SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 22, 2000
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SHOP AT HOME, INC.
(Exact name of registrant as specified in its charter)
Tennessee 0-25596 62-1282758
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
5388 Hickory Hollow Parkway
Antioch, Tennessee 37013
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (615) 263-8000
<PAGE>
ITEM 5. OTHER EVENTS.
On June 30, 2000, Shop At Home, Inc. (the "Company") issued 2,000
shares of its Series B Convertible Preferred Stock and related warrants in a
private placement to institutional investors. On December 22, 2000, the Company
agreed with the holders of its Series B Preferred Stock to amend the terms
thereof. The amendment provides for the redemption of 416 shares of Series B
Preferred Stock on December 29, 2000 and additional shares of Series B Preferred
Stock under certain conditions prior to March 31, 2001. The amendment extends
restrictions on the conversion of the Series B Preferred Stock into Common Stock
and the shorting of stock by holders of the Series B Preferred Stock. The
amendment also waives certain terms of the related warrants. On December 29,
2000 the Company redeemed 416 shares of Series B Preferred Stock pursuant to the
terms of the Redemption and Waiver Agreement. A copy of the Redemption and
Waiver Agreement, dated December 22, 2000, is attached hereto as Exhibit 10.1
and incorporated herein by reference. The Press Release that the Company
released on December 27, 2000 concerning this event is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
10.1 Redemption and Waiver Agreement, dated as of December
22, 2000, by and among Shop At Home, Inc. and the
holders of the Series B Convertible Preferred Stock.
99.1 Press Release.
<PAGE>
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.
SHOP AT HOME, INC.
Dated: January 2, 2001 By:
Name: Arthur D. Tek
Title: Executive Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10.1 Redemption and Waiver Agreement, dated as of December 22, 2000, by and
among Shop At Home, Inc. and the holders of the Series B Convertible
Preferred Stock.
99.1 Press Release.
<PAGE>
Exhibit 10.1
REDEMPTION AND WAIVER AGREEMENT
This Redemption and Waiver Agreement (this "Agreement"), which waives
certain rights and obligations of the parties hereto set forth in the Securities
Purchase Agreement (the "Purchase Agreement"), dated June 30, 2000, by and among
Shop At Home, Inc., a Tennessee corporation (the "Company"), and HFTP Investment
L.L.C. ("HFTP") and Leonardo, L.P. ("Leonardo" and together with HFTP, the
"Buyers") and the Articles of Amendment to the Charter of Shop At Home, Inc.
filed pursuant to the Purchase Agreement on June 30, 2000 (the "Articles of
Amendment") and the Registration Rights Agreement (the "Registration Rights
Agreement"), dated June 30, 2000, by and among the Company and the Buyers and
the warrants (the "Warrants") to purchase shares of the Company's common stock,
par value $0.0025 per share (the "Common Stock") issued to the Buyers pursuant
to the Purchase Agreement as each such document has been amended or waived
pursuant to the September Waiver and Agreement (as defined below), and also sets
forth certain additional agreements between the parties hereto, is dated and
effective as of December 22, 2000.
WHEREAS, the Company desires to redeem from each of the Buyers certain
shares of the Company's Series B Convertible Preferred Stock (the "Preferred
Shares") as set forth below; and
WHEREAS, the Company desires that each Buyer waives certain provisions
of the Articles of Amendment, the Purchase Agreement and the Warrants and enter
into certain agreements relating to the parties rights and obligations as set
forth in those documents;
NOW THEREFORE, for the mutual consideration set forth below each of the
Buyers and the Company agree as follows:
1. Agreements and Waivers.
a. Redemption of Preferred Shares. The Company shall redeem
Preferred Shares from each Buyer in the following amounts and manner:
i. First Redemption. On December 29, 2000 (the
"First Redemption Closing Date"), subject to satisfaction (or
waiver) of the conditions set forth in Sections 5 and 6 hereof, the
Company shall redeem from each Buyer and each Buyer shall allow the
Company to redeem from it that number of Preferred Shares set forth
opposite such Buyer's name on the Schedule of Buyers attached hereto
(the "First Redemption Closing"), which number of Preferred Shares
to be redeemed from all the Buyers at the First Redemption Closing
shall equal in the aggregate 416 Preferred Shares (the "First
Redemption Shares"). The redemption price for each First Redemption
Share shall be equal to 105% of the Conversion Amount (as defined in
the Articles of Amendment) of such First Redemption Share on the First
Redemption Closing Date (the "First Redemption Price").
ii. Additional Redemptions. Subject to satisfaction
(or waiver) of the conditions set forth in Sections 5 and 6 hereof,
upon the issuance of any equity security by the Company (other than
pursuant to the exercise of Options (as defined in the Articles of
Amendment) or Convertible Securities (as defined in the Articles of
Amendment) outstanding on the date of this Agreement), the terms of
which have not been amended or waived since the date of this Agreement)
on or prior to March 31, 2001 (an "Equity Issuance"), the Company shall
redeem from the Buyers, on a pro rata basis (determined based on
the number of Preferred Shares each Buyer initially purchased
pursuant to the Purchase Agreement compared to the total
number of Preferred Shares issued pursuant to the Purchase Agreement),
that number of Preferred Shares (the "Additional Redemption Shares"
and, collectively with the First Redemption Shares, the "Redemption
Shares") for which the aggregate Additional Redemption Price (as
defined below) of all such redeemed Preferred Shares is equal to the
net cash proceeds to the Company from the issuance of such equity
security (each, an "Additional Redemption Closing"). On or before
the first Business Day (as defined below) following the consummation
of an Equity Issuance, the Company shall deliver written notice
of such closing to each Buyer, which notice shall state the net
proceeds to the Company from such Equity Issuance and the Additional
Redemption Closing Date with respect to such Equity Issuance. An
"Additional Redemption Closing Date" means, with respect to each
Equity Issuance, the date which is three (3) Business Days after the
date of consummation of such Equity Issuance. The "Additional
Redemption Price" means, with respect to each Additional Redemption
Share, the product of (A) the Redemption Percentage (as defined in the
Articles of Amendment) on the applicable Additional Redemption Closing
Date, multiplied by (B) the Conversion Amount on the applicable
Additional Redemption Closing Date of such Additional Redemption Share;
and, collectively, the First Redemption Price and the Additional
Redemption Price, are referred to herein as the "Redemption Price".
iii. The Closing Dates. The time of the First
Redemption Closings and each Additional Redemption Closing
(collectively, the "Closings") shall be 1:00 p.m., Eastern Time,
on the First Redemption Date or the Additional Redemption Date,
respectively, (collectively, the "Closing Dates"), subject to
satisfaction (or waiver) of the conditions to the
applicable Closing set forth in Sections 5 and 6 (or such later date as
is mutually agreed to by the Company and each of the Buyers). Each
Closing shall occur on the applicable Closing Date at the offices of
Katten Muchin Zavis, 525 West Monroe Street, Suite 1600, Chicago,
Illinois 60661-3693. "Business Day" means any day other than Saturday,
Sunday or other day on which commercial banks in the city of New York
are authorized or required by law to remain closed.
iv. Payment of Redemption Price. On each Closing
Date (i) the Company shall pay the Redemption Price to each Buyer
for the Redemption Shares being redeemed by the Company from such Buyer
on such Closing Date, by wire transfer of immediately available funds
in accordance with such Buyer's written wire transfer instructions,
and (ii) each Buyer shall deliver to the Company, stock certificates
(the "Stock Certificates") representing such number of Redemption
Shares which the Company is redeeming from such Buyer at such Closing,
duly endorsed for transfer to the Company. If the number of
Preferred Shares represented by the Stock Certificate delivered by
a Buyer to the Company in connection with a Closing is greater than the
number of Preferred Shares that the Company is redeeming from such
Buyer at such Closing, then the Company shall, as soon as practicable
and in no event later than five (5) Business Days after such Closing
and at its own expense, issue and deliver to such Buyer a new Stock
Certificate representing the number of Preferred Shares not redeemed
at such Closing.
b. Waivers to the Purchase Agreement. Provided that, and
for so long as, the Company continues to comply with its obligations under
Sections 1, 4(b) and 8(i) of this Agreement and under the Articles of
Amendment as it relates to the Company's Conversion Election Notices (as defined
in the Articles of Amendment) delivered pursuant to the September Waiver and
Agreement (as defined below), each of the Buyers waives, during the
Forbearance Period (as defined below) only, its right to engage in any
transaction constituting a Short Sale (as defined in the Purchase Agreement),
to the extent such transaction is otherwise prohibited by Section 4(l) of the
Purchase Agreement, solely as a result of the occurrence of an event described
in either clause (c), clause (d), clause (h) or clause (i) of Section 4(l) of
the Purchase Agreement, provided that the occurrence of such event took
place prior to, or during, the Forbearance Period.
c. Agreement on Conversion Restrictions. Notwithstanding
any rights or obligations contained in the Articles of Amendment, the Company
and each of the Buyers agree as follows:
The right of a holder of Preferred Shares to convert Preferred Shares
pursuant to Section 2(b) of the Articles of Amendment shall be limited
as set forth below. Subject to the exceptions described below, without
the prior consent of the Company, no holder of Preferred Shares shall
be entitled to convert any Preferred Shares during the period beginning
on the date hereof and ending on and including March 31, 2001.
Notwithstanding the foregoing, the conversion restrictions set forth in
this Section 6 shall not apply: (i) with respect to each holder of
Preferred Shares, to the number of Preferred Shares equal to the
aggregate of all such holder's Pro Rata Conversion Amounts (as defined
in the Articles of Amendment) set forth in each Company's Election
Conversion Notice (as defined in the Articles of Amendment) received by
such holder on or prior to the date of determination (including,
without limitation, the Company's Election Conversion Notice deemed
delivered by the Company on November 30, 2000, pursuant to the Waiver
and Agreement, dated as of September 21, 2000, by and among the Company
and each of the Buyers (the "September Waiver and Agreement") to the
extent not converted prior to the date of this Agreement); (ii) on or
after any date on which the Common Stock is not quoted on the Nasdaq
National Market or listed on The New York Stock Exchange, Inc. or has
been suspended from trading on such market or exchange (other than
suspensions of not more than one day due to business announcements by
the Company) or on which delisting or suspension by such market or
exchange has been threatened or is pending either (I) in writing by
such market or exchange or (II) by falling below the minimum listing
maintenance requirements of such market or exchange; (iii) on or after
any date on which there shall have occurred a Triggering Event (as
defined in the Articles of Amendment) or an event that with the passage
of time and without being cured would constitute a Triggering Event;
(iv) on or after any date on which a Change of Control (as defined in
the Articles of Amendment) shall have been consummated or there has
been a public announcement of a pending, proposed or intended Change of
Control; (v) on or after any date on which the Company issues or sells
or is deemed to have issued or sold any Convertible Securities or
Options that are convertible into or exercisable or exchangeable for
shares of Common Stock at a conversion or exercise price which varies
or may vary with the market price of the Common Stock, including by way
of one or more reset(s) to a fixed price; (vi) on or after any date on
which the Company fails to pay the Company's Election Redemption Price
(as defined in the Articles of Amendment) or the Redemption Price for
any Preferred Shares in a timely manner in accordance with a Redemption
at Company's Election pursuant to Section 6 of the Articles of
Amendment or pursuant to Section 1 hereof, respectively; (vii) with
respect to the conversion of any Preferred Share pursuant to a
Conversion Notice (as defined in the Article of Amendment) delivered to
the Company in accordance with Section 2 (d) (i) of the Articles of
Amendment on a date in which the Closing Sale Price (as defined in the
Articles of Amendment) of the Common Stock is greater than $5.00
(subject to adjustment for stock splits, stock dividends, stock
combinations and other similar transactions after the date of this
Agreement); (viii) with respect to any conversion of Preferred Shares
at a price equal to the Fixed Conversion Price then in effect; or
(ix) on and after the first date on which the Company fails to comply
in any respect with its obligations under Section 4(n) of the Purchase
Agreement or Section 1, Section 4(b) or Section 8(i) of this Agreement
and under the Articles of Amendment as it relates to the Company's
Conversion Election Notices delivered pursuant to the September Waiver
and Agreement.
d. Amendment to the Warrants. Each of the Buyers and the
Company amend the Warrant held by each such Buyer by replacing Section 8(a) in
its entirety with the following:
Adjustment of Warrant Exercise Price upon Issuance of Common Stock. If
and whenever on or after the date of issuance of this Warrant, the
Company issues or sells, or is deemed to have issued or sold, any
shares of Common Stock (including the issuance or sale of shares of
Common Stock owned or held by, or for the account, of the Company, but
excluding (A) shares of Common Stock issued or deemed to have been
issued by the Company in connection with an Approved Stock Plan or upon
exercise or conversion of the Other Securities and (B) the Excluded
Securities) for a consideration per share less than a price (the
"Applicable Price") equal to the Warrant Exercise Price in effect
immediately prior to such issuance or sale, then immediately after such
issue or sale the Warrant Exercise Price then in effect shall be
reduced to an amount equal to the consideration, if any, received by
the Company upon such issue or sale; provided, however, that the
Warrant Exercise Price shall not be reduced pursuant to this Section
8(a) at any time that the amount of such reduction would be an amount
less than 2% of the Warrant Exercise Price immediately preceding such
reduction, but any such amount shall be carried forward and a reduction
in the Warrant Exercise Price pursuant to this Section 8(a) shall be
made with respect to such amount at the earlier of (x) such time as all
such amounts which have been carried forward pursuant to this provison
aggregate 2% or more of the Warrant Exercise Price then in effect and
(y) the next reduction of the Warrant Exercise Price pursuant to this
Section 8(a).
Notwithstanding the foregoing, the amendment set forth in this Section
1(d) shall be null and void and of no further force or effect on and after the
first date hereof on which the Company fails in any respect to comply with its
obligations under Sections 1, 4(b) or 8(i) of this Agreement and under the
Articles of Amendment as it relates to the Company's Conversion Election Notices
delivered pursuant to the September Waiver and Agreement.
e. Definitions. "Forbearance Period" shall mean the period
beginning on and including the date hereof and ending on and including March 31,
2001.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
Each Buyer represents and warrants with respect to only itself
that:
a. Authorization; Enforcement. This Agreement has been duly
and validly authorized, executed and delivered on behalf of such Buyer and
is a valid and binding agreement of such Buyer enforceable against such Buyer
in accordance with its terms, subject as to enforceability to general principles
of equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Buyers
that:
a. Organization and Qualification. The Company is a
corporation duly organized and validly existing in good standing under the laws
of the State of Delaware and has the requisite corporate power and
authorization to own its properties and to carry on its business as now being
conducted.
b. Authorization; Enforcement; Validity. The Company has
the requisite corporate power and authority to enter into and perform its
obligations under this Agreement. The execution and delivery of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby, including without limitation the redemption of the Redemption Shares,
has been duly authorized and approved by the Company's Board of Directors
and no further consent or authorization is required by the Company, its Board
of Directors or its stockholders. This Agreement has been duly executed and
delivered by the Company and constitutes the valid and binding obligations
of the Company enforceable against the Company in accordance with its terms,
subject as to enforceability to general principles of equity and to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.
c. No Conflicts. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby (including, without limitation, the redemption
of the Redemption Shares) will not (i) result in a violation of the Company's
Charter, as amended and as in effect on the date hereof (the "Charter"), and the
Company's Bylaws, as amended and as in effect on the date hereof (the "Bylaws");
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party; (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal Market (as
defined below)) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries is bound or
affected. The Company is not required to obtain any consent (that has not been
obtained prior to the First Redemption Closing Date), authorization or order of,
or make any filing or registration with, any court or governmental agency, any
regulatory or self-regulatory agency, or any other person or entity in order for
it to execute, deliver or perform any of its obligations under or contemplated
by this Agreement in accordance with the terms hereof.
d. SEC Documents; Financial Statements. Since June 30, 1999,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange Commission
(the "SEC") pursuant to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "1934 Act") (all of the foregoing filed prior to
the date hereof and all exhibits included therein and financial statements and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the "SEC Documents"). As of their respective dates,
the SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents. None of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Neither the Company nor any of its subsidiaries or any of their
officers, directors, employees or agents have provided the Buyers with any
material, nonpublic information.
e. Absence of Certain Changes. The Company has not taken any
steps, and does not currently expect to take any steps, to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
f. No Other Agreements. The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or
conditions of the transactions contemplated by this Agreement except as set
forth in this Agreement.
4. COVENANTS.
a. Best Efforts. Each party shall use its best efforts to
timely satisfy each of the conditions to be satisfied by it as provided in
Sections 5 and 6 of this Agreement.
b. Filing of Form 8-K and Public Announcement. On or before
the first (1st) Business Day following the First Redemption Closing Date, the
Company shall file a current report on Form 8-K with the SEC describing the
terms of the transactions contemplated by this Agreement and include as exhibits
to such Form 8-K this Agreement in the form required by the 1934 Act. Prior to
the Company's delivering written notice to the Buyers concerning the
consummation of an Equity Issuance pursuant to Section 1(a)(ii), the Company
shall publicly disclose the material terms of such Equity Issuance (including,
without limitation, the net proceeds to the Company from such Equity Issuance
and any other information included in such written notice). If the Company fails
to redeem all the Redemption Shares required on any Additional Redemption
Closing Date, then by 5:00 p.m., Eastern Time, the Company shall publicly
announce that it has failed to redeem all required Preferred Shares on such
Additional Redemption Closing Date. In the event that the Company breaches its
obligation in the immediately preceding sentence, then, in addition to any other
remedy provided for herein, each Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material nonpublic information without the prior approval of the Company
or its officers, directors, employees or agents. No Buyer shall have any
liability to the Company, its subsidiaries, or any of its or their respective
officers, directors, employees, shareholders or agents for any such disclosure.
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligation of the Company hereunder to redeem the applicable number of
Redemption Shares from any Buyer at an applicable Closing is subject to the
satisfaction, at or before such Closing Date, of each of the following
conditions, provided that these conditions are for the Company's sole benefit
and may be waived by the Company at any time in its sole discretion by providing
each Buyer with prior written notice thereof:
i. Such Buyer shall have executed this Agreement
and delivered the same to the Company.
ii. Such Buyer shall have delivered to the
Company the Stock Certificates representing the Redemption Shares
to be redeemed by the Company from such Buyer at such Closing.
iii. The representations and warranties of such Buyer
contained herein shall be true and correct as of the date when made
and as of such Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date), and
such Buyer shall have performed, satisfied and complied with the
covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by such Buyer at or prior to the
such Closing Date.
6. CONDITIONS TO EACH BUYER'S OBLIGATIONS AT CLOSING. The
obligation of each Buyer hereunder to permit the Company to redeem the
applicable number of Redemption Shares at the applicable Closing is subject to
the satisfaction, at or before the applicable Closing Date, of each of the
following conditions, provided that these conditions are for such Buyer's sole
benefit and may be waived by such Buyer at any time in its sole discretion by
providing the Company and each other Buyer with prior written notice thereof:
i. The Company shall have executed this Agreement
and delivered the same to such Buyer.
ii. The representations and warranties of the
Company contained herein shall be true and correct as of the date
when made and as of the applicable Closing Date as though made at
that time (except for representations and warranties that speak as
of a specific date) and the Company shall have performed, satisfied
and complied with the covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the
Company at or prior to the applicable Closing Date. Such Buyer shall
have received a certificate, executed by the Chief Executive Officer of
the Company, dated as of the applicable Closing Date, to the foregoing
effect.
iii. The Company shall have delivered to such Buyer
the applicable Redemption Price for the number of Redemption Shares
being redeemed by the Company from such Buyer on the applicable Closing
Date.
iv. The Board of Directors of the Company shall have
adopted resolutions consistent with Section 3(b) above (the
"Resolutions").
v. The Company shall have delivered to such Buyer
a secretary's certificate, dated as of the applicable Closing Date,
certifying as to (A) the Resolutions, (B) the Charter and (C) the
By-laws, each as in effect at the applicable Closing.
7. INDEMNIFICATION. In consideration of each Buyer's execution
and delivery of this Agreement and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend, protect, indemnify
and hold harmless each Buyer and all of their stockholders, officers, directors,
employees and direct or indirect Buyers and any of the foregoing persons' agents
or other representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the "Indemnitees") from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Indemnitee is
a party to the action for which indemnification hereunder is sought), and
including reasonable attorneys' fees and disbursements (the "Indemnified
Liabilities"), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in this Agreement or
any other certificate, instrument or document contemplated hereby or thereby or
(c) any cause of action, suit or claim brought or made against such Indemnitee
(other than a cause of action, suit or claim which is brought or made by the
Company or its stockholders whether directly or as a derivative suit) and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other certificate, instrument or document
contemplated hereby, other than those arising out of a Buyer's breach of the
terms hereof or thereof. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 7 shall be the same as those set forth in
Sections 6(a) and (d) of the Registration Rights Agreement, including, without
limitation, those procedures with respect to the settlement of claims and the
Company's rights to assume the defense of claims.
8. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the non-exclusive jurisdiction of
the state and federal courts sitting in the City of New York, borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
b. Counterparts. This Agreement may be executed in two or
more identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other parties; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.
c. Headings. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement supersedes
all other prior oral or written agreements between the Buyers, the Company,
their affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. Notwithstanding the
foregoing the Purchase Agreement, the Warrants, the Registration Rights
Agreement, the September Waiver and Agreement and the Articles of Amendment
shall remain in full force and effect with respect to the securities and the
transactions contemplated thereby. No provision of this Agreement may be amended
other than by an instrument in writing signed by the Company and the Buyers
which on the date of this Agreement held at least two-thirds of the
aggregate number of Preferred Shares outstanding and no provision hereof may be
waived other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that
it applies to less than all of the Buyers. No consideration shall be offered or
paid to any person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is offered to all
of the parties to this Agreement.
f. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of the Preferred Shares and Warrants. The
Company shall not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Buyers which as of the date of this
Agreement held at least two-thirds of the aggregate number of Preferred
Shares outstanding. A Buyer may assign some or all of its rights under this
Agreement without the consent of the Company; provided, however, that any such
assignment shall not release such Buyer from its obligations hereunder unless
such obligations are assumed by such assignee and the Company has consented to
such assignment and assumption, which consent shall not be unreasonably
withheld. Notwithstanding anything to the contrary contained in this Agreement,
the Buyers shall be entitled to pledge the Preferred Shares and the Warrants in
connection with a bona fide margin account or other loan or financing
arrangement secured by the Preferred Shares and the Warrants.
g. No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
h. Survival. Unless this Agreement is terminated under
Section 8(k), the representations and warranties of the Company and the Buyers
contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 1, 4 and 8, and the indemnification provisions set forth in Section 7,
shall survive each of the Closings. Each Buyer shall be responsible only for its
own representations, warranties, agreements and covenants hereunder.
i. Publicity. The Company and each Buyer shall have the
right to approve before issuance any press releases or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company shall be entitled, without the prior approval of any
Buyer, to make any press release or other public disclosure with respect to such
transactions as the Company reasonably believes, after consulting with its
counsel, to be required by applicable law and regulations (although each Buyer
shall be consulted by the Company in connection with any such press release or
other public disclosure prior to its release and shall be provided with a copy
thereof).
j. Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
k. Termination. In the event that the First Redemption Closing
shall not have occurred with respect to a Buyer on December 29, 2000 due to the
Company's or the Buyer's failure to satisfy the conditions set forth in Sections
5 and 6 above (and the non-breaching party's failure to waive such unsatisfied
condition(s)), any non-breaching party shall have the option to terminate this
Agreement with respect to such non-breaching party at the close of business on
such date or any day thereafter without liability of any party to any other
party.
l. No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
m. Remedies. Each Buyer shall have all rights and remedies
set forth in this Agreement and all rights and remedies which such Buyer has
been granted at any time under any other agreement or contract (including,
without limitation, the Purchase Agreement, the Warrants, the Registration
Rights Agreement and the Charter) and all of the rights which such holders have
under any law. Any person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without posting
a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law.
n. Payment Set Aside. To the extent that the Company makes
a payment or payments to any Buyer hereunder or such Buyer enforces or exercises
its rights hereunder or thereunder, and such payment or payments or the proceeds
of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company or to a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then, to the extent of any such restoration,
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
o. Mutual General Release. i. In consideration of the release
set forth in Section 8(o)(ii), effective as of the First Redemption Closing (the
"Effective Time") each Buyer, severally and not jointly, on behalf of itself and
its heirs, executors, administrators, devisees, trustees, partners, directors,
officers, shareholders, employees, consultants, representatives, predecessors,
principals, agents, parents, associates, affiliates, subsidiaries, attorneys,
accountants, successors, successors-in-interest and assignees (collectively, the
"Buyer Releasing Persons"), hereby waives and releases, to the fullest extent
permitted by law and to the extent that such Buyer has the power to grant such
waiver and release, but subject to Section 8(o)(iii) below, any and all claims,
rights and causes of action, whether known or unknown arising prior to the date
hereof (collectively, the "Buyer Claims"), that any of the Buyer Releasing
Persons had or currently has against (i) the Company, (ii) any of the Company's
current or former parents, shareholders, affiliates, subsidiaries, predecessors
or assigns, or (iii) any of the Company's or such other persons' or entities'
current or former officers, directors, employees, agents, principals, investors,
signatories, advisors, consultants, spouses, heirs, estates, executors,
attorneys, auditors and associates and members of their immediate families
(collectively, the "Company Released Persons"), including, without limitation,
Buyer Claims arising out of or relating to the Purchase Agreement, the
Registration Rights Agreement, the Charter, the September Waiver Agreement and
the Warrants (collectively, the "Released Documents") (other than arising after
the Effective Time).
ii. In further consideration of the Buyers entering
into this Agreement, effective as of the date of this Agreement, the
Company on behalf of itself and its heirs, executors, administrators,
devisees, trustees, partners, directors, officers, shareholders,
employees, consultants, representatives, predecessors, principals,
agents, parents, associates, affiliates, subsidiaries, attorneys,
accountants, successors, successors-in-interest and assignees
(collectively, the "Company Releasing Persons"), hereby waives and
releases, to the fullest extent permitted by law and to the extent the
Company has the power to grant such waiver and release, but subject to
Section 8(o)(iii) below, any and all claims, rights and causes of
action, whether known or unknown arising prior to the date hereof
(collectively, the "Company Claims"), that any of the Company Releasing
Persons had or currently has against (i) the Buyers, (ii) any of the
Buyers' respective current or former parents, shareholders, affiliates,
subsidiaries, predecessors or assigns, or (iii) any of the Buyers' or
such other persons' or entities' current or former officers, directors,
employees, agents, principals, investors, signatories, advisors,
consultants, spouses, heirs, estates, executors, attorneys, auditors
and associates and members of their immediate families (collectively,
the "Buyer Released Persons"), including, without limitation, any
Company Claims arising out of or relating to the Released Documents.
iii. The Company and each of the Buyers acknowledges
that the release set forth in Sections 8(o)(i) and 8(o)(ii) above does
not affect any claim which any Company Releasing Person or Buyer
Releasing Person may have under this Agreement, Section 8 of the
Purchase Agreement or Section 6 or Section 7 of the Registration Rights
Agreement.
<PAGE>
IN WITNESS WHEREOF, the Buyers and the Company have caused this
Agreement to be duly executed as of the date first written above.
COMPANY: BUYERS:
------- ------
SHOP AT HOME, INC. HFTP INVESTMENT L.L.C.
By: /s/ Kent E. Lillie By: Promethean Asset Management L.L.C.
-----------------------
Name: Kent E. Lillie Its: Investment Manager
----------------
Title: President/ CEO
By: /s/ John Floegel
Name: John Floegel
Title: Authorized Representative
LEONARDO, L.P.
By: Angelo, Gordon & Co., L.P.,
Its: General Partner
By: /s/ Michael L. Gordon
Name: Michael L. Gordon
Title: Chief Operating Officer
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF BUYERS
Number of
Preferred
Shares
Buyer Address to be Buyer's Legal Representatives'
Buyer's Name and Facsimile Number Redeemed Address and Facsimile Number
<S> <C> <C> <C>
HFTP Investment L.L.C. _Promethean Asset Management, L.L.C. 208 Katten Muchin & Zavis
750 Lexington Avenue, 22nd Floor 525 W. Monroe Street
New York, NY 10022 Chicago, Illinois 60661-3693
Attention: David M. Kittay Attention: Robert J. Brantman, Esq.
John Floegel Telephone: (312) 902-5200
Telephone: (212) 702-5200 Facsimile: (312) 902-1061
Facsimile: (212) 758-9334
Residence: New York
Leonardo, L.P. c/o Angelo, Gordon & Co., L.P. 208 c/o Angelo, Gordon & Co., L.P.
245 Park Avenue - 26th Floor 245 Park Avenue - 26th Floor
New York, New York 10167 New York, New York 10167
Attention: Ari Storch Attention: Ari Storch
Adam Chill Adam Chill
Telephone: (212) 692-2035 Telephone: (212) 692-2035
Facsimile: (212) 867-6449 Facsimile: (212) 867-6449
Residence: Cayman Islands
</TABLE>
<PAGE>
Exhibit 99.1
Contact:
Arthur D. Tek
Executive Vice President
and Chief Financial Officer
615-263-8000
Shop At Home Announces $4.5 Million Cash Redemption
of Preferred Stock
Preferred Shareholders Extend Standstill Period to March 31, 2001
-----------------------------------------
NASHVILLE, TENNESSEE (December 27, 2000) - - Shop At Home,
Inc. (Nasdaq: SATH), an electronic commerce leader in both the broadcast and
Internet channels, announced today that it is redeeming 416 shares of its Series
B Preferred Stock for $4.5 million in cash. The redemption consideration was
determined in accordance with the provisions of the Company's Charter, and
includes accrued dividends and will be paid on December 29, 2000. The Company
originally issued 2,000 shares of the Series B Preferred (with a total stated
value of $20,000,000) on June 30, 2000. The Series B stockholders have
previously converted 871 shares and have been mandated by the Company to convert
up to another 129 shares by December 31, 2000. When the cash redemption and
mandated conversions are completed at year-end, there will be 584 shares of
Series B Preferred Stock outstanding with a stated value of $5,840,000 (assuming
that the terms of the Company's Charter permit the Series B stockholders to
convert all 129 shares by December 31, 2000 as mandated by the Company).
Shop At Home's President and CEO, Kent Lillie, said: "This
redemption and agreement with our Preferred stockholders reduces the overhang on
our common stock to a modest level. As of December 31, 2000, our Preferred
shareholders will have converted 1,000 shares and the Company will have
repurchased 416 of the original 2,000 shares, or a total of $14,160,000 of the
original $20,000,000. It is expected that the remainder $5,840,000 plus accrued
interest will be converted or redeemed in an orderly fashion by March 31, 2001.
We appreciate the cooperation of the Series B investors in extending the
standstill period which will allow us to better maximize value for all our
shareholders, Common as well as Preferred."
Houston Station Sale
The Company announced on November 13, 2000 an agreement to
sell its Houston television station, KZJL, Channel 61, for $57 million in cash
at closing and certain rights to its 700 MHz spectrum to Liberman Broadcasting
Company. It is expected that the Federal Communications Commission will approve
the transfer of the license within the next several weeks, and that the sale and
transfer will be completed by the end of February.
Additional Details Regarding the Preferred Shareholder Rights
The Company also announced that the Series B holders have
agreed to extend until March 31, 2001, the current restrictions on converting
the Series B Preferred Stock and shorting common stock which otherwise would
have expired on December 31, 2000. In general, these restrictions prohibit the
holders of Series B Preferred Stock from converting their shares to common stock
and from shorting common stock in excess of the number of shares underlying the
warrants they hold. The Company agreed to use the net cash proceeds of any
equity offering completed before March 31, 2001 to redeem additional shares of
Series B Preferred Stock. No such equity offering is currently contemplated.
Also with regard to the warrants, the holders of the Series B Preferred Stock
agreed to waive the provision of the warrant, which would have increased the
number of shares issuable upon exercise of the warrants if the Company were to
issue additional shares of common stock at a price below the warrant exercise
price. Therefore, the number of shares of common stock underlying the warrant is
a fixed number.
About Shop At Home
Shop At Home, Inc., a leader in converged technology, is a
premier retailer of specialty consumer products, primarily collectibles, through
interactive electronic media including broadcast, cable and satellite television
and, increasingly, over the Internet. Shop At Home Network reaches over 60
million unique cable and satellite households and owns full power television
stations in San Francisco, Boston, Houston, Cleveland, Raleigh and Bridgeport,
which is licensed to the New York market.
Shop At Home also operates collectibles.com, a leading online
site for the retail sale of collectibles products that features state-of-the-art
technology from Oracle Corp. (Nasdaq: ORCL), and others to offer collectors a
unique online shopping experience. collectibles.com has completed
exclusive-to-the-Internet distribution agreements with more than 85 of the
leading manufacturers and licensees of collectibles products. For more
information, visit www.collectibles.com.
--------------------------------------------------------------------------------
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995 - This release contains forward-looking statements within the meaning of
Section 27A of Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Actual results may differ materially from those identified for a
number of reasons as are discussed from time to time in Shop At Home's SEC
reports, including but not limited to the registration statement on Form S-3 as
amended on July 1, 1999, the report on Form 10-K for the year ended June 30,
2000 (Business and Management's Discussion and Analysis of Financial Condition
and Results of Operations), the Form 10-Q filed for the Quarter ending September
30, 2000 and any recent Forms 8-K.
--------------------------------------------------------------------------------
####
