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company shall bind and inure to the
benefit of its respective successors and assigns hereunder.
SECTION 16. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 17. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the registered holders of the Warrant Certificates any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be for the
sole and exclusive benefit of the Company and the registered holders of the
Warrant Certificates.
SECTION 18. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page Follows]
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
NATIONAL MEDIA CORPORATION
By: /s/ Robert N. Verratti
----------------------------------
Title: President and Chief Executive
Officer
VALUEVISION INTERNATIONAL, INC.
(OR ITS DESIGNEE)
By: /s/ Robert L. Johander
----------------------------------
Title: Chairman and Chief Executive
Officer
S-1
<PAGE>
EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS.
No. 1 250,000 Shares
Warrant Certificate
NATIONAL MEDIA CORPORATION
This Warrant Certificate certifies that ValueVision International, Inc.,
("ValueVision") or registered assigns, is the registered holder of 250,000
Warrants expiring on the earlier of (i) January 5, 2003 or (ii) the occurrence
of the Termination Event (as defined below) (the "Warrants") to purchase Common
Stock, $.01 par value (the "Common Stock"), of NATIONAL MEDIA CORPORATION, a
Delaware corporation (the "Company"). Each Warrant entitles the holder upon
exercise to receive from the Company on or before the earlier of (i) 5:00 p.m.
New York City Time on January 5, 2003 or (ii) the occurrence of the Termination
Event, one fully paid and nonassessable share of Common Stock (a "Warrant
Share") at the initial exercise price (the "Exercise Price") equal to the
average of the Quoted Prices of the Common Stock reported on the New York Stock
Exchange Composite Tape for the twenty (20) consecutive trading days immediately
succeeding the date of the first advance by ValueVision to the Company under the
$10 million Demand Promissory Note between ValueVision and the Company dated as
of the date hereof (the "Demand Note"), payable in lawful money of the United
States of America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office of the Company designated for such purpose, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after the earlier of (i) 5:00 p.m., New York
Time on January 5, 2003 or (ii) the occurrence of the Termination Event, and to
the extent not exercised by such time such Warrants shall become null and void.
A-1
<PAGE>
Reference is hereby made to the further provisions of this Warrant
Certificate set forth below and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless signed by officers of
the Company as set forth in Section 2 of the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its President and by its Secretary and has caused its corporate
seal to be affixed hereunto or imprinted hereon.
Dated:
NATIONAL MEDIA CORPORATION
By:
--------------------------
President
By:
--------------------------
Secretary
A-2
<PAGE>
[Form of Warrant Certificate]
[Continued]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the earlier of (i) January 5, 2003 and
(ii) the occurrence of the Termination Event. The Warrants (issued in
denominations representing a multiple of 25,000 shares) entitle the holder on
exercise to receive shares of Common Stock, $0.01 par value, of the Company (the
"Common Stock"), and are issued or to be issued pursuant to a Warrant Agreement
dated as of January 5, 1998 (the "Warrant Agreement"), duly executed and
delivered by the Company, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants. A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrants may be exercised at any time after the earlier to occur of (1)
the 75th day after termination of the Merger Agreement and (2) a default under
the Demand Note and before the earlier to occur of (i) January 5, 2003 and (ii)
the occurrence of the Termination Event. The holder of Warrants evidenced by
this Warrant Certificate may exercise them by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon properly
completed and executed, together with payment of the Exercise Price at the
office of the Company designated for such purpose, but only subject to the
conditions set forth herein and in the Warrant Agreement referred to below. In
the event that upon any exercise of Warrants evidenced hereby the number of
Warrants exercised shall be less than the total number of Warrants evidenced
hereby, there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment
shall be made for any dividends on any Common Stock issuable upon exercise of
this Warrant.
For purposes of this Agreement, "Termination Event" shall mean (i) the
consummation of the transactions contemplated by the Merger Agreement or (ii)
the termination by the Company of the Agreement and Plan of Reorganization and
Merger dated as of the date hereof by and among ValueVision, the Company and V-L
Holdings Corp. (the "Merger Agreement"), if such termination results from a
breach of any covenant thereunder by ValueVision or in the event the
shareholders of ValueVision do not approve the terms of the proposed merger as
contemplated under the Merger Agreement; provided, however, that if (x) within
seventy-five (75) days after the occurrence of the Termination Event, the
Company has not paid in full in cash all of its obligations under the Demand
Note or (y) a default by the Company occurs under the Demand Note during such
seventy-five day period, no Termination Event shall be deemed to have occurred.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of
A-3
<PAGE>
a share of Common Stock will be issued upon the exercise of any Warrant, but the
Company will pay the cash value thereof determined as provided in the Warrant
Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in a Registration Rights Agreement
dated as of January 5, 1998, between the Company and ValueVision. A copy of the
Registration Rights Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
A-4
<PAGE>
EXHIBIT 10.9
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENT OF SUCH ACT OR SUCH LAWS.
No. 1 250,000 Shares
Warrant Certificate
NATIONAL MEDIA CORPORATION
This Warrant Certificate certifies that ValueVision International, Inc.,
("ValueVision") or registered assigns, is the registered holder of 250,000
Warrants expiring on the earlier of (i) January 5, 2003 or (ii) the occurrence
of the Termination Event (as defined below) (the "Warrants") to purchase Common
Stock, $.01 par value (the "Common Stock"), of NATIONAL MEDIA CORPORATION, a
Delaware corporation (the "Company"). Each Warrant entitles the holder upon
exercise to receive from the Company on or before the earlier of (i) 5:00 p.m.
New York City Time on January 5, 2003 or (ii) the occurrence of the Termination
Event, one fully paid and nonassessable share of Common Stock (a "Warrant
Share") at the initial exercise price (the "Exercise Price") equal to the
average of the Quoted Prices of the Common Stock reported on the New York Stock
Exchange Composite Tape for the twenty (20) consecutive trading days immediately
succeeding the date of the first advance by ValueVision to the Company under the
$10 million Demand Promissory Note between ValueVision and the Company dated as
of the date hereof (the "Demand Note"), payable in lawful money of the United
States of America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office of the Company designated for such purpose, but
only subject to the conditions set forth herein and in the Warrant Agreement
referred to on the reverse hereof. The Exercise Price and number of Warrant
Shares issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events set forth in the Warrant Agreement.
No Warrant may be exercised after the earlier of (i) 5:00 p.m., New York
Time on January 5, 2003 or (ii) the occurrence of the Termination Event, and to
the extent not exercised by such time such Warrants shall become null and void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth below and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless signed by officers
of the Company as set forth in Section 2 of the Warrant Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its President and by its Secretary and has caused its corporate seal
to be affixed hereunto or imprinted hereon.
Dated: January 5, 1998
NATIONAL MEDIA CORPORATION
By: /s/ Robert N. Verratti
-------------------------
President
By: /s/ Brian J. Sisko
-------------------------
Secretary
<PAGE>
[Continued]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring on the earlier of (i) January 5, 2003 and
(ii) the occurrence of the Termination Event. The Warrants (issued in
denominations representing a multiple of 25,000 shares) entitle the holder on
exercise to receive shares of Common Stock, $0.01 par value, of the Company (the
"Common Stock"), and are issued or to be issued pursuant to a Warrant Agreement
dated as of January 5, 1998 (the "Warrant Agreement"), duly executed and
delivered by the Company, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants. A
copy of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrants may be exercised at any time after the earlier to occur of (1) the
75th day after termination of the Merger Agreement and (2) a default under the
Demand Note and before the earlier to occur of (i) January 5, 2003 and (ii) the
occurrence of the Termination Event. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price at the office of the
Company designated for such purpose, but only subject to the conditions set
forth herein and in the Warrant Agreement referred to below. In the event that
upon any exercise of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby, there shall be
issued to the holder hereof or his assignee a new Warrant Certificate evidencing
the number of Warrants not exercised. No adjustment shall be made for any
dividends on any Common Stock issuable upon exercise of this Warrant.
For purposes of this Agreement, "Termination Event" shall mean (i) the
consummation of the transactions contemplated by the Merger Agreement or (ii)
the termination by the Company of the Agreement and Plan of Reorganization and
Merger dated as of the date hereof by and among ValueVision, the Company and V-L
Holdings Corp. (the "Merger Agreement"), if such termination results from a
breach of any covenant thereunder by ValueVision or in the event the
shareholders of ValueVision do not approve the terms of the proposed merger as
contemplated under the Merger Agreement; provided, however, that if (x) within
seventy-five (75) days after the occurrence of the Termination Event, the
Company has not paid in full in cash all of its obligations under the Demand
Note or (y) a default by the Company occurs under the Demand Note during such
seventy-five day period, no Termination Event shall be deemed to have occurred.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant,
<PAGE>
but the Company will pay the cash value thereof determined as provided in the
Warrant Agreement.
The holders of the Warrants are entitled to certain registration rights
with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in a Registration Rights Agreement
dated as of January 5, 1998, between the Company and ValueVision. A copy of the
Registration Rights Agreement may be obtained by the holder hereof upon written
request to the Company.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder thereof in person or by legal representative or attorney duly
authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
<PAGE>
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to receive __________ shares
of Common Stock and herewith tenders payment for such shares to the order
of NATIONAL MEDIA CORPORATION in the amount of $_________ in accordance
with the terms hereof. The undersigned requests that a certificate for
such shares be registered in the name of ________________,
whose address is _______________________________ and that such shares
be delivered to ________________ whose address is
_________________________________. If said number of shares is less than all
of the shares of Common Stock purchasable hereunder, the undersigned
requests that a new Warrant Certificate representing the remaining balance
of such shares be registered in the name of ______________, whose
address is _________________________, and that such Warrant Certificate
be delivered to _________________, whose address is
______________________.
Signature: _________________________
Date: ______________
Signature Guaranteed: ___________________________
<PAGE>
EXHIBIT 10.10
================================================================================
REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
NATIONAL MEDIA CORPORATION
and
VALUEVISION INTERNATIONAL, INC.
Dated as of January 5, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS*
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 1. Definitions................................................. 1
SECTION 2. Securities Subject to this Agreement........................ 3
(a) Registrable Securities...................................... 3
(b) Holders of Registrable Securities........................... 3
SECTION 3. Demand Registrations........................................ 3
(a) Demand by Holders........................................... 3
(b) Effective Registration...................................... 4
(c) Registration Statement Form................................. 5
(d) Selection of Underwriters................................... 5
(e) Registration of Other Securities............................ 6
(f) Priority in Requested Registration.......................... 6
SECTION 4. Piggyback Registrations..................................... 6
(a) Participation............................................... 6
(b) Underwriter's Cutback....................................... 7
(c) No Effect on Demand Registrations........................... 8
SECTION 5. Hold-Back Agreements........................................ 8
(a) Restrictions on Public Sale by Holder of Registrable
Securities................................................ 8
(b) Restrictions on Public Sale by the Company and Others....... 9
SECTION 6. Registration Procedures..................................... 9
SECTION 7. Registration Expenses....................................... 16
SECTION 8. Indemnification............................................. 18
(a) Indemnification by the Company.............................. 18
(b) Indemnification by Holder of Registrable Securities......... 20
(c) Contribution................................................ 20
SECTION 9. Rule 144.................................................... 21
SECTION 10. Participation in Underwritten Registrations................. 22
</TABLE>
- - ---------------
* This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 11. Miscellaneous.............................................. 22
(a) Remedies..................................................... 22
(b) No Inconsistent Agreements................................... 22
(c) Adjustments Affecting Registrable Securities................. 22
(d) Amendments and Waivers....................................... 22
(e) Notices...................................................... 23
(f) Successors and Assigns....................................... 23
(g) Counterparts................................................. 23
(h) Headings..................................................... 24
(i) Governing Law................................................ 24
(j) Severability................................................. 24
(k) Entire Agreement............................................. 24
</TABLE>
ii
<PAGE>
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is dated as of
January 5, 1998 and entered into by and between NATIONAL MEDIA CORPORATION, a
Delaware corporation (the "Company") and VALUEVISION INTERNATIONAL, INC., a
Minnesota corporation (the "Investor").
This Agreement is made pursuant to the Demand Note (as defined below).
In order to induce Victory to issue the loan evidenced by the Demand Note, the
Company has agreed to provide the registration rights set forth in this
Agreement. The execution of this Agreement is a condition to the issuance of
the Demand Note.
The parties hereby agree as follows:
SECTION 1. Definitions.
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Agent: Any Person authorized to act and who acts on behalf of the
Investor with respect to the transactions contemplated by this Agreement.
Common Stock: The common stock, $0.01 par value, of the Company.
Convertible Note Shares: The shares of Common Stock issuable in
certain circumstances pursuant to the Demand Note.
Demand Note: The $10,000,000 Demand Promissory Note dated the date
hereof issued by the Company in favor of the Investor.
Exchange Act: The Securities Exchange Act of 1934, as amended from
time to time.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated
by reference in such prospectus.
<PAGE>
Registrable Securities: (i) the Warrant Shares and (ii) the Convertible
Note Shares. Registrable Securities shall also include any securities which
may be issued or distributed with respect to, or in exchange for, such
Registrable Securities pursuant to a stock dividend, stock split or other
distribution, merger, consolidation, recapitalization or reclassification or
similar transaction; provided, however, that any such Registrable Securities
shall cease to be Registrable Securities to the extent (i) a Registration
Statement with respect to the sale of such Registrable Securities has been
declared effective under the Securities Act and such Registrable Securities
have been disposed of in accordance with the plan of distribution set forth in
such Registration Statement, (ii) such Registrable Securities may be
distributed pursuant to Rule 144 (or any similar provision then in force) under
the Securities Act, or (iii) such Registrable Securities shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting transfer under the Securities Act shall have been delivered by the
Company and they may be publicly resold without subsequent registration under
the Securities Act or in compliance with Rule 144 thereunder; provided,
further, however, that any securities that have ceased to be Registrable
Securities cannot thereafter become Registrable Securities, and any securities
that are issued or distributed in respect of securities that have ceased to be
Registrable Securities are not Registrable Securities.
Registration: A Demand Registration (as defined in Section 3) or a
Piggyback Registration (as defined in Section 4) of the Company's securities
for sale to the public under a Registration Statement.
Registration Expenses: See Section 7 hereof.
Registration Statement: Any registration statement of the Company filed
with the Securities and Exchange Commission under the rules and regulations
promulgated under the Securities Act which covers Registrable Securities
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such Registration Statement, including
post-effective amendments, and all exhibits and all material incorporated by
reference in such Registration Statement.
Securities Act: The Securities Act of 1933, as amended from time to time.
SEC: The Securities and Exchange Commission.
Underwritten Registration or Underwritten Offering: A Registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
2
<PAGE>
1995 Warrants: The Warrants to purchase 500,000 shares of Common Stock
(subject to customary anti-dilution adjustments) issued by the Company to the
Investor pursuant to a Telemarketing, Production and Post-Production Agreement
dated November 24, 1995 (the "Telemarketing Agreement") by and between the
Company and the Investor.
1997 Warrants: The Warrants to purchase 250,000 shares of Common Stock
(subject to customary anti-dilution adjustments) issued pursuant to the Warrant
Agreement (as defined below).
Warrant Agreement: The Warrant Agreement dated the date hereof by and
between the Company and the Investor.
Warrant Shares: Any shares of Common Stock issued or issuable upon
exercise of the 1995 Warrants or the 1997 Warrants.
SECTION 2. Securities Subject to this Agreement.
(a) Registrable Securities. The securities entitled to the benefits of
this Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is deemed to be a holder
of Registrable Securities whenever such Person owns Registrable Securities or
has the right to acquire such Registrable Securities, whether or not such
ownership or right was acquired pursuant to the Telemarketing Agreement, the
Warrant Agreement or the Demand Note, and whether or not such acquisition has
actually been effected and disregarding any legal restrictions upon the
exercise of such right.
SECTION 3. Demand Registrations.
(a) Demand by Holders. The majority of the holders of Registrable
Securities, at any time from and after the date hereof, may make, in the
aggregate, one written request to the Company for Registration under and in
accordance with the provisions of the Securities Act of all or part of the
Registrable Securities. Any such Registration requested shall hereinafter be
referred to as a "Demand Registration." Such request for a Demand Registration
shall specify the kind and aggregate amount of Registrable Securities to be
registered and the intended methods of disposition thereof. Upon such request
for a Demand Registration, the Company shall use its best efforts to effect the
Registration of such Registrable Securities under (i) the Securities Act, and
(ii)
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the blue sky laws of such jurisdictions as any holder of such Registrable
Securities requesting such Registration or any underwriter, if any, may
reasonably request; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but
for this Section 3(a). The Company shall also use its best efforts to have all
such Registrable Securities registered with or approved by such other federal
or state governmental agencies or authorities as may be necessary in the
opinion of counsel to the Company and counsel to the holders of a majority of
such Registrable Securities to consummate the disposition of such Registrable
Securities.
(b) Effective Registration. The Company shall be deemed to have effected
a Demand Registration if the Registration Statement relating to such Demand
Registration is declared effective by the SEC and remains effective at all
times until such date as is the earlier of (i) the date on which all of the
Registrable Securities have been sold and (ii) the date on which all of the
Registrable Securities may be immediately sold to the public without
registration under Rule 144(k) under the Securities Act (the "Registration
Period"); provided, however, that no Demand Registration shall be deemed to
have been effected if (i) such registration, after it has become effective, is
interfered with by any stop order, injunction or other order or requirement of
the SEC or other governmental agency or court for any reason not attributable
to the selling holders of Registrable Securities, or (ii) the conditions to
closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration are not satisfied, other than by
reason of a failure on the part of the selling holders of Registrable
Securities and other than by reasons of a failure on the part of an underwriter
selected by the selling holders of Registrable Securities.
Notwithstanding the foregoing, if at any time prior to the expiration of
the Registration Period, in the good faith reasonable judgment of the Company's
Board of Directors, the disposition of Registrable Securities would require the
premature disclosure of material non-public information which may reasonably be
expected to have an adverse effect on the Company, then the Company shall not
be required to maintain the effectiveness of or amend or supplement such
Registration Statement for a period (a "Disclosure Delay Period") expiring upon
the earlier to occur of (i) the date on which such material information is
disclosed to the public or ceases to be material or (ii) subject to the
following paragraph, up to 30 calendar days after the date on which the Company
provides a notice to the holders of Registrable Securities stating that the
failure to disclose such non-public information causes the prospectus included
in the Registration Statement, as then in effect, to include an untrue
statement of a material fact or to omit to state a
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material fact required to be stated therein or necessary to make the
statements therein not misleading. In no event shall a Disclosure Delay Period
exceed 30 calendar days.
The Company will give prompt written notice to the holders of Registrable
Securities, in the manner prescribed by Section 11(e) hereof, of each
Disclosure Delay Period. Advance notice of the Disclosure Delay Period
shall be given to the extent practicable. If practicable, such notice shall
estimate the duration of such Disclosure Delay Period. Each holder of
Registrable Securities, by accepting such Registrable Securities, agrees that,
upon receipt of such notice prior to such holder's disposition of all such
Registrable Securities, such holder will forthwith discontinue disposition of
such Registrable Securities pursuant to the Registration Statement and will not
deliver any prospectus forming a part thereof in connection with any sale of
such Registrable Securities until the expiration of such Disclosure Delay
Period. Notwithstanding anything in this Section 3(b) to the contrary, there
shall not be more than an aggregate of 30 calendar days in any 12 month period
during which the Company is in a Disclosure Delay Period, nor more than an
aggregate of 30 calendar days in any 90 calendar day period during which the
Company is in a Disclosure Delay Period, nor more than an aggregate of 60
calendar days during the Registration Period during which the Company is in a
Disclosure Delay Period.
(c) Registration Statement Form. Registrations under this Section 3 shall
be on such appropriate registration form of the SEC (i) as shall be selected by
the Company and as shall be reasonably satisfactory to the holders of a
majority of the Registrable Securities requesting a Demand Registration and
(ii) as shall permit the disposition of such Registrable Securities in
accordance with the intended method or methods of disposition specified in such
holders' requests for such Registration. If, in connection with any
Registration under this Section 3 which is proposed by the Company to be on
Form S-3 or any successor form to such Form, the managing underwriter (if any)
or holders of a majority of the Registrable Securities requesting a Demand
Registration shall advise the Company in writing that in its reasonable opinion
the use of another permitted form is of material importance to the success of
the offering, then such Registration shall be on such other permitted form.
(d) Selection of Underwriters. If at any time or from time to time a
majority of the holders of Registrable Securities covered by a Registration
Statement desire to sell Registrable Securities in an Underwritten Offering,
the investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the holders of a majority of the
Registrable Securities included in such offering.
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(e) Registration of Other Securities. Whenever the Company shall effect a
Registration pursuant to this Section 3 in connection with an Underwritten
Offering by one or more holders of Registrable Securities, no securities other
than Registrable Securities shall be included among the securities covered by
such Registration unless (a) the managing underwriter of such offering shall
have advised each selling holder of Registrable Securities to be covered by
such Registration in writing that the inclusion of such other securities
would not adversely affect such offering or (b) the selling holders of a
majority of all Registrable Securities to be covered by such Registration shall
have consented in writing to the inclusion of such other securities.
(f) Priority in Requested Registration. If the Company shall effect a
Registration pursuant to this Section 3 in connection with an Underwritten
Offering by one or more holders of Registrable Securities, and if the managing
underwriter of such offering shall advise the Company in writing (with a copy
to each selling holder of Registrable Securities requesting Registration) that,
in its opinion, the number of securities requested to be included in such
Registration exceeds the number which can be sold in such offering within a
price range acceptable to the selling holders of a majority of the Registrable
Securities requested to be included in such Registration, the Company will
include in such Registration, to the extent of the number which the Company is
so advised can be sold in such offering, Registrable Securities requested to be
included in such Registration, selected pro rata from the Registrable
Securities of the selling holders requesting such Registration on the basis of
the percentage of the total amount of the Registrable Securities which such
selling holders requested to be so registered. In connection with any such
Registration to which this Section 3(f) is applicable, no securities other than
Registrable Securities shall be covered by such Registration.
SECTION 4. Piggyback Registrations.
(a) Participation. Subject to Section 4(b) hereof, if at any time from
and after the date hereof, the Company proposes to file a Registration
Statement under the Securities Act with respect to any offering of any of its
securities, whether or not for its own account (other than (i) a registration
on Form S-4 or S-8 or any successor form to such Forms, (ii) any registration
of securities as it relates to an offering and sale to employees, officers or
directors of the Company pursuant to any employee stock plan or other employee
benefit plan arrangement or (iii) any Registration Statement filed at the
demand or request of a holder of the Company's Series C Convertible Preferred
Stock, or securities issued in exchange for such Series C Convertible Preferred
Stock), then, as promptly as practicable, the Company shall give written notice
of such proposed filing to each holder of Registrable
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Securities and such notice shall offer the holders of Registrable
Securities the opportunity to register such number of Registrable Securities as
each such holder may request (a "Piggyback Registration"). Subject to Section
4(b), the Company shall include in such Registration Statement all Registrable
Securities requested within 15 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
such holder) to be included in the Registration for such offering pursuant to a
Piggyback Registration. Each holder of Registrable Securities shall be
permitted to withdraw all or part of such holder's Registrable Securities
from a Piggyback Registration at any time prior to the effective date thereof.
(b) Underwriter's Cutback. The Company shall use its best efforts to
cause the managing underwriter or underwriters of a proposed Underwritten
Offering to permit the Registrable Securities requested to be included in the
Registration for such offering under Section 4(a) or pursuant to other
piggyback registration rights granted by the Company, if any (the "Piggyback
Securities"), to be included on the same terms and conditions as any similar
securities included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of any such proposed Underwritten Offering informs
the Company and the holders of such Piggyback Securities in writing that the
total amount or kind of securities, including Piggyback Securities, which such
holders and any other persons or entities intend to include in such offering
would be reasonably likely to adversely affect the price or distribution of the
securities offered in such offering or the timing thereof, then the securities
to be included in such Registration shall be the number of securities that, in
the opinion of such underwriter or underwriters, can be sold without an adverse
effect on the price, timing or distribution of the securities to be included,
selected (i) first, from the securities originally proposed by the Company to
be included in the Registration for such offering, (ii) second, and only if all
the securities originally proposed by the Company to be included in such
Registration have been so included, from the Piggyback Securities requested for
inclusion in such Registration, provided that if less than 100% of such
Piggyback Securities is to be included in such Registration, the Piggyback
Securities to be so included shall be selected pro rata from the Piggyback
Securities of the selling holders requesting such Piggyback Registration on the
basis of the percentage of the total amount of the Piggyback Securities which
such selling holders requested to be so registered, and (iii) third, and only
if all of the Piggyback Securities requested for inclusion in such Registration
have been so included, from any other securities eligible for inclusion in such
Registration.
Notwithstanding the foregoing, in the case of a registration statement
registering securities pursuant to the Registration Rights Agreement, dated as
of December 19, 1994, by and among the Company and the other signatories
thereto (the "December 1994 Agreement"), the holders of a majority of the
securities to be registered pursuant to
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such agreement have in good faith determined that the inclusion of
Registrable Securities would be detrimental to the offering of such securities,
then in each case the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities
with respect to which a holder of Registrable Securities has requested
inclusion hereunder as the underwriter or such other holders, respectively,
shall permit. Any exclusion of Registrable Securities shall be made pro rata
among the holders of Registrable Securities seeking to include Registrable
Securities, in proportion to the number of Registrable Securities sought to be
included by such holders; provided, however, that the Company shall not exclude
any Registrable Securities unless the Company has first excluded all
outstanding securities, the holders of which are not entitled to inclusion of
such securities in such Registration Statement or are not entitled to pro rata
inclusion with the Registrable Securities; and provided, further, however,
that, after giving effect to the immediately preceding proviso, any exclusion
of Registrable Securities shall be made pro rata with holders of other
securities having the right to include such securities in the Registration
Statement other than holders of securities entitled to inclusion of their
securities in such Registration Statement by reason of demand registration
rights and provided that any reduction of securities to be registered pursuant
to the December 1994 Agreement or the Securities Purchase Agreement, dated as
of September 30, 1994, as amended as of December 19, 1994, by and among the
Company and the other signatories thereto or the Option Agreement dated as of
January 13, 1995, between the Company and Buckeye Communications, Inc., or the
1995 Warrants shall be allocated among the parties hereto as provided therein.
No right to registration of Registrable Securities under this Section 4(b)
shall be construed to limit any registration required under Section 3(a)
hereof. If an offering in connection with which a holder of Registrable
Securities is entitled to registration under this Section 4(b) is an
underwritten offering, then each holder of Registrable Securities whose
Registrable Securities are included in such Registration Statement shall,
unless otherwise agreed by the Company, offer and sell such Registrable
Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same
terms and conditions as other shares of Common Stock included in such
underwritten offering.
(c) No Effect on Demand Registrations. No Registration of Registrable
Securities effected pursuant to a request under this Section 4 shall be deemed
to have been effected pursuant to Section 3 hereof or shall relieve the Company
of its obligation to effect any Registration upon request under Section 3
hereof.
SECTION 5. Hold-Back Agreements.
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(a) Restrictions on Public Sale by Holder of Registrable Securities. Each
holder of Registrable Securities agrees, if requested by (i) the managing
underwriters in an Underwritten Offering, or (ii) the holders of a majority of
the Registrable Securities included pursuant to Section 3 hereof in a Demand
Registration not being underwritten, not to effect any public sale or
distribution of securities of the Company the same as or similar to those being
registered, or any securities convertible into or exchangeable or exercisable
for such securities, in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act (except as part of such Underwritten
Registration), during the 10-day period prior to, and during the 90-day period
(or, with respect to a Piggyback Registration, such longer period of up to 180
days as may be required by such underwriter) beginning on, the effective date
of any Registration Statement in which holders of Registrable Securities are
participating (except as part of such registration) or the commencement of the
public distribution of securities, to the extent timely notified in writing by
the Company or the managing underwriters (or the holders, as the case may be).
The foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or regulation from
entering any such agreement; provided that any such holder shall undertake, in
its request to participate in any such Underwritten Offering, not to effect any
public sale or distribution of the applicable class of Registrable Securities
commencing on the date of sale of such applicable class of Registrable
Securities unless it has provided 45 days' prior written notice of such sale or
distribution to the underwriter or underwriters.
(b) Restrictions on Public Sale by the Company and Others. The Company
agrees that if, after the date hereof, any "holdback" or any other similar
right relating to restrictions on the public or private sale of the Company's
equity securities is granted by the Company or any other holders of the
Company's equity securities with respect to any of the Company's equity
securities, then the Company shall immediately amend this Agreement to provide
for at least as favorable of a holdback or other similar right for the benefit
of the holders of the Registrable Securities.
SECTION 6. Registration Procedures.
In connection with the Company's registration obligations pursuant to
Sections 3 and 4 hereof, the Company will use its best efforts to effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible:
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(a) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to the holders of the
Registrable Securities covered by such Registration Statement and the
underwriters, if any, copies of all such documents proposed to be filed,
which documents will be subject to the review of such holders and
underwriters (it being understood that, with respect to the holders of
the Registrable Securities, such review shall be completed as
expeditiously as possible), and the Company will not file any
Registration Statement or amendment thereto or any Prospectus or any
supplement thereto to which the holders of a majority of the Registrable
Securities covered by such Registration Statement or the underwriters,
if any, shall reasonably object;
(b) prepare and file with the SEC a Registration Statement or
Registration Statements relating to the applicable Demand Registration or
Piggyback Registration including all exhibits and financial statements
required by the SEC to be filed therewith, and use its best efforts to
cause such Registration Statement to become effective under the
Securities Act; and prepare and file with the SEC such amendments and
post-effective amendments to such Registration Statement, and such
supplements to the Prospectus, as may be reasonably requested by any
holder of Registrable Securities or any underwriter of Registrable
Securities or as may be required by the rules, regulations or
instructions applicable to the registration form utilized by the Company
or by the Securities Act or rules and regulations otherwise necessary to
keep the Registration Statement effective for a period of not less than
90 days (or such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold or
withdrawn) with respect to a Piggyback Registration, and for a period
continuing during the Registration Period with respect to a Demand
Registration, or, if such Registration Statement relates to an
Underwritten Offering, such longer period as in the opinion of counsel
for the underwriters a Prospectus is required by law to be delivered in
connection with sales of Registrable Securities by an underwriter or
dealer; and cause the Prospectus as so supplemented to be filed pursuant
to Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act and the Exchange Act with respect to the disposition
of all securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of disposition
by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;
(c) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly, and (if requested by any such
Person) confirm such advice in writing,
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(1) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective,
(2) of any request by the SEC for amendments or supplements
to the Registration Statement or the Prospectus or for additional
information,
(3) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose,
(4) if at any time the representations and warranties of the
Company contemplated by paragraph (o) below cease to be true and
correct,
(5) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, and
(6) of the existence of any fact which results in the
Registration Statement, the Prospectus or any document
incorporated therein by reference containing an untrue statement
of material fact or omitting to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading;
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the
earliest possible moment;
(e) if requested by the managing underwriter or underwriters or a
holder of Registrable Securities being sold in connection with an
Underwritten Offering, immediately incorporate in a Prospectus supplement
or post-effective amendment such information as the managing underwriters
and the holders of a majority of the Registrable Securities being sold
agree should be included therein relating to the plan of distribution
with respect to such Registrable Securities, including, without
limitation, information with respect to the amount of Registrable
Securities being
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sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; and make all required filings of
such Prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such Prospectus supplement
or post-effective amendment;
(f) furnish to each selling holder of Registrable Securities and
each managing underwriter, without charge, at least one signed copy of
the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated
therein by reference and all exhibits (including, if requested, those
incorporated by reference);
(g) deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons may reasonably request (it being understood that
the Company consents to the use of the Prospectus or any amendment or
supplement thereto by each of the selling holders of Registrable
Securities and the underwriters, if any, in connection with the offering
and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto) and such other documents as such selling
holder may reasonably request in order to facilitate the disposition of
the Registrable Securities by such holder and underwriters, if any;
(h) prior to any public offering of Registrable Securities, register
or qualify or cooperate with the selling holders of Registrable
Securities, the underwriters, if any, and their respective counsel in
connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of
such jurisdictions as any selling holder of Registrable Securities or any
underwriter reasonably requests in writing and do any and all other acts
or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service
of process in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
sold and not bearing any
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restrictive legends; and enable such Registrable Securities to be in
such denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale of
Registrable Securities to the underwriters;
(j) use its best efforts to cause the Registrable Securities covered
by the applicable Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriters, if
any, to consummate the disposition of such Registrable Securities;
(k) if any fact contemplated by paragraph (c)(6) above shall exist,
prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein
by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(l) cause all Registrable Securities covered by the Registration
Statement to be listed on the New York Stock Exchange (the "NYSE") or, if
not listed on the NYSE, (i) to be listed on each securities exchange on
which similar securities issued by the Company are then listed or (ii) to
be quoted on the Nasdaq National Market, if requested by the holders of a
majority of such Registrable Securities or the managing underwriters, if
any;
(m) cause the Registrable Securities covered by the Registration
Statement to be rated with the appropriate rating agencies, if so
requested by the holders of a majority of such Registrable Securities or
the managing underwriters, if any;
(n) not later than the effective date of the applicable Registration
Statement, provide a CUSIP number for all Registrable Securities and
provide the applicable transfer agent with printed certificates for the
Registerable Securities which are in a form eligible for deposit with
Depositary Trust Company;
(o) enter into agreements (including underwriting agreements) and
take all other appropriate actions in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection,
whether or not an underwriting
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agreement is entered into and whether or not the registration is an
Underwritten Registration, deliver such documents and certificates as may
be requested by the holders of a majority of the Registrable Securities
being sold and the managing underwriters, if any, to evidence compliance
with paragraph (k) above and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company,
and if an underwriting agreement is entered into or if the registration is
an Underwritten Registration:
(1) make such representations and warranties to the holders
of such Registrable Securities and the underwriters, if any, in
form, substance and scope as are customarily made by issuers to
underwriters in primary Underwritten Offerings and covering
matters including, but not limited to, those set forth in the
Agreement and Plan of Reorganization and Merger dated as of the
date hereof by and among the Investor, the Company and V-L Holdings
Corp.;
(2) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters, if
any, and the holders of a majority of the Registrable Securities
being sold) addressed to each selling holder and the underwriters,
if any, covering the matters customarily covered in opinions
requested in Underwritten Offerings and such other matters as may
be reasonably requested by such holders and underwriters;
(3) obtain "cold comfort" letters and updates thereof from
the Company's independent certified public accountants addressed
to the selling holders of Registrable Securities and the
underwriters, if any, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort"
letters by underwriters in connection with primary Underwritten
Offerings; and
(4) if an underwriting agreement is entered into, cause the
same to set forth in full the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section.
The above shall be done at the effectiveness of such Registration
Statement, each closing under any underwriting or similar agreement as
and to the extent required
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thereunder and from time to time as may be requested by any selling
holder in connection with the disposition of Registrable Securities
pursuant to such Registration Statement;
(p) make available for inspection by a representative of the holders
of a majority of the Registrable Securities, any underwriter
participating in any disposition pursuant to such Registration Statement,
and any attorney or accountant retained by the sellers or underwriter,
all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with
the registration; provided that any records, information or documents
that are designated by the Company in writing as confidential shall be
kept confidential by such Persons unless disclosure of such records,
information or documents is required by court or administrative order;
(q) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its
security holders, earnings statements satisfying the provisions of
Section 11(a) of the Securities Act, no later than 45 days after the end
of any 12-month period (or 90 days, if such period is a fiscal year) (1)
commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in an Underwritten Offering, or, if
not sold to underwriters in such an offering and (2) beginning with the
first month of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement, which statements shall
cover said 12-month periods;
(r) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of
the NASD); and
(s) promptly prior to the filing of any document which is to be
incorporated by reference into the Registration Statement or the
Prospectus (after initial filing of the Registration Statement), provide
copies of such document to counsel to the selling holders of Registrable
Securities and to the managing underwriters, if any, make the Company's
representatives available for discussion of such document and make such
changes in such document prior to the filing thereof as counsel for such
selling holders or underwriters may reasonably request; it being
understood that any document filed pursuant to the Exchange Act will be
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provided concurrently with such filing and will not be subject to prior
review before filing.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(k) hereof, such holder
will forthwith discontinue disposition of Registrable Securities until such
holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(k) hereof, or until it is advised in writing by the
Company that the use of the Prospectus may be resumed, and has received copies
of any additional or supplemental filings which are incorporated by reference in
the Prospectus, and, if so directed by the Company, such holder will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods during which such
Registration Statement shall be maintained effective shall be extended by the
number of days during the period from and including the date of the giving of
such notice to and including the date when each seller of Registrable Securities
covered by such Registration Statement either receives the copies of the
supplemented or amended prospectus contemplated by Section 6(k) hereof or is
advised in writing by the Company that the use of the Prospectus may be resumed.
On or before the tenth (10th) day of each month immediately following a
month in which the Investor sells Registrable Securities on the NYSE or
otherwise, the Investor shall deliver a notice to the Company setting forth the
number of Registrable Securities sold by the Investor during such month and the
number of Registrable Securities held by the Investor as of the end of such
month.
SECTION 7. Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement will be paid by the Company, regardless of whether the
Registration Statement becomes effective, including without limitation:
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<PAGE>
(1) all registration and filing fees (including with respect to
filings required to be made with the SEC, the NYSE and the NASD);
(2) fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters or
selling holders in connection with blue sky qualifications of the
Registrable Securities and determination of their eligibility for
investment under the laws of such jurisdictions as the managing
underwriters or holders of a majority of the Registrable Securities being
sold may designate);
(3) printing (including expenses of printing certificates for the
Registrable Securities in a form eligible for deposit with the Depositary
Trust Company and of printing prospectuses), messenger, telephone and
delivery expenses;
(4) fees and disbursements of counsel for (i) the Company, (ii)
subject to the last paragraph of this Section 7(a), the underwriters and
(iii) subject to the last paragraph of this Section 7(a), the
sellers of the Registrable Securities (subject to the provisions of
Section 7(b) hereof);
(5) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit
and "cold comfort" letters required by or incident to such performance);
(6) subject to the last paragraph of this Section 7(a), fees and
disbursements of underwriters (excluding discounts, commissions or fees
of underwriters, selling brokers, dealer managers or similar securities
industry professionals relating to the distribution of the Registrable
Securities and legal expenses of any Person other than the Company, the
underwriters and the selling holders);
(7) fees and expenses of other Persons retained by the Company; and
(8) fees and expenses associated with any NASD filing required to be
made in connection with the Registration Statement, including, if
applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of the NASD (all such expenses
being herein called "Registration Expenses").
17
<PAGE>
The Company will, in any event, pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange on which similar securities issued by
the Company are then listed, rating agency fees and the fees and expenses of
any Person, including special experts, retained by the Company.
The Company shall not be required to pay more than $25,000 for the fees
and expenses referred to in Section 7(a)(4)(ii) and (iii) and Section 7(a)(6)
above.
(b) In connection with each Registration Statement required hereunder, the
Company will reimburse the holders of Registrable Securities being registered
pursuant to such Registration Statement for the reasonable fees and
disbursements of not more than one counsel (or more than one counsel if a
conflict exists among such selling holders in the exercise of the reasonable
judgment of counsel for the selling holders and counsel for the Company) chosen
by the holders of a majority of such Registrable Securities.
SECTION 8. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each holder of Registrable Securities, its officers, directors,
employees and Agents and each Person who controls such holder within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such person being sometimes hereinafter referred to as an
"Indemnified Holder") from and against all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation and legal expenses)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement or Prospectus or in
any amendment or supplement thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or allegation thereof based upon information furnished in
writing to the Company by such holder expressly for use therein; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or expense arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission in any Prospectus or preliminary prospectus, if such untrue
statement or alleged untrue statement, omission or alleged omission is
completely corrected in an amendment or supplement to the Prospectus or
preliminary prospectus and if, having previously been furnished by or on behalf
of the
18
<PAGE>
Company with copies of the Prospectus or preliminary prospectus as so
amended or supplemented, such holder thereafter fails to deliver such
Prospectus or preliminary prospectus as so amended or supplemented, prior to or
concurrently with the sale of a Registrable Security to the person asserting
such loss, claim, damage, liability or expense who purchased such Registrable
Security which is the subject thereof from such holder. This indemnity will be
in addition to any liability which the Company may otherwise have. The Company
will also indemnify underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, their
officers and directors and each Person who controls such Persons (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
to the same extent as provided above with respect to the indemnification of the
Indemnified Holders of Registrable Securities.
If any action or proceeding (including any governmental investigation or
inquiry) shall be brought or asserted against an Indemnified Holder in respect
of which indemnity may be sought from the Company, such Indemnified Holder
shall promptly notify the Company in writing, and the Company shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Holder and the payment of all expenses. Such Indemnified
Holder shall have the right to employ separate counsel in any such action and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Holder unless (a) the
Company has agreed to pay such fees and expenses or (b) the Company shall have
failed to assume the defense of such action or proceeding and has failed to
employ counsel satisfactory to such Indemnified Holder in any such action or
proceeding or (c) the named parties to any such action or proceeding (including
any impleaded parties) include both such Indemnified Holder and the Company,
and such Indemnified Holder shall have been advised by counsel that there may
be one or more legal defenses available to such Indemnified holder which are
different from or additional to those available to the Company (in which case,
if such Indemnified Holder notifies the Company in writing that it elects to
employ separate counsel at the expense of the Company, the Company shall not
have the right to assume the defense of such action or proceeding on behalf of
such Indemnified Holder, it being understood, however, that the Company shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for such Indemnified Holder and any other Indemnified
Holders, which firm shall be designated in writing by such Indemnified
Holders). The Company shall not be liable for any settlement of any such
action or proceeding effected without its written consent, but if settled with
its written consent, or
19
<PAGE>
if there be a final judgment for the plaintiff in any such action or
proceeding, the Company agrees to indemnify and hold harmless such Indemnified
Holders from and against any loss or liability by reason of such settlement or
judgment.
(b) Indemnification by Holder of Registrable Securities. Each holder of
Registrable Securities agrees to indemnify and hold harmless the Company, its
officers, directors, employees and Agents and each Person, if any, who controls
the Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to such holder, but only with respect to information relating
to such holder furnished in writing by such holder expressly for use in any
Registration Statement or Prospectus, or any amendment or supplement thereto,
or any preliminary prospectus. In case any action or proceeding shall be
brought against the Company or its directors or officers or any such
controlling person, in respect of which indemnity may be sought against a
holder of Registrable Securities, such holder shall have the rights and duties
given the Company and the Company or its officers, directors, employees and
Agents or such controlling person shall have the rights and duties given to
each holder by the preceding paragraph. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount than
the dollar amount of the proceeds received by such holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement or any amendment or
supplement thereto, or any preliminary prospectus.
(c) Contribution. If the indemnification provided for in this Section 8
is unavailable to an indemnified party under Section 8(a) or Section 8(b)
hereof (other than by reason of exceptions provided in those Sections) in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then each applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and of the Indemnified Holder on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand
and of the Indemnified Holder on the other shall be determined
20
<PAGE>
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Indemnified Holder and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in the second paragraph of Section 8(a),
any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
The Company and each holder of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this Section 8(c) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section
8(c), an Indemnified Holder shall not be required to contribute any amount in
excess of the amount by which the total price at which the Securities sold by
such Indemnified Holder or its affiliated Indemnified Holders and distributed
to the public were offered to the public exceeds the amount of any damages
which such Indemnified Holder, or its affiliated Indemnified Holder, has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 9. Rule 144.
The Company covenants that it will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required
to file such reports, it will, upon the request of any holder of Registrable
Securities made after the first anniversary of the date hereof, make publicly
available such information as necessary to permit sales pursuant to Rule 144
under the Securities Act), and it will take such further action as any holder
of Registrable Securities may reasonably request, all to the extent required
from time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. Upon the request of any holder of Registrable Securities, the Company
will deliver to such holder a written statement as to whether it has complied
with such information and requirements.
21
<PAGE>
SECTION 10. Participation in Underwritten Registrations.
No Person may participate in any Underwritten Registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
SECTION 11. Miscellaneous.
(a) Remedies. Each holder of Registrable Securities, in addition to being
entitled to exercise all rights provided herein, in the Warrant Agreement, the
Telemarketing Agreement and the Demand Note and granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the date
of this Agreement enter into any agreement with respect to its securities which
is inconsistent with the rights granted to the holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The Company represents and warrants that the rights granted to the holders of
Registrable Securities hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) Adjustments Affecting Registrable Securities. The Company will not
take any action, or permit any change to occur, with respect to the Registrable
Securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given unless the Company has obtained the written consent of holders of at
least a majority of the outstanding Registrable Securities. Notwithstanding
the foregoing, a waiver or consent to departure from the provisions hereof that
relates exclusively to the rights of holders of
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<PAGE>
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Securities may be given by the holders
of a majority of the Registrable Securities being sold.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to the Company in accordance with the
provisions of this Section 11(e), which address initially is, with
respect to the Investor, 6740 Shady Oak Road, Eden Prairie, Minnesota
55344-3433, Attention: General Counsel, with a copy to Latham & Watkins,
633 West Fifth Street, Los Angeles, California 90071, Attention: Michael
Sturrock, Esq.; and
(ii) if to the Company, initially at Eleven Penn Center, Suite 1100,
1835 Market Street, Philadelphia, Pennsylvania, Attention: General
Counsel and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 11(e), with a copy to
Klehr, Harrison, Harvey, Branzburg & Ellers LLP, 1401 Walnut Street,
Philadelphia, Pennsylvania 19102, Attention: Stephen T. Burdumy, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent holders of Registrable Securities; provided, however, that after the
date hereof this Agreement shall not inure to the benefit of or be binding upon
a successor or assign of a holder of Registrable Securities unless and to the
extent such successor or assign acquired Registrable Securities from such
holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so
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<PAGE>
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities issued pursuant to the Warrant Agreement or the Demand Note.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NATIONAL MEDIA CORPORATION
By: /s/ Robert N. Verratti
-----------------------------
Name: Robert N. Verratti
Title: President and Chief
Executive Officer
VALUEVISION INTERNATIONAL, INC.
By: /s/ Robert L. Johander
------------------------------
Name: Robert L. Johander
Title: Chairman and Chief
Executive Officer
S-1
<PAGE>
EXHIBIT 99.1
VALUEVISION INTERNATIONAL, INC. AND NATIONAL MEDIA CORPORATION
TO MERGE BY FORMING NEW CORPORATION
Merger to Create New Television Infomercial/Shopping, Mail Order,
and Internet Direct Marketing Company
With Global Sales in Excess of $500 Million
Merged Company to Use Quantum Television Name on ValueVision's
U.S. Shopping Channel, Accelerate Addition of TV Shopping
to Quantum International Infomercial Business
MINNEAPOLIS, MN and PHILADELPHIA, PA, January 5, 1998--ValueVision
International, Inc. (Nasdaq: VVTV) and National Media Corporation (NYSE: NM)
today announced that their respective boards of directors have agreed to merge
their respective companies into a holding company, creating an integrated
worldwide marketer of consumer merchandise through infomercials, television
home shopping, mail order, Internet and retail channels.
Upon closing of the transaction, National Media shareholders will receive 1
share in a new holding company for each share held in National Media and
ValueVision shareholders will receive 1.19 shares in the new enterprise for
each ValueVision share held. No cash is included in the merger consideration.
The transaction is intended to be accounted for as a purchase and is expected
to be tax-free. As a result of the transaction, it is anticipated that
ValueVision shareholders will own approximately 55 percent of the new company
with National Media shareholders owning the remainder.
"This merger creates compelling synergies, as ValueVision aligns its powerful
balance sheet and streamlined operations with National Media's sales strength
and international merketing
-more-
<PAGE>
VALUEVISION AND NATIONAL MEDIA
ADD -1-
opportunities," said Robert L. Johander, chairman and chief executive officer
of ValueVision. "We're exhilarated at the near- and long-term prospects for
this new enterprise."
The merger is expected to provide National Media with the necessary financial
strength to support its steadily improving worldwide TV merchandising activity
and successful recent product launches. National Media also plans to take
advantage of excess capacity in ValueVision's existing telemarketing and order
fulfillment facilities to streamline National Media's U.S. operations and make
use of ValueVision's 24-hour-per-day home shopping channel as a new outlet for
certain products.
For ValueVision, the merger matches its operational and financial resources
with significant new growth opportunities through international expansion,
media cost efficiencies applied to the combined organization's $100-million-plus
annual TV budget, and significant merchandising leverage to improve product
sourcing and costs.
"The international infrastructure that National Media has created with its
Quantum Television business will prove a valuable platform for ValueVision's TV
shopping and mail order businesses as we explore international expansion," said
Robert N. Verratti, president and chief executive officer of National Media.
"In addition, because both companies' stock-in-trade is TV selling, the
combined facilities, media buying power, creative, production, and distribution
skills we can marshal will allow us to realize significant cost efficiencies and
create a formidable competitive force in bringing products from the initial
concept stage to ultimate mass retail distribution."
NEW COMPANY EXPECTED TO GENERATE MORE THAN $500 MILLION IN ANNUAL SALES
The new, yet-to-be-named company will be publicly traded and will exploit and
expand the world-wide use of National Media's Quantum Television brand name for
electronic retailing. Annual sales of the combined entities are expected to
exceed $500 million, including domestic TV shopping and infomercials, U.S. mail
order catalog sales, and international infomercial merchandise sales. The merger
will include the renaming of ValueVision's 24-hour-per-day U.S. television home
shopping channel to include the Quantum Television name. The companies also
expect to expand Quantum Television international activities to include
television home shopping in a number of the more than 70 countries in which
Quantum Television currently conducts long-form infomercial business.
The companies will also combine U.S. telemarketing and outsourced services
management, warehousing, fulfillment, customer service, and a variety of general
and administrative functions to streamline and improve operational efficiencies
for both.
MANAGEMENT TEAMS WILL PROVIDE FOR A SMOOTH TRANSITION
Mr. Johander will serve as interim CEO of the new company. It is the intention
of the new company's board of directors to conduct a world-wide search for a
permanent chief executive
-more-
<PAGE>
ValueVision and National Media
Add -2-
officer. Mr. Verratti, will reduce his operational responsibilities upon
completion of the merger while remaining a member of the new company's board of
directors and serving on its executive committee.
Frederick S. Hammer, chairman of National Media's board of directors, and Mr.
Johander will serve as co-chairmen of the board of the combined company.
Nicholas M. Jaksich, ValueVision's chief operating officer, will serve as
president and chief operating officer of the combined company. Constantinos I.
Costalas, National Media's vice-chairman of the board and chief operating
officer, will remain chief operating officer of National Media, and
ValueVision's chief financial officer, Stuart R. Romenesko, will become chief
financial officer of the merged company.
ValueVision to extend interim working capital loan to National Media
Under the agreement, ValueVision has extended to National Media a working
capital loan commitment of up to $10 Million for various purposes, including
funding of inventory and related rollout expenses for several of National
Media's successful new product launches including the Cyclone cross-trainer and
several homeware products. The loan will bear interest at prime rate plus 1.5
percent and would be due on January 1, 1999 or upon termination of the merger
agreement in certain circumstances, including lack of National Media
shareholder approval. In the event National Media is unable to pay the loan
when due, ValueVision may elect to receive repayment in shares of National
Media common stock at its then market value. In consideration of providing the
loan, ValueVision is receiving a warrant to acquire 250,000 shares of national
Media common stock and registration rights for the shares issuable upon
conversion of the notes and exercise of the warrant.
Conditions to closing and post-merger matters
In addition to approval of the transaction by the shareholders of both
companies, the merger is conditioned on redemption of National Media's Series C
Convertible Preferred Stock for approximately $23.5 million (pursuant to a
binding agreement under which holders of the Series C Convertible Preferred
Stock were issued warrants to acquire 500,000 shares of National Media common
stock at $6.82 per share), closing by ValueVision on the repurchase from
Montgomery Ward of 1,280,000 shares of ValueVision common stock and
cancellation of warrants previously issued to Montgomery Ward to acquire
approximately 3.8 million shares of ValueVision common stock (which
transactions were approved by the United States Bankruptcy Court in Delaware on
December 30, 1997).
Furthermore, the merger is subject to customary regulatory filings, reviews and
approvals, including those with the Securities and Exchange Commission, the
Federal Trade Commission and the Federal Communications Commission. The merger
agreement provides for a break-up fee of $5 million to be payable to either
company under certain circumstances. In addition each company has granted the
other an option to acquire 19.9 percent of its common stock under
-more-
<PAGE>
VALUEVISON AND NATIONAL MEDIA
ADD -3-
certain limited conditions. The merger is expected to be completed during the
second calender quarter of 1998.
The merger agreement calls for the new company - to be incorporated in
Delaware - - to initially form a 10-member board of directors, comprised of
five directors nominated by the current National Media board and five
directors nominated by the ValueVision board. Certain corporate governance
matters will require a "super-majority" vote for passage. An eleventh board
seat will be held open and filled by the chief executive officer upon
successful completion of the proposed search.
Upon completion of the merger, based on currently outstanding shares of stock
of the companies, the new company will have approximately 58 million shares of
common stock outstanding. If exercised, various additional warrants and stock
options would raise approximately $100 million and result in the issuance of
approximately 17 million shares.
The new company will consolidate key administrative functions at its respective
facilities in the Philadelphia, Minneapolis and Los Angeles areas and will
integrate its U.S. telemarketing, customer service, warehousing and fulfillment
operations currently centered in Boston, Eden Prairie (Minnesota), Bowling Green
(Kentucky) and Phoenix.
National Media Corporation (NYSE: NM) is the world's largest publicly held
infomercial company. It broadcasts more than 3,000 half-hours of programming
each week, reaches 90 percent of television homes in the United States, and
brings its programming to more than 370 million television households in more
than 70 countries worldwide.
ValueVision International, Inc. (Nasdaq: VVTC) is an integrated electronic and
print media direct marketing company and the third-largest television home
shopping network in the United States.
Bear Stearns & Co., Inc. served as financial advisor to ValueVision; Lehman
Brothers served as financial advisor to National Media.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain information included in this press
release (as well as information included in oral statements or other written
statements made or to be made by the company) contains statements that are
forward-looking, such as statements relating to consummation of the merger,
anticipated future revenues of the merged companies, cost savings and other
synergies resulting from the merger, success of current product offerings, and
recruitment of a new chief executive officer. Such forward-looking information
involves important risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly,such results may differ
materially from those expressed in any forward-looking statements made by or on
behalf of the company. For a description of additional risks and uncertainties,
please refer to the companies' filings with the Securities and Exchange
Commissions, including Forms 10-K and 10-Q.
