<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 4)*
VALUEVISION INTERNATIONAL, INC.
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
92047K10
(CUSIP Number)
Montgomery Ward & Co., Incorporated
Montgomery Ward Plaza
Chicago, Illinois 60671
ATTN: John L. Workman
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 27 and 28, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D,
and is filing this Schedule because of Rule 13d-1(b)(3) or (4), check
the following box.
Check the following box if a fee is being paid with the statement.
(A fee is not required only if the Reporting Person: (1) has a
previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1; and
(2) has filed no amendment subsequent thereto reporting beneficial
ownership of five percent or less of such class.) (See Rule 13d-7.)
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Note. Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1 (a) for other parties
to whom copies are to be sent.
(Continued on following pages) <PAGE>
<PAGE>
_____________________________________________________________________
1. Name of Reporting Person:
Montgomery Ward & Co., Incorporated
_____________________________________________________________________
2. Check the Appropriate Box if a Member of a Group:
(a)
(b) X
_____________________________________________________________________
3. SEC Use Only
_____________________________________________________________________
4. Source of Funds: WC
_____________________________________________________________________
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
_____________________________________________________________________
6. Citizenship or Place of Organization: Illinois
_____________________________________________________________________
7. Sole Voting Power: 5,122,143 (But see
Items 4 and 5)
Number of _____________________________________________
Shares
Beneficially 8. Shared Voting Power: 0
Owned By _____________________________________________
Each
Reporting 9. Sole Dispositive Power: 5,122,143 (But
Person see Items 4 and 5)
With _____________________________________________
10. Shared Dispositive Power: 0
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
5,122,143 (But see Items 4 and 5)
_____________________________________________________________________
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
_____________________________________________________________________
13. Percent of Class Represented by Amount in Row (11): 15.2% (But
see Items 4 and 5)
_____________________________________________________________________
14. Type of Reporting Person: CO <PAGE>
_____________________________________________________________________ <PAGE>
<PAGE>
_____________________________________________________________________
1. Name of Reporting Person:
Montgomery Ward Holding Corp.
_____________________________________________________________________
2. Check the Appropriate Box if a Member of a Group: (a)
(b) X
3. SEC Use Only
_____________________________________________________________________
4. Source of Funds: WC
_____________________________________________________________________
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
_____________________________________________________________________
6. Citizenship or Place of Organization: Delaware
_____________________________________________________________________
7. Sole Voting Power: 0
_____________________________________________
Number of
Shares 8. Shared Voting Power: 5,122,143(1) (But
Beneficially see Items 4 and 5)
Owned By _____________________________________________
Each
Reporting 9. Sole Dispositive Power: 0
Person _____________________________________________
With
10. Shared Dispositive Power:
5,122,143 (1) (But see Items 4 and 5)
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
5,122,143 (But see Items 4 and 5)
_____________________________________________________________________
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
_____________________________________________________________________
13. Percent of Class Represented by Amount in Row (11): 15.2% (But
see Items 4 and 5)
_____________________________________________________________________
14. Type of Reporting Person: CO
_____________________________________________________________________
(1) Solely in its capacity as the sole stockholder of Montgomery Ward &
Co., Incorporated, an Illinois corporation. <PAGE>
<PAGE>
_____________________________________________________________________
1. Name of Reporting Person:
Bernard F. Brennan
_____________________________________________________________________
2. Check the Appropriate Box if a Member of a Group: (a)
(b) X
3. SEC Use Only
_____________________________________________________________________
4. Source of Funds: WC
_____________________________________________________________________
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
_____________________________________________________________________
6. Citizenship or Place of Organization: United States
_____________________________________________________________________
7. Sole Voting Power: 0
_____________________________________________
Number of
Shares 8. Shared Voting Power: 5,122,143(1) (But
Beneficially see Items 4 and 5)
Owned By _____________________________________________
Each
Reporting 9. Sole Dispositive Power: 0
Person _____________________________________________
With
10. Shared Dispositive Power:
5,122,143(1) (But see Items 4 and 5)
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
5,122,143 (But see Items 4 and 5)
_____________________________________________________________________
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
_____________________________________________________________________
13. Percent of Class Represented by Amount in Row (11): 15.2% (But
see Items 4 and 5)
_____________________________________________________________________
14. Type of Reporting Person: IN
_____________________________________________________________________
(1)Mr. Brennan is Chairman of the Board and Chief Executive Officer of each of
Montgomery Ward & Co., Incorporated, an Illinois corporation, and Montgomery
Ward Holding Corp., a Delaware corporation, and Designator under that certain
Stockholders' Agreement dated as of June 17, 1988, as amended and restated to
date, applicable to shares of common stock of Montgomery Ward Holding Corp.
As Designator, Mr. Brennan has the right to designate a majority of the board of
directors of Montgomery Ward Holding Corp. In addition, Mr. Brennan has the
right to vote approximately 38% of the outstanding shares of common stock of
Montgomery Ward Holding Corp. <PAGE>
<PAGE>
_____________________________________________________________________
1. Name of Reporting Person:
Montgomery Ward Direct, L.P.
_____________________________________________________________________
2. Check the Appropriate Box if a Member of a Group: (a)
(b) X
_____________________________________________________________________
3. SEC Use Only
_____________________________________________________________________
4. Source of Funds: OO
_____________________________________________________________________
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
_____________________________________________________________________
6. Citizenship or Place of Organization: Delaware
_____________________________________________________________________
Number 7. Sole Voting Power: 0
of
Shares _____________________________________________
Beneficially
Owned By 8. Shared Voting Power: 0
Each _____________________________________________
Reporting
Person 9. Sole Dispositive Power: 0
With
10. Shared Dispositive Power: 0
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 0
_____________________________________________________________________
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
_____________________________________________________________________
13. Percent of Class Represented by Amount in Row (11): 0.0% (But
see Items 4 and 5)
_____________________________________________________________________
14. Type of Reporting Person: PN
_____________________________________________________________________<PAGE>
<PAGE>
_____________________________________________________________________
1. Name of Reporting Person:
MW Direct General, Inc.
_____________________________________________________________________
2. Check the Appropriate Box if a Member of a Group: (a)
(b) X
_____________________________________________________________________
3. SEC Use Only
_____________________________________________________________________
4. Source of Funds: OO
_____________________________________________________________________
5. Check box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) or 2(f):
_____________________________________________________________________
6. Citizenship or Place of Organization: Delaware
_____________________________________________________________________
7. Sole Voting Power: 0
_____________________________________________
Number of
Shares 8. Shared Voting Power: 0
Beneficially
Owned By _____________________________________________
Each
Reporting 9. Sole Dispositive Power: 0
Person
With _____________________________________________
10. Shared Dispositive Power: 0
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person: 0
_____________________________________________________________________
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain
Shares:
_____________________________________________________________________
13. Percent of Class Represented by Amount in Row (11): 0.0% (But
see Items 4 and 5)
_____________________________________________________________________
14. Type of Reporting Person: CO
_____________________________________________________________________
(1) Solely in its capacity as the sole general partner of Montgomery Ward
Direct, L.P., a Delaware limited partnership. <PAGE>
<PAGE>
This statement constitutes Amendment No. 4 to the Statement on
Schedule 13D (the "Schedule 13D") filed March 22, 1995 by Montgomery
Ward & Co., Incorporated, an Illinois corporation, Montgomery Ward
Holding Corp., a Delaware corporation, and Bernard F. Brennan in
connection with the beneficial ownership of shares of common stock,
$.01 par value, of ValueVision International, Inc., a Minnesota
corporation. Capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed thereto in the Schedule 13D,
as amended through Amendment No. 3 thereto.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and restated as follows:
The source and amount of funds or other consideration used by
the Reporting Persons to purchase the Purchased Shares (as defined
herein) consisted solely of working capital of MW. MW has not yet
determined the source of funds or other consideration to be used to
exercise any Warrants (as defined herein) or New Warrants (as defined
herein). New Warrants have been received by Direct as consideration
for the acquisition by the Company of substantially all of the
assets, and the assumption by the Company of enumerated liabilities,
of Direct.
Item 4. Purpose of Transaction.
Item 4 is hereby amended and restated as follows:
The Shares to which this statement relates have been acquired
for investment purposes and to influence the direction and management
of the Company.
On March 13, 1995, the Company and MW entered into each of an
Operating Agreement (the "Operating Agreement"), a Credit Card
License and Receivables Sales Agreement, and a Servicemark License
Agreement (collectively, the "Related Agreements"), pursuant to which
MW provides the Company with certain operational support, including
merchandise sourcing and permitting the use of MW credit cards by the
Company's customers.
Also on March 13, 1995, the Company and MW entered into a
Securities Purchase Agreement (the "Securities Purchase Agreement"),
pursuant to which, on August 8, 1995 (the "Closing Date"), the
Company issued and sold to MW 1,280,000 Shares (the "Purchased
Shares") at a price of $6.25 per share, or $8,000,000 in the
aggregate. Also pursuant to the Securities Purchase Agreement, on
the Closing Date the Company issued and sold to MW non-transferable
warrants (the "Warrants") to purchase an aggregate of 25,000,000
Shares with exercise prices ranging from $6.50 to $17.00 per Share,
and an average exercise price of $9.16 per Share. The Warrants were
subject to the terms and provisions of a Warrant Agreement (the
"Warrant Agreement") dated August 8, 1995 between the Company and MW,
which provided terms with respect to vesting of the Warrants, their
<PAGE>
expiration, certain termination rights, certain adjustment mechanisms
and pre-emptive rights.
On the Closing Date, the Company and MW entered into a
Registration Rights Agreement pursuant to which MW has certain demand
and so-called "piggyback" registration rights.
Pursuant to the Operating Agreement, the Company expanded its
board of directors from five members to seven and agreed to nominate
and recommend to the stockholders of the Company in the Company's
Proxy Statement for its annual meeting of stockholders two
individuals designated by MW to fill the two new directorships.
The foregoing descriptions of the Securities Purchase
Agreement, the Operating Agreement, the Warrant Agreement, the
Registration Rights Agreement and the Warrants are qualified in their
entirety by reference to the texts of such documents, which are filed
as Exhibits 1, 2, 6, 7 and 8 hereto, respectively, and incorporated
herein by reference.
On September 5, 1996, MW and the Company entered into a
Restructuring Agreement dated as of July 27, 1996 (the "Restructuring
Agreement") with respect to a restructuring of the relationship
between the Company and MW. The consummation of such restructuring
occurred on September 27, 1996 (the "1996 Closing Date"), and on such
date the parties entered into, among other agreements, amendments and
restatements of the Operating Agreement, the Warrant Agreement and
the Registration Rights Agreement. The foregoing description is
qualified in its entirety by reference to the Restructuring Agreement
(including the exhibits thereto) filed as Exhibit 10 hereto and
incorporated herein by reference.
On the 1996 Closing Date, pursuant to the Restructuring
Agreement, in connection with certain revisions to the terms of the
Operating Agreement and the Related Agreements and the acquisition by
the Company of the assets of Direct, all of the Warrants, other than
7,000,000 Warrants which were currently exercisable, were replaced
with new "Series P" warrants to purchase 1,484,467 Shares at an
exercise price of $0.01 per Share ("New Warrants") and Direct
received New Warrants with respect to 1,484,993 Shares. All New
Warrants expire on August 8, 2003 and are fully exercisable.
The Operating Agreement, as amended and restated, now provides
that during the period commencing on the 1996 Closing Date and ending
on the first to occur of (x) the date on which MW owns or has the
right to own less than 10% of the outstanding common stock of the
Company (computed on a fully diluted basis) and (y) the date on which
the Operating Agreement terminates, MW will have the right to
designate one nominee on the Company's slate of nominees for the
Company's Board of Directors. MW, the Company and Messrs. Robert
Johander and Nicholas Jaksich agreed in the amended and restated
Operating Agreement to vote all shares over which they have voting
power for the election of the slate of directors nominated by the
Company, including the MW designees. MW's right to designate<PAGE>
<PAGE>
individuals to serve as directors of the Company is subject to
certain limitations provided in the amended and restated Operating
Agreement. John L. Workman, who was originally elected as a director
of the Company on August 8, 1995, currently serves as MW's nominee on
the Company's board of directors.
On September 4, 1996, MW, the Company and Merchant Advisors,
Limited Partnership ("MALP") entered into an agreement dated as of
July 27, 1996 (the "MPLP Agreement") with respect to a contribution
to be made by each of MW, the Company and MALP to Merchant Partners,
Limited Partnership ("MPLP"). Each of MW and the Company are limited
partners of MPLP and MALP is the sole general partner of MPLP.
Pursuant to the MPLP Agreement, on the 1996 Closing Date, MW
contributed to MPLP New Warrants with respect to 1,327,317 Shares and
the Company contributed to MPLP New Warrants with respect to 199,097
Shares. MALP concurrently contributed to MPLP cash and a promissory
note in an amount determined pursuant to the MPLP Agreement. The
foregoing description is qualified in its entirety by reference to
the MPLP Agreement filed as Exhibit 11 hereto and incorporated herein
by reference.
Also on the 1996 Closing Date, Direct and its partners made a
liquidating distribution of the New Warrants received on the 1996
Closing Date by Direct, and such New Warrants are, therefore, now
held directly by MW.
On September 28, 1996, pursuant to an Exchange Agreement dated
as of September 28, 1996 between MW and the Company (the "Exchange
Agreement"), MW exchanged the 7,000,000 exercisable Warrants held by
it with the Company for 2,200,000 New Warrants. Following such
transaction, MW no longer holds any Warrants, but holds New Warrants
with respect to an aggregate of 3,842,143 Shares. In connection with
this exchange, the parties entered into a Second Amended and Restated
Warrant Agreement and a Second Amended and Restated Registration
Rights Agreement, each of which contained amendments reflecting the
exchange of all remaining original Warrants. The foregoing
description of the Exchange Agreement is qualified in its entirety by
reference to the text of the Exchange Agreement, which is filed as
Exhibit 12 hereto and incorporated herein by reference.
The foregoing descriptions of the Amended and Restated
Operating Agreement, the Second Amended and Restated Warrant
Agreement, the Second Amended and Restated Registration Rights
Agreement and the New Warrants are qualified in their entirety by
reference to the texts of such documents, which are filed as Exhibits
13, 14, 15 and 16 hereto, respectively, and incorporated herein by
reference.
The Reporting Persons intend to review continuously their
investment in the Company and, on the basis of such review and such
market and other factors as they may deem relevant, may, subject to
the limitations contained in the agreements described above,
determine to increase or decrease their investment in the Company.
In addition, the designees of MW on the Company's board of directors<PAGE>
<PAGE>
may make proposals and take such other actions as are commensurate
with their rights and duties as directors.
Except as described herein, the Reporting Persons have no plans
or proposals with respect to the Company that relate to or would
result in any of the actions specified in clauses (a) through (j) of
Item 4 of Schedule 13D.
Item 5. Interests in Securities of the Issuer.
Item 5 is hereby amended and restated as follows:
According to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended July 31, 1996, as of September 12, 1996,
29,888,298 Shares were outstanding. The calculations made pursuant
to this Item 5 assume that the application of Rule 13d-3(d)(1)(i)
promulgated under the Act could result in beneficial ownership by the
Reporting Persons of all of the Shares subject to the Warrants.
(a) Including the 3,842,143 Shares subject to the New Warrants
held by MW, MW may be deemed to beneficially own (pursuant to Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) directly 5,122,143 Shares, which constitutes approximately
15.2% of the Shares outstanding including such 5,122,143 Shares.
Both Holding and Brennan, through their relationship with MW, may be
deemed to beneficially own all of the Shares beneficially owned by
MW. Because of the liquidating distributions described in Item 4,
neither Direct nor General currently beneficially owns any Shares.
MPLP may be deemed to beneficially own (pursuant to Rule 13d-3)
1,526,414 Shares (or approximately 4.9% of the Shares outstanding).
Each of the Reporting Persons disclaims any beneficial ownership with
respect to Shares beneficially owned by MPLP.
(b) Except as limited by the agreement contained in the
Operating Agreement with respect to the election of directors as
described in Item 4 above, MW will have the sole power to
vote or direct the vote of, and the sole power to dispose or direct
the disposition of, the Shares reported herein as owned by it.
Holding, as the sole stockholder of MW, and Brennan, as the Chairman
of the Board and Chief Executive Officer of MW and as Designator, may
each be deemed to share voting and dispositive power with respect to
all Shares beneficially owned by MW.
(c) Except as set forth above, the Reporting Persons do not
beneficially own any Shares and, except as set forth herein, have
effected no transactions in Shares during the preceding 60 days.<PAGE>
<PAGE>
Item 7. Material to be filed as Exhibits.
Item 7 is hereby amended by adding thereto the following:
Exhibit 12 Exchange Agreement
Exhibit 13 Amended and Restated Operating Agreement
Exhibit 14 Second Amended and Restated Warrant Agreement
Exhibit 15 Second Amended and Restated Registration
Rights Agreement
Exhibit 16 Series P Warrant Certificates <PAGE>
<PAGE>
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
Dated: September 30, 1996
MONTGOMERY WARD & CO., INCORPORATED
By: /s/ JOHN L. WORKMAN
John L. Workman, Executive
Vice President and Chief
Financial Officer
MONTGOMERY WARD HOLDING CORP.
By: /s/ JOHN L. WORKMAN
John L. Workman, Executive
Vice President and Chief
Financial Officer
/s/ MYRON LIEBERMAN
Myron Lieberman, as
attorney-in-fact for
Bernard F. Brennan
MONTGOMERY WARD DIRECT, L.P.
By: MW DIRECT GENERAL, INC.,
its general partner
By:/s/ JOHN L. WORKMAN
John L. Workman, Treasurer
MW DIRECT GENERAL, INC.
By: /s/ JOHN L. WORKMAN
John L. Workman, Treasurer<PAGE>
<PAGE>
EXHIBIT A
Pursuant to Rule 13d-1(f)(1)(iii) of Regulation 13D-G of the
General Rules and Regulations of the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, the
undersigned agree that the statement to which this Exhibit is
attached is filed on behalf of each of them in the capacities set
forth herein below.
Dated: September 30, 1996
MONTGOMERY WARD & MONTGOMERY WARD HOLDING CORP.
CO., INCORPORATED
By: /s/ JOHN L. WORKMAN By: /s/ JOHN L. WORKMAN
John L. Workman, John L. Workman,
Executive Vice President Executive Vice President
and Chief Financial Officer and Chief Financial Officer
/s/ MYRON LIEBERMAN
Myron Lieberman, as
attorney-in-fact for
Bernard F. Brennan
MONTGOMERY WARD DIRECT, L.P.
By: MW DIRECT GENERAL, INC.,
its general partner
By:/s/ JOHN L. WORKMAN
John L. Workman, Treasurer
MW DIRECT GENERAL, INC.
By: /s/ JOHN L. WORKMAN
John L. Workman, Treasurer<PAGE>
<PAGE>
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT is made as of September 28, 1996,
between Montgomery Ward & Co., Incorporated, an Illinois corporation
("MW") and ValueVision International, Inc., a Minnesota corporation
("VVI").
R E C I T A L S
A. MW and VVI entered into a Stock Purchase Agreement (the
"Stock Purchase Agreement"), pursuant to which MW agreed to purchase
and VVI agreed to issue 1,280,000 shares of VVI common stock (the
"Shares"), and VVI also agreed to issue a total of 25,000,000
warrants, subject to adjustment (the "Original Warrants") to MW. .
B. The closing of the purchase of the Shares and issuance of
the Original Warrants took place on August 8, 1995, at which time the
Shares and the Original Warrants were issued, and MW and VVI entered
into (i) a Warrant Agreement with respect to the Original Warrants
(the "Original Warrant Agreement") and (ii) a Registration Rights
Agreement with respect to the Shares and the shares of stock
underlying the Original Warrants (the "Original Registration Rights
Agreement"). The Original Warrant Agreement and the Original
Registration Rights Agreement are referred to herein as the "Original
Securities Related Agreements".
C. On July 27, 1996, MW and VVI entered into a restructuring
agreement (the Restructuring Agreement ) which provided for, among
other matters, the exchange of the Series C through O Warrants,
inclusive for newly issues Series P Warrants and the execution of an
Amended and Restated Warrant Agreement (the Amended and Restated
Warrant Agreement ) which amends and restates the Original Warrant
Agreement and the execution of an Amended and Restated Registration
Rights Agreement (the Amended and Restated Warrant Agreement ) which
amends and restates the Original Registration Rights Agreement. In
connection with such Restructuring Agreement, Montgomery Ward Direct,
L.P., a Delaware limited partnership ("MWD")received certain Series P
Warrants ( MWD Warrants ) and subsequently transferred all of its
right title and interest in and to the MWD Warrants to MW. In
addition, MW transferred certain of its Series P Warrants to Merchant
Partners, Limited Partnership, a Delaware limited partnership
( MPLP ).
D. Original Warrants of Series A and B have vested ( Vested
Warrants ). MW and VVI now desire to exchange the Vested Warrants for
New Warrants, as provided, and to amend the Amended and Restated
Warrant Agreement and the Amended and Restated Registration Rights
Agreement according as set forth in Exhibits A and B respectively. <PAGE>
<PAGE>
A G R E E M E N T S
NOW, THEREFORE, the parties agree as follows:
1. Amendment and Restatement of Agreements. On the Closing
Date:
(a) MW, MWD, MPLP and VVI shall amend and restate the
Amended and Restated Warrant Agreement by entering into a
Second Amended and Restated Warrant Agreement in the form
attached hereto as Exhibit A (the "Second Amended and Restated
Warrant Agreement"); and
(b) MW, MWD, MPLP and VVI shall amend and restate the
Amended and Restated Registration Rights Agreement by entering
into an Second Amended and Restated Registration Rights
Agreement in the form attached hereto as Exhibit B (the "Second
Amended and Restated Registration Rights Agreement").
The documents referred to in this paragraph 2 are referred to herein
collectively as the "Second Amended and Restated Documents".
2. Surrender of Warrants. On the Closing Date, MW shall
surrender to VVI all of the Vested Warrants for cancellation.
3. Issuance of New Warrants. In consideration of the
surrender of the Vested Warrants, VVI shall issue to MW a total of
2,200,000 New Warrants.
All New Warrants shall contain the terms and features set forth in
the Second Amended and Restated Warrant Agreement. Concurrently with
the issuance of New Warrants.
4. Time of Closing; Effectiveness of Closing. The closing of
the surrender and cancellation of the Vested Warrants, and the
issuance of the New Warrants (the "Closing"), shall all take place
concurrently, on the date which is not more than five (5) business
days after the date on which this Agreement is executed by all of the
parties hereto(the "Closing Date").
5. Notices. All notices, demands, requests or other
communications which may be or are required to be given pursuant to
this Agreement or any of the Related Agreements shall be in writing
and shall be personally delivered, mailed by first-class, registered
or certified mail, postage prepaid, or sent by electronic or
facsimile transmission, addressed as follows:
If to VVI:
ValueVision International, Inc.
6740 Shady Oak Road
- 2 -<PAGE>
<PAGE>
Minneapolis, Minnesota 55344
Attention: Chief Executive Officer
with a copy to:
Maslon, Edelman, Borman & Brand, a
professional limited liability partnership
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4140
Attention: William M. Mower
If to MW:
Montgomery Ward & Co., Incorporated
619 W. Chicago Avenue
Chicago, Illinois 60671
Attention: General Counsel
with a copy to:
Altheimer & Gray
Suite 4000
10 South Wacker Drive
Chicago, Illinois 60606
Attention: Myron Lieberman
Each party may designate by notice in writing a new address to which
any notice, demand, request or communication may thereafter be so
given, served or sent. Each notice, demand, request or communication
which shall be delivered, mailed or transmitted in the manner
described above shall be deemed sufficiently given, served, sent or
received for all purposes at such time as it is delivered to the
addressee or at such time as delivery is refused by the addressee
upon presentation.
6. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective
and valid under applicable law, but if one or more of the provisions
of any of such documents are subsequently declared invalid or
unenforceable, such invalidity or unenforceability shall not in any
way affect the validity or enforceability of the remaining provisions
of such documents, which shall be applied and construed so as to
reflect substantially the intent of the parties and achieve the same
economic effect as originally intended by the terms hereof, unless
those provisions which are invalidated or unenforceable are material
to the performance of either party's affirmative or negative
obligations under the relevant agreement, in which case the entire
such agreement shall be terminable, at the option of the party whose
rights thereunder have been adversely affected thereby, provided that
such party must exercise its option to terminate such agreement
- 3 -<PAGE>
<PAGE>
within ninety (90) days following the date on which such provision is
declared or determined to be invalid, voidable or unenforceable and
the other party must be given sixty (60) days in which to agree to a
valid modification of such agreement which would substantially
eliminate such adverse effects.
7. Waivers. Neither the waiver by any party hereto of a
breach of or a default under any of the provisions of this Agreement
, nor the failure of any party hereto, on one or more occasions, to
enforce any of the provisions of any of said documents or to exercise
any right, remedy or privilege hereunder shall thereafter be
construed as a waiver of any such provisions, rights, remedies or
privileges hereunder. Any of the terms, covenants, representations,
warranties, or conditions hereof and thereof may be waived only by a
written instrument executed by the party waiving compliance.
8. Exercise of Rights. No failure or delay on the part of
any party hereto in exercising any right, power or privilege under
this Agreement, and no course of dealing between the parties hereto
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under any of such documents
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
9. Binding Effect. Subject to the provisions hereof
restricting assignment, this Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective
successors and permitted assigns.
10. Entire Agreement. This Agreement, including the Exhibits
hereto, contains the entire agreement between the parties hereto with
respect to the matters contained herein and therein, and supersede
all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein.
11. Pronouns. All pronouns and any variations thereof used
in this Agreement shall be deemed to refer to the masculine,
feminine, neuter, singular or plural, as the identity of the Person
or the context may require.
12. Headings. Section headings contained in this Agreement
and the Related Agreements are inserted for convenience of reference
only, shall not be deemed to be a part of such Agreement for any
purpose, and shall not in any way define or affect the meaning,
construction or scope of any of the provisions hereof.
13. Governing Law. This Agreement, the rights and
obligations of the parties hereto and thereto, and any claim or
disputes relating to any thereof, shall be governed by and construed
in accordance with the internal laws of the State of Illinois,
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without giving effect to the principles of conflicts of laws thereof.
14. Execution in Counterparts. To facilitate execution, this
Agreement may each be executed in as many counterparts as may be
required, and it shall not be necessary that the signatures of, or on
behalf of, each party, or that the signatures of all Persons required
to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or
that the signatures of the Persons required to bind any party, appear
on one or more of the counterparts. All counterparts shall
collectively constitute a single agreement. It shall not be
necessary in making proof of this Agreement to produce or account for
more than the number of counterparts containing the respective
signatures of, or on behalf of, all of the parties hereto.
15. Assignment. Neither party may assign its rights under
this Agreement without the consent of the other party, which consent
may be granted or withheld in the sole discretion of such other
party, except that either party may assign all of its rights
hereunder in connection with a sale or other transfer of
substantially all of its assets, provided that the assignee assumes
all of the liabilities of the assignor hereunder. No permitted
assignment shall relieve the assignor of its obligations (which shall
be primary and which may be discharged in whole or in part by the
assignee) under this Agreement. Any unauthorized assignment and any
assignment made in contravention of this Section 18 shall be null and
void.
16. Amendments and Modification. This Agreement may only be
amended or modified by a subsequent written agreement by the parties
hereto.
17. Construction. This Agreement shall not be construed more
strictly against one party than against the other merely by virtue of
the fact that such document may have been prepared primarily by
counsel for one of the parties, it being recognized that both parties
have contributed substantially and materially to the preparation of
such documents.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective on the date first set forth above.
MONTGOMERY WARD & CO., INCORPORATED VALUEVISION INTERNATIONAL, INC.
BY: /s/ JOHN L. WORKMAN BY: /s/ ROBERT L. JOHANDER
TITLE: Executive Vice President TITLE: Chief Executive Officer
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Exhibit A
SECOND AMENDED AND RESTATED WARRANT AGREEMENT
Warrant Agreement dated as of this 28th day of September, 1996,
by and among ValueVision International, Inc., a Minnesota corporation
(the "Company"), Montgomery Ward & Co., Incorporated, an Illinois
corporation ("MW"), Montgomery Ward Direct, L.P., a Delaware limited
partnership ("MWD")and Merchant Partners, Limited Partnership, a
Delaware limited partnership ( MPLP ).
R E C I T A L S
A. Pursuant to a Securities Purchase Agreement dated as of
March 13, 1995 by and between the Company and MW, the Company agreed
to issue and sell, and MW agreed to purchase, Existing Warrants (as
herein defined) to purchase an aggregate of 25,000,000 shares of the
Common Stock of the Company, subject to adjustment, under the terms
and subject to the conditions set forth therein. The Existing
Warrants are governed by the terms of a certain Warrant Agreement,
dated August 8, 1995, between MW and VVI (the Original Warrant
Agreement ).
B. Pursuant to a certain Restructuring Agreement, dated July
27, 1996, between the Company and MW (the "Restructuring Agreement"),
the Company and MW agreed to exchange the Series C-O Warrants, to
amend and restate that certain Operating Agreement and that certain
Servicemark License Agreement, and to amend that certain Credit Card
Receivables Sale and Purchase Agreement, all dated as of March 13,
1995, and to amend and restate that certain Registration Rights
Agreement, dated August 8, 1995 and this Agreement, all in
consideration of the issuance by VVI of new Series P Warrants to
purchase an aggregate of 1,484,462 shares of Common Stock (the
"Exchange Warrants").
D. Pursuant to an Asset Purchase Agreement, dated as of July
27, 1996, between the Company s subsidiary, ValueVision Direct
Marketing Company, Inc., and MWD (the "Asset Purchase Agreement"),
ValueVision Direct Marketing Company, Inc. delivered to MWD, as
consideration for the sale of all of MWD's assets, Series P warrants
to purchase an aggregate of 1,484,993 shares of Common Stock (the
"MWD Warrants"). MWD subsequently transferred all of its right title
and interest in and to the MWD Warrants to MW. In addition, MW
transferred certain of its Series P Warrants to MPLP.
E. Pursuant to an Exchange Agreement dated September ___,
1996, (the Exchange Agreement )VVI and MW have agreed to exchange
the Vested Warrants for additional Series P Warrants to purchase an
aggregate of 2,200,000 shares of Common Stock (the Replacement
Warrants )and to amend this Agreement and the Amended and Restated
Registration Rights.
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F. MPLP desires to become a party to this Agreement and MW,
MWD, MPLP and VVI desire to amend and restate the Amended and
Restated Warrant Agreement to set forth the terms under which the New
Warrants may be exercised.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises set forth
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, MW MPLP
and MWD agree that the Original Warrant Agreement shall be amended
and restated to read as follows:
A. Definition of Terms. As used in this Warrant Agreement,
the following capitalized terms shall have the following respective
meanings:
(a) Asset Purchase Agreement: "Asset Purchase
Agreement" has the meaning assigned thereto in the Recitals.
(b) Business Day: A day other than a Saturday, Sunday
or other day on which banks in the State of Minnesota are
authorized by law to remain closed.
(c) Common Stock: Common stock, $.01 par value per
share, of the Company.
(d) Common Stock Equivalents: Securities that are
convertible into or exercisable for Common Stock.
(e) Company: "Company" has the meaning assigned
thereto in the Preamble.
(f) Conversion Ratio: The number of Warrant Shares of
Common Stock issuable upon the exercise of a Warrant, which
shall initially be 1, subject to adjustment from time to time
pursuant to Section 6.1.
(g) Exchange Act: The Securities Exchange Act of 1934,
as amended.
(h) Exchange Agreement: "Exchange Agreement" has the
meaning assigned thereto in the Recitals.
(i) Exchange Warrants: "Exchange Warrants" has the
meaning assigned thereto in Recital B.
(j) Exercise Price Per Share: The "Exercise Price Per
Share" shall mean in the case of New Warrants, the exercise
price payable for each Warrant Share upon exercise of a New
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Warrant, which shall initially be set at $.01 per share,
subject to adjustment from time to time pursuant to Section
6.1.
(k) Existing Warrants: Warrants issued pursuant to the
Securities Purchase Agreement and the Warrant Agreement.
(l) Expiration Date: August 8, 2003, or if such day is
not a Business Day, the next succeeding day which is a Business
Day.
(m) HSR Act: "HSR Act" has the meaning assigned
thereto in Section 5.9.
(n) Market Price: The Market Price per share of Common
Stock at any date shall be deemed to be the average of the
daily closing prices for the 20 consecutive trading days ending
on such date. The closing price for each day shall be the last
sale price of the Common Stock, or in case no such reported
sales take place on such day, the average of the last reported
bid and asked prices of the Common Stock, in either case on the
principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or
admitted to trading on any such exchange, as reported by
NASDAQ, or other similar organization if NASDAQ is no longer
reporting such information, or if not so available, the fair
market price of the Common Stock as determined in good faith by
the Board of Directors.
(o) MPLP: "MPLP" has the meaning assigned thereto in
Section 13.
(p) MW: "MW" has the meaning assigned thereto in the
Preamble.
(q) MWD: "MWD" has the meaning assigned thereto in the
Preamble.
(r) MWD Warrants: "MWD Warrants has the meaning
assigned thereto in Recital E.
(s) MW Group: "MW Group" has the meaning assigned
thereto in that certain Amended and Restated Operating
Agreement by and between MW and the Company of even date
herewith.
(t) NASD: National Association of Securities Dealers,
Inc. and NASDAQ: NASD Automatic Quotation System.
(u) New Warrants: Warrants in the form attached hereto
as Exhibit A to be issued on the date hereof pursuant to the
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Exchange Agreement, the Restructuring Agreement and the Asset
Purchase Agreement in exchange for all of the Existing Warrants
including but not limited to the Series A-B Warrants, and all
other warrants that may be issued in their place (together
evidencing the right to purchase an aggregate of 5,169,455
shares of Common Stock), subject to adjustment pursuant to
Section 6 hereof. The New Warrants include the Exchange
Warrants, the Replacement Warrants and the MWD Warrants.
(v) Original Warrant Agreement: That certain Warrant
Agreement, dated August 8, 1995, between the Company and MW.
(w) Replacement Warrants: Warrants in the form
attached hereto as Exhibit A to be issued on the date hereof
pursuant to the Exchange Agreement in exchange for all of the
Vested Warrants, and all other warrants that may be issued in
their place, to purchase an aggregate of 2,200,000 shares of
Common Stock subject to adjustment pursuant to Section 6
hereof.
(x) Exchange Agreement: "Exchange Agreement" has the
meaning assigned thereto in the Recitals.
(y) Series A-B Warrants: "Series A-B Warrants" has the
meaning assigned thereto in the Recitals.
(z) Series C-O Warrants: "Series C-O Warrants" has the
meaning assigned thereto in the Recitals.
(aa) SEC: The Securities and Exchange Commission.
(ab) Securities Purchase Agreement: "Securities
Purchase Agreement" has the meaning assigned thereto in the
Recitals.
(ac) Term: "Term" has the meaning assigned thereto in
Section 15.
(ad) Warrants: The New Warrants.
(ae) Warrant Shares: "Warrant Shares" has the meaning
assigned thereto in Section 2.
B. Warrant Shares. Each New Warrant will initially be
exercisable for one share of Common Stock (a "Warrant Share"),
subject to adjustment pursuant to Section 6 hereof.
C. Vesting. All New Warrants shall be fully vested when
issued.
D. Expiration of Warrants. All Warrants shall expire at
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5:00 pm Minneapolis, Minnesota time, on the Expiration Date. All
Warrants that are not exercised on or prior to the Expiration Date
shall become void on the Expiration Date, and all rights hereunder
and under such Warrants shall thereupon cease.
E. Exercise of Warrants.
1. Exercise Period. Any or all Warrants may be
exercised by the holder thereof at any time and from time to time
after 9:00 am, Minneapolis, Minnesota time, on the date hereof, and
before 5:00 pm, Minneapolis, Minnesota time, on the Expiration Date.
2. Exercise Procedure. The Warrant holder may
exercise Warrants during any time that such Warrants are exercisable
in whole or in part, by presentation and surrender of the Warrant
Certificate to the Company at its principal executive offices, with
the Subscription Form annexed thereto duly executed and accompanied
by payment of the full Exercise Price Per Share for each Warrant
Share to be purchased in immediately available funds by wire transfer
to a bank designated by the Company from time to time.
3. Issuance of Warrant Shares. Subject to Section
5.9, upon receipt of the Warrant Certificate with Subscription Form
duly executed and accompanied by payment of the aggregate Exercise
Price Per Share for the Warrant Shares for which the Warrant is then
being exercised, and provided that the holder has made any government
filings, and has obtained any governmental actions, consents,
approvals, or waiver, required on the holder's part in order to
exercise the Warrants, the Company shall cause to be issued
certificates for the total number of whole shares of Common Stock for
which the Warrant is being exercised (adjusted to reflect the effect
of the provisions contained in Section 6 hereof, if any), in such
denominations as are requested for delivery to the holder, and the
Company shall thereupon deliver such certificates to the holder. The
holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then
be actually delivered to the holder. If at the time a Warrant is
exercised, a Registration Statement is not in effect to register
under the Securities Act the Warrant Shares issuable upon exercise of
such Warrant, the Company may require the holder to make such
representations, and may place such legends on certificates
representing the Warrant Shares, as are customary and may be
reasonably required in the opinion of counsel to the Company to
permit the Warrant Shares to be issued without such registration.
4. Residual Warrants. In case the Warrant holder
shall exercise a Warrant with respect to less than all of the Warrant
Shares that may be purchased under such Warrant, the Company shall
execute a Warrant in the form of such Warrant for the balance of such
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Warrant Shares and deliver such Warrant to the holder.
5. Transfer Taxes. The Company shall pay any and all
stock transfer and similar taxes which may be payable in respect of
the issue of the Warrant or in respect of the issue of any Warrant
Shares.
6. Reservation of Shares. The Company hereby agrees
that at all times while any Warrants are outstanding there shall be
reserved for issuance and delivery upon exercise of the Warrants such
number of shares of Common Stock or other shares of capital stock of
the Company from time to time issuable upon exercise of the Warrants.
All such shares shall be duly authorized, and when issued upon such
exercise, shall be validly issued, fully paid and nonassessable, free
and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale and free and clear of all
preemptive rights.
7. Fractional Shares. The Company shall not be
required to issue any fraction of a share of its capital stock in
connection with the exercise of a Warrant. The holder of Warrants
will be required to exercise such number of Warrants so that a whole
number of shares of Common Stock will be issued, or, at the Company's
sole option, the Company may (i) pay such holder an amount in cash
equal to such fraction of a share multiplied by the Market Price of
one share of Common Stock on the exercise date, or (ii) may issue the
larger number of whole shares purchasable upon exercise of the
Warrant, and may require such holder to pay an additional amount
equal to the exercise price multiplied by the balance of the share.
8. Listing. Prior to the issuance of shares of Common
Stock upon exercise of a Warrant, the Company shall use its
reasonable best efforts to secure the listing of such shares of
Common Stock upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance upon exercise of the
Warrant) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of the Warrant; and the
Company shall so list on each national securities exchange or
automated quotation system, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the
exercise of the Warrant if and so long as any shares of the same
class shall be listed on such national securities exchange or
automated quotation system.
9. Approvals of Regulatory Authorities. In the event
any filings with or approvals by any federal or state regulatory
agency would be required by virtue of the exercise of any of the
Warrants (including, without limitation, the U.S. Departments of
Justice and Commerce under the Hart-Scott-Rodino Antitrust
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Improvements Act ("HSR Act") or the Federal Communications Commission
under the Federal Communications Act), such exercise of such Warrant
shall be conditional upon (x) expiration or termination of the
waiting period under the HSR Act, and (y) receipt of any other
required regulatory approvals, but shall otherwise be unconditional.
If this Section 5.9 is applicable, (x) the parties will cooperate
with each other and make such respective filings and take such other
respective actions as may be necessary or desirable in order that the
exercise of any such Warrant shall be in accordance with applicable
laws, and (y) the Term of this agreement shall be extended, if
required, during the period in which applications for regulatory
approvals are pending before regulatory authorities.
F. Exercise Price Per Share and Conversion Ratio Adjustments.
The Exercise Price Per Share and the Conversion Ratio, and the kind
of Warrant Shares shall be subject to adjustment from time to time
upon the occurrence of certain events and at the times as provided
for in this Section 6.
1. Mechanical Adjustments. If at any time prior to the
exercise of any Warrant, the Company shall (i) declare a dividend or
make a distribution on the Common Stock payable in shares of its
capital stock (whether shares of Common Stock or of capital stock of
any other class); (ii) subdivide, reclassify or recapitalize
outstanding Common Stock into a greater number of shares;
(iii) combine, reclassify or recapitalize its outstanding Common
Stock into a smaller number of shares, or (iv) issue any shares of
its capital stock by reclassification of its Common Stock (including
any such reclassification in connection with a consolidation or a
merger in which the Company is the continuing corporation),
excluding, however, any dividend, distribution, reclassification or
recapitalization that requires the payment of more than nominal
additional consideration by security holders, the Conversion Ratio in
effect at the time of the record date of such dividend, distribution,
subdivision, combination, reclassification or recapitalization shall
be immediately adjusted so that upon exercise of a Warrant the holder
thereof shall be entitled to receive the aggregate number and kind of
shares which, if the Warrants had been exercised in full immediately
prior to such event, the holder thereof would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination, reclassification or
recapitalization, for the same aggregate consideration. The Exercise
Price Per Share payable upon exercise of each Warrant shall
simultaneously be adjusted by multiplying the initial Exercise Price
Per Share in effect for such Warrant by the Conversion Ratio in
effect immediately prior to such adjustment and dividing the products
so obtained by the Conversion Ratio, as adjusted. Any adjustments
required by this Section 6.1 shall be made successively immediately
after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination,
reclassification or recapitalization, to allow the purchase of such
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aggregate number and kind of shares, subject to Section 6.4.
2. Subsequent Adjustments. In the event that at any
time, as a result of any adjustment made pursuant to Section 6, the
holder of a Warrant thereafter shall become entitled to receive any
shares of the Company other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of any Warrant shall
be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Section 6, subject to Section 6.6.
3. No Adjustment for Cash Dividends. No adjustment in
respect of any cash dividends not constituting Special Dividends
shall be made during the term of the Warrants or upon the exercise of
any Warrant.
6.4 Notice of Adjustment. No adjustment in the Conversion
Ratio shall be required unless such adjustment would increase or
decrease the Conversion Ratio by at least .001; provided, however,
that any adjustments which by reason of this Section 6.6 are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 6
shall be made to the nearest one-hundredth of a share or the nearest
tenth of a cent, as the case may be. The adjusted Conversion Ratio
may be rounded off to the nearest one millionth (six places to the
right of the decimal point). Whenever the Conversion Ratio or the
Exercise Price Per Share is adjusted as herein provided, the Company
shall prepare and deliver forthwith to all holders of Warrants a
certificate signed by its Chief Financial Officer, setting forth the
adjusted Conversion Ratio, the adjusted number of shares purchasable
upon the exercise of Warrants and the Exercise Price Per Share of
such shares after such adjustment, setting forth a brief statement of
the facts requiring such adjustment and setting forth the computation
by which such adjustment was made. The failure to give such notice
or any defect therein shall not affect the validity or effectiveness
of any such adjustment.
6.5 Form of Warrant After Adjustments. The form of
Warrants need not be changed because of any adjustments in the
Exercise Price Per Share or the number or kind of the Warrant Shares,
and Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in an
adjusted Warrant, as initially issued.
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G. No Rights as Shareholders; Notice to Holders. Nothing
contained in this Agreement or in the Warrants shall be construed as
conferring upon a holder of Warrants by virtue of its status as a
Warrant holder the right to vote or to receive dividends or to
consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company
or of any other matter, or any rights whatsoever as shareholders of
the Company. The Company shall give notice to all holders of
Warrants if at any time prior to the expiration or exercise in full
of the Warrants, any of the following events shall occur:
(a) the Company shall authorize the payment of any
dividend payable in any securities upon shares of Common Stock or
authorize the making of any distribution (other than a regular
cash dividend or distribution paid out of net profits legally
available therefor) to all holders of Common Stock;
(b) the Company shall authorize the issuance to all
holders of Common Stock of any additional shares of Common Stock
or Common Stock Equivalents or of rights, options or warrants to
subscribe for or purchase Common Stock or Common Stock Equivalents
or of any other subscription rights, options or warrants;
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, or
sale or conveyance of the property of the Company as an entirety
or substantially as an entirety); or
(d) a capital reorganization or reclassification of the
Common Stock (other than a change in the par value of the Common
Stock) or any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which
the Company is the continuing corporation and that does not result
in any reclassification or change of Common Stock outstanding) or
in the case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an
entirety.
Such giving of notice shall be initiated (i) at least 5 Business Days
prior to the date fixed as a record date or effective date or (ii)
the date of closing of the Company's stock transfer books for the
determination of the shareholders entitled to such dividend,
distribution or subscription rights, or for the determination of the
shareholders entitled to vote on such proposed merger, consolidation,
sale, conveyance, dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing the
stock transfer books, as the case may be. Failure to provide such
notice shall not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights,
or proposed merger, consolidation, sale, conveyance, dissolution,
liquidation or winding up.
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H. Lost, Stolen, Mutilated or Destroyed Warrants. If a Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such
terms as to indemnity or otherwise as it may in its discretion impose
(which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and
tenor as, and in substitution for the Warrant.
I. Restrictions on Transfer of Warrants and Warrant Shares.
The Warrants and the Warrant Shares may not be transferred, disposed
of or encumbered (any such action, a "Transfer"), except in
accordance with and subject to the provisions of the Securities Act
and the rules and regulations promulgated thereunder. If at the time
of a Transfer, a Registration Statement is not in effect to register
the Warrant Shares, the Company may require the holder thereof to
make such representations, and to provide the Company with an opinion
of counsel reasonably acceptable to the Company that such Transfer
would not result in violation of any federal or state law regarding
the offering or sale of securities and the Company may place such
legends on certificates representing the Warrant Shares, as are
customary and may be reasonably required in the opinion of counsel to
the Company to permit a Transfer without such registration. Subject
to the foregoing and to Section 13, all Warrants and Warrant Shares
shall be freely transferable.
J. Warrant Register. All Warrants shall be in registered form.
The Company shall maintain a register of the Warrants (the "Warrant
Register"). All Transfers of Warrants shall be recorded in the
Warrant Register.
K. Registration Under the Securities Act of 1933. The Warrant
Shares shall be entitled to certain registration rights provided in
that Registration Rights Agreement by and among the Company, MW and
MWD of even date herewith.
L. Certain Filings. The parties will cooperate with each other
in determining whether action by or in respect of, or filing with,
any governmental body, agency or official, or authority is required,
or any actions, consents, approvals or waivers are required to be
obtained in connection with the transactions and adjustments
contemplated by this Agreement, and provide each other with
reasonable assistance in seeking any such actions, consents,
approvals, or waivers or making any such filings, furnishing
information required in connection therewith, and seeking timely to
obtain any such actions, consents, approvals or waivers.
M. Right of First Offer. No holder of a Warrant or Common
Stock (including Warrant Shares) will transfer, sell, or in any
manner convey any interest in any Warrants or Common Stock (including
Warrant Shares), except through an offering to the public that is
registered under the Securities Act, or pursuant to the provisions of
Rule 144 under the Securities Act (excluding paragraph (k) of Rule
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144), unless such holder first offers such Warrants or Common Stock
(including Warrant Shares) to the Company. The holder shall provide
the Company with a written offer specifying the amount of securities
being offered, the purchase price and other terms of such offer. The
Company shall have fifteen (15) days from and after the date of
receipt by the Company of such written offer within which to accept
such offer, or to make a written counteroffer with respect to all or
any part of the securities offered. If the Company does not accept
the holder's offer, or the holder does not accept the Company's
counteroffer, by written notice given within such 15-day period, the
holder may offer and sell such securities to any party within 180
days thereafter on terms that are not less favorable to the holder
than the terms of the later to be made of the holder's last offer to
the Company or the Company's last counteroffer to the holder, if any,
provided that the terms of a sale to a third party shall not be
deemed to be less favorable to the holder solely based on a lower
purchase price paid by the third party if such lower purchase price
is at least 90% of the highest price offered by or to the Company.
This Section 13 shall not apply to any transfer of Warrants or Common
Stock (including Warrant Shares) (i) by any member of the MW Group to
any other member of the MW Group, (ii) by MW to MPLP, or (iii) by
MPLP to its partners, and the partners or stockholders (direct or
remote) of such partners.
N. Term. Subject to Section 5.9, the term of this Agreement
shall begin on the date hereof and expire on August 8, 2003 (the
"Term").
O. Additional Actions and Documents. Each of the parties
hereto agrees to take or cause to be taken such further actions, to
execute, acknowledge, deliver and file or cause to be executed,
acknowledged, delivered and filed such further documents and
instruments, and to use all reasonable efforts to obtain such
consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this
Agreement.
17. Cancellation and Return of Existing Warrants. Effective as
at the date hereof, all Existing Warrants including but not limited
to all of the Series A-B Warrants and the Series C-O Warrants issued
pursuant to the Original Warrant Agreement and the Securities
Purchase Agreement are deemed to have expired unexercised and are
hereby terminated. All Existing Warrants shall be surrendered to the
Company within 30 days of the date hereof.
<PAGE>
IN WITNESS WHEREOF, this Warrant Agreement has been duly
executed by the Company under its corporate seal as of the date first
above written.
VALUEVISION INTERNATIONAL, INC.
By:
Robert L. Johander
Its Chief Executive Officer
Attest:_______________________
Secretary
MONTGOMERY WARD & CO., INCORPORATED
By:
______ President
Attest:_______________________
Secretary
MONTGOMERY WARD DIRECT, L.P.
By: MW Direct General, Inc., the
general partner
By:
Its:
Attest:_______________________
Secretary
MERCHANT PARTNERS, LIMITED
PARTNERSHIP
By: MERCHANT PARTNERS, LIMITED
PARTNERSHIP, the general partner
By: Merchant Development Corp.,
the general partner
By:
Its:
Attest:_______________________
Secretary
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Exhibit B
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Amended and Restated Registration Rights Agreement dated as of
September 28, 1996, by and among ValueVision International, Inc., a
Minnesota corporation (the "Company"), Montgomery Ward Direct, L.P.,
a Delaware limited partnership ("MWD"), Montgomery Ward & Co.,
Incorporated, an Illinois corporation ("MW")and Merchant Partners,
Limited Partnership, a Delaware limited partnership ( MPLP ).
R E C I T A L S
A. Pursuant to a Securities Purchase Agreement, dated as of
March 13, 1995, by and between the Company and MW (the "Securities
Purchase Agreement"), the Company agreed to issue and sell, and MW
agreed to purchase, 1,280,000 shares (the "Shares") of Common Stock
of the Company, under the terms and subject to the conditions set
forth therein.
B. Pursuant to the Securities Purchase Agreement, the Company
also agreed to issue and sell, and MW agreed to purchase, Existing
Warrants (as herein defined) to purchase an aggregate of 25,000,000
shares of the Common Stock of the Company, subject to adjustment,
under the terms and subject to the conditions set forth therein.
Existing Warrants of Series A and Series B, both inclusive (the
"Series A-B Warrants"), have vested, and Existing Warrants of Series
C through Series O, all inclusive (the "Series C-O Warrants") have
not vested.
C. Pursuant to the Securities Purchase Agreement, the Company
agreed to grant MW certain registration rights with respect to the
Shares and the shares issued upon exercise of the Existing Warrants
and executed that certain Registration Rights Agreement, dated as of
August 8, 1995 (the Original Registration Rights Agreement ).
D. Pursuant to a certain Exchange Agreement, dated as of even
date herewith, between the Company and MW (the "Exchange Agreement"),
the Company and MW have agreed to exchange the Series C-O Warrants,
to amend and restate that certain Operating Agreement and that
certain Servicemark License Agreement, and to amend that certain
Credit Card Receivables Sale and Purchase Agreement, all dated as of
March 13, 1995, and to amend and restate that certain Warrant
Agreement, dated August 8, 1995 and this Agreement, all in
consideration of the issuance by VVI of new Series P Warrants ( New
Warrants ) to purchase an aggregate of 1,484,462 shares of Common
Stock.
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E. MWD is a wholly owned subsidiary of MW. Pursuant to an
Asset Purchase Agreement, dated as of August 1, 1996, between the
Company s subsidiary, ValueVision Direct Marketing Company, Inc.,
and MWD (the "Asset Purchase Agreement"), ValueVision Direct
Marketing Company, Inc. has agreed to deliver to MWD, as
consideration for the sale of all of MWD's assets, New Warrants to
purchase an aggregate of 1,484,993 shares of Common Stock ( MWD
Warrants ). MWD subsequently transferred all of its right title and
interest in and to the MWD Warrants to MW. In addition, MW
transferred certain of its Series P Warrants to MPLP. MWD no longer
desires to be a party to this Agreement but MPLP desires to be a
party to this Agreement.
F. Pursuant to the Exchange Agreement, dated as of September
28, 1996, between the Company and MW (the "Exchange Agreement"), VVI
and MW have agreed to exchange all of the Series A-B Warrants for
Series P Warrants to purchase 2,200,000 shares of Common Stock (the
Exchange Warrants ).
G. In connection with the cancellation of the Series C-O Warrants
and the issuance of the New Warrants, the parties agreed to amend and
restate the Original Registration Rights Agreement as set forth
herein.
H. In connection with the cancellation of the Series A-B Warrants
and the issuance of the Replacement Warrants, the parties desire to
amend and restate the Amended and Restated Registration Rights
Agreement as set forth herein.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises set forth herein
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, MWD and MW
agree that the Original Registration Rights Agreement is amended and
restated in its entirety to read as follows:
1. Definition of Terms. As used in this Registration Rights
Agreement, the following capitalized terms shall have the following
respective meanings:
(a) Asset Purchase Agreement: See Recital E.
(b) Business Day: A day other than a Saturday, Sunday or
other day on which banks in the State of Minnesota are authorized by
law to remain closed.
(c) Closing Date: August 8, 1995.
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(d) Common Stock: Common Stock, $.01 par value per share,
of the Company.
(e) Company: See the Preamble.
(f) Demand Notice: See Section 3(a).
(g) Demand Registration: See Section 3(a).
(h) Demand Registration Rights: See Section 3(a).
(i) Exchange Act: The Securities Exchange Act of 1934, as
amended.
(j) Exercise Price: The exercise price of a New Warrant
as indicated in, and as may be adjusted by, the Warrant Agreement.
(k) Expiration Date: 5:00 P.M., Minneapolis, Minnesota
time, on August 7, 2003, or if such day is not a Business Day, the
next succeeding day which is a Business Day.
(l) Inspectors: See Section 5(g).
(m) MW: See the Preamble.
(n) MWD: See the Preamble.
(o) NASD: National Association of Securities Dealers,
Inc. and NASDAQ: NASD Automated Quotation System.
(p) New Warrants: Series P warrants issued pursuant to
the Amended and Restated Exchange Agreement and the Asset Purchase
Agreement.
(q) Outstanding Registration Rights Agreement: The
Representative's Warrant Agreement dated as of November 15, 1993 by
and between the Company and Gerard Klauer Mattison & Co., Inc.
(r) Person: An individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any
department or agency thereof.
(s) Piggyback Notice: See Section 2(a).
(t) Piggyback Registration: See Section 2(a).
(u) Piggyback Registration Rights: See Section 2(a).
(v) Prospectus: Any prospectus included in any
Registration Statement, as amended or supplemented by any prospectus
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supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement
and all other amendments and supplements to the Prospectus, including
post-effective amendments and all material incorporated by reference
in such Prospectus.
(w) Public Offering: A public offering of any of the
Company's equity or debt securities pursuant to a registration
statement under the Securities Act.
(x) Records: See Section 5(g).
(y) Registration Expenses: Any and all expenses incurred
in connection with any registration or action incident to performance
of or compliance by the Company with this Agreement, including,
without limitation, (i) all SEC, national securities exchange and
NASD registration and filing fees; all listing fees and all transfer
agent fees; (ii) all fees and expenses of complying with state
securities or blue sky laws; (iii) all printing, mailing, messenger
and delivery expenses and (iv) all fees and disbursements of counsel
for the Company and of its accountants, including the expenses of any
special audits and/or "cold comfort" letters required by or incident
to such performance and compliance, but excluding underwriting
discounts and commissions, brokerage fees and transfer taxes, if any,
and fees of counsel or accountants retained by MW.
(z) Registration Notice: See Section 2(a).
(aa) Registration Period: The period of time from the
second anniversary of the Closing Date to the Expiration Date except
as provided in Sections 3(a), 3(b) and 5.
(ab) Registrable Securities: Any Shares or Warrant Shares
issued to MW or MPLP, including those which may thereafter be issued
by the Company in respect of any such securities by means of any
stock splits, stock dividends, recapitalizations, reclassifications
or the like, and as adjusted pursuant to the Amended and Restated
Warrant Agreement.
(ac) Registration Statement: Any registration statement of
the Company filed or to be filed with the SEC which covers any of the
Registrable Securities pursuant to the provisions of this Agreement,
including all amendments (including post-effective amendments) and
supplements thereto, all exhibits thereto and all material
incorporated therein by reference.
(ad) SEC: The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or
the Exchange Act.
(ae) Securities Act: The Securities Act of 1933, as
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amended.
(af) Securities Purchase Agreement: See Recital A.
(ag) Series A-B Warrants: See Recital B.
(ah) Series C-O Warrants: See Recital B.
(ai) Series P Warrants: See Recital B.
(aj) Shares: See Recital A.
(ak) Warrant Agreement: That certain Second Amended and
Restated Warrant Agreement, dated as of July 27, 1996, among the
Company, MW, MPLP and MWD.
(al) Warrant Shares: All shares of Common Stock issued or
issuable upon exercise of any or all of the New Warrants.
2. Piggyback Registration.
(a) Right to Include Registrable Securities. If at any
time during the Registration Period, the Company proposes to register
any of its securities under the Securities Act on any form for the
registration of securities under such Act, whether or not for its own
account (other than by a registration statement on Form S-4, S-8 or
other successor form), it shall as expeditiously as possible give
written notice (a "Registration Notice") to the holders of
Registrable Securities of its intention to do so. Upon the written
request of any such holder (a "Piggyback Notice", which notice shall
specify the Registrable Securities intended to be registered) made
within 20 days after receipt of a Registration Notice, the Company
shall include in the Registration Statement the Registrable
Securities (a "Piggyback Registration") which the Company has been so
requested by such holder to register, subject to the limitations
provided in the Existing Registration Rights Agreements. Such
holder's rights to register shares hereunder are referred to
hereinafter as "Piggyback Registration Rights."
(b) Withdrawal of Piggyback Registration by Company. If,
at any time after giving a Registration Notice but prior to the
effective date of the related Registration Statement, the Company
shall determine for any reason not to register such securities, the
Company shall give written notice of such determination to the
holders of the Registrable Securities sought to be registered and,
thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such Piggyback
Registration. All best efforts obligations of the Company shall
cease if the Company determines to terminate prior to such effective
date any registration where Registrable Securities are being
registered pursuant to this Section 2.
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(c) Piggyback Registration of Underwritten Public
Offerings. If a Piggyback Registration involves an offering by or
through underwriters, then, (i) the holders of the Registrable
Securities sought to be registered must agree to sell their
Registrable Securities included in the Company's Registration
Statement to the underwriters selected by the Company on the same
terms and conditions as apply to other selling shareholders and (ii)
such holders may elect in writing, not later than five Business Days
prior to the effectiveness of the Registration Statement filed in
connection with such registration, not to have their Registrable
Securities so included in connection with such registration.
(d) Payment of Registration Expenses for Piggyback
Registration. The Company shall pay all Registration Expenses in
connection with each registration of Registrable Securities requested
pursuant to a Piggyback Registration Right contained in this Section
2.
3. Demand Registration.
(a) Request for Registration. Upon the written request (a
"Demand Notice") of a holder of Registrable Securities at any time
during the Registration Period, and subject to the limitations
provided in the Existing Registration Rights Agreements, the Company
shall, as soon as practicable, use its best efforts to file a
Registration Statement (a "Demand Registration") with respect to all
Registrable Securities that such holder requested be registered in
the Demand Notice. Prior to the filing of such Demand Registration,
the Company shall give written notice to all other holders of
Registrable Securities of the Demand Registration. Upon the written
request of any such holder made within 20 days after receipt of such
notice, the Company shall include in the Demand Registration the
Registrable Securities that such holder requested be registered,
subject to the limitations provided in the Existing Registration
Rights Agreements. The rights of holders of Registrable Securities
to register shares hereunder are referred to hereinafter as "Demand
Registration Rights." The holders of Registrable Securities may in
the aggregate exercise up to two Demand Registration Rights during
the Registration Period. The Company shall use its best efforts to
obtain the effectiveness of the Registration Statement and to take
all other action necessary under any Federal or state law or
regulation to permit such Registered Securities to be sold or
otherwise disposed of, and the Company shall maintain such compliance
with each such Federal and state law and regulation for the period
necessary for the holder of Registrable Securities to effect the
proposed sale or other disposition (but in no event for more than 120
days). The Company shall be entitled to have the Demand Registration
prepared, filed and caused to become effective pursuant to Form S-3
or any successor form promulgated by the SEC ("Form S-3") pursuant to
this Section 3(a), so long as it is eligible to register its
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securities pursuant to Form S-3 and Form S-3 is available for the
distribution contemplated by the holder of Registrable Securities.
(b) Deferment of Demand Registration by Company. The
Company shall be entitled to defer a Demand Registration for a period
of up to 120 days if and to the extent that its Board of Directors
shall determine in good faith that such registration would interfere
with a pending material corporate transaction which has been approved
by the Board of Directors of the Company. In such event, the
Registration Period shall be extended by the amount of such delay and
the related Demand Registration Right would be deemed not to be
exercised.
(c) Payment of Registration Expenses for Demand
Registration. Except as provided below, holders of Registrable
Securities sought to be registered shall pay the first $75,000 or
Registration Expenses, plus 50% of all remaining Registration
Expenses of a Demand Registration and the Company shall pay the
balance of such Registration Expenses; and holders of such
Registrable Securities and the Company shall pay the fees and
expenses of each of their respective legal counsel. A registration
will not count as a Demand Registration until it has become
effective, unless the holders demanding such registration withdraw
the Registrable Securities, in which case such demand will count as a
Demand Registration unless the holders of such Registrable Securities
agree to pay all Registration Expenses.
(d) Registration of Additional Securities. Except to the
extent required by the Outstanding Registration Rights Agreements,
neither the Company nor any other party may include in any
Registration Statement filed pursuant to a Demand Registration any
additional shares of Common Stock for registration for sale by the
Company or any other holder of securities. The Company shall not
grant any rights inconsistent with this Section 3(d).
(e) Priority in Demand Registration. If a Demand
Registration involves an offering by or through an underwriter or
underwriters, and the managing underwriter or underwriters of such
offering advise the Company and the holders of Registrable Securities
sought to be registered pursuant to such Demand Registration in
writing that in their opinion the size of the offering which such
holders and all other persons including the Company intend to make is
such that the success of the offering would be materially and
adversely affected by the inclusion of the Registrable Securities
requested to be included, then the amount of securities to be offered
for the account of holders of Registrable Securities shall be reduced
pro rata (according to the Registrable Securities proposed for
registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended
by such managing underwriter or underwriters; provided that if
securities are being offered for the account of other persons or
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entities as well as the Company, then with respect to the Registrable
Securities intended to be offered by holders of Registrable
Securities, the proportion by which the amount of such securities is
reduced shall not exceed the proportion by which the amount of such
class of securities intended to be offered by such other persons or
entities is reduced, except to the extent such other persons are
entitled to a lesser reduction under the Existing Registration Rights
Agreements.
4. Company Buy-out of Piggyback Registration or Demand
Registration. In lieu of carrying out its obligations to effect a
Piggyback Registration or Demand Registration of any Registrable
Securities pursuant to this Agreement, the Company may carry out such
obligation by offering to purchase and purchasing such Registrable
Securities requested to be registered (a) in the case of outstanding
shares of Common Stock, at the last sale price of the Common Stock on
the day immediately prior to the day the request for registration is
made and (b) in the case of shares not yet purchased under the New
Warrants or Series A-B Warrants at an amount in cash equal to the
difference between (i) the last sale price of the Common Stock on the
day immediately prior to the day the request for registration is made
and (b) the Exercise Price in effect on such day.
5. Registration Procedures. Whenever a holder of Registrable
Securities has requested that any Registrable Securities be
registered pursuant to either Section 2 or 3 hereof, the Company will
use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with
any such request, the Company will as expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall
be available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such filed
registration statement to become effective; provided that before
filing a Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to one counsel
selected by such holder copies of all such documents proposed to be
filed, which documents will be subject to the review of such counsel,
and that after the filing of the registration statement, the Company
will promptly notify all holders of Registrable Securities of any
stop order issued or threatened by the SEC and take all reasonable
actions required to prevent the entry of such stop order or to remove
it if entered;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration
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Statement effective for a period of not less than 120 days or such
shorter period which will terminate when all Registrable Securities
covered by such Registration Statement have been sold (but not before
the expiration of the requirement of underwriters and dealers to
deliver Prospectuses in connection with such distribution) and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement
during such period in accordance with the intended methods of
disposition by the selling holders thereof set forth in such
Registration Statement;
(c) furnish to each selling holder of Registrable
Securities and to each underwriter, prior to filing the Registration
Statement or Prospectus or any amendment or supplement thereto, if
requested, copies of such Registration Statement as proposed to be
filed, and thereafter furnish to each selling holder of Registrable
Securities and such underwriter such number of copies of such
Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the Prospectus included in
such Registration Statement (including each Preliminary Prospectus)
and such other documents as each selling holder of Registrable
Securities or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by
each selling holder of Registrable Securities;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws
of such jurisdictions as any selling holder of Registrable Securities
or any managing underwriter reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable
to enable any selling holder of Registrable Securities or such
managing underwriter to consummate the disposition in such
jurisdictions of the Registrable Securities owned by any selling
holder of Registrable Securities; provided that the Company will not
be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this clause, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any
such jurisdiction;
(e) use its best efforts to cause the Registrable
Securities covered by such Registration Statement to be registered
with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the
Company or its subsidiaries to enable any selling holder of
Registrable Securities and any managing underwriters to consummate
the disposition of such Registrable Securities;
(f) immediately notify each selling holder of Registrable
Securities, at any time when a Prospectus relating thereto is
required to be delivered under the Securities Act, of the happening
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of any event as a result of which the Prospectus included in such
Registration Statement contains an untrue statement of a material
fact or omits to state any material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading, and the
Company will promptly prepare a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such 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;
(g) make available for inspection by each selling holder
of Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by any selling holder of
Registrable Securities or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due
diligence responsibilities, and cause the Company's officers,
directors and employees to supply all information reasonably
requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of
such Records is necessary in the opinion of the underwriter's
counsel, if any, or counsel to selling holders of Registrable
Securities to avoid or correct a material misstatement or omission in
the Registration Statement, or (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or governmental agency, or (iii) the
information in such Records has been made generally available to the
public. Each selling holder of Registrable Securities agrees that it
will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction or by a governmental agency, give
notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(h) for purposes of a Demand Registration only, furnish to
each selling holder of Registrable Securities and to each
underwriter, if any, (x) an opinion or opinions of counsel to the
Company and (y) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or
by comfort letters, as the case may be, as any selling holder of
Registrable Securities or the managing underwriter reasonably
requests;
(i) otherwise use its best efforts to comply with all
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applicable rules and regulations of the SEC, and make generally
available to its security holders, as soon as reasonably practicable,
an earnings statement covering a period of twelve months, beginning
within three months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Act and Rule 158 thereunder;
(j) use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(k) cooperate with the selling holders of Registrable
Securities, the underwriter or underwriters (or broker/dealer
involved in the distribution), if any, and their respective counsel
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
If any Demand Registration is requested to be in the form of an
underwritten offering, the selection of the managing underwriter
shall be subject to the Company's consent, which consent shall not be
unreasonably withheld. If requested by the underwriters for any
underwritten offering, the Company shall enter into an underwriting
agreement in customary form with such underwriters for such offering,
but subject to the Company's reasonable approval. The selling
holders of the Registrable Securities shall be a party to such
underwriting agreement. All fees and expenses (other than
Registration Expenses otherwise required to be paid) of any managing
underwriter, any co-manager or any independent underwriter shall be
paid for by such underwriters or by such selling holders.
The Company may require the selling holders of Registrable
Securities to furnish to the Company such information regarding the
distribution of such Registrable Securities as the Company may from
time to time reasonably request and such other information as may be
legally required or reasonably requested in connection with such
registration.
Each selling holder of Registrable Securities agrees that, upon
receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(f) hereof, such selling holder
will forthwith discontinue disposition of such Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(f)
hereof, 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 Company shall extend the period during which such
Registration Statement shall be maintained effective pursuant to this
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Agreement (including the period referred to in Section 5(b) hereof)
by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 5(f) hereof to and
including the date when each seller of Registrable Securities covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 5(f)
hereof.
Except as otherwise provided in this Agreement, the Company shall
have sole control in connection with the preparation, filing,
withdrawal, amendment or supplementing of each Registration
Statement, the selection of underwriters, and the distribution of any
preliminary prospectus included in the Registration Statement, and
may include within the coverage thereof additional shares of Common
Stock or other securities for its own account or for the account of
one or more of its other security holders.
6. Indemnification.
(a) Indemnification by Company. In connection with each
Registration Statement relating to disposition of Registrable
Securities, the Company shall indemnify and hold harmless each
selling holder of Registrable Securities and each underwriter of
Registrable Securities and each Person, if any, who controls any
selling holder of Registrable Securities or underwriter (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable
investigation, legal and other expenses 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 the Securities Act, the Exchange Act or other Federal
or state law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, Prospectus or
preliminary prospectus or any amendment thereof or supplement
thereto, or arise out of or are 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;
provided, however, that such indemnity shall not inure to the benefit
of any selling holder of Registrable Securities or underwriter (or
any Person controlling any selling holder of Registrable Securities
or underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) on account of any losses, claims,
damages or liabilities arising from the sale of the Registrable
Securities if such untrue statement or omission or alleged untrue
statement or omission was made in such Registration Statement,
Prospectus or preliminary prospectus, or such amendment or
supplement, in reliance upon and in conformity with information
furnished in writing to the Company by such selling holder of
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Registrable Securities or underwriter specifically for use therein.
The Company shall also indemnify 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 Holders
of Registrable Securities, if requested. The indemnification
obligation imposed on the Company under this Section 6(a) shall be in
addition to any liability which the Company may otherwise have.
(b) Indemnification by Holder of Registrable Securities.
In connection with each Registration Statement, each selling holder
of Registrable Securities shall indemnify, to the same extent as the
indemnification provided by the Company in Section 6(a), the Company,
its directors and each officer who signs the Registration Statement
and each Person who controls the Company (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act)
but only insofar as such losses, claims, damages and liabilities
arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which was made in the
Registration Statement, the Prospectus or preliminary prospectus or
any amendment thereof or supplement thereto, in reliance upon and in
conformity with information furnished in writing by such selling
holder of Registrable Securities to the Company specifically for use
therein. In no event shall the liability of any selling holder of
Registrable Securities hereunder be greater in amount than the dollar
amount of the net proceeds received by any selling holder of
Registrable Securities from the sale of the Registrable Securities
giving rise to such indemnification obligation. The Company shall be
entitled to receive indemnities from underwriters participating in
the distribution, in the underwriting agreement pursuant to which
such sales are made, with respect to information so furnished in
writing by such Persons specifically for inclusion in any Prospectus,
Registration Statement or preliminary prospectus or any amendment
thereof or supplement thereto.
(c) Conduct of Indemnification Procedure. Any party that
proposes to assert the right to be indemnified hereunder will,
promptly after receipt of notice of commencement of any action, suit
or proceeding against such party in respect of which a claim is to be
made against an indemnifying party or parties under this Section,
notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served.
No indemnification provided for in this Section shall be available to
any party who shall fail to give notice as provided in this Section 6
if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced
by the failure to give such notice but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not
relieve it from any liability that it may have to any indemnified
- 13 -<PAGE>
<PAGE>
party for contribution or otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the
approval by the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses,
except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall
have the right to employ its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has
been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without
its written consent, but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless
such indemnified parties from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that
are the subject matter of such proceeding.
(d) Contribution. If the indemnification provided for in
this Section 6 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then the
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
- 14 -<PAGE>
<PAGE>
expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. 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 Section 6(c), any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) 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 this Section 6(d). No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(e) Priority of Indemnification. If indemnification is
available under this Section 6, the indemnifying parties shall
indemnify each indemnified party to the full extent provided in
subparagraphs (a) and (b) of this paragraph without regard to the
relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 6.
7. Assignment. The Piggyback Rights, Demand Registration
Rights and any other rights of MW and MPLP pursuant to this Agreement
shall run in favor of any subsequent holder of Registrable
Securities.
8. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing
and shall be delivered, or mailed first-class postage prepaid,
registered or certified mail,
if to MW, addressed to:
MONTGOMERY WARD & CO, INCORPORATED
Montgomery Ward Plaza
619 West Chicago Avenue
Chicago, IL 60671
Attention: General Counsel
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<PAGE>
if to MPLP, addressed to:
MERCHANT PARTNERS, LIMITED PARTNERSHIP
9690 Deereco Road
Timonium, Maryland 21093
Attention: Raymond L. Bank
in case of either (i) or (ii), with a copy to:
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: David W. Schoenberg
Telecopier: (312) 715-4800
if to the Company, addressed to:
VALUEVISION INTERNATIONAL, INC.
6740 Shady Oak Road
Minneapolis, MN 55344-3433
Attention: Chief Executive Officer
with a copy to:
Maslon, Edelman, Borman & Brand, a professional
limited liability partnership
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4140
Attention: William M. Mower
and such notices and other communications shall for all purposes of
this Agreement be treated as being effective or having been given if
delivered personally, or, if sent by mail, when received.
9. Headings. The headings of the Sections and paragraphs of
this Agreement have been inserted for convenience of reference only
and do not constitute part of this Agreement.
10. Choice of Law. It is the intention of the parties that the
laws of Minnesota shall govern the validity of this Agreement, the
construction of its terms and the interpretation of the rights and
duties of the parties.
11. Counterparts. This Agreement may be executed concurrently
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
12. Invalid Provisions. If any provision of this Agreement is
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<PAGE>
held to be illegal, invalid or unenforceable under present or future
law, such provision shall be fully severable, and this Agreement
shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement,
and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or its severance from this Agreement.
13. Termination of MWD s Interest. Upon execution of the this
Agreement by the parties hereto, MWD shall cease to be a party to
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the date first above written.
VALUEVISION INTERNATIONAL, INC.
By:
Robert L. Johander
Its Chief Executive Officer
MONTGOMERY WARD & CO., INCORPORATED
By:
_____ President
MONTGOMERY WARD DIRECT, L.P.
By: MW Direct General, Inc., the
general partner
By:
Its:
MERCHANT PARTNERS, LIMITED
PARTNERSHIP
By: MERCHANT PARTNERS, LIMITED
PARTNERSHIP, the general partner
By: Merchant Development Corp.,
the general partner
By:
Its:
- 17 -<PAGE>
<PAGE>
AMENDED AND RESTATED OPERATING AGREEMENT
THIS AGREEMENT is made as of July 27, 1996 between
Montgomery Ward & Co., Incorporated, an Illinois corporation
("MW") and ValueVision International, Inc., a Minnesota
corporation ("VVI").
R E C I T A L S
A. MW and VVI are parties to a certain Operating
Agreement, dated March 13, 1995 (the "Original Agreement"),
pursuant to which MW granted to VVI certain rights, and
agreed to certain restrictions on its activities, in
connection with Television Home Shopping (as herein
defined).
B. Effective concurrently herewith, VVI is purchasing
from Montgomery Ward Direct, L.P., a Delaware limited
partnership which is a wholly owned indirect subsidiary of
MW ("MWD"), substantially all of the assets of MWD. MWD is
engaged in the business of selling Products (as herein
defined) through direct-mail specialty catalogs. In
addition, concurrently herewith, (x) the existing
Servicemark License Agreement between MW and VVI, dated
March 13, 1995 is being amended and restated to include the
granting to VVI of a license to use the service mark
"Montgomery Ward Direct" (the "MWD Mark") and (y) the
existing Credit Card License and Receivables Sale Agreement
between MW and VVI, dated March 13, 1995 is being amended in
certain respects, to include the use of the Card (as herein
defined) in connection with Catalog Activities (as herein
defined).
C. By virtue of the acquisition of the assets of MWD,
and the grant of the license to use the MWD Mark, the
parties desire to amend and restate the Original Agreement
to (i) cover the direct-mail businesses to be conducted by
VVI under the MWD Mark, and (ii) revise certain provisions
of the Original Agreement to reflect understandings reached
by the parties based upon their fifteen months of experience
in operating under the Original Agreement.
A G R E E M E N T S
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby
acknowledged, the parties hereby amend and restate the
Original Agreement to read as follows:
1. Certain Definitions. For the purposes of this
Agreement:
(a) "Affiliate" shall mean any Person which
directly or indirectly is controlled by the Person in<PAGE>
<PAGE>
question. "Control" means the possession, directly or
indirectly, of the power to direct or to cause the
direction of the management and policies of a Person
whether through ownership of voting securities, through
the power to appoint directors, by contract or
otherwise. For purposes of this Agreement, neither the
General Electric Company ("GE"), nor General Electric
Capital Corporation ("GECC"), nor any subsidiary of GE
or GECC, shall be deemed to be an Affiliate of MW.
(b) "Cable Systems" shall mean individual cable
television systems. Each cable television system shall
be considered to be an individual Cable System,
regardless of whether such cable television system is
operated by an operator of more than one Cable System.
(c) "Card" shall mean any private-label credit
card offered by any member of the MW Group or its
designee to customers of any member of the MW Group,
including but not limited to the Montgomery Ward credit
card and the Lechmere credit card.
(d) "Catalog Activities" shall mean the conduct
of the following activities:
(i) the offer and sale of Products through
mail-order catalog offers (the "Primary Catalog
Activity");
(ii) the offer and sale of Products through
direct mail syndications and reverse syndications
(as such terms are commonly used in the catalog
and direct-mail industry);
(iii) the offer and sale of Products through
telemarketing to customers derived through the
Primary Catalog Activity;
(iv) prospecting for new customers using a
combination catalog and pre-approved credit offer;
(v) use of 30, 60 and 120 second television
commercials for promotion of the Primary Catalog
Activity;
(vi) the offer and sale of Products through
solo and multi-solo mailings to customers derived
through the Primary Catalog Activity; and
(vii) the use of the Internet and on-line
services to promote the Primary Catalog Activity.
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<PAGE>
(e) "Effective Date" shall mean March 13, 1995.
(f) "Excluded Products" shall mean unique,
proprietary Products (as herein defined) such as the
PowerGrower, that (x) are developed or promoted by a
member of the MW Group for the primary benefit of the
MW Group, and (y) are not marketed through the use of
any of the Marks.
(g) "HSN" shall mean Home Shopping Network, Inc.,
a Delaware corporation.
(h) "HSN Agreements" shall mean (i) that certain
Agreement, dated as of October 12, 1988 among Signature
Agency, Inc., HSN and HSN Insurance, Inc., (ii) that
certain Agreement, dated as of October 31, 1987,
between Signature's Nationwide Auto Club, Inc., HSN and
Home Shopping Insurance, Inc., (iii) that certain
Agreement, dated as of October 12, 1987, between
Montgomery Ward Life Insurance Company, HSN and Home
Shopping Insurance, Inc., and (iv) that certain
Agreement, dated as of October 10, 1991, among
Montgomery Ward Enterprises, Inc., The Signature Life
Insurance Company of America, Home Shopping Club, Inc.
and HSN Insurance, Inc.
(i) "Marks" shall have the meaning ascribed to
such term in the Restated Servicemark License
Agreement.
(j) "MW Group" shall mean, collectively, MW and
its Affiliates.
(k) "MW Products" shall mean Products offered for
sale by any member of the MW Group.
(l) "MW Services" shall mean services offered
from time to time by Signature (as herein defined).
(m) "New Warrants" shall mean Series P Warrants
to purchase shares of common stock, $.01 par value, of
VVI.
(n) "Person" shall mean a natural person,
corporation, general or limited partnership, limited
liability company or partnership, proprietorship,
association, joint venture, governmental agency, trust,
estate, unincorporated organization, or other entity or
organization whether acting in an individual,
fiduciary, or other capacity.
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<PAGE>
(o) "Pledge Agreement" shall mean that certain
Pledge Agreement, dated of even date herewith, between
MW and VVI.
(p) "Product" or "Products" shall mean any
consumer merchandise other than Excluded Products.
(q) "Related Agreements" shall mean the Pledge
Agreement, the Receivables Sale and Purchase Agreement
(as herein defined) and the Restated Servicemark
License Agreement (as herein defined).
(r) "QVC" shall mean QVC Network, Inc., a
Delaware corporation.
(s) "Restated Servicemark License Agreement"
shall mean that certain Amended and Restated
Servicemark License Agreement between MW and VVI,
of even date herewith.
(t) "Receivables Sale and Purchase
Agreement" shall mean that certain Credit Card
License and Receivables Sale Agreement between MW
and VVI, dated March 13, 1995, as amended by a
letter agreement of even date herewith.
(u) "Retailer" shall mean a Person principally
engaged in the retail merchandising of consumer goods
within the United States, other than a member of the MW
Group or VVI. By way of example and not of limitation,
"Retailer" includes merchandisers such as Sears,
J.C.Penney, Macys, Target, and the like.
(v) "Retained Catalog Rights" shall mean the
following:
(i) the right of MW to conduct its existing
special-offers business through statement inserts,
solo and multi-solo mailings and through
syndications;
(ii) the right of Signature (as herein
defined) to market a membership-based shopping
service and to do catalog or solo mailings to
potential members to solicit memberships and to
encourage members to purchase merchandise through
such service; and
(iii) the right of Signature to conduct
continuity businesses.
-4- <PAGE>
<PAGE>
(w) "Signature" shall mean Signature
Financial/Marketing, Inc. and its Affiliates, all of
which presently are members of the MW Group.
(x) "Syndicated Programs" shall mean
syndicated/transactional television programming
intended for broadcast over multiple broadcast or cable
television networks, using a format other than that
described in the first sentence of the definition of
Television Home Shopping.
(y) "Taxes" shall mean sales, use, service and
similar taxes.
(z) "Television Home Shopping" shall mean
Product-focused television programming whereby Products
are sold by "on-air" hosts and orders are placed by
viewers directly with the party providing said
television programming or its agents or
representatives, using substantially the format used as
of the date hereof by VVI, HSN and QVC. Without
limiting the generality of the preceding sentence,
Television Home Shopping does not include commercials
or Syndicated Programs, but does, for the five year
period commencing on the date hereof, include so-called
"infomercials" of a length not exceeding 30 minutes.
(aa) "ViaTV" shall mean RSTV, Inc., a Florida
corporation.
(y) "VVI" shall mean ValueVision International,
Inc. and its Affiliates.
(z) "VVI Cataloging Business" shall mean the
conduct by VVI of Catalog Activities, through the use
of one or more of the Marks and/or offering customers
the use of the Card.
Other definitions are contained in the body of this
Agreement.
2. Exclusivity. During the term of this Agreement:
(a) No member of the MW Group will, directly or
indirectly:
(i) sell or offer for sale any Product
through Television Home Shopping or Catalog
Activities within the United States, except
through VVI; provided, however that this Section
2(a)(i) shall not apply to (w) Excluded Products,
(x) Retained Catalog Rights, or (y) Products
-5-<PAGE>
<PAGE>
offered for sale by any business that is acquired
from a third party after the Effective Date by any
member of the MW Group;
(ii) start up a Television Home Shopping
business or, for a period of five years,
commencing on the date hereof, a Catalog
Activities business;
(iii) acquire 10% or more of the outstanding
equity securities (or securities representing 10%
or more of the aggregate voting power of the
outstanding securities) of a Person principally
engaged in Television Home Shopping, including,
without limitation, HSN, QVC, and ViaTV, or, for a
period of five years, commencing on the date
hereof, Catalog Activities; or
(iv) enter into, or assist any Person (i) to
obtain, arrangements for Cable System carriage of
Television Home Shopping, including, without
limitation, by purchasing advertising time on any
such Cable System for the purpose of so assisting
such Person, or purchase advertising time on
Television Home Shopping programming on any Cable
System, except with VVI pursuant to this
Agreement, or (ii) in starting-up, developing or
conducting any Catalog Activities (other than the
Retained Catalog Rights).
This Section 2(a) shall not prevent any member of the
MW Group from acquiring a voting or equity interest in,
or the operating assets of, a Person that engages in
Television Home Shopping or Catalog Activities other
than as a principal business; provided, however, that
if the MW Group shall acquire a Person, or the assets
of a Person, engaged in Catalog Activites other than as
a principal business, MW shall notify VVI, and, if VVI
shall desire to purchase the portion of such Person
which is engaged in Catalog Activities, MW shall
negotiate in good faith with VVI with a view to selling
such portion to VVI.
(b) Without the prior written consent of MW,
which shall not unreasonably be withheld:
(i) VVI and its Affiliates will not sell or
offer for sale any Products through Television
Home Shopping within the United States using the
servicemarks, trade names or trademarks of any
Retailer; and
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<PAGE>
(ii) VVI and its Affiliates shall not engage
in Catalog Activities using any servicemarks,
trade names or trademarks of any Retailer other
than MW and its Affiliates, or offer for sale
through Catalog Activities services which are
competitive with MW Services then being offered by
Signature, provided that Signature shall have
offered such MW Services prior to the time
competitive services are intended to be offered by
VVI;
(c) Except as otherwise provided in the HSN
Agreements, MW shall give to VVI the first opportunity
to offer for sale, via Television Home Shopping, MW
Services which MW considers in good faith to be
appropriate for sale by means of Television Home
Shopping. MW shall do so by giving VVI notice of MW's
intent to offer such MW Services, and the prices, terms
and other economic terms with respect to such MW
Services which MW desires. MW and VVI shall thereupon
negotiate in good faith over whether VVI shall offer
such MW Services, and the terms of any such offer. If
MW and VVI reach an agreement with respect to such MW
Service within 30 days after the commencement of
negotiations, then VVI shall have the exclusive right
to offer such MW Service through Television Home
Shopping. If the parties do not so reach an agreement,
MW shall thereafter have the right to offer such MW
Service to other Television Home Shopping networks on
such terms as MW shall determine in its sole judgement,
provided that the Card shall not be offered and the
Marks shall not be used in connection with the offering
of such MW Services on such networks.
(d) MW shall give to VVI the first opportunity to
carry any Syndicated Program which MW desires to be
distributed by a broadcast or cable television network
engaged primarily in Television Home Shopping,
including without limitation VVI, HSN, QVC and ViaTV.
MW shall do so by giving VVI notice of MW's intent to
so distribute such Syndicated Program, and the economic
terms with respect to such Syndicated Program which MW
desires. MW and VVI shall thereupon negotiate in good
faith over the terms pursuant to which such Syndicated
Program would be broadcast by VVI and the compensation,
if any, payable to MW therefor. If MW and VVI reach an
agreement with respect to such Syndicated Program
within 30 days after the commencement of negotiations,
then MW shall not offer such Syndicated Program over
any broadcast or cable television network engaged
primarily in Television Home Shopping other than VVI.
If the parties do not so reach an agreement, MW shall
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<PAGE>
thereafter have the right to offer such Syndicated
Program to other Television Home Shopping networks on
terms not materially less favorable to MW than the
terms which were offered to VVI, provided that the Card
shall not be offered and the Marks shall not be used in
connection with such Syndicated Program on such
network.
3. Marks. MW shall not license or permit any
Person, other than VVI or its Affiliates, to use the Marks
(or marks confusingly similar thereto) in Television Home
Shopping or Catalog Activities, nor shall MW license or
permit any Person other than VVI engaged primarily in
Television Home Shopping or Catalog Activities, including
without limitation QVC, HSN and ViaTV, to use the Marks (or
marks confusingly similar thereto) for any purpose.
4. Card. MW shall not license or permit any Person,
other than VVI, to use the Card to sell or offer for sale
any Products through Television Home Shopping or Catalog
Activities, nor shall MW license or permit any Person other
than VVI engaged primarily in Television Home Shopping
(including without limitation QVC, HSN, and ViaTV) or
Catalog Activities, to use the Card for any purpose,
provided, however, that notwithstanding the foregoing, the
Card may be used for any purpose other than to sell or offer
for sale any Products through Television Home Shopping or
Catalog Activities (other than through the Retained Catalog
Rights) by (i) any member of the MW Group, and (ii) any
person that was using the Card prior to such time as MW
obtained actual knowledge that such Person was controlled by
a company engaged primarily in Television Home Shopping or
Catalog Activities.
5. Programming and Catalog Content. VVI shall have
exclusive control over all television programming for
Television Home Shopping, and catalog and mailing content
for Catalog Activities, including without limitation,
product selection, method and form of presentation and
content; provided, however, that any Television Home
Shopping programming, and any Catalog Activity, employing
any of the Marks, or using the Card, shall be subject to the
provisions of the Restated Servicemark License Agreement and
the Receivables Sale and Purchase Agreement. Nothing
contained herein shall preclude VVI from offering television
programming in formats other than Television Home Shopping.
-8-<PAGE>
<PAGE>
6. Fulfillment. VVI shall have sole responsibility
for, and exclusive control over, fulfillment except as
provided herein. Without limiting the generality of the
preceding sentence:
(a) Except as provided in this paragraph, VVI
shall have sole responsibility for and exclusive
control over inbound telemarketing and fulfillment of
viewer orders generated through Television Home
Shopping, and fulfillment of sales generated through
Catalog Activities, either from VVI's inventory or
through drop-shipments arranged by VVI with MW or other
drop-ship vendors. Notwithstanding the foregoing, MW
shall have responsibility for fulfillment of viewer or
customer orders that are drop-shipped from MW to the
customer.
(b) Except as provided in this paragraph, VVI
shall bear the sole risk of loss with respect to all
merchandise, including MW Products, including the loss
of risk in transit and the risk of theft.
Notwithstanding the foregoing, MW shall bear the sole
risk of loss, including the risk of loss in transit and
the risk of theft, for orders that are drop-shipped
from MW to the customer.
(c) VVI shall bear the sole credit risk with
respect to all Products, including MW Products, and MW
Services, which VVI shall sell on credit, excluding,
however, any Product sold through use of the Card,
except as otherwise provided in the Restated Receivable
Sales and Purchase Agreement.
(d) Except as provided in this paragraph, VVI
will be solely responsible for collecting from its
customers any Taxes which may be due on any sales of
Product (including MW Products) or MW Services to its
customers and shall remit all such amounts to the
appropriate taxing authorities. Notwithstanding the
foregoing, MW shall be solely responsible for
collection of Taxes from its customers who buy Product
or MW Services using the Card, except as provided in
the Restated Receivable Sales and Purchase Agreement.
Nevertheless, MW shall remit to VVI, pursuant to the
Restated Receivable Sales and Purchase Agreement, an
amount equal to the Taxes charged to customers by VVI
on each purchase using the Card, which amount VVI shall
remit to the appropriate taxing authority.
(e) VVI will not modify its standard 30-day
Product return period (except for Products constituting
"seconds", Products which have been repaired or
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<PAGE>
reconditioned or close-outs) without MW's consent,
which consent will not unreasonably be withheld. VVI
and MW shall instruct customers to return Product
purchased from VVI through Television Home Shopping or
Catalog Activities (other than Product drop-shipped by
MW) to VVI, and not to MW stores. In the event that MW
accepts returns of Product purchased from VVI through
Television Home Shopping or Catalog Activities in
accordance with VVI's return policy, MW shall promptly
ship such product to VVI. If such return was accepted
in accordance with VVI's return policy, VVI will bear
the freight cost associated with such return;
otherwise, VVI and MW will each bear 50% of such cost.
7. Purchase of MW Products and MW Services from MW.
(a) VVI shall have the right, exercisable from
time to time upon written notice to MW using an agreed
form of purchase order, to purchase MW Products, for
the purpose of resale by means of Television Home
Shopping or Catalog Activities, subject to (i)
applicable restrictions in vendor agreements pursuant
to which MW purchased such MW Products, and (ii) MW's
own requirements for MW Products. Upon request, MW
will advise VVI as to whether an agreement with any of
MW's vendors contains any restrictions on MW's ability
to resell Product from such vendor to VVI. MW shall
have the sole right to determine its requirements for
such MW Products. The prices of such MW Products shall
not exceed MW's direct cost thereof (including freight,
but excluding corporate overhead charges), and the
terms of sale shall be the same terms as those under
which MW purchased such MW Products, except that such
MW Products shall be shipped to VVI f.o.b. MW's
warehouses. MW agrees to use commercially reasonable
efforts to assist VVI to obtain vendors' consents and
any necessary trademark licenses. VVI will cease
offering via Television Home Shopping any MW Product
with respect to which MW advises VVI in writing that
the vendor has specifically requested that such MW
Product not be sold via Television Home Shopping
("Withdrawn Product"). MW will accept returns of all
such Withdrawn Product from VVI and will reimburse to
VVI the purchase price and freight charges paid by VVI
in acquiring or returning such Withdrawn Product.
(b) Prices and terms with respect to MW Services
shall be as agreed from time to time by MW and VVI with
respect to the particular MW Service to be offered
through Television Home Shopping or Catalog Activities.
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<PAGE>
(c) MW shall have the right to establish a credit
limit, and credit terms, for all VVI purchases pursuant
to this Section 7 and pursuant to Section 8. Except as
provided above with respect to Withdrawn Product,
return privileges with respect to MW Products shall be
as agreed between MW and VVI with respect to the
particular MW Products, and in the absence of such an
agreement, VVI shall not have return privileges, except
with respect to defective goods.
(d) MW disclaims any express or implied
warranties with respect to MW Products, including
without limitation the implied warranties of
merchantability and fitness for a particular purpose,
except for any private-label MW Products as to which MW
offers a manufacturer's warranty (in which case MW's
standard manufacturer's warranty for such MW Product
shall apply). MW will assign to or otherwise make
available to VVI all manufacturer's warranties and
other rights of MW relating to third party claims
arising from MW Products sold by MW to VVI and provide
reasonable assistance to VVI in obtaining the benefits
of such warranties, at no expense to MW; provided,
however, that MW shall retain the concurrent right to
assert such rights with respect to such MW Product.
8. Introductions to MW Vendors. From time to time
during the term hereof, MW will introduce VVI's buyers to
MW's principal vendors and such other MW vendors to which
VVI reasonably requests an introduction, and MW's buyers
will provide reasonable advice and assistance to VVI's
buyers to obtain Product, vendors' consents and licenses,
consistent with the needs of MW's business. In its
discretion, and subject to the terms of its agreements with
its vendors, MW may purchase Product for resale to VVI, on
terms established by MW and acceptable to VVI.
9. Buying Office. During the term hereof, MW will
make available to VVI, without charge, except as provided in
this Section 9, office space and reasonable office support
services at MW's headquarters in Chicago for use as a buying
office. To the extent required in order to efficiently
implement the provisions of this Agreement, during the term
hereof, VVI will make office space and reasonable office
support services available to MW at its headquarters in
Minneapolis, without charge, except as provided in this
Section 9. Each party may charge the other party for any
office support service costs (e.g., long distance telephone,
photocopies, postage), at such party's direct cost
(excluding overhead) to be agreed upon by the parties. The
parties agree to work together in good faith to determine
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the most cost-effective means to equip and operate such
offices.
10. Cable Carriage Agreements and Advertising
Commitments. MW and VVI agree that:
(a) VVI shall, and MW may at its option, use
commercially reasonable efforts to negotiate for long
term cable carriage agreements pursuant to which Cable
Systems will agree to carry VVI's Television Home
Shopping programming. Each party will use its best
efforts to promptly notify the other of the
commencement of negotiations with any Cable System, and
will permit the other party to participate therein. MW
shall have the right, but not be obligated, to assist
VVI to obtain long term cable carriage agreements by
purchasing advertising time on such Cable Systems, with
cash or non-cash consideration acceptable to the Cable
System (such as MW Services);
(b) subject to the remainder of this paragraph
10, MW shall not be obligated to purchase advertising
time except to the extent it expressly agrees in
writing with the Cable System or VVI to be so obligated
(an "Advertising Commitment"). Notwithstanding the
preceeding sentence, MW hereby makes an Advertising
Commitment that the MW Group will, collectively,
purchase not less than $20,000,000 of advertising time
on Cable Systems through VVI during the five year
period commencing August 1, 1996. The MW Group will
have sole control of (i) the nature and extent of all
advertising it places with Cable Systems, (ii) the
content of all advertisements, and (iii) the selection
of the specific Cable Systems on which it intends to
place advertising. MW shall receive full credit under
this paragraph 10 for any advertising placed by an
Affiliate of MW as of August 1, 1996 through VVI even
though such Affiliate shall have ceased to be an
Affiliate of MW. MW shall use its best efforts to
place (i) $5,000,000 of advertising through VVI during
the one year period commencing August 1, 1996, (ii)
$4,000,000 of advertising during each of the years
commencing on the first, second and third anniversary
of said date, and (iii) $3,000,000 of advertising
during the year commencing on the fourth anniversary of
said date. To the extent the MW Group shall have
placed less than the minimum amount of advertising for
a one year period referred to in the preceding
sentence, the shortfall shall be carried forward to
subsequent years; provided, however, that MW shall be
obligated to place all $20,000,000 of advertising prior
to August 1, 2001. As collateral security for MW's
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<PAGE>
obligations under the preceding portions of this
subparagraph (b), MW shall pledge to VVI New Warrants
to purchase 1,637,138 shares, pursuant to the Pledge
Agreement;
(c) VVI shall not be obligated to enter into any
cable carriage agreement except to the extent that VVI
has determined, in its sole discretion, that such cable
carriage agreement is in the best interests of VVI. If
at any time VVI is required to pay additional amounts
to a Cable System solely because of MW's failure to
purchase advertising time that MW had committed to
purchase in an Advertising Commitment (other than by
reason of a breach of such Advertising Commitment by
such Cable System), MW will reimburse VVI for such
additional amount that VVI is required to pay the Cable
System, not to exceed the difference between the amount
MW committed to expend on advertising with such Cable
System pursuant to such Advertising Commitment, and the
amount paid by MW for advertising under such
Advertising Commitment. In addition to all other
rights and remedies otherwise provided by law, except
as specifically limited hereunder, in the event that MW
breaches an Advertising Commitment, VVI shall have the
termination right provided in subparagraph 22(b)(ii).
11. Board of Directors. Subject to the provisions of
this paragraph 11, commencing on the date of this Agreement
and ending on the first to occur of (x) the date on which MW
owns or shall have the right to own less than 10% of the
outstanding common stock of VVI (computed on a fully diluted
basis) and (y) the date on which this Agreement terminates,
MW will have the right to designate one nominee on
management's slate of nominees for the Board of Directors;
provided, however that MW will not designate as a director
nominee (x) any person who is an officer or director of GE
or GECC or any of their Affiliates, (y) any person with
respect to whom VVI would be required to disclose
information in response to Item 401(f) of Regulation S-K or
Item 401(d) of Regulation S-B, or (z) any proposed nominee
to the extent VVI is advised in writing by its counsel that,
in such counsel's opinion, nomination of such designee would
result in a violation of the fiduciary duties of VVI's
directors. During the period in which MW has the right to
designate a director-nominee, (i) VVI will agree to
recommend such nominee to its stockholders, (ii) VVI (with
respect to any Shares as to which it has voting power) and
Messrs. Robert Johander and Nicholas Jaksich, as long as
such individuals remain members of VVI's Board of Directors,
will each vote all Shares over which they have voting power
in favor of the election of MW's nominee, and (iii) MW will
vote all Shares over which it has voting power in favor of
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<PAGE>
VVI's nominees. If this Agreement shall terminate, unless
MW shall at such time own 10% or more of VVI's then
outstanding common stock, MW will cause its designee to
promptly resign from the Board of Directors. The MW
director-nominee, and the directors of MW who were appointed
by GE or GECC, shall each execute such recusal statements as
may be required from time to time in order that none of VVI,
GECC nor GE (as both the ultimate indirect owner of shares
of MW and the owner of National Broadcasting Company, Inc.
and its subsidiaries will be in violation of the multiple
ownership and combined ownership rules, regulations, and
policies of the Federal Communications Commission.
12. [Intentionally omitted.]
13. Insurance.
(a) VVI shall purchase and maintain in effect at
all times during the term of this Agreement, the
following policies of insurance:
(i) A policy of commercial general liability
insurance, on an occurrence rather than a claims
made basis, including coverage for contractual
liability, product liability, business automobile
liability insurance, personal injury, and property
damage and advertising injury, naming MW as an
additional insured, with a combined single limit
of liability for bodily injury and property damage
of not less than $1 million, and endorsed to
eliminate the exclusion for coverage as to
property in MW's care, custody and control;
(ii) A policy of employer's liability
insurance with a combined single limit of
liability of $500,000 per occurrence and in the
aggregate.
(iii) Umbrella liability insurance on an
occurrence basis with a $10,000,000 combined
single limit of liability per occurrence and in
the aggregate.
(iv) Director's and officer's liability
insurance covering all directors and executive
officers, with a combined single limit of not less
than $2,000,000 per occurrence and in the
aggregate.
(v) Crime insurance, including coverage for
employee dishonesty, with a combined single limit
of not less than $1,000,000 per occurrence and in
the aggregate.
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All such insurance shall be endorsed to provide at
least ten (10) days' prior written notice to MW in the
event of any proposed cancellation or modification.
All of the insurance specified in this paragraph shall
be with insurance carriers duly authorized to do
business in Minnesota. Upon request, VVI shall furnish
MW with copies of policies, certificates or other
evidence of all such insurance in conformity with the
requirements of this Agreement. VVI will also use
commercially reasonable efforts to obtain vendor's
endorsements with respect to all material items of
merchandise, other than MW Products or jewelry, sold by
VVI, naming MW as an additional insured.
(b) During the term of this Agreement, MW will:
(i) cause VVI to be named as an additional
insured with respect to all coverages, including
without limitation, contractual liability,
products liability and advertising injury, under
MW's comprehensive general liability insurance
policies with respect to all MW Products; and
(ii) use commercially reasonable efforts to
obtain vendor's endorsements, naming VVI, with
respect to all material MW Products which are sold
to VVI pursuant to this Agreement.
14. Inspection of Records. Each party will have the
right to inspect the other's books, records, and premises
with regard to any transaction under this Agreement and the
Related Agreements. In order to verify the accuracy of all
the above accounts and records, each party will have the
right at its sole cost to copy said books and records. All
information in such books, records, or revealed by such
inspection, shall be deemed to be confidential information
subject to the provisions of Sections 15 (except to the
extent provided in Section 15(a)(i), (ii) and (iii) and
15(b)(i), (ii) and (iii), and 16 hereof).
15. Confidentiality.
(a) In the performance of this Agreement and the
Related Agreements, VVI and its Affiliates may be
exposed to the confidential information or trade
secrets of the MW Group and others. VVI and its
Affiliates shall not disclose to anyone not employed by
the MW Group or MW's designee under the Receivables
Sale and Purchase Agreement nor use except on behalf of
the MW Group or MW's designee under the Receivables
Sale and Purchase Agreement any such confidential
information acquired by VVI or its Affiliates in the
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<PAGE>
performance of this Agreement or the Related
Agreements, except as authorized by MW by prior
writing. Information regarding all aspects of the MW
Group's business, either directly or indirectly
disclosed to VVI or its Affiliates or developed by VVI
or its Affiliates in the performance of this Agreement
and the Related Agreements shall be presumed to be
confidential except to the extent that such information
(i) shall have been published or otherwise made freely
available to the general public without restriction
through no wrongdoing of VVI or its Affiliates,
(ii) shall have been obtained from a third party not
reasonably known by VVI or its Affiliates after
reasonable inquiry, to be subject to a confidentiality
agreement with MW or any of its Affiliates or (iii) is
required (in the reasonable opinion of VVI's legal
counsel) to be disclosed pursuant to law or legal
process. With regard to all of such confidential
information, VVI agrees that it and its Affiliates
shall: (a) forever hold in strict confidence such
information; (b) not alter, copy, misappropriate,
misuse, transfer, sell, deliver or divulge, under any
circumstances, any of such confidential information to
anyone other than an employee or agent of VVI or its
Affiliates whose duties require access to such
information and then only in the course of VVI's
performance under this Agreement and such employee or
agent shall be bound by the terms of this paragraph
15(a); and (c) upon the termination of this Agreement,
return all such confidential information to MW or to
destroy same together with all additional copies
thereof.
(b) In the performance of this Agreement and the
Related Agreements, the MW Group (which, for the
purposes of this paragraph 15(b) shall include MW's
designee under the Receivables Sale and Purchase
Agreement) may be exposed to confidential information
or trade secrets of VVI, its Affiliates and others. The
MW Group shall not disclose to anyone not employed by
VVI or its Affiliates nor use except on behalf of VVI
and its Affiliates any such confidential information
acquired by the MW Group in the performance of this
Agreement and the Related Agreements, except as
authorized by VVI by prior writing. Information
regarding all aspects of VVI's business either directly
or indirectly disclosed to the MW Group or developed by
any member of the MW Group in the performance of this
Agreement and the Related Agreements shall be presumed
to be confidential except to the extent that such
information (i) shall have been published or otherwise
made freely available to the general public without
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restriction through no wrongdoing of the MW Group,
(ii) shall have been obtained from a third party not
reasonably known by the MW Group, after reasonable
inquiry, to be subject to a confidentiality agreement
with VVI or any of its Affiliates or (iii) is required
(in the reasonable opinion of MW's legal counsel) to be
disclosed pursuant to law or legal process. With
regard to all of such confidential information, the MW
Group shall: (a) forever hold in strict confidence such
information; (b) not alter, copy, misappropriate,
misuse, transfer, sell, deliver or divulge, under any
circumstances, any of such confidential information to
anyone other than an employee or agent of the MW Group
whose duties require access to such information and
then only in the course of the MW Group's performance
under this Agreement and such employee or agent shall
be bound by the terms of this paragraph 15(b); and (c)
upon the termination of this Agreement, return all such
confidential information to VVI or to destroy same
together with all additional copies thereof.
(c) The obligations of the parties under
paragraphs 15(a) and 15(b) shall survive the
termination or expiration of this Agreement for a
period of five years after such termination or
expiration.
16. Cardholder Data.
(a) Pursuant to the Receivables Sale and Purchase
Agreement, VVI and MW have come into, or will hereafter
come into, possession of the names, addresses and other
data and information ("Cardholder Data") with respect
to VVI viewers or customers who are or become holders
of the Card and who purchase Product from VVI using the
Card ("Cardholders"). Cardholder Data already in MW's
or VVI's possession as of the Effective Date or which
MW or VVI acquires from sources other than the other
party do not constitute Cardholder Data. Customers who
have purchased Product from VVI by use of the Card
(regardless of whether such customers have also used
any other credit card) are referred to herein as
"Cardholder Customers."
(b) The parties agree that (i) all Cardholder
Data provided by MW to VVI with respect to Persons who
are not Cardholder Customers shall remain the sole
property of MW, and (ii) Cardholder Data with respect
to Cardholder Customers will be the joint property of
MW and VVI. Each of MW and VVI may exercise all rights
of ownership with respect to Cardholder Data with
respect to Cardholder Customers; provided, however,
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<PAGE>
that (x) no so-called "back-end" marketing of Products
or services by VVI to Cardholder Customers, other than
through Catalog Activities, shall include the use of
the Marks or the offering of the Card without MW's
approval, which shall not unreasonably be withheld, and
(y) VVI will not, directly or indirectly, sell or lease
to parties other than Affiliates of VVI as of the date
hereof any Cardholder Data relating to Cardholder
Customers to any Retailer or to any Person which is
engaged in the rendering of services which are in
competition with any of the MW Services as then offered
by Signature. In any sale or lease of Cardholder Data
pertaining to Cardholder Customers which is not
prohibited pursuant to the preceding sentence, VVI
shall not make available any Cardholder Data pertaining
to the Cardholder Customer's past use of the Card or
such Cardholder Customer's creditworthiness, to the
extent any such information was obtained from the MW
Group or the issuer of the Card.
(c) The obligations of the parties under
paragraphs 16(a) and 16(b) shall survive the
termination or expiration of this Agreement for a
period of five years after such termination or
expiration.
17. Representations and Warranties. The parties make
the following representations and warranties to each other:
(a) MW makes the following representations and
warranties to VVI:
(i) MW is a corporation duly organized,
existing and in good standing under the laws of
the State of Illinois;
(ii) MW has all necessary corporate
authority, and it has obtained all required
consents, to enter into this Agreement and the
Related Agreements, and that such entry shall not
constitute a breach of any other material
agreement to which MW is a party or may be bound;
(iii) MW has obtained all necessary consents,
authorizations, orders or approvals, if any, of
any governmental authority or other person
required on the part of MW for the performance by
MW or its agents of its obligations under this
Agreement and the Related Agreements;
(iv) MW possesses all material permits and
licenses, if any, necessary to the performance of
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its obligations under this Agreement and the
Related Agreements;
(v) No member of the MW Group is subject to,
or obligated under, any provision of (i) their
respective articles of incorporation or by-laws,
(ii) any agreement, arrangement or understanding,
including, without limitation, the HSN Agreements,
(iii) any license, franchise or permit, or (iv)
any law, regulation, order, judgment or decree;
that would be breached or violated, or in respect
of which a right of termination or acceleration or
any encumbrances on any of their respective assets
would be created, by the execution, delivery and
performance of this Agreement and the Related
Agreements by MW;
(vi) neither the execution and delivery of
this Agreement or the Related Agreements by MW and
VVI, nor their performance thereof in accordance
with the terms thereof, will result in a violation
of any applicable law, regulations, orders,
rulings or agreements which violation would have a
material adverse effect on either MW or VVI;
(vii) MW is the user and owner of the entire
right, title and interest in and to the Marks in
the United States subject to any licenses that
have previously been granted;
(viii) MW has no knowledge of any
infringement in the United States of the rights
granted under the Restated Servicemark License
Agreement by any third party; and
(ix) MW has not granted any rights to any
third party that conflict with the rights granted
under the Restated Servicemark License Agreement.
(b) VVI makes the following representations and
warranties to MW:
(i) VVI is a corporation duly organized,
existing and in good standing under the laws of
the State of Minnesota;
(ii) VVI has all necessary corporate
authority, and has obtained all required consents,
to enter into this Agreement and the Related
Agreements and that such entry shall not
constitute the breach of any other material
agreement to which VVI is a party or may be bound;
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(iii) VVI has obtained all necessary
consents, authorizations, orders or approvals, if
any, of any governmental authority or other person
required on the part of VVI for the performance by
VVI or its agents of its obligations under this
Agreement and the Related Agreements;
(iv) VVI possesses all material permits and
licenses, if any, necessary to the performance of
its obligations under this Agreement and the
Related Agreements; and
(v) VVI is not subject to, or obligated
under, any provision of (i) its articles of
incorporation or by-laws, (ii) any agreement,
arrangement or understanding, (iii) any license,
franchise or permit, or (iv) any law, regulation,
order, judgment or decree; that would be breached
or violated, or in respect of which a right of
termination or acceleration or any encumbrances on
any of its assets would be created, by the
execution and delivery of this Agreement and the
Related Agreements by VVI or the performance of
this Agreement or the Related Agreements.
(c) The representations and warranties of the
parties made in this Section 17 shall survive the
execution of this Agreement for an eighteen month
period.
18. Other Obligations of the Parties. The parties
make the following affirmative covenants to each other:
(a) MW makes the following affirmative covenants
to VVI:
(i) MW will comply in all material respects
with all applicable laws and regulations which
affect the performance in any material respect of
MW's obligations under this Agreement and the
Related Agreements.
(ii) MW shall not grant any rights to any
third party that conflict with the rights granted
under the Restated Servicemark License Agreement.
(b) VVI makes the following affirmative covenants
to MW:
(i) VVI will comply in all material respects
with all applicable laws and regulations which
affect the performance in any material respect of
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VVI's obligations under this Agreement and the
Related Agreements; provided, however, that this
covenant shall not be deemed to apply to laws and
regulations with respect to the legality of the
proposed use of the Card or the Revolving Charge
Plan (as defined in the Receivables Sale and
Purchase Agreement) in accordance with the
Receivables Sale and Purchase Agreement;
(ii) not later than ninety (90) days after
the end of each fiscal year of VVI, commencing
with the fiscal year ending January 31, 1998, VVI
shall give to MW a written statement, certified as
accurate by VVI's chief financial officer, setting
forth a detailed computation of gross and net
sales of Products through Catalog Activities for
the preceding fiscal year. MW shall have the
right, exercisable upon reasonable prior notice,
to inspect and copy VVI's books and records
relating to the foregoing computations.
19. Term. Unless sooner terminated pursuant to
paragraph 22 hereof, the term of this Amended and Restated
Operating Agreement shall commence on the date hereof and
end on July 31, 2008.
20. Events of Default.
(a) The occurrence of any of the following
circumstances shall be an Event of Default by MW:
(i) MW or any member of the MW Group, as
applicable, shall be in material default of its
material obligations under this Agreement or the
Related Agreements, and such material default
shall not have been cured within 90 days after
notice thereof is given by VVI to MW; or
(ii) any of MW's representations and
warranties contained herein shall have been untrue
in a material respect when made.
(b) It shall be an Event of Default by VVI upon
the occurrence of any of the following circumstances:
(i) VVI shall be in material default of its
material obligations under this Agreement or the
Related Agreements and such material default shall
not have been cured within 90 days after written
notice thereof is given by MW to VVI; or
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(ii) any of VVI's representations and
warranties contained herein shall have been untrue
in a material respect when made.
21. Termination Rights. The parties shall have the
following rights to terminate this Agreement, or portions
thereof, prior to the expiration of the term set forth in
Section 19:
(a) MW shall have the right to terminate those
provisions of this Agreement and the Related Agreements
which permit VVI to engage in Catalog Activities
through the use of the Marks and /or the Card, and
which preclude the MW Group from engaging in Catalog
Activities, if the net sales of VVI and its Affiliates
from Catalog Activities for any two consecutive fiscal
years (commencing February 1, 1997) through the use of
the Marks and/or the offering of the Card shall be less
than $40,000,000 per year. For the purposes of the
preceding sentence:
(i) net sales shall mean gross sales, less
returns, allowances and discounts and shall not
include Taxes; and
(ii) the foregoing right shall be
exercisable during a 90 day period commencing on
the date which is 90 days after the end of the
second such calendar year. If the foregoing right
is not so exercised, the first of such calendar
years shall be ignored for the purposes of
determining whether MW shall again have the right
to terminate said provisions in the event the net
sales of VVI and its Affiliates from Catalog
Activities through the use of the Marks and/or the
Card for the current year shall be less than
$40,000,000;
(b) MW shall have the right to terminate those
portions of this Agreement which pertain to Television
Home Shopping if VVI shall cease to engage in
Television Home Shopping, or in substantially similar
Product merchandising-focused television programming.
Termination pursuant this Section 21(b) shall be
effective on the date such notice is given;
(c) VVI may terminate this Agreement upon the
occurrence of any of the following events:
(i) if during any month, MW fails to pay to
VVI or to Cable Systems (where such failure to pay
Cable Systems results in VVI being required to pay
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an additional amount to the Cable System, and MW
has not reimbursed VVI for such additional amount)
a minimum of 75% of the aggregate dollar amount
required to be paid by MW during said month
pursuant to all outstanding Advertising
Commitments, other than by reason of a breach or
default by such Cable System, and such failure is
not cured by MW within 60 days after written
notice thereof is given to MW by VVI, then VVI may
terminate this Agreement upon written notice to MW
given at any time during the 30 day period
immediately following the expiration of such 60
day cure period;
(ii) a petition shall be filed by or against
MW under any chapter of the Bankruptcy Code (and,
if filed against MW, such petition shall not be
dismissed within sixty days thereafter), MW shall
make an assignment for the benefit of creditors or
a composition with creditors, MW shall admit in
writing its inability to pay its debts as they
become due, or a receiver shall be appointed for
MW or any of its material assets; or
(iii) an Event of Default with respect to MW
shall occur and be continuing.
Termination pursuant to any subparagraph of this
Section 21(c) shall be effective on the date such
notice is given;
(d) MW may terminate this Agreement upon the
occurrence of any of the following events:
(i) a petition shall be filed by or against
VVI under any chapter of the Bankruptcy Code (and,
if filed against VVI, such petition shall not be
dismissed within sixty days thereafter), VVI shall
make an assignment for the benefit of creditors or
a composition with creditors, VVI shall admit in
writing its inability to pay its debts as they
become due, or a receiver shall be appointed for
VVI or any of its material assets; or
(ii) an Event of Default with respect to VVI
shall occur and be continuing.
Termination pursuant to any subparagraph of this
Section 21(c) shall be effective 60 days after the date
on which such notice is given.
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Termination of this Agreement shall operate as a concurrent
termination of the Related Agreements.
22. Effects of Termination. Neither party shall have
any liability to the other party solely by reason of the
termination of this Agreement in accordance with paragraph
21, other than by reason of an Event of Default. No
termination of this Agreement or the Related Agreements
shall affect any obligation of a party under such documents
which arose prior to termination, except as provided
therein, or any obligations of VVI or MW under Section 3.1,
3.2 and 3.5 of the Receivables Sale and Purchase Agreement
in respect of credit authorizations or Credit Sales arising
prior to termination, and Customer Credits and chargebacks
relating to such credit authorizations or Credit Sales.
Notwithstanding any other provision of this Agreement to the
contrary, the termination of this Agreement shall terminate
each party's obligations hereunder, with the exception of
obligations under paragraphs 10, 16, 17, 19(b)(ii), 23, 24,
25, 26, 27 and 28, all of which shall survive any
termination of this Agreement for the periods (if any) set
forth therein and, in the absence of a stated survival
period, indefinitely.
23. VVI Indemnification Covenants.
(a) VVI shall indemnify, defend and hold harmless
the MW Group, and their respective officers, directors,
employees, agents, representatives, successors and
assigns (collectively, "MW Indemnitees") from and
against all liability, demands, claims, actions or
causes of action, assessments, losses, fines,
penalties, costs, damages and expenses, including,
without limitation, reasonable fees and disbursements
of counsel and witness fees, (collectively, "MW
Claims") which are sustained or incurred by such Person
as a result of, or arising out of or by virtue of:
(i) the failure of VVI to comply in all
material respects with, or the material breach by
VVI of any representation or warranty of VVI or of
any of the material covenants of this Agreement or
the Related Agreements to be performed by VVI
(including, without limitation, this paragraph
23);
(ii) product liability claims relating to any
Product purchased by a viewer or customer from
VVI, other than Products sold by MW to VVI which
were defective or dangerous at the time of
delivery to VVI or, if the Product was drop-
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shipped directly to the customer by MW, delivery
to the customer;
(iii) material dilution, disparagement, or
loss of good will to any of the Marks as a result
of VVI's material breach of the Restated
Servicemark License Agreement; or
(iv) VVI's failure to comply in all material
respects with all applicable laws and regulations
materially affecting the performance by VVI of its
obligations under this Agreement and the Related
Agreements; provided, however, that this paragraph
(iv) shall not apply with respect to the
Receivables Sale and Purchase Agreement to the
extent it would, but for this proviso, apply to
the legality of the proposed use of the Card or
the Revolving Charge Plan (as defined in the
Receivables Sale and Purchase Agreement) in
accordance with the Restated Receivables Sale and
Purchase Agreement.
(b) Notwithstanding anything in this Agreement to
the contrary, VVI shall be liable to indemnify the MW
Indemnitees only if the aggregate amount of MW Claims
exceeds $100,000, in which event MW shall be entitled
to indemnification for all MW Claims.
(c) The indemnification covenants provided in
this paragraph 23 shall survive the termination of this
Agreement until two years after the termination hereof,
except with respect to claims made by governmental
entities or other third parties, with respect to which
the indemnification covenants shall survive until four
years after the termination hereof. Any
indemnification claim which is asserted by an MW
Indemnitee during the applicable survival period shall
survive until the final disposition thereof.
24. MW Indemnification Covenants.
(a) MW shall indemnify, defend and hold harmless
VVI, its Affiliates, and their respective officers,
directors, employees, agents, representatives,
successors and assigns (collectively, "VVI
Indemnitees") from and against all liability, demands,
claims, actions or causes of action, assessments,
losses, fines, penalties, costs, damages and expenses,
including, without limitation, fees and disbursements
of counsel and witness fees, (collectively, "VVI
Claims") which are sustained or incurred by any such
-25-<PAGE>
<PAGE>
Person as a result of, or arising out of or by virtue
of:
(i) the failure of MW to comply in all
material respects with, or the material breach by
MW of any representation or warranty of MW or any
of the material covenants of this Agreement or the
Related Agreements to be performed by MW
(including, without limitation, this paragraph
24);
(ii) any challenge to the validity of any of
the Marks in the United States or right to the
limited license of any of the Marks, or any claim
that any of the Marks infringe in the United
States on the rights of a third party, as a result
of any authorized use by VVI of any of the Marks
pursuant to the Restated Servicemark License
Agreement;
(iii) product liability claims relating to
any Products sold by VVI to its viewers or
customers which were sold by MW to VVI and were
defective or dangerous at the time of delivery to
VVI, or, if the Product was drop-shipped directly
to the customer by MW, delivery to the customer;
(iv) MW's failure to comply in all material
respects with all applicable laws and regulations
materially affecting the performance by MW of its
obligations under this Agreement or the Related
Agreements, including, without limitation, any
failure of the Card or transactions under the
Receivables Sale and Purchase Agreement to comply
with all applicable laws, regulations, orders,
rulings or agreements if used in compliance with
the Receivables Sale and Purchase Agreement.
(b) Notwithstanding anything in this Agreement to
the contrary, MW shall be liable to indemnify VVI only
if the aggregate amount of VVI Claims exceeds $100,000,
in which event VVI shall be entitled to indemnification
for all VVI Claims.
(c) The indemnification covenants provided in
this paragraph 24 shall survive the termination of this
Agreement until two years after the termination hereof,
except with respect to claims made by governmental
entities or other third parties, with respect to which
the indemnification covenants shall survive until four
years after the termination hereof. Any
indemnification claim which is asserted by a VVI
-26-<PAGE>
<PAGE>
Indemnitee during the applicable survival period shall
survive until the final disposition thereof.
25. Rights Upon Indemnification. The rights of the MW
Indemnitees and the VVI Indemnitees with respect to claims
asserted by any Person other than the MW Indemnitees and the
VVI Indemnitees shall be governed by the following:
(a) For the purposes of this paragraph 25, an
"Indemnified Party" shall be an MW Indemnitee or VVI
Indemnitee (as the case may be), who is entitled to
indemnification pursuant to paragraph 23 or 24, and an
"Indemnifying Party" shall be either MW or VVI, to the
extent MW or VVI shall have an obligation of
indemnification pursuant to paragraph 23 or 24.
(b) Promptly after receipt by an Indemnified
Party of notice of the commencement of any action which
may result in a claim for indemnification pursuant to
either paragraph 23 or 24, the Indemnified Party will
notify the Indemnifying Party thereof within a
reasonable time thereafter. The failure so to notify
any Indemnifying Party will not relieve it of any
liability for indemnification hereunder as to the
particular item for which indemnification may then be
sought except to the extent that the failure to give
notice shall have been prejudicial to the Indemnifying
Party.
(c) An Indemnified Party shall have the right (i)
to employ separate counsel in any action as to which
indemnification shall be sought under paragraph 23 or
24 of this Agreement and to participate in the defense
thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party
unless (x) the Indemnifying Party has agreed in writing
to pay such fees and expenses, (y) the Indemnifying
Party has failed to assume the defense thereof and
employ counsel within a reasonable period of time after
being given the notice required above, and as a
consequence thereof, the Indemnified Party has employed
separate counsel to protect its rights, or (z) the
named parties to any such action (including any
impleaded parties) include both such Indemnified Party
and the Indemnifying Party and such Indemnified Party
shall have reasonably concluded that representation of
the Indemnified Party and the Indemnifying Party by the
same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such
representation by the same counsel has been proposed)
due to actual or reasonably anticipated conflicts of
interest between the Indemnified Party and the
-27-<PAGE>
<PAGE>
Indemnifying Party in the conduct of the defense of
such action (in which case the Indemnifying Party shall
not have the right to direct the defense on behalf of
the Indemnified Party). It is understood, however,
that the Indemnifying Party shall, in connection with
any one such action or separate but substantially
similar or related actions in the same jurisdiction
arising out of the same general allegations or
circumstances, be liable for the reasonable fees and
expenses of only one separate firm of attorneys (in
addition to any local counsel) at any time for all such
Indemnified Parties having actual or reasonably
anticipated conflicts of interest with the Indemnifying
Party.
(d) In any case in which the Indemnifying Party
has assumed the defense of the claim or has agreed to
pay the fees and expenses of counsel for the
Indemnified Party, the Indemnifying Party shall not be
liable for any settlement of such action effected by
the Indemnified Party without the written consent of
the Indemnifying Party, which consent shall not
unreasonably be withheld. No failure of an
Indemnifying Party to assume the defense of a claim or
agree to pay the fees and expenses of counsel for the
Indemnified Party shall relieve the Indemnifying Party
of any obligation of indemnification which such party
shall have under Section 23 or 24 hereof.
(e) The indemnification provided in paragraphs 23
and 24 is for the benefit of the MW Indemnitees and the
VVI Indemnitees only, and shall not be deemed to create
any right (to indemnification or otherwise) for any
other Person.
26. Non-Solicitation. For a period of two years
following termination of this Agreement for any reason, no
member of the MW Group shall employ or solicit the
employment of any officers, executive employees, or on-air
hosts of VVI, or any of the other persons named in Exhibit A
to that certain confidentiality letter, dated December 4,
1994 (or persons performing similar functions).
27. Prevailing Party. If the parties hereto become
parties to any litigation, commenced by or against one
another involving the enforcement of any rights or remedies
under this Agreement or any of the Related Agreements, or
arising on account of a default of the other party in its
performance of such party's obligations under any of the
foregoing, the prevailing party in such litigation shall be
entitled to reimbursement of all of its reasonable legal
fees, costs, and expenses incurred in connection with such
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<PAGE>
litigation, (including allocated costs of internal counsel)
and interest accrued thereon from the date of judgment, at
the maximum rate permitted by law.
28. Relationship. This Agreement and the Related
Agreements are not and shall not be construed as an
agreement of lease, partnership, agency or employment of
(x) VVI or of any of VVI's employees or agents by MW, or
(y) MW or any of MW's employees or agents by VVI. The
parties acknowledge and agree that the parties are
independent contractors whose operations are independent,
separate and apart from that of the other. Neither shall
order any merchandise, incur any indebtedness, enter into
any undertaking or make any commitment in the other party's
name or purporting to be on the other party's behalf, except
with the other party's prior written approval. Neither
party will represent, suggest or indicate in any way to any
of its customers, suppliers, printers, service companies or
other business entities that it is financially affiliated
with, backed, supported, maintained or assisted by the other
in any manner, except as may be required to implement the
terms of this Agreement and with the other party's prior
written approval.
29. Publicity. VVI and MW will jointly be responsible
for initiating news releases and related announcements
concerning this Agreement and the Related Agreements.
Disclosures required by applicable law or regulation for
either VVI or MW will be exempt from prior approval but will
be provided in advance to the other party.
30. Additional Actions and Documents. Each of the
parties hereto agrees to take or cause to be taken such
further actions, to execute, acknowledge, deliver and file
or cause to be executed, acknowledged, delivered and filed
such further documents and instruments, and to use all
reasonable efforts to obtain such consents, as may be
necessary or as may be reasonably requested in order to
fully effectuate the purposes, terms and conditions of this
Agreement and the Related Agreements.
31. Notices. All notices, demands, requests or other
communications which may be or are required to be given
pursuant to this Agreement or any of the Related Agreements
shall be in writing and shall be personally delivered,
mailed by first-class,registered or certified mail, postage
prepaid, or sent by electronic or facsimile transmission,
addressed as follows:
If to VVI:
ValueVision International, Inc.
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<PAGE>
6740 Shady Oak Road
Minneapolis, Minnesota 55344
Attention: Chief Executive Officer
with a copy to:
Maslon, Edelman, Borman & Brand, a
professional limited liability
partnership
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4140
Attention: William M. Mower
If to MW:
Montgomery Ward & Co., Incorporated
619 West Chicago Avenue
Chicago, Illinois 60671
Attention: General Counsel
with a copy to:
Altheimer & Gray
Suite 4000
10 South Wacker Drive
Chicago, Illinois 60606
Attention: Myron Lieberman
Each party may designate by notice in writing a new address
to which any notice, demand, request or communication may
thereafter be so given, served or sent. Each notice,
demand, request or communication which shall be delivered,
mailed or transmitted in the manner described above shall be
deemed sufficiently given, served, sent or received for all
purposes at such time as it is delivered to the addressee or
at such time as delivery is refused by the addressee upon
presentation.
32. Severability. Whenever possible, each provision
of this Agreement and the Related Agreements shall be
interpreted in such a manner as to be effective and valid
under applicable law, but if one or more of the provisions
of any of such documents are subsequently declared invalid
or unenforceable, such invalidity or unenforceability shall
not in any way affect the validity or enforceability of the
remaining provisions of such documents, which shall be
applied and construed so as to reflect substantially the
intent of the parties and achieve the same economic effect
as originally intended by the terms hereof,
unless those provisions which are invalidated or
unenforceable are material to the performance of either
-30-<PAGE>
<PAGE>
party's affirmative or negative obligations under the
relevant agreement, in which case the entire such agreement
shall be terminable, at the option of the party whose rights
thereunder have been adversely affected thereby, provided
that such party must exercise its option to terminate such
agreement within ninety (90) days following the date on
which such provision is declared or determined to be
invalid, voidable or unenforceable and the other party must
be given sixty (60) days in which to agree to a valid
modification of such agreement which would substantially
eliminate such adverse effects.
33. Force Majeure. No party shall be liable for any
failure of or delay in the performance of this Agreement or
the Related Agreements for the period that such failure or
delay is due to acts of God, public enemy, war, strikes or
labor disputes, or any other cause beyond the parties'
reasonable control, it being understood that lack of
financial resources is not to be deemed a cause beyond a
party's control. If the delay or failure caused by such
force majeure condition shall continue for more than ninety
(90) days, the party which did not suffer the event shall
have the right, in its sole discretion, to terminate this
Agreement, by giving notice to the other party of its
election to terminate. Each party shall notify the other
party promptly of the occurrence of any such cause and carry
out this Agreement or any of the Related Agreements as
promptly as practicable after such cause is terminated;
provided, however, that the existence of any such cause
shall not extend the term of any agreement.
34. Waivers. Neither the waiver by any party hereto
of a breach of or a default under any of the provisions of
this Agreement or any of the Related Agreements, nor the
failure of any party hereto, on one or more occasions, to
enforce any of the provisions of any of said documents or to
exercise any right, remedy or privilege hereunder shall
thereafter be construed as a waiver of any such provisions,
rights, remedies or privileges hereunder. Any of the terms,
covenants, representations, warranties, or conditions hereof
and thereof may be waived only by a written instrument
executed by the party waiving compliance.
35. Exercise of Rights. No failure or delay on the
part of any party hereto in exercising any right, power or
privilege under this Agreement or any of the Related
Agreements, and no course of dealing between the parties
hereto shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege
under any of such documents preclude any other or further
exercise thereof or the exercise of any other right, power
or privilege.
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<PAGE>
36. Binding Effect. Subject to the provisions hereof
and thereof restricting assignment, this Agreement and the
Related Agreements shall be binding upon and shall inure to
the benefit of the parties and their respective successors
and permitted assigns.
37. Entire Agreement. This Agreement and the Related
Agreements contain the entire agreement between the parties
hereto with respect to the matters contained herein and
therein, and supersede all prior oral or written agreements,
commitments or understandings with respect to the matters
provided for herein.
38. Pronouns. All pronouns and any variations thereof
used in this Agreement and the Related Agreements shall be
deemed to refer to the masculine, feminine, neuter, singular
or plural, as the identity of the Person or the context may
require.
39. Headings. Section headings contained in this
Agreement and the Related Agreements are inserted for
convenience of reference only, shall not be deemed to be a
part of such Agreement for any purpose, and shall not in any
way define or affect the meaning, construction or scope of
any of the provisions hereof.
40. Governing Law. This Agreement and the Related
Agreements, the rights and obligations of the parties hereto
and thereto, and any claim or disputes relating to any
thereof, shall be governed by and construed in accordance
with the internal laws of the State of Illinois, without
giving effect to the principles of conflicts of laws
thereof.
41. Execution in Counterparts. To facilitate
execution, this Agreement and the Related Agreements may
each be executed in as many counterparts as may be required,
and it shall not be necessary that the signatures of, or on
behalf of, each party, or that the signatures of all Persons
required to bind any party, appear on each counterpart; but
it shall be sufficient that the signature of, or on behalf
of, each party, or that the signatures of the Persons
required to bind any party, appear on one or more of the
counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in
making proof of this Agreement or any of the Related
Agreements to produce or account for more than the number of
counterparts containing the respective signatures of, or on
behalf of, all of the parties hereto.
42. Assignment. Neither party may assign its rights
under this Agreement or any of the Related Agreements
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<PAGE>
without the consent of the other party, which consent may be
granted or withheld in the sole discretion of such other
party. No permitted assignment shall relieve the assignor
of its obligations (which shall be primary and which may be
discharged in whole or in part by the assignee) under this
Agreement or the Related Agreements. Any unauthorized
assignment and any assignment made in contravention of this
Section 42 shall be null and void.
43. Time. Time is to be considered of the essence for
the purposes of this Agreement and the Related Agreements.
44. Amendments and Modification. This Agreement and
the Related Agreements may only be amended or modified by a
subsequent written agreement by the parties hereto.
45. Construction. This Agreement and the Related
Agreements shall not be construed more strictly against one
party than against the other merely by virtue of the fact
that such document may have been prepared primarily by
counsel for one of the parties, it being recognized that
both parties have contributed substantially and materially
to the preparation of such documents.
46. Restructuring of MW Group. As of the date hereof,
the MW Group is exploring various potential strategic
options and restructurings, including without limitation the
potential sale of equity in MW to an investor and an entire
or partial disposition of Signature, such as by means of a
spin-off or an initial public offering (any such
transactions being referred to herein as a "Restructuring").
Provided that as a result of any such Restructuring, MW (or
any successor thereof in the Restructuring) shall remain
obligated to perform all of its obligations under this
Agreement and the Related Agreements, and Signature (or any
successor thereof in the Restructuring) shall become
obligated to perform all of its obligations under this
Agreement and the Related Agreements, VVI (i) hereby
consents to the Restructuring, and (ii) agrees to execute
such amendments to this Agreement as counsel for MW shall
deem to be reasonably necessary in order to reflect the
effects of the Restructuring on this Agreement and the
Related Agreements, including without limitation the
possibility that Signature could cease to be an Affiliate of
MW by virtue of the Restructuring.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement effective as of the date first set forth
above.
MONTGOMERY WARD & VALUEVISION
INTERNATIONAL, INC.
CO., INCORPORATED
BY: /s/ JOHN L. WORKMAN BY: /s/ ROBERT L. JOHANDER
TITLE: Executive Vice President TITLE: Chief Executive Officer
Robert L. Johander and Nicholas M. Jaksich hereby join in
the foregoing Agreement for the sole purpose of agreeing to
be bound by clause (ii) of paragraph 11 thereof.
/s/ ROBERT L. JOHANDER /s/ NICHOLAS M. JAKSICH
Robert L. Johander Nicholas M. Jaksich
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<PAGE>
SECOND AMENDED AND RESTATED WARRANT AGREEMENT
Warrant Agreement dated as of this 28th day of September, 1996,
by and among ValueVision International, Inc., a Minnesota corporation
(the "Company"), Montgomery Ward & Co., Incorporated, an Illinois
corporation ("MW"), Montgomery Ward Direct, L.P., a Delaware limited
partnership ("MWD")and Merchant Partners, Limited Partnership, a
Delaware limited partnership ( MPLP ).
R E C I T A L S
A. Pursuant to a Securities Purchase Agreement dated as of
March 13, 1995 by and between the Company and MW, the Company agreed
to issue and sell, and MW agreed to purchase, Existing Warrants (as
herein defined) to purchase an aggregate of 25,000,000 shares of the
Common Stock of the Company, subject to adjustment, under the terms
and subject to the conditions set forth therein. The Existing
Warrants are governed by the terms of a certain Warrant Agreement,
dated August 8, 1995, between MW and VVI (the Original Warrant
Agreement ).
B. Pursuant to a certain Restructuring Agreement, dated July
27, 1996, between the Company and MW (the "Restructuring Agreement"),
the Company and MW agreed to exchange the Series C-O Warrants, to
amend and restate that certain Operating Agreement and that certain
Servicemark License Agreement, and to amend that certain Credit Card
Receivables Sale and Purchase Agreement, all dated as of March 13,
1995, and to amend and restate that certain Registration Rights
Agreement, dated August 8, 1995 and this Agreement, all in
consideration of the issuance by VVI of new Series P Warrants to
purchase an aggregate of 1,484,462 shares of Common Stock (the
"Exchange Warrants").
D. Pursuant to an Asset Purchase Agreement, dated as of July
27, 1996, between the Company s subsidiary, ValueVision Direct
Marketing Company, Inc., and MWD (the "Asset Purchase Agreement"),
ValueVision Direct Marketing Company, Inc. delivered to MWD, as
consideration for the sale of all of MWD's assets, Series P warrants
to purchase an aggregate of 1,484,993 shares of Common Stock (the
"MWD Warrants"). MWD subsequently transferred all of its right title
and interest in and to the MWD Warrants to MW. In addition, MW
transferred certain of its Series P Warrants to MPLP.
E. Pursuant to an Exchange Agreement dated September ___,
1996, (the Exchange Agreement )VVI and MW have agreed to exchange
the Vested Warrants for additional Series P Warrants to purchase an
aggregate of 2,200,000 shares of Common Stock (the Replacement
Warrants )and to amend this Agreement and the Amended and Restated
Registration Rights.
F. MPLP desires to become a party to this Agreement and MW,
MWD, MPLP and VVI desire to amend and restate the Amended and
Restated Warrant Agreement to set forth the terms under which the New<PAGE>
<PAGE>
Warrants may be exercised.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises set forth
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, MW MPLP
and MWD agree that the Original Warrant Agreement shall be amended
and restated to read as follows:
A. Definition of Terms. As used in this Warrant Agreement,
the following capitalized terms shall have the following respective
meanings:
(a) Asset Purchase Agreement: "Asset Purchase
Agreement" has the meaning assigned thereto in the Recitals.
(b) Business Day: A day other than a Saturday, Sunday
or other day on which banks in the State of Minnesota are
authorized by law to remain closed.
(c) Common Stock: Common stock, $.01 par value per
share, of the Company.
(d) Common Stock Equivalents: Securities that are
convertible into or exercisable for Common Stock.
(e) Company: "Company" has the meaning assigned
thereto in the Preamble.
(f) Conversion Ratio: The number of Warrant Shares of
Common Stock issuable upon the exercise of a Warrant, which
shall initially be 1, subject to adjustment from time to time
pursuant to Section 6.1.
(g) Exchange Act: The Securities Exchange Act of 1934,
as amended.
(h) Exchange Agreement: "Exchange Agreement" has the
meaning assigned thereto in the Recitals.
(i) Exchange Warrants: "Exchange Warrants" has the
meaning assigned thereto in Recital B.
(j) Exercise Price Per Share: The "Exercise Price Per
Share" shall mean in the case of New Warrants, the exercise
price payable for each Warrant Share upon exercise of a New
Warrant, which shall initially be set at $.01 per share,
subject to adjustment from time to time pursuant to Section
6.1.
(k) Existing Warrants: Warrants issued pursuant to the
Securities Purchase Agreement and the Warrant Agreement. <PAGE>
<PAGE>
(l) Expiration Date: August 8, 2003, or if such day is
not a Business Day, the next succeeding day which is a Business
Day.
(m) HSR Act: "HSR Act" has the meaning assigned
thereto in Section 5.9.
(n) Market Price: The Market Price per share of Common
Stock at any date shall be deemed to be the average of the
daily closing prices for the 20 consecutive trading days ending
on such date. The closing price for each day shall be the last
sale price of the Common Stock, or in case no such reported
sales take place on such day, the average of the last reported
bid and asked prices of the Common Stock, in either case on the
principal national securities exchange on which the Common
Stock is admitted to trading or listed, or if not listed or
admitted to trading on any such exchange, as reported by
NASDAQ, or other similar organization if NASDAQ is no longer
reporting such information, or if not so available, the fair
market price of the Common Stock as determined in good faith by
the Board of Directors.
(o) MPLP: "MPLP" has the meaning assigned thereto in
Section 13.
(p) MW: "MW" has the meaning assigned thereto in the
Preamble.
(q) MWD: "MWD" has the meaning assigned thereto in the
Preamble.
(r) MWD Warrants: "MWD Warrants has the meaning
assigned thereto in Recital E.
(s) MW Group: "MW Group" has the meaning assigned
thereto in that certain Amended and Restated Operating
Agreement by and between MW and the Company of even date
herewith.
(t) NASD: National Association of Securities Dealers,
Inc. and NASDAQ: NASD Automatic Quotation System.
(u) New Warrants: Warrants in the form attached hereto
as Exhibit A to be issued on the date hereof pursuant to the
Exchange Agreement, the Restructuring Agreement and the Asset
Purchase Agreement in exchange for all of the Existing Warrants
including but not limited to the Series A-B Warrants, and all
other warrants that may be issued in their place (together
evidencing the right to purchase an aggregate of 5,169,455
shares of Common Stock), subject to adjustment pursuant to
Section 6 hereof. The New Warrants include the Exchange
Warrants, the Replacement Warrants and the MWD Warrants.
(v) Original Warrant Agreement: That certain Warrant<PAGE>
<PAGE>
Agreement, dated August 8, 1995, between the Company and MW.
(w) Replacement Warrants: Warrants in the form
attached hereto as Exhibit A to be issued on the date hereof
pursuant to the Exchange Agreement in exchange for all of the
Vested Warrants, and all other warrants that may be issued in
their place, to purchase an aggregate of 2,200,000 shares of
Common Stock subject to adjustment pursuant to Section 6
hereof.
(x) Exchange Agreement: "Exchange Agreement" has the
meaning assigned thereto in the Recitals.
(y) Series A-B Warrants: "Series A-B Warrants" has the
meaning assigned thereto in the Recitals.
(z) Series C-O Warrants: "Series C-O Warrants" has the
meaning assigned thereto in the Recitals.
(aa) SEC: The Securities and Exchange Commission.
(ab) Securities Purchase Agreement: "Securities
Purchase Agreement" has the meaning assigned thereto in the
Recitals.
(ac) Term: "Term" has the meaning assigned thereto in
Section 15.
(ad) Warrants: The New Warrants.
(ae) Warrant Shares: "Warrant Shares" has the meaning
assigned thereto in Section 2.
B. Warrant Shares. Each New Warrant will initially be
exercisable for one share of Common Stock (a "Warrant Share"),
subject to adjustment pursuant to Section 6 hereof.
C. Vesting. All New Warrants shall be fully vested when
issued.
D. Expiration of Warrants. All Warrants shall expire at
5:00 pm Minneapolis, Minnesota time, on the Expiration Date. All
Warrants that are not exercised on or prior to the Expiration Date
shall become void on the Expiration Date, and all rights hereunder
and under such Warrants shall thereupon cease.
E. Exercise of Warrants.
1. Exercise Period. Any or all Warrants may be
exercised by the holder thereof at any time and from time to time
after 9:00 am, Minneapolis, Minnesota time, on the date hereof, and
before 5:00 pm, Minneapolis, Minnesota time, on the Expiration Date.
2. Exercise Procedure. The Warrant holder may<PAGE>
<PAGE>
exercise Warrants during any time that such Warrants are exercisable
in whole or in part, by presentation and surrender of the Warrant
Certificate to the Company at its principal executive offices, with
the Subscription Form annexed thereto duly executed and accompanied
by payment of the full Exercise Price Per Share for each Warrant
Share to be purchased in immediately available funds by wire transfer
to a bank designated by the Company from time to time.
3. Issuance of Warrant Shares. Subject to Section
5.9, upon receipt of the Warrant Certificate with Subscription Form
duly executed and accompanied by payment of the aggregate Exercise
Price Per Share for the Warrant Shares for which the Warrant is then
being exercised, and provided that the holder has made any government
filings, and has obtained any governmental actions, consents,
approvals, or waiver, required on the holder's part in order to
exercise the Warrants, the Company shall cause to be issued
certificates for the total number of whole shares of Common Stock for
which the Warrant is being exercised (adjusted to reflect the effect
of the provisions contained in Section 6 hereof, if any), in such
denominations as are requested for delivery to the holder, and the
Company shall thereupon deliver such certificates to the holder. The
holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that
certificates representing such shares of Common Stock shall not then
be actually delivered to the holder. If at the time a Warrant is
exercised, a Registration Statement is not in effect to register
under the Securities Act the Warrant Shares issuable upon exercise of
such Warrant, the Company may require the holder to make such
representations, and may place such legends on certificates
representing the Warrant Shares, as are customary and may be
reasonably required in the opinion of counsel to the Company to
permit the Warrant Shares to be issued without such registration.
4. Residual Warrants. In case the Warrant holder
shall exercise a Warrant with respect to less than all of the Warrant
Shares that may be purchased under such Warrant, the Company shall
execute a Warrant in the form of such Warrant for the balance of such
Warrant Shares and deliver such Warrant to the holder.
5. Transfer Taxes. The Company shall pay any and all
stock transfer and similar taxes which may be payable in respect of
the issue of the Warrant or in respect of the issue of any Warrant
Shares.
6. Reservation of Shares. The Company hereby agrees
that at all times while any Warrants are outstanding there shall be
reserved for issuance and delivery upon exercise of the Warrants such
number of shares of Common Stock or other shares of capital stock of
the Company from time to time issuable upon exercise of the Warrants.
All such shares shall be duly authorized, and when issued upon such
exercise, shall be validly issued, fully paid and nonassessable, free
and clear of all liens, security interests, charges and other
encumbrances or restrictions on sale and free and clear of all<PAGE>
<PAGE>
preemptive rights.
7. Fractional Shares. The Company shall not be
required to issue any fraction of a share of its capital stock in
connection with the exercise of a Warrant. The holder of Warrants
will be required to exercise such number of Warrants so that a whole
number of shares of Common Stock will be issued, or, at the Company's
sole option, the Company may (i) pay such holder an amount in cash
equal to such fraction of a share multiplied by the Market Price of
one share of Common Stock on the exercise date, or (ii) may issue the
larger number of whole shares purchasable upon exercise of the
Warrant, and may require such holder to pay an additional amount
equal to the exercise price multiplied by the balance of the share.
8. Listing. Prior to the issuance of shares of Common
Stock upon exercise of a Warrant, the Company shall use its
reasonable best efforts to secure the listing of such shares of
Common Stock upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then
listed (subject to official notice of issuance upon exercise of the
Warrant) and shall maintain, so long as any other shares of Common
Stock shall be so listed, such listing of all shares of Common Stock
from time to time issuable upon the exercise of the Warrant; and the
Company shall so list on each national securities exchange or
automated quotation system, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the
exercise of the Warrant if and so long as any shares of the same
class shall be listed on such national securities exchange or
automated quotation system.
9. Approvals of Regulatory Authorities. In the event
any filings with or approvals by any federal or state regulatory
agency would be required by virtue of the exercise of any of the
Warrants (including, without limitation, the U.S. Departments of
Justice and Commerce under the Hart-Scott-Rodino Antitrust
Improvements Act ("HSR Act") or the Federal Communications Commission
under the Federal Communications Act), such exercise of such Warrant
shall be conditional upon (x) expiration or termination of the
waiting period under the HSR Act, and (y) receipt of any other
required regulatory approvals, but shall otherwise be unconditional.
If this Section 5.9 is applicable, (x) the parties will cooperate
with each other and make such respective filings and take such other
respective actions as may be necessary or desirable in order that the
exercise of any such Warrant shall be in accordance with applicable
laws, and (y) the Term of this agreement shall be extended, if
required, during the period in which applications for regulatory
approvals are pending before regulatory authorities.
F. Exercise Price Per Share and Conversion Ratio Adjustments.
The Exercise Price Per Share and the Conversion Ratio, and the kind
of Warrant Shares shall be subject to adjustment from time to time
upon the occurrence of certain events and at the times as provided
for in this Section 6. <PAGE>
<PAGE>
1. Mechanical Adjustments. If at any time prior to the
exercise of any Warrant, the Company shall (i) declare a dividend or
make a distribution on the Common Stock payable in shares of its
capital stock (whether shares of Common Stock or of capital stock of
any other class); (ii) subdivide, reclassify or recapitalize
outstanding Common Stock into a greater number of shares;
(iii) combine, reclassify or recapitalize its outstanding Common
Stock into a smaller number of shares, or (iv) issue any shares of
its capital stock by reclassification of its Common Stock (including
any such reclassification in connection with a consolidation or a
merger in which the Company is the continuing corporation),
excluding, however, any dividend, distribution, reclassification or
recapitalization that requires the payment of more than nominal
additional consideration by security holders, the Conversion Ratio in
effect at the time of the record date of such dividend, distribution,
subdivision, combination, reclassification or recapitalization shall
be immediately adjusted so that upon exercise of a Warrant the holder
thereof shall be entitled to receive the aggregate number and kind of
shares which, if the Warrants had been exercised in full immediately
prior to such event, the holder thereof would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
distribution, subdivision, combination, reclassification or
recapitalization, for the same aggregate consideration. The Exercise
Price Per Share payable upon exercise of each Warrant shall
simultaneously be adjusted by multiplying the initial Exercise Price
Per Share in effect for such Warrant by the Conversion Ratio in
effect immediately prior to such adjustment and dividing the products
so obtained by the Conversion Ratio, as adjusted. Any adjustments
required by this Section 6.1 shall be made successively immediately
after the record date, in the case of a dividend or distribution, or
the effective date, in the case of a subdivision, combination,
reclassification or recapitalization, to allow the purchase of such
aggregate number and kind of shares, subject to Section 6.4.
2. Subsequent Adjustments. In the event that at any
time, as a result of any adjustment made pursuant to Section 6, the
holder of a Warrant thereafter shall become entitled to receive any
shares of the Company other than Common Stock, thereafter the number
of such other shares so receivable upon exercise of any Warrant shall
be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Section 6, subject to Section 6.6.
3. No Adjustment for Cash Dividends. No adjustment in
respect of any cash dividends not constituting Special Dividends
shall be made during the term of the Warrants or upon the exercise of
any Warrant.
6.4 Notice of Adjustment. No adjustment in the Conversion
Ratio shall be required unless such adjustment would increase or
decrease the Conversion Ratio by at least .001; provided, however,
that any adjustments which by reason of this Section 6.6 are not
required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations under this Section 6<PAGE>
<PAGE>
shall be made to the nearest one-hundredth of a share or the nearest
tenth of a cent, as the case may be. The adjusted Conversion Ratio
may be rounded off to the nearest one millionth (six places to the
right of the decimal point). Whenever the Conversion Ratio or the
Exercise Price Per Share is adjusted as herein provided, the Company
shall prepare and deliver forthwith to all holders of Warrants a
certificate signed by its Chief Financial Officer, setting forth the
adjusted Conversion Ratio, the adjusted number of shares purchasable
upon the exercise of Warrants and the Exercise Price Per Share of
such shares after such adjustment, setting forth a brief statement of
the facts requiring such adjustment and setting forth the computation
by which such adjustment was made. The failure to give such notice
or any defect therein shall not affect the validity or effectiveness
of any such adjustment.
6.5 Form of Warrant After Adjustments. The form of
Warrants need not be changed because of any adjustments in the
Exercise Price Per Share or the number or kind of the Warrant Shares,
and Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in an
adjusted Warrant, as initially issued.
G. No Rights as Shareholders; Notice to Holders. Nothing
contained in this Agreement or in the Warrants shall be construed as
conferring upon a holder of Warrants by virtue of its status as a
Warrant holder the right to vote or to receive dividends or to
consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company
or of any other matter, or any rights whatsoever as shareholders of
the Company. The Company shall give notice to all holders of
Warrants if at any time prior to the expiration or exercise in full
of the Warrants, any of the following events shall occur:
(a) the Company shall authorize the payment of any
dividend payable in any securities upon shares of Common Stock or
authorize the making of any distribution (other than a regular
cash dividend or distribution paid out of net profits legally
available therefor) to all holders of Common Stock;
(b) the Company shall authorize the issuance to all
holders of Common Stock of any additional shares of Common Stock
or Common Stock Equivalents or of rights, options or warrants to
subscribe for or purchase Common Stock or Common Stock Equivalents
or of any other subscription rights, options or warrants;
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, or
sale or conveyance of the property of the Company as an entirety
or substantially as an entirety); or
(d) a capital reorganization or reclassification of the
Common Stock (other than a change in the par value of the Common
Stock) or any consolidation or merger of the Company with or into
another corporation (other than a consolidation or merger in which<PAGE>
<PAGE>
the Company is the continuing corporation and that does not result
in any reclassification or change of Common Stock outstanding) or
in the case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an
entirety.
Such giving of notice shall be initiated (i) at least 5 Business Days
prior to the date fixed as a record date or effective date or (ii)
the date of closing of the Company's stock transfer books for the
determination of the shareholders entitled to such dividend,
distribution or subscription rights, or for the determination of the
shareholders entitled to vote on such proposed merger, consolidation,
sale, conveyance, dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing the
stock transfer books, as the case may be. Failure to provide such
notice shall not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights,
or proposed merger, consolidation, sale, conveyance, dissolution,
liquidation or winding up.
H. Lost, Stolen, Mutilated or Destroyed Warrants. If a Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such
terms as to indemnity or otherwise as it may in its discretion impose
(which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and
tenor as, and in substitution for the Warrant.
I. Restrictions on Transfer of Warrants and Warrant Shares.
The Warrants and the Warrant Shares may not be transferred, disposed
of or encumbered (any such action, a "Transfer"), except in
accordance with and subject to the provisions of the Securities Act
and the rules and regulations promulgated thereunder. If at the time
of a Transfer, a Registration Statement is not in effect to register
the Warrant Shares, the Company may require the holder thereof to
make such representations, and to provide the Company with an opinion
of counsel reasonably acceptable to the Company that such Transfer
would not result in violation of any federal or state law regarding
the offering or sale of securities and the Company may place such
legends on certificates representing the Warrant Shares, as are
customary and may be reasonably required in the opinion of counsel to
the Company to permit a Transfer without such registration. Subject
to the foregoing and to Section 13, all Warrants and Warrant Shares
shall be freely transferable.
J. Warrant Register. All Warrants shall be in registered form.
The Company shall maintain a register of the Warrants (the "Warrant
Register"). All Transfers of Warrants shall be recorded in the
Warrant Register.
K. Registration Under the Securities Act of 1933. The Warrant
Shares shall be entitled to certain registration rights provided in
that Registration Rights Agreement by and among the Company, MW and
MWD of even date herewith.<PAGE>
<PAGE>
L. Certain Filings. The parties will cooperate with each other
in determining whether action by or in respect of, or filing with,
any governmental body, agency or official, or authority is required,
or any actions, consents, approvals or waivers are required to be
obtained in connection with the transactions and adjustments
contemplated by this Agreement, and provide each other with
reasonable assistance in seeking any such actions, consents,
approvals, or waivers or making any such filings, furnishing
information required in connection therewith, and seeking timely to
obtain any such actions, consents, approvals or waivers.
M. Right of First Offer. No holder of a Warrant or Common
Stock (including Warrant Shares) will transfer, sell, or in any
manner convey any interest in any Warrants or Common Stock (including
Warrant Shares), except through an offering to the public that is
registered under the Securities Act, or pursuant to the provisions of
Rule 144 under the Securities Act (excluding paragraph (k) of Rule
144), unless such holder first offers such Warrants or Common Stock
(including Warrant Shares) to the Company. The holder shall provide
the Company with a written offer specifying the amount of securities
being offered, the purchase price and other terms of such offer. The
Company shall have fifteen (15) days from and after the date of
receipt by the Company of such written offer within which to accept
such offer, or to make a written counteroffer with respect to all or
any part of the securities offered. If the Company does not accept
the holder's offer, or the holder does not accept the Company's
counteroffer, by written notice given within such 15-day period, the
holder may offer and sell such securities to any party within 180
days thereafter on terms that are not less favorable to the holder
than the terms of the later to be made of the holder's last offer to
the Company or the Company's last counteroffer to the holder, if any,
provided that the terms of a sale to a third party shall not be
deemed to be less favorable to the holder solely based on a lower
purchase price paid by the third party if such lower purchase price
is at least 90% of the highest price offered by or to the Company.
This Section 13 shall not apply to any transfer of Warrants or Common
Stock (including Warrant Shares) (i) by any member of the MW Group to
any other member of the MW Group, (ii) by MW to MPLP, or (iii) by
MPLP to its partners, and the partners or stockholders (direct or
remote) of such partners.
N. Term. Subject to Section 5.9, the term of this Agreement
shall begin on the date hereof and expire on August 8, 2003 (the
"Term").
O. Additional Actions and Documents. Each of the parties
hereto agrees to take or cause to be taken such further actions, to
execute, acknowledge, deliver and file or cause to be executed,
acknowledged, delivered and filed such further documents and
instruments, and to use all reasonable efforts to obtain such
consents, as may be necessary or as may be reasonably requested in
order to fully effectuate the purposes, terms and conditions of this
Agreement.<PAGE>
<PAGE>
17. Cancellation and Return of Existing Warrants. Effective as
at the date hereof, all Existing Warrants including but not limited
to all of the Series A-B Warrants and the Series C-O Warrants issued
pursuant to the Original Warrant Agreement and the Securities
Purchase Agreement are deemed to have expired unexercised and are
hereby terminated. All Existing Warrants shall be surrendered to the
Company within 30 days of the date hereof.
IN WITNESS WHEREOF, this Warrant Agreement has been duly
executed by the Company under its corporate seal as of the date first
above written.
VALUEVISION INTERNATIONAL, INC.
By: /s/ ROBERT L. JOHANDER
Robert L. Johander
Its Chief Executive Officer
Attest: /s/ STUART ROMENESKO
Secretary
MONTGOMERY WARD & CO., INCORPORATED
By: /s/ JOHN L. WORKMAN
Executive Vice President
Attest: /s/ SPENCER H. HEINE
Secretary
MONTGOMERY WARD DIRECT, L.P.
By: MW Direct General, Inc., the
general partner
By: /s/ JOHN L. WORKMAN
Its: Vice President
Attest:/s/ PHILIP D. DELK
Secretary
MERCHANT PARTNERS, LIMITED
PARTNERSHIP
By: MERCHANT PARTNERS, LIMITED
PARTNERSHIP, the general partner
By: Merchant Development Corp.,
the general partner
By: /s/ RAYMOND L. BANK
Its: President
Attest:_______________________
Secretary<PAGE>
<PAGE>
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Amended and Restated Registration Rights Agreement dated as of
September 28, 1996, by and among ValueVision International, Inc., a
Minnesota corporation (the "Company"), Montgomery Ward Direct, L.P.,
a Delaware limited partnership ("MWD"), Montgomery Ward & Co.,
Incorporated, an Illinois corporation ("MW")and Merchant Partners,
Limited Partnership, a Delaware limited partnership ( MPLP ).
R E C I T A L S
A. Pursuant to a Securities Purchase Agreement, dated as of
March 13, 1995, by and between the Company and MW (the "Securities
Purchase Agreement"), the Company agreed to issue and sell, and MW
agreed to purchase, 1,280,000 shares (the "Shares") of Common Stock
of the Company, under the terms and subject to the conditions set
forth therein.
B. Pursuant to the Securities Purchase Agreement, the
Company also agreed to issue and sell, and MW agreed to purchase,
Existing Warrants (as herein defined) to purchase an aggregate of
25,000,000 shares of the Common Stock of the Company, subject to
adjustment, under the terms and subject to the conditions set forth
therein. Existing Warrants of Series A and Series B, both inclusive
(the "Series A-B Warrants"), have vested, and Existing Warrants of
Series C through Series O, all inclusive (the "Series C-O Warrants")
have not vested.
C. Pursuant to the Securities Purchase Agreement, the
Company agreed to grant MW certain registration rights with respect
to the Shares and the shares issued upon exercise of the Existing
Warrants and executed that certain Registration Rights Agreement,
dated as of August 8, 1995 (the Original Registration Rights
Agreement ).
D. Pursuant to a certain Exchange Agreement, dated as of
even date herewith, between the Company and MW (the "Exchange
Agreement"), the Company and MW have agreed to exchange the Series C-
O Warrants, to amend and restate that certain Operating Agreement and
that certain Servicemark License Agreement, and to amend that certain
Credit Card Receivables Sale and Purchase Agreement, all dated as of
March 13, 1995, and to amend and restate that certain Warrant
Agreement, dated August 8, 1995 and this Agreement, all in
consideration of the issuance by VVI of new Series P Warrants ( New
Warrants ) to purchase an aggregate of 1,484,462 shares of Common
Stock.
E. MWD is a wholly owned subsidiary of MW. Pursuant to an
Asset Purchase Agreement, dated as of August 1, 1996, between the
Company s subsidiary, ValueVision Direct Marketing Company, Inc.,
and MWD (the "Asset Purchase Agreement"), ValueVision Direct
Marketing Company, Inc. has agreed to deliver to MWD, as<PAGE>
<PAGE>
consideration for the sale of all of MWD's assets, New Warrants to
purchase an aggregate of 1,484,993 shares of Common Stock ( MWD
Warrants ). MWD subsequently transferred all of its right title and
interest in and to the MWD Warrants to MW. In addition, MW
transferred certain of its Series P Warrants to MPLP. MWD no longer
desires to be a party to this Agreement but MPLP desires to be a
party to this Agreement.
F. Pursuant to the Exchange Agreement, dated as of September
28, 1996, between the Company and MW (the "Exchange Agreement"), VVI
and MW have agreed to exchange all of the Series A-B Warrants for
Series P Warrants to purchase 2,200,000 shares of Common Stock (the
Exchange Warrants ).
G. In connection with the cancellation of the Series C-O
Warrants and the issuance of the New Warrants, the parties agreed to
amend and restate the Original Registration Rights Agreement as set
forth herein.
H. In connection with the cancellation of the Series A-B
Warrants and the issuance of the Replacement Warrants, the parties
desire to amend and restate the Amended and Restated Registration
Rights Agreement as set forth herein.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the premises set forth
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, MWD and MW
agree that the Original Registration Rights Agreement is amended and
restated in its entirety to read as follows:
1. Definition of Terms. As used in this Registration Rights
Agreement, the following capitalized terms shall have the following
respective meanings:
(a) Asset Purchase Agreement: See Recital E.
(b) Business Day: A day other than a Saturday, Sunday
or other day on which banks in the State of Minnesota are authorized
by law to remain closed.
(c) Closing Date: August 8, 1995.
(d) Common Stock: Common Stock, $.01 par value per
share, of the Company.
(e) Company: See the Preamble.
(f) Demand Notice: See Section 3(a).
(g) Demand Registration: See Section 3(a).<PAGE>
<PAGE>
(h) Demand Registration Rights: See Section 3(a).
(i) Exchange Act: The Securities Exchange Act of 1934,
as amended.
(j) Exercise Price: The exercise price of a New
Warrant as indicated in, and as may be adjusted by, the Warrant
Agreement.
(k) Expiration Date: 5:00 P.M., Minneapolis, Minnesota
time, on August 7, 2003, or if such day is not a Business Day, the
next succeeding day which is a Business Day.
(l) Inspectors: See Section 5(g).
(m) MW: See the Preamble.
(n) MWD: See the Preamble.
(o) NASD: National Association of Securities Dealers,
Inc. and NASDAQ: NASD Automated Quotation System.
(p) New Warrants: Series P warrants issued pursuant to
the Amended and Restated Exchange Agreement and the Asset Purchase
Agreement.
(q) Outstanding Registration Rights Agreement: The
Representative's Warrant Agreement dated as of November 15, 1993 by
and between the Company and Gerard Klauer Mattison & Co., Inc.
(r) Person: An individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any
department or agency thereof.
(s) Piggyback Notice: See Section 2(a).
(t) Piggyback Registration: See Section 2(a).
(u) Piggyback Registration Rights: See Section 2(a).
(v) Prospectus: Any 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 such Registration Statement
and all other amendments and supplements to the Prospectus, including
post-effective amendments and all material incorporated by reference
in such Prospectus.
(w) Public Offering: A public offering of any of the
Company's equity or debt securities pursuant to a registration
statement under the Securities Act.
(x) Records: See Section 5(g).<PAGE>
<PAGE>
(y) Registration Expenses: Any and all expenses
incurred in connection with any registration or action incident to
performance of or compliance by the Company with this Agreement,
including, without limitation, (i) all SEC, national securities
exchange and NASD registration and filing fees; all listing fees and
all transfer agent fees; (ii) all fees and expenses of complying with
state securities or blue sky laws; (iii) all printing, mailing,
messenger and delivery expenses and (iv) all fees and disbursements
of counsel for the Company and of its accountants, including the
expenses of any special audits and/or "cold comfort" letters required
by or incident to such performance and compliance, but excluding
underwriting discounts and commissions, brokerage fees and transfer
taxes, if any, and fees of counsel or accountants retained by MW.
(z) Registration Notice: See Section 2(a).
(aa) Registration Period: The period of time from the
second anniversary of the Closing Date to the Expiration Date except
as provided in Sections 3(a), 3(b) and 5.
(ab) Registrable Securities: Any Shares or Warrant
Shares issued to MW or MPLP, including those which may thereafter be
issued by the Company in respect of any such securities by means of
any stock splits, stock dividends, recapitalizations,
reclassifications or the like, and as adjusted pursuant to the
Amended and Restated Warrant Agreement.
(ac) Registration Statement: Any registration statement
of the Company filed or to be filed with the SEC which covers any of
the Registrable Securities pursuant to the provisions of this
Agreement, including all amendments (including post-effective
amendments) and supplements thereto, all exhibits thereto and all
material incorporated therein by reference.
(ad) SEC: The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or
the Exchange Act.
(ae) Securities Act: The Securities Act of 1933, as
amended.
(af) Securities Purchase Agreement: See Recital A.
(ag) Series A-B Warrants: See Recital B.
(ah) Series C-O Warrants: See Recital B.
(ai) Series P Warrants: See Recital B.
(aj) Shares: See Recital A.
(ak) Warrant Agreement: That certain Second Amended and
Restated Warrant Agreement, dated as of July 27, 1996, among the
Company, MW, MPLP and MWD.<PAGE>
<PAGE>
(al) Warrant Shares: All shares of Common Stock issued
or issuable upon exercise of any or all of the New Warrants.
2. Piggyback Registration.
(a) Right to Include Registrable Securities. If at any
time during the Registration Period, the Company proposes to register
any of its securities under the Securities Act on any form for the
registration of securities under such Act, whether or not for its own
account (other than by a registration statement on Form S-4, S-8 or
other successor form), it shall as expeditiously as possible give
written notice (a "Registration Notice") to the holders of
Registrable Securities of its intention to do so. Upon the written
request of any such holder (a "Piggyback Notice", which notice shall
specify the Registrable Securities intended to be registered) made
within 20 days after receipt of a Registration Notice, the Company
shall include in the Registration Statement the Registrable
Securities (a "Piggyback Registration") which the Company has been so
requested by such holder to register, subject to the limitations
provided in the Existing Registration Rights Agreements. Such
holder's rights to register shares hereunder are referred to
hereinafter as "Piggyback Registration Rights."
(b) Withdrawal of Piggyback Registration by Company.
If, at any time after giving a Registration Notice but prior to the
effective date of the related Registration Statement, the Company
shall determine for any reason not to register such securities, the
Company shall give written notice of such determination to the
holders of the Registrable Securities sought to be registered and,
thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such Piggyback
Registration. All best efforts obligations of the Company shall
cease if the Company determines to terminate prior to such effective
date any registration where Registrable Securities are being
registered pursuant to this Section 2.
(c) Piggyback Registration of Underwritten Public
Offerings. If a Piggyback Registration involves an offering by or
through underwriters, then, (i) the holders of the Registrable
Securities sought to be registered must agree to sell their
Registrable Securities included in the Company's Registration
Statement to the underwriters selected by the Company on the same
terms and conditions as apply to other selling shareholders and (ii)
such holders may elect in writing, not later than five Business Days
prior to the effectiveness of the Registration Statement filed in
connection with such registration, not to have their Registrable
Securities so included in connection with such registration.
(d) Payment of Registration Expenses for Piggyback
Registration. The Company shall pay all Registration Expenses in
connection with each registration of Registrable Securities requested
pursuant to a Piggyback Registration Right contained in this Section
2.<PAGE>
<PAGE>
3. Demand Registration.
(a) Request for Registration. Upon the written request
(a "Demand Notice") of a holder of Registrable Securities at any time
during the Registration Period, and subject to the limitations
provided in the Existing Registration Rights Agreements, the Company
shall, as soon as practicable, use its best efforts to file a
Registration Statement (a "Demand Registration") with respect to all
Registrable Securities that such holder requested be registered in
the Demand Notice. Prior to the filing of such Demand Registration,
the Company shall give written notice to all other holders of
Registrable Securities of the Demand Registration. Upon the written
request of any such holder made within 20 days after receipt of such
notice, the Company shall include in the Demand Registration the
Registrable Securities that such holder requested be registered,
subject to the limitations provided in the Existing Registration
Rights Agreements. The rights of holders of Registrable Securities
to register shares hereunder are referred to hereinafter as "Demand
Registration Rights." The holders of Registrable Securities may in
the aggregate exercise up to two Demand Registration Rights during
the Registration Period. The Company shall use its best efforts to
obtain the effectiveness of the Registration Statement and to take
all other action necessary under any Federal or state law or
regulation to permit such Registered Securities to be sold or
otherwise disposed of, and the Company shall maintain such compliance
with each such Federal and state law and regulation for the period
necessary for the holder of Registrable Securities to effect the
proposed sale or other disposition (but in no event for more than 120
days). The Company shall be entitled to have the Demand Registration
prepared, filed and caused to become effective pursuant to Form S-3
or any successor form promulgated by the SEC ("Form S-3") pursuant to
this Section 3(a), so long as it is eligible to register its
securities pursuant to Form S-3 and Form S-3 is available for the
distribution contemplated by the holder of Registrable Securities.
(b) Deferment of Demand Registration by Company. The
Company shall be entitled to defer a Demand Registration for a period
of up to 120 days if and to the extent that its Board of Directors
shall determine in good faith that such registration would interfere
with a pending material corporate transaction which has been approved
by the Board of Directors of the Company. In such event, the
Registration Period shall be extended by the amount of such delay and
the related Demand Registration Right would be deemed not to be
exercised.
(c) Payment of Registration Expenses for Demand
Registration. Except as provided below, holders of Registrable
Securities sought to be registered shall pay the first $75,000 or
Registration Expenses, plus 50% of all remaining Registration
Expenses of a Demand Registration and the Company shall pay the
balance of such Registration Expenses; and holders of such
Registrable Securities and the Company shall pay the fees and
expenses of each of their respective legal counsel. A registration<PAGE>
<PAGE>
will not count as a Demand Registration until it has become
effective, unless the holders demanding such registration withdraw
the Registrable Securities, in which case such demand will count as a
Demand Registration unless the holders of such Registrable Securities
agree to pay all Registration Expenses.
(d) Registration of Additional Securities. Except to
the extent required by the Outstanding Registration Rights
Agreements, neither the Company nor any other party may include in
any Registration Statement filed pursuant to a Demand Registration
any additional shares of Common Stock for registration for sale by
the Company or any other holder of securities. The Company shall not
grant any rights inconsistent with this Section 3(d).
(e) Priority in Demand Registration. If a Demand
Registration involves an offering by or through an underwriter or
underwriters, and the managing underwriter or underwriters of such
offering advise the Company and the holders of Registrable Securities
sought to be registered pursuant to such Demand Registration in
writing that in their opinion the size of the offering which such
holders and all other persons including the Company intend to make is
such that the success of the offering would be materially and
adversely affected by the inclusion of the Registrable Securities
requested to be included, then the amount of securities to be offered
for the account of holders of Registrable Securities shall be reduced
pro rata (according to the Registrable Securities proposed for
registration) to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended
by such managing underwriter or underwriters; provided that if
securities are being offered for the account of other persons or
entities as well as the Company, then with respect to the Registrable
Securities intended to be offered by holders of Registrable
Securities, the proportion by which the amount of such securities is
reduced shall not exceed the proportion by which the amount of such
class of securities intended to be offered by such other persons or
entities is reduced, except to the extent such other persons are
entitled to a lesser reduction under the Existing Registration Rights
Agreements.
4. Company Buy-out of Piggyback Registration or Demand
Registration. In lieu of carrying out its obligations to effect a
Piggyback Registration or Demand Registration of any Registrable
Securities pursuant to this Agreement, the Company may carry out such
obligation by offering to purchase and purchasing such Registrable
Securities requested to be registered (a) in the case of outstanding
shares of Common Stock, at the last sale price of the Common Stock on
the day immediately prior to the day the request for registration is
made and (b) in the case of shares not yet purchased under the New
Warrants or Series A-B Warrants at an amount in cash equal to the
difference between (i) the last sale price of the Common Stock on the
day immediately prior to the day the request for registration is made
and (b) the Exercise Price in effect on such day.
5. Registration Procedures. Whenever a holder of<PAGE>
<PAGE>
Registrable Securities has requested that any Registrable Securities
be registered pursuant to either Section 2 or 3 hereof, the Company
will use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with
any such request, the Company will as expeditiously as possible:
(a) prepare and file with the Commission a Registration
Statement on any form for which the Company then qualifies or which
counsel for the Company shall deem appropriate and which form shall
be available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such filed
registration statement to become effective; provided that before
filing a Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to one counsel
selected by such holder copies of all such documents proposed to be
filed, which documents will be subject to the review of such counsel,
and that after the filing of the registration statement, the Company
will promptly notify all holders of Registrable Securities of any
stop order issued or threatened by the SEC and take all reasonable
actions required to prevent the entry of such stop order or to remove
it if entered;
(b) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective for a period of not less than 120 days or such
shorter period which will terminate when all Registrable Securities
covered by such Registration Statement have been sold (but not before
the expiration of the requirement of underwriters and dealers to
deliver Prospectuses in connection with such distribution) and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement
during such period in accordance with the intended methods of
disposition by the selling holders thereof set forth in such
Registration Statement;
(c) furnish to each selling holder of Registrable
Securities and to each underwriter, prior to filing the Registration
Statement or Prospectus or any amendment or supplement thereto, if
requested, copies of such Registration Statement as proposed to be
filed, and thereafter furnish to each selling holder of Registrable
Securities and such underwriter such number of copies of such
Registration Statement, each amendment and supplement thereto (in
each case including all exhibits thereto), the Prospectus included in
such Registration Statement (including each Preliminary Prospectus)
and such other documents as each selling holder of Registrable
Securities or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by
each selling holder of Registrable Securities;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws<PAGE>
<PAGE>
of such jurisdictions as any selling holder of Registrable Securities
or any managing underwriter reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable
to enable any selling holder of Registrable Securities or such
managing underwriter to consummate the disposition in such
jurisdictions of the Registrable Securities owned by any selling
holder of Registrable Securities; provided that the Company will not
be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but
for this clause, (ii) subject itself to taxation in any such
jurisdiction, or (iii) consent to general service of process in any
such jurisdiction;
(e) use its best efforts to cause the Registrable
Securities covered by such Registration Statement to be registered
with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the
Company or its subsidiaries to enable any selling holder of
Registrable Securities and any managing underwriters to consummate
the disposition of such Registrable Securities;
(f) immediately notify each selling holder of
Registrable Securities, at any time when a Prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the Prospectus included
in such Registration Statement contains an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not
misleading, and the Company will promptly prepare a supplement or
amendment to such Prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such 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;
(g) make available for inspection by each selling
holder of Registrable Securities, any underwriter participating in
any disposition pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by any selling holder of
Registrable Securities or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due
diligence responsibilities, and cause the Company's officers,
directors and employees to supply all information reasonably
requested by any such Inspector in connection with such Registration
Statement. Records which the Company determines, in good faith, to
be confidential and which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i) the disclosure of
such Records is necessary in the opinion of the underwriter's
counsel, if any, or counsel to selling holders of Registrable
Securities to avoid or correct a material misstatement or omission in
the Registration Statement, or (ii) the release of such Records is<PAGE>
<PAGE>
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or governmental agency, or (iii) the
information in such Records has been made generally available to the
public. Each selling holder of Registrable Securities agrees that it
will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction or by a governmental agency, give
notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of the
Records deemed confidential;
(h) for purposes of a Demand Registration only, furnish
to each selling holder of Registrable Securities and to each
underwriter, if any, (x) an opinion or opinions of counsel to the
Company and (y) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary form and
covering such matters of the type customarily covered by opinions or
by comfort letters, as the case may be, as any selling holder of
Registrable Securities or the managing underwriter reasonably
requests;
(i) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally
available to its security holders, as soon as reasonably practicable,
an earnings statement covering a period of twelve months, beginning
within three months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Act and Rule 158 thereunder;
(j) use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed; and
(k) cooperate with the selling holders of Registrable
Securities, the underwriter or underwriters (or broker/dealer
involved in the distribution), if any, and their respective counsel
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
If any Demand Registration is requested to be in the form of an
underwritten offering, the selection of the managing underwriter
shall be subject to the Company's consent, which consent shall not be
unreasonably withheld. If requested by the underwriters for any
underwritten offering, the Company shall enter into an underwriting
agreement in customary form with such underwriters for such offering,
but subject to the Company's reasonable approval. The selling
holders of the Registrable Securities shall be a party to such
underwriting agreement. All fees and expenses (other than
Registration Expenses otherwise required to be paid) of any managing
underwriter, any co-manager or any independent underwriter shall be
paid for by such underwriters or by such selling holders.
The Company may require the selling holders of Registrable
Securities to furnish to the Company such information regarding the
distribution of such Registrable Securities as the Company may from<PAGE>
<PAGE>
time to time reasonably request and such other information as may be
legally required or reasonably requested in connection with such
registration.
Each selling holder of Registrable Securities agrees that, upon
receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(f) hereof, such selling holder
will forthwith discontinue disposition of such Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until such holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 5(f)
hereof, 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 Company shall extend the period during which such
Registration Statement shall be maintained effective pursuant to this
Agreement (including the period referred to in Section 5(b) hereof)
by the number of days during the period from and including the date
of the giving of such notice pursuant to Section 5(f) hereof to and
including the date when each seller of Registrable Securities covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 5(f)
hereof.
Except as otherwise provided in this Agreement, the Company
shall have sole control in connection with the preparation, filing,
withdrawal, amendment or supplementing of each Registration
Statement, the selection of underwriters, and the distribution of any
preliminary prospectus included in the Registration Statement, and
may include within the coverage thereof additional shares of Common
Stock or other securities for its own account or for the account of
one or more of its other security holders.
6. Indemnification.
(a) Indemnification by Company. In connection with
each Registration Statement relating to disposition of Registrable
Securities, the Company shall indemnify and hold harmless each
selling holder of Registrable Securities and each underwriter of
Registrable Securities and each Person, if any, who controls any
selling holder of Registrable Securities or underwriter (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable
investigation, legal and other expenses 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 the Securities Act, the Exchange Act or other Federal
or state law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities arise out of or are based
upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement, Prospectus or<PAGE>
<PAGE>
preliminary prospectus or any amendment thereof or supplement
thereto, or arise out of or are 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;
provided, however, that such indemnity shall not inure to the benefit
of any selling holder of Registrable Securities or underwriter (or
any Person controlling any selling holder of Registrable Securities
or underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) on account of any losses, claims,
damages or liabilities arising from the sale of the Registrable
Securities if such untrue statement or omission or alleged untrue
statement or omission was made in such Registration Statement,
Prospectus or preliminary prospectus, or such amendment or
supplement, in reliance upon and in conformity with information
furnished in writing to the Company by such selling holder of
Registrable Securities or underwriter specifically for use therein.
The Company shall also indemnify 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 Holders
of Registrable Securities, if requested. The indemnification
obligation imposed on the Company under this Section 6(a) shall be in
addition to any liability which the Company may otherwise have.
(b) Indemnification by Holder of Registrable
Securities. In connection with each Registration Statement, each
selling holder of Registrable Securities shall indemnify, to the same
extent as the indemnification provided by the Company in Section
6(a), the Company, its directors and each officer who signs the
Registration Statement and each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act) but only insofar as such losses, claims,
damages and liabilities arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which
was made in the Registration Statement, the Prospectus or preliminary
prospectus or any amendment thereof or supplement thereto, in
reliance upon and in conformity with information furnished in writing
by such selling holder of Registrable Securities to the Company
specifically for use therein. In no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in
amount than the dollar amount of the net proceeds received by any
selling holder of Registrable Securities from the sale of the
Registrable Securities giving rise to such indemnification
obligation. The Company shall be entitled to receive indemnities
from underwriters participating in the distribution, in the
underwriting agreement pursuant to which such sales are made, with
respect to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus, Registration Statement
or preliminary prospectus or any amendment thereof or supplement
thereto.
(c) Conduct of Indemnification Procedure. Any party<PAGE>
<PAGE>
that proposes to assert the right to be indemnified hereunder will,
promptly after receipt of notice of commencement of any action, suit
or proceeding against such party in respect of which a claim is to be
made against an indemnifying party or parties under this Section,
notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served.
No indemnification provided for in this Section shall be available to
any party who shall fail to give notice as provided in this Section 6
if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced
by the failure to give such notice but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not
relieve it from any liability that it may have to any indemnified
party for contribution or otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the
approval by the indemnifying party to such indemnified party of its
election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not
be liable to such indemnified party for any legal or other expenses,
except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall
have the right to employ its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party has
been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in
which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any
settlement of any action, suit, proceeding or claim effected without
its written consent, but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or
proceeding, the indemnifying party shall indemnify and hold harmless
such indemnified parties from and against any loss or liability (to
the extent stated above) by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional<PAGE>
<PAGE>
release of such indemnified party from all liability on claims that
are the subject matter of such proceeding.
(d) Contribution. If the indemnification provided for
in this Section 6 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to herein, then the
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 indemnifying party and indemnified parties in connection
with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. 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 Section 6(c), any
legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding. The parties hereto
agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) 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 this Section 6(d). No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(e) Priority of Indemnification. If indemnification is
available under this Section 6, the indemnifying parties shall
indemnify each indemnified party to the full extent provided in
subparagraphs (a) and (b) of this paragraph without regard to the
relative fault of said indemnifying party or indemnified party or any
other equitable consideration provided for in this Section 6.
7. Assignment. The Piggyback Rights, Demand Registration
Rights and any other rights of MW and MPLP pursuant to this Agreement
shall run in favor of any subsequent holder of Registrable
Securities.<PAGE>
<PAGE>
8. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing
and shall be delivered, or mailed first-class postage prepaid,
registered or certified mail,
if to MW, addressed to:
MONTGOMERY WARD & CO, INCORPORATED
Montgomery Ward Plaza
619 West Chicago Avenue
Chicago, IL 60671
Attention: General Counsel
if to MPLP, addressed to:
MERCHANT PARTNERS, LIMITED PARTNERSHIP
9690 Deereco Road
Timonium, Maryland 21093
Attention: Raymond L. Bank
in case of either (i) or (ii), with a copy to:
Altheimer & Gray
10 South Wacker Drive
Suite 4000
Chicago, Illinois 60606
Attention: David W. Schoenberg
Telecopier: (312) 715-4800
if to the Company, addressed to:
VALUEVISION INTERNATIONAL, INC.
6740 Shady Oak Road
Minneapolis, MN 55344-3433
Attention: Chief Executive Officer
with a copy to:
Maslon, Edelman, Borman & Brand, a
professional limited liability
partnership
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402-4140
Attention: William M. Mower
and such notices and other communications shall for all purposes of
this Agreement be treated as being effective or having been given if
delivered personally, or, if sent by mail, when received.
9. Headings. The headings of the Sections and paragraphs of
this Agreement have been inserted for convenience of reference only
and do not constitute part of this Agreement.<PAGE>
<PAGE>
10. Choice of Law. It is the intention of the parties that
the laws of Minnesota shall govern the validity of this Agreement,
the construction of its terms and the interpretation of the rights
and duties of the parties.
11. Counterparts. This Agreement may be executed
concurrently in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.
12. Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable under present or
future law, such provision shall be fully severable, and this
Agreement shall be construed and enforced as if such illegal, invalid
or unenforceable provision had never comprised a part of this
Agreement, and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or its severance from
this Agreement.
13. Termination of MWD s Interest. Upon execution of the
this Agreement by the parties hereto, MWD shall cease to be a party
to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
agreement as of the date first above written.
VALUEVISION INTERNATIONAL, INC.
By: /s/ ROBERT L. JOHANDER
Robert L. Johander
Its Chief Executive Officer
MONTGOMERY WARD & CO.,
INCORPORATED
By: /s/ JOHN L. WORKMAN
Executive Vice President
MONTGOMERY WARD DIRECT, L.P.
By: MW Direct General, Inc.,
the general partner
By: /s/ JOHN L. WORKMAN
Its: Vice President
MERCHANT PARTNERS, LIMITED
PARTNERSHIP
By: MERCHANT PARTNERS, LIMITED
PARTNERSHIP, the general partner
By: Merchant Development Corp.,
the general partner
By: /s/ RAYMOND L. BANK
Its: President <PAGE>
<PAGE>
EXERCISABLE ON OR BEFORE, AND VOID AFTER,
5:00 P.M. MINNEAPOLIS TIME, AUGUST 8, 2003
Series P Certificate for 1,642,143 Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
VALUEVISION INTERNATIONAL, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
THIS CERTIFIES that Montgomery Ward & Co., Incorporated, is
the owner of the number of Warrants set forth above, each of
which represents the right to purchase from ValueVision
International, Inc., a Minnesota corporation (the
"Company"), at any time on or before 5:00 Minneapolis time,
August 8, 2003, upon compliance with and subject to the
conditions set forth herein and in the Amended and Restated
Warrant Agreement dated as of July 27, 1996 among the
Company, Montgomery Ward & Co., Incorporated and Montgomery
Ward Direct, L.P. (the "Warrant Agreement"), one share
(subject to adjustments as set forth in the Warrant
Agreement) of the Common Stock of the Company (such shares
purchasable upon exercise of the Warrants being herein
called the "Shares"), by surrendering this Warrant
Certificate, with the Purchase Form duly executed, at the
principal office of the Company, and by paying in full, in
cash or by certified or official bank check payable to the
order of the Company, the exercise price of $.01 per share.
This Warrant Certificate is issued under and is subject
to the terms and conditions of the Warrant Agreement and the
Warrant Agreement is hereby incorporated by reference into
this Warrant Certificate.
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED WITHOUT (I)
THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
TRANSFER MAY BE LAWFULLY MADE WITHOUT REGISTRATION UNDER THE
FEDERAL SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE
SECURITIES LAWS OR (II) SUCH REGISTRATION.
RESTRICTION ON TRANSFER AND VOTING, REDEMPTION IF TRANSFER
RESTRICTIONS VIOLATED. THE RESTATED ARTICLES OF
INCORPORATION OF THE CORPORATION, AS AMENDED, PROVIDE THAT,
EXCEPT AS OTHERWISE PROVIDED BY LAW, SHARES OF STOCK IN THE
CORPORATION SHALL NOT BE TRANSFERRED TO "ALIENS" UNLESS,
AFTER GIVING EFFECT TO SUCH TRANSFER, THE AGGREGATE NUMBER
OF SHARES OF STOCK OWNED BY OR FOR THE ACCOUNT OF "ALIENS"
WILL NOT EXCEED 20% OF THE NUMBER OF SHARES OF OUTSTANDING
STOCK OF THE CORPORATION, AND THE AGGREGATE VOTING POWER OF
SUCH SHARES WILL NOT EXCEED 20% OF THE AGGREGATE VOTING
POWER OF ALL OUTSTANDING SHARES OF VOTING STOCK OF THE<PAGE>
<PAGE>
CORPORATION. NOT MORE THAN 20% OF THE AGGREGATE VOTING
POWER OF ALL SHARES OUTSTANDING ENTITLED TO VOTE MAY BE
VOTED BY OR FOR THE ACCOUNT OF "ALIENS". IF,
NOTWITHSTANDING SUCH RESTRICTION ON TRANSFERS TO "ALIENS",
THE AGGREGATE NUMBER OF SHARES OF STOCK OWNED BY OR FOR THE
ACCOUNT OF "ALIENS" EXCEEDS 20% OF THE NUMBER OF SHARES OF
OUTSTANDING STOCK OF THE CORPORATION, OR IF THE AGGREGATE
VOTING POWER OF SUCH SHARES EXCEEDS 20% OF THE AGGREGATE
VOTING POWER OF ALL OUTSTANDING SHARES OF VOTING STOCK OF
THE CORPORATION, THE CORPORATION HAS THE RIGHT TO REDEEM
SHARES OF ALL CLASSES OF CAPITAL STOCK, AT THEIR THEN FAIR
MARKET VALUE, ON A PRO RATA BASIS, OWNED BY OR FOR THE
ACCOUNT OF ALL "ALIENS" IN ORDER TO REDUCE THE NUMBER OF
SHARES AND/OR PERCENTAGE OF VOTING POWER HELD BY OR FOR THE
ACCOUNT OF "ALIENS" TO THE MAXIMUM NUMBER OR PERCENTAGE
ALLOWED UNDER THE RESTATED ARTICLES OF INCORPORATION, AS
AMENDED, OR OTHERWISE REQUIRED BY APPLICABLE FEDERAL LAW.
AS USED HEREIN, "ALIENS" MEANS ALIENS AND THEIR
REPRESENTATIVES, FOREIGN GOVERNMENTS, AND THEIR
REPRESENTATIVES, AND CORPORATIONS ORGANIZED UNDER THE LAWS
OF A FOREIGN COUNTRY, AND THEIR REPRESENTATIVES.
THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS OF AN AMENDED AND RESTATED WARRANT AGREEMENT
DATED AS OF JULY 27, 1996, A COPY OF WHICH IS ON FILE AT THE
REGISTERED OFFICE OF THE COMPANY.
IN WITNESS WHEREOF, the undersigned has executed this
Warrant Certificate on the 24th day of September, 1996.
VALUEVISION INTERNATIONAL, INC.
By: /s/ ROBERT L. JOHANDER
Its: Chief Executive Officer <PAGE>
<PAGE>
TO: ValueVision International, Inc.
6740 Shady Oak Road
Minneapolis, MN 55344
PURCHASE FORM
(To be Executed in Order to Exercise Warrant Certificates)
The undersigned hereby irrevocably elects to exercise
___________________* of the Warrants represented by the
Series P Warrant Certificate and to purchase for cash the
Shares issuable upon the exercise of said Warrants and
requests that certificates for such Shares shall be issued
in the name of the undersigned.
Dated:______________
By:
Its:
*Insert here the number of Warrants evidenced on the face of
this Warrant Certificate (or, in the case of a partial
exercise, the portion thereof being exercised), in either
case without making any adjustment for additional Common
Stock or any other securities or property or cash which,
pursuant to the adjustment provisions referred to in this
Warrant Certificate, may be deliverable upon exercise.<PAGE>
<PAGE>
EXERCISABLE ON OR BEFORE, AND VOID AFTER,
5:00 P.M. MINNEAPOLIS TIME, AUGUST 8, 2003
Series P Certificate for 2,200,000 Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
VALUEVISION INTERNATIONAL, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
THIS CERTIFIES that Montgomery Ward & Co., Incorporated, is
the owner of the number of Warrants set forth above, each of
which represents the right to purchase from ValueVision
International, Inc., a Minnesota corporation (the
"Company"), at any time on or before 5:00 Minneapolis time,
August 8, 2003, upon compliance with and subject to the
conditions set forth herein and in the Amended and Restated
Warrant Agreement dated as of July 27, 1996 among the
Company, Montgomery Ward & Co., Incorporated and Montgomery
Ward Direct, L.P. (the "Warrant Agreement"), one share
(subject to adjustments as set forth in the Warrant
Agreement) of the Common Stock of the Company (such shares
purchasable upon exercise of the Warrants being herein
called the "Shares"), by surrendering this Warrant
Certificate, with the Purchase Form duly executed, at the
principal office of the Company, and by paying in full, in
cash or by certified or official bank check payable to the
order of the Company, the exercise price of $.01 per share.
This Warrant Certificate is issued under and is subject
to the terms and conditions of the Warrant Agreement and the
Warrant Agreement is hereby incorporated by reference into
this Warrant Certificate.
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED WITHOUT (I)
THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
TRANSFER MAY BE LAWFULLY MADE WITHOUT REGISTRATION UNDER THE
FEDERAL SECURITIES ACT OF 1933 AND ALL APPLICABLE STATE
SECURITIES LAWS OR (II) SUCH REGISTRATION.
RESTRICTION ON TRANSFER AND VOTING, REDEMPTION IF TRANSFER
RESTRICTIONS VIOLATED. THE RESTATED ARTICLES OF
INCORPORATION OF THE CORPORATION, AS AMENDED, PROVIDE THAT,
EXCEPT AS OTHERWISE PROVIDED BY LAW, SHARES OF STOCK IN THE
CORPORATION SHALL NOT BE TRANSFERRED TO "ALIENS" UNLESS,
AFTER GIVING EFFECT TO SUCH TRANSFER, THE AGGREGATE NUMBER
OF SHARES OF STOCK OWNED BY OR FOR THE ACCOUNT OF "ALIENS"
WILL NOT EXCEED 20% OF THE NUMBER OF SHARES OF OUTSTANDING
STOCK OF THE CORPORATION, AND THE AGGREGATE VOTING POWER OF
SUCH SHARES WILL NOT EXCEED 20% OF THE AGGREGATE VOTING
POWER OF ALL OUTSTANDING SHARES OF VOTING STOCK OF THE<PAGE>
<PAGE>
CORPORATION. NOT MORE THAN 20% OF THE AGGREGATE VOTING
POWER OF ALL SHARES OUTSTANDING ENTITLED TO VOTE MAY BE
VOTED BY OR FOR THE ACCOUNT OF "ALIENS". IF,
NOTWITHSTANDING SUCH RESTRICTION ON TRANSFERS TO "ALIENS",
THE AGGREGATE NUMBER OF SHARES OF STOCK OWNED BY OR FOR THE
ACCOUNT OF "ALIENS" EXCEEDS 20% OF THE NUMBER OF SHARES OF
OUTSTANDING STOCK OF THE CORPORATION, OR IF THE AGGREGATE
VOTING POWER OF SUCH SHARES EXCEEDS 20% OF THE AGGREGATE
VOTING POWER OF ALL OUTSTANDING SHARES OF VOTING STOCK OF
THE CORPORATION, THE CORPORATION HAS THE RIGHT TO REDEEM
SHARES OF ALL CLASSES OF CAPITAL STOCK, AT THEIR THEN FAIR
MARKET VALUE, ON A PRO RATA BASIS, OWNED BY OR FOR THE
ACCOUNT OF ALL "ALIENS" IN ORDER TO REDUCE THE NUMBER OF
SHARES AND/OR PERCENTAGE OF VOTING POWER HELD BY OR FOR THE
ACCOUNT OF "ALIENS" TO THE MAXIMUM NUMBER OR PERCENTAGE
ALLOWED UNDER THE RESTATED ARTICLES OF INCORPORATION, AS
AMENDED, OR OTHERWISE REQUIRED BY APPLICABLE FEDERAL LAW.
AS USED HEREIN, "ALIENS" MEANS ALIENS AND THEIR
REPRESENTATIVES, FOREIGN GOVERNMENTS, AND THEIR
REPRESENTATIVES, AND CORPORATIONS ORGANIZED UNDER THE LAWS
OF A FOREIGN COUNTRY, AND THEIR REPRESENTATIVES.
THE SECURITIES EVIDENCED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS OF AN AMENDED AND RESTATED WARRANT AGREEMENT
DATED AS OF JULY 27, 1996, A COPY OF WHICH IS ON FILE AT THE
REGISTERED OFFICE OF THE COMPANY.
IN WITNESS WHEREOF, the undersigned has executed this
Warrant Certificate on the 24th day of September, 1996.
VALUEVISION INTERNATIONAL, INC.
By: /s/ ROBERT L. JOHANDER
Its: Chief Executive Officer <PAGE>
<PAGE>
TO: ValueVision International, Inc.
6740 Shady Oak Road
Minneapolis, MN 55344
PURCHASE FORM
(To be Executed in Order to Exercise Warrant Certificates)
The undersigned hereby irrevocably elects to exercise
___________________* of the Warrants represented by the
Series P Warrant Certificate and to purchase for cash the
Shares issuable upon the exercise of said Warrants and
requests that certificates for such Shares shall be issued
in the name of the undersigned.
Dated:______________
By:
Its:
*Insert here the number of Warrants evidenced on the face of
this Warrant Certificate (or, in the case of a partial
exercise, the portion thereof being exercised), in either
case without making any adjustment for additional Common
Stock or any other securities or property or cash which,
pursuant to the adjustment provisions referred to in this
Warrant Certificate, may be deliverable upon exercise.<PAGE>
