<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)
- --------------------------------------------------------------------------------
(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)(1) 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 LOGO]
VALUEVISION INTERNATIONAL, INC.
6740 SHADY OAK ROAD
EDEN PRAIRIE, MINNESOTA 55344-3433
May 19, 2000
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
ValueVision International, Inc., a Minnesota corporation (the "Company"), to be
held at the St. Francis Hotel, 335 Powell Street, San Francisco, California
94102, on Tuesday, June 13, 2000 at 9:00 a.m., Pacific time.
The enclosed Notice of Annual Meeting of Shareholders and Proxy Statement
describe the matters to come before the meeting. During the meeting, we will
also review the activities and financial results of the past year and comment on
the upcoming year.
We hope that you will be able to attend the meeting in person and we look
forward to seeing you. Whether or not you plan to attend the meeting, please
take the time to vote. You may vote via the Internet, by calling a toll-free
telephone number, or by completing the enclosed proxy card and mailing it in the
enclosed envelope. See the enclosed proxy card for more details on voting.
Please send your proxy via the Internet, telephone, or mail as soon as possible
so that your proxy is received prior to the meeting. This will assure that your
shares will be represented at the meeting and voted in accordance with your
wishes.
Sincerely,
/s/ GENE MCCAFFERY
Gene McCaffery
Chairman of the Board, Chief Executive
Officer
and President
<PAGE> 3
VALUEVISION INTERNATIONAL, INC.
6740 SHADY OAK ROAD
EDEN PRAIRIE, MINNESOTA 55344-3433
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 13, 2000
------------------------------
To the Shareholders of ValueVision International, Inc.:
The Annual Meeting of Shareholders (the "Meeting") of ValueVision
International, Inc. (the "Company") will be held at the St. Francis Hotel, 335
Powell Street, San Francisco, California 94102 on Tuesday, June 13, 2000 at 9:00
a.m., Pacific time, or at any adjournment or adjournments thereof. The Meeting
is being held for the purpose of considering and taking appropriate action with
respect to the following:
1. To elect seven Directors, five of whom will be elected by the holders of
shares of common stock, par value $.01 per share, of the Company, voting
separately as a class, and two of whom will be elected by the holders of
shares of Series A Redeemable Convertible Preferred Stock, par value
$.01 per share, of the Company, voting separately as a class;
2. To approve Amendment No. 7 to the Second Amended ValueVision
International, Inc. 1990 Stock Option Plan to increase the number of
shares issuable thereunder from 3,250,000 to 4,250,000;
3. To ratify the appointment of Arthur Andersen LLP as independent auditors
of the Company for the fiscal year ending January 31, 2001; and
4. To transact such other business as may properly come before the Meeting
or any adjournments thereof.
Only shareholders of record at the close of business on May 3, 2000 will be
entitled to receive notice of and to vote at the Meeting or any adjournments
thereof. This notice and proxy statement was first sent to shareholders on
approximately May 19, 2000.
A proxy card for the Meeting is enclosed. Whether or not you plan to attend
the Meeting in person, you are requested to vote your proxy either (i) via the
Internet at the address listed on the proxy card, (ii) by calling a toll-free
telephone number listed on the proxy card, or (iii) by marking, signing and
dating the proxy card and mailing it in the enclosed envelope. If you have
returned your proxy via the Internet, telephone or mail and then attend the
Meeting, you may revoke your proxy and vote in person on all matters submitted
at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF EACH
OF THE PROPOSALS AND IN FAVOR OF THE NOMINEES TO THE BOARD OF DIRECTORS.
By Order of the Board of Directors
/s/ GENE MCAFFERY
Gene McCaffery
Chairman of the Board, Chief Executive
Officer
and President
May 19, 2000
<PAGE> 4
VALUEVISION INTERNATIONAL, INC.
6740 SHADY OAK ROAD
EDEN PRAIRIE, MINNESOTA 55344-3433
------------------------------
PROXY STATEMENT
FOR THE
2000 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 13, 2000
------------------------------
GENERAL INFORMATION
VOTING OF PROXIES
All shares of common stock, par value $.01 per share (the "Common Stock"),
of ValueVision International, Inc., a Minnesota corporation (the "Company"), and
Series A Redeemable Convertible Preferred Stock, par value $.01 per share (the
"Preferred Stock"), of the Company which are entitled to vote and are
represented at the Meeting by properly executed proxies received via the
Internet, telephone, or mail prior to the date of the Meeting or at the 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 on the proposals (the "Proposals") as
follows:
(1) FOR approval of Proposal Number 1 to elect seven Director members
of the Company's Board of Directors (each a "Director," collectively, the
"Board of Directors"), five of whom will be elected by the holders of
shares of Common Stock voting separately as a class and two of whom will be
elected by the holders of shares of Preferred Stock voting separately as a
class;
(2) FOR approval of Proposal Number 2 to approve Amendment No. 7 to
the Second Amended ValueVision International, Inc. 1990 Stock Option Plan,
as amended from time to time (the "1990 Plan"), to increase the number of
shares issuable thereunder from 3,250,000 to 4,250,000; and
(3) FOR approval of Proposal Number 3 to ratify the appointment of
Arthur Andersen LLP as independent auditors of the Company for the fiscal
year ending January 31, 2001.
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.
SOLICITATION OF PROXIES
The Company will bear the cost of preparing, assembling and mailing this
Proxy Statement, the Annual Report and other material which may be sent to the
shareholders of the Company 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 shares, 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, by facsimile, by electronic mail or by special letter.
RECORD DATE; SHARES ENTITLED TO VOTE; QUORUM
Only shareholders of record at the close of business on May 3, 2000 (the
"Record Date") will be entitled to vote at the Meeting or any adjournments
thereof. As of the Record Date, there were 38,517,158 shares of Common Stock
issued and outstanding and 350 record holders of Common Stock. In addition, as
of the Record Date, there were 5,339,500 shares of Preferred Stock issued and
outstanding, all of which were held by
<PAGE> 5
GE Capital Equity Investments, Inc. ("GE Equity"). The holders of the Common
Stock and the Preferred Stock will vote together as one class at the Meeting on
Proposals 2 and 3, with the holders of the Preferred Stock voting on an "as
converted" basis (meaning such shares will be entitled to 5,339,500 votes on
Proposals 2 and 3). With respect to Proposal 1, the holders of the Preferred
Stock, voting separately as a class, are entitled to elect two Directors to the
Board of Directors and the holders of the Common Stock, voting separately as a
class, are entitled to elect five Directors to the Board of Directors. The
Common Stock and Preferred Stock are collectively referred to in this Proxy
Statement as the "Voting Securities."
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Voting Securities entitled to vote at the
Meeting will constitute a quorum for the combined class voting on Proposals 2
and 3. With respect to Proposal 1, the presence, in person or by properly
executed proxy, of the holders of a majority of the outstanding shares of (a)
the Common Stock entitled to a separate class vote on five Directors at the
Meeting will constitute a quorum for purposes of such class vote, and (b) the
Preferred Stock entitled to a separate class vote on two Directors at the
Meeting will constitute a quorum for purposes of such class vote.
VOTES REQUIRED; EFFECT OF ABSTENTIONS AND BROKER NON-VOTES
The affirmative vote of the holders of a majority of the outstanding shares
of Voting Securities (voting as one class) present in person or by proxy and
entitled to vote is required to approve, or ratify, as applicable, Proposals 2
and 3, provided that the total vote cast on each such Proposal represents at
least 50% of all shares of the Voting Securities entitled to vote on each such
Proposal.
With respect to Proposal 1, two Directors are to be elected by the holders
of shares of Preferred Stock voting separately as a class and five Directors are
to be elected by the holders of shares of Common Stock voting separately as a
class. In each separate class vote, the Directors will be elected by the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock and Preferred Stock, as applicable, present in person or by proxy
and entitled to vote, provided that the total vote cast represents, in each
case, at least 50% of all of the shares of Common Stock and Preferred Stock
entitled to vote.
A shareholder who abstains with respect to any Proposal is considered to be
present and entitled to vote at the Meeting, and is in effect casting a negative
vote. A shareholder who is not otherwise present and entitled to vote at the
Meeting and who does not give authority to a proxy to vote on a 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 votes cast on such Proposal represent at least 50% of all shares
entitled to vote thereon.
REVOCABILITY OF PROXIES
The presence at the Meeting of a shareholder of the Company 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 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, Minnesota
55344-3433, Attention: Chief Financial Officer, or may be hand-delivered to an
officer of the Company at the Meeting.
BOARD RECOMMENDATIONS
The Board recommends a vote FOR the election of each of the nominees to the
Board of Directors set forth in Proposal 1 and FOR the approval, or
ratification, as applicable, of each of the other Proposals.
2
<PAGE> 6
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding the beneficial
ownership of securities of the Company as of the Record Date (unless otherwise
indicated) based on a total of 38,517,158 shares of Common Stock and 5,339,500
shares of Preferred Stock outstanding as of such 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, (iii) the Chief Executive Officer and each of the executive
officers named in the Summary Compensation Table who is or was an executive
officer of the Company during the year ended January 31, 2000 ("Fiscal 2000"),
and (iv) all Directors and executive officers of the Company as a group.
Shareholders listed below possess sole voting and investment power with respect
to their shares unless otherwise indicated.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES
(IF DIFFERENT FROM THE COMPANY) TITLE OF CLASS BENEFICIALLY OWNED PERCENT OF CLASS
------------------------------- -------------- ------------------ ----------------
<S> <C> <C> <C>
GE Capital Equity Investments, Inc.(1)......... Common Stock 16,338,918 37.0%
120 Long Ridge Road Preferred Stock 5,339,500 100%
Stamford, Connecticut 06927
National Broadcasting Company, Inc.(1)......... Common Stock 16,338,918 37.0%
30 Rockefeller Plaza Preferred Stock 5,339,500 100%
New York, New York 10112
General Electric Capital Corporation(1)........ Common Stock 16,338,918 37.0%
260 Long Ridge Road Preferred Stock 5,339,500 100%
Stamford, Connecticut 06927
General Electric Capital Services, Inc.(1)..... Common Stock 16,338,918 37.0%
260 Long Ridge Road Preferred Stock 5,339,500 100%
Stamford, Connecticut 06927
General Electric Company(1).................... Common Stock 16,338,918 37.0%
3135 Easton Turnpike Preferred Stock 5,339,500 100%
Fairfield, Connecticut 06431
National Broadcasting Company Holding,
Inc.(1)...................................... Common Stock 16,338,918 37.0%
30 Rockefeller Plaza Preferred Stock 5,339,500 100%
New York, New York 10112
Gene McCaffery(2).............................. Common Stock 900,000 2.3%
Stuart U. Goldfarb(3).......................... Common Stock 183,332 *
Marshall S. Geller(4).......................... Common Stock 134,500 *
Robert J. Korkowski(5)......................... Common Stock 178,631 *
Paul D. Tosetti(6)............................. Common Stock 110,000 *
Mark W. Begor(7)............................... Common Stock 16,338,918 37.0%
Preferred Stock 5,339,500 100%
John L. Flannery, Jr.(8)....................... Common Stock 16,338,918 37.0%
Preferred Stock 5,339,500 100%
Cary L. Deacon(9).............................. Common Stock 170,833 *
Steve Jackel(10)............................... Common Stock 108,333 *
Edwin G. Pohlmann(11).......................... Common Stock 188,333 *
David T. Quinby(12)............................ Common Stock -0- *
All Directors and executive officers as a
group........................................ Common Stock 18,257,879 39.8%
(eleven persons)(13) Preferred Stock 5,339,500 100%
</TABLE>
- -------------------------
* Less than 1%
(1) Information with respect to GE Equity, National Broadcasting Company, Inc.
("NBC"), General Electric Capital Corporation, General Electric Capital
Services, Inc., General Electric Company and National Broadcasting Company
Holding, Inc. is provided in reliance upon information included in a
3
<PAGE> 7
Schedule 13D/A filed on July 7, 1999. General Electric Capital Services,
Inc., General Electric Company and National Broadcasting Company Holding,
Inc. disclaim beneficial ownership with respect all Common Stock and
Preferred Stock of the Company. Pursuant to certain agreements, GE Equity,
NBC, and General Electric Capital Corporation, as the parent company of GE
Equity, may be deemed to share voting power and dispositive power with
respect to 16,338,918 shares of Common Stock, which consists of (i)
10,674,418 shares of Common Stock of the Company, (ii) 5,339,500 shares of
Preferred Stock which are currently convertible into 5,339,500 shares of
Common Stock, and (iii) 325,000 shares of Common Stock which are currently
exercisable under a warrant. See "CERTAIN TRANSACTIONS -- Strategic
Alliance with GE Equity and NBC".
(2) Represents options to purchase 900,000 shares of Common Stock that are
presently exercisable.
(3) Represents options to purchase 183,332 shares of Common Stock that are
presently exercisable or will become exercisable within 60 days.
(4) Includes options to purchase 47,500 shares of Common Stock that are
presently exercisable or will become exercisable within 60 days.
(5) Includes options to purchase 87,500 shares of Common Stock that are
presently exercisable or will become exercisable within 60 days.
(6) Includes options to purchase 100,000 shares of Common Stock that are
presently exercisable or will become exercisable within 60 days.
(7) As an officer of NBC, Mr. Begor may be deemed to have beneficial ownership
of all shares of the Company that are beneficially owned by NBC. Mr. Begor
disclaims beneficial ownership of 16,338,918 shares of Common Stock and
5,339,500 shares of Preferred Stock which are beneficially owned by NBC.
(8) As an officer of GE Equity, Mr. Flannery may be deemed to have beneficial
ownership of all shares of the Company that are beneficially owned by GE
Equity. Mr. Flannery disclaims beneficial ownership of 16,338,918 shares of
Common Stock and 5,339,500 shares of Preferred Stock which are beneficially
owned by GE Equity.
(9) Represents options to purchase 170,833 shares of Common Stock that are
presently exercisable or will become exercisable within 60 days.
(10) Represents options to purchase 108,333 shares of Common Stock that are
presently exercisable or will become exercisable within 60 days.
(11) Mr. Pohlmann resigned from his position as Chief Operating Officer and
Executive Vice President of the Company effective February 4, 2000.
(12) Mr. Quinby resigned from his position as Vice President, General Counsel
and Secretary of the Company effective December 31, 1999.
(13) Includes (i) options to purchase 1,730,830 shares of Common Stock that are
presently exercisable or will become exercisable within 60 days, (ii)
5,339,500 shares of Preferred Stock which are currently convertible into
5,339,500 shares of Common Stock, and (iii) 325,000 shares of Common Stock
which are currently exercisable under a warrant. Includes all Directors and
executive officers of the Company as of the Record Date. Beneficial
ownership of 16,338,918 shares of Common Stock and 5,339,500 shares of
Preferred Stock has been disclaimed by Messrs. Begor and Flannery and is
therefore disclaimed for all Directors and executive officers of the
Company as a group.
4
<PAGE> 8
PROPOSAL 1
ELECTION OF DIRECTORS
Seven Directors will be elected at the Meeting, five of whom (Messrs.
McCaffery, Goldfarb, Geller, Korkowski and Tosetti) will be voted upon and
elected by the holders of shares of Common Stock voting separately as a class
and two of whom (Messrs. Begor and Flannery) will be voted upon and elected by
the holders of shares of Preferred Stock voting separately as a class. Each
Director will hold office until the next annual meeting of shareholders of the
Company 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 following table sets forth information concerning the persons who are
nominated for election to the Board of Directors.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITIONS CURRENTLY HELD WITH THE COMPANY
---- --- -------- -----------------------------------------
<S> <C> <C> <C>
Gene McCaffery..................... 52 1998 Chairman of the Board, Chief Executive Officer
and President
Stuart U. Goldfarb................. 45 1999 Vice Chairman
Marshall S. Geller................. 61 1993 Director
Robert J. Korkowski................ 59 1993 Director
Paul D. Tosetti.................... 45 1996 Director
Mark W. Begor(1)................... 42 1999 Director
John L. Flannery, Jr.(1)........... 38 1999 Director
</TABLE>
- -------------------------
(1) Messrs. Begor and Flannery are the nominees of the holders of shares of
Preferred Stock.
NOMINEES FOR ELECTION BY HOLDERS OF SHARES OF COMMON STOCK
Gene McCaffery
Mr. McCaffery joined the Company in March 1998, was named Chief Executive
Officer in June 1998 and President and Chairman of the Board in February 1999.
Mr. McCaffery spent 14 years at Montgomery Ward & Co., Incorporated ("Montgomery
Ward"), a department store retailer, most recently through 1995 as Senior
Executive Vice President of Merchandising Marketing, Strategic Planning and
Credit Services. In July 1997, Montgomery Ward filed for reorganization under
Chapter 11 of the Federal bankruptcy laws. From 1994 to 1996, Mr. McCaffery also
served as Vice Chairman of The Signature Group, one of the nation's largest
direct marketing companies. From March 1996 to March 1998, Mr. McCaffery served
as Chief Executive Officer and managing partner of Marketing Advocates, a
celebrity-driven product and service development company based in Los Angeles,
California and Chicago, Illinois. He also served as Vice Chairman of the Board
of the Company from August 1995 to March 1996. Mr. McCaffery served as an
infantry officer in Vietnam and was appointed as Civilian Aid to the Secretary
of the Army by President George Bush in 1991. Mr. McCaffery also serves as a
director of NetRadio Corporation.
Stuart U. Goldfarb
Mr. Goldfarb has been Vice Chairman of the Company since July 1999, and a
Director since March, 1999. From March 1995 to July 1999, Mr. Goldfarb held a
number of senior executive positions at NBC, most recently as the Executive Vice
President, Worldwide Business Development, where he was responsible for
coordinating all of NBC's United States and international core business
development activities. From 1993 to 1995, Mr. Goldfarb was Managing Director of
Communications Equity Associates, a media investment banking firm. From 1988 to
1992, Mr. Goldfarb was President of Heartland Ventures, Inc., a media consulting
and investment firm. Mr. Goldfarb also serves on the board of directors of
BigStar Entertainment, Inc., and Petopia.com, Inc. He is on the board of
advisors of the TH Lee Putnam Internet Fund.
5
<PAGE> 9
Marshall S. Geller
Mr. Geller has been a Director since May 1993 and was Vice Chairman of the
Board of Directors from August 1994 until July 1999. Mr. Geller is currently the
Chairman, Chief Executive Officer, and Founding Partner of Geller & Friend
Capital Partners, Inc., an investment banking firm 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 Equities & Debt for Bear Stearns' offices in Los Angeles, San
Francisco, Chicago and Hong Kong. Mr. Geller also serves on the boards of
directors of the following companies: Ballantyne of Omaha, Inc., Cabletel
Communications Corp., Hexcel Corporation and Strouds, Inc.
Robert J. Korkowski
Mr. Korkowski has been a Director since May 1993. From 1989 to his
retirement in 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 systems company based in Minneapolis. From 1974 to 1986, Mr.
Korkowski was Executive Vice President and Chief Financial Officer of G.
Heileman Brewing Company.
Paul D. Tosetti
Mr. Tosetti has been a Director 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.
NOMINEES FOR ELECTION BY HOLDERS OF SHARES OF PREFERRED STOCK
Mark W. Begor
Mr. Begor has been a Director since October 1999 and has been the Executive
Vice President and Chief Financial Officer of NBC since April 1998. He is
responsible for NBC's global finance, accounting, tax and information technology
activities. Mr. Begor began his career with General Electric Company ("GE") in
1980, holding various financial positions in GE and GE Plastics, including
Manager of Finance and Business Development for GE Plastics Pacific in
Singapore, before being named General Manager of GE Plastics' Global Sourcing
and Petrochemicals operations in October 1993. From August 1995 to March 1998,
Mr. Begor served as GE's Manager of Investor Communications and was appointed a
corporate officer of GE in December 1996. Mr. Begor is a member of the board of
directors of NBC Internet, Inc.
John L. Flannery, Jr.
Mr. Flannery has been a Director since July 1999 and has been the Managing
Director, Media/ Consumer Group of GE Equity since August 1999. From January
1997 to August 1999, Mr. Flannery served as GE Equity's Managing Director for
Latin America, where he started GE Equity's Latin American activities. From
January 1997 to August 1999, Mr. Flannery was also President of GE Capital
Argentina/ Chile. From 1994 until December 1996, Mr. Flannery served as Senior
Vice President and Manager of Domestic Equity for GE Equity. Mr. Flannery also
serves on the boards of directors of the following companies: Translate, Inc.,
Pensare, Inc., PKS Retail Networks, Consumer Financial Network, and
Autobytel.Europe, LLC.
6
<PAGE> 10
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 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.
THE BOARD OF DIRECTORS BELIEVES THE ELECTION TO
THE BOARD OF DIRECTORS OF THE NOMINEES SET FORTH ABOVE
TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS
AND RECOMMENDS A VOTE "FOR" APPROVAL OF EACH OF THE NOMINEES.
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
The business and affairs of the Company are managed by the Board of
Directors, which held five meetings during Fiscal 2000. Committees established
and maintained by the Board of Directors include the Audit Committee and the
Compensation Committee. During Fiscal 2000, each Director attended 75% or more
of the aggregate of the total number of meetings of the Board of Directors and
total number of meetings held by all committees of the Board of Directors on
which he served. Mr. Flannery was appointed a Director in July 1999 as one of
the two representatives of the holders of Preferred Stock. In October 1999, Mr.
Goldfarb resigned from the Board of Directors as the nominee of the holders of
Preferred Stock and was simultaneously appointed as a Director on behalf of the
holders of the Common Stock, while Mr. Begor was appointed as a Director on
behalf of the holders of Preferred Stock. The Board of Directors has not
established a standing nominating committee nor does any committee of the Board
of Directors perform similar functions.
The Board of Directors will be considering a proposal to expand the
membership of the Board of Directors from its current membership of seven
members to ten members in the coming months. Expansion of the Board of Directors
in this manner would permit the consideration of new candidates for the Board
who may represent greater diversity and broader industry contacts. Under the
Company's amended and restated Articles of Incorporation, any such expansion
would currently require the consent of the holders of a majority of the
outstanding shares of Preferred Stock. Any new members which are added to the
Board of Directors subsequent to the Annual Meeting of Shareholders on June 13,
2000 would be elected by the existing Board of Directors to serve until the next
following Annual Meeting of Shareholders, at which time their re-election would
be subject to the vote of the shareholders of the Company.
The Audit Committee consisted of Messrs. Flannery (elected July 1999),
Korkowski and Tosetti in Fiscal 2000. The Audit Committee held two meetings
during Fiscal 2000. The Audit Committee recommends to the Board of Directors 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. On April 10,
2000, the Board of Directors adopted a new Audit Committee Charter that complies
with the new standards set forth in Securities and Exchange Commission
regulations and the Nasdaq Stock Market's independent director and Audit
Committee listing standards. These changes require, in part, that all companies
listed on Nasdaq or that had applied for listing on Nasdaq prior to December 14,
1999, certify that they have adopted a formal written Audit Committee charter
and will review and assess the adequacy of the charter on an annual basis by
June 14, 2000. In addition, all of the companies must also certify that they
comply, and will continue to comply, with the new Audit Committee structure and
membership requirements set forth in such regulations and listing standards by
June 14, 2001. The new Audit Committee Charter is attached to this Proxy
Statement as Appendix A.
The Compensation Committee, which consisted of Messrs. Begor (elected in
October 1999), Geller and Tosetti in Fiscal 2000, held three meetings during
Fiscal 2000. The Compensation Committee reviews the Company's remuneration
policies and practices, and makes recommendations to the Board of Directors in
connection with compensation matters concerning the Company.
7
<PAGE> 11
DIRECTOR COMPENSATION
For Fiscal 2000, the Company paid certain of its non-employee Directors,
Messrs. Geller, Korkowski and Tosetti, an annual retainer of $125,000, $30,000
and $20,000, respectively (paid quarterly on a pro rata basis), plus $1,000 for
each Board of Directors and committee meeting attended in person and $750 for
each Board of Directors and committee meeting in which such Director
participated by telephone. The Company reimburses all Directors for costs and
expenses in connection with their attendance at Board of Directors and committee
meetings. The Directors elected by the holder of shares of Preferred Stock are
not entitled to any fees (but will be entitled to reimbursement of costs and
expenses) in connection with their services as members of the Board of
Directors. During Fiscal 2000, no options to purchase shares of Common Stock
were granted to non-employee Directors.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth certain summary information with respect to
compensation earned during the fiscal years ended January 31, 2000, 1999, and
1998, for the Company's (i) Chief Executive Officer, (ii) four other most highly
compensated executive officers who were serving as executive officers on January
31, 2000, and (iii) a former executive officer whose salary and bonus exceeded
$100,000 during Fiscal 2000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------------------------- UNDERLYING
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS/SARS
--------------------------- ----------- ------ ----- ------------
($) ($) ($) (#)
<S> <C> <C> <C> <C>
Gene McCaffery(1)........................... 2000 541,667 678,000 100,000
Chairman of the Board, 1999 413,462 130,000 800,000
Chief Executive Officer and President 1998 -- -- --
Stuart U. Goldfarb(2)....................... 2000 122,885 50,000 550,000
Vice Chairman 1999 -- -- --
1998 -- -- --
Cary L. Deacon(3)........................... 2000 267,685 100,000 175,000
President of Marketing 1999 109,615 -- 100,000
1998 -- -- --
Steve Jackel(4)............................. 2000 197,115 44,231 225,000
President -- TV Home 1999 -- -- --
Shopping Operations 1998 -- -- --
Edwin G. Pohlmann(5)........................ 2000 291,242 17,308 175,000
Chief Operating Officer and 1999 -- -- 155,000
Executive Vice President 1998 -- -- --
David T. Quinby(6).......................... 2000 178,365 -- --
Vice President, General 1999 165,712 -- 75,000
Counsel and Secretary 1998 140,000 50,000 50,000
</TABLE>
- -------------------------
(1) Mr. McCaffery was named Chief Executive Officer on June 2, 1998 and Chairman
of the Board and President on February 2, 1999.
(2) Mr. Goldfarb was named Vice Chairman on July 28, 1999.
(3) Mr. Deacon was named President of Marketing in March 2000.
(4) Mr. Jackel was named President -- TV Home Shopping Operations in August
1999.
(5) Mr. Pohlmann resigned from the Company effective February 4, 2000.
(6) Mr. Quinby resigned from the Company effective December 31, 1999.
9
<PAGE> 13
OPTION GRANTS DURING FISCAL YEAR ENDED JANUARY 31, 2000
The following table sets forth information with respect to options to
purchase shares of Common Stock granted during Fiscal 2000 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 2000.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
NUMBER OF PERCENT OF TOTAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM($)(6)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#) FISCAL YEAR(1) ($/SH) DATE 5%($) 10%($)
---- ------------ ---------------- ----------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Gene McCaffery.......... 100,000 4.6 40.56(2) 12/2/2009 2,550,954 6,464,618
Stuart U. Goldfarb...... 550,000 25.1 24.00(3) 7/28/2006 5,373,726 12,523,066
Cary L. Deacon.......... 75,000 3.4 16.75(4) 6/7/2006 511,420 1,191,826
100,000 4.6 24.00(3) 7/28/2006 977,041 2,276,921
Steve Jackel............ 50,000 2.3 16.00(4) 6/4/2006 325,680 758,974
75,000 3.4 10.31(5) 4/16/2006 314,867 733,773
100,000 4.6 24.00(3) 7/28/2006 977,041 2,276,921
Edwin G. Pohlmann....... 75,000 3.4 16.75(4) 6/7/2006 511,420 1,191,826
100,000 4.6 24.00(3) 7/28/2006 977,041 2,276,921
David T. Quinby......... -- -- -- -- -- --
</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
a share of Common Stock on the date of grant and were fully vested at time
of grant. These options will expire after ten years or six months from the
date of termination of employment.
(3) Options were granted at an exercise price equal to the fair market value of
a share of Common Stock on the date of grant and vest one-third at the time
of issuance and one-third on each of the next two grant date anniversaries.
Such options will expire five years after vesting or three months from the
date of termination of employment.
(4) Options were granted at an exercise price equal to the fair market value of
a share of Common Stock on the date of grant and vest one-half upon each
anniversary of the grant date. Such options will expire five years after
vesting or three months from the date of termination of employment.
(5) Options were granted at an exercise price equal to the fair market value of
a share of Common Stock on the date of grant and vest two-thirds upon the
first grant date anniversary and one-third upon the second grant date
anniversary. Such options will expire five years after vesting or three
months from the date of termination of employment.
(6) The amounts shown in these columns are the result of calculations at assumed
annual rates required by the SEC 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.
10
<PAGE> 14
OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table sets forth information as of January 31, 2000 with
respect to the unexercised options held by each of the executive officers named
in the Summary Compensation Table above.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SAR AT
JANUARY 31, 2000(#) JANUARY 31, 2000($)
---------------------- -----------------------
SHARES ACQUIRED ON VALUE (EXERCISABLE/ (EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE) UNEXERCISABLE)(1)
---- ------------------ ----------- -------------- -----------------
<S> <C> <C> <C> <C>
Gene McCaffery............ 0 0 900,000/0 25,748,000/0
Stuart U. Goldfarb........ 0 0 183,332/366,668 2,119,318/4,238,682
Cary L. Deacon............ 0 0 133,333/141,667 3,516,329/2,181,421
Steve Jackel.............. 0 0 45,333/179,667 688,299/3,339,263
Edwin G. Pohlmann(2)...... 0 0 188,333/141,667 4,879,864/2,181,421
David T. Quinby(3)........ 125,000 3,200,445 0/0 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 $35.56 on January 31, 2000.
(2) Mr. Pohlmann resigned as an officer of the Company effective February 4,
2000 and forfeited 141,667 shares subject to options not yet vested that
were granted to him in Fiscal 2000.
(3) Mr. Quinby exercised all of his options in Fiscal 2000.
EMPLOYMENT AGREEMENTS
Gene McCaffery
Effective December 2, 1999, the Company entered into an amended and
restated employment agreement with Mr. McCaffery (the "McCaffery Employment
Agreement"), amending and restating Mr. McCaffery's previous employment
agreement except with respect to the issuance of options to purchase Common
Stock thereunder. Pursuant to the McCaffery Employment Agreement, Mr. McCaffery
serves as the President and Chief Executive Officer of the Company until March
31, 2001, and will receive a base salary of $750,000 during the term of the
McCaffery Employment Agreement, a signing bonus of $300,000 and a $600 monthly
automobile allowance. The McCaffery Employment Agreement provides for bonus
salary of up to 100% of the base salary, which may be earned only upon the
Company meeting certain operating income, revenue and stock performance
criteria. In addition, pursuant to the McCaffery Employment Agreement, Mr.
McCaffery was issued fully vested stock options to acquire 100,000 shares of
Common Stock, with an exercise price equal to $40.5625 per share, the last
trading price of a share of Common Stock on December 1, 1999. Also, the
McCaffery Employment Agreement provides for Mr. McCaffery to receive a retention
bonus of $1,000,000 to be paid if Mr. McCaffery (i) remains employed through
March 31, 2001, (ii) is discharged without Cause, or (iii) resigns for Employer
Cause or following a Change in Control, as such terms are defined in the
McCaffery Employment Agreement. In addition, the McCaffery Employment Agreement
provides that the Company grant to Mr. McCaffery a line of credit in the
principal amount of $5,000,000 to be secured by securities of the Company owned
by Mr. McCaffery.
The McCaffery Employment Agreement generally provides that Mr. McCaffery
may not compete against the Company for six months after his employment is
terminated. In addition, in the event of a Change of Control, Mr. McCaffery's
employment can be terminated by the Company or Mr. McCaffery in certain
circumstances. In the event of such a termination, Mr. McCaffery would be
entitled to receive the base salary and bonus salary remaining to be paid
through the end of the term of the McCaffery Employment Agreement, together with
accrued benefits.
11
<PAGE> 15
Stuart U. Goldfarb
Effective July 28, 1999, the Company entered into a three-year employment
agreement with Mr. Goldfarb (the "Goldfarb Employment Agreement"), pursuant to
which Mr. Goldfarb serves as the Vice Chairman of the Company and will continue
to be nominated to serve as a Director. Mr. Goldfarb will receive a base salary
of $450,000 for the first year, $500,000 for the second year, and $550,000 for
the last year during the term of the Goldfarb Employment Agreement and the use
of an automobile and apartment in Minnesota provided by the Company. The
Goldfarb Employment Agreement also provides for bonus salary of up to $200,000
per year, depending upon whether the Company meets certain operating income
criteria. In addition, pursuant to the Goldfarb Employment Agreement, Mr.
Goldfarb was issued options to acquire 550,000 shares of Common Stock, with an
exercise price equal to $24 per share, the last trading price of a share of
Common Stock on July 27, 1999. Such options vest one-third upon grant and
one-third upon each anniversary of the grant date.
The Goldfarb Employment Agreement generally provides that Mr. Goldfarb may
not compete against the Company for twelve months after his employment is
terminated. In addition, in the event of a Change of Control (as defined in the
Goldfarb Employment Agreement), Mr. Goldfarb's employment can be terminated by
the Company or Mr. Goldfarb in certain circumstances. In the event of such a
termination, Mr. Goldfarb would be entitled to receive the base salary and bonus
salary remaining to be paid through the end of the term of the Goldfarb
Employment Agreement, together with accrued benefits.
Cary L. Deacon
On December 30, 1998, the Company entered into an employment agreement with
Mr. Deacon (the "Deacon Employment Agreement"), pursuant to which Mr. Deacon
will serve as the Company's Senior Vice President of Marketing and Business
Development until March 31, 2001. In March 2000, Mr. Deacon was named President
of Marketing. Pursuant to the Deacon Employment Agreement, the Company has
agreed to pay Mr. Deacon a base salary of at least $225,000 annually in addition
to a monthly car allowance of $450. The Deacon Employment Agreement also
provides for bonus salary in each fiscal year up to $150,000 based upon the
achievement by the Company of certain performance milestones. Pursuant to the
Deacon Employment Agreement, Mr. Deacon has agreed not to compete with the
Company in the television home shopping and direct marketing businesses for a
period of six months following termination of his employment by the Company.
Steve Jackel
Effective June 4, 1999, the Company entered into a two-year employment
agreement with Mr. Jackel (the "Jackel Employment Agreement"), pursuant to which
Mr. Jackel serves as the Executive Vice President/General Manager of the Company
and receives a base salary of at least $325,000 per year for the term of the
Jackel Employment Agreement and the use of an automobile and apartment provided
by the Company. The Jackel Employment Agreement also provides for bonus salary
of at least $50,000 per year and up to $150,000 per year, depending upon whether
the Company meets certain operating income criteria. In accordance with the
Jackel Employment Agreement, and pursuant to the Company's 1990 Stock Option
Plan, Mr. Jackel was issued options to acquire 50,000 shares of Common Stock,
with an exercise price equal to $16 per share, the last trading price of a share
of Common Stock on June 3, 1999. Such options vest one-half upon each
anniversary of the grant date. The Jackel Employment Agreement generally
provides that Mr. Jackel may not compete against the Company for six months
after his employment is terminated.
Richard D. Barnes
Effective October 19, 1999, the Company entered into a three-year
employment agreement with Mr. Barnes (the "Barnes Employment Agreement"),
pursuant to which Mr. Barnes serves as the Senior Vice President and Chief
Financial Officer of the Company. Mr. Barnes receives a base salary of at least
$240,000 per year with performance reviews to be conducted annually, a monthly
automobile allowance of $500 per month and reimbursement for moving expenses.
The Barnes Employment Agreement also provides for bonus
12
<PAGE> 16
salary of at least $50,000 per year and up to $200,000 per year, depending upon
whether the Company meets certain operating income criteria. In addition,
pursuant to the Barnes Employment Agreement, Mr. Barnes was issued stock options
to acquire 200,000 shares of Common Stock, with an exercise price equal to
$26.688 per share, the last trading price of a share of Common Stock on October
18, 1999. The options vest one-third upon grant and one-third upon each
anniversary of the grant date. The Barnes Employment Agreement generally
provides that Mr. Barnes may not compete against the Company for twelve months
after his employment is terminated.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives generally have been
made by the Compensation Committee. During Fiscal 2000, the Compensation
Committee consisted of three non-employee Directors, Mark W. Begor, Paul D.
Tosetti and Marshall S. Geller. Mr. Begor is an executive officer of NBC, the
largest shareholder of the Company, and Mr. Tosetti is a partner at Latham &
Watkins, a law firm that provides legal services to the Company. All decisions
by the Compensation Committee relating to the compensation of the Company's
executive officers are reviewed by the full Board of Directors. 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
Fiscal 2000 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 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 1990
Plan and the Company's 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 1990 Plan also permits the granting
of stock options to key personnel. Options become exercisable based upon
criteria established by the Company. During Fiscal 2000, option grants were made
to the following executive officers of the Company: options to acquire 100,000
shares of Common Stock were granted to Mr. McCaffery; options to acquire 550,000
shares of Common Stock were granted to Mr. Goldfarb; options to acquire 225,000
shares of Common Stock were granted to Mr. Jackel; options to acquire 200,000
shares of Common Stock were granted to Mr. Barnes; and options to acquire
175,000 shares of Common Stock were granted to Mr. Deacon.
The Compensation Committee surveys employee stock option programs of
companies with similar capitalization to the Company prior to recommending the
grant of options to purchase shares of Common Stock 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 a share of 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
13
<PAGE> 17
granted in a previous year. The Board 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 Common Stock.
As of December 2, 1999, the Compensation Committee adjusted Mr. McCaffery's
compensation structure by entering into an amended and restated employment
agreement with Mr. McCaffery. Prior to this amendment and restatement, Mr.
McCaffery's employment agreement provided for (i) a base salary of $525,000 for
the year ended January 31, 2000; (ii) a bonus up to 100% of the base salary, of
which 72% was earned in Fiscal 2000, and (iii) the grant of options to purchase
800,000 shares of Common Stock, all of which were vested as of January 31, 2000.
The Compensation Committee believes that the continued growth, expansion and
profitability of the Company during Fiscal 2000 and the successful negotiation
of a transaction with GE Equity and NBC were due in large part to Mr.
McCaffery's efforts. Therefore, the McCaffery Employment Agreement includes a
signing bonus of $300,000, a base salary of $750,000, a bonus salary of up to
100% of the base salary, a grant of fully vested options to purchase 100,000
shares of Common Stock in addition to his prior grant of 800,000 options, and a
retention bonus of $1,000,000 if employed through the March 2001 contract date,
as provided in the McCaffery Employment Agreement.
During 1993, the Internal Revenue Code of 1986 was amended to include
Section 162(m) which denies a deduction to any publicly held corporation for
compensation paid to any "covered employee" (which is defined as the Chief
Executive Officer and the Company's other four most highly compensated officers,
as of the end of a taxable year) to the extent that the compensation exceeds
$1,000,000 in any taxable year of the corporation beginning after 1993.
Compensation which constitutes "performance based compensation" is excludable in
applying the $1,000,000 limit. It is the Company's policy to qualify
compensation paid to its top executives for deductibility under Section 162(m)
in order to maximize the Company's income tax deductions wherever, in the
judgment of the Compensation Committee, to do so would be consistent with the
objectives of the Company's compensation policies.
14
<PAGE> 18
CERTAIN TRANSACTIONS
TRANSACTION INVOLVING MR. DEACON
On March 26, 1999, the Company loaned $170,000 to Cary L. Deacon, an
executive officer of the Company, pursuant to a demand promissory note. The
promissory note bears interest at 5.5%. Although the promissory note was
originally due on August 31, 1999, the Company has extended the due date until
such time that the Company demands payment in full, including all accrued
interest. The promissory note is secured by a second mortgage on certain real
property owned by Mr. Deacon and his spouse. As of May 3, 2000, the aggregate
amount of principal and accrued interest due to the Company by Mr. Deacon was
approximately $180,260 and represents the largest amount of indebtedness
outstanding with respect to Mr. Deacon since the beginning of the Company's last
fiscal year.
TRANSACTION INVOLVING MR. MCCAFFERY
Pursuant to the McCaffery Employment Agreement, Gene McCaffery, the
President, Chief Executive Officer and Chairman of the Board of the Company has
been granted a line of credit from the Company in the principal amount of
$5,000,000 to be secured by securities of the Company owned by Mr. McCaffery.
The McCaffery Employment Agreement requires that the value of the securities of
the Company pledged by Mr. McCaffery be equal to 150% of the aggregate amounts
borrowed from the Company by Mr. McCaffery, such collateral to be adjusted on a
quarterly basis. The interest to be paid by Mr. McCaffery on amounts withdrawn
on the line of credit is equal to the minimum amount of interest allowable under
Federal tax laws. As of May 19, 2000, Mr. McCaffery had not withdrawn any amount
pursuant to such line of credit. A separate pledge agreement and promissory note
from Mr. McCaffery to the Company will be entered into with respect to any
amounts to be withdrawn pursuant to this line of credit.
TRANSACTION INVOLVING MR. TOSETTI
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.
STRATEGIC ALLIANCE WITH GE EQUITY AND NBC
On March 8, 1999, the Company entered into a strategic alliance with NBC
and GE Equity. Pursuant to the terms of the transaction, GE Equity acquired
5,339,500 shares of Preferred Stock, and NBC was issued a warrant (the
"Distribution Warrant") to acquire 1,450,000 shares of Common Stock under a
Distribution and Marketing Agreement discussed below. The Preferred Stock was
sold by the Company for aggregate consideration of approximately $44,265,000 (or
approximately $8.29 per share) and the Company will receive an additional
approximately $12.0 million upon exercise of the Distribution Warrant. In
addition, the Company issued to GE Equity a warrant (the "Investment Warrant")
to increase its potential aggregate equity stake (together with its affiliates,
including NBC) to 39.9%. NBC also has the exclusive right to negotiate on behalf
of the Company for the distribution of its television home shopping service. The
shareholders of the Company approved the above-described transaction with GE
Equity and NBC at a special meeting of shareholders of the Company held on June
2, 1999. The material agreements constituting this strategic alliance to which
the Company is a party are described below.
Investment Agreement
Pursuant to the Investment Agreement between the Company and GE Equity
dated March 8, 1999 (the "Investment Agreement"), the Company sold to GE Equity
5,339,500 shares of Preferred Stock for an aggregate of $44,265,000. The
Preferred Stock is convertible into an equal number of shares of Common Stock,
subject to customary anti-dilution adjustments, has a mandatory redemption on
the 10th anniversary of its issuance or upon a "change of control" at its stated
value ($8.29 per share), participates in dividends on the same basis as the
Common Stock and has a liquidation preference over the Common Stock and any
other junior securities. So long as NBC or GE Equity is entitled to designate a
nominee to the Board of Directors (see discussion under "Shareholder Agreement"
below), the holders of the Preferred Stock are entitled to a
15
<PAGE> 19
separate class vote on the directors subject to nomination by NBC and GE Equity.
During such period of time, such holders will not be entitled to vote in the
election of any other Directors, but will be entitled to vote on all other
matters put before shareholders of the Company. Consummation of the sale of
3,739,500 shares of the Preferred Stock was completed on April 15, 1999. Final
consummation of the transaction regarding the sale of the remaining 1,600,000
Preferred Stock shares was completed at a special meeting of the Company's
shareholders held on June 2, 1999.
Pursuant to the Investment Agreement, the Company also issued to GE Equity
the Investment Warrant, which gave to GE Equity the right to acquire a number of
shares of Common Stock that would result in the combined beneficial ownership by
GE Equity and NBC of 39.9% of the Common Stock outstanding from time to time
subject to certain limitations as set forth in the Investment Warrant. On July
6, 1999, GE Equity exercised the Investment Warrant, allowing it to acquire an
additional 10,674,000 shares of the Company's Common Stock for an aggregate of
$178,370,000, or $16.71 per share, representing the 45-day average closing price
of the underlying Common Stock ending on the trading day prior to exercise.
Shareholder Agreement
Pursuant to the Investment Agreement, the Company and GE Equity entered
into a Shareholder Agreement (the "Shareholder Agreement") which provides for
certain corporate governance and standstill matters. The Shareholder Agreement
(together with the Certificate of Designation of the Preferred Stock) provides
that GE Equity and NBC are entitled to designate nominees for an aggregate of 2
out of 7 board seats so long as their aggregate beneficial ownership is at least
equal to 50% of their initial beneficial ownership, and 1 out of 7 board seats
so long as their aggregate beneficial ownership is at least 10% of the "adjusted
outstanding shares of Common Stock". GE Equity and NBC have also agreed to vote
their shares of Common Stock in favor of the Company's nominees to the Board of
Directors in certain circumstances. John L. Flannery, Jr. and Mark W. Begor,
Directors of the Company and currently nominees for election to the Board of
Directors by the holders of the Preferred Stock, are employed by GE Equity and
NBC, respectively.
All committees of the Board of Directors will include a proportional number
of directors nominated by GE Equity and NBC. The Shareholder Agreement also
requires the consent of GE Equity prior to the Company entering into any
substantial agreements with certain restricted parties (broadcast networks and
internet portals in certain limited circumstances, as defined), as well as
taking any of the following actions: (i) issuance of more than 15% of the total
voting shares of the Company in any 12-month period (25% in any 24-month
period), (ii) payment of quarterly dividends in excess of 5% of the Company's
market capitalization (or repurchases and redemption of Common Stock with
certain exceptions), (iii) entry by the Company into any business not ancillary,
complementary or reasonably related to the Company's current business, (iv)
acquisitions (including investments and joint ventures) or dispositions
exceeding the greater of $35.0 million or 10% of the Company's total market
capitalization, or (v) incurrence of debt exceeding the greater of $40.0 million
or 30% of the Company's total capitalization.
Pursuant to the Shareholder Agreement, so long as GE Equity and NBC have
the right to name at least one nominee to the Board of Directors, the Company
will provide them with certain monthly, quarterly and annual financial reports
and budgets. In addition, the Company has agreed not to take actions which would
cause the Company to be in breach of or default under any of its material
contracts (or otherwise require a consent thereunder) as a result of
acquisitions of the Common Stock by GE Equity or NBC. The Company is also
prohibited from taking any action that would cause any ownership interest of
certain FCC regulated entities from being attributable to GE Equity, NBC or
their affiliates.
The Shareholder Agreement provides that during the Standstill Period (as
defined in the Shareholder Agreement), and with certain limited exceptions, GE
Equity and NBC shall be prohibited from: (i) any asset/business purchases from
the Company in excess of 10% of the total fair market value of the Company's
assets, (ii) increasing their beneficial ownership above 39.9% of the Company's
shares, (iii) making or in any way participating in any solicitation of proxies,
(iv) depositing any securities of the Company in a voting trust, (v) forming,
joining, or in any way becoming a member of a 13D Group with respect to any
voting securities of the Company, (vi) arranging any financing for, or providing
any financing commitment specifically for, the
16
<PAGE> 20
purchase of any voting securities of the Company, (vii) otherwise acting,
whether alone or in concert with others, to seek to propose to the Company any
tender or exchange offer, merger, business combination, restructuring,
liquidation, recapitalization or similar transaction involving the Company, or
nominating any person as a director of the Company who is not nominated by the
then incumbent directors, or proposing any matter to be voted upon by the
shareholders of the Company. If during the Standstill Period any inquiry has
been made regarding a "takeover transaction" or "change in control" which has
not been rejected by the Board of Directors, or the Board of Directors pursues
such a transaction, or engages in negotiations or provides information to a
third party and the Board of Directors has not resolved to terminate such
discussions, then GE Equity or NBC may propose to the Company a tender offer or
business combination proposal.
In addition, unless GE Equity and NBC beneficially own less than 5% or more
than 90% of the adjusted outstanding shares of Common Stock, GE Equity and NBC
shall not sell, transfer or otherwise dispose of any securities of the Company
except for transfers: (i) to certain affiliates who agree to be bound by the
provisions of the Shareholder Agreement, (ii) which have been consented to by
the Company, (iii) pursuant to a third party tender offer, provided that no
shares of Common Stock may be transferred pursuant to this clause (iii) to the
extent such shares were acquired upon exercise of the Investment Warrant on or
after the date of commencement of such third party tender offer or the public
announcement by the offeror thereof or that such offeror intends to commence
such third party tender offer, (iv) pursuant to a merger, consolidation or
reorganization to which the Company is a party, (v) in a bona fide public
distribution or bona fide underwritten public offering, (vi) pursuant to Rule
144 of the Securities Act of 1933, as amended (the "Securities Act"), or (vii)
in a private sale or pursuant to Rule 144A of the Securities Act; provided that,
in the case of any transfer pursuant to clause (v) or (vii), such transfer does
not result in, to the knowledge of the transferor after reasonable inquiry, any
other person acquiring, after giving effect to such transfer, beneficial
ownership, individually or in the aggregate with such person's affiliates, of
more than 10% of the adjusted outstanding shares of the Common Stock.
The Standstill Period will terminate on the earliest to occur of (i) the 10
year anniversary of the Shareholder Agreement, (ii) the entering into by the
Company of an agreement that would result in a "change in control" (subject to
reinstatement), (iii) an actual "change in control," (iv) a third party tender
offer (subject to reinstatement), and (v) six months after GE Equity and NBC can
no longer designate any nominees to the Board of Directors. Following the
expiration of the Standstill Period pursuant to clause (i) or (v) above
(indefinitely in the case of clause (i) and two years in the case of clause
(v)), GE Equity and NBC's beneficial ownership position may not exceed 39.9% of
the Company on fully-diluted outstanding stock, except pursuant to issuance or
exercise of any warrants or pursuant to a 100% tender offer for the Company.
Registration Rights Agreement
Pursuant to the Investment Agreement, the Company and GE Equity entered
into a Registration Rights Agreement providing GE Equity, NBC and their
affiliates and any transferees and assigns, an aggregate of four demand
registrations and unlimited piggyback registration rights.
Distribution and Marketing Agreement
NBC and the Company have entered into a Distribution and Marketing
Agreement dated March 8, 1999 (the "Distribution Agreement") which provides that
NBC shall have the exclusive right to negotiate on behalf of the Company for the
distribution of its home shopping television programming service. The agreement
has a 10-year term and NBC has committed to delivering an additional 10 million
full-time equivalent ("FTE") subscribers over the first 42 months of the term.
In compensation for such services, the Company will pay NBC an annual fee of
$1.5 million (increasing no more than 5% annually) and issued NBC the
Distribution Warrant. The exercise price of the Distribution Warrant is
approximately $8.29 per share and vested 200,000 shares immediately, with the
remainder of the Distribution Warrant vesting 125,000 shares annually over the
10-year term of the Distribution Agreement. The Distribution Warrant is
exercisable for five years after vesting. The value assigned to the Distribution
and Marketing Agreement and Distribution Warrant of $6,931,000 was determined
pursuant to an independent appraisal and is being amortized on a
17
<PAGE> 21
straight-line basis over the term of the agreement. Assuming certain performance
criteria above the 10 million FTE homes are met, NBC will be entitled to
additional warrants to acquire Common Stock at the then current market price.
The Company has a right to terminate the Distribution Agreement after the
twenty-fourth, thirty-sixth and forty-second month anniversary if NBC is unable
to meet the performance targets. If terminated by the Company in such
circumstance, the unvested portion of the Distribution Warrant will expire. In
addition, the Company will be entitled to a $2.5 million payment from NBC if the
Company terminates the Distribution Agreement as a result of NBC's failure to
meet the 24 month performance target.
NBC may terminate the Distribution Agreement if the Company enters into
certain "significant affiliation" agreements or a transaction resulting in a
"change of control."
Letter Agreement
The Company, GE Equity and NBC have also entered into a non-binding letter
of intent dated March 8, 1999 providing for certain cooperative business
activities which the parties contemplate pursuing, including but not limited to,
development of a private label credit card, development of electronic commerce
and other internet strategies, development of programming concepts for the
Company, and cross channel promotion.
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 SEC initial
reports of ownership and reports of changes in beneficial ownership of Common
Stock and other equity securities of the Company. Officers, Directors and
greater than ten percent shareholders of the Company 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 2000, all Section 16(a) filing
requirements applicable to its officers, Directors and greater than ten percent
shareholders were complied with except for the following. On May 12, 2000, Mark
W. Begor, a Director, filed a Form 3 that was due November 10, 1999. On May 10,
2000, Marshall S. Geller, a Director, filed a Form 4 with respect to one
transaction for which a report on Form 4 was due July 10, 1999, three
transactions for which a report on Form 4 was due February 10, 2000, and one
transaction for which a report on Form 4 was due March 10, 2000.
18
<PAGE> 22
STOCK PERFORMANCE GRAPH
The line-graph set forth below compares the cumulative, five-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, 1995 to January 31, 2000,
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., and E4L, Inc. (formerly known as National Media
Corporation). Fingerhut Companies, Inc., which had been included in the "peer
group" index in the Company's previous proxy statements, entered into a
transaction in the last fiscal year which resulted in its stock no longer being
publicly traded. Fingerhut is therefore no longer available for inclusion in the
index. These corporations are involved in various aspects of the direct
marketing to consumers industry. In each case, the cumulative return is
calculated assuming an investment of $100 on January 31, 1995, and reinvestment
of all dividends.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG VALUEVISION INTERNATIONAL, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
VALUEVISION NASDAQ STOCK
INTERNATIONAL, INC. PEER GROUP MARKET (U.S.)
------------------- ---------- -------------
<S> <C> <C> <C>
1/95 100.00 100.00 100.00
1/96 122.50 76.15 141.30
1/97 92.50 121.26 185.26
1/98 75.00 192.56 218.66
1/99 185.00 171.00 342.21
1/00 711.26 176.67 532.68
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
VALUEVISION NASDAQ STOCK
INTERNATIONAL, INC. PEER GROUP MARKET (U.S.)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1/95 100.00 100.00 100.00
---------------------------------------------------------------------------------------------------
1/96 122.50 76.15 141.30
---------------------------------------------------------------------------------------------------
1/97 92.50 121.26 185.26
---------------------------------------------------------------------------------------------------
1/98 75.00 192.56 218.66
---------------------------------------------------------------------------------------------------
1/99 185.00 171.00 342.21
---------------------------------------------------------------------------------------------------
1/00 711.26 176.67 532.68
---------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 23
PROPOSAL 2
PROPOSAL TO APPROVE AMENDMENT NO. 7
TO THE SECOND AMENDED VALUEVISION INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES ISSUABLE
THEREUNDER FROM 3,250,000 TO 4,250,000
On June 5, 1990, the Company's shareholders and the Board of Directors
unanimously approved the 1990 Plan. Prior to such date, the 1990 Plan had been
subsequently amended from time to time to, among other things, increase the
number of shares issuable thereunder. The aggregate number of shares of Common
Stock that may be currently awarded under the 1990 Plan cannot exceed 3,250,000.
Due to the Company's continued growth and expansion and its need to attract,
retain and reward its key employees, the number of shares of Common Stock
issuable pursuant to options granted under the 1990 Plan has substantially
reached the 3,250,000 share limit. The Board of Directors believes that it is in
the best interests of the Company and its shareholders to amend the 1990 Plan to
increase the number of shares of Common Stock that may be issued thereunder to
4,250,000. The Board of Directors believes such increase will strengthen the
Company's ability to attract, retain and motivate employees by providing a means
to encourage share ownership and a proprietary interest in the Company to valued
employees whose judgment, initiative and efforts are necessary to the continued
financial success and growth of the Company's business. The proposed Amendment
No. 7 and the complete text of the 1990 Plan (together with all prior
amendments) are attached as Appendix B and Appendix C, respectively, to this
Proxy Statement. The brief summary of the 1990 Plan which follows is qualified
in its entirety by reference to the complete text. Capitalized terms used in
this summary without definition shall have the meanings ascribed to them in the
1990 Plan.
GENERAL
The purpose of the 1990 Plan is to increase shareholder value and to
advance the interests of the Company by furnishing a variety of economic
incentives designed to attract, retain and motivate employees of the Company.
The 1990 Plan provides that a committee comprised of at least two
"disinterested" members of the Board of Directors may grant stock options to
employees. Currently, the 1990 Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee") comprised of Messrs.
Begor, Geller and Tosetti. In general, a Director is "disinterested" if he or
she has not received stock options under the 1990 Plan, or under another plan of
the Company, for at least one year. Stock options may be granted only to key
management employees of the Company (including officers, but excluding
Directors) selected from time to time by the Committee. While all of the
Company's key management employees (including officers and directors, but
excluding directors of the Company who are not also full-time employees of the
Company) are eligible to receive options under the 1990 Plan, only certain of
these management employees named by the Committee received grants of options
under the 1990 Plan in the past year.
Currently, the number of shares of Common Stock which may be issued under
the 1990 Plan may not exceed 3,250,000, subject to adjustment in the event of a
merger, recapitalization or other corporate restructuring. The amendment
presently before the shareholders of the Company, if approved, will increase the
number of shares of Common Stock issuable under the 1990 Plan to an aggregate of
4,250,000, subject to adjustment in the event of a merger, recapitalization or
other corporate restructuring.
STOCK OPTIONS
Under the 1990 Plan, the Committee may grant non-qualified stock options
and Incentive Stock Options to eligible employees to purchase shares of Common
Stock from the Company. The 1990 Plan confers on the Committee discretion, with
respect to any such stock option, to determine the number and purchase price of
the shares of Common Stock subject to the option, the term of each option and
the time or times during its term when the option becomes exercisable. The
purchase price for Incentive Stock Options may not be less than the fair market
value of the shares subject to such option on the date of grant. The term of a
non-qualified
20
<PAGE> 24
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 granted under the 1990 Plan shall become immediately exercisable in the
event of specified changes in corporate ownership or control.
In the event that an optionee ceases to be an employee 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 employment shall
be exercisable or shall expire at the time or times established by the
Committee.
NON-TRANSFERABILITY OF INCENTIVES
No stock option will be transferable by its holder, except in the event of
the holder's death, by will or the laws of descent and distribution. During an
employee's lifetime, a stock option may be exercised only by the employee or by
his or her guardian or legal representative.
AMENDMENT OF THE 1990 PLAN
The Board of Directors may amend or discontinue the 1990 Plan at any time.
However, subject to adjustment in the event of a merger, recapitalization, or
other corporate restructuring, no such amendment or discontinuance may, without
shareholder approval, (a) adversely affect, without the consent of the recipient
thereof, a stock option previously granted, (b) increase the maximum number of
shares of Common Stock which may be issued under the 1990 Plan, (c) decrease the
minimum stock option price under the 1990 Plan, (d) materially change the
eligibility requirements to participate in the 1990 Plan, or (e) materially
increase the benefits accruing to participants.
FEDERAL INCOME TAX CONSEQUENCES
When a non-qualified stock option granted pursuant to the 1990 Plan is
exercised, the employee will realize ordinary income measured by the difference
between the aggregate purchase price of the shares of Common Stock as to which
the option is exercised and the aggregate fair market value of the shares of
Common Stock on the exercise date. 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 that qualify as Incentive Stock Options are entitled to special tax
treatment. If certain statutory employment and holding period conditions are
satisfied before the optionee disposes of shares acquired pursuant to an
Incentive Stock Option, 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 of Common Stock
purchased will be equal to the amount 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. For alternative minimum tax purposes, however, an
Incentive Stock Option will be treated as if it were a non-qualified stock
option.
If the optionee disposes of the shares of Common Stock acquired upon
exercise of an Incentive Stock Option before the expiration of the statutory
holding periods, 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
such shares and the lesser 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.
THE BOARD OF DIRECTORS BELIEVES PROPOSAL 2
TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS
AND RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 2.
21
<PAGE> 25
PROPOSAL 3
PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
JANUARY 31, 2001
The Board of Directors has appointed Arthur Andersen LLP as independent
auditors of the Company for the fiscal year ending January 31, 2001, it being
intended that such appointment would be presented for ratification by the
shareholders of the Company. Arthur Andersen LLP has been the independent
accountant for the Company since 1990. Arthur Andersen LLP will have
representatives at the Meeting who will have an opportunity to make a statement
if they desire to do so and will be available to respond to appropriate
questions.
In the event the shareholders of the Company do not ratify the appointment
of Arthur Andersen LLP, the selection of other independent auditors will be
considered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JANUARY 31, 2001.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
matters that will be presented for consideration at the Meeting other than as
described in this Proxy Statement. If any other matters shall properly come
before the Meeting or any adjournments or postponements thereof and be voted
upon, the enclosed proxy will be deemed to confer discretionary authority on the
individuals named as proxies therein to vote the shares represented by such
proxies as to any such matters. The persons named as proxies intend to vote or
not to vote in accordance with the recommendation of the management of the
Company.
SUBMISSION OF SHAREHOLDER PROPOSALS
All shareholder proposals intended to be presented at the 2001 annual
meeting of the Company and desired to be included in the Company's proxy
statement and form of proxy for that meeting must be received by the Company at
its principal executive office no later than January 19, 2001. If notice of any
other shareholder proposal intended to be presented at that meeting is not
received by the Company on or before April 4, 2001, the proxy solicited by the
Board of Directors of the Company for use in connection with that meeting may
confer authority on the proxies named in such proxy to vote in their discretion
on such proposal without any discussion in the Company's proxy statement for
that meeting of either the proposal or how such proxies intend to exercise their
voting discretion. The Company suggests that all such proposals be sent to the
Company by certified mail, return receipt requested.
By Order of the Board of Directors
/s/ GENE MCCAFFERY
Gene McCaffery
Chairman of the Board, Chief Executive
Officer and President
22
<PAGE> 26
APPENDIX A
AUDIT COMMITTEE CHARTER
VALUEVISION INTERNATIONAL, INC.
AUDIT COMMITTEE CHARTER
(AS OF FEBRUARY 1, 2000)
PURPOSE
There shall be an Audit Committee of the Board of Directors of ValueVision
International, Inc., a Minnesota corporation (the "Company").
The Committee shall have responsibility to oversee the Company's management
and outside auditors in regard to corporate accounting and financial reporting.
The Committee has the authority to conduct any investigation it deems
appropriate, with full access to all books and records, facilities, personnel
and outside advisors of the Company. The Committee is empowered to retain
outside counsel, auditors or other experts in its discretion.
ORGANIZATION
The Committee shall consist of at least three directors. Each director
appointed to the Committee shall:
a) not be disqualified from being an "independent director" within the
meaning of Rule 4200 of the NASD Manual, and shall have no relationship
with the Company which, in the opinion of the Board, would interfere with
the exercise of independent judgment; and
b) be able to read and understand fundamental financial statements,
including the Company's balance sheet, income statement and cash flow
statement. If a director is not capable of understanding such fundamental
financial statements, he or she must become able to do so within a
reasonable period of time after appointment to the Committee.
At least one member of the Committee shall have past employment experience
in finance or accounting, requisite professional certification in accounting or
any other comparable experience or background which results in the director's
financial sophistication.
RESPONSIBILITIES
The Committee recognizes that the preparation of the Company's financial
statements and other financial information is the responsibility of the
Company's management and that the auditing, or conducting limited reviews, of
those financial statements and other financial information is the responsibility
of the Company's outside auditors. The Committee's responsibility is to oversee
the financial reporting process.
The Company's management, and its outside auditors, in the exercise of
their responsibilities, acquire greater knowledge and more detailed information
about the Company and its financial affairs than the members of the Committee.
Consequently, the Committee is not responsible for providing any expert or other
special assurance as to the Company's financial statements and other financial
information or any professional certification as to the outside auditors' work,
including without limitation their reports on and limited reviews of, the
Company's financial statements and other financial information.
In carrying out its oversight responsibilities, the Committee shall:
a) review and reassess the adequacy of the Audit Committee Charter
annually;
b) require that the outside auditors provide the Committee with a
formal written statement delineating all relationships between the outside
auditors and the Company, consistent with Independence Standards Board
Standard No. 1, and discuss with the outside auditors their independence;
A-1
<PAGE> 27
c) actively engage in a dialogue with the outside auditors regarding
any disclosed relationships or services that may impact the objectivity and
independence of the outside auditors;
d) take, or recommend that the full Board take, appropriate action to
oversee the independence of the outside auditors;
e) review and consider the matters identified in Statement on Auditing
Standards No. 61 with the outside auditors and management;
f) beginning with the audited financial statements of the Company for
the fiscal year ending January 31, 2001, review and discuss the Company's
audited financial statements that are to be included in the Company's Form
10-K with the outside auditors and management and determine whether to
recommend to the Board of Directors that the financial statements be
included in the Company's Form 10-K for filing with the Securities and
Exchange Commission; and
g) review, or the Committee's Chairman shall review, any matters
identified by the outside auditors pursuant to Statement on Auditing
Standards No. 71 regarding the Company's interim financial statements. Any
such review shall occur prior to the filing of such interim financial
statements on the Company's Form 10-Q.
The outside auditors are ultimately accountable to the Board and the
Committee, as representatives of the shareholders. The Board and the Committee
have ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside auditors, and, if applicable, to nominate the
outside auditors to be proposed for approval by the shareholders in any proxy
statement.
A-2
<PAGE> 28
APPENDIX B
AMENDMENT NO. 7 TO THE SECOND AMENDED
VALUEVISION INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
The number "3,250,000" is deleted from the first sentence of Section 14 of
the Second Amended 1990 Stock Option Plan (the "Plan") and is replace with the
number "4,250,000." As amended, Section 14 reads as follows:
14. Number of Shares. The aggregate number of shares of Class A Common
Stock which may be issued under options and which shall be reserved for purposes
of the Plan shall be 4,250,000, subject to adjustment pursuant to Section 10
hereof. Authorized but unissued shares or treasury shares or both may be
utilized for purposes of the Plan. If any stock option shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
under such option shall again become available for purposes of the Plan so long
as the holder of such stock option received no benefit of ownership from the
stock.
With the exception of the foregoing, the Plan remains in full force and
effect.
B-1
<PAGE> 29
APPENDIX C
SECOND AMENDED VALUEVISION INTERNATIONAL, INC. 1990 STOCK OPTION PLAN
1. PURPOSE
The purpose of the Second Amended ValueVision International, Inc. 1990
Stock Option Plan (the "Plan") is to provide officers and other key management
employees ("Employees") of ValueVision International, Inc. (the "Company") and
its present and future subsidiaries (within the meaning of Section 425 of the
Internal Revenue Code of 1986, as amended (the "Code")) with an increased
incentive to make significant and extraordinary contributions to the performance
and growth of the Company and its subsidiaries, to increase stock ownership of
Employees, and to attract and retain Employees of exceptional ability, by means
of stock options.
2. ADMINISTRATION
(a) The administrator of the Plan (the "Plan Administrator") shall be
either:
(i) the Board of Directors of the Company, provided, however that with
regard to participation in the Plan by members of the Board of Directors, a
majority of the Board and a majority of the Directors acting in the matter
shall be "disinterested persons" as defined in Rule 16b-3 (or any successor
provision) adopted under the Securities Exchange Act of 1934 (the "Act");
or
(ii) at the discretion and by appointment of the Board of Directors of
the Company, by a committee of three or more persons (the "Committee").
Each of such appointees shall be "disinterested persons" as defined in
Subparagraph 2(a)(i) herein and shall serve at the pleasure of the Board.
All action of the Committee shall be taken by a majority of its members,
and shall be effective whether taken in person or by written action. 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.
(b) The Plan Administrator shall have full and complete authority in its
discretion, but subject to the provisions of the Plan: to authorize the grant of
options under the Plan; to select those Employees to be granted stock options
under the Plan; to determine the number of stock options to be granted to an
Employee; to determine the time or times at which such options shall be granted;
to establish the terms and conditions to be contained in option agreements under
the Plan; to remove any restrictions and conditions upon such stock options; and
to adopt such rules and regulations and to make all other determinations deemed
necessary or desirable for administration of the Plan.
3. ELIGIBILITY AND PARTICIPATION
The class of employees eligible to receive stock options under the Plan are
key management employees (including officers and directors, but excluding
directors of the Company who are not also full-time employees of the Company)
who shall be selected by the Plan Administrator from those employees who, in the
opinion of the Plan Administrator, are in positions which enable them to make
significant and extraordinary contributions to the performance and growth of the
Company and its subsidiaries.
4. STOCK OPTIONS
Stock options to purchase full shares of the Class A Common Stock, par
value $.01 per share ("Class A Common Stock"), of the Company may at the
discretion of the Plan Administrator be Incentive Stock Options (as defined in
Section 422A of the Code) or Non-Incentive Stock Options are sometimes
hereinafter collectively referred to as "stock options" or "options".
5. DETERMINATION OF OPTION PRICE
The option price of Class A Common Stock covered by each stock option
designated an Incentive Stock Option shall be determined by the Plan
Administrator but shall not be less than the fair market value of
C-1
<PAGE> 30
Class A Common Stock on the date of grant of such stock option. Such fair market
value shall be the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
on the date of grant of the stock option. The option price of Class A Common
Stock covered by each option designated a Non-Incentive Stock Option shall be
determined by the Plan Administrator on the date of grant of the stock option.
6. OPTION TERM
The term within which each stock option is exercisable shall be for such
period as the Plan Administrator may determine, but such term shall not exceed a
period of ten years in the case of Incentive Stock Options and ten years and one
day in the case of Non-Incentive Stock Options from the date of grant of an
option.
7. OPTION AGREEMENTS
Each stock option shall be evidenced by an option agreement containing such
terms and conditions, consistent with the provisions of the Plan, as the Plan
Administrator shall from time to time determine. Such terms and conditions, at
the discretion of the Plan Administrator, may include, without limitation,
provisions with respect to the time or times at which the stock option is
exercisable, the effect of termination of employment upon right of exercise, the
manner of exercise of such stock option, the payment for Class A Common Stock
either with other shares of Class A Common Stock or with cash or with both, and
payment of income tax withholding requirements in connection with the exercise
of a Non-Incentive Stock Option by the Company withholding or an Employee
delivering shares of Class A Common Stock.
8. DATE OF GRANT
The date of grant of a stock option shall occur when the granting of the
stock option is authorized by the Plan Administrator, or such later date as may
be specified by the Plan Administrator in such authorization.
9. 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:
(a) The aggregate fair market value (determined as of the time the
option is granted) of Class A Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by an employee during any
calendar year (under all plans of the Company or of its parent or any
subsidiary of the Company) shall not exceed $100,000;
(b) All Incentive Stock Options must be granted within ten years from
the earlier of the date on which this Plan was adopted by the Board of
Directors or the date this Plan was approved by the shareholders; and
(c) No Incentive Stock Options shall be granted to any Employee 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 Company or of its
parent or any subsidiary.
10. ADJUSTMENTS
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 Class A Common Stock then subject to the Plan, the number and
kind of shares of stock or other securities to which the holders of the shares
of Class A 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 Class A Common Stock, the number of shares of
Class A Common Stock then subject to the Plan, including shares subject to
options, shall be adjusted in proportion to the change in outstanding shares of
Class A Common Stock. In the event of any such adjustments, the purchase price
of any option and the shares of Class A Common Stock issuable pursuant to
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<PAGE> 31
any option shall be adjusted as and to the extent appropriate, in the discretion
of the Plan Administrator, to provide participants with the same relative rights
before and after such adjustment.
11. EFFECT OF TERMINATION OF EMPLOYMENT
In the event an employee ceases employment with the Company for any reason,
including death, any options held by such Employee may be exercised or shall
expire at such times as may be determined by the Plan Administrator.
12. TRANSFERABILITY OF OPTIONS
Options under the Plan shall not be assignable or transferable, or subject
to encumbrance or charge of any nature, otherwise than by will or the laws of
descent and distribution, and the Company shall not be required to recognize any
attempted assignment of such rights by an Employee. A stock option may be
exercised, during the lifetime of the Employee to whom such stock option was
granted, only by such Employee.
13. AMENDMENT AND TERMINATION
The Board of Directors of the Company may at any time and from time to time
amend, suspend or terminate the Plan in whole or in part; provided, however,
that the Board of Directors may not, without the favorable vote of a majority of
the shares of voting stock represented at a meeting of shareholders of the
Company, (a) increase the aggregate number of shares of Class A Common Stock
which may be issued under the Plan, or decrease the minimum stock option price
set forth in Paragraph 5 hereof, or change the designation of the class of
employees eligible to receive Incentive Stock Options under the plan, unless
otherwise permitted by the Code or (b) materially increase the benefits accruing
to participants under the Plan or materially modify the requirements as to
eligibility for participation in the Plan. No such amendment, suspension or
termination may, without the consent of the Employee to whom an option shall
theretofore have been granted, adversely affect the rights of such Employee
under such option.
14. COMMON STOCK RESERVED FOR PLAN
The aggregate number of shares of Class A Common Stock which may be issued
under options and which shall be reserved for purposes of the Plan shall be
300,000. Authorized but unissued shares or treasury shares or both may be
utilized for purposes of the Plan. If any stock option shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
under such option shall again become available for purposes of the Plan.
15. USE OF COMMON STOCK FOR INCOME TAX WITHHOLDING REQUIREMENTS
(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 an Employee is required to pay to the
Company an amount required to be withheld under applicable income tax laws in
connection with the exercise of a stock option, the Employee may satisfy this
obligation in whole or in part by electing (the "Election") to have the Company
withhold from the distribution shares of Class A 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 Class A Common Stock (as
determined in Paragraph 5 herein) on the date that the amount of tax to be
withheld shall be determined (herein "Tax Date").
(b) Each Election must be made prior to the Tax Date. The Plan
Administrator may disapprove of any Election, may suspend or terminate the right
to make Elections, or may provide with respect to any option that the right to
make Elections shall not apply to such option. An Election is irrevocable.
C-3
<PAGE> 32
(c) If the Employee is an officer or director of the Company within the
meaning of Section 16 of the Act, then an Election is subject to the following
additional restrictions:
(1) No election shall be effective for a Tax Date which occurs within
six months of the grant of the option, except that this limitation shall
not apply in the event death or disability of the Employee occurs prior to
the expiration of the six-month period.
(2) The Election must be made either six months prior to the Tax Date
or must be made during a period beginning on the third business day
following the date of release for publication of the Company's quarterly or
annual summary statements of sales and earnings and ending on the twelfth
business day following such date.
16. SECURITIES LAWS
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 grant of any option or the issuance of any shares of
Class A Common Stock pursuant to any option, require the recipient of the
option, as a condition to the receipt thereof or to the receipt of shares of
Class A Common Stock issued pursuant thereto, to deliver to the Company a
written representation of present intention to acquire the option or the shares
of Class A Common Stock issued pursuant thereto for such recipient's own account
for investment and not for distribution; and (b) if at any time the Company
further determines, in its discretion, that the listing, registration or
qualification (or any updating of any such document) of any option or the shares
of class a 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 grant of any option, the
issuance of shares of Class A Common Stock pursuant thereto, or the removal of
any restrictions imposed on such shares, such option shall not be awarded or
such shares of Class A 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.
17. MISCELLANEOUS PROVISIONS
(a) Nothing in the Plan or in any stock option granted pursuant to the Plan
shall confer on any Employee the right to continue in the employ of the Company
or any of its subsidiaries or affect in any way the right of the Company or any
such subsidiary to terminate such Employee's employment at any time.
(b) The grant of stock options under the Plan shall not confer upon any
Employee any of the rights of a shareholder until due exercise of the Employee's
stock option.
18. DURATION OF PLAN
(a) The Plan will become effective upon its approval by the affirmative
vote of the holders of a majority of the voting stock of the Company at a
meeting of its shareholders. Unless approved within one year after the date of
the Plan's adoption by the Board of Directors, the Plan shall not be effective
for any purpose.
(b) The Plan shall remain in effect until all options granted under the
Plan have been satisfied by the issuance of shares of Class A Common Stock or
terminated under the terms of the Plan and all restrictions imposed on shares of
Class A Common Stock in connection with their issuance under the Plan have
lapsed. No options may be granted under the Plan after the tenth anniversary of
the date the plan is approved by the shareholders of the Company.
(c) 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.
C-4
<PAGE> 33
19. IMMEDIATE ACCELERATION OF OPTIONS UPON CHANGE IN CONTROL
Notwithstanding any provision in the Plan, any option agreement, or any
other agreement relating thereto to the contrary, all options granted under the
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).
AMENDMENT NO. 1 TO THE SECOND AMENDED
VALUEVISION INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
Section 2 of the Second Amended 1990 Stock Option Plan (the "Plan") is
hereby deleted and replaced with the following:
2. Administration. The Plan shall be administered by the stock option
committee (the "Committee") of the board of directors of the Company. 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"). 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 interpret 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.
With the exception of the foregoing, the Plan remains in full force
and effect.
C-5
<PAGE> 34
AMENDMENT NO. 2 TO THE SECOND AMENDED
VALUEVISION INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
Section 14 of the Second Amended 1990 Stock Option Plan (the "Plan") is
hereby deleted and replaced with the following:
14. Number of Shares. The aggregate number of shares of Class A Common
Stock which may be issued under options and which shall be reserved for
purposes of the Plan shall be 650,000, subject to adjustment pursuant to
Section 10 hereof. Authorized but unissued shares or treasury shares or
both may be utilized for purposes of the Plan. If any stock option shall
expire or terminate for any reason without having been exercised in full,
the unpurchased shares under such option shall again become available for
purposes of the Plan so long as the holder of such stock option received no
benefit of ownership from the stock.
With the exception of the foregoing, the Plan remains in full force and
effect.
AMENDMENT NO. 3 TO THE SECOND AMENDED
VALUEVISION INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
Section 14 of the Second Amended 1990 Stock Option Plan (the "Plan") is
hereby deleted and replaced with the following:
14. Number of Shares. The aggregate number of shares of Class A Common
Stock which may be issued under options and which shall be reserved for
purposes of the Plan shall be 1,150,000, subject to adjustment pursuant to
Section 10 hereof. Authorized but unissued shares or treasury shares or
both may be utilized for purposes of the Plan. If any stock option shall
expire or terminate for any reason without having been exercised in full,
the unpurchased shares under such option shall again become available for
purposes of the Plan so long as the holder of such stock option received no
benefit of ownership from the stock.
With the exception of the foregoing, the Plan remains in full force
and effect.
AMENDMENT NO. 4 TO THE SECOND AMENDED
VALUEVISION INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
The number "1,150,000" is deleted from the first sentence of Section 14 of
the Second Amended 1990 Stock Option Plan (the "Plan") and is replaced with the
number "2,150,000." As amended, Section 14 reads as follows:
14. Number of Shares. The aggregate number of shares of Class A Common
Stock which may be issued under options and which shall be reserved for
purposes of the Plan shall be 2,150,000, subject to adjustment pursuant to
Section 10 hereof. Authorized but unissued shares or treasury shares or
both may be utilized for purposes of the Plan. If any stock option shall
expire or terminate for any reason without having been exercised in full,
the unpurchased shares under such option shall again become available for
purposes of the Plan so long as the holder of such stock option received no
benefit of ownership from the stock.
With the exception of the foregoing, the Plan remains in full force
and effect.
C-6
<PAGE> 35
AMENDMENT NO. 5 TO THE SECOND AMENDED
VALUEVISION INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
The phrase "(including officers but excluding directors of the Company who
are not also employees of the Company)" in the first sentence of Section 3 of
the Second Amended 1990 Stock Option Plan (the "Plan") is hereby deleted and
replaced with the phrase "(including officers but excluding directors of the
Company)." As amended, Section 3 of the Plan reads as follow:
3. Eligibility and Participation. The class of employees eligible to
receive stock options under the Plan are key management employees
(including officers, but excluding directors of the Company) who shall be
selected by the Plan Administrator from those employees who, in the opinion
of the Plan Administrator, are in positions which enable them to make
significant and extraordinary contributions to the performance and growth
of the Company and its subsidiaries.
With the exception of the foregoing, the Plan remains in full force
and effect.
AMENDMENT NO. 6 TO THE SECOND AMENDED
VALUEVISION INTERNATIONAL, INC.
1990 STOCK OPTION PLAN
The number "2,150,000" is deleted from the first sentence of Section 14 of
the Second Amended 1990 Stock Option Plan (the "Plan") and is replaced with the
number "3,250,000." As amended, Section 14 reads as follows:
14. Number of Shares. The aggregate number of shares of Class A Common
Stock which may be issued under options and which shall be reserved for
purposes of the Plan shall be 3,250,000, subject to adjustment pursuant to
Section 10 hereof. Authorized but unissued shares or treasury shares or
both may be utilized for purposes of the Plan. If any stock option shall
expire or terminate for any reason without having been exercised in full,
the unpurchased shares under such option shall again become available for
purposes of the Plan so long as the holder of such stock option received no
benefit of ownership from the stock.
A new Section 20 is added as follows:
20. Clarification. All references to Class A Common Stock in the Plan
shall be deemed to be references to the Common Stock, par value $.01 per
share, of the Company.
With the exception of the foregoing, the Plan remains in full force
and effect.
C-7
<PAGE> 36
VALUEVISION INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, JUNE 13, 2000 AT 9:00 A.M., PACIFIC TIME
ST. FRANCIS HOTEL, 335 POWELL STREET, SAN FRANCISCO, CALIFORNIA 94102
[LOGO]
V A L U E V I S I O N.
6740 SHADY OAK ROAD
EDEN PRAIRIE, MINNESOTA 55344-3433 PROXY
================================================================================
COMMON STOCK PROXY CARD
COMMON STOCK PROXY
VALUEVISION INTERNATIONAL, INC.
PROXY FOR 2000 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 Gene McCaffery and Richard D. Barnes, 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 St. Francis
Hotel, 335 Powell Street, San Francisco, California 94102, on June 13, 2000 at
9:00 a.m., Pacific time, 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 nominees
in Proposal 1, FOR Proposals 2 and 3 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 Meeting.
See reverse for voting instructions.
<PAGE> 37
---------------------------
COMPANY #
CONTROL #
---------------------------
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
- - Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
- - Follow the simple instructions the Voice provides you.
VOTE BY INTERNET - HTTP://WWW.EPROXY.COM/VVTV/ - QUICK *** EASY *** IMMEDIATE
- - Use the Internet to vote your proxy 24 hours a day, 7 days a week.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope or return it to ValueVision International, Inc., c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-0873
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
<TABLE>
<CAPTION>
<S><C>
\/ PLEASE DETACH HERE \/
- ------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
1. Election of directors: 01 Gene McCaffery 03 Stuart U. Goldfarb [ ] Vote FOR all [ ] Vote WITHHELD
02 Marshall S. Geller 04 Robert J. Korkowski nominees (except from all
05 Paul D. Tosetti as marked) nominees
------------------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
------------------------------------------
2. Proposal to approve Amendment No. 7 to the Second Amended [ ] For [ ] Against [ ] Abstain
ValueVision International, Inc. 1990 Stock Option Plan to increase the
number of shares issuable thereunder from 3,250,000 to 4,250,000.
3. Proposal to ratify Arthur Andersen LLP as independent auditors for the [ ] For [ ] Against [ ] Abstain
current fiscal year.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED
FOR EACH PROPOSAL.
Address Change? Mark Box [ ]
Indicate changes below: Date
---------------------------------
------------------------------------------
------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear on Proxy.
If held in joint tenancy, all persons must sign. Trustees,
administrators, etc., should include title and authority.
Corporations should provide full name of corporation and
title of authorized officer signing the proxy.
</TABLE>
<PAGE> 38
VALUEVISION INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, JUNE 13, 2000 AT 9:00 A.M., PACIFIC TIME
ST. FRANCIS HOTEL, 335 POWELL STREET, SAN FRANCISCO, CALIFORNIA 94102
[LOGO]
V A L U E V I S I O N.
6740 SHADY OAK ROAD
EDEN PRAIRIE, MINNESOTA 55344-3433 PROXY
================================================================================
PREFERRED STOCK PROXY CARD
PREFERRED STOCK PROXY
VALUEVISION INTERNATIONAL, INC.
PROXY FOR 2000 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 Gene McCaffery and Richard D. Barnes, 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 St. Francis
Hotel, 335 Powell Street, San Francisco, California 94102, on June 13, 2000 at
9:00 a.m., Pacific time, 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 nominees
in Proposal 1, FOR Proposals 2 and 3 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 Meeting.
See reverse for voting instructions.
<PAGE> 39
<TABLE>
<CAPTION>
<S><C>
\/ PLEASE DETACH HERE \/
- ------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
1. Election of directors: 01 Mark W. Begor [ ] Vote FOR all [ ] Vote WITHHELD
02 John L. Flannery, Jr. nominees (except from all
as marked) nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED ------------------------------------------
NOMINEE, WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED
TO THE RIGHT.)
------------------------------------------
2. Proposal to approve Amendment No. 7 to the Second Amended [ ] For [ ] Against [ ] Abstain
ValueVision International, Inc. 1990 Stock Option Plan
to increase the number of shares issuable thereunder from 3,250,000 to
4,250,000.
[ ] For [ ] Against [ ] Abstain
3. Proposal to ratify Arthur Andersen LLP as independent auditors for the
current fiscal year.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED
FOR EACH PROPOSAL.
Address Change? Mark Box [ ]
Indicate changes below: Date
---------------------------------
------------------------------------------
------------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear on Proxy.
If held in joint tenancy, all persons must sign. Trustees,
administrators, etc., should include title and authority.
Corporations should provide full name of corporation and
title of authorized officer signing the proxy.
</TABLE>
