<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ValueVision International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
VALUEVISION INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
VALUEVISION INTERNATIONAL, INC.
6740 SHADY OAK ROAD
MINNEAPOLIS, MINNESOTA 55344-3433
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF VALUEVISION INTERNATIONAL, INC.:
Please take notice that the 1998 Annual Meeting of Shareholders of
ValueVision International, Inc. (the "Company") will be held, pursuant to due
call by the Board of Directors of the Company, at the Minneapolis Marriott
Southwest, 5801 Opus Parkway, Minnetonka, Minnesota 55343, on Tuesday, June 2,
1998 at 9:00 a.m., or at any adjournment or adjournments thereof. The Company
did not hold a 1997 Annual Meeting of Shareholders, and the attached Proxy
Statement contains disclosures for both years. The 1998 Annual Meeting of
Shareholders is being held for the purpose of considering and taking appropriate
action with respect to the following:
1. To consider and act upon a proposal to elect five nominees as
directors of the Company.
2. To consider and act upon a proposal to approve the ValueVision
International, Inc. 1997 Director Stock Option Plan.
3. To consider and act upon a proposal to approve Amendment No. 1 to
the ValueVision International, Inc. 1994 Executive Stock Option and
Compensation Plan to increase the number of shares issuable under such plan
from 2,000,000 to 2,400,000.
4. To transact any other business as may properly come before the
meeting or any adjournments thereof.
Pursuant to due action of the Board of Directors, shareholders of record on
April 24, 1998, will be entitled to vote at the meeting or any adjournments
thereof.
A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE REQUESTED TO FILL IN
AND SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
VALUEVISION INTERNATIONAL, INC.
ROBERT L. JOHANDER
Robert L. Johander
Chairman of the Board and
Chief Executive Officer
May 1, 1998
<PAGE> 3
PROXY STATEMENT
OF
VALUEVISION INTERNATIONAL, INC.
6740 SHADY OAK ROAD
MINNEAPOLIS, MINNESOTA 55344-3433
1998 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
JUNE 2, 1998
PROXIES
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company to be used at the Annual
Meeting to be held on Tuesday, June 2, 1998. The approximate date on which this
Proxy Statement and the accompanying proxy were first sent or given to
shareholders was May 5, 1998.
RECENT DEVELOPMENTS
National Media Merger. On January 5, 1998, the Company entered into an
Agreement and Plan of Reorganization and Merger (the "Merger Agreement"), by and
among the Company, National Media Corporation ("National Media") and Quantum
Direct Corporation, formerly known as V-L Holdings Corp. ("Quantum Direct"), a
newly-formed Delaware corporation. If the mergers (the "Mergers") contemplated
by the Merger Agreement were to be consummated, the Company and National Media
would have become wholly-owned subsidiaries of Quantum Direct, with each
outstanding share of the Company's common stock, $.01 par value (the "Common
Stock"), being converted into 1.19 shares of common stock of Quantum Direct and
each outstanding share of common stock of National Media being converted into
one share of common stock of Quantum Direct. Consummation of the Mergers is
subject to the satisfaction of a number of conditions, including, but not
limited to, holders of no more than 5% of the issued and outstanding shares of
the Common Stock of the Company making the demands and giving the notices
required under Minnesota law to assert dissenters' appraisal rights.
On April 8, 1998, it was announced that the Company received preliminary
notification from holders of more than 5% of the Common Stock that they intended
to exercise their dissenter's rights with respect to the proposed Mergers. The
Company also reported that it had advised National Media that it does not intend
to waive the Merger Agreement condition to closing requiring that holders of not
more than 5% of the shares of the Common Stock have demanded their dissenter's
rights. The Company and National Media had special meetings of their
shareholders scheduled on April 14, 1998 to vote on the proposed Mergers. In
light of the receipt of the dissenters' notice, the companies mutually agreed to
postpone their respective shareholder meetings while the companies attempted to
negotiate a restructuring of the Mergers that is acceptable to each of the
companies and in the best interests of their respective shareholders. As of the
date hereof, the Company and National Media are still attempting to negotiate a
restructuring of the Mergers and have not yet rescheduled their respective
special meetings. There can be no assurances that the companies will
successfully be able to negotiate such a restructuring, or if negotiated, that
such Mergers will be consummated.
Chief Executive Officer. Mr. Gene McCaffery and Quantum Direct have entered
into a three year employment agreement pursuant to which Mr. McCaffery will
serve as Quantum Direct's Chief Executive Officer with a base salary of $500,000
during the first year, $525,000 during the second year, and $550,000 during the
third year. The agreement also provides for bonus salary of up to 100% of the
base salary, which may be earned only upon Quantum Direct meeting certain
operating income, revenue and stock performance criteria. In addition, pursuant
to the agreement, Mr. McCaffery is being issued stock options to acquire 800,000
shares of Quantum Direct's common stock, $.01 par value, with an exercise price
equal to $3.375 per
1
<PAGE> 4
share, the last trading price of the Common Stock on March 30, 1998. The
exercise price of such options will be adjusted to the last trading price of
Quantum Direct's common stock on the first day it trades, to the extent such
price is lower than $3.375. In the event the Mergers are not consummated, the
Company and Mr. McCaffery have agreed to enter into an employment agreement on
substantially the same terms pursuant to which Mr. McCaffery would become the
Chief Executive Officer of the Company.
Annual Meeting. The Company did not hold a 1997 Annual Meeting of
Shareholders due to the pending nature of the Mergers. As a result of the
postponement of the Company's special shareholders meeting to vote on the
Mergers, the Company has scheduled its 1998 Annual Meeting of Shareholders for
June 2, 1998 (the "Annual Meeting"). Accordingly, the Annual Meeting will
address the Company's performance for both the 1997 and 1998 fiscal years and
this Proxy Statement contains disclosures for both years.
VOTING
VOTING OF PROXIES
All shares of the Common Stock which are entitled to vote and are
represented at the Annual Meeting by properly executed proxies received prior to
or at the Annual Meeting, and are not revoked, will be voted at such meeting and
any adjournments thereof in accordance with the instructions indicated on such
proxy. If no instructions are indicated, proxies will be voted:
(1) FOR approval of Proposal Number 1 to elect five nominees as
directors of the Company.
(2) FOR approval of Proposal Number 2 to approve the ValueVision
International, Inc. 1997 Director Stock Option Plan (the "1997 Director
Plan").
(3) FOR approval of Proposal Number 3 to approve Amendment No. 1 to
the ValueVision International, Inc. 1994 Executive Stock Option and
Compensation Plan (the "1994 Executive Plan") to increase the number of
shares issuable under such Plan from 2,000,000 to 2,400,000.
If any other matters are properly presented at the meeting for
consideration, the persons named in the enclosed form of proxy and acting
thereunder will have discretion to vote on such matters in accordance with their
best judgment. Management of the Company will not use proxies voted against a
proposal to vote for adjournment in order to permit additional solicitation.
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM
Only shareholders of record at the close of business on April 24, 1998 (the
"Record Date") will be entitled to vote at the Annual Meeting or any
adjournments thereof. The presence, in person or by properly executed proxy, of
the holders of a majority of the outstanding shares of the Common Stock entitled
to vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting.
VOTES REQUIRED; EFFECT OF ABSTENTIONS AND BROKER NON-VOTES
The affirmative vote of the holders of a majority of the outstanding shares
of the Common Stock present in person or by proxy and entitled to vote on each
Proposal is required to approve each Proposal, provided that the total vote cast
on each Proposal represents at least 50% of all shares of the Common Stock
entitled to vote on each Proposal. A shareholder who abstains with respect to a
Proposal is considered to be present and entitled to vote at the meeting, and is
in effect casting a negative vote, but a shareholder who does not give authority
to a Proxy to vote on the Proposal shall not be considered present and entitled
to vote on the Proposal. Accordingly, broker non-votes will not affect the
outcome of the vote on a Proposal, provided that the total vote cast on such
Proposal represented at least 50% of all shares of the Common Stock entitled to
vote thereon.
2
<PAGE> 5
REVOCABILITY OF PROXIES
The presence at the Annual Meeting of a shareholder will not revoke his or
her proxy. However, a proxy may be revoked with respect to any matter at any
time before the proxy is voted on such matter by delivering to an officer of the
Company written notice of such revocation or a duly executed new proxy. Such
written notice of revocation or duly executed new proxy will be effective upon
filing with an officer of the Company, either prior to or at the Annual Meeting;
however, a revocation or new proxy will not affect a vote on any matter that was
cast prior to such filing. All written notices of revocation and other
communications with respect to the revocation of proxies should be delivered to
ValueVision International, Inc., 6740 Shady Oak Road, Eden Prairie, MN
55344-3433, Attention: Corporate Secretary, or may be hand-delivered to an
officer of the Company at the Annual Meeting.
BOARD OF DIRECTORS RECOMMENDATIONS
The Board of Directors recommend a vote FOR approval of Proposal Number 1
to elect five nominees as directors of the Company, FOR approval of Proposal
Number 2 to approve the 1997 Director Plan and FOR approval of Proposal Number 3
to approve Amendment No. 1 to the 1994 Executive Plan.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
As of the Record Date, the Company had outstanding 26,780,778 shares.
The following table sets forth certain information regarding the beneficial
ownership of securities of the Company as of the Record Date by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of the Common Stock, (ii) each of the directors and nominees
for election to the Board of Directors of the Company, (iii) the Chief Executive
Officer and each of the executive officers named in the Summary Compensation
Table, and (iv) all directors and executive officers of the Company as a group.
Each shareholder possesses sole voting and investment power with respect to the
shares of the Common Stock listed opposite the holder's name except as otherwise
indicated herein.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED PERCENT
---------------- ------------------ -------
<S> <C> <C>
Snyder Capital Management, Inc.(1).................. 3,847,100 14.4
350 California Street
San Francisco, CA 94104
Merchant Partners LP(2)............................. 1,526,414 5.7
4200 Piney Grove Road
Glyndon, MD 21071
Robert L. Johander(3)............................... 1,806,911 6.6
6740 Shady Oak Road
Eden Prairie, MN 55344
Nicholas M. Jaksich(4).............................. 1,741,762 6.4
6740 Shady Oak Road
Eden Prairie, MN 55344
Robert J. Korkowski(5).............................. 219,816 *
Marshall S. Geller(6)............................... 169,600 *
Edward A. Karr(7)................................... 170,000 *
Michael L. Jones(8)................................. 115,000 *
David T. Quinby(9).................................. 11,000 *
Stuart R. Romenesko(10)............................. 72,000 *
Paul D. Tosetti(11)................................. 25,000 *
All directors and executive officers as a group
(eleven persons)(12).............................. 4,345,089 15.2
</TABLE>
- -------------------------
* Less than 1%
3
<PAGE> 6
(1) Based upon information contained in the Schedule 13G of Snyder Capital
Management, Inc. dated February 19, 1998.
(2) Based upon information contained in the audited Financial Statements of
Merchant Partners LP as of December 31, 1997.
(3) Such shares include 437,632 shares beneficially owned by Mr. Johander in
his capacity as General Partner to the Robert L. Johander Limited
Partnership. Includes 7,200 shares owned by Mr. Johander's wife for the
benefit of his children, as to which shares Mr. Johander disclaims
beneficial ownership. Includes 600,000 shares that are exercisable or will
become exercisable within 60 days.
(4) Such shares include 423,632 shares beneficially owned by Mr. Jaksich in his
capacity as General Partner to the Nicholas M. Jaksich Limited Partnership.
Includes 600,000 shares that are exercisable or will become exercisable
within 60 days.
(5) Includes 100,000 shares that are exercisable or will become exercisable
within 60 days.
(6) Includes 160,000 shares that are exercisable or will become exercisable
within 60 days.
(7) Includes 160,000 shares that are exercisable or will become exercisable
within 60 days.
(8) Represents 115,000 shares that are exercisable or will become exercisable
within 60 days.
(9) Includes 10,000 shares that are exercisable or will become exercisable
within 60 days.
(10) Represents 72,000 shares that are exercisable or will become exercisable
within 60 days.
(11) Represents 25,000 shares that are exercisable or will be exercisable within
60 days.
(12) Includes 1,856,000 shares that are issuable upon exercise of stock options
exercisable or will become exercisable within 60 days and includes 7,200
shares as to which the reporting persons disclaim beneficial ownership.
4
<PAGE> 7
PROPOSAL NUMBER 1: ELECTION OF DIRECTORS
Five directors will be elected at the Annual Meeting, each director to hold
office until the next Annual Meeting of Shareholders and until his or her
successor is elected and shall have qualified, or his or her earlier resignation
or removal. All of the persons listed below have consented to serve as a
director, if elected. The Board of Directors proposes for election the nominees
listed below:
- --------------------------------------------------------------------------------
ROBERT L. JOHANDER Director since 1990
Age 52
Mr. Johander is a founder of the Company, and has served as Chairman of the
Board and Chief Executive Officer of the Company since June 1990. Mr. Johander's
experience in television home shopping began in 1984 as president of Telethon
Marketing Company, where he was responsible for the creation, production, and
management of national cable television home shopping programs, which were
subsequently acquired by C.O.M.B. Co. ("C.O.M.B."), a Minneapolis-based mail
order liquidator of consumer merchandise. In early 1986, Mr. Johander, as
General Manager of C.O.M.B.'s Value Network, conceived and managed the launch of
Cable Value Network, a joint-venture television home shopping network formed by
C.O.M.B. and several national cable television system operators. In 1987,
C.O.M.B. changed its name to CVN Companies, Inc. ("CVN") which was subsequently
acquired by QVC Network, Inc. and Mr. Johander was appointed internal consultant
to the Chairman of the Board of CVN, in which capacity he served until June
1989.
- --------------------------------------------------------------------------------
NICHOLAS M. JAKSICH Director since 1990
Age 53
Mr. Jaksich is a founder of the Company, and has served as President and Chief
Operating Officer and as a director of the Company since June 1990. From
February 1984 to June 1986, Mr. Jaksich was Vice President, Distribution and
Operations for Lillian Vernon Corporation, a national direct-mail merchandising
firm. In July 1986, Mr. Jaksich joined C.O.M.B. to assist in the launch of its
television activities. His responsibilities included the direct day-to-day
supervision of television production and merchandising activities, the
development of various television order response, inventory, and sales tracking
systems, and supervision of on-air hosts. In 1987, Mr. Jaksich succeeded Mr.
Johander as divisional Senior Vice President of CVN Television, a division of
CVN.
- --------------------------------------------------------------------------------
ROBERT J. KORKOWSKI Director since 1993
Age 57
Mr. Korkowski has been a director of the Company since May 1993. From 1989 to
1996, Mr. Korkowski was the Senior Vice President of Finance and a Director of
Opus Corporation, a privately held real estate developer and construction
company. From 1986 to 1989 Mr. Korkowski was the Vice President and Chief
Financial Officer of National Computer Systems, Inc., a publicly-held
information system company based in Minneapolis. From 1974 to 1986, Mr.
Korkowski was Executive Vice President and Chief Financial Officer of G.
Heileman Brewing Company.
- --------------------------------------------------------------------------------
MARSHALL S. GELLER Director since 1993
Age 59
Mr. Geller has been a director of the Company since May 1993 and Vice Chairman
of the Board since August 1994. Mr. Geller is currently the Chairman, CEO, and
Founding Partner of Geller & Friend Capital Partners, Inc., which was formed in
November 1995. From 1991 to October 1995, Mr. Geller was the Senior Managing
Partner and founder of Golenberg and Geller, Inc., a merchant banking investment
company. From 1988 to 1990, he was Vice-Chairman of Gruntal & Company, a New
York Stock Exchange investment banking firm. Prior to 1988, Mr. Geller spent 21
years with Bear Stearns & Co., an investment banking firm, where he was the
Managing Partner in charge of all areas of Corporate Finance, Public Finance,
Institutional
5
<PAGE> 8
Equities & Debt for Bear Stearns' offices in Los Angeles, San Francisco, Chicago
and Hong Kong. Mr. Geller was Interim President and Chief Operating Officer of
Players International, Inc., and now serves on their Board and is Chairman of
their Investment Committee. Mr. Geller also serves on the Boards of the
following companies: Ballantyne of Omaha, Inc., iMALL, Inc., Datalink System
Corporation, Cabletel Communications Corporation, Arc International, and Lone
Wolf International, Inc.
- --------------------------------------------------------------------------------
PAUL D. TOSETTI Director since 1996
Age 43
Mr. Tosetti has been a director of the Company since August 1996 and is a
partner in the Los Angeles office of the law firm of Latham & Watkins, a
position he has held since 1989. Mr. Tosetti has been associated with Latham &
Watkins since 1982, and is Chairman of that firm's Mergers and Acquisitions
group and a member of its Corporate Department. His principal areas of practice
specialization are mergers and acquisitions and corporate finance.
- --------------------------------------------------------------------------------
All shares represented by proxies will be voted FOR the election of the
foregoing nominees unless a contrary choice is specified. If one or more of
these nominees become unable or unwilling to serve at the time of the Annual
Meeting, the shares represented by proxy will be voted for the remaining
nominees and for any substitute nominees designated by the Board of Directors
or, if none, the size of the Board of Directors will be reduced accordingly. The
Board of Directors does not anticipate that any nominee will be unavailable or
unable to serve.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth certain summary information with respect to
compensation earned during the fiscal years ended January 31, 1998, 1997, 1996
and 1995 for the Company's Chief Executive Officer and each of the Company's
four other most highly compensated executive officers who were serving as
executive officers on January 31, 1998 and 1997, and whose salary and bonus
exceeded $100,000 during the fiscal years ended January 31, 1998 and 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
ANNUAL COMPENSATION ------------
---------------------------------------------- SECURITIES
FISCAL OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS
--------------------------- ------ ------ ----- --------------- ------------
($) ($) ($) (#)
<S> <C> <C> <C> <C> <C>
Robert L. Johander....................... 1998 293,750 -- 6,000 --
Chief Executive Officer 1997 237,500 -- 6,000 --
and Chairman of the Board 1996 181,442 -- 6,000 --
1995 125,000 -- 6,000 --
Nicholas M. Jaksich...................... 1998 293,750 -- 6,000 --
Chief Operating Officer 1997 237,500 -- 6,000 --
and President 1996 165,635 -- 6,000 --
1995 115,000 -- 6,000 --
Edward A. Karr........................... 1998 160,831 -- 5,400 --
Executive Vice President 1997 153,125 -- 5,400 --
Merchandising & Programming 1996 134,231 -- 5,400 100,000
1995 125,000 -- 3,150 50,000
Stuart R. Romenesko...................... 1998 167,212 32,500 5,400 50,000
Senior Vice President Finance, 1997 123,654 30,000 5,400 10,000
Chief Financial Officer, Treasurer 1996 115,000 -- 5,400 40,000
and Assistant Secretary 1995 83,333 -- 2,700 30,000
David T. Quinby.......................... 1998 140,000 50,000 5,400 50,000
Vice President General Counsel 1997 -- -- -- --
and Secretary 1996 -- -- -- --
1995 -- -- -- --
Michael L. Jones......................... 1998 120,000 -- 5,400 --
Vice President, Television 1997 120,000 -- 5,400 --
Broadcasting 1996 120,000 -- 5,400 --
1995 108,462 -- 3,150 115,000
</TABLE>
- -------------------------
(1) Automobile allowance
7
<PAGE> 10
OPTION GRANTS DURING FISCAL YEARS ENDED JANUARY 31, 1998 AND 1997
The following table sets forth information with respect to options to
purchase shares of the Common Stock granted during the fiscal years ended
January 31, 1998 and 1997 to each of the executive officers in the Summary
Compensation Table above. No stock appreciation rights ("SARs") were granted to
any of the persons listed on the table below during fiscal 1998 and 1997.
OPTION/SAR GRANTS IN LAST TWO FISCAL YEARS
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
NUMBER OF PERCENT OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS/ SARS FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM($)
FISCAL OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION -------------------
NAME YEAR GRANTED (#) FISCAL YEAR(1) ($/SH)(2) DATE(2) 5% ($) 10% ($)
---- ------ ------------ ------------------ ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert L. Johander.......... 1998 -- 0% -- -- -- --
1997 -- 0% -- -- -- --
Nicholas M. Jaksich......... 1998 -- 0% -- -- -- --
1997 -- 0% -- -- -- --
Edward A. Karr.............. 1998 -- 0% -- -- -- --
1997 -- 0% -- -- -- --
Stuart R. Romenesko......... 1998 50,000 19.2% 3.88 03/01/07 121,848 308,788
1997 10,000 2.1% 5.75 09/04/06 36,161 91,640
David T. Quinby............. 1998 50,000 19.2% 4.63 02/01/07 145,432 368,553
1997 -- 0% -- -- -- --
Michael L. Jones............ 1998 -- 0% -- -- -- --
1997 -- 0% -- -- -- --
</TABLE>
- -------------------------
(1) Percentage calculations in this column are based solely on the number of
options granted to employees of the Company and do not take into account
options granted to non-employee consultants or directors of the Company.
(2) Options were granted at an exercise price equal to the fair market value of
the Common Stock on the date of grant and vest over a five year term in
increments of 20% each on the anniversary of the date of grant. Such options
will expire five years after vesting.
(3) The amounts shown in these columns are the result of calculations at assumed
annual rates required by the Securities and Exchange Commission and are not
intended to forecast possible future appreciation, if any, of the price of
the Common Stock. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock and overall stock
market conditions. The amounts reflected in this table may not necessarily
be achieved.
8
<PAGE> 11
OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table sets forth information with respect to the unexercised
options held by each of the executive officers named in the Summary Compensation
Table above, as of January 31, 1998 and 1997. None of such persons exercised any
options during fiscal 1998 or fiscal 1997.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT JANUARY 31, (#) AT JANUARY 31, ($)
FISCAL --------------------------- ------------------------------
NAME YEAR (EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)
---- ------ --------------------------- ------------------------------
<S> <C> <C> <C>
Robert L. Johander.................... 1998 600,000/150,000 0/0
1997 450,000/300,000 0/0
Nicholas M. Jaksich................... 1998 600,000/150,000 0/0
1997 450,000/300,000 0/0
Edward A. Karr........................ 1998 160,000/90,000 0/0
1997 140,000/110,000 2,500/3,750
Stuart R. Romenesko................... 1998 57,000/73,000 0/0
1997 50,000/30,000 0/0
David T. Quinby....................... 1998 10,000/40,000 0/0
1997 0/0 0/0
Michael L. Jones...................... 1998 115,000/0 0/0
1997 115,000/0 0/0
</TABLE>
- ---------------------
(1) The dollar amount represents the positive spread between the exercise price
of the options and the closing price per share of the Common Stock on the
Nasdaq National Market of $3.75 and $4.625 on January 31, 1998 and 1997,
respectively.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Robert L.
Johander and Nicholas M. Jaksich which expire on January 31, 1999. Effective
July 1, 1995, the annual base salaries for Messrs. Johander and Jaksich were
$220,000 and $200,000 respectively. Messrs. Johander and Jaksich are eligible to
receive discretionary bonuses, as determined by the Board of Directors. Their
base salaries will be increased by 5% annually, or by a higher amount if the
Company achieves certain pre-tax net income goals. The base salaries of both
Messrs. Johander and Jaksich were increased to $237,500 on January 31, 1996, due
to the Company achieving minimum pre-tax income of at least $7.25 million, for
the fiscal year ended on such date (the "Fiscal 1996 Net Income Goals"). The
base salaries of both Messrs. Johander and Jaksich were increased to $293,750 on
January 31, 1997, due to the Company achieving minimum pre-tax income of at
least $8.5 million, for the fiscal year ended on such date (the "Fiscal 1997 Net
Income Goals"). The base salaries of both Messrs. Johander and Jaksich were
increased to $350,000 on January 31, 1998, due to the Company achieving minimum
pre-tax income of at least $11.75 million in the fiscal year ending on such date
(together with the fiscal 1996 and 1997 Net Income Goals, the "Net Income
Goals"). Messrs. Johander and Jaksich cannot be terminated except for disability
or cause. Messrs. Johander and Jaksich have agreed not to compete in the
television home shopping business or in any other business in which the Company
has engaged during the six months prior to the employee's termination, during
the term of the employment agreement and for the period ending (i) one year
after the expiration of the employment agreement and any extension thereof, (ii)
two years after termination for cause due to a willful failure to perform under
the terms of the employment agreement, or (iii) five years after termination for
any other reason other than cause, including the employee's voluntary
termination.
9
<PAGE> 12
In September 1993 and in connection with entering into employment
agreements with Messrs. Johander and Jaksich, the Company granted to each of
Messrs. Johander and Jaksich options to purchase 500,000 shares of the Common
Stock at $15.00 (in excess of the then fair market value) per share exercisable
until January 31, 2002 and 500,000 shares of the Common Stock at $25.00 (in
excess of the then fair market value) per share exercisable until January 31,
2005 on each of January 31, 1995, 1996, 1997, 1998 and 1999 if the Company
achieved certain pre-tax income goals, as defined. In the event that the Company
fails to achieve a Net Income Goal in any year, Messrs. Johander and Jaksich
will vest in the options attributable to such "missed" year if in a subsequent
year the Company's pre-tax net income is greater than or equal to such
subsequent year's Net Income Goal plus the Net Income Goal for the missed year.
In August 1995, pursuant to an independent compensation study, the Compensation
Committee, consisting of non-employee Directors, recommended and with the
approval of the Board of Directors, approved and repriced the exercise price of
the granted options with original exercise prices of $15.00 and $25.00 per share
to $8.50 and $10.50 per share (in excess of the then fair market value),
respectively. In addition, the number of shares available per each respective
grant was reduced from 500,000 to 375,000 options and the options vest and
become exercisable at the earlier of meeting the Net Income Goal or in September
2003, assuming that either of Messrs. Johander or Jaksich is still an employee
of the Company. The Board of Directors repriced the exercise price of the
options granted because the Board of Directors believed that, due to the decline
in the Company's stock price since the grant of the options, the options did not
provide sufficient long-term stock based incentive and such incentive would be
provided by the repricings. The Board of Directors believes that the option
grants with deferred vesting to executive officers are important in retaining
executive officers and providing them with incentives consistent with the
shareholders' objectives for appreciation in the value of the Company's stock.
On September 1, 1995 the Company entered into an employment agreement with
Edward A. Karr (the "Karr Employment Agreement") and continuing on a full-time
basis for a period of thirty-six (36) months. Pursuant to the Karr Employment
Agreement, the Company has agreed to pay Mr. Karr $150,000 annually, reimburse
him for reasonable and necessary business expenses, pay him a monthly car
allowance of $450 and granted him options to purchase 100,000 shares of the
Common Stock. Mr. Karr has agreed not to compete with the Company in the
television home shopping business for a period of thirty-six (36) months
following termination of Mr. Karr's employment by the Company.
On February 1, 1997, the Company entered into an employment agreement with
David T. Quinby (the "Quinby Employment Agreement") and continuing on a
full-time basis for a period of twenty-four (24) months. Pursuant to the Quinby
Employment Agreement, the Company has agreed to pay Mr. Quinby $140,000
annually, reimburse him for reasonable and necessary business expenses, pay him
a monthly car allowance of $450 and granted him options to purchase 50,000
shares of the Common Stock. Mr. Quinby is also eligible to receive discretionary
bonuses. Pursuant to the Quinby Employment Agreement, Mr. Quinby has agreed not
to compete with the Company in the television home shopping and direct marketing
businesses for a period of six (6) months following termination of Mr. Quinby's
employment by the Company.
If the Mergers are consummated, certain terms of Messrs. Johander's and
Jaksich's employment contracts will become effective and new employment
agreements with Messrs. Romenesko and Quinby will become effective. For a
summary of the terms of these new agreements, see "The Merger -- Interests of
Certain Persons in the Merger -- Employment Agreements" in the Joint Proxy
Statement/Prospectus of the Company and National Media dated March 16, 1998.
DIRECTOR COMPENSATION
For the fiscal year ended January 31, 1997, the Company paid non-employee
directors a $20,000 annual retainer (paid quarterly on a pro rata basis), plus
$1,000 for each board of directors and committee meeting attended, and $750 for
each board of directors and committee meeting in which such director
participated by telephone. The Company also reimburses directors for costs and
expenses they incur to attend board of directors and committee meetings. The
Company did not pay any cash compensation or issue any stock options to the
director named by Montgomery Ward & Co., Incorporated ("Montgomery Ward").
During fiscal 1998, Montgomery Ward's right to name a director was terminated.
On September 4, 1996 the Company granted Mr. Paul D. Tosetti options to purchase
25,000 shares of the Common Stock at an exercise
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<PAGE> 13
price of $5.75 per share (the market price of the stock on the business day
immediately preceding the date of grant). Such options vested on September 4,
1997 and expire on September 4, 2002.
Effective March 3, 1997, to reflect the outside directors' increasing role
in evaluating strategic opportunities intended to enhance shareholder value, the
annual retainer to be paid to Messrs. Geller and Korkowski was increased to
$125,000 and $30,000, respectively, and the Company granted Messrs. Geller,
Korkowski and Tosetti options to purchase 37,500, 37,500 and 75,000 shares,
respectively, of the Common Stock at an exercise price of $4.5625 per share (the
market price of the stock on the business day immediately preceding the date of
grant). Such options vest the earlier of (i) the eighth anniversary of the date
of grant, (ii) one-third ( 1/3) each when the Common Stock has a closing (last
trade) price for twenty consecutive trading days at or above $6.25, $7.25 and
$8.25, respectively, provided that such vesting shall be limited to one-third
( 1/3) in any twelve-month period measured by the anniversary date of the date
of the option grant, or (iii) when the Common Stock has a closing (last trade)
price for sixty consecutive trading days at or above $8.25. These options were
issued under and are contingent upon approval by the shareholders of the 1997
Director Plan. See "Item 2: Proposal to Approve the ValueVision International,
Inc. 1997 Director Stock Option Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1998 and fiscal 1997, the Company's Compensation Committee
consisted of two nonemployee directors, Paul D. Tosetti and Marshall S. Geller.
Mr. Tosetti is a partner at Latham & Watkins, a law firm that provides legal
services to the Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives generally have been
made by the Compensation Committee. Each member of the Compensation Committee is
a non-employee director. All decisions by the Compensation Committee relating to
the compensation of the Company's executive officers are reviewed by the full
Board. Pursuant to rules designed to enhance disclosure of the Company's
policies toward executive compensation, set forth below is a report prepared by
the Compensation Committee addressing the compensation policies for the Company
and its subsidiaries for the years ended January 31, 1998 and 1997 as they
affected the Company's executive officers.
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual objectives and long-term goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
Company in attracting and retaining qualified executives. Executive compensation
is set at levels that the Compensation Committee believes to be consistent with
others in the Company's industry.
The four elements in the Company's executive compensation program, all
determined by individual and corporate performance, are base salary
compensation, annual incentive compensation, stock options and miscellaneous
benefits and perquisites (consisting primarily of a car allowance and customary
life and health benefits). Total compensation opportunities are generally
competitive with those offered by employers of comparable size, growth and
profitability in the Company's industry.
Base salary compensation is determined by the potential impact the
individual has on the Company, the skills and experiences required by the job,
and the performance and potential of the incumbent in the job. Annual incentive
compensation for executives of the Company is based primarily on corporate
operating results and revenue growth and the Company's positioning for future
results, but also includes an overall assessment of executive management's
performance, as well as market conditions. Awards of stock grants under the
Company's Second Amended 1990 Stock Option Plan (the "Stock Option Plan") and
the 1994 Executive Plan are designed to promote the identity of long-term
interests between the Company's executives and its shareholders and assist in
the retention of executives. The Stock Option Plan also permits the granting of
stock options to key personnel. Options become exercisable based upon criteria
established by the Company. During the fiscal year ended January 31, 1997, stock
options to acquire 10,000 shares of the Common Stock were granted to Mr. Stuart
R. Romenesko, the Company's Senior Vice President Finance,
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<PAGE> 14
Chief Financial Officer, Treasurer and Assistant Secretary. During the fiscal
year ended January 31, 1998, stock options to acquire 50,000 shares of the
Common Stock were each granted to Mr. David T. Quinby, the Company's Vice
President, General Counsel and Secretary, and Mr. Romenesko. Messrs. Quinby and
Romenesko were the only named executive officers to receive any stock options
during fiscal 1998 and 1997.
The Compensation Committee surveys employee stock option programs of
companies with similar capitalization to the Company prior to recommending the
grant of options to executives. While the value realizable from exercisable
options is dependent upon the extent to which the Company's performance is
reflected in the market price of the Common Stock at any particular point in
time, the decision as to whether such value will be realized in any particular
year is determined by each individual executive and not by the Compensation
Committee. Accordingly, when the Committee recommends that an option be granted
to an executive, that recommendation does not take into account any gains
realized that year by that executive as a result of his or her individual
decision to exercise an option granted in a previous year. The Board of
Directors believes that the option grants with deferred vesting to executive
officers are important in retaining executive officers and providing them with
incentives consistent with the shareholders' objections for appreciation in the
value of the Common Stock.
The Compensation Committee established a compensation structure and entered
into an employment agreement with Mr. Johander that provided for a base salary
and the granting of stock options. The contract provided for (i) a base salary
of $293,750 for the year ended January 31, 1998, and the vesting of 75,000
options exercisable at $8.50 and 75,000 options exercisable at $10.50, based on
achieving a pretax income of at least $8,500,000, and (ii) a base salary of
$237,500 for the year ended January 31, 1997, and the vesting of 75,000 options
exercisable at $8.50 and 75,000 options exercisable at $10.50, based on
achieving a pretax income of at least $7,250,000. As the Company exceeded these
targets for the years ended January 31, 1998 and January 31, 1997, the base
salary was increased and the options mentioned were vested. The Compensation
Committee believes that the continued growth, expansion and profitability of the
Company during fiscal 1998 and 1997 was due in large part to Mr. Johander's
efforts.
In 1993, Section 162(m) of the Internal Revenue Code was adopted which,
beginning in 1994, imposed an annual deduction limitation of $1.0 million on the
compensation of certain executive officers of publicly traded companies. The
Company does not believe that the Section 162(m) limitation will materially
affect the Company in the near future as of date, no executive officer of the
Company has received compensation that is nearing $1 million per year.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
MARSHALL S. GELLER
PAUL D. TOSETTI
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<PAGE> 15
STOCK PERFORMANCE GRAPH
The line-graph set forth below compares the cumulative, six-year, total
shareholder return to the Company's shareholders (based on appreciation of the
market price of the Common Stock) on an indexed basis with (i) a broad equity
market index and (ii) an appropriate published industry or line-of-business
index, or peer group index constructed by the Company. The presentation compares
the Common Stock price in the period from January 31, 1992 to January 31, 1998,
to the Nasdaq National Market stock index and to a "peer group" index created by
the Company over the same period. The "peer group" index consists of the common
stock of: Damark International, Inc., Land's End, Inc., Hanover Direct, Inc.,
Lillian Vernon Corp., National Media Corporation and Fingerhut Companies, Inc.
These corporations are involved in various aspects of direct marketing to
consumers industry. In each case, the cumulative return is calculated assuming
an investment of $100 on January 31, 1992, and reinvestment of all dividends.
<TABLE>
<CAPTION>
NASDAQ
VALUEVISION STOCK
Measurement Period INTERNATIONAL, PEER MARKET-
(Fiscal Year Covered) INC. GROUP US
<S> <C> <C> <C>
1/92 100 100 100
1/93 209 108 113
1/94 852 171 130
1/95 348 97 124
1/96 426 92 175
1/97 322 106 230
1/98 261 160 272
</TABLE>
13
<PAGE> 16
CERTAIN TRANSACTIONS
Management Indebtedness
As of April 30, 1998, the Company had loaned $343,000 to Robert L.
Johander, the Company's Chief Executive Officer and Chairman, in the form of
eight promissory notes. The promissory notes bear interest at 5.63% and are due
one year after each date of issuance. Such loans were utilized by Mr. Johander
for personal purposes. As collateral for the promissory notes, Mr. Johander has
pledged shares of the Common Stock owned directly by Mr. Johander. As of April
30, 1998, principal and accrued interest thereon of approximately $361,000 was
due the Company by Mr. Johander and such amount represents the largest aggregate
amount of indebtedness outstanding since the beginning of the Company's last
fiscal year.
As of April 30, 1998, the Company had loaned $550,000 to Nicholas M.
Jaksich, the Company's President and Chief Operating Officer, in the form of two
promissory notes. The first promissory note of $50,000 in principal was due May
15, 1997, bears interest at 6.80% and has been extended until May 15, 1998. Mr.
Jaksich has pledged stock as collateral against the note. The second promissory
note of $500,000 in principal bears interest at 5 7/8% and is due the earlier of
November 20, 2002 or when Mr. Jaksich requests and is permitted to sell shares
of the Common Stock which are pledged to secure such indebtedness. Such loans
were utilized by Mr. Jaksich in the purchase of his home. The second promissory
note is secured by a security interest in certain shares of the Common Stock
owned by Mr. Jaksich and by a mortgage on certain real property. As of April 30,
1998, principal and accrued interest thereon of approximately $632,000 was due
the Company by Mr. Jaksich and such amount represents the largest aggregate
amount of indebtedness outstanding since the beginning of the Company's last
fiscal year.
Other Relationships
Paul D. Tosetti, a director of the Company, is a partner at Latham &
Watkins, a law firm that has provided legal services to the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), requires the Company's directors and executive officers, and persons who
own more than ten percent of the Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company during fiscal 1998, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company during fiscal
1997, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with,
except with respect to Paul D. Tosetti, a director of the Company, and Gary
Kazmer, a former executive officer of the Company, each of who filed one late
report.
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<PAGE> 17
PROPOSAL NUMBER 2:
PROPOSAL TO APPROVE THE VALUEVISION INTERNATIONAL, INC.
1997 DIRECTOR STOCK OPTION PLAN.
On March 4, 1997, the Board of Directors approved the granting of stock
options to the Company's three non-employee directors, Marshall S. Geller,
Robert J. Korkowski and Paul D. Tosetti, to acquire 37,500, 37,500 and 75,000
shares, respectively, of the Common Stock (the "Director Options"). The Director
Options will be governed by the 1997 Director's Plan, which has been approved by
the Board of Directors but which is subject to shareholder approval. A complete
text of the 1997 Director Plan is set forth as Exhibit A to this Proxy
Statement. The following summary of the 1997 Director Plan is qualified in its
entirety by reference to the complete text.
General
The purposes of the 1997 Director Plan are to enhance shareholder value and
to advance the interests of the Company by granting stock options to its
non-employee directors to reflect their increasing role in the evaluation of
strategic opportunities for the Company and to increase their ownership stake in
the Common Stock. The 1997 Director Plan provides that Board of Directors of the
Company shall administer the plan.
The number of shares of the Common Stock which may be issued under the 1997
Director Plan may not exceed 150,000 shares, subject to adjustment in the event
of a merger, recapitalization or other corporate restructuring. All such shares
were issued pursuant to the Director Options, which issuances are subject to
approval of the 1997 Director Plan by shareholders of the Company. Such shares
represent less than 1.0% of the outstanding shares of the Common Stock on April
24, 1998. On April 24, 1998, the last sale price of the Common Stock as reported
by NASDAQ national Market was $3.5625 per share. As of April 24, 1998, the
market value of the 150,000 shares issued under the 1997 Director Plan was
$534,375, while the aggregate exercise price of such shares was $684,375.
Stock Options
Under the 1997 Director Plan, the Board of Directors may grant
non-qualified stock options to non-employee directors of the Company on the date
of grant to purchase shares of the Common Stock from the Company. The 1997
Director Plan confers on the Board of Directors discretion, with respect to any
such stock option, to determine the number and purchase price of the shares
subject to the option, the term of each option and the time or times during its
term when the option becomes exercisable, provided that the purchase price may
not be less than the fair market value of the shares subject to the option on
the business day immediately preceding the date of grant. The term of a
non-qualified option may not exceed 13 years from the date of grant. Any option
shall become immediately exercisable in the event of specified changes in
corporate ownership or control. The Committee may accelerate the exercisability
of any option. The option price must be paid in cash at the time of exercise.
The Director Options issued under the 1997 Director Plan each have an
exercise price of $4.5625 per share, the fair market value of the stock on the
business day immediately preceding the date of grant. Such options vest the
earlier of (i) the eighth anniversary of the date of grant, (ii) one-third (1/3)
each when the Common Stock has a closing (last trade) price for twenty
consecutive trading days at or above $6.25, $7.25 and $8.25, respectively,
provided that such vesting shall be limited to one-third (1/3) in any
twelve-month period measured by the anniversary date of the date of the option
grant, or (iii) when the Common Stock has a closing (last trade) price for sixty
consecutive trading days at or above $8.25.
Amendment of the 1997 Director Plan
The 1997 Director Plan may be suspended, terminated or reinstated, in whole
or in part, at any time by the Board of Directors. The Board of Directors may
from time to time make such amendments to the 1997 Director Plan as it may deem
advisable; provided, however, that without the approval of the Company's
shareholders no amendment shall be made which: (a) increases the maximum number
of shares of the
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<PAGE> 18
Common Stock which may be subject to stock options granted under the plan (other
than as provided in Section 4.1, as appropriate); or (b) extends the term of the
plan; or (c) otherwise materially increases the benefits accruing to
participants under the plan. Except as otherwise provided, termination or
amendment of the 1997 Director Plan shall not, without the consent of a
participant, affect such participant's rights under any stock option previously
granted to such participant.
Federal Income Tax Consequences
When a non-qualified stock option granted pursuant to the 1997 Director
Plan is exercised, the non-employee director will realize ordinary income
measured by the difference between the aggregate purchase price of the shares of
the Common Stock as to which the option is excised and the aggregate fair market
value of shares of the Common Stock on the exercise date, and the Company will
be entitled to a deduction in the year the option is exercised equal to the
amount the non-employee director is required to treat as ordinary income.
Voting Information
The Board of Directors recommends a vote FOR Proposal Number 2. All shares
represented by proxies will be voted FOR Proposal Number 2 unless a contrary
choice is specified. The affirmative vote of the holders of a majority of the
outstanding shares of the Common Stock present in person or by proxy and
entitled to vote on Proposal Number 2 is required for its approval, provided
that the total vote cast on Proposal Number 2 represents at least 50% of all
shares of the Common Stock entitled to vote on Proposal Number 2.
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<PAGE> 19
PROPOSAL NUMBER 3:
PROPOSAL TO APPROVE AMENDMENT NO. 1
TO THE VALUEVISION INTERNATIONAL, INC.
1994 EXECUTIVE STOCK OPTION AND COMPENSATION PLAN
TO INCREASE THE NUMBER OF SHARES ISSUABLE
UNDER SUCH PLAN FROM 2,000,000 TO 2,400,000.
As announced by the Company on March 30, 1998 and as described above under
"Recent Developments -- Chief Executive Officer", Gene McCaffery has entered
into an Employment Agreement with Quantum Direct pursuant to which, among other
things, he became its Chief Executive Officer and was granted options to acquire
800,000 shares of Quantum Direct common stock. The Company is also a party to
such employment agreement, pursuant to which the Company may be required to
issue to Mr. McCaffery options to acquire 800,000 shares of the Common Stock
should he become the Company's Chief Executive Officer in the event that the
Mergers are not consummated. The 1994 Executive Plan, which was approved on
August 17, 1994 by the Company's shareholders and Board of Directors, currently
has 400,000 shares available to be issued pursuant to options under such plan.
The Board of Directors believes that it is in the best interests of the Company
to amend the 1994 Executive Plan to increase the number shares remaining to be
issued under the plan by 400,000 shares (the "Additional Shares") so that an
aggregate of 800,000 shares will be available under options that may be
necessary to be issued to Mr. McCaffery. The proposed Amendment and a complete
text of the 1994 Executive Plan are set forth as Exhibit B and Exhibit C,
respectively, to this Proxy Statement. The brief summary of the 1994 Executive
Plan which follows is qualified in its entirety by reference to the complete
text.
General
The purpose of the 1994 Executive Plan is the increase shareholder value
and to advance the interests of the Company by furnishing a variety of economic
incentives ("Incentives") designed to attract and retain executive officers and
to put a substantial portion of such executive officer's compensation at risk to
motivate such executive employees.
The 1994 Executive Plan provides that a committee (the "Committee"),
composed of at least two members of the board of directors of the Company who
are "disinterested persons" within the meaning of Rule 16b-3 of the 1934 Act and
are "outside directors" within the mean of Section 162(m) of the Internal
Revenue Code of 1986, as amended and the regulations promulgated thereunder the
(the "Code"), may grant Incentives to employees in the following forms: (i)
stock options; (ii) stock appreciation rights ("SARs"); (iii) stock awards; (iv)
restricted stock; (v) performance shares; and (vi) cash awards. Incentives may
be granted only to executive officers of the Company selected from time to time
by the Committee.
The number of shares of Common Stock which may be issued under the 1994
Executive Plan currently may not exceed 2,000,000 shares, subject to adjustment
in the event of a merger, recapitalization or other corporate restructuring. As
of April 24, 1998, 1,600,000 shares had been issued under the 1994 Executive
Plan, leaving 400,000 shares available for future issuance. The remaining shares
available represent approximately 1.5% of the outstanding shares of the Common
Stock on April 24, 1998. Approximately seven persons were eligible to receive
shares under the 1994 Executive Plan as of April 24, 1998, however, if the
Mergers are not consummated, it is currently contemplated that all remaining
shares together with the Additional Shares would be issued pursuant to options
granted to Mr. McCaffery. On April 24, 1998, the last sale price of the Common
Stock as reported by NASDAQ National Market was $3.5625 per share, and the
market value of the 400,000 shares remaining under the 1994 Executive Plan was
$1,425,000.
Stock Options
Under the 1994 Executive Plan, the Committee may grant non-qualified and
incentive stock options to eligible executive officers to purchase shares of the
Common Stock from the Company. The 1994 Executive Plan confers on the Committee
discretion, with respect to any such stock option, to determine the number and
purchase price of the shares subject to the option, the term of each option and
the time or times during its
17
<PAGE> 20
term when the option becomes exercisable, provided that the purchase price may
not be less than the fair market value of the shares subject to the option of
the date of grant. No 1994 Executive Plan participant may receive any
combination of options and SARs with respect to more than one million
(1,000,000) shares of the Common Stock under the plan. The number of shares
subject to an option will be reduced proportionately to the extent that the
optionee exercises a related SAR. The term of a non-qualified option may not
exceed 10 years and one day from the date of grant and the term of an incentive
stock option may not exceed 10 years from the date of grant. Any option shall
become immediately exercisable in the event of specified changes in corporate
ownership or control. The Committee may accelerate the exercisability of any
option or may determine to cancel stock options in order to make a participant
eligible for the grant of an option at a lower price. The Committee may approve
the purchase by the Company of an unexercised stock option for the difference
between the exercise price and the fair market value of the shares covered by
such option. Any of a participant's options or SARs that are terminated or
canceled shall count against the participant's individual share limit.
The option price may be paid in cash, check, bank draft or by delivery of
shares of the Common Stock valued at their fair market value at the time of
purchase or by withholding from the shares issuable upon exercise of the option
shares of the Common Stock valued at their fair market value or as otherwise
authorized by the Committee. The 1994 Executive Plan also permits the
successive, simultaneous exercise of stock options.
In the event that an optionee ceases to be an executive officer of the
Company for any reason, including death, any stock option or unexercised portion
thereof which was otherwise exercisable on the date of termination of executive
officer status shall expire at the time or times established by the Committee.
Stock Appreciation Rights
A stock appreciation right or an "SAR" is a right to receive, without
payment to the Company, a number of shares, cash or any combination thereof, the
amount of which is determined pursuant to the formula described below. An SAR
may be granted with respect to any stock option granted under the 1994 Executive
Plan, or alone, without reference to any stock option. An SAR granted with
respect to any stock option may be granted concurrently with the grant of such
option or at such later time as determined by the Committee and as to all or any
portion of the shares subject to the option.
The 1994 Executive Plan confers on the Committee discretion to determine
the number of shares as to which an SAR will relate as well as the duration and
exercisability of an SAR. No participant may receive any combination of SARs and
options with respect to more than one million (1,000,000) shares of the Common
Stock under the Plan. In the case of an SAR granted with respect to a stock
option, the number of shares of Common Stock to which the SAR pertains will be
reduced in the same proportion that the holder exercises the related option. The
term of an SAR may not exceed ten years and one day from the date of grant.
Unless otherwise provided by the Committee, and SAR will be exercisable for the
same time period as the stock option to which it relates is exercisable. Any SAR
shall become immediately exercisable in the event of specified changes in
corporate ownership or control. The Committee may accelerate the exercisability
of any SAR.
Upon exercise of an SAR, the holder is entitled to receive an amount which
is equal to the aggregate amount of the appreciation in the shares of the Common
Stock as to which the SAR is exercised. For this purpose, the "appreciation" in
the shares consists of the amount by which the fair market value of the shares
of the Common Stock on the exercise date exceeds (i) in the case of an SAR
related to a stock option, the purchase price of the shares under the option or
(ii) in the case of an SAR granted alone, without reference to a related stock
option, an amount determined by the Committee at the time of grant. The
Committee may pay the amount of this appreciation to the holder of the SAR by
the delivery of the Common Stock, cash, or any combination of Common Stock and
cash.
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Restricted Stock
Restricted stock consists of the sale or transfer by the Company to an
eligible executive officer of one or more shares of the Common Stock which are
subject to restrictions on their sale or other transfer by the executive
officer. The price at which restricted stock will be sold will be determined by
the Committee, and it may vary from time to time and among executive officers
and may be less than the fair market value of the shares at the date of sale.
All shares of restricted stock will be subject to such restrictions as the
Committee may determine. Subject to these restrictions and other requirements of
the 1994 Executive Plan, a participant receiving restricted stock shall have all
of the rights of a shareholder as to those shares.
Stock Awards
Stock awards consist of the transfer by the Company to an eligible
executive officer of shares of the Common Stock, without payment, as additional
compensation for services to the Company. The number of shares transferred
pursuant to any stock award will be determined by the Committee.
Performance Shares
Performance shares consist of the grant by the Company to an eligible
employee of a contingent right to receive cash or payment of shares of the
Common Stock. The performance shares shall be paid in shares of the Common Stock
to the extent performance objectives set forth in the grant are achieved. The
number of shares granted and the performance criteria will be determined by the
Committee.
Cash Awards
A cash award consists of a monetary payment made by the Company to an
eligible employee as additional compensation for his services to the Company.
Payment may depend on the achievement of specified performance objectives. The
amount of any monetary payment constituting a cash award shall be determined by
the Committee.
Non-Transferability of Most Incentives
No stock option, SAR, performance share or restricted stock granted under
the 1994 Executive Plan will be transferable by its holder, except in the event
of the holder's death, by will or the laws of descent an distribution. During a
holder's lifetime, an Incentive may be exercised only by him or her or by his or
her guardian or legal representative.
Amendment of the 1994 Executive Plan
The Board of Directors may amend or discontinue the 1994 Executive Plan at
any time. However, no such amendment or discontinuance may, subject to
adjustment in the event of a merger, recapitalization, or other corporate
restructuring, (i) change or impair, without the consent of the recipient
thereof, and Incentive previously granted, (ii) increase the maximum number of
shares of the Common Stock which may be issued to all employees under the 1994
Executive Plan, (iii) change or expand the types of Incentives that may be
granted under the 1994 Executive Plan, (iv) change the class of persons eligible
to receive Incentives under the 1994 Executive Plan, or (v) materially increase
the benefits accruing to participants. Certain 1994 Executive Plan amendments
require shareholder approval, including amendments which would materially
increase benefits accruing to participants, increase the number of securities
issuable under the 1994 Executive Plan, or change the requirements for
eligibility under the 1994 Executive Plan.
Federal Income Tax Consequences
Under existing Federal income tax provisions, an employee who receives a
stock option or performance shares or an SAR under the 1994 Executive Plan or
who purchases or receives shares of restricted stock under the 1994 Executive
Plan which are subject to restrictions which create a "substantial risk of
forfeiture" (within the meaning of section 83 of the Internal Revenue Code) will
not normally realize any income, nor
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will the Company normally receive any deduction for federal income tax purposes
in the year such Incentive is granted. An employee who receives a stock award
under the 1994 Executive Plan consisting of shares of the Common Stock will
realize ordinary income in the year of the award in an amount equal to the fair
market value of the shares of the Common Stock covered by the award on the date
it is made, and the Company will be entitled to a deduction equal to the amount
the employee is required to treat as ordinary income. An employee who receives a
cash award will realize ordinary income in the year the award is paid equal to
the amount thereof, and the amount of cash will be deductible by the Company.
When a non-qualified stock option granted pursuant to the 1994 Executive
Plan is exercised, the employee will realize ordinary income measured by the
difference between the aggregate purchase price of the shares of the Common
Stock as to which the option is excised and the aggregate fair market value of
shares of the Common Stock on the exercise date, and the Company will be
entitled to a deduction in the year the option is exercised equal to the amount
the employee is required to treat as ordinary income.
Options which qualify as incentive stock options are entitled to special
tax treatment. Under existing federal income tax law, if shares purchased
pursuant to the exercise of such an option are not disposed of by the optionee
within two years from the date of granting of the option or within one year
after the transfer of the shares to the optionee, whichever is longer, then (i)
no income will be recognized to the optionee upon the exercise of the option;
(ii) any gain or loss will be recognized to the optionee only upon ultimate
disposition of the shares and, assuming the shares constitute capital assets in
the optionee's hands, will be treated as long-term capital gain or loss; (iii)
the optionee's basis in the shares purchased will be equal to the amount of cash
paid for such shares; and (iv) the Company will not be entitled to a federal
income tax deduction in connection with the exercise of the option. The Company
understands that the difference between the option price and the fair market
value of the shares acquired upon exercise of an incentive stock option will be
treated as an "item of tax preference" for purposes of the alternative minimum
tax. In addition, incentive stock options exercised more than three months after
retirement are treated as non-qualified options.
The Company further understands that if the optionee disposes of the shares
acquired by exercise of an incentive stock option before the expiration of the
holding period described above, the optionee must treat as ordinary income in
the year of that disposition an amount equal to the difference between the
optionee's basis in the shares and the less of the fair market value of the
shares on the date of exercise or the selling price. In addition, the Company
will be entitled to a deduction equal to the amount the employee is required to
treat as ordinary income.
If the exercise price of an option is paid by surrender of previously owned
shares, the basis of the shares received in replacement of the previously owned
shares is carried over. If the option is a nonstatutory option, the gain
recognized on exercise is added to the basis. If the option is an incentive
stock option, the optionee will recognize gain if the shares surrendered were
acquired through the exercise of an incentive stock option and have not been
held for the applicable holding period. This gain will be added to the basis of
the shares received in replacement of the previously owned shares.
When a stock appreciation right granted pursuant to the 1994 Executive Plan
is exercised, the employee will realize ordinary income in the year the right is
exercised equal to the value of the appreciation which he is entitled to receive
pursuant to the formula described above, and the Company will be entitled to a
deduction in the same year and in the same amount.
An employee who receives restricted stock or performance shares subject to
restrictions which create a "substantial risk of forfeiture" (within the meaning
of section 83 of the Internal Revenue Code) will normally realize taxable income
on the date the shares become transferable or no longer subject to substantial
risk or forfeiture or on the date of their earlier disposition. The amount of
such taxable income will be equal to the amount by which the fair market value
of the shares of the Common Stock on the date such restrictions lapse (or any
earlier date on which the shares are disposed of) exceeds their purchase price,
if any. An employee may elect, however, to include in income in the year of
purchase or grant the excess of the fair market value of the shares of the
Common Stock (without regard to any restrictions) on the date of purchase or
grant over its purchase price. The Company will be entitled to a deduction for
compensation paid in the same year and in the same amount as income is realized
by the employee.
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Voting Information
The Board of Directors recommends a vote FOR Proposal Number 3. All shares
represented by proxies will be voted FOR Proposal Number 3 unless a contrary
choice is specified. The affirmative vote of the holders of a majority of the
outstanding shares of the Common Stock present in person or by proxy and
entitled to vote on Proposal Number 3 is required for its approval, provided
that the total vote cast on Proposal Number 3 represents at least 50% of all
shares of the Common Stock entitled to vote on Proposal Number 3.
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at the 1999 Annual
Meeting of Shareholders of the Company must be received by the Company at its
executive offices on or before January 5, 1999.
OTHER MATTERS
Board of Directors and Committees
The Board of Directors held ten meetings during fiscal 1998 and three
meetings during fiscal 1997. John Workman, the Montgomery Ward nominee to the
Board of Directors until his resignation in October 1997, missed more than 25%
of the meetings held in each fiscal 1998 and fiscal 1997.
The Company's audit committee consisted of Mr. Korkowski, Mr. Workman and
Mr. Tosetti in fiscal 1998 and 1997, until Mr. Workman's resignation in October
1997 (at which time the committee's size was reduced to two). The audit
committee held one meeting during fiscal 1998 and two meetings during fiscal
1997. The audit committee recommends to the board the engagement of the
independent accountants, reviews the audit plan and results of the audit
engagement, reviews the independence of the auditors, and reviews the adequacy
of the Company's system of internal accounting controls.
The Company's executive committee consisted of Mr. Johander, Mr. Geller and
Mr. Korkowski in both fiscal 1998 and fiscal 1997, but did not formally meet in
either fiscal year. The executive committee reviews and recommends to the board
strategic alternatives for the Company.
The Company's compensation committee, which consisted of Messrs. Geller and
Tosetti in fiscal 1998 and 1997, held one meeting in fiscal 1998 and no formal
meetings in fiscal 1997. The compensation committee reviews the Company's
remuneration policies and practices, makes recommendations to the board in
connection with the compensation matters concerning the Company.
Independent Accountants
Arthur Andersen LLP has been the independent accountant for the Company
since 1990. Representatives of Arthur Andersen LLP will attend the Annual
Meeting, will have an opportunity to make a statement if they desire to do so
and will be available to answer questions of the shareholders.
Solicitation
The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement, Annual Report and other material which may be sent to
the shareholders in connection with this solicitation. Brokerage houses and
other custodians, nominees and fiduciaries may be requested to forward
soliciting material to the beneficial owners of stock, in which case they will
be reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail, but, in addition, officers and regular employees of
the Company may solicit proxies personally, by telephone, by telegram or by
special letter. The Company intends to use the services of Beacon Hill Partners,
Inc. to aid in the solicitation of proxies at an anticipated fee of $2,000 plus
reasonable expenses.
The Board of Directors does not intend to present to the meeting any other
matter not referred to above and does not presently know of any matters that may
be presented to the meeting by others. However, if other
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matters come before the meeting, it is the intent of the persons named in the
enclosed proxy to vote the proxy in accordance with their best judgment.
By Order of the Board of Directors
VALUEVISION INTERNATIONAL, INC.
ROBERT L. JOHANDER
Robert L. Johander
Chairman of the Board and
Chief Executive Officer
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EXHIBIT A
VALUEVISION INTERNATIONAL, INC.
1997 DIRECTOR STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The purposes of the 1997 Director Stock Option Plan (the "Plan") are to
enhance shareholder value and to advance the interests of ValueVision
International, Inc. (the "Company") by granting stock options to its
non-employee directors to reflect their increasing role in the evaluation of
strategic opportunities for the Company and to increase their ownership stake in
the Company's Common Stock.
2. GENERAL PROVISIONS
2.1 Definitions
As used in the Plan:
(a) "Board of Directors" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, including any and
all amendments thereto.
(c) "Common Stock" means the Company's common stock, $.01 par value.
(d) "Fair Market Value" means, with respect to a specific date, the last
reported sale price of the Common Stock on the Nasdaq National
Market, and in the absence of any sale on such day, the Fair Market
Value as determined in good faith by the Board of Directors on the
basis of such quotations and other considerations as the Board of
directors deems appropriate.
(e) "Nasdaq National Market" means the Nasdaq National Market tier of
The Nasdaq Stock Market.
(f) "Participant" means a person to whom a Stock Option has been granted
under the Plan.
(g)"Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended from time to time, or any successor
rule.
(h) "Share" means shares of the Common Stock.
(i) "Stock Option" means a stock option granted under the Plan which is
intended not to qualify as an "incentive stock option" under Section
422 of the Code.
(j) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Stock Option, each of the corporations
other than the last corporation in the unbroken chain owns 50% or
more of the total voting power of all classes of stock in one of the
other corporations in such chain.
2.2 Administration of the Plan
(a) The Plan shall be administered by the Board of Directors. The Board
of Directors shall have the full power, subject to and within the
limits of the Plan, to: (i) interpret and administer the Plan, and
Stock Options granted under it; (ii) make and interpret rules and
regulations for the administration of the Plan and to make changes
in and revoke such rules and regulations (and in the exercise of
this power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect, omission, or
inconsistency in the Plan or any agreement evidencing the grant of
any Stock Option in a manner and to the extent it shall deem
necessary to make the Plan fully effective); (iii) determine those
persons to whom Stock Options shall be granted and the number of
Stock Options to be granted to any person; (iv) determine the terms
of Stock Options granted under the Plan, consistent with the
provisions of the Plan; and (v) generally, exercise such powers and
perform such acts in
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connection with the Plan as are deemed necessary or expedient to
promote the best interests of the Company. The interpretation and
construction by the Board of Directors of any provisions of the Plan
or of any Stock Option shall be final, binding and conclusive.
(b) The Board of Directors may act only by a majority of its members
then in office; however, the Board of Directors may authorize any
one (1) or more of its members or any officer of the Company to
execute and deliver documents on behalf of the Board of Directors.
(c) No member of the Board of Directors shall be liable for any action
taken or omitted to be taken or for any determination made by him or
her in good faith with respect to the Plan, and the Company shall
indemnify and hold harmless each member of the Board of Directors
against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval
of the Board of Directors) arising out of any act or omission in
connection with the administration or interpretation of the Plan,
unless arising out of such person's own fraud or bad faith.
2.3 Effective Date
The Plan shall become effective upon its adoption by the Board of
Directors, and Stock Options may be granted upon such adoption and from time to
time thereafter, subject, however, to approval of the Plan by the affirmative
vote of the holders of a majority of the shares of the Common Stock present in
person or by proxy and entitled to vote at an annual meeting of the shareholders
of the Company or at a special meeting of the shareholders of the Company
expressly called for such purposes, or any adjournments thereof. If the Plan is
not approved at such annual or special meeting or at any adjournments thereof,
this Plan and all Stock Options previously granted thereunder shall become null
and void.
2.4 Duration
If approved by the shareholders of the Company, as provided in Section 2.3,
unless sooner terminated by the Board of Directors, the Plan remain in effect
for a period of thirteen (13) years following its adoption by the Board of
Directors.
2.5 Shares Subject to the Plan
The maximum number of shares which may be subject to Stock Options granted
under the Plan shall be 150,000. The Stock Options shall be subject to
adjustment in accordance with Section 4.1, as appropriate, and shares to be
issued upon exercise of Stock Options may be either authorized and unissued
shares of Common Stock or authorized and issued shares of Common Stock purchased
or acquired by the Company for any purpose.
2.6 Amendments
The Plan may be suspended, terminated or reinstated, in whole or in part,
at any time by the Board of Directors. The Board of Directors may from time to
time make such amendments to the Plan as it may deem advisable; provided,
however, that without the approval of the Company's shareholders no amendment
shall be made which:
(a) increases the maximum number of shares which may be subject to Stock
Options granted under the Plan (other than as provided in Section
4.1, as appropriate); or
(b) extends the term of the Plan; or
(c) otherwise materially increases the benefits accruing to Participants
under the Plan; or
Except as otherwise provided herein, termination or amendment of the Plan
shall not, without the consent of a Participant, affect such Participant's
rights under any Stock Option previously granted to such Participant.
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2.7 Participants and Grants
Stock Options under this Plan may be granted by the Board of Directors to
directors who are not employees of the Company on the date of grant. Subject to
the award limit provided in Section 3.1 and the limitations of Section 2.5, the
Board of Directors may grant Stock Options to purchase such number of shares as
the Board of Directors may, in its sole discretion, determine. In granting Stock
Options under the Plan, the Board of Directors, on an individual basis, may vary
the number of Stock Options as between Participants and may grant Stock Options
to a Participant in such amounts as the Board of Directors may determine in its
sole discretion. The Board of Directors may amend or waive any term or condition
of any Stock Option, including any condition to the exercisability of any such
Stock Option, and no such amendment or waiver shall in any way diminish the
effectiveness of such Stock Option as granted on its date of grant, as so
amended or as so modified by any waiver, or constitute the grant of a new Stock
Option.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be evidenced by written
agreements executed by the Company and the Participant to whom granted, which
agreement shall state the number of shares of Common Stock which may be
purchased upon the exercise thereof and shall contain such investment
representations and other terms and conditions as the Committee may from time to
time determine.
3.2 Purchase Prices and Vesting Terms
In its discretion, the Board of Directors may (i) establish a purchase
price per share at which a Stock Option may be issued pursuant to the Plan,
provided however, that such price shall not be less than the Fair Market Value
of a share of Common Stock on the business day immediately preceding the date
the Stock Option is granted, and (ii) establish the vesting terms pursuant to
which the Stock Option is exercisable.
3.3 Period
The duration or term of each Stock Option granted under the Plan shall be
for such period as the Committee shall determine but in no event more than
thirteen (13) years from the date of grant thereof.
3.4 Exercise Upon Death
If a Participant dies while the Stock Option remains in effect, the Stock
Option may be exercised (to the extent that Participant shall have been entitled
to do so on the day of his death) by the legatee or legatees of Participant
under his will, or by his personal representatives or distributees, at anytime
within ninety (90) days after his death. Upon the expiration of such ninety (90)
day period, or, if earlier, upon the expiration date of the Stock Option as set
forth in Paragraph 3.2 hereof, the Stock Option shall become null and void.
3.5 Method of Exercising Stock Option
Subject to the terms and conditions of this Agreement, the Stock Option may
only be exercised by written notice to the Company. Such notice shall state the
election to exercise the Stock Option and the number of shares in respect of
which it is being exercised, and shall be signed by the person or person so
exercising the Stock Option. Such notice shall either: (a) be accompanied by
payment of the full purchase price of such shares, in which event the Company
shall deliver a certificate or certificates representing such shares as soon as
practicable after the notice shall be received; or (b) fix a date (not less than
five (5) nor more than ten (10) business days from the date such notice shall be
received by the Company) for the payment of the full purchase price of such
shares against delivery of a certificate or certificates representing such
shares. Payment of such purchase price shall, in either case, be made by
certified or cashier's check payable to the order of the Company. All shares
that shall be purchased upon the exercise of the Stock Option as provided herein
shall be fully paid and non-assessable.
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3.6 Immediate Acceleration of Stock Options Upon Change in Control
Notwithstanding any provision contained herein, or any other agreement
relating hereto to the contrary, the Stock Options granted pursuant to this Plan
will become exercisable immediately if any of the following events occur, unless
otherwise determined by the Board of Directors and a majority of the Incumbent
Members (as defined below) or unless and to the extent that the exercise of the
Option would result in the application of the provisions of Section 280G of the
Internal Revenue Code of 1986, as amended:
(a) Any person, as defined in Sections 3(a)(9) and 13(d)(3) of the
Act, becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated
pursuant to the Act) directly or indirectly, of 30% or more of combined
voting power of the Company's then outstanding securities; or
(b) The occurrence within any twelve-month period of a change in the
Board of Directors of the Company with the result that the Incumbent
Members (as defined below) do not constitute a majority of the Board of
Directors. "Incumbent Members" in respect of any twelve-month period, shall
mean the members of the Board on the date immediately preceding the
commencement of such twelve-month period, provided that any person becoming
a Director during such twelve-month period whose election or nomination for
election was supported by a majority of the Directors who, on the date of
such election or nomination for election, comprised the Incumbent Members
shall be considered one of the Incumbent Members in respect to such
twelve-month period; or (c) the shareholders of the Company approve an
agreement to merge or consolidate with or into another corporation or an
agreement to sell or otherwise dispose of all or substantially all of the
Company's assets (including a plan of liquidation).
4. MISCELLANEOUS PROVISIONS
4.1 Adjustments Upon Changes in Capital Structure
If all or any portion of the Option shall be exercised subsequent to any
Share dividend, split-up, recapitalization, merger, consolidation, combination
or exchange of shares, separation, reorganization, or liquidation occurring
after the date hereof, as a result of which shares of any class shall be issued
in respect of outstanding shares, or shares shall be changed into the same or a
different number of shares of the same or another class or classes, the person
or persons so exercising the Option shall receive, for the aggregate price paid
upon such exercise, the aggregate number and class of shares which, if shares
(as authorized at the date hereof) had been purchased at the date hereof for the
same aggregate price (on the basis of the price per Share set forth in paragraph
2 hereof) and had not been disposed of, such person or persons would be holding,
at the time of such exercise, as a result of such purchase and all such shared
dividends, split-ups, recapitalizations, mergers, consolidations, combinations
or exchanges of shares, separations, reorganizations, or liquidations; provided,
however, that no fractional Share shall be issued upon any such exercise, and
the aggregate price paid shall be appropriately reduced on account of any
fractional Share not issued.
4.2 Non-Transferability
The Stock Option shall not be transferable otherwise than by will or the
laws of descent and distribution, and the Stock Option may be exercised, during
the lifetime of Participant, only by Participant. More particularly (but without
limiting the generality of the foregoing), the Stock Option may not be assigned,
transferred (except as provided above), pledged, or hypothecated in any way,
shall not be assignable by operation of law, and shall not be subject to
execution, attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Stock Option contrary to the
provisions hereof, and the levy of any execution, attachment, or similar process
upon the Stock Option shall be null and void and without effect.
4.3 Withholding
The Company's obligations under this Plan shall be subject to applicable
federal, state and local tax withholding requirements. Federal, state and local
withholding tax due at the time of a grant or upon the exercise of any Stock
Option may, in the discretion of the Board of Directors, be paid in shares of
Common Stock already owned by the Participant or through the withholding of
shares otherwise issuable to such
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Participant, upon such terms and conditions as the Board of Directors shall
determine. If the Participant shall fail to pay, or make arrangements
satisfactory to the Board of Directors for the payment, to the Company of all
such federal, state and local taxes required to be withheld by the Company, then
the Company shall, to the extent permitted by law, have the right to deduct from
any payment of any kind otherwise due to such Participant an amount equal to any
federal, state or local taxes of any kind required to be withheld by the
Company.
4.4 Compliance with Law and Approval of Regulatory Bodies
No Stock Option, shall be exercisable and no shares will be delivered under
the Plan except in compliance with all applicable federal and state laws and
regulations including, without limitation, compliance with all federal and state
securities laws and withholding tax requirements and with the rules of the
Nasdaq Stock Market and of all other domestic stock exchanges on which the
Common Stock may be listed. Any share certificate issued to evidence shares for
which a Stock Option is exercised may bear legends and statements the Board of
Directors shall deem advisable to assure compliance with federal and state laws
and regulations. No Stock Option shall be exercisable and no shares will be
delivered under the Plan, until the Company has obtained consent or approval
from regulatory bodies, federal or state, having jurisdiction over such matters
as the Committee may deem advisable. In the case of the exercise of a Stock
Option by a person or estate acquiring the right to exercise the Stock Option as
a result of the death of the Participant, the Board of Directors may require
reasonable evidence as to the ownership of the Stock Option and may require
consents and releases of taxing authorities that it may deem advisable.
4.5 No Right to Continuation as a Director
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, nor the granting of
any Stock Options hereunder, shall confer upon any Participant under the Plan
any right to continue as a Director of the Company or any Subsidiary, or shall
in any way affect the right and power of the Company or any Subsidiary to
terminate the Participant as a Director of the Company at any time with or
without assigning a reason therefor, to the same extent as might have been done
if the Plan had not been adopted.
4.6 Abandonment of Options
A Participant may at any time abandon a Stock Option prior to its
expiration date. The abandonment shall be evidenced in writing, in such form as
the Committee may from time to time prescribe. A Participant shall have no
further rights with respect to any Stock Option so abandoned.
4.7 Severability
If any of the terms or provisions of the Plan conflict with the
requirements of Rule 16b-3, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Rule 16b-3.
4.8 Interpretation of the Plan
Headings are given to the Sections of the Plan solely as a convenience to
facilitate reference, such headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the construction of the Plan
or any provision hereof. The use of the masculine gender shall also include
within its meaning the feminine. The use of the singular shall also include
within its meaning the plural and vice versa.
4.9 Use of Proceeds
Funds received by the Company upon the exercise of Stock Options shall be
used for the general corporate purposes of the Company.
4.10 Construction of Plan
The place of administration of the Plan shall be in the State of Minnesota,
and the validity, construction, interpretation, administration and effect of the
Plan and of its rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the State of Minnesota.
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EXHIBIT B
VALUEVISION INTERNATIONAL, INC.
AMENDMENT NO. 1 TO THE 1994 EXECUTIVE
STOCK OPTION AND COMPENSATION PLAN
The number "2,000,000" is deleted from the first sentence of Section 5.1 of
the 1994 Executive Stock Option and Compensation Plan and is replaced with the
number "2,400,000." As amended, Section 5.1 reads as follows:
5.1. Limited Number of Shares. Subject to adjustment as provided in Section
11.6, the number of shares of Common Stock of the Company ("Common Stock") that
may be issued under the Plan shall not exceed two million four hundred thousand
(2,400,000) shares of Common Stock. No executive officer may receive any
combination of stock purchase options and SARs with respect to more than one
million (1,000,000) shares of Common Stock under the Plan, subject to adjustment
as provided in Section 11.6.
With the exception of the foregoing, the Plan remains in full force and
effect.
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EXHIBIT C
VALUEVISION INTERNATIONAL, INC.
1994 EXECUTIVE STOCK OPTION AND COMPENSATION PLAN
1. PURPOSE. The purpose of the ValueVision International, Inc. 1994
Executive Stock Option and Compensation Plan (the "Plan") is to advance the
interests of ValueVision International, Inc. (the "Company") and its
shareholders by furnishing a variety of economic incentives ("Incentives")
designed to attract and retain executive officers and to put a substantial
portion of such executive employees' compensation at risk to motivate such
executive officers.
2. ADMINISTRATION. The plan shall be administered by a committee of the
board of directors of the Company (the "Committee"). The Committee shall consist
of not less than two directors of the Company and shall be appointed from time
to time by the board of directors of the Company. Each member of the Committee
shall be a "disinterested person" within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934, and the regulations promulgated thereunder (the
"1934 Act") and an "outside director" within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder (the "Code"). The board of directors of the Company may from time to
time appoint members of the Committee in substitution for, or in addition to,
members previously appointed, and may fill vacancies, however caused, in the
Committee. The Committee shall select one of its members as its chairman and
shall hold its meetings at such times and places as it shall deem advisable. A
majority of the Committee's members shall constitute a quorum. All action of the
Committee shall be taken by the majority of its members. Any action may be taken
by a written instrument signed by majority of the members and actions so taken
shall be fully effective as if it had been made by a majority vote at a meeting
duly called and held. The Committee may appoint a secretary, shall keep minutes
of its meetings and shall make such rules and regulations for the conduct of its
business as it shall deem advisable. The Committee shall have complete authority
to award Incentives under the Plan, to determine whether any previously granted
Incentives have vested or earned (as the case may be), to interpret the Plan, to
amend the Plan, and to make any other determination which it believes necessary
and advisable for the proper administration of the Plan. The Committee's
decisions and matters relating to the Plan shall be final and conclusive on the
Company and its participants.
3. PARTICIPATION. Each executive officer of the Company shall become
eligible to receive Incentives under the Plan when designated by the Committee.
Participation by executive officers of the Company or its subsidiaries or
affiliates and any performance objectives relating to such officers must be
approved by the Committee.
4. TYPES OF INCENTIVES. Incentives under the Plan may be granted in any one
or a combination of the following forms: (a) incentive stock options under Code
Section 422A and non-statutory stock options (section 6); (b) stock appreciation
rights ("SARs") (section 7); (c) stock awards (section 8); (d) restricted stock
(section 8); (e) performance shares (section 9); and (f) cash awards (section
10).
5. SHARES SUBJECT TO THE PLAN.
5.1. Limited Number of Shares. Subject to adjustment as provided in
Section 11.6, the number of shares of Common Stock of the Company ("Common
Stock") that may be issued under the Plan shall not exceed two million
(2,000,000) shares of Common Stock. No executive officer may receive any
combination of stock purchase options and SARs with respect to more than
one million (1,000,000) shares of Common Stock under the Plan, subject to
adjustment as provided in Section 11.6.
5.2. Cancellation. To the extent that cash in lieu of shares of Common
Stock is delivered upon the exercise of an SAR pursuant to Section 7.4, the
Company shall be deemed, for purposes of applying the limitations on the
number of shares, to have issued the greater of the number of shares of
Common Stock which it was entitled to issue upon such exercise or on the
exercise of any related option. In the event that a stock option or SAR
granted hereunder expires or is terminated or canceled unexercised as to
any shares of Common Stock, such shares may again be issued under the Plan
either pursuant to stock options, SARs or otherwise. In the event that
shares of Common Stock are issued as restricted stock or
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pursuant to a stock award and thereafter are forfeited or reacquired by the
Company pursuant to rights reserved upon issuance thereof, such forfeited
and reacquired shares may again be issued under the Plan, either as
restricted stock, pursuant to stock awards or otherwise. The Committee may
also agree to the cancellation of stock options in order to make a
participant eligible for the grant of a stock option at a lower price than
the option to be cancelled.
Notwithstanding the foregoing, any of a participant's options or SARs that
are terminated or cancelled shall continue to be counted against the
participant's individual share limit under Section 5.1.
5.3. Type of Common Stock. Common Stock issued under the Plan in
connection with stock options, SARs, performance shares, restricted stock
or stock awards, may be authorized and unissued shares or shares previously
purchased by the Company.
6. STOCK OPTIONS. A stock option is a right to purchase shares of Common
Stock from the Company. Each stock option granted by the Committee under this
Plan shall be subject to the following terms and conditions:
6.1. Price. The option price per share shall be determined by the
Committee, subject to adjustment under Section 11.6.
6.2. Number. The number of shares of Common Stock subject to the
option shall be determined by the Committee, subject to the limits of
Section 5 and adjustment as provided in Section 11.6. The number of shares
of Common Stock subject to a stock option shall be reduced in the same
proportion that the holder thereof exercises an SAR if any SAR was granted
in conjunction with or related to the stock option.
6.3. Duration and Time for Exercise. Subject to earlier termination as
provided in Section 11.4, the term of each stock option shall be determined
by the Committee but shall not exceed ten years and one day from the date
of grant. Each stock option shall become exercisable at such time or times
during its term as shall be determined by the Committee at the time of
grant. The Committee may accelerate the exercisability of any stock option.
Subject to the foregoing and with the approval of the Committee, all or any
part of the shares of Common Stock with respect to which the participant's
right to purchase has accrued may be purchased by the Company at the time
of such accrual or at any time or times thereafter during the term of the
option.
6.4. Manner of Exercise. A stock option may be exercised, in whole or
in part, by giving written notice to the Company, specifying the number of
shares of Common Stock to be purchased and accompanied by the full purchase
price for such shares. The option price shall be payable in United States
dollars upon exercise of the option and may be paid by cash; uncertified or
certified check; bank draft; by delivery of shares of Common Stock in
payment of all or any part of the option price, which shares shall be
valued for this purpose at their Fair Market Value on the date such option
is exercised; by instructing the Company to withhold from the shares of
Common Stock issuable upon exercise of the stock option sufficient shares
of Common Stock to constitute payment of all or any part of the option
price, which shares shall be valued for this purpose at their Fair Market
Value or in such other manner as may be authorized from time to time by the
Committee. Prior to the issuance of shares of Common Stock upon the
exercise of a stock option, a participant shall have no rights as a
stockholder.
6.5. Incentive Stock Options. Notwithstanding anything in the Plan to
the contrary, the following additional provisions shall apply to the grant
of stock options which are intended to qualify as Incentive Stock Options
(as such term is defined in Section 422A of the Code):
(a) The aggregate Fair Market Value (determined as of the time the
option is granted) of the shares of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any
participant during any calendar year (under all of the Company's plans)
shall not exceed $100,000.
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(b) Any Incentive Stock Option certificate authorized under the
Plan shall contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and contain all
provisions required in order to qualify the options as Incentive Stock
Options.
(c) All Incentive Stock Options must be granted within ten years
from the earlier of the date on which this Plan was adopted by board of
directors or the date this Plan was approved by the stockholders.
(d) Unless sooner exercised, all Incentive Stock Options shall
expire no later than 10 years after the date of grant.
(e) The option price for Incentive Stock Options shall be not less
than the Fair Market Value of the Common Stock subject to the option on
the date of grant.
(f) No Incentive Stock Options shall be granted to any participant
who, at the time such option is granted, would own (within the meaning
of Section 422A of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the employer
corporation or of its parent or subsidiary corporation.
7. STOCK APPRECIATION RIGHTS. A stock appreciation right ("SAR") is a right
to receive, without payment to the Company, a number of shares of Common Stock,
cash or any combination thereof, the amount of which is determined pursuant to
the formula set forth in Section 7.4. An SAR may be granted (a) with respect to
any stock option granted under this Plan, either concurrently with the grant of
such stock option or at such later time as determined by the Committee (as to
all or any portion of the shares of Common Stock subject to the stock option);
or (b) alone, without reference to any related stock option. Each SAR granted by
the Committee under this Plan shall be subject to the following terms and
conditions:
7.1. Number. Each SAR granted to any participant shall relate to such
number of shares of Common Stock as shall be determined by the Committee,
subject to the limits of Section 5.1 and adjustment as provided in Section
11.6. In the case of an SAR granted with respect to a stock option, the
number of shares of Common Stock to which the SAR pertains shall be reduced
in the same proportion and at the same time that the holder of the option
exercises the related stock option.
7.2. Duration. Subject to earlier termination as provided in Section
11.4, the term of each SAR shall be determined by the Committee but shall
not exceed ten years and one day from the date of grant. Unless otherwise
provided by the Committee, each SAR shall become exercisable at such time
or times, to such extent and upon such conditions as the stock option, if
any, to which it relates is exercisable. The Committee may in its
discretion accelerate the exercisability of any SAR.
7.3. Exercise. An SAR may be exercised, in whole or in part, by giving
written notice to the Company, specifying the number of SARs which the
holder wishes to exercise. Upon receipt of such written notice, the Company
shall, within 90 days thereafter, deliver to the exercising holder
certificates for the shares of Common Stock or cash or both, as determined
by the Committee, to which the holder is entitled pursuant to Section 7.4.
7.4. Payment. Subject to the right of the Committee to deliver cash in
lieu of shares of Common Stock (which, as it pertains to officers and
directors of the Company, shall comply with all requirements of the 1934
Act), the number of shares of Common Stock that are issuable upon the
exercise of an SAR shall be determined by dividing:
(a) the number of shares of Common Stock as to which the SAR is
exercised multiplied by the amount of the appreciation in such shares
(for this purpose, the "appreciation" shall be the amount by which the
Fair Market Value of the shares of Common Stock subject to the SAR on
the exercise date exceeds (1) in the case of an SAR related to a stock
option, the purchase price of the shares of Common Stock under the stock
option or (2) in the case of an SAR granted alone, without reference to
a related stock option, an amount which shall be determined by the
Committee at the time of grant, subject to adjustment under Section
11.6); by
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(b) the Fair Market Value of a share of Common Stock on the
exercise date.
In lieu of issuing shares of Common Stock upon the exercise of an SAR,
the Committee may elect to pay the holder of the SAR cash equal to the Fair
Market Value on the exercise date of any or all of the shares which would
otherwise be issuable. No fractional shares of Common Stock shall be issued
upon the exercise of an SAR; instead, the holder of the SAR shall be
entitled to receive a cash adjustment equal to the same fraction of the
Fair Market Value of a share of Common Stock on the exercise date or to
purchase the portion necessary to make a whole share at its Fair Market
Value on the date of exercise.
8. STOCK AWARDS AND RESTRICTED STOCK. A "stock award" consists of the
transfer by the Company to a participant of shares of Common Stock, without
other payment therefor, as additional compensation for services to the Company.
A share of "restricted stock" consists of shares of Common Stock which are sold
or transferred by the Company to a participant at a price determined by the
Committee (which price shall be at least equal to the minimum price required by
applicable law for the issuance of a share of Common Stock) and subject to
restrictions on their sale or other transfer by the participant, as determined
by the Committee. The transfer of Common Stock pursuant to stock awards and the
transfer and sale of restricted stock shall be subject to the following terms
and conditions:
8.1. Number of Shares. The number of shares to be transferred or sold
by the Company to a participant pursuant to a stock award or as restricted
stock shall be determined by the Committee.
8.2. Sale Price. The Committee shall determine the price, if any, at
which shares of restricted stock shall be sold to a participant, which may
vary from time to time and among participants and which may be below the
Fair Market Value of such shares of Common Stock at the date of sale.
8.3. Restrictions. All shares of restricted stock transferred or sold
hereunder shall be subject to such restrictions as the Committee may
determine, including, without limitation any or all of the following:
(a) a prohibition against the sale, transfer, pledge or other
encumbrance of the shares of restricted stock, such prohibition to lapse
upon such event or events, or at such time or times as the Committee
shall determine (whether in annual or more frequent installments, at the
time of the death, disability or retirement of the holder of such
shares, or otherwise);
(b) a requirement that the holder of shares of restricted stock
forfeit, or (in the case of shares sold to a participant) resell back to
the Company at his or her cost, all or a part of such shares in the
event of termination of his or her employment during any period in which
such shares are subject to restrictions; and
(c) such other conditions or restrictions as the Committee may deem
advisable.
8.4. Escrow. In order to enforce the restrictions imposed by the
Committee pursuant to Section 8.3, the participant receiving restricted
stock shall enter into an agreement with the Company setting forth the
conditions of the grant. Shares of restricted stock shall be registered in
the name of the participant and deposited, together with a stock power
endorsed in blank, with the Company. Each such certificate shall bear a
legend in substantially the following form:
The transferability of this certificate and the shares of Common
Stock represented by it are subject to the terms and conditions
(including conditions of forfeiture) contained in the 1994 Executive
Stock Option and Compensation Plan of ValueVision International, Inc.
(the "Company"), and an agreement entered into between the registered
owner and the Company. A copy of the Plan and the agreement is on
file in the office of the secretary of the Company.
8.5. End of Restrictions. Subject to Section 11.5, at the end of any
time period during which the shares of restricted stock are subject to
forfeiture and restrictions on transfer, such shares will be delivered free
of all restrictions to the participant or to the participant's legal
representative, beneficiary or heir.
8.6. Stockholder. Subject to the terms and conditions of the Plan,
each participant receiving restricted stock shall have all the rights of a
stockholder with respect to shares of stock during any period in which such
shares are subject to forfeiture and restrictions on transfer, including
without limitation, the
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right to vote such shares. Dividends paid in cash or property (other than
Common Stock) with respect to shares of restricted stock shall be paid to
the participant currently. Any dividends payable in the form of Common
Stock, with respect to a participant's restricted stock, shall be paid in
the form of restricted stock subject to the same restrictions and
forfeitures as the participant's existing restricted stock.
9. PERFORMANCE SHARES. A "performance share" consists of an award which
shall be paid in shares of Common Stock, as described below. The grant of
performance share shall be subject to such terms and conditions as the Committee
deems appropriate, including the following:
9.1. Performance Objectives. Each performance share will be subject to
performance objectives for the Company or one of its operating units to be
achieved by the end of a specified period. The number of performance shares
granted shall be determined by the Committee and may be subject to such
terms and conditions, as the Committee shall determine. If the performance
objectives are achieved, each participant will be paid in shares of Common
Stock or cash as determined by the Committee. If such objectives are not
met, each grant of performance shares may provide for lesser payments in
accordance with formulas established in the award.
9.2. Not Stockholder. The grant of performance shares to a participant
shall not create any rights in such participant as a stockholder of the
Company, until the payment (if any) of shares of Common Stock with respect
to an award.
9.3. No Adjustments. No adjustment shall be made in performance shares
granted on account of cash dividends that may be paid or other rights that
may be issued to the holders of Common Stock prior to the end of any period
for which performance objectives were established.
9.4. Expiration of Performance Share. If any participant's employment
with the Company is terminated for any reason other than normal retirement,
death or disability prior to the achievement of the participant's stated
performance objectives, all the participant's rights on the performance
shares shall expire and terminate unless otherwise determined by the
Committee. In the event of termination of employment by reason of death,
disability, or normal retirement, the Committee, in its own discretion may
determine what portions, if any, of the performance shares should be paid
to the participant.
10. CASH AWARDS. A cash award consists of a monetary payment made by the
Company to a participant as additional compensation for his or her services to
the Company. Payment of a cash award will normally depend on achievement of
performance objectives by the Company or by individual participants. The amount
of any monetary payment constituting a cash award shall be determined by the
Committee in its sole discretion. Cash awards may be subject to other terms and
conditions, which may vary from time to time and among participants, as the
Committee determines to be appropriate.
The Committee has approved cash award incentives under the Plan for each of
Robert L. Johander, the Company's Chief Executive Officer and Chairman of the
Board, Nicholas M. Jaksich, the Company's President and a director of the
Company, in the form of increases in their base salaries to occur if the
following objectives are met. The base salaries of both Messrs. Johander and
Jaksich will be increased to $181,250, $237,500, $293,750 and $350,000 on
January 31, 1995, 1996, 1997 and 1998, respectively, if the Company has achieved
minimum pre-tax income of at least $2 million, $5.25 million, $8.5 million and
$11.75 million in the respective fiscal years ending on such dates.
11. GENERAL.
11.1. Effective Date. The Plan shall take effect on the date of
adoption of the Plan by the Board of Directors, subject to the condition
that the Plan is approved by the affirmative vote of the holders of a
majority of the voting stock of the Company at the first annual meeting of
stockholders held after the date hereof. If such stockholder approval is
not obtained, all Incentives granted under the Plan shall be void, except
for any immediate cash awards, granted without other future conditions.
Incentives may be granted under the Plan at any time after adoption of the
Plan by the Board of Directors.
11.2. Duration. The Plan shall remain in effect until all Incentives
granted under the Plan have either been satisfied by the issuance of shares
of Common Stock or the payment of cash or have been
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terminated under the terms of the Plan, and all restrictions imposed on
shares of Common Stock in connection with their issuance under the Plan
have lapsed. No Incentives may be granted under the Plan after the tenth
anniversary of the date on which this Plan was adopted by board of
directors, or the date of approval by the stockholders, whichever is
earlier.
11.3. Non-transferability of Incentives. No stock option, SAR,
restricted stock or performance award may be transferred, pledged or
assigned by the holder thereof except, in the event of the holder's death,
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code of 1986,
as amended, or Title I of the Employee Retirement Income Security Act, or
the rules thereunder, and the Company shall not be required to recognize
any attempted assignment of such rights by any participant. During a
participant's lifetime, an Incentive may be exercised only by him or her,
or by his or her guardian or legal representative.
11.4. Effect of Termination of Employment or Death. In the event that
a participant ceases to be an employee of the Company for any reason,
including death, any Incentives may be exercised or shall expire at such
times as may be determined by the Committee.
11.5. Additional Condition. Notwithstanding anything in this Plan to
the contrary: (a) the Company may, if it shall determine it necessary or
desirable for any reason, at the time of award of any Incentive or the
issuance of any shares of Common Stock pursuant to any Incentive, require
the recipient of the Incentive, as a condition to the receipt thereof or to
the receipt of shares of Common Stock issued pursuant thereto, to deliver
to the Company a written representation of present intention to acquire the
Incentive or the shares of Common Stock issued pursuant thereto for his or
her own account for investment and not for distribution; and (b) if at any
time the Company further determines, in its sole discretion, that the
listing, registration or qualification (or any updating of any such
document) of any Incentive or the shares of Common Stock issuable pursuant
thereto is necessary on any securities exchange or under any federal or
state securities or blue sky law, or that the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of,
or in connection with the award of any Incentive, the issuance of shares of
Common Stock pursuant thereto, or the removal of any restrictions imposed
on such shares, such Incentive shall not be awarded or such shares of
Common Stock shall not be issued or such restrictions shall not be removed,
as the case may be, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
11.6. Adjustment. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or corporations,
there shall be substituted for each of the shares of Common Stock then
subject to the Plan, including shares subject to restrictions, options, or
achievement of performance share objectives, the number and kind of shares
of stock or other securities to which the holders of the shares of Common
Stock will be entitled pursuant to the transaction. In the event of any
recapitalization, stock dividend, stock split, combination of shares or
other change in the Common Stock, the number of shares of Common Stock then
subject to the Plan, including shares subject to restrictions, options or
achievement of performance share objectives, shall be equitably adjusted in
proportion to the change in outstanding shares of Common Stock. In the
event of any such adjustments, the purchase price of any option, the
performance objectives of any Incentive, and the shares of Common Stock
issuable pursuant to any Incentive shall be equitably adjusted as and to
the extent appropriate, in the discretion of the Committee, to provide
participants with the same relative rights before and after such
adjustment.
11.7. Incentive Plans and Agreements. Except in the case of stock
awards or cash awards, the terms of each Incentive shall be stated in a
plan or agreement approved by the Committee. The Committee may also
determine to enter into agreements with holders of options to reclassify or
convert certain outstanding options, within the terms of the Plan, as
Incentive Stock Options or as non-statutory stock options and in order to
eliminate SARs with respect to all or part of such options and any other
previously issued options.
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11.8. Withholding.
(a) The Company shall have the right to withhold from any payments
made under the Plan or to collect as a condition of payment, any taxes
required by law to be withheld. At any time when a participant is
required to pay to the Company an amount required to be withheld under
applicable income tax laws in connection with a distribution of Common
Stock or upon exercise of an option or SAR, the participant may satisfy
this obligation in whole or in part by electing (the "Election") to have
the Company withhold from the distribution shares of Common Stock having
a value up to the amount required to be withheld. The value of the
shares to be withheld shall be based on the Fair Market Value of the
Common Stock on the date that the amount of tax to be withheld shall be
determined ("Tax Date").
(b) Each Election must be made prior to the Tax Date. The Committee
may disapprove of any Election, may suspend or terminate the right to
make Elections, or may provide with respect to any Incentive that the
right to make Elections shall not apply to such Incentive. An Election
is irrevocable.
(c) If a participant is an officer or director of the Company
within the meaning of Section 16 of the 1934 Act, then an Election must
comply with all of the requirements of the 1934 Act.
11.9. No Continued Employment or Right to Corporate Assets. No
participant under the Plan shall have any right, because of his or her
participation, to continue in the employ of the Company for any period of
time or to any right to continue his or her present or any other rate of
compensation. Nothing contained in the Plan shall be construed as giving an
employee, the employee's beneficiaries or any other person any equity or
interests of any kind in the assets of the Company or creating a trust of
any kind or a fiduciary relationship of any kind between the Company and
any such person.
11.10. Deferral Permitted. Payment of cash or distribution of any
shares of Common Stock to which a participant is entitled under any
Incentive shall be made as provided in the Incentive. Payment may be
deferred at the option of the participant if provided in the Incentive.
11.11. Amendment of the Plan. The Board may amend or discontinue the
Plan at any time. However, no such amendment or discontinuance shall,
subject to adjustment under Section 11.6, (a) change or impair, without the
consent of the recipient, an Incentive previously granted, (b) materially
increase the maximum number of shares of Common Stock that may be issued to
any or all participants under the Plan, (c) materially increase the
benefits that may be granted under the Plan, (d) materially modify the
requirements as to eligibility for participation in the Plan, or (e)
materially increase the benefits accruing to participants under the Plan.
11.12. Immediate Acceleration of Incentives. Notwithstanding any
provision in this Plan or in any Incentive to the contrary, (a) the
restrictions on all shares of restricted stock award shall lapse
immediately, (b) all outstanding options and SARs will become exercisable
immediately, and (c) all performance share objectives shall be deemed to be
met and payment made immediately, if subsequent to the date that the Plan
is approved by the Board of Directors of the Company, any of the following
events occur unless otherwise determined by the board of directors and a
majority of the Continuing Directors (as defined below):
(1) any person or group of persons becomes the beneficial owner of
30% or more of any equity security of the Company entitled to vote for
the election of directors;
(2) a majority of the members of the board of directors of the
Company is replaced within the period of less than two years by
directors not nominated and approved by the board of directors; or
(3) the stockholders of the Company approve an agreement to merge
or consolidate with or into another corporation or an agreement to sell
or otherwise dispose of all or substantially all of the Company's assets
(including a plan of liquidation).
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For purposes of this Section 11.12, beneficial ownership by a person
or group of persons shall be determined in accordance with Regulation 13D
(or any similar successor regulation) promulgated by the Securities and
Exchange Commission pursuant to the 1934 Act. Beneficial ownership of more
than 30% of an equity security may be established by any reasonable method,
but shall be presumed conclusively as to any person who files a Schedule
13D report with the Securities and Exchange Commission reporting such
ownership. If the restrictions and forfeitability periods are eliminated by
reason of provision (1), the limitations of this Plan shall not become
applicable again should the person cease to own 30% or more of any equity
security of the Company.
For purposes of this Section 11.12, "Continuing Directors" are
directors (a) who were in office prior to the time any of provisions (1),
(2) or (3) occurred or any person publicly announced an intention to
acquire 20% or more of any equity security of the Company; (b) directors in
office for a period of more than two years; and (c) directors nominated and
approved by the Continuing Directors.
11.13. Definition of Fair Market Value. Whenever "Fair Market Value"
of Common Stock shall be determined for purposes of this Plan, it shall be
determined by reference to the last sale price of a share of Common Stock
on the principal United States Securities Exchange registered under the
1934 Act on which the Common Stock is listed (the "Exchange") or, if not
so listed, on the National Association of Securities Dealers, Inc.
Automatic Quotation System (including the National Market System)
("NASDAQ") on the trading day immediately preceding the date the Incentive
is granted. If the Exchange or NASDAQ is closed for trading on such date,
or if the Common Stock does not trade on such date, then the last sale
price used shall be the one on the date the Common Stock last traded on the
Exchange or NASDAQ, as applicable.
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[FORM OF PROXY CARD]
- --------------------------------------------------------------------------------
PROXY PROXY
VALUEVISION INTERNATIONAL, INC.
PROXY FOR 1998 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS
The undersigned, a shareholder of ValueVision International, Inc., hereby
appoints Robert L. Johander, Nicholas M. Jaksich and Stuart R. Romenesko, and
each of them, as proxies, with full power of substitution, to vote on behalf
of the undersigned the number of shares which the undersigned is then entitled
to vote, at the Annual Meeting of Shareholders of ValueVision International,
Inc. to be held at the Minneapolis Marriott Southwest, 5801 Opus Parkway,
Minnetonka, Minnesota 55343 on Tuesday, June 2, 1998 at 9:00 a.m., and at any
and all adjournments thereof, with all the powers which the undersigned would
possess if personally present, upon the matters set forth herein. When properly
executed, this proxy will be voted on the proposals set forth herein as
directed by the shareholder, but if no direction is made in the space provided,
the proxies will vote FOR all proposals and at their discretion on any other
business as may properly come before the meeting.
The undersigned hereby revokes all previous proxies relating to the Shares
covered hereby and acknowledges receipt of the Notice and Proxy Statement
relating to the Annual Meeting of Shareholders.
To be Signed on Reverse Side
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S><C>
(1) Election of Directors: Nominees: Robert L. Johander, Nicholas M. Jaksich,
Marshall S. Geller, Robert J. Korkowski and Paul D. Tosetti.
[ ] FOR all nominees [ ] WITHHOLD All Nominees [ ] FOR all nominees, except vote withheld from the following nominees
------------------------------------------------------------------------------------------------------------------------
(2) Proposal to approve the 1997 Director Stock Option Plan.
[ ] FOR [ ] OPPOSE
(3) Proposal to approve Amendment No. 1 to the 1994 Executive Stock Option and Compensation Plan to increase the number of shares
issuable under such Plan from 2,000,000 to 2,400,000.
[ ] FOR [ ] OPPOSE
(4) Upon such other business as may properly come before the meeting or any adjournments thereof.
Signature(s)
---------------------------------
Dated , 1998
---------------------------------
NOTE: Please sign exactly as name appears
hereon. Joint owners should each sign.
</TABLE>
