SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
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 5, 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>
_____________________________________________________________________
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: 27,079,860 (But see
Items 4 and 5)
Number of _____________________________________________
Shares
Beneficially 8. Shared Voting Power: 0
Owned By _____________________________________________
Each
Reporting 9. Sole Dispositive Power: 27,079,860 (But
Person see Items 4 and 5)
With _____________________________________________
10. Shared Dispositive Power: 0
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
27,079,860 (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): 49.1% (But
see Items 4 and 5)
_____________________________________________________________________
14. Type of Reporting Person: CO
_____________________________________________________________________
<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: 27,079,860(1) (But
Beneficially see Items 4 and 5)
Owned By _____________________________________________
Each
Reporting 9. Sole Dispositive Power: 0
Person _____________________________________________
With
10. Shared Dispositive Power:
27,079,860(1) (But see Items 4 and 5)
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
27,079,860 (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): 49.1% (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>
_____________________________________________________________________
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: 27,079,860(1) (But
Beneficially see Items 4 and 5)
Owned By _____________________________________________
Each
Reporting 9. Sole Dispositive Power: 0
Person _____________________________________________
With
10. Shared Dispositive Power:
27,079,860(1) (But see Items 4 and 5)
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
27,079,860 (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): 49.1% (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>
_____________________________________________________________________
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: 1,484,993 (But see
of Items 4 and 5)
Shares _____________________________________________
Beneficially
Owned By 8. Shared Voting Power: 0
Each _____________________________________________
Reporting
Person 9. Sole Dispositive Power: 1,484,993 (But
With see Items 4 and 5)
_____________________________________________
10. Shared Dispositive Power: 0
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,484,993 (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): 4.8% (But
see Items 4 and 5)
_____________________________________________________________________
14. Type of Reporting Person: PN
_____________________________________________________________________
<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: 1,484,993(1) (But
see Items 4 and 5)
_____________________________________________
Number of
Shares 8. Shared Voting Power: 0
Beneficially
Owned By _____________________________________________
Each
Reporting 9. Sole Dispositive Power: 1,484,993(1)
Person (But see Items 4 and 5)
With _____________________________________________
10. Shared Dispositive Power: 0
_____________________________________________________________________
11. Aggregate Amount Beneficially Owned by Each Reporting Person:
1,484,993 (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): 4.8% (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>
This statement constitutes Amendment No. 3 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. 2 thereto.
Item 2. Identity and Background.
Item 2 is hereby amended by deleting subsection (a) thereof and
by inserting in lieu thereof the following:
(a) The undersigned, Montgomery Ward and Co., Incorporated,
an Illinois corporation ("MW"), Montgomery Ward Holding Corp., a
Delaware corporation ("Holding"), Bernard F. Brennan ("Brennan"),
Montgomery Ward Direct, L.P., a Delaware limited partnership
("Direct") and MW Direct General, Inc., a Delaware corporation
("General") hereby file this Statement on Schedule 13D. The
foregoing persons and entities are sometimes collectively referred to
herein as the "Reporting Persons".
Item 2 is also hereby amended by adding at the end of
subsection (b)(c) thereof the following:
Direct is a Delaware limited partnership whose principal
business is direct-mail marketing. General is the sole general
partner of Direct. All of the outstanding shares of General are
owned by MW. The principal business address of Direct is 600 South
Highway 169, St. Louis Park, Minnesota 55426. The principal business
address of General is Montgomery Ward Plaza, Chicago, Illinois 60671.
Mr. Brennan is Chairman and a director of General, Mr. Heine is a
director of General and Mr. Workman is Treasurer of General. The
only other executive officer of General is its Secretary, Philip D.
Delk, whose business address is Montgomery Ward Plaza, Chicago,
Illinois 60671 and whose principal occupation is as Vice President
and Deputy General Counsel of MW.
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). If the transactions contemplated by the Restructuring
Agreement described in Item 4 are consummated, New Warrants will be
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, as more fully described
in Item 4 and in the Restructuring Agreement (including exhibits
thereto), attached hereto as Exhibit 10 and incorporated herein by
reference.
Item 4. Purpose of Transaction.
Item 4 is hereby amended by deleting the fifteenth paragraph
thereof and by inserting in lieu thereof the following:
<PAGE>
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. 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, those Warrants which have not yet
become exercisable will, at the closing of the transactions
contemplated by the Restructuring Agreement (the "Closing") be
replaced with new warrants to purchase 1,484,467 Shares at an
exercise price of $0.01 per Share ("New Warrants") and Direct will
receive New Warrants with respect to 1,484,993 Shares. Certain of
the vesting provisions, the termination rights, the adjustments and
the pre-emptive rights described above with respect to the Warrants
will be inapplicable to the New Warrants. At the Closing, the
Operating Agreement will be revised to provide that MW's right to
designate two directors to the Company's board will be reduced to the
right to designate one director. In addition, the Company's
obligation under the Operating Agreement with respect to the "cross-
ownership rules" discussed above will be eliminated. The
Restructuring Agreement provides that the Closing will occur on the
date which is three business days after the date on which the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, with respect to the acquisition by the Company of
the assets of Direct shall have expired or been terminated. 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 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. The
MPLP Agreement provides that on the date of the Closing, MW will
contribute to MPLP New Warrants with respect to 1,327,317 Shares and
the Company would contribute to MPLP New Warrants with respect to
199,097 Shares. MALP would concurrently contribute to MPLP cash or 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.
It is currently anticipated by the Reporting Persons that,
immediately or shortly following the Closing, each of Direct and
General will be dissolved and liquidated, and the New Warrants to be
received at the Closing by Direct would thereafter be held directly
by MW.
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 April 30, 1996, as of June 12, 1996,
29,376,748 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 25,000,000 Shares subject to the Warrants,
MW may be deemed to beneficially own directly 26,280,000 Shares,
which constitutes approximately 48.3% of the Shares outstanding
<PAGE>
including such 26,280,000 Shares. As set forth in Item 4 above,
adjustments under the Warrants will be made pursuant to the Warrant
Agreement. Assuming such adjustment to increase the Shares of Common
Stock subject to the Warrants to 25,799,860, MW may be deemed to
beneficially own approximately 49.1% of the Shares outstanding
(including such 25,799,860 Shares). Both Holding and Brennan,
through their relationship with MW, may be deemed to beneficially own
all of the Shares beneficially owned by MW.
If the transactions contemplated by each of the Restructuring
Agreement and the MPLP Agreement referenced in Item 4 are
consummated, it is anticipated that Direct will beneficially own
(pursuant to Rule 13d-3 promulgated under the Act) 1,484,993 Shares
(or approximately 4.8% of the Shares outstanding) and that MW will
beneficially own (pursuant to such Rule 13d-3) 11,249,460 Shares (or
approximately 28.6% of the Shares outstanding), including Shares
directly owned by Direct. General, through its relationship with
Direct, may be deemed to beneficially own all of the Shares
beneficially owned by Direct. If the transactions contemplated by
the MPLP Agreement are consummated, 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 directly by
it. If the transactions contemplated by the Restructuring Agreement
referenced in Item 4 are consummated, Direct 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 subject to the New Warrants to
be received 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. General, as the sole general partner of Direct, will have sole
voting and dispositive power with respect to all Shares beneficially
owned by Direct. MW, as the sole stockholder of General, and thereby
each of Holding and Brennan, as set forth above, may each be deemed
to share voting and dispositive power with respect to all Shares
beneficially owned by Direct.
(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.
Item 7. Material to be filed as Exhibits.
Item 7 is hereby amended by adding thereto the following:
Exhibit 10. Restructuring Agreement dated as of July 27,
1996 between MW and the Company.
Exhibit 11. Agreement dated as of July 27, 1996 among MW,
MALP and the Company.
<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 6, 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 6, 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
RESTRUCTURING AGREEMENT
THIS RESTRUCTURING 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. Pursuant to a certain Operating Agreement, dated as of
March 13, 1995 (the "Original Operating Agreement"), MW and VVI
established a strategic relationship pursuant to which VVI was
granted certain rights to use certain of MW's servicemarks, and MW's
private-label credit card, in the field of television home shopping.
Concurrently with the entry into the Original Operating Agreement,
(i) MW and VVI entered into a Servicemark License Agreement (the
"Original Servicemark License Agreement") and a Receivables Sale and
Purchase Agreement (the "Original Receivables Sale and Purchase
Agreement"), which were intended to implement the Original Operating
Agreement, and (ii) 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. For the purposes of this Agreement, the Original Operating
Agreement, the Original Servicemark License Agreement and the
Original Receivables Sale and Purchase Agreement are referred to
herein collectively as the "Original Television Home Shopping
Agreements".
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. Certain subsidiaries of MW are currently the sole partners
of Montgomery Ward Direct, L.P., a Delaware limited partnership
("MWD"). MWD engages in the direct-mail marketing business.
D. VVI desires to enter the direct-mail marketing business
through the acquisition of the assets of MWD, and to obtain certain
additional rights to conduct said business through an expansion of
the Television Home Shopping Agreements to encompass certain direct-
mail activities. MWD and VVI also desire to make certain
modifications to their strategic relationship with respect to the
field of television home shopping. In consideration for the
acquisition of the assets of MWD and the requested modifications of
the Television Home Shopping Agreements, VVI is willing to issue New
Warrants (as herein defined) to MW.
E. Original Warrants of Series' C through O, both inclusive,
have not vested (the "Unvested Warrants"). MW and VVI desire to
exchange the Unvested Warrants for New Warrants, as herein defined.
A G R E E M E N T S
<PAGE>
NOW, THEREFORE, the parties agree as follows:
1. Purchase of Assets of MWD. On the Closing Date (as herein
defined), VVI shall cause its wholly owned subsidiary, ValueVision
Direct Marketing Company, Inc., a Minnesota corporation ("VVI Sub")
to purchase, and MW shall cause MWD to sell, substantially all of the
assets of MWD, and VVI shall cause VVI Sub to assume and to discharge
when due, certain enumerated liabilities and obligations of MWD, all
as set forth in a certain Asset Purchase Agreement, in the form
attached hereto as Exhibit A (the "Asset Purchase Agreement"). MWD
and VVI Sub shall enter into the Asset Purchase Agreement on the
Closing Date. MW hereby agrees to cause MWD to enter into the Asset
Purchase Agreement and guarantees the full and prompt payment and
performance of all obligations of MWD under the Asset Purchase
Agreement. VVI hereby agrees to cause VVI Sub to enter into the
Asset Purchase Agreement and guarantees the full and prompt payment
and performance of all obligations of VVI Sub under the Asset
Purchase Agreement.
2. Amendment and Restatement of Agreements. On the Closing
Date:
(a) MW and VVI shall amend and restate the Original
Operating Agreement by entering into an Amended and Restated
Operating Agreement in the form attached hereto as Exhibit B;
(b) MW shall cause its subsidiary, Signature
Financial/Marketing, Inc., a Delaware corporation ("Signature")
to enter, and VVI shall enter, into an Agreement in the form
attached hereto as Exhibit C;
(c) MW and VVI shall amend and restate the Original
Servicemark License Agreement by entering into an Amended and
Restated Servicemark License Agreement in the form attached
hereto as Exhibit D;
(d) MW and VVI shall amend the Receivables Sale and
Purchase Agreement by entering into a certain letter agreement
in the form attached hereto as Exhibit E;
(e) MW and VVI shall amend and restate the Warrant
Agreement by entering into an Amended and Restated Warrant
Agreement in the form attached hereto as Exhibit F (the
"Amended and Restated Warrant Agreement"); and
(f) MW and VVI shall amend and restate the Registration
Rights Agreement by entering into an Amended and Restated
Registration Rights Agreement in the form attached hereto as
Exhibit G.
The documents referred to in this paragraph 2 are referred to herein
collectively as the "Amended and Restated Documents".
3. Surrender of Warrants. On the Closing Date, MW shall
surrender to VVI all of the Unvested Warrants for cancellation.
4. Issuance of New Warrants. In consideration of:
(a) the acquisition of the assets of MWD pursuant to the
Asset Purchase Agreement, on the Closing Date, VVI shall cause
VVI Sub to deliver to MWD a total of 1,484,993 New Warrants;
and
2
<PAGE>
(b) the entry into the Amended and Restated Documents,
and the cancellation and surrender of the Unvested Warrants,
VVI shall issue to MW a total of 1,484,467 New Warrants.
All New Warrants shall contain the terms and features set forth in
the Amended and Restated Warrant Agreement. Concurrently with the
issuance of New Warrants, MW and VVI shall enter into a Pledge
Agreement, in the form attached hereto as Exhibit H, and MW shall
deliver to VVI a warrant certificate for 1,637,138 New Warrants and a
stock power with respect thereto, duly executed in blank by MW.
5. Time of Closing; Effectiveness of Closing. The closing of
(w) the purchase of the assets of MWD pursuant to the Asset Purchase
Agreement, (x) the entry into the Amended and Restated Documents, (y)
the surrender and cancellation of the Unvested Warrants, and (z) the
issuance of the New Warrants (the "Closing"), shall all take place
concurrently, on the date which is three business days after the date
on which the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") with respect to
the acquisition of the assets of MWD shall have expired or been
terminated (the "Closing Date"). MW and VVI shall forthwith make all
filings which are required by them respectively under the HSR Act,
and shall request early termination of the waiting period under the
HSR Act. If the Closing shall occur, it shall be deemed, as among
MW, MWD, VVI and VVI Sub, to have occurred for all purposes as of the
commencement of business on July 27, 1996. Without limiting the
generality of the preceding sentence, all income or loss, all cash
receipts and disbursements, and all liabilities of MWD arising,
during the period commencing July 27, 1996 and ending on the Closing
Date, shall be for the sole account of VVI.
6. Conditions of Closing. The Closing shall be subject to the
following conditions:
(a) the waiting period under the HSR Act shall have
expired or been terminated; and
(b) not later than September 15, 1996, MW shall have
delivered to VVI the Disclosure Schedule referred to in Section
4.2 of the Asset Purchase Agreement (the "Disclosure
Schedule"), and the Disclosure Schedule shall not contain any
exception to any of the representations and warranties of MWD
to be made pursuant to Section 4.2 of the Asset Purchase
Agreement which would have a material adverse effect on the
Business (as defined in the Asset Purchase Agreement). VVI
shall be obligated to notify MW not later than five business
days after the date of delivery of the Disclosure Schedule of
any such exception. If VVI shall give any such notice, and if
any such exception shall in fact exist, this Agreement shall
terminate.
7. Effect of Termination. If this Agreement shall be
terminated by VVI pursuant to Section 6(b), the transactions
contemplated herein shall not occur, or if the waiting period under
the HSR Act shall not have expired or been terminated on or before
September 30, 1996 this Agreement shall automatically terminate
without any liability on the part of either MW, MWD, VVI or VVI Sub.
Termination shall be effective (i) upon delivery of the notice
referred to in Section 6(b), or (ii) on October 1, 1996 in the case
of failure of the waiting period under the HSR Act to expire or been
terminated. In such event, the Original Television Home Shopping
3
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Agreements and the Original Securities Related Agreements shall
remain in full force and effect.
8. 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
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.
9. 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
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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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. 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,
without giving effect to the principles of conflicts of laws thereof.
17. 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
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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.
18. 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.
19. Amendments and Modification. This Agreement may only be
amended or modified by a subsequent written agreement by the parties
hereto.
20. 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 JOHANDER
TITLE: Executive Vice President TITLE: President
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Exhibit A
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") dated as of
July 27, 1996, is made by and among Montgomery Ward Direct, L.P., a
Delaware limited partnership ("Seller"), and ValueVision Direct
Marketing Company, Inc., a Minnesota corporation ("Purchaser").
R E C I T A L S
A. Seller is engaged in the specialty direct-mail catalogue
business (the "Business").
B. Seller desires to sell to Purchaser all of Seller's
assets, properties and rights, other than the Excluded Assets, as
herein defined (the "Purchased Assets"), and Purchaser desires to
purchase the Purchased Assets, all on the terms and subject to the
conditions contained in this 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
hereto agree as follows:
ARTICLE I
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and subject
to the conditions contained in this Agreement, Purchaser agrees to
purchase from Seller, and Seller agrees to sell to Purchaser, all of
the Purchased Assets.
1.2 Enumeration of Purchased Assets. The Purchased Assets
shall include but are not limited to the following assets owned by
Seller:
(a) all cash on hand and in banks, and other
depositaries but in any event in an amount not less than
$4,000,000;
(b) all inventory, including, without limitation, raw
materials, work in process, finished goods, service parts and
supplies (collectively, the "Inventory"), including without
limitation the Inventory listed on Schedule 1.2(b);
(c) all furniture, fixtures, equipment, machinery,
parts, computer hardware, racks, pallets, automobiles and
trucks and all other tangible personal property (other than the
Inventory) (collectively, the "Equipment"), including without
limitation the Equipment listed on Schedule 1.2(c);
(d) all leasehold interests in personal property leased
to Seller (the "Leased Personalty"), including without
limitation the Leased Personalty listed on Schedule 1.2(d);
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(e) Seller's entire leasehold interest as lessee of
that certain real property commonly known as Interchange Tower,
Suite 300, 600 South Highway 169, St. Louis Park, Minnesota
55426 (the "Leased Premises");
(f) all trade accounts receivable, notes receivable,
negotiable instruments and chattel paper (collectively, the
"Accounts Receivable"), including without limitation the
Accounts Receivable listed on Schedule 1.2(f);
(g) all claims and rights (and benefits arising
therefrom) with or against all persons whomsoever to the extent
they are legally transferable by Seller;
(h) all sales orders and sales contracts, purchase
orders and purchase contracts, quotations and bids;
(i) all Intellectual Property (as herein defined), and
all goodwill associated with the Intellectual Property;
(j) all license agreements, distribution agreements,
sales representative agreements, service agreements, supply
agreements, franchise agreements, computer software agreements
and technical service agreements to the extent they are legally
transferable by Seller;
(k) all customer lists, customer records and
information;
(l) all insurance policies;
(m) all rights in connection with prepaid expenses with
respect to the assets being sold hereunder;
(n) all letters of credit, if any, issued to Seller;
(o) all computer software, including all documentation
and source codes with respect to such software and licenses and
leases of software to the extent they are legally transferable
by Seller;
(p) all sales and promotional materials, catalogues and
advertising literature;
(q) all rights of Seller under that certain Amended and
Restated Services Agreement, dated as of June 5, 1996 between
Seller and Fingerhut Corporation, a Minnesota corporation
("Fingerhut"); and
(r) all telephone numbers of Seller and all lock boxes
to which Seller's account debtors remit payments.
1.3 Excluded Assets. The Excluded Assets shall consist of
the following items:
(a) all contracts with Seller's Affiliates (as herein
defined);
(b) claims (and benefits to the extent they arise
therefrom) that relate to liabilities other than the Assumed
Liabilities (as herein defined) and assets other than the
Purchased Assets;
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(c) rights arising from prepaid expenses, if any, with
respect to assets not being sold hereunder;
(d) tax refunds due from federal, state and local
taxing authorities;
(e) Seller's rights under this Agreement;
(f) Seller's partnership agreement, minute and stock
record books, and tax returns; and
(g) the service marks "Montgomery Ward" and "Montgomery
Ward Direct".
ARTICLE II
Assumption of Liabilities
2.1 Agreement to Assume. At the Closing (as herein defined),
Purchaser shall assume and agree to discharge and perform when due,
the liabilities of Seller (and only those liabilities of Seller)
which are enumerated in Section 2.2 (the "Assumed Liabilities"). All
claims against and liabilities and obligations of Seller not
specifically assumed by Purchaser pursuant to Section 2.2, including,
without limitation, the liabilities enumerated in Section 2.3, are
collectively referred to herein as the "Excluded Liabilities."
Seller shall promptly pay and discharge when due all of the Excluded
Liabilities.
2.2 Description of Assumed Liabilities. The Assumed
Liabilities shall consist of the following liabilities of Seller:
(a) all liabilities of Seller incurred in the ordinary
course of business which are reflected on or reserved against
in the Interim Financial Statements (as herein defined) which
have not been discharged on or prior to the date hereof, to the
extent such liabilities are so reflected or reserved against;
(b) liabilities of the type described in paragraph (a)
of this Section 2.1 which, in accordance with generally
accepted accounting principles ("GAAP"), were required to be
reflected on or reserved against in the Interim Financial
Statements but which were not fully reflected on or fully
reserved against, in an aggregate amount not in excess of
$250,000;
(c) all liabilities of Seller incurred in the ordinary
course of business after the date of the Interim Financial
Statements and prior to the date hereof which have not been
discharged on or prior to the date hereof; and
(d) all executory liabilities of Seller under
contracts, leases and other agreements which are included in
the Purchased Assets and assigned to Purchaser.
2.3 Excluded Liabilities. Notwithstanding Section 2.2 (and
without implication that Purchaser is assuming any liability not
expressly excluded by this Section 2.3 and, where applicable, without
implication that any of the following would constitute Assumed
Liabilities but for the provisions of this Section 2.3), the
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following claims against and liabilities of Seller are excluded and
shall not be assumed or discharged by Purchaser:
(a) any liabilities to any of Seller's Affiliates;
(b) any liabilities for legal, accounting, audit and
investment banking fees, brokerage commissions, and any other
expenses incurred by Seller in connection with the negotiation
and preparation of this Agreement and the sale of the Purchased
Assets to Purchaser or negotiations or agreements with
Fingerhut;
(c) any liabilities of Seller for taxes, other than for
sales taxes collected from customers;
(d) any liability for or related to indebtedness of
Seller to banks, financial institutions or other persons or
entities with respect to borrowed money or otherwise;
(e) any liabilities of Seller under those leases,
contracts, insurance policies, commitments, sales orders,
purchase orders and Permits which are not assigned to Purchaser
pursuant to the provisions of this Agreement;
(f) any liabilities of Seller in connection with or
arising out of the transfer or assignment of any lease,
contract, commitment, or other agreement, including, without
limitation, under any computer software agreement;
(g) any liabilities of Seller under collective
bargaining agreements pertaining to employees of Seller; any
liabilities of Seller to pay severance benefits to employees of
Seller whose employment is terminated prior to the Closing Date
or in connection with or following the sale of the Purchased
Assets pursuant to the provisions hereof; or any liability
under any Federal or state civil rights or similar law, or the
so-called "WARN Act", resulting from the termination of
employment of employees;
(h) product warranty liabilities of Seller with respect
to products shipped on or prior to the Closing Date and
products constituting finished goods inventory as of the
Closing Date, to the extent such liabilities are not reserved
against on the Interim Financial Statements;
(i) liabilities with respect to returns or allowances
of products which were sold on or prior to the Closing Date or
which constitute finished goods inventory as of the Closing
Date and liabilities with respect to recalls of products sold
prior to the Closing Date, whether required by a governmental
body or otherwise, to the extent not reserved against on the
Interim Financial Statements;
(j) any claims against or liabilities of Seller for
injury to or death of persons or damage to or destruction of
property (including, without limitation, any workmen's
compensation claim) regardless of when said claim or liability
is asserted, including, without limitation, any claim or
liability for consequential or punitive damages in connection
with the foregoing, to the extent not reserved against on the
Interim Financial Statements;
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(k) any liabilities for medical, dental, and disability
(both long-term and short-term) benefits, whether insured or
self-insured, accruing or based upon exposure to conditions, or
aggravation of disabilities or conditions in existence, on or
prior to the Closing Date or for claims incurred or
disabilities commencing on or prior to the Closing Date, and
any liability for the foregoing, regardless of when accrued and
regardless of when any condition existed, which arises by
virtue of an employment relationship at any time with Seller;
(l) any liabilities arising out of or in connection
with any of Seller's employee welfare and pension benefit
(including profit sharing) plans;
(m) any bonus or other compensation payments to
Seller's employees which are owed by reason of the sale of the
Purchased Assets, and any liabilities for salaries, wages,
bonuses, vacation pay and other compensation which are owed to
employees of Seller;
(n) any liabilities arising out of or in connection
with any violation of a statute or governmental rule,
regulation or directive; and
(o) without limitation by the specific enumeration of
the foregoing, any liabilities not expressly assumed by
Purchaser pursuant to the provisions of Section 2.2.
2.4 No Expansion of Third Party Rights. The assumption by
Purchaser of the Assumed Liabilities shall not expand the rights or
remedies of any third party against the Purchaser or the Seller as
compared to the rights and remedies which such third party would have
had against the Seller had the Purchaser not assumed the Assumed
Liabilities.
ARTICLE III
Consideration, Manner of Payment and Closing
3.1 Consideration. The consideration for the Purchased
Assets shall consist of a Class P Warrant to purchase 1,484,993
shares of common stock, $.01 par value, of Purchaser's parent,
ValueVision International, Inc., a Minnesota corporation ("VVI"), in
the form attached hereto as Exhibit A (the "Warrant"), plus the
aggregate book amount of the Assumed Liabilities (the "Purchase
Price").
3.2 Time and Place of Closing. The transactions contemplated
by this Agreement shall be consummated (the "Closing") at 10:00 am at
the offices of Altheimer & Gray, 10 South Wacker Drive, Suite 4000,
Chicago, Illinois, 60606 on the date hereof. The date on which the
Closing occurs in accordance with the preceding sentence is referred
to in this Agreement as the "Closing Date". The Closing shall be
effective for all purposes as of 12:01 a.m., Central Daylight Time,
on the Closing Date.
3.3 Manner of Satisfaction of the Consideration. At the
Closing, Purchaser shall assume the Assumed Liabilities and deliver
the Warrant to Seller. The Warrant shall (i) be subject to the terms
of an Amended and Restated Warrant Agreement, dated of even date
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herewith, between Montgomery Ward & Co., Incorporated, an Illinois
corporation ("MW"), VVI and Purchaser, and (ii) have the benefits of
an Amended and Restated Registration Rights Agreement, dated of even
date herewith, between MW and VVI.
3.4 Effect of Agreement. This Agreement shall be effective
to convey, transfer and assign the Purchased Assets to Purchaser, and
for Purchaser to assume the Assumed Liabilities, without the
necessity for any further instruments of transfer, conveyance or
assumption.
3.5 Allocation of Purchase Price. The Purchase Price shall
be allocated among the Purchased Assets in the manner required by
Section 1060 of the Internal Revenue Code of 1986, as amended (the
"Code").
ARTICLE IV
Representations and Warranties
4.1 Purchaser's Representations and Warranties. Purchaser
represents and warrants to Seller that:
(a) Purchaser is a corporation duly organized, existing
and in good standing, under the laws of the State of Minnesota.
(b) Purchaser has full corporate power and authority to
enter into and perform (x) this Agreement and (y) all documents
and instruments to be executed by Purchaser pursuant to this
Agreement (collectively, "Purchaser's Ancillary Documents").
This Agreement has been, and Purchaser's Ancillary Documents
will be, duly executed and delivered by duly authorized
officers of Purchaser.
(c) No consent, authorization, order or approval of, or
filing or registration with, any governmental authority or
other person is required for the execution and delivery by
Purchaser of this Agreement and Purchaser's Ancillary
Documents, and the consummation by Purchaser of the
transactions contemplated by this Agreement and Purchaser's
Ancillary Documents.
(d) Neither the execution and delivery of this
Agreement and Purchaser's Ancillary Documents by Purchaser, nor
the consummation by Purchaser of the transactions contemplated
hereby, will conflict with or result in a breach of any of the
terms, conditions or provisions of Purchaser's Articles of
Incorporation or By-laws, or of any statute or administrative
regulation, or of any order, writ, injunction, judgment or
decree of any court or governmental authority or of any
arbitration award.
(e) Purchaser is not a party to any unexpired,
undischarged or unsatisfied written or oral contract,
agreement, indenture, mortgage, debenture, note or other
instrument under the terms of which performance by Purchaser
according to the terms of this Agreement will be a default, or
whereby timely performance by Purchaser according to the terms
of this Agreement may be prohibited, prevented or delayed.
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(f) Neither Purchaser nor any of its Affiliates has
dealt with any person or entity who is or may be entitled to a
broker's commission, finder's fee, investment banker's fee or
similar payment for arranging the transaction contemplated
hereby or introducing the parties to each other. As used
herein, an "Affiliate" is any person or entity which controls a
party to this Agreement, which that party controls, or which is
under common control with that party. "Control" means the
power, direct or indirect, to direct or cause the direction of
the management and policies of a person or entity through
voting securities, contract or otherwise.
4.2 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser that, except as set forth in the
schedule delivered by Seller to Purchaser concurrently herewith and
identified as the "Disclosure Schedule":
(a) Seller is a limited partnership duly organized,
existing and in good standing under the laws of the State of
Delaware. Seller has all necessary partnership power and
authority to conduct the Business as the Business is now being
conducted.
(b) Seller has qualified as a foreign limited
partnership, and is in good standing, under the laws of all
jurisdictions where the nature of the Business or the nature or
location of its assets requires such qualification and where
the failure to so qualify would have a Material Adverse Effect
(as herein defined). For the purposes of this Agreement,
"Material Adverse Effect" means a material adverse effect on
the assets, liabilities, financial condition or results of
operations of the Business, taken as a whole.
(c) Seller has full partnership power and authority to
enter into and perform (x) this Agreement and (y) all documents
and instruments to be executed by Seller pursuant to this
Agreement (collectively, "Seller's Ancillary Documents"). This
Agreement has been, and Seller's Ancillary Documents will be,
duly executed and delivered by duly authorized officers of
Seller.
(d) No consent, authorization, order or approval of, or
filing or registration with, any governmental authority or
other person is required for the execution and delivery of this
Agreement and Seller's Ancillary Documents and the consummation
by Seller of the transactions contemplated by this Agreement
and Seller's Ancillary Documents.
(e) Neither the execution and delivery of this
Agreement and Seller's Ancillary Documents by Seller, nor the
consummation by Seller of the transactions contemplated hereby,
will conflict with or result in a breach of any of the terms,
conditions or provisions of Seller's Agreement or Limited
Partnership or of any statute or administrative regulation, or
of any order, writ, injunction, judgment or decree of any court
or any governmental authority or of any arbitration award.
(f) Copies of the balance sheet, statement of income
and retained earnings, statement of cash flows, and notes to
financial statements of Seller, as of and for the year ended
December 29, 1995, and the unaudited balance sheet and
statement of income of Seller as of and for the six month
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period ended June 28, 1996 (the "Interim Financial
Statements"), are contained in the Disclosure Schedule. Said
financial statements present fairly, in all material respects,
the financial position of Seller as of the dates thereof, and
the results of operations and cash flow of Seller for the
periods covered by said statements, in accordance with GAAP,
consistently applied, except (x) as disclosed therein, (y) in
the case of the Interim Financial Statements, for normal year-
end adjustments, and (z) in the case of the Interim Financial
Statements for the omission of footnote disclosures required by
GAAP.
(g) Seller has good title to, and the partnership power
to sell, the Purchased Assets, free and clear of any liens,
claims, encumbrances and security interests, except for the
following liens: (i) statutory liens for taxes not yet due,
(ii) liens of landlords, carriers, warehousemen, mechanics and
materialmen for sums not yet due; (iii) liens incurred or
deposits made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and the like
or to secure other performance and obligations; and (iv) minor
irregularities of title which do not in the aggregate
materially detract from the value or use of the Purchased
Assets. The foregoing representation and warranty shall not
apply to the Leased Premises.
(h) Since June 28, 1996, Seller has not:
(i) sold or transferred any material portion of
its assets or property, except for (A) sales of Inventory
and (B) cash applied in payment of Seller's liabilities,
in the usual and ordinary course of business;
(ii) suffered any material loss, or any material
interruption in use, of any material assets or property
(whether or not covered by insurance), on account of
fire, flood, riot, strike or other hazard or Act of God;
(iii) made or suffered any change in the conduct or
nature of the Business which would, individually or in
the aggregate, have a Material Adverse Effect;
(iv) waived any material rights other than in the
ordinary course of business;
(v) paid or declared any distributions to its
partners, or purchased or redeemed any of its partnership
interests;
(vi) incurred any liability or obligation of any
kind, other than in the ordinary course of business; or
(vii) without limitation by the enumeration of any
of the foregoing, entered into any material transaction
other than in the usual and ordinary course of business.
(i) The Disclosure Schedule lists and describes all
material contracts, leases, and agreements to which Seller is a
party and which relate to the conduct of the Business,
including, without limitation: employment and employment
related agreements; covenants not to compete; loan agreements;
notes; security agreements; sales representative, distribution,
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franchise, advertising and similar agreements; leases and
subleases of Leased Personalty or the Leased Premises; license
agreements; purchase orders and purchase contracts and sales
orders and sales contracts. All contracts, leases, subleases
and other instruments referred to in this paragraph 4.3(i) are
binding upon the parties thereto. No default by Seller has
occurred thereunder and, to Seller's knowledge, no default by
the other contracting parties has occurred thereunder, which
default would, individually or in the aggregate, have a
Material Adverse Effect.
(j) Seller is not a party to, or bound by, any
unexpired, undischarged or unsatisfied written contract,
agreement, indenture, mortgage, debenture, note or other
instrument under the terms of which performance by Seller
according to the terms of this Agreement will be a default or
an event of acceleration, which default or acceleration would,
individually or in the aggregate, have a Material Adverse
Effect, or whereby timely performance by Seller according to
the terms of this Agreement may be prohibited, prevented or
delayed.
(k) Seller possesses all licenses, permits,
registration and governmental approvals (the "Permits") which
are required in order for the Seller to conduct the Business as
presently conducted where the failure to possess such Permits
would have a Material Adverse Effect. The Disclosure Schedule
contains a complete list of all Permits issued to Seller.
(l) There is no litigation or proceeding, in law or in
equity, and there are no proceedings or governmental
investigations before any commission or other administrative
authority, pending, or, to Seller's knowledge, overtly
threatened, against Seller or its Affiliates, or with respect
to the consummation of the transaction contemplated hereby, or
the use of the Purchased Assets (whether used by Purchaser
after the Closing or by Seller prior thereto) which if decided
adversely to Seller would have a Material Adverse Effect.
(m) Seller is not in violation of, or delinquent in
respect to, any decree, order or arbitration award or law,
statute, or regulation of or agreement with, or Permit from,
any Federal, state or local governmental authority (or to which
its properties, assets, personnel, business activities or the
Leased Premises are subject or to which it, itself, is
subject), including, without limitation, laws, statutes and
regulations relating to equal employment opportunities, fair
employment practices, and discrimination, which violation or
delinquency would have a Material Adverse Effect.
(n) The Leased Premises are leased to Seller pursuant
to written leases, copies of which are attached to the
Disclosure Schedule. Seller is not in default under any
material term of any agreement relating to the Leased Premises
nor, to Seller's knowledge, is any other party thereto in
material default thereunder.
(o) Each material (i) trademark, service mark, slogan,
trade name, trade dress and the like (collectively with the
associated goodwill of each, "Trademarks"), including
information regarding each registration and pending application
to register any such Trademarks; (ii) common law Trademark;
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(iii) patent on and pending application to patent any
technology or design; (iv) registration of and application to
register any copyright; and (v) license of rights in computer
software, Trademarks, patents, copyrights, unpatented
formulations, and know-how, whether to or by Seller, is listed
in the Disclosure Schedule. The scheduled rights are referred
to herein collectively as the "Intellectual Property".
(p) Seller has no knowledge: (i) that any other person
or entity claims the right to use in connection with similar or
closely related goods and in the same geographic area, any mark
which is identical or confusingly similar to any of the
Trademarks; (ii) of any claim that any third party asserts
ownership rights in any of the Intellectual Property; (iii) of
any claim that Seller's use of any Intellectual Property
infringes any right of any third party; and (iv) that any third
party is infringing any of Seller's rights in any of the
Intellectual Property.
(q) Neither Seller, nor any of its Affiliates, has
dealt with any person or entity who is or may be entitled to a
broker's commission, finder's fee, investment banker's fee or
similar payment from Purchaser for arranging the transaction
contemplated hereby or introducing the parties to each other.
4.3 Limitation on Warranties. Except as expressly set forth
in Section 4.2, Seller makes no express or implied warranty of any
kind whatsoever, including, without limitation, any representation as
to physical condition or value of any of the Purchased Assets or the
future profitability or future earnings performance of the Business.
ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED.
4.4 Definition of Knowledge. For the purposes of this
Agreement, the knowledge of Seller shall be deemed to be limited to
the actual knowledge as of the Closing Date of Bernard F. Brennan,
John W. Workman, Spencer H. Heine and Philip Hartung, without giving
effect to imputed knowledge.
ARTICLE V
Post-Closing Agreements
5.1 Post-Closing Agreements. From and after the Closing, the
parties shall have the respective rights and obligations which are
set forth in the remainder of this Article V.
5.2 Inspection of Records. Seller and Purchaser shall each
make their respective books and records (including work papers in the
possession of their respective accountants) available for inspection
by the other party, or by its duly accredited representatives, for
reasonable business purposes at all reasonable times during normal
business hours, for a seven (7) year period after the Closing Date,
with respect to all transactions occurring prior to and those
relating to the Closing, the historical financial condition, results
of operations and cash flows of Seller, or the Assumed Liabilities.
As used in this Section 5.2, the right of inspection includes the
right to make extracts or copies. The representatives of a party
inspecting the records of the other party shall be reasonably
satisfactory to the other party.
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5.3 Payments of Accounts Receivable. In the event Seller
shall receive any instrument of payment of any of the Accounts
Receivable, Seller shall forthwith deliver it to Purchaser, endorsed
where necessary, without recourse, in favor of Purchaser.
5.4 Products Liability Insurance. For a period of five years
commencing on the Closing Date, Purchaser shall maintain policies of
products liability insurance naming Seller as an additional insured
and covering the operations of the Business with coverages and limits
which are comparable to those maintained from time to time by
Purchaser with respect to its own business.
5.5 Non-Assignment. Notwithstanding any provision to the
contrary contained herein, Seller shall not be obligated to assign to
Purchaser any contract, purchase order, sales order, lease or other
instrument which provides that it may not be assigned without the
consent of the other party thereto and for which such consent is not
obtained, but in any such event, Seller shall cooperate with
Purchaser in any reasonable arrangement designed to provide the
benefits thereof to Purchaser.
5.6 Further Assurances. The parties shall execute such
further documents, and perform such further acts, as may be necessary
to transfer and convey the Purchased Assets to Purchaser, on the
terms herein contained, and to otherwise comply with the terms of
this Agreement and consummate the transaction contemplated hereby.
5.7 Right of Endorsement, Etc. Effective upon the Closing,
Seller hereby constitutes and appoints Purchaser and its successors
and assigns, the true and lawful attorney of Seller with full power
of substitution, in the name of Purchaser, or the name of the Seller,
on behalf of and for the benefit of Purchaser, to collect all items
being sold, transferred, conveyed and assigned to Purchaser as
provided herein, to endorse, without recourse, notes and other
instruments constituting or relating to the Assets in the name of the
Seller, to institute and prosecute, in the name of the Seller or
otherwise, all proceedings which Purchaser may deem proper in order
to collect, assert or enforce any claim, right or title of any kind
in or to the Purchased Assets, to defend and compromise any and all
actions, suits or proceedings in respect of any of the Purchased
Assets and to do all such acts and things in relation thereto as
Purchaser may deem advisable. The foregoing powers are coupled with
an interest and shall be irrevocable by Seller, directly or
indirectly, whether by the dissolution of the Seller or in any manner
or for any reason.
ARTICLE VI
Intentionally Omitted
ARTICLE VII
Indemnification
7.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article VII. As used in
this Agreement, the term "Damages" shall mean all liabilities,
demands, claims, actions or causes of action, regulatory, legislative
or judicial proceedings or investigations, assessments, levies,
losses, fines, penalties, damages, costs and expenses, including,
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without limitation, reasonable attorneys', accountants',
investigators', and experts' fees and expenses, sustained or incurred
in connection with the defense or investigation thereof.
7.2 Indemnification Obligations of Seller. Subject to the
provisions of Section 7.3, Seller shall indemnify, save and keep
harmless Purchaser and its successors and permitted assigns
("Purchaser Indemnitees") against and from all Damages sustained or
incurred by any of them resulting from or arising out of or by virtue
of:
(a) any material inaccuracy in or breach of any
representation and warranty made by Seller in this Agreement or
in any closing document delivered to Purchaser in connection
with this Agreement;
(b) any material breach by Seller of, or failure by
Seller to comply with, any of its covenants or obligations
under this Agreement (including, without limitation, its
obligations under this Article VII); and
(c) the failure to discharge any liability or
obligation of Seller other than the Assumed Liabilities.
7.2 Limitation on Seller's Indemnification Obligations.
Seller's obligations pursuant to the provisions of Section 7.2 are
subject to the following limitations:
(a) the Purchaser Indemnitees shall not be entitled to
recover under Section 7.2(a): (i) until the total amount which
Purchaser would recover under Section 7.2(a), but for this
Section 7.3(a), exceeds $100,000, and then only for the excess
over $100,000; (ii) unless a claim for Damages has been
asserted by written notice, specifying the details of the
alleged misrepresentation or breach of warranty, delivered to
Seller prior to April 1, 1998; or (iii) if at or before the
time of Closing Mark Payne or Stuart Romenesko had actual
knowledge of the misrepresentation or breach of warranty;
(b) the Purchaser Indemnitees shall not be entitled to
recover under Section 7.2(b) or (c) hereof if indemnification
is also available under Section 7.2(a) hereof;
(c) the Purchaser Indemnitees shall not be entitled to
recover under Section 7.2:
(i) WITH RESPECT TO CONSEQUENTIAL DAMAGES,
INCLUDING CONSEQUENTIAL DAMAGES CONSISTING OF BUSINESS
INTERRUPTION OR LOST PROFITS, OR WITH RESPECT TO PUNITIVE
DAMAGES;
(ii) to the extent aggregate Damages under Section
7.3(a) exceed $10,000,000; and
(iii) to the extent the Damages are covered by
insurance (including title insurance) held by Purchaser.
7.4 Purchaser's Indemnification Covenants. Purchaser shall
indemnify, save and keep harmless Seller and its successors and
permitted assigns against and from all Damages sustained or incurred
by any of them resulting from or arising out of or by virtue of:
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(a) any material inaccuracy in or breach of any
representation and warranty made by Purchaser in this Agreement
or in any closing document delivered to Seller in connection
with this Agreement;
(b) any material breach by Purchaser of, or failure by
Purchaser to comply with, any of its covenants or obligations
under this Agreement (including, without limitation, its
obligations under this Article VII); or
(c) Purchaser's failure to pay, discharge and perform
any of the Assumed Liabilities.
7.5 Indemnification Exclusive Remedy. Indemnification
pursuant to the provisions of this Article VII shall be the exclusive
remedy of the parties for any misrepresentation or breach of any
warranty or covenant contained herein or in any closing document
executed and delivered pursuant to the provisions hereof with respect
to any matter which is the subject of this Article VII. Without
limiting the generality of the preceding sentence, no legal action
sounding in tort or strict liability may be maintained by any party.
ARTICLE VIII
Miscellaneous
8.1 References. The following terms are defined in the
Agreement:
Term Section
Accounts Receivable 1.2(f)
Affiliate 4.1(f)
Agreement Preamble
Assumed Liabilities 2.1
Business Recitals
Closing 3.2
Closing Date 3.2
Code 3.5
Control 4.1(f)
Damages 7.1
Disclosure Schedule 4.2
Employee(s) 6.1
Equipment 1.2(b)
ERISA 6.2
GAAP 2.2(a)
Intellectual Property 4.2(o)
Interim Financial Statements 4.2(f)
Inventory 1.2(b)
Leased Personalty 1.2(d)
Leased Premises 1.2(e)
Material Adverse Effect 4.2(b)
MW 3.3
Permits 4.2(k)
Purchased Assets Recitals
Purchase Price 3.1
Purchaser Preamble
Purchaser Indemnitees 7.2
Purchaser's Ancillary Documents 4.1(b)
Seller Preamble
Seller's Ancillary Documents 4.2(c)
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VVI 3.1
Trademarks 4.2(o)
Warrant 3.1
Welfare Plans 6.2
8.2 Sales and Transfer Taxes. Purchaser shall pay all sales,
use, transfer and conveyance taxes arising in connection with the
sale and transfer of the Purchased Assets to Purchaser pursuant to
this Agreement.
8.3 Publicity. Except as otherwise required by law, press
releases concerning this transaction shall be made only with the
prior agreement of the Seller and Purchaser.
8.4 Notices. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by
facsimile, by nationally recognized private courier, or by United
States mail. Notices delivered by mail shall be deemed given three
(3) business days after being deposited in the United States mail,
postage prepaid, registered or certified mail. Notices delivered by
hand by facsimile, or by nationally recognized private carrier shall
be deemed given on the first business day following receipt;
provided, however, that a notice delivered by facsimile shall only be
effective if such notice is also delivered by hand, or deposited in
the United States mail, postage prepaid, registered or certified
mail, on or before two (2) business days after its delivery by
facsimile. All notices shall be addressed as follows:
If to Seller,
addressed to:
Montgomery Ward Direct, L.P.
Interchange Tower, Suite 300
600 South Highway 169
St. Louis Park, Minnesota 55426
Attention: Chief Executive Officer
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 Purchaser,
addressed to:
ValueVision International, Inc.
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
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and/or to such other respective addresses and/or addressees as may be
designated by notice given in accordance with the provisions of this
Section 8.4.
8.5 Expenses. Each party hereto shall bear all fees and
expenses incurred by such party in connection with, relating to or
arising out of the execution, delivery and performance of this
Agreement and the consummation of the transaction contemplated
hereby, including, without limitation, attorneys', accountants' and
other professional fees and expenses.
8.6 Entire Agreement. This Agreement and the instruments to
be delivered by the parties pursuant hereto constitute the entire
agreement between the parties. Each exhibit and the Disclosure
Schedule shall be considered incorporated into this Agreement. Any
matter which is disclosed in any portion of the Disclosure Schedule
is deemed to have been disclosed for the purposes of all relevant
provisions of this Agreement. The inclusion of any item in the
Disclosure Schedule is not evidence of the materiality of such item
for the purposes of this Agreement and Seller's Ancillary Documents.
The parties make no representations or warranties to
each other, except as contained in this Agreement. Purchaser
acknowledges that it has conducted an independent investigation of
the financial condition, assets, liabilities, properties and
projected operations of the Business in making its determination as
to the propriety of the transaction contemplated by this Agreement,
and in entering into this Agreement has relied solely on the results
of said investigation and on the representations and warranties of
Seller expressly contained in this Agreement.
8.7 Non-Waiver. The failure in any one or more instances of
a party to insist upon performance of any of the terms, covenants or
conditions of this Agreement, to exercise any right or privilege in
this Agreement conferred, or the waiver by said party of any breach
of any of the terms, covenants or conditions of this Agreement, shall
not be construed as a subsequent waiver of any such terms, covenants,
conditions, rights or privileges, but the same shall continue and
remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party.
8.8 Applicable Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction,
effect and in all other respects by the internal laws of the State of
Illinois applicable to contracts made in that State.
8.9 Binding Effect; Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto, and their
successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended to confer on any person other than the
parties hereto, and their respective successors and permitted assigns
any rights, remedies, obligations or liabilities under or by reason
of this Agreement, including, without limitation, third party
beneficiary rights.
8.10 Assignability. This Agreement shall not be assignable by
either party without the prior written consent of the other party.
8.11 Amendments. This Agreement shall not be modified or
amended except pursuant to an instrument in writing executed and
delivered on behalf of each of the parties hereto.
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8.12 Headings. The headings contained in this Agreement are
for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first above written.
SELLER:
MONTGOMERY WARD DIRECT, L.P.
By: MW Direct General, Inc.,
the general partner
By:
Its:
PURCHASER:
VALUEVISION DIRECT MARKETING
COMPANY, INC.
By:
Its:
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EXHIBIT A
EXERCISABLE ON OR BEFORE, AND VOID AFTER,
5:00 P.M. MINNEAPOLIS TIME, AUGUST 8, 2003
Series P Certificate for _______ Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
VALUEVISION INTERNATIONAL, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
THIS CERTIFIES that __________________________________, 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 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
<PAGE>
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 __ day of September, 1996.
VALUEVISION INTERNATIONAL, INC.
By:
Its:
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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>
Exhibit B
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 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.
<PAGE>
(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.
(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.
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(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.
(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
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(iii) the right of Signature to conduct continuity
businesses.
(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
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,
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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
(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.
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(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 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.
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:
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(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 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
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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.
(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
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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 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 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
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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 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
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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.
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.
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(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 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 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,
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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,
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.
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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 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.
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(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;
(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
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performance in any material respect of 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
(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
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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 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:
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(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.
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 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
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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 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
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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
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 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
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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.
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
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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 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
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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.
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 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.
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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.
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:___________________________ BY:________________________
TITLE:________________________ TITLE:_____________________
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.
______________________________ __________________________
Robert L. Johander Nicholas M. Jaksich
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Exhibit C
AGREEMENT
THIS AGREEMENT is made as of July 27, 1996 between Signature
Financial/Marketing, Inc., a Delaware corporation ("Signature") and
ValueVision International, Inc., a Minnesota corporation ("VVI"),
which term shall include VVI's Affiliates.
R E C I T A L S
A. Signature and its subsidiaries are subsidiaries of Montgomery
Ward & Co., Incorporated, an Illinois corporation ("MW"). Signature
and its subsidiaries are referred to herein collectively as the
"Signature Companies".
B. Pursuant to an Asset Purchase Agreement of even date herewith,
Montgomery Ward Direct, L.P., a Delaware limited partnership which is
a wholly owned subsidiary of MW ("MWD") is selling, and ValueVision
Direct Marketing Company, Inc., a Minnesota corporation which is a
wholly owned subsidiary of VVI is purchasing, substantially all of
the assets of MWD. Following the purchase of such assets, VVI will
engage in a direct-mail and catalog business using certain service
marks of MW and offering MW's private label credit card, pursuant to
an Amended and Restated Operating Agreement of even date herewith
between MW and VVI (the "Amended and Restated Operating Agreement").
Capitalized terms which are not otherwise defined herein shall have
the meanings ascribed to them in the Amended and Restated Operating
Agreement.
C. VVI desires that the Signature Companies provide certain
services to VVI in connection with the VVI Catalog Business, and
Signature desires to cause the Signature Companies to provide such
services.
D. Signature desires that, in connection with both Television
Home Shopping and the VVI Catalog Business, VVI promote both the use
of the Card and credit protection programs offered from time to time
by the Signature Companies, and VVI is willing to do so.
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 agree
as follows:
1. List Support Services. For a period of three years,
commencing on the date hereof, Signature shall cause the Signature
Companies to provide the following list support services to VVI for
the benefit of the VVI Catalog Business (collectively, "Services"):
(a) the Signature Companies will provide list selection
support for the VVI Catalog Business, consisting of the following:
(i) prospecting for new buyers from the marketing
activity file;
(ii) selections of existing catalog buyers to
stimulate repeat purchasing, from the catalog buyer file
which presently is maintained for MWD by Fingerhut
Companies, Inc.;
<PAGE>
(iii) assistance in selection of potential catalog
buyers from customer lists rented or otherwise obtained by
VVI;
(iv) supplying marketing activity file and Cardholder
extract file data to VVI for its own research, modeling and
analysis, including the merge/purge of the data with VVI's
data file; and
(v) consulting with VVI employees related to any
modeling or research that VVI may conduct on its own.
List selection support shall include selection of promotable
accounts, elimination of do not solicits, merge/purge across
lists, application of scoring systems, and creation of final
output files. VVI will provide criteria to the Signature
Companies from time to time in order for the Signature Companies
to generate mailing lists meeting VVI's criteria. Signature will
provide a magnetic tape or disc, on a monthly basis, in machine
readable form, for use by VVI in mailing catalogs to customers and
prospective customers in accordance with the rights granted under
the Operating Agreement and the Related Agreements. Such list
selection support shall be of a nature comparable to that which
Signature provides itself in the conduct of its own businesses;
(b) the Signature Companies will provide such research
support for the VVI Catalog Business as VVI shall reasonably
require, including creation of scoring systems, back-end analysis
of mailings, and recommendations of file depth for scored
mailings. Research will also include special analyses such as
merchandise cross shopping habits or frequency of purchase across
cardholders. Such research support shall be in the form of
written reports or analyses of data in a form comparable to that
used by Signature in the conduct of its own businesses;
(c) in providing Services for VVI, Signature shall use the
same standard of care as it uses with respect to the processing of
its own data of similar kinds. Signature shall use its existing
data processing systems for the provision of Services and shall
not be required to acquire any additional computer hardware or
software. Signature shall provide the services of trained
associates, who shall devote substantially all of their business
time and attention to the performance of Services pursuant to this
Agreement. Signature presently estimates that the services of
four associates shall be required for the performance of Services,
but staffing levels shall be in Signature's sole discretion;
(d) as compensation for the Services to be rendered
pursuant to this paragraph 1, VVI shall reimburse Signature for
its out of pocket costs for performing such Services, including
(i) salaries or wages, fringe benefits and employment taxes with
respect to associates dedicated to the performance of Services,
(ii) any necessary travel or other out of pocket expenses, (iii)
costs of media and postage, and (iv) cost of data overlays.
Signature shall provide monthly invoices to VVI, setting forth the
amounts of such costs in reasonable detail with respect to the
previous month. Terms of payment of such invoices shall be net 30
days from the invoice dates. In the event VVI shall fail to pay
any invoice when due, and such failure shall continue for a period
of 30 days after Signature shall have delivered written notice to
VVI, Signature shall have the right to suspend the furnishing of
Services until such delinquency has been cured.
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2. Credit Insurance Products. In connection with the VVI Catalog
Business and Television Home Shopping, Signature shall make available
for sale by VVI from time to time those credit insurance products
which Signature deems appropriate, and shall provide to VVI, without
charge, a reasonable number of copies of all literature used
generally by Signature in connection with the promotion of such
insurance products for use by VVI in catalog mailings to its
customers. Signature shall have the sole right to approve any
application for a credit insurance product procured by VVI. VVI
shall refer all such customers who express an interest in purchasing
credit insurance to a licensed insurance agent (who may be an
employee of one of the Signature Companies) for the sale of such
credit insurance product. For each approved application for such a
credit insurance product, Signature shall cause one of the Signature
Companies to pay to VVI the sum of $25. Such payments shall be made
monthly with respect to applications accepted during the preceding
month.
3. Card Solicitations. Pursuant to the Restated Receivables Sale
and Purchase Agreement, VVI shall have the right to offer the use of
the Card to prospective purchasers of Product through Television Home
Shopping or the VVI Catalog Business. For each approved application
for a Card which VVI shall procure, Signature shall cause one of the
Signature Companies to pay to VVI the sum of $5. Such payments shall
be made monthly with respect to applications approved during the
preceding month.
4. Term. Subject to the remainder of this paragraph 4, the
provisions of paragraphs 2 and 3 shall continue in effect for the
duration of the Term. In the event the Operating Agreement shall be
terminated for any reason prior to the end of the Term, this
Agreement shall terminate concurrently with the termination of the
Operating Agreement. No termination of this Agreement shall affect
any rights which arose prior to termination.
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
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 Signature:
Signature Financial/Marketing, Inc.
200 N. Martingale Road
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<PAGE>
Schaumburg, Illinois 60173-2096
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 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 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.
7. 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 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.
8. 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
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<PAGE>
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.
9. 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.
10. Binding Effect. Subject to the provisions hereof and
thereof restricting assignment, this Agreement shall be binding upon
and shall inure to the benefit of the parties and their respective
successors and permitted assigns.
11. Entire Agreement. This Agreement 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.
12. 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.
13. 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.
14. 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, without giving effect to
the principles of conflicts of laws thereof.
15. 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.
16. 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.
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
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<PAGE>
assignment and any assignment made in contravention of this Section
16 shall be null and void.
17. Time. Time is to be considered of the essence for the
purposes of this Agreement.
18. Amendments and Modification. This Agreement may only be
amended or modified by a subsequent written agreement by the parties
hereto.
19. 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.
SIGNATURE FINANCIAL/MARKETING, INC. VALUEVISION INTERNATIONAL,
INC.
BY:___________________________ BY:__________________________
TITLE:________________________ TITLE:_______________________
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<PAGE>
Exhibit D
AMENDED AND RESTATED SERVICEMARK LICENSE AGREEMENT
THIS AMENDED AND RESTATED SERVICEMARK LICENSE AGREEMENT is made as
of this 27th day of July, 1996, by and 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 Servicemark License Agreement,
dated as of March 13, 1995 (the "Original Servicemark Agreement").
The Original Agreement was entered into in connection with an
Operating Agreement of even date herewith (the "Original Operating
Agreement"). The Original Servicemark Agreement granted to VVI a
license to use the "Marks" (as defined in the Original Servicemark
Agreement) in connection with VVI's television home shopping
business.
B. Pursuant to a Restructuring Agreement of even date herewith
(the "Restructuring Agreement"), a wholly owned subsidiary of VVI
will purchase substantially all of the assets of Montgomery Ward
Direct, L.P., a Delaware limited partnership which is a wholly owned
subsidiary of MW ("MWD"). MWD has been engaged in the direct-mail
business.
C. Pursuant to the Restructuring Agreement, the Original
Operating Agreement is being amended and restated, effective as of
the date hereof, to take into account the acquisition of the assets
of MWD and its entry into the direct-mail business (the "Amended and
Restated Operating Agreement").
D. As contemplated by the Restructuring Agreement, the parties
desire to amend and restate the Original Servicemark Agreement to
reflect the acquisition of the assets of MWD and the effects of the
amendment and restatement of the Original Operating Agreement.
Capitalized terms which are not otherwise defined herein shall have
the meanings ascribed to them in the Amended and Restated Operating
Agreement.
A G R E E M E N T S
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged by the parties, the
Original Servicemark Agreement is hereby amended and restated to read
as follows:
I. LICENSE GRANT
Section 1.1 The License. During the term of this Servicemark
License Agreement, and subject to the terms and conditions hereof, MW
hereby grants to VVI the non-exclusive (except to the extent set
forth in the Amended and Restated Operating Agreement),
nontransferable, nonassignable and royalty-free right and license,
without the right to grant sublicenses to any party, to use the
"Marks", as hereinafter defined, solely in the conduct of the
"Permitted Business", as herein defined, throughout the "Territory",
as hereinafter defined. For the purposes hereof, the term "Marks"
<PAGE>
shall include any future stylized versions of any of the Marks which
MW (or, in the case of the "Lechmere" Mark, Lechmere, Inc.) may
hereafter adopt. In connection with VVI's television home shopping
business, MW authorizes any cable system, television station, or
other cable or broadcast television outlet to which VVI provides
programming in accordance with this Servicemark License Agreement to
transmit such programming to its subscribers or viewers. For
purposes of this Servicemark License Agreement:
(a) the capitalized term "Marks" shall mean, collectively
and individually as the context may require, the MW Mark, as
herein defined, and the "Auxiliary Marks", as herein defined;
(b) the capitalized term "MW Mark" shall mean the
servicemark "Montgomery Ward", which is registered with the United
States Patent Office as No. 1,170,705;
(c) the capitalized term "Auxiliary Marks" shall mean the
servicemarks set forth on Exhibit A hereof, which may be amended
from time to time upon mutual agreement of the parties;
(d) the capitalized term "Permitted Business" shall mean
"Television Home Shopping" and "Catalog Activities", as such terms
are defined in the Amended and Restated Operating Agreement; and
(e) the capitalized term "Territory" shall mean (x), with
respect to Television Home Shopping, the United States of America,
its territories and possessions, and (y) with respect to Catalog
Activities, the world.
Notwithstanding anything to the contrary contained herein or in the
Amended and Restated Operating Agreement, MW acknowledges that
because of the satellite footprint, VVI's Television Home Shopping
programming may be received outside of the Territory in portions of
Canada and Mexico, and MW further acknowledges and agrees that VVI
shall not be in violation hereof simply by virtue of the reception of
VVI's programming in such locations outside of the Territory.
Section 1.2 Use of the MW Mark. The MW Mark shall be used in any
case in which VVI promotes to its viewers or customers the use of the
Card for the making of purchases. As agreed between MW and VVI, VVI
shall display the Marks in connection with Television Home Shopping
for other purposes as well, such as an acknowledgment that a
programming segment has been produced "in cooperation with" MW or as
the name of a programming segment, such as a program entitled
"Electric Ave. & More".
II. OWNERSHIP
Section 2.1 VVI Acknowledgment. VVI acknowledges (i) that MW is
the owner of the entire right, title and interest to and in the
Marks, including any inurements thereto, subject to any licenses that
MW has previously granted; and (ii) the validity of MW's title to the
Marks. VVI agrees not to challenge or cooperate in challenging MW's
rights in the Marks, and, in connection therewith, VVI further
covenants and agrees that it shall not do any of the following:
(a) use the Marks or marks confusingly similar thereto, in
connection with the packaging, use, advertising, sale or
distribution of any merchandise or services other than as
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<PAGE>
permitted by this Agreement in connection with the conduct of the
Permitted Business;
(b) apply for or seek registration anywhere at any time of
the Marks or marks confusingly similar thereto or assist any third
party in doing so (it being agreed that, when called upon in
writing by MW within a reasonable time after MW first learns of
the registration or use by VVI of words or marks that are
confusingly similar to the Marks, VVI shall, at the election and
expense of MW, either assign to MW in writing any rights which it
might have therein or release and cancel any rights of record
which it might have therein); or
(c) use the Marks or any components or any words or marks
confusingly similar thereto, in any corporate, partnership or
trade name.
Nothing in this Section 2.1 is intended to give MW greater rights to
the Marks than are otherwise available to it under the Lanham Act, or
any other statutory or common law relating to marks or tradenames.
Section 2.2 MW Acknowledgment. MW shall not use or claim any
rights in any mark used by VVI in connection with the Permitted
Business, other than the Marks, other marks to which MW has rights,
and marks that are confusingly similar to the foregoing.
III. LABELING
Section 3.1 Legends. VVI shall, to the extent reasonably
specified by MW, accompany the use of the Marks with such legends as
may be reasonably required or desired for protecting the Marks or
other purposes relating to this Amended and Restated Servicemark
License Agreement.
Section 3.2 Specifications. VVI shall comply with MW's
reasonable written specifications as to VVI's affixation, colors, and
means of displaying the Marks. MW shall contemporaneously herewith
provide VVI with MW's written specifications as to VVI's affixation,
colors and means of displaying the Marks. MW shall provide VVI with
not less than forty-five (45) days advance written notice of any
changes to said specifications. VVI may continue to follow prior
specifications during said forty-five (45) days or until VVI has
consumed all materials prepared in accordance with said prior
specifications, whichever first occurs; provided, however, that MW
may purchase said materials from VVI at VVI's cost for said
materials. The cost of preparation of any items required to comply
with revised MW specifications which are not consumable shall be
borne as agreed by the parties.
IV. QUALITY CONTROL AND COVENANTS
OF VVI
Section 4.1 Standards. In connection with the use by VVI of the
Marks in the Permitted Business, VVI expressly recognizes the
importance to MW of MW's reputation and goodwill and of maintaining
high, uniformly applied standards of quality in the selection,
provision, advertising, marketing and distribution of merchandise.
Accordingly, VVI agrees that it shall:
(a) offer customer service (via a toll-free telephone
number for Television Home Shopping) for use by customers during
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VVI's normal business hours, which currently are 8:30 a.m. to 5:00
p.m. Minneapolis, Minnesota time, Monday through Friday;
(b) on average, fulfill customer orders (other than so
called "reservation orders" where the delay in shipping is
disclosed to the customer as part of the programming) within ten
(10) days of receipt, except for merchandise that is drop-shipped
or that is subject to back order or other delay on an exception
basis, or for which shipment will be delayed due to a force
majeure condition (as defined in the Amended and Restated
Operating Agreement) it being expressly understood and agreed that
for purposes of this Agreement, orders shall be deemed fulfilled
when they leave the warehouse/fulfillment facility and are loaded
onto trucks for delivery to customers;
(c) offer merchandise of a quality that is substantially
similar to that offered in the television home shopping industry
and the direct-mail marketing industry in general;
(d) provide customers the right to return merchandise
purchased from VVI for a refund, on terms generally consistent
with the return policies of VVI, as provided in the Amended and
Restated Operating Agreement;
(e) provide order placement and order tracing services on
a timely basis, consistent with industry practices in the
television home shopping industry and the direct-mail industry;
(f) provide courteous customer service with respect to
customer inquiries on a timely basis, consistent with industry
practices in the television home shopping industry and the direct-
mail industry;
(g) comply in all material respects with all applicable
laws and regulations which specifically relate to consumer rights
or the performance in any material respect of VVI's obligations
under this Amended and Restated Servicemark License Agreement, the
Operating Agreement, or the Receivables Sale and Purchase
Agreement, as amended; and
(h) not offer to take or accept orders for merchandise in
quantities that materially exceed the quantities that VVI can
arrange to promptly ship within a reasonable time after the order
is taken consistent with practices in the television home shopping
industry and the direct-mail industry unless the delay in shipping
is disclosed to the customer as part of the VVI programming,
including without limitation so called "reservation orders", or
unless the delay in shipping is caused by MW.
Section 4.2 Provision of Materials for Inspection. Upon written
request of MW, VVI will provide copies or samples of the following
materials (the "Materials") to MW for its prior review and approval,
which approval shall not be unreasonably withheld or delayed:
(a) proposed written materials for use in connection with
merchandise or services offered in programming, catalogs or other
materials that utilize any of the Marks; and
(b) all advertising and promotional material and scripts
of any kind intended for use in connection with programming or
direct-mail marketing that utilizes any of the Marks.
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All Materials shall be deemed to be confidential information of VVI
that is subject to Section 16 of the Amended and Restated Operating
Agreement, including, without limitation, the provisos of Section
16(b)(i), (ii) and (iii).
Section 4.3 MW Objections to the Use of the Marks. In the event
that MW reasonably objects to any of the Materials, or the
merchandise or services offered on programming or through direct-mail
that utilizes the Marks ("Objectionable Products"), MW will notify
VVI in writing of the specific objectionable portions of the
documents or scripts or Objectionable Products, and VVI agrees not to
(i) use the objectionable portions of the documents or scripts to
market or offer for sale merchandise or services, or (ii) offer the
Objectionable Products, in programming or through sale by direct-mail
that in any way utilizes the Marks. MW agrees that its objections
will not be arbitrary or capricious, but will be based on MW's good
faith belief that the Materials or Objectionable Products could
reasonably be believed to be detrimental to MW, its reputation, image
or goodwill.
Section 4.4 Right to Inspect. VVI hereby agrees, upon reasonable
request, to permit MW, at all reasonable times, to inspect (i) the
merchandise to be marketed or sold by VVI in connection with the
Marks and (ii) the methods of VVI relating to the standards described
in Section 4.1 (the "Section 4.1 Standards"), and VVI also agrees
that any such inspection may occur on the premises of VVI. Any
information obtained by MW as a result of such inspection shall be
deemed to be confidential information of VVI that is subject to
Section 16 of the Operating Agreement, including, without limitation,
the provisos of Section 16(b)(i), (ii) and (iii).
Section 4.5 Certain Assurances. During the term of this
Servicemark License Agreement, VVI covenants and agrees to provide
MW, upon MW's reasonable request, reasonable assurances of its
material compliance with the Section 4.1 Standards. During the term
of this Agreement VVI will not use or promote the use of any credit
cards or facilities other than the Card and other facilities widely
accepted by retailers generally in the market in question (including,
but not limited to, American Express, MasterCard, VISA, and Discover,
but excluding any such card or facility that uses the ValueVision
trade name or servicemark, or any other trade name or servicemark
registered or controlled by VVI or its affiliates, except as may be
permitted by the Receivables Sale and Purchase Agreement), provided
that a Permitted ValueVision Card Use will be permitted (i) during
the term of the Receivables Sale and Purchase Agreement to the extent
permitted by the Receivables Sale and Purchase Agreement, and (ii) at
any time after the termination of the Receivables Sale and Purchase
Agreement.
Section 4.6 Governmental Actions. During the term of this
Agreement, VVI hereby agrees that it will promptly provide MW copies
of all complaints or inquiries received by VVI from any governmental
agency relating to or in connection with the merchandise or services
offered and sold in programming or through direct-mail that in any
way utilizes the Marks, including those relating to any and all
advertising or the terms and conditions with respect to the sale of
such merchandise or services to the public, provided that copies of
such complaints that are received from a governmental agency in
response to isolated customer complaints need only be so provided if
they are material. VVI agrees that, except to the extent a response
is required by a governmental agency or by applicable law, regulation
or policy before it is reasonably possible to obtain MW's comments or
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approval, it will not respond to any such complaint or inquiry
without submitting such response to MW for (i) MW's comments, not to
be unreasonably delayed, on the form and substance of VVI's response,
and (ii) MW's approval, not to be unreasonably withheld or delayed,
of any response that specifically relates to MW's Products, MW's
Services, the Card or the Marks. In no event shall VVI enter into
any settlement agreement, consent decree, or other arrangement with
any governmental agency specifically relating to MW's merchandise,
services, credit card or Marks without the express written consent of
MW, which shall not be unreasonably withheld.
V. REGISTRATION, MAINTENANCE, POLICING AND PROTECTION
Section 5.1 Infringements or Challenges to the Marks. VVI shall
promptly advise MW of any infringements or challenges to its use of
the Marks or package simulations that shall come to VVI's attention.
MW agrees to prosecute any infringer of the MW Mark, or any infringer
of any of the Auxiliary Marks if such infringement of an Auxiliary
Mark is reasonably likely to adversely affect the Permitted Business.
VVI will not sue any such infringer either in its own or in the name
of MW. Any recovery from a proceeding attributable to infringement
by a third party using a mark confusingly similar to any of the
Marks, whether by judgment or settlement, shall be paid to MW, except
to the extent that such damages specifically arise from the lost
profits or similar damages to the Permitted Business and the judgment
entered specifically allocates a portion of the judgment, after
recovery of all of MW's costs and expenses, to VVI's lost profits or
damages to the Permitted Business. VVI shall not enter into a
settlement regarding an infringement involving the use of the Marks
without the prior written approval of MW. MW will obtain VVI's
consent, not to be unreasonably withheld or delayed, to any such
settlement if it permits a continuing use by the alleged infringer of
the Marks that could reasonably have an adverse impact on VVI's
rights under this Amended and Restated Servicemark License Agreement.
Section 5.2 Control of Litigation. To the extent that MW
initiates any lawsuit to abate such infringement, as described in
Section 5.1, MW shall control such litigation, and MW shall pay all
of the costs and expenses of said lawsuit, and shall have the right
to select counsel with respect thereto. VVI agrees to cooperate in
any such litigation, at MW's expense, to the extent reasonably
required by MW.
VI. TERM AND TERMINATION
Section 6.1 Term. The Servicemark License Agreement shall take
effect upon the date first written above, and shall remain in effect
until the date of termination of the Amended and Restated Operating
Agreement.
Section 6.2 Termination of Use of the Marks. In the event of the
termination of this Amended and Restated Servicemark License
Agreement, VVI shall forthwith cease to use, and not thereafter
resume the use, of the Marks or any confusingly similar marks, alone
or in combination with any letters, other words, or designs, in any
manner.
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IN WITNESS WHEREOF, the parties hereto have executed this Amended
and Restated Servicemark License Agreement effective as of the date
first set forth above.
VALUEVISION INTERNATIONAL, INC.,
a Minnesota corporation
By
Its
MONTGOMERY WARD & CO., INCORPORATED,
an Illinois corporation
By
Its
Lechmere, Inc., a wholly owned subsidiary of MW, joins in the
foregoing agreement for the purposes of granting a license to the
Mark "Lechmere", and any stylized versions hereof which are hereafter
adopted by Lechmere, Inc., subject to all of the terms and conditions
of this Agreement.
LECHMERE, INC.
By:___________________________
Its:__________________________
<PAGE>
EXHIBIT A
AUXILIARY MARKS
Auto Express
Electric Ave.
Electric Ave. & More
Gold N' Gems
Home Ideas
Kids Store
Lechmere
Montgomery Ward Direct
Romantic Moods
Rooms & More
<PAGE>
Exhibit E
[Date]
ValueVision International, Inc.
6740 Shady Oak Road
Minneapolis, Minnesota 55344
Attention:
Re: Credit Card License & Receivables Sale Agreement Between
Montgomery Ward & Co., Incorporated ("Montgomery Ward")
and ValueVision International, Inc. ("ValueVision")
dated March 13,
1995 ("Credit Card
Agreement")
Dear :
Effective April 1, 1996, Montgomery Ward entered into an interim
Consumer Credit Card Program Agreement ("Interim Agreement") with
Monogram Credit Card Bank of Georgia ("Monogram"), which, like
Montgomery Ward Credit Corporation ("MWCC"), is a wholly owned
subsidiary of General Electric Capital Corporation. Pursuant to the
Interim Agreement, Monogram is issuing the "Card" and administrating
the "Revolving Charge Plan" as contemplated by the Credit Card
Agreement. The new arrangements with Monogram differ from the prior
Account Purchase Agreement between Montgomery Ward and MWCC dated
June 24, 1988, as amended ("Account Purchase Agreement") in that the
receivables are created directly between the customer and Monogram
rather than being sold by the retailer as is generally the case under
the Account Purchase Agreement. The Interim Agreement is to be
replaced by various definitive agreements to be entered into among
Montgomery Ward, Monogram, MWCC and their affiliates ("Definitive
Agreements").
In connection with the Definitive Agreements, the acquisition by
ValueVision of the assets of Montgomery Ward Direct, L.P.
("Montgomery Ward Direct"), and the restructuring of various
arrangements between ValueVision and Montgomery Ward (such new
arrangements between Montgomery Ward and ValueVision, including those
relating to Montgomery Ward Direct, herein referred to as
"ValueVision Agreements"), the parties to this letter agreement
hereby agree to make such modifications to the Credit Card Agreement
as are required or reasonably desired to reflect, comply with, and be
consistent with the terms of the ValueVision Agreements and
Definitive Agreements, and to permit Montgomery Ward and its
affiliates to comply with their obligations in connection with the
Definitive Agreements. Such modifications to the Credit Card
Agreement will include, but will not be limited to, the following:
1. References to the "Account Purchase Agreement" shall be
changed to references to the Definitive Agreements.
2. References to the "Operating Agreement," "Service Mark
License Agreement," and "Permitted Business" shall be
changed to refer to such agreements as they will be modified
as part of the ValueVision Agreements, and to reflect the
permitted businesses under the ValueVision Agreements as to
which ValueVision will be permitted to use the Montgomery
Ward "Card."
<PAGE>
August 13, 1996
Page 2
3. The defined term "Specified Percentage" will be modified by
deleting the reference to 3% and substituting a reference to
1 1/2%.
4. The fees payable to ValueVision for approved credit card
applications obtained by it through its television
programming will also apply to approved applications
obtained by ValueVision through the Montgomery Ward Direct
catalog business conducted by ValueVision.
5. Modifications will be made that are needed to reflect the
fact that under the Definitive Agreements receivables will
be created directly between the customer and Monogram rather
than being sold by the retailer as is the case under the
Account Purchase Agreement.
Please indicate your agreement to the foregoing by executing and
returning to the undersigned a copy of this letter.
Very truly yours,
MONTGOMERY WARD & CO., INCORPORATED
By:
Its:
Accepted and Agreed to:
VALUEVISION INTERNATIONAL, INC.
By:
Its:
<PAGE>
Exhibit F
AMENDED AND RESTATED WARRANT AGREEMENT
Warrant Agreement dated as of this 27th day of July, 1996, by and
among ValueVision International, Inc., a Minnesota corporation (the
"Company"), Montgomery Ward & Co., Incorporated, an Illinois
corporation ("MW") and Montgomery Ward Direct, L.P., a Delaware
limited partnership ("MWD").
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. 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.
D. Pursuant to a certain Restructuring Agreement, dated as of
even date herewith, between the Company and MW (the "Restructuring
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 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").
E. MWD is a wholly owned subsidiary of MW. 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. has agreed to deliver 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").
F. MW, MWD and VVI desire to amend and restate the Original
Warrant Agreement to set forth the terms under which the New Warrants
will be issued and the Series A-B Warrants shall 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 and MWD
agree that the Original Warrant Agreement shall be amended and
restated to read as follows:
<PAGE>
1. 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 Warrants: "Exchange Warrants" has the meaning
assigned thereto in Recital D.
(i) Exercise Price Per Share: The "Exercise Price Per
Share" shall mean:
(i) 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; and
(ii) in the case of Series A-B Warrants, the exercise
price payable for each Warrant Share upon
exercise of a Series A or Series B Warrant set
forth on the Vesting Schedule to the Original
Warrant Agreement, subject to adjustment from
time to time pursuant to Section 6.1.
(j) Existing Warrants: Warrants issued pursuant to the
Securities Purchase Agreement.
(k) Expiration Date: August 8, 2003, or if such day is
not a Business Day, the next succeeding day which is a Business
Day.
(l) HSR Act: "HSR Act" has the meaning assigned thereto
in Section 5.9.
(m) 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
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<PAGE>
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.
(n) MPLP: "MPLP" has the meaning assigned thereto in
Section 13.
(o) MW: "MW" has the meaning assigned thereto in the
Preamble.
(p) MWD: "MWD" has the meaning assigned thereto in the
Preamble.
(q) MWD Warrants: "MWD Warrants has the meaning assigned
thereto in Recital E.
(r)
(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
Restructuring Agreement and the Asset Purchase Agreement, and all
other warrants that may be issued in their place (together
evidencing the right to purchase an aggregate of 2,969,455 shares
of Common Stock), subject to adjustment pursuant to Section 6
hereof. The New Warrants include the Exchange Warrants and the
MWD Warrants.
(v) Original Warrant Agreement: That certain Warrant
Agreement, dated August 8, 1995, between the Company and MW.
(w) Restructuring Agreement: "Restructuring Agreement"
has the meaning assigned thereto in the Recitals.
(x) Series A-B Warrants: "Series A-B Warrants" has the
meaning assigned thereto in the Recitals.
(y) Series C-O Warrants: "Series C-O Warrants" has the
meaning assigned thereto in the Recitals.
(z) SEC: The Securities and Exchange Commission.
(aa) Securities Purchase Agreement: "Securities Purchase
Agreement" has the meaning assigned thereto in the Recitals.
(ab) Term: "Term" has the meaning assigned thereto in
Section 15.
(ac) Warrants: New Warrants and Series A-B Warrants.
(ad) Warrant Shares: "Warrant Shares" has the meaning
assigned thereto in Section 2.
3
<PAGE>
2. Warrant Shares. Each New Warrant and each Series A-B
Warrant will initially be exercisable for one share of Common Stock
(a "Warrant Share"), subject to adjustment pursuant to Section 6
hereof.
3. Vesting. All Series A-B Warrants are fully vested. All New
Warrants shall be fully vested when issued.
4. 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.
5. Exercise of Warrants.
5.1 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.
5.2 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.
5.3 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.
5.4 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.
4
<PAGE>
5.5 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.
5.6 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.
5.7 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.
5.8 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.
5.9 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.
5
<PAGE>
6. 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.
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
aggregate number and kind of shares, subject to Section 6.4.
6.2 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.
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
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<PAGE>
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.
7. 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,
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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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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.
13. 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
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<PAGE>
(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 Merchant Partners,
Limited Partnership, a Delaware limited partnership ("MPLP"), or
(iii) by MPLP to its partners, and the partners or stockholders
(direct or remote) of such partners.
14. 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").
15. 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.
16. Cancellation and Return of Series C-O Warrants. Effective as
at the date hereof, the Series C-O Warrants issued pursuant to the
Original Warrant Agreement are deemed to have expired unexercised and
are hereby terminated. All Series C-O Warrants shall be surrendered
to the Company within 30 days of the date hereof.
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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
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EXHIBIT A
EXERCISABLE ON OR BEFORE, AND VOID AFTER,
5:00 P.M. MINNEAPOLIS TIME, AUGUST 8, 2003
Series P Certificate for _______ Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
VALUEVISION INTERNATIONAL, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
THIS CERTIFIES that __________________________________, 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 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
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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 __ day of September, 1996.
VALUEVISION INTERNATIONAL, INC.
By:
Its:
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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.
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Exhibit G
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
Amended and Restated Registration Rights Agreement dated as of
July 27, 1996, by and among ValueVision International, Inc., a
Minnesota corporation (the "Company"), Montgomery Ward Direct, L.P.,
a Delaware limited partnership ("MWD"), and Montgomery Ward & Co.,
Incorporated, an Illinois corporation ("MW").
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 Restructuring Agreement, dated as of
even date herewith, between the Company and MW (the "Restructuring
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
consideration for the sale of all of MWD's assets, New Warrants to
purchase an aggregate of 1,484,993 shares of Common Stock.
F. In connection with the cancellation of the Series C-O Warrants
and the issuance of the New Warrants, the parties desire to amend and
restate the Original 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
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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).
(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
or a Series A-B 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) Existing Warrants: Warrants issued pursuant to the
Securities Purchase Agreement.
(m) Inspectors: See Section 5(g).
(n) MW: See the Preamble.
(o) MWD: See the Preamble.
(p) NASD: National Association of Securities Dealers,
Inc. and NASDAQ: NASD Automated Quotation System.
(q) New Warrants: Series P warrants issued pursuant to
the Restructuring Agreement and the Asset Purchase Agreement.
(r) 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.
(s) Person: An individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any
department or agency thereof.
(t) Piggyback Notice: See Section 2(a).
(u) Piggyback Registration: See Section 2(a).
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(v) Piggyback Registration Rights: See Section 2(a).
(w) 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.
(x) Public Offering: A public offering of any of the
Company's equity or debt securities pursuant to a registration
statement under the Securities Act.
(y) Records: See Section 5(g).
(z) 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.
(aa) Registration Notice: See Section 2(a).
(ab) 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.
(ac) Registrable Securities: Any Shares or Warrant Shares
issued to MW or MWD, 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 Warrant Agreement.
(ad) 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.
(ae) SEC: The Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or
the Exchange Act.
(af) Securities Act: The Securities Act of 1933, as
amended.
(ag) Securities Purchase Agreement: See Recital A.
(ah) Series A-B Warrants: See Recital B.
(ai) Series C-O Warrants: See Recital B.
(aj) Shares: See Recital A.
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(ak) Warrant Agreement: That certain Amended and Restated
Warrant Agreement, dated as of July 27, 1996, among the Company, MW
and MWD.
(al) Warrant Shares: All shares of Common Stock issued or
issuable upon exercise of any or all Series A-B Warrants and 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.
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
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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
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
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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 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
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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
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")
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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
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
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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
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
9
<PAGE>
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 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,
10
<PAGE>
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
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
11
<PAGE>
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 MWD 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,
(i) if to MW, addressed to:
MONTGOMERY WARD & CO, INCORPORATED
Montgomery Ward Plaza
619 West Chicago Avenue
Chicago, IL 60671
Attention: General Counsel
(ii) if to MWD, addressed to:
MONTGOMERY WARD DIRECT, L.P.
Interchange Tower, Suite 300
600 South Highway 169
St. Louis Park, Minnesota 55426
Attention: Chief Executive Officer
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
(iii) 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
12
<PAGE>
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. 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:
13
<PAGE>
Exhibit H
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of this 27th day of July, 1996
between Montgomery Ward & Co., Incorporated, an Illinois corporation
("Pledgor") and ValueVision International, Inc., a Minnesota
corporation ("Secured Party").
R E C I T A L S:
A. Pursuant to paragraph 10(b) of an Amended and Restated
Operating Agreement of even date herewith (the "Restated Operating
Agreement"), Pledgor agreed to an "Advertising Commitment" to place
$20,000,000 of advertising through VVI.
B. As collateral security for the performance of the "Advertising
Commitment", VVI desires to receive a pledge of 1,637,138 Class P
Warrants to purchase shares of common stock, $.01 par value per
share, of VVI (the "Warrants"), and MW is willing to pledge said
securities to VVI.
NOW, THEREFORE, for good and valuable consideration, Pledgor
hereby agrees with Secured Party as follows:
1. Definitions. As used herein, the following terms shall have
the following meanings:
(a) "Pledged Securities" shall mean the Warrants, any
shares of common stock of VVI issuable upon exercise of the
Warrants, and any securities issued in exchange or in
substitution, for the Warrants or shares or as stock dividends
thereon, and any and all proceeds of any of the foregoing.
(b) "Obligations" shall mean the the obligation of MW
under paragraph 10(b) of the Restated Operating Agreement to place
$20,000,000 of advertising through VVI, all as set forth in the
Restated Operating Agreement.
2. Security Interest. As collateral security for the payment
and performance of the Obligations, Pledgor hereby pledges to Secured
Party and grants to Secured Party a security interest in and to the
Pledged Securities.
3. Deliveries to Secured Party.
(a) Concurrently with the execution of this Pledge
Agreement, Pledgor hereby delivers to Secured Party certificates
representing the Pledged Securities, with duly executed stock
powers attached, endorsed in blank.
(b) If Pledgor shall become entitled to receive or shall
receive any certificate representing stock issued in exchange for,
in substitution of, or as a stock dividend on any of, the Pledged
Securities, Pledgor agrees to deliver the same promptly to Secured
Party with the endorsement of Pledgor or with duly executed stock
powers endorsed in blank, to be held by Secured Party as further
security for the Obligations. If Pledgor shall exercise any of
the Warrants, Pledgor shall deliver to Secured Party certificates
representing the shares issued upon exercise of the Warrants,
together with duly executed stock powers with respect thereto
endorsed in blank.
<PAGE>
4. Representations, Warranties and Agreements of Pledgor.
Pledgor hereby represents and warrants to, and agrees with, Secured
Party as follows:
(a) Except for the security interest granted herein,
Pledgor is the owner of the Pledged Securities, free and clear of
any and all security interests, liens or other encumbrances.
(b) Pledgor has full power and authority to enter into
this Pledge Agreement and will defend the Pledged Securities
against the claims and demands of any persons or entities adverse
to the claim of Secured Party.
(c) Until the Obligations shall be paid and discharged in
full, the Pledged Securities shall remain free and clear of any
and all security interests, liens and other encumbrances, except
the security interest granted herein.
(d) Pledgor will reimburse Secured Party for all costs,
expenses and fees, including reasonable attorneys' fees, incurred
by Secured Party in enforcing the security interest granted
herein.
(e) Pledgor will, at any time and from time to time,
execute such further instruments, documents, financing statements
and other writings, and do such other acts and things as Secured
Party shall deem necessary or advisable to effect the purposes of
this Pledge Agreement.
5. Default; Remedies. Upon the occurrence of any default in
payment of the Obligations or any default hereunder, Secured Party
shall have, in addition to any other rights and remedies it may have,
all of the rights and remedies of a Secured Party under applicable
law, including, without limitation, the right to sell or otherwise
dispose of and deliver the Pledged Securities at public or private
sale or to propose to retain the Pledged Securities in satisfaction
of the Obligations. The net proceeds of any such sale or other
disposition shall be applied first to the payment of the costs and
expenses incurred in connection with such sale or disposition or
incidental to the care of safekeeping of the Pledged Securities or in
any way relating to the rights of Secured Party hereunder, including
reasonable attorneys' fees and legal expenses, and then to the
payment of the Obligations. Pledgor shall remain liable for any
deficiency remaining unpaid after such application. Pledgor agrees
that ten (10) days' notice of the time and place of any public sale
or of the time after which a private sale or other intended
disposition is to take place is reasonable notification of such
matters.
6. Transfers by Pledgor. Except as permitted in paragraph 7
hereof, Pledgor shall not sell, assign, transfer or otherwise dispose
of, grant any option with respect to, or mortgage, pledge or
otherwise encumber the Pledged Securities or any interest therein.
Except as provided in paragraph 7, the event of a sale, assignment,
transfer or other disposition of or mortgage, pledge or other
encumbrance of the Pledged Securities, the Pledged Securities so
sold, assigned, transferred or otherwise disposed of or mortgaged,
pledged or otherwise encumbered shall remain subject to the
provisions of this Pledge Agreement, and the purchaser, assignee,
transferee or other acquiror, mortgagee or pledgee shall agree in
writing, in form and substance reasonably satisfactory to Secured
Party, to be bound by all the terms of this Pledge Agreement with the
same force and effect as if such transferee were a party hereto.
7. Partial Releases. As long as no Event of Default (as
defined in the Restated Operating Agreement) shall have occurred with
2
<PAGE>
respect to the Obligations and be continuing, Secured Party shall
from time to time make a partial release of the Pledged Securities to
enable Pledgor to sell such Pledged Securities provided that all net
proceeds from the sale of any Pledged Securities (net of income taxes
payable by virtue of the sale of such Pledged Securities) shall be
applied to the payment of the Obligations. In addition, at the end
of each one year period, commencing on the first anniversary of the
date hereof and on each succeeding anniversary, Secured Party shall
release from this Security Agreement a number of the Pledged
Securities which bears the same ratio to the original total number of
Pledged Securities as the amount of the Advertising Commitment
expended by MW during the year then ended bears to $20,000,000.
8. Rights. Unless and until an Event of Default shall have
occurred hereunder or under the Restated Operating Agreement with
respect to the Obligations, Pledgor shall be entitled to exercise all
voting rights with respect to the Pledged Securities and shall be
entitled to receive all dividends and distributions thereon.
9. Term. This Pledge Agreement and the security interest
created hereby shall remain in full force and effect until all of the
Obligations shall have been paid and performed in full, at which time
this Agreement shall terminate and the Pledged Securities shall be
returned to Pledgor.
10. Miscellaneous.
(a) The various headings of this Pledge Agreement are
inserted for convenience only and shall not affect the meaning or
interpretation of this Pledge Agreement or any provision hereof.
(b) No right or remedy provided for herein is intended to
be exclusive of any other right or remedy, but every such right or
remedy shall be cumulative and shall be in addition to every other
right or remedy herein granted or now or hereafter existing at law
of in equity.
(c) No failure or delay on the part of Secured Party in
the exercise of any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such right or remedy preclude other or further exercise or the
exercise of any other right or remedy.
(d) This Pledge Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
(e) If any provision hereof shall be deemed invalid or
unenforceable, such invalidity or unenforceability shall not
affect the validity and enforceability of any other provision
hereof.
(f) This Pledge Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois.
(g) No change, amendment or modification of this Pledge
Agreement shall be valid unless the same shall be in writing and
signed by all of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement on the date first written above.
MONTGOMERY WARD & CO.,
INCORPORATED
3
<PAGE>
By:________________________
Vice President
VALUEVISION INTERNATIONAL,
INC.
By:________________________
Vice President
4
AGREEMENT
THIS AGREEMENT is made as of July 27, 1996 among Merchant
Advisors, Limited Partnership, a Delaware limited partnership
("MALP"), 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. Pursuant to a Restructuring Agreement of even date herewith
between MW and VVI (the "Restructuring Agreement"), it is
contemplated that MW and VVI will restructure their existing business
relationship, and that a subsidiary of VVI will acquire all of the
assets of Montgomery Ward Direct, L.P., a Delaware limited
partnership.
B. MALP, MW and VVI are all of the partners of Merchant
Partners, Limited Partnership ("MPLP").
C. It is contemplated that upon the closing of the
transactions contemplated by the Restructuring Agreement, the parties
will make additional capital contributions to MPLP. In the case of
MW and VVI, these capital contributions will take the form of Series
P Warrants of VVI to purchase shares of VVI at a purchase price of
$.01 per share (the "New Warrants"). In the case of MALP, its
capital contribution will take the form of cash or a promissory note.
Concurrently with the making of said capital contributions, they will
execute Amendment No. 3 to the First Amended and Restated Limited
Partnership Agreement of MPLP, substantially in the form attached
hereto as Exhibit A (the "Amendment").
D. The parties desire to enter into this Agreement, for the
purposes of agreeing to execute the Amendment and determining the
amounts to be set forth in paragraph 3 of the Amendment.
A G R E E M E N T S
NOW, THEREFORE, the parties agree as follows:
1. On the date of closing of the acquisition of the assets of
MWD as contemplated by paragraph 1 of the Restructuring Agreement
(the "MWD Closing Date"), the parties hereto shall execute and
deliver the Amendment, and make the capital contributions
contemplated thereby.
2. For the purposes of determining the values of the capital
contributions of MW and VVI, as set forth in paragraph 3 of the
Amendment, the number of warrants to be contributed by MW and VVI,
respectively, to MPLP shall be multiplied by the last sale price of
VVI's shares, as quoted on NASDAQ, on the MWD Closing Date.<PAGE>
3. In order to determine the amount of the capital
contribution of MALP for the purposes of the Amendment, the total
value of the capital contributions of MW and VVI, as determined
pursuant to the preceding paragraph, shall first be computed (the
"Limited Partner Capital Contributions"). The capital contribution
of MALP to MPLP shall be equal to .625% of the amount of the Limited
Partner Capital Contributions.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
<PAGE>
MERCHANT ADVISERS, LIMITED PARTNERSHIP
By: Merchant Development Corp., general partner
By:/s/ RAYMOND L. BANK
President
MONTGOMERY WARD & CO., INCORPORATED
By:/s/ JOHN L. WORKMAN
Executive Vice President
VALUEVISION INTERNATIONAL, INC.
By:/s/ ROBERT JOHANDER
President
2
<PAGE>
Exhibit A
DRAFT 9/4/96
AMENDMENT NO. 3 TO THE
FIRST AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
MERCHANT PARTNERS, LIMITED PARTNERSHIP
AMENDMENT (the "Amendment") dated as of the ____ day of
September, 1996, by and among Merchant Advisors, Limited Partnership,
Montgomery Ward & Co., Incorporated ("MW") and ValueVision
International, Inc. ("VV"), to the First Amended and Restated Limited
Partnership Agreement of Merchant Partners, Limited Partnership dated
as of October 18, 1994, as heretofore amended (the "Partnership
Agreement").
WHEREAS, the parties hereto desire to amend the Partnership
Agreement as provided herein.
NOW, THEREFORE, the parties hereto, in consideration of the
premises and the agreements herein contained and intending to be
legally bound hereby, agree as follows:
1. Capitalized terms used in this Amendment and not defined
herein shall have the respective meanings provided for in the
Partnership Agreement.
2. Schedule A to the Partnership Agreement is amended in
that the Total Subscriptions by the Partners shall be their
respective Total Subscriptions prior to this Amendment, increased by
the contributions to be made by them pursuant to Paragraph 3 below.
3. On the date hereof, the Partners shall make the following
capital contributions to the Partnership:
The General Partner - $
MW - $
VV - $
The General Partner's capital contribution shall be made in the form
of cash or promissory notes (to the extent permitted by the
Partnership Agreement). MW's and VV's capital contributions shall be
made in the form of 1,327,317 VV Warrants and 199,097 VV Warrants,
respectively. For purposes of this Amendment, VV Warrants means
warrants to purchase shares of VV common stock, $.01 par value per
share, at an exercise price of $.01 par share, expiring August 8,
2003, in the form attached hereto as Exhibit A, with one VV Warrant
being equivalent to the right to purchase one such share. The
Capital Accounts of MW and VV shall be credited with the fair market
value of the VV Warrants contributed, which fair market value in each
case shall be deemed equal to the amounts set forth above. In
connection with such capital contributions by MW and VV:
(a) the Partnership shall have the same rights, and be
subject to the same restrictions, with respect to the VV Warrants as
are imposed upon MW pursuant to that certain Amended and Restated
Warrant Agreement and that certain Amended and Restated Registration
Rights Agreement, each dated as of July 27, 1996, between VV and MW
(the "Warrant Related Agreements"); and
(b) the VV Warrants contributed to the Partnership pursuant
to this Paragraph 3 by VV shall be subject to, and entitled to the
benefits of, the Warrant Related Agreements to the same extent as if
<PAGE>
they had been acquired by MW and contributed by MW to the
Partnership, rather than being contributed directly by VV to the
Partnership.
4. From and after the date of this Amendment, 100% of the
Partnership's net realized gains (other than to the extent
attributable to the fair market value of the Partnership's respective
assets and properties immediately after the contributions
contemplated by paragraph 3 hereof) shall be allocated solely to the
Capital Account of the General Partner until $2,760,000 in the
aggregate of such net realized gains has been so allocated (the
"Special GP Allocation"). The net realized gains constituting the
Special GP Allocation shall be disregarded for purposes of
determining pursuant to Paragraph 7(a)(i) and (ii) of the Partnership
Agreement the amount of the Partnership's cumulative net realized
gains and net gains deemed to have been realized during a fiscal year
on distributions in kind.
5. Until such time as the General Partner has received, from
and after the date of this Amendment, distributions from the
Partnership in the aggregate amount of $2,760,000 (excluding for
purposes of such calculation any and all distributions (i) pursuant
to Paragraph 8(a) of the Partnership Agreement and (ii) to the extent
attributable to the fair market value of the Partnership's respective
assets and properties immediately after the contributions
contemplated by paragraph 3 hereof), 100% of all distributions, by
the Partnership shall be made solely to the General Partner,
provided, however, that the cumulative amount of such distributions
shall not exceed the cumulative amount of the Special GP Allocation
that has been made at the time of any such distribution.
6. The first sentence of Paragraph 8(c) of the Partnership
Agreement is amended and restated in its entirety to read as follows:
"Until the Limited Partners as a group have
recovered through distributions an amount
equal to $46,000,000, each distribution,
other than distributions made pursuant to
Paragraph 8(a) or 11 of this Agreement or
Paragraph 5 of a certain Amendment to this
Agreement dated September __, 1996, shall be
made to and among the Partners in proportion
to their respective Contributions Accounts at
the time such distribution is made."
7. Income, gain, loss and deduction with respect to the VV
Warrants contributed to the capital of the Partnership pursuant to
this Amendment shall, solely for tax purposes, be allocated among the
Partners in accordance with Section 704(c) of the Code and any
regulations thereunder so as to take account of any variation between
the adjusted basis of the VV Warrants for federal income tax purposes
and their fair market value, determined in each case at the time of
contribution to the Partnership.
8. The parties to this Amendment acknowledge that (i) none
of the Principals is obligated by reason of this Amendment to provide
any services to any Limited Partner and (ii) the Principals have in
the past and may in the future perform services for one or more of
the Limited Partners pursuant to existing or separately documented
arrangements with such Limited Partners. Without limiting the
generality of the foregoing, the Limited Partners acknowledge that
Mangone is a consultant to each of them, is the Chairman of Merchant
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<PAGE>
Development Corp., which is the general partner of the General
Partner, and will not have any management or other responsibility
with respect to the ongoing operations of the business heretofore
operated by Montgomery Ward Direct, L.P. ("MWD") following the
acquisition of substantially all the assets of MWD by a subsidiary of
VV pursuant to a certain Asset Purchase Agreement, dated as of August
1, 1996, between MWD and said subsidiary.
9. If and to the extent that any of the terms and provisions
of this Amendment conflict with the terms and provisions of the
Partnership Agreement as heretofore in effect, this Amendment shall
take precedence over such Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the date first above written.
MERCHANT ADVISORS, LIMITED
PARTNERSHIP
By: Merchant Development Corp.
general partner
By:
President
MONTGOMERY WARD & CO, INCORPORATED
By:
Title:
VALUEVISION INTERNATIONAL, INC.
By:
Title:
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