EXHIBIT 10.5
Value Vision/National Media Letter Agreement
VALUEVISION INTERNATIONAL, INC.
0000 Xxxxx Xxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
August 11, 1998
NM Acquisition Co., LLC
c/o BT Xxxx Xxxxx Incorporated
0 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx,
Managing Member
National Media Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Chief Executive Officer
Gentlemen:
ValueVision International, Inc. ("ValueVision"), a Minnesota
corporation, agrees with NM Acquisition Co., LLC ("ACO"), a Delaware limited
liability company and National Media Corporation, a Delaware corporation ("NMC")
as follows:
1. Description of ValueVision Note. ValueVision is the holder of a
Demand Promissory Note (the "ValueVision Note") dated January 5, 1998, pursuant
to which NMC promises to pay $10 million to ValueVision.
2. Description of ValueVision Warrant. ValueVision is the holder of a
warrant (the "ValueVision Warrant") dated November 24, 1995, pursuant to which
NMC agrees to issue up to 500,000 shares of the common stock of NMC ("Shares")
to ValueVision at an exercise price (the "Exercise Price") of $8.865 per Share.
3. Description of Telemarketing Agreement. ValueVision and NMC are
parties to a Telemarketing, Production and Post-Production Agreement (the
"Telemarketing Agreement") dated April 13, 1995, and amended on October 23,
1995, November 24, 1995 and November 5, 1996, pursuant to which ValueVision is
required to pay $1.2 million to NMC for the ValueVision Warrant,
$800,000 of which has previously been paid and $400,000 of which is payable on
or before September 1, 1998. NMC hereby agrees that ValueVision shall pay the
remaining $400,000 by offsetting such amount against interest payments owing
from time to time under the ValueVision Note and that ValueVision shall not be
required to make any other payment under the Telemarketing Agreement prior to
the termination of this Agreement. Further, ValueVision shall have the right to
exercise the ValueVision Warrant at any time in accordance with its terms.
4. Representations and Warranties.
(a) Representations and Warranties of ValueVision. ValueVision
represents and warrants to NMC and ACO as follows:
(i) ValueVision has not, and has not formed the
intention to, exercise any right arising under the ValueVision Note as
a result of any Triggering Event or Event of Default (as defined in the
ValueVision Note) or any breach of any obligation of NMC under the ValueVision
Note (any such Triggering Event, Event of Default or breach is a "Default" for
the purposes of this Agreement).
(ii) ValueVision has authorized, executed and
delivered this Agreement and this Agreement constitutes a valid and
binding agreement on the part of ValueVision, enforceable in accordance with its
terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles.
(iii) ValueVision has been duly organized and is
validly existing in good standing under the Minnesota Business
Corporations Act; and ValueVision has full legal right, power and authority to
enter into and perform its obligations under this Agreement. All consents,
approvals, authorizations and orders required for the execution and delivery by
ValueVision of this Agreement, have been obtained and are in full force and
effect.
(b) Representations and Warranties of ACO. ACO represents and
warrants to ValueVision as follows:
(i) ACO has been duly organized and is validly
existing as a limited liability company under the Delaware Limited
Liability Company Act; and ACO has full legal right, power and authority to
enter into and perform its obligations under this Agreement.
(ii) ACO has duly authorized, executed and
delivered this Agreement and this Agreement constitutes a valid and
binding agreement on the part of ACO, enforceable in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
negotiable principles.
5. ValueVision Note.
(a) Subject to the following sentence, to the extent that the
transactions (the "Transactions") contemplated by the Stock Purchase Agreement
of even date herewith between NMC and ACO (the "Series E Agreement"), and
consummation thereof by ACO and NMC, and any actions of NMC which are necessary
or incidental with respect thereto, constitute or give rise to any Default,
ValueVision hereby conditionally (as described below) waives all of its rights
under the ValueVision Note with respect to such Default. The foregoing waiver is
conditional and will expire upon the earliest to occur of (1) January 1, 1999,
(2) the termination or expiration of the Series E Agreement, (3) the date any
party to the Series E Agreement makes an announcement to the effect that it will
not or does not intend to proceed with the transactions contemplated by the
Series E Agreement and (4) the date after execution of the Series E Agreement
upon which the Series E Agreement is materially amended or changed in a manner
which is materially detrimental to ValueVision (or the date upon which an
agreement to effect such amendment or change is entered into).
(b) ValueVision hereby waives its rights prior to January 1,
1999 to declare immediately due and payable any of the principal amount
outstanding under the ValueVision Note (the "Principal") to the extent that such
rights derive from the failure of a Loan Party (as defined in the ValueVision
Note) to comply with any covenant or agreement contained in the Merger Agreement
(as defined in the ValueVision Note). From the date hereof through January 1,
1999, ValueVision agrees to forbear from declaring any default under the
ValueVision Note unless: (i) NMC fails to make any interest payment to
ValueVision as required under the ValueVision Note or (ii) First Union National
Bank shall declare an event of default, and accelerate the amount due, under the
Amended and Restated Loan Agreement, as amended through the date hereof.
(c) If ValueVision is or becomes entitled to make a demand for
repayment of the Principal, or the Principal becomes immediately due and
payable, prior to January 1, 1999, and if NMC subsequently fails to repay at
least $2,500,000 against the ValueVision Note in accordance with its terms,
ValueVision agrees that its right to elect payment in common stock of NMC,
pursuant to Section 2.a of the ValueVision Note, shall be limited to $2.5
million in aggregate prior to January 1, 1999, at $1.073125 per share after
which time any remaining unpaid amounts may be the subject to such an election.
(d) For the purposes of Section 6.a.(5) of the ValueVision
Note, the Amended and Restated Loan Agreement (as defined in the ValueVision
Note) shall be deemed to be amended by the First Union National Bank Consent
Agreement (as defined in the Series E Agreement). To the extent that the Amended
and Restated Loan Agreement is fully satisfied prior to the ValueVision Note and
no comparable debt facility is entered into by NMC, the parties hereto agree
that the ValueVision Note will be amended to contain the covenants contained in
Sections 8 and 9 of the Amended and Restated Loan Agreement, as amended through
the date hereof.
(e) The second paragraph of Section 2 a of the ValueVision
Note is hereby amended in its entirety to read as follows:
Borrower shall pay the demanded amount within five Business
Days (as defined below) of demand. In the event Lender makes a
demand for repayment and Borrower cannot repay the demanded
amount in cash, Lender may, in its sole discretion, elect
repayment of any or all of the principal and/or interest in
shares of the common stock of Borrower, par value $.01 per
share (the "Common Stock"), which have been duly and validly
issued, fully paid and non-assessable, at a per share price of
$1.073125 subject to adjustment as set forth below. The
parties agree that the $1.073125 per share price is not
applicable to any payment in full on maturity or prepayment
pursuant to Section 2(b) is as specifically set forth in the
immediately preceding sentence.
Mechanical Adjustments. If at any time prior to satisfaction
of this Note in full, the Borrower shall (i) declare a
dividend or make a distribution on the Common Stock payable in
shares of its capital stock (whether shares of Common Stock or
of capital stock of any other class); (ii) subdivide,
reclassify or recapitalize outstanding Common Stock into a
greater number of shares; (iii) combine, reclassify or
recapitalize its outstanding Common Stock into a smaller
number of shares, or (iv) issue any shares of its capital
stock by reclassification of its Common Stock (including any
such reclassification in connection with a consolidation or a
merger in which the Company is the continuing corporation),
the conversion price in effect at the time of the record date
of such dividend, distribution, subdivision, combination,
reclassification or recapitalization shall be adjusted so that
the Lender shall be entitled to receive the aggregate number
and kind of shares which, if this Note had been converted in
full immediately prior to such event, lender would have owned
upon such exercise and been entitled to receive by virtue of
such dividend, distribution, subdivision, combination,
reclassification or recapitalization. Any adjustment required
by this paragraph shall be made successively immediately after
the record date, in the case of a dividend or distribution, or
the effective date, in the
case of a subdivision, combination, reclassification or
recapitalization, to allow the purchase of such aggregate
number and kind of shares.
6. ValueVision Warrant. The parties hereby agree that the exercise
price under that certain Warrant dated January 5, 1998 issued by NMC to
ValueVision, pursuant to which NMC has agreed to issue ValueVision 250,000
shares of NMC Common Stock (the "January Warrant"), is $2.74 for each such
share. The ValueVision Warrant is hereby amended by reducing the exercise price
for each Share from $8.865 to $2.74.
7. NMC agrees within 20 days of the date hereof to execute amendments
to the ValueVision Warrant and the January Warrant to reflect that the exercise
price under each such warrant is $2.74 per share.
8. Set Off. All amounts owing by NMC to ValueVision pursuant to the
ValueVision Note shall be set off against all amounts owing by ValueVision to
NMC pursuant to the Telemarketing Agreement, such that the difference only shall
be payable by the party owing the greater amount.
9. Condition Subsequent. The rights and obligations of the parties
hereto shall terminate on January 1, 1999, if the Transactions have not been
consummated on or before December 31, 1998; provided, however, that sections
5(e), 6 and 7 shall remain in effect without respect to any such termination.
10. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to ACO shall be
mailed, delivered, or telecopied (and confirmed by letter) to you at the address
set forth above or at telecopier number (818) 461- 5496, Attention: Xxxx Xxxxx,
with a copy to Buchalter, Nemer, Fields & Younger, 000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxx. If
sent to ValueVision, such notice shall be mailed, delivered, or telecopied (and
confirmed by letter) to the address set forth above, Attention: Chief Executive
Officer, or at telecopier number (000) 000-0000. If sent to NMC, such notice
shall be mailed, delivered, or telecopied (and confirmed by letter) to the
address set forth above, Attention: General Counsel, or at telecopier number
(000) 000-0000.
11. Parties. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and each of their respective executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person or entity, other
than the parties hereto and their respective executors, administrators,
successors and assigns, any legal or equitable right, remedy or claim in respect
of this Agreement or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto and their
respective executors, administrators, successors and assigns.
12. Entire Agreement; Amendments. This Agreement supersedes all prior
agreements and understandings set forth in that certain Letter of Agreement
dated July 15, 1998 between the parties hereto. This Agreement may be amended
only by a written instrument duly executed by the parties or their respective
successors or assigns.
13. Survival of Representations. All representations, warranties and
agreements made by ACO and ValueVision in this Agreement shall survive the
consummation of the transactions contemplated hereby.
14. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable.
15. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware.
16. Counterparts. This Agreement may be signed in several counterparts,
each of which will constitute an original, and together shall constitute one and
the same Agreement.
If the foregoing correctly sets forth our understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding Agreement among ACO, ValueVision and NMC.
"VALUEVISION"
VALUEVISION INTERNATIONAL, INC.,
a Minnesota corporation
By:
-----------------------------------------
Xxxx XxXxxxxxx, Chief Executive Officer
Accepted and agreed as of
the date written above:
NM ACQUISITION CO., LLC.,
a Delaware limited liability company
By its Manager,
TEMPORARY MEDIA CO., LLC
a Delaware Limited Liability Company
By:
----------------------------------
Xxxx Xxxxx, Managing Member
Accepted and agreed as of
the date written above:
NATIONAL MEDIA CORPORATION,
a Delaware corporation
By:
----------------------------------
Its:
------------------------
